e- ; REPORT OF JOINT COMMITTEE OF THE SENATE AND ASSEMBLY RELATIVE TO T A X A T I O N FOR STATE AND LOCAL PURPOSES. TRANSMITTED TO THE LEGISLATURE MARCH 17, 1893. ALBANY : JAMES B. LYON, STATE PRINTER. 1893. Iffl STATE OF NEW YORK. No. 69. x" UNIVERSITY IN ASSEMBLY, MARCH 17, 1893. REPORT OF THE JOINT COMMITTEE OF THE SENATE AND ASSEMBLY RELATIVE TO THE EXAMINATION OF THE SUB- JECT OF TAXATION BOTH FOR STATE AND LOCAL PURPOSES, APPOINTED IN 1892, PURSUANT TO A JOINT RESOLUTION. To the Legislature of the State of New York : The Joint Committee of the Senate and Assembly " for the purpose of examining into the subject of taxation both for State and local purposes," appointed from those bodies in 1892, pursu- ant to a joint resolution, presents this its final report : Following the extension grante.d by the joint resolution of 1893, under a resolution which accompanied its preliminary report, and which was duly adopted, Mr. Malby and Mr. Ains- worth were appointed by the Speaker of the Assembly to act in place of Mr. Stranahan and Mr. Gifford, respectively thereon, and Mr. Byrnes was subsequently similarly added in place of Mr. Quigley, who resigned by reason of his engagements as chair- man of the committee on ways and means. Your committee continued its investigation of the subjects assigned for their consideration, and report, and the examination of witnesses, and the testimony taken before them is embraced in 916 pages of evidence which is submitted with the report. The witnesses so appearing represented, and were selected for their study and knowledge of the wants, complaints and opinions of the various sections, employments and industries of the State aifected by the important questions of taxation and interest, and included many of the best informed public officials and represen- tative officers of the associations formed for the advancement of the welfare of the agricultural communities. Your committee is pleased to be able to add that the con- clusions at which they have arrived, the recommendations which they make and the bills which they offer to accompany this report are unanimously sustained by its members, and that they have deemed it most wise and expeditious, where any difference in views existed amongst them upon topics properly embraced within the subjects before them, to relieve the discussion of this report from all embarrassment through their presentation. By the terms of the resolution creating your committee its duty was defined to be to examine " the propriety of modifying the present laws relating to taxation, assessment and interest, so far as they affect the agricultural, manufacturing, commercial, laboring, banking and other interests of the State ; as to whether capital has been or is being driven from this State by restrictions affecting corporations, and, if so, as to the remedy therefor; the operating and effect of the present tax laws of the State, and report to the Legislature at the next annual session by bill, either proposed new laws or such proposed changes in or modifications of existing laws, as, in their judgment, will increase the indirect revenues of the State government, and, as far as possible, equalize the burdens of taxation." THE PROPRIETY OF MODIFYING THE PRESENT TAX LAWS. The plan of valuation, assessment and collection by local assessors, and collectors and boards of supervisors in counties at present in force was first adopted by chapter 133 of the Colonial Laws of 1703, and has since so existed with practically no modi- fication in essential particulars. A reform of the principles of our system was directly attempted by the commissions of 1861, 1871 and 1881. The last one alone succeeded in any radical inno- vation, though leaving undisturbed the general rules which had so long prevailed, but succeeded in securing the adoption of the prin- ciple now in such successful operation for the levy and collection of taxes for State purposes solely, and generally referred to as the Corporation Tax Law, and which was followed by the Inheritance Tax Law of 1885, having the same end in view. Contemporaneous with our own labors, the State has had the benefit of those of Mr. Charles A. Collin and Mr. J. Newton Fiero, the counsel appointed by Governor Flower, under chapter 660 of the Laws of 1892, to examine the laws of this and other States relating to taxation, and whose report, transmitted to you on February 3, 1893, with the accompanying bill, now awaits your consideration. The sessions of your committee were publicly held, and the testimony taken thereat quite fully reported, and thoroughly dis- cussed as it appeared in the public press generally. This afforded to all parties interested ample opportunity to follow and profit by its developments, and brought about a full exchange of criti- cisms and suggestions, and leads naturally to some natural com- mon conclusions. With most of the views advanced in the coun- sel's report, the committee in the main agrees, yet directly differs with it in the following respects : First. The equalization of personal taxes between the counties as proposed, would be the attempt to correct an inequality which unquestionably exists, by a remedy which would legalize a system of official guessing, which would be an unworthy act of legisla- 6 tion, unbecoming to the State, and only intensifying and pro- longing a conflict between its several local divisions which it is the aim of this report to do away with wholly, and which we believe while in its present form relating to real property alone has been and will continue to be the most serious obstacle in the way of genuine tax reform. Second. The taxation of mortgages, as treated of subsequently in this report, we believe to be a proper change from the present law which that report considers but does not affect. Third. The taxation of savings bank deposits would be an undesirable interference with the earnings and savings of our thrifty people. The bill submitted by the counsel in the procedure which it recommends for the levy and collection of taxes, and their review (with some changes under the head of State tax sales), and for the guidance and control of officials, being the result of the labors of lawyers of great experience, and the special knowledge of Professor Collin through his valuable service as a member of the of the Statutory Revision Committee, is admirably adapted to eliminate the dissatisfaction produced by the antiquated methods and confusions of the present system. EQUALIZATION OE STATE TAX. The necessity for an equalization of taxes between the several counties exists wholly by reason of their collection of their share of the taxes raised to meet the expenses and appropriations of the State. It has always been confined to equalization upon real property. Even in such a case where the object assessed can be seen, its results are never satisfactory, and it will always continue to be an arbitrary exercise of power, and not a pure exercise of judgment, which should be tolerated only until constant, well directed effort can abrogate the necessity, which alone justifies it. This method of raising the revenue of the State by', local taxation, not so much by the burden which it imposes, but by the excuse which it affords the local assessors for reducing assessments upon real, and ignoring the existence of personal property, which should be taxed. The taxing officers who come nearest to a compliance with their legal duty will be criticised for inviting an increase of the State tax upon their community. In fact, in the judgment of your committee, it is this which has done as much as any other one cause to dull the public conscience into a toleration of the wholesale and manifest evasion of taxation upon personal property. Were the taxes raised by each county disbursed solely for the expenses of its own administration, the fixing of the responsi- bility which would ensue, could not fail to lead to and develop economy. The public generally, does not stop to consider, and an extravagant local administration will, as far as possible, conceal from them the small share of State expenses at present included in their taxes. The average levy for the past two years for State purposes is about one and seven-tenths of one per cent per annum, while the average for the preceding thirty years was nearly three times as great. The enlightened under- standing of the principles of taxation, which our examination leads us to believe, has very greatly spread during the past few years is so seriously obstructed in its attempts to arrive at any reform of those principles by the present methods of collecting this part of the State's revenue. In view of all these facts your committee was impressed at the outset with, and still firmly adheres to, the opinion that the elementary step indispensable to develop these reforms, was to revise means whereby the revenues of the State should be raised independent of local taxation, and which we believe our pro- posed amendments to the existing laws will in a short time produce. 8 FINE AND IMPRISONMENT FOB NONPAYMENT OF TAXES. The proceedings for contempt provided by existing statutes, as a remedy for the enforcement of the payment oi taxes, is of necessity applied to cases of tax upon personal property. The fact that it must be resorted to is generally the most satisfactory evidence that the tax should never have been levied. It arises only as a remedy against those individuals who, being conscious that they have no. property which is taxable, and relying upon that, neglect to examine the assessors' books. The ordinary action and execution will afford ample relief, and in harmony with the prevailing sentiment, we have provided for abolishing the recourse to fine and imprisonment. TAXATION OF EXECUTORS. The evasion of the tax upon estates held in trust under wills is generally complained of. Where there is more than one, the changing of the possession from one county to another or to another State, following the residence of the executors or trus- tees, will hereafter be obviated by a bill which we report, fixing the county of probate as the localit} 7 where the tax shall be levied. This measure will afford considerable relief, it is believed, to the counties of New York and Kings. POWERS AND DUTIES OF ASSESSORS. The powers of the assessors to examine complaints should be enlarged so as to permit of the examination of any persons and papers which to them may appear pertinent to the inquiry. At present this is practically limited to such evidence as the com- plainant may offer, and the power to compel the production of papers and persons is not vested in the assessors. We believe that the necessary amendment is provided by a bill which we submit, and wherein provision is also made for more extensive powers over the reopening and revision of lists where persons or 9 property are omitted. The payment of assessors has been frequently urged upon the committee as in part the cause why more thorough examinations are not made by them. We, there- fore, recommend that their actual and necessary disbursements should be audited and allowed to them. Upon the other hand, recognizing that the assessor is intrusted with duties whose evasion work incalculable wrong, we believe that the added penalty which we provide for misconduct, whereby he is dis- qualified forever from holding office, will have a proper restraining effect. AGRICULTURAL INTERESTS. It needed no special examination to impress upon our members that the value of farming lands had generally suffered a severe decline during the past decade and that at their present depreciated prices they have found but little market. The testimony taken showed this to be very nearly a universal rule. It can not be said, however, that the question of taxation has played any important part as a factor in producing this undesirable condi- tion, and, clearly, the State tax has been so light that it may be said to have had positively no bearing. This being the case, whatever injustice they have suffered in regard to taxation must be said to arise from lax and extravagant administration of the laws in their several localities, and for which they themselves should be primarily held liable. It is hardly to be expected that the field of general taxation, judging from the tendency of public opinion of to-day, will in this State be extended. After reaping such benefits as we trust will follow from the tax reforms which it is to be hoped this Legislature will adopt, the relief must be sought in other channels than tax legislation. It is undoubtedly true that the expenses of local government are chiefly chargeable to the city and to the village rather than to oar scattered commu- nities. It would be proper in view of this to allot the respective 2 10 shares of such burden upon a different basis than at present used. Some table by which a city and village should pay 110 per cent on their assessed valuation, and thereby reduce that of the remainder to 90 per cent, would make a due allowance for the sources of the expense and benefits received. In this connec- tion it will be proper to report upon these topics which find their chief if not sole advocates outside of the centers of popula- tion in our State. These are the listing system, the income tax, the exemption of personal property by offset for debt, the rate of interest, and the taxation of mortgage indebtedness. THE LISTING SYSTEM. The representative farmers who appeared before us were them- selves considerably divided in opinion as to the advisability of, or probable success from its adoption. The reports from those States where it has been in operation do not show a healthy increase in property or values of the subjects listed. This State cannot well afford, therefore, to experiment with the subject, but can wisely and well afford to await a full and fair trial by those States which have ventured in this direction, with the certainty that the intelligence and independence of our citizens will cheer- fully profit by the result when time and experience has demon- strated that the results to be expected are not problematical. THE INCOME TAX. This is justly regarded as one of the fairest means of raising public revenue. It is, however, we believe, regarded by the great majority of our people as a last resort, a kind of war measure. In a State whose wealth is distributed as ours is, and where the extreme contrasts of great wealth and poverty, of comfort and privation do not exist, and the absence of which conditions pre- vents the striking contrasts which justify and render it necessary in European countries, it would lack the moral support of the 11 people, and would only re-enact, in another form, the inequalities which to-day follow the efforts to enforce our laws for taxing personal property. DEDUCTIONS FOR PERSONAL DEBTS. Each instance where an unlawful advantage of this provision of our laws is gained is discussed until the evil is multiplied far beyond what, in our judgment, really exists. The principal property owners who would be affected by a repeal of this provision are those whose effects are in sight, our farmers, mechanics and manufactures. It is the only means whereby they equalize in a small degree the extra burden which they bear for the owners of personal property, whose property is not visible to the assessors. The creation of fictitious debts by this latter class, will, it is confidently expected, be overcome by the provisions of the Deyo act of 1892. To refuse this concession to the people of a commercial State such as ours, would be a virtual attempt to ignore the system of credits upon which its commercial prosperity is based, and as a direct sequence fasten upon every consumer an increased cost for the necessaries of life. THE RATE OF INTEREST. As upon the question of the listing system a wider difference of opinion was found among farmers than we had been led to expect by the advocates of a reduction of the present rate of six percent. Borrowers among commercial people were generally opposed to it upon intelligent reasoning. It can not be said that such an enactment is seriously demanded by any interest. In the belief, however, that the law of supply and demand which must control this matter largely will lead thereby to the voluntary reduction in most instances, we have recommended the exemption of mortgages from all taxation except a specific State tax of one- half of one per cent. 12 TAXATION or MORTGAGES. Money can not lay idle, and the borrowers who have goo security will find many lenders. This is evidenced in the pre- vailing fact that loans of this character are now frequently made considerably below the fixed legal rate. Where the security is not fitted to find help in this market the borrower must seek it where the lender will exact all the law allows. More he can not safely do. The plan that is proposed by your committee of taxing mort- gages for State purposes is deemed to be the wisest course. Its success may demonstrate that the claim that the exemption of all personal property from general taxation would be a positi public benefit is well founded. LOCAL OPTION. Local option means absolutely the exemption of personal prop- erty from taxation. We accept the judgment of the representa- tive men of New York who testified before us to that opinion. We believe their prediction that, once adopted in New York city and county, it would compel adjoining counties, one by one, to follow its example, in self-protection, if not from choice. Where would those be who would be tardy in joining the movement, and if they were tardy in doing so, what would be their condi- tion ? They would be stripped of the resident population which possessed wealth. From this deplorable condition how long would it require for them to regain it ? It is doubtful if they ever could. Sufficient other causes are already in operation, depleting the population of many of our counties. If it be wise policy to exempt personal property, the Legislature shoul face the issue fairly, and not by indirection. All counties should be given a fair start in its advantages if it really possesses them. / f UNIVERSITY 13 ^i, .^ Is CAPITAL DRIVEN FROM THE STATE ? The formation of corporations in adjoining States, and in some quite distant, in which the moving spirits are citizens of New York, and the substantial capital is their contribution, is not due, primarily, to our tax laws. The provisions of our statutes whereby personal liability may follow stockholders, and corporations are required to furnish full reports is the essential grievance. Those requirements are in conformity with the well settled policy of this State. They simply carry out a virtual requirement of our Con- stitution, which provides (Article YIII, section 12), "Dues from corporations shall be secured by such individual liability of the corporators, and other means as may be prescribed by law." These provisions of our corporation laws have given to those bodies an enviable reputation for stability which it would be unwise to destroy. The tax collected is but an incident in the history of this flight of capital, if we are to believe the uniform testimony produced before us. These emigrants return to New York to transact their business. If they desire to publish them- selves as avoiding liability under our laws the loss is their own. The loss as a source of taxation can be remedied by applying to them the same laws which tax our domestic corporations, and the amendment which we submit allows them no advantage, nor does it discrimate against them, but simply provides that such business can not be carried on here unless the tax shall first be paid, both for original entry, and annually thereafter. A State tax is also recommended upon corporations now exempt, where the net earnings exceed six per cent. INCREASING THE REVENUES OF THE STATE. The report of Comptroller Campbell, submitted this year, esti- mates the probable expenditures to be provided for by State tax for the current fiscal year, $7,784,848.16. 14 To impose taxes which would at once raise so large a sum through new channels or different methods would bean innovation too startling to command success. A gradual, sure, but by no means slow method which can attain this desirable end will commend itself to the people and their representatives. The sum at present raised by general tax for State purposes from fixed causes- must continue to decline. The extinguishment of the State debt, decreased deficiencies of the State prisons, conclusion of the Chicago exposition, completion of the Capitol, and other causes promise a speedy retrenchment in the amount so necessary to be raised. In the meantime the additions from the more efficient administration and natural increase under the laws, and the development of those proposed for State revenue will speedily climb to a point where they will meet and pass the demands upon the State. The first increase is recommended to be raised by a tax for State purposes upon mortgages. TAXING MORTGAGES. As personal property mortgages are now taxable, and presum- ably are contributing the share thus specifically imposed upon them, but in reality are not. The tax proposed is about the general average which they have been so subject to for the past thirty years. The additional burden is that no deduction for debt is allowed as against the tax for State purposes. It is not a violent assumption to assert that the holders of mortgages have at least that amount of net assets which are, therefore, rightfully taxable. To the general investor in mortgages this change presents an opportunity for the exemption from all other taxes, and it is believed will lead to a general reduction in t rate of interest upon those securities by increasing their availa bility as an investment by insuring a large margin of net profit* than many public securities now pay. As a tax upon personal property it is an ideal one. It defies evasion, and must be paid in every instance when the mortgage lis ler 15 is taken as security. The chief argument against taxing personal property is that it can not be universally, that is, equitably enforced. The system proposed completely obviates this objec- tion. Of the results to be anticipated from this source of revenue a few figures will give demonstrations. The present assessed equalized value of real property in this State is $3,526,645,815. The State Assessors say that this is but sixty-five per cent of the actual value, which should be, therefore, in round numbers, $5,400,000,000, which is, probably, still a low estimate. If forty per cent of this is mortgaged for fifty per cent of its value, there would be in mortgages about $1,000,000,000. This is exclusive of mortgages on personal property. A tax of one-half of one per cent on that amount would produce $5,000,000, but which will be reduced by the securities held by savings banks and nontaxable institutions. SUCCESSION TAX. The conclusions arrived at by the committee are to favor the incorporation into the present law of a progressive or graded tax ; to include real estate in estates of over $50,000, in the direct line ; and to abolish exemptions on all amounts over $10,000. When it is recalled that the increase of receipts from the succession tax last year over the previous one was $895,950.93, it would seem safe to expect a still larger increase from the proposed amendments. CORPORATION TAX. The practice of incorporating under the laws of other States has already been referred to. 'Amendments are reported to the existing organization and franchise tax which is collected from domestic corporations, which protect our own corporations by compelling foreign corporations doing business in this State to contribute equally with them. Evasions of this tax by domestic corporations which being heavily bonded pay no dividend and are, therefore, not propor- tionately assessed upon the basis of the market value of their 16 stock, are overcome by an amendment which provides that the capital stock shall in such cases be assessed at its par value. From those changes in the corporation tax a handsome income can also be reasonably estimated. CONCLUSION. Your committee concludes that the direct revenues of the State will, if their suggestions are enacted by you and meet with the executive sanction, start with an annual increase in the State revenues of over $4,000,000. They believe it will solve the question of taxes for State purposes and open the way for intelligent reform upon the vital topics of taxation for local purposes. We confess a considerable change of heart from the opinions at first entertained by us when we say that the propo- sition to relieve personal property from taxation presents a problem which we are well satisfied is worthy of careful study, but to which we do not feel fully warranted in giving our present assent further than in the direction recommended. CHAS. P. MCCLELLAND. JOHN F. AHEARN. H. J. COGGESHALL. THOMAS F. BYRNES. HENRY H. GUENTHER. JOHN J. CASSIN. GEO. R. MALBY. Dated ALBANY, Mcwch 17, 1893. APPENDIX AN ACT to amend chapter four hundred and eighty-three of the laws of eighteen hundred and eighty-five, entitled "An act to tax gifts, legacies, and collateral inheritances in certain cases," and the several acts amendatory thereof. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. Section one of chapter four hundred and eighty-three of the laws of eighteen hundred and eighty-five, as amended by chapter seven hundred and thirteen of the laws of eighteen hun- dred and eighty-seven, and by chapter two hundred and fifteen of the laws of eighteen hundred and ninety-one, and as further amended by chapter one hundred and sixty-nine of the laws of eighteen hundred and ninety-two, is hereby amended so as to read as follows: 1. After the passage of this act, all property which shall pass by will or by the intestate laws of this state from any person who may die seized or possessed of the same while a resident of this state; or, if the decedent was not a resident of this state at the time of his death, which property, or any part thereof, shall be within this state; or any interest therein, or income therefrom, which shall be transferred by deed, grant, sale or gift made in contemplation of the death of the grantor or bargainer, or intended to take effect in possession or enjoyment after such death, or whether bequeathed or devised to representatives in lieu of commissions upon the value of such property over and above the commissions allowed by law to any person or persons, or to any body, politic or corporate, in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled in possession or expectancy to any property or the income thereof, shall be and is subject to a tax at the rate 3 18 hereinafter specified, to be paid to the treasurer of the proper county, and in the county of New York to the comptroller thereof, for the use of the state; and all heirs, legatees, devisees, adminis- trators, executors and trustees shall be liable for any and all such taxes until the same shall have been paid as hereinafter directed. When the beneficial interest to any personal property or income therefrom shall pass to or for the use of any father, mother, husband, wife, child, brother, sister, wife or widow of a son, or the husband of a daughter, or any child or children adopted as such in conformity with the laws of the state of New York, or to any person to whom the deceased, for not less than ten years prior to death, stood in the mutually acknowledged relation of a parent, or to any lineal descendant born in lawful wedlock; in every such case the rate of such tax shall be one dollar on every hundred dollars of the clear market value of such property, so passed, up to the amount of one hundred thousand dollars, and on all sums beyond said one hundred thousand dollars, and up to the amount of five hundred thousand dollars, such tax shall be two dollars on every hundred dollars of the clear market value of such property, and on all sums beyond said five hundred thousand dollars, said tax shall be two dollars and fifty cents on every hundred dollars of the clear market value of such property, provided that an estate which may be valued at a less sum than ten thousand dollars, shall not be subject to any such duty or tax. When the beneficial interest in any real property or any income therefrom shall pass to or for the use of any father, mother, husband, wife, child, brother, sister, wife or widow of a son, or the husband of a 'laugh- ter, or any child or children adopted as such in conformity with the laws of the state of New York, or to any person to whom the deceased, for not less than ten years prior to death, stood in the mutually acknowledged relation of a parent, or to any lineal descendant born in lawful wedlock; in every such case the rate of such tax shall be one dollar on every hundred dollars of the clear market value of such property, provided that an estate which may be valued at a less sum than fifty thousand dollars shall not be subject to any such duty or tax. In all other cases the rate shall be five dollars on each and every hundred dollars of the clear market value of all property, real and personal, and at and 19 after the same rate for any less amount, provided that an estate which may be valued at a less sum than five hundred dollars shall not be subject to any such duty or tax; and provided further that any property hereafter devised or bequeathed to any religious corporation to an amount not to exceed ten thousand dollars shall be exempted from and not to be subject to the provisions of this act 2. This act shall take effect immediately. AN ACT to abolish fine and imprisonment for non- payment of taxes. The People of the State of New York, represented in /Senate and Assembly , do enact as follows ; Section 1. After the passage of this act, a neglect or refusal to pay any tax, shall not be punishable as a contempt, and fine and imprisonment for any such nonpayment is hereby abolished. 2. This act shall take effect immediately. AN ACT to amend chapter five hundred and forty- two of the laws of eighteen hundred and eighty, entitled " An act to provide for raising taxes for the use of the state, upon certain corporations, joint-stock companies, and associations," and the several acts amendatory thereof. The People of the State of New York, represented in Senate and Assembly, do enact as follows : Section 1. Section three of chapter five hundred and forty-two of the laws of eighteen hundred and eighty, entitled "An act to provide for raising taxes for the use of the state upon certain cor- porations, joint-stock companies, and associations, as amended by chapter three hundred and sixty-one of the laws of eigjhteen hun- dred and eighty-one, and chapter three hundred and fifty-nine of the laws of eighteen hundred and eighty-five, and chapter one hundred and ninety-three of the laws of eighteen hundred and eighty-nine, and chapter three hundred and fifty-three of the laws of eighteen hundred and eighty-nine, and chapter five hundred and twenty-two of the laws of eighteen hundred and ninety, is hereby further amended so as to read as follows: 3. Every corporation, joint-stock company, or association, or express company, whatever, now or hereafter incorporated, organ- ized or formed under, by, or pursuant to law of this state, except only savings banks and institutions for savings, life insurance companies, banks, foreign insurance companies, and agricultural and horticultural societies, associations or corporations, which exceptions, however, shall not include gas companies, trust com- panies, electric and steam heating, lighting and power companies, shall be liable to and shall pay a tax, as a tax upon its franchise or business, into the state treasury annually, to be computed as follows: If the dividend or dividends made or declared by such corporation, joint-stock company or association, or express com- pany during any year ending, with the first day of November, amount to six or more than six per centum upon the par value of its capital stock, then the tax to be at the rate of one-quarter mill upon the capital stock for each one per centum of dividends so made or declared; or if no dividend be made or declared, or if the dividend or dividends made or declared do not amount to six per centum upon the par value of said capital stock, then the tax to be at the rate of one and one-half mills upon each dollar of the said capital stock, at its par value; and in case any such corpora- tion, joint-stock company or association or express company shall have more than one kind of capital stock, as for instance, common and preferred stock, and upon one of said stocks a dividend or dividends, amounting to six or more than six per centum upon the par value thereof, has b~en made or declared, and upon the other no dividend has been made or declared, or the dividend or dividends made or declared thereon amount to less than six per centum upon the par value thereof, then the tax shall be at the rate of one-quarter mill for each one per centum of dividem made or declared upon the capital stock upon the par value which the dividend or dividends made or declared amount to six or more than six per centum, and in addition thereto tax shall be charged at the rate of one and one-half mills upon each dollar of capital stock at par value, upon which no dividend was made or 21 declared, or upon the par value of which the dividend or dividends made or declared did not amount to six per centum. Domestic manufacturing or mining corporations, or companies wholly engaged in carrying on manufacture, or mining ores within this state, shall not be taxable as herein provided, unless the net earnings thereof shall exceed six per centum per annum. Any foreign corporation doing business in this state shall annually pay a like tax as an excise tax or license fee, to be computed as follows, viz. : Upon that percentage of its total capital stock, which the business of said corporation done in this state bears to its entire business. Upon the annual payment thereof the state treasurer shall deliver to such foreign corporation a certifi- cate of such payment^ and no action shall be maintained, or recov- ery had, in any of the courts of this state, by such foreign corpora- tion doing business in this state without such annual certificate. 2. This act shall take effect immediately. AN ACT to provide for licensing foreign stock corporations. The People of the State of New York, represented in Senate and Assembly, do enact as follows : Section 1. Every foreign corporation doing business in this state shall pay a tax of one-eighth of one per cent upon that percentage of its total capital stock which the business of said corporation done in this state bears to its entire business, to the state treas- urer, for the use of the state, upon obtaining a certificate of authority from the secretary of state to do business in this state; and, if subsequent to the obtaining of such authority, it should increase its capital, it shall pay a like tax upon such increase. The amount of capital on which such tax shall be paid shall be fixed by the comptroller in the same manner as he fixes the tax to be paid by a corporation for exercising a corporate fran- chise. No action shall be maintained, or recovery had, in any of the courts of this state by such foreign corporation doing business in this state, without obtaining such certificate of authority and a receipt for the license fee hereby imposed. 2. This act shall take effect immediatelv. 22 AN ACT in relation to the assessment and collecti< of taxes. The People of the State of New York, represented >n and Assembly, do enact as follows : Section 1. Whenever a person on his own behalf, or on behalf of others, shall apply to any assessor, or board or body, charged with the levying of assessments or taxes, to reduce the value of any real or personal estate, as set down on the assessment-roll, it shall be the duty of such assessor, board or body, to examine such person under oath, touching the value of the said real or personal estate, and they shall have power to administer the necessary oath therefor, and to issue to any and all persons, sub- poenas duces teciun, to appear before and submit to examination upon such application, and after such examination, and such other supplementary evidence under oath as shall have been received, they shall fix the value thereof; but if such person so applying, or the party to whom such application is made shall refuse to answer any question as to the value of such real or personal estate, or the amount thereof, or shall fail to present sufficient supplementary evidence, under oath, to justify the reduction, the said assessors shall not reduce the value of such real or personal estate. The examination so taken shall be writr ten, be subscribed by the persons examined, severally, and shall be filed in the office of said assessors, board or body; and any person who may willfully swear false on such examination, shall be deemed guilty of willful and corrupt perjury. 2. Whenever it shall be made to appear to the assessors, or any board or body, charged with levying any tax, that any body or person lawfully taxable shall have been omitted from the assessment-roll for the current or preceding year, it shall be their duty to enter the same in the assessment-roll of the current year at any time within five days previous to the final day foi inspection of said assessment-roll, and shall forthwith cause notice of such addition or change to be mailed to the person or persons affected thereby, at his last known place of residence. 3. In addition to the compensation now fixed by law, every town assessor shall be entitled to be reimbursed for necessary 23 and lawful expenses while engaged in the performance of his duties, to be audited and allowed by the board of town auditors. 4. Every omission of duty by any assessor shall be a mis- demeanor, and upon conviction shall disqualify the person so convicted thereafter from holding any public office or employ- ment. 5. The place wherein the testator last resided in any county in which the will is probated, shall be the place where all taxes shall be levied, and paid on any property held under the terms of said will. 6. This act shall take effect immediately. AN ACT to regulate the taxation of mortgages. 77i * some changes. 35 Q. That is to the Legislature,? A. Yes, sir; I know we have; there is one in my mind now, because I happened to prepare the bill and submit it myself; I think it was about in 1884, and that is relative to the taxation of corporations, known as telegraph and electric companies, I think; in 1854 there was an act passed, I think, for the formation of telegraph companies which deter- mined the valuation of the capital of a telegraph company to be based upon the valuation of construction or reconstruction of their poles and wires, so I submitted an act repealing that act, and leav- ing them then necessarily under the general act so far as other corporations were concerned ; we can not get any taxes out of those corporations. By Mr. Creamer; Q. You submitted a bill to become a law? A. Yes, sir; it was printed in the lower house and that was the end of it. By Mr. Quigley.- Q. What would have been the effect if that law had been put on the statute books? A. I know no reason why telegraph compa- nies and companies of that kind should not stand the same as other corporations; what the effect will be absolutely I can not tell until we see the returns and how much they will be liable for under that act. Q. Will it have a tendency to increase the tax on this property? A. I think so ; without any doubt. By Mr. Coggeshall. Q. What were the provisions of this bill? A. Eepealing the act of 1854. By Mr. Creamer. Q. Exempting them? A. Making! that the basis of their capital stock. By the Chairman. Q. The cost of construction? A. Or reconstruction. By Mr. Guenther; Q. Would you suggest the repeal of that law? A. Yes, sir. 36 *y Mr. Quigley. Q. Since that time there has not been any material chj made regarding the act of 1854? A. No, sir; before I entered the department, the opinion of the corporation counsel of the city was had as to upon what basis we would value those corpo- rations, and his answer was that the act of 1857 in relation to corporations generally did not repeal the act of 1854, and he said we would have to follow the act of 1854; you can see that since 1854, the Legislature has made poles and wires real estate for assessable purposes, and as the measure of the valuation of its capital is based upon poles and wires, and they are already assessed, there is nothing to assess in the capital. By Mr. Creamer. Q. That is deducted from the capital? A. Yes, sir. Q. What proportion does that generally bear to the capital? A. Nothing at all. Q. There is < some proportion? A. Comparatively, I am speaking. Q. Can you give the committee an idea as to what return those telegraph companies do make? A. I can give you the figures we have. Q. In round numbers, just an idea? A. I could not give you any figures now; I will have to give you the figures from the returns when they make a report; we do not assess them on the capital at all. Q. Are they exempt? A. Yes, sir; practically exempt, because the valuation of the poles and wires we assess as real estate, therefore, they are not liable for anything. Q. Under the general law? A. They do not come under the general law. Q. What special act? A. 1854. Q. That has never been disturbed? A. No, sir. By the Chairman. Q. To make it plain, what is the basis of valuation in assessing a telegraph company; what is taken into consideration in fixing the value; can you tell the committee that? A. The poles and wires are the only basis; that is practically the situation. 37 By Mr. Quigley. Q. Is it a fact that the telegraph companies doing business in the city of New York file any return as to the value of their real estate based upon their value of the poles and wires and also the buildings they own? A. Yes, sir; of course, the buildings are assessed separately; the report that they make for the pur- pose of capital tax is the value of the poles and wires. Q. That is considered real estate? A. Yes, sir; that is only rendered to us for the purpose of measuring the value of their capital. By Mr. Coggeshall. Q. The capital is not assessed at all? A. It is practically unassessed. By Mr. Quigley. Q. Then, through the State, in every village and every city, the poles and wires are virtually exempted. A. No, sir; the poles and wires are assessed as real estate. Q. In each locality? A. I don't know what they do in other parts of the State; I know it is that way here in New York city. Q. It is a general law? A. Yes, sir. Q. What I mean is, there is local taxation on their wires and poles as real estate in the locality in which they are situated? A. I don't understand your question. Q. For instance, if they have poles and wires in different cities of the State, are they not assessed as real estate in the different cities? A. Yes, sir; under the general law. Q. That is a tax collected in the locality? A. Yes, sir; it is real estate and assessable as real estate wherever it may be situated. By Mr. Guenther. Q. What amount of personal property is taxed in New York city in round figures? A. Over two hundred millions. 38 By Mr. Creamer. Q. Nearly three hundred millions, is it not? A. I think so; it runs up nearly to that. Q. Last year it was over two hundred millions? A. Yes, sir; I think it is about three hundred millions. By the Chairman. Q. Do you recall the valuation of personal property upon which Mr. Jay Gould paid taxes in this county, Mr. Fietner? A. Five hundred thousand dollars. Q. Now, will you tell the committee, if you please, by what method that valuation was fixed on Mr. Gould's personal prop- erty; how your department arrived at the valuation of $500,000? A. I think that has been standing on the books for a number of jears at $500,000; I don't know but what it was fixed before I got into the department. Q. To the best of your knowledge your department has simply followed for a number of years what was fixed prior to that time? A. Yes, sir. Q. You don't know of any effort having been made subsequent thereto to ascertain whether Mr. Gould had more taxable per- sonal property or not? A. I think there was; I think it was originally $250,000, and it was raised to $500,000, now that you speak of it, but I am not sure. By Mr. Coggeshall. Q. How long has it remained at $500,000? A. About four or five ye"ars, I guess ; I know there was a complaint about that. By the Chairman. Q. Have you any recollection of anything that led to the increase? A. No, sir; you know our deputy makes the assess- ment originally; I don't know what led to the increase that year. Q. You don't know of any effort on the part of the commission to ascertain whether the valuation fixed by the department was right, or anywhere near right? A. We are always making what- 39 ever effort we can, but unless we have some fair information as to the justification of an increase, we do not increase; we do not believe in using the department I don't want to use such a hard expression as blackmailing the citizens of this city; we want to do the just and fair thing to all, no matter whether it is Jay Gould or Tom Brown, the small shoe store man; we want to treat them all alike; at the same time, there is no telling on account of our condition of affairs what any man is worth in taxable assets. Q. The only object I had in asking those questions in relation to Mr. Gould was to ascertain by what method your department reached a basis of valuation of personal property? A. The deputy makes the assessment, and if it is too high they come in and complain and swear it down. Q. And in the absence of any complaint of excessive valuation, does the commission uniformly approve the action of the deputy? A. They uniformly approve unless they have some good reason to disapprove, from any knowledge they may have. Q. Do you recall any instance where the commission has inquired into the action of the deputy in fixing the valuation where it was deemed too low? A. Yes, sir; we have got some information from some outside people, and we have instructed the deputy to increase the assessment, and in every case that I remember they not only swore off the assessments that were increased, but took the whole thing off. By Mr. Coggeshall . Q. In the cases you suggest, a person appears before the coin- mission and makes oath as to the tax being excessive; are there other witnesses produced usually, or is it upon that affidavit or oath, and the evidence given, that the commission feel bound to reduce it? A. As a general rule, it is on the affidavit, but it is not in the sense of an affidavit; it is an examination made by the commissioners, going into all the assets of the individual all the debts that he may claim; they very often upset them on the question of indebtedness, they claiming that a liability is a debt 40 under the statute; we examine about ten thousand every year in our department, and again and again we have been able to hold people who expected to be able to swear off. Q. Do you subpena parties other than those interested? A. Not often, but we do if we have any question about it. By the Chairman. Q. Assuming that the published accounts of Mr. Gould's hold- ings were anywhere near correct, in your opinion was he suffi- ciently assessed by your department for personal estate during the last year of his life? A. We can not have any positive opinion about that to-day; Mr Gould may have forty million of debts for all we know; it was stated by Mr. Depew once to us that Mr. Vanderbilt maintained twenty millions of debts, because he could make the difference between four and seven per cent, and that would absolutely wipe off all his taxable assets. Q. Could >ou furnish to the committee such information as your department may possess covering the last five years of the indebtedness sworn to by Mr. Gould? A. If there is any; yes. sir. Q. If any? A. Yes, sir. Mr. Creamer. I also add the report concerning the Western Union Telegraph Company. By Mr. McClelland. Q. And such information or record as your department have of any effort that was made to ascertain the holdings of Mr. Gould liable to taxation as personal property? A. All right; you must remember, you know, from what I have seen I have been read- ing the will the great part of that estate is untaxable assets; of course, all his stocks are untaxable. By Mr. Stranahan. Q. That Western Union is all untaxable? A. Yes, sir; the Manhattan Elevated railroad is untaxable, so that we have to come down to bonds, so far as he is concerned. By Mr. Creamer: Q. And his annual income is taxable? A. No, sir. Q. The amount of money he has on hand? A. Yes, sir; of course, anything of that sort; it is not taxable as income. Q. I mean the accumulation from those large properties? A. Yes, sir, By Mr. Stranahan. Q. Did the $500,000 represent both real and personal prop- erty? A. No, sir. Q. Do you now recall the taxation on real property? A. No, sir; we do not assess real estate as against individuals in the city of New York; under the Consolidation Act we assess as against land and buildings alone by ward and block numbers, and if we have not the name -correct it don't affect the individual; we are not supposed to know who the owners of real estate are. By Mr. Coggeshall. Q. You spoke about raising money from bonds and mortgages for the purpose of defraying State taxes; is it not extremely difficult to get at bonds and mortgages for the purpose of taxa- tion? A. I don't know that it is so very difficult. Q. They escape taxation a good deal; do they not; what would you suggest in the way of a law to reach them? A. They escape on account of debts the way all property does; there is no necessity of allowing debts as an offset. Q. Would you suggest a remedy not to allow deductions on account of indebtedness? A. Yes, sir. Q. Make personal property subject to the same rule as real estate? A. So far as State purposes is concerned, and it then would be practically assessing real estate, because the security is upon real estate, but it would be eliminating this question of equalization as between the different counties, and leave us a certainty as to the amount of capital, whatever that may be, whether higher or lower. 42 By the Chairman. Q. The object of my question was, while not intending to criticise your department, to ascertain whether the fault lies in the law as it stands or the execution of it; in order that I may make my purpose plain, we want to know if it is possible, whether or not the personal property of to-day could not be reached under the present law? A. I don't think it could; I will tell you the reason why; suppose we had raised Mr. Gould to one million dollars or five millions of dollars, if you please, he could regulate without doing injustice to the present laws he could regulate his investments in an instant by exchang- ing his bonds for stock and leave us in a position where we would not be able to obtain a cent from him; or, he might in his case, in place of residing in New York city, claim Ms residence in Westchester; he was just as much of a resident in Westchester almost as he was in New York city; in that way again we would have lost him. Q. So far as personal property is concerned your main objection to the present law is that it is easily evaded? A. Easily evaded. Q. And you would recommend the amendment of the law at least to the extent of wiping out the provisions which allows one an offset by indebtedness from taxation? A. For State purposes; I don't go so far as that in relation to our general condition, if it is to continue as it is; if we can not adopt a radical system of change, something in the line that I have suggested, leaving local authorities to look after their own interests, all these intan- gible and uncertain personal interests or assets, why, the present system although so very defective, had better continue until we radically change it. Q. Why would not the allowance of indebtedness be just as injurious in a local sense as in a state sense; you say that you only refer in recommending that change to state purposes? A. I want to go so far as to say that the change should lend up to the local authorities determining for the purposes of their rev- 43 enue code that they want to establish, if you may call it a revenue code, and if in their judgment personal property was not to be assessed at all, they would have the right to do so, and if debts were to be allowed, they would have the right to say so. Q. That is in the line of local self-government? A. Yes, sir. Q. To have the local tax raised by local taxation, for instance, by legislation enacted by the board of aldermen of the city and county of New York? A. It does not need to be by the board of aldermen, although the constitution seems to require the local power to be in the board of aldermen, but you could propose a bill which would give us or the sinking fund commissioners power to prepare local laws for taxation purposes, and to cover your constitutional provisions have your board of aldermen sanction them. By Mr. Mr. Coggeshall. Q. Then in the rural localities the board of supervisors would do that? A. Yes, sir. By Mr. Stranahan. Q. Are you familar with the bill in the last Legislature and the one preceding introduced by Mr. Connolly? A. Somewhat. Q. Does that embrace your ideas? A. It allowed localities to determine for themselves their tax, but still our present system would continue so far as the state was concerned. By Mr. Coggeshall. Q. Are you familiar with the listing system in vogue in some of the states? A. I have read of it, I think, in Massachusetts and Illinois. Q. Have you any knowledge as to their practical working? A. I have not Q. Have you any idea as to that class of legislation in this state as to the effect? A. I think it would lead to more certainty if the listing system was adopted under our present general system, but I am not in favor of a listing system. By Mr. Creamer. Q. Coming back to the taxation of mortgages, you mention one mill, as I remember it, as being a fair tax; is it not a fact that bonds and mortgages generally escape taxation that there is no taxation on bonds and mortgages? A. I don't know as it is; we assess individuals and are after them all the time whenever they own bonds and mortgages they pay upon them the same as any other personal property. Q. Of the three hundred millions on your books, deducting coiporations and bank shares, how much personal tax is there on the books? A. About one hundred million, I believe. Q. Of that what proportion would you consider mortgages from your examinations; ten per cent? A. I could not give you any figures on that. Q. Are there ten million out of the one hundred million? A. I would like to answer you, but it is impossible, for this reason, that in our examination mortgages may turn up and other things may turn up that are liable, and we don't question as to what the personal property is if we find the valuation. Q. We will start again; the bank shares and the corporation capital, that is not bond and mortgage? A. No, sir. Q. You say that is about two hundred millions? A. Yes, sir; I think of the three hundred million. Q. Then, it would leave about one hundred million for all the personal property in this county? A. The resident personal here is $126,000,000. Q. What year? A. This year, 1892. Q. Nonresident? A. Resident personal; that means individuals. Q. What is the aggregate? A. Three hundred and twenty-three million dollars. Q. Of what is that made up? A. Insurance companies, $3,205,000; trust companies, $6,695,000; railroad companies, $29,327,000; miscellaneous corporations, $59,895,000; then non- resident corporations, $9,939,000; nonresident personal, $9,497,000; 45 resident personal, $120,619,000; shareholders of banks, $78,180,000. Q. Then, the resident personal is $120,019,000? A. Yes, sir. Q. And non-resident personal? A. Nine million four hundred and ninety-seven thousand dollars. Q. That is $135,000,000? A. Yes, sir. Q. Can not you and your colleague give the committee an estimate as to what percentage of that $135,000,000, because within that sum must be included the amount of bonds and mortgages assessed in this county, what percentage of that $135,000,000 is bonds and mortgages; is it one-half? A. It is impossible to state that. Q. I should think that an examination of those who apply for an adjustment of their taxes would give it to you; is it ten per cent? A. I can not say as to what percentage it is; it might be seventy-five per cent; there is nothing to determine it. Q. If it was seventy-five per cent bond and mortgages you would be placing the entire wealth of this city outside of bonds and stocks at $35,000,000? A. If that were so. Q. That is not at all probable? A. Not probable; there is no telling, because, as I say, the question of the particular assets does not arise unless there is some doubt as to the testimony of the taxpayer; if we feel there is any doubt about his testimony, then we inquire as to the assets that go to make up that amount; as to the particular assets, we want to find out how much he is worth ; it may be bonds of railroads or anything else. Q. What I want to show is that in counties embracing cities, there are a very few corporations and banks in proportion to what exist in this county; that the amount of personal property assessed is quite large in proportion, and that this city, owing to those amendments made year after year no doubt, to the personal tax laws, while it is generally believed that a great share of the bonds and mortgages existing here pay some tax; that actually but a very small portion of the bonds and mortgages of this county do pay any tax whatever? A. That may be so and there would be a reason for it; in the first place, the banks loan very heavily on property in the city of New York the savings banks and they are exempt 46 Q. How heavily would you suppose? A. Many, many millions; the reports will show that; then the life insurance companies, they have quite a market here for their loans on real estate, and go into it very heavily; there may be thousands and thousands of individuals that have loans, as there are no doubt, that are not residents here. Q. Eight there; those corporations, excluding the savings bank, which we do not propose to interfere with, notwithstanding that they can erect buildings exclusively for bank purposes, and very extravagant, some of them; some of those corporations holding those large sums in their assets on bond and mortgage, collect on an average about five per cent, do they not? They have collected as high as seven; in States west and south, they collect as high as eight; still they are exempted specially; do you think that it is a proper exemption? A. Speaking of life insurance, companies? Q. Any of those companies; I do not wish to refer to the life insurance companies any more than others. A. Read the question. (Question repeated.) A. I don't favor exemptJon of life insurance companies as a general thing; I don't know why they are favored by the State; I don't know of any other corporations that get such an exemp- tion in the way of personal property, Q, Now, as regards the hesitancy of capital to invest in bond and mortgage in this State and in this county particularly owing to this tax, that is really a myth; is it not true that a city bond on the corporation of this city can be sold in the market, even at a premium, at two and a half per cent? A. It is. Q. Do you consider that there is much difference in the intrinsic value of a city bond of the corporation of the government of this city, and a first bond and mortgage on property within the limits of that corporation? A. No. Q. There is very little difference? A. There is very little difference. Q. And still the corporation of the city of New York can obtain all the money it wants at any time for two and a half per 47 cent, therefore, couiniissionpr, do you think it would be a great hardship on capital invested here in first bonds and mortgages to the amount very likely of hundreds of millions to pay at least one-half of one per cent tax to the city and State? A. No; I don't think that would be a very severe tax. Q. Or one-fourth say? A. The only difficulty about the four and a half and five per cent is this, that capitalists won't come in to the city of New York certain capitalists, I don't say all of them when they run the risk of having a two per cent tax levied upon their bond and mortgage, and it may leave, and I have not the least doubt it does to a great extent leave, the field in the way of line of bonds and mortgages very much open to the life insurance companies and the savings banks. Q. Now, what remedy would you suggest concerning a manner of proceeding to place upon the tax books of the various counties of this State personal property liable to taxation; with your experience as to the effectiveness of this system yon have already, wherein is it defective and what would you suggest as a remedy; that is one of the things that this resolution inquires about? A. The difficulties I have enumerated when I have spoken of indebted- ness and liability of transfer special preparation to regulate your affairs so far as this city is concerned on the second Monday of January, changing the situs of property and changing resi- dence, all of these elements enter into the present condition of the taxation laws, and make them objectionable so far as the assessment upon personal property is concerned as against individuals; the remedy is in the general line that I have already given, so far as my judgment directs, in separating the local and the State system of taxation; as to the remedy for the present general laws and trying to amend them, I don't think it possible so that you will accomplish very much; you may make corrections that will lead to some benefits, but I do not think that it is possible to get over the difficulties that exist in relation to per- sonal property assessments. Q. If, for example, the relations existing between New York county and adjoining counties, Kings county and Westchester, where we find that in proportion the adjoining counties are 48 assessed and no dou'bt suffer from their proximity to the larger county in the matter of taxes, and the amount they get on their books; take those three counties located here in the metropolitan district, to enlighten us on this subject as to whether anything can be done there towards improving or increasing the power of your office to properly hold those after you assess them, I don't know whether your department is continuous year after year, but we will take 1891 or 1892; about how much did you assess personal property at to commence with? A. About a billion and a half, I think, or a billion and a quarter. Q. About 1,500,000,000? A. About that. Q. That is the amount you generally year after year enter on your books as assessed? A. Yes, sir. Q. Do I understand those 10,000 parties that object are prin- cipally responsible for the reduction of that sum to 300,000,000? A. No, sir; we have 10,000 individuals; then we have three to four thousand statements from corporations in addition. Q. That is what is the cause of the reduction from this large sum year after year entered on the books? A. Yes, sir; then we have about 22,000 shareholders of banks; they do not all come in; if they did it would take the whole year. Q. When a citizen who has a personal tax notice that he is assessed on f 50,000 appears at your office and his first claim is that he lives either in Brooklyn or Westchester, what is the pro- ceeding generally now in vogue in your office in regard to this matter? A. The commissioner he appears before examines him under oath, and we inquire as to the general situation, as to whether he has a residence or any kind of a residence here; whether he has any business here, and such other information as from the beginning of the examination we can follow out, you know, from suggestions made by him ; if we have any doubt about the question of his residence we may resubmit to a further exami- nation by an assistant corporation counsel, so that he can be prepared for any defense that may be made on that question. Q. Suppose that he sets up an answer that he pays elsewhere? A. It wouldn't make any difference with us. Q. It doesn't make any difference? A. No, sir. 49 Q. Suppose in the end that it does, after you take his affidavit to that effect; there is no power in your board to ascertain any- thing further in relation to him, is there? A. We have a right to examine him on anything and everything relating to the ques- tion of his residence, and we do put him through. Q. Then you think you have full power in those cases; that the law gives you full power to hold or punish any person making a false statement at your office as to the residence and his liability for taxation? A. I have no suggestion as to how you should correct the law so as to make it still stronger in the question of punishment as to non-residence of one claiming non-residence; if, of course, the question of residence is a mere matter of jurisdic- tion, as the courts have often held, no matter how we may hold it is a question of jurisdiction, and the court takes another view of it; that settles it. Q. Can you give me your opinion as to whether you think the law is broad enough which gives you authority to examine, so that after you have administered the oath to the party, and you find that he has sworn falsely as to his residence, that the law is sufficiently broad to warrant a criminal proceeding for punish- ment? A. I think the law is broad enough for examination; as to what the criminal code says as to punishment in a case of that kind I am not able to say, but let me say here, the question of residence is based somewhat, upon the present statutes, upon the place of business; if a man has one or more residences, and has a place of business, the place of business is to be the determining point; that is the residence under our present statutes; now, whether that might not be added to by which we might still further determine his place of residence is a question; I have an instance in my mind of a person who had three residences, one here, one in Jersey and one in Newport By the Chairman. Q. Who prefers to be taxed in Newport? A. I don't know where he prefers to be taxed, but he don't prefer to be taxed here; the question arises as to where his residence is; he claims to be a 7 50 resident of Jersey, because he has a farm there with three or four or five hundred cattle, and we had a very full examination of that individual, and concluded to hold him; that he claimed to be his business, as farming the land; he is president of a very large corporation in the city of New York, and on that ground we held that his place of business, which we believe to be his actual business, we held him to be a resident; now, that don't involve alone the question of his individual liability, because he happened to be a trustee of a very large estate; it involved a settlement in relation to that trusteeship. By Mr. Ahearn. Q. Have you ever had a case before you where a man has made fraudulent statements as to his residence? A. No, sir; there are many men claiming residence which we reject, and who pay under that. By Mr. Coggeshall. Q. There has been no appeal from your decision? A. No, sir; they held. By the Chairman. Q. It would be a fair assumption then that the statements so made were false? A. I don't know; he might conclude that he might prefer to pay in the city of New York. B.p Mr. Coggeshall . Q. The rate of taxation, how has it been with reference to the increase of real estate or personal property; which has shown the greater increase? A. I think real estate is showing the greater increase proportionately; I would not be able to say; we are increasing both here. By the Chairman. Q. As a matter of fact, there has been a decrease in personal property, hasn't there? A. Not since I have been in the office; it has been growing since 1883, but there was a very sudden and large decrease some three or four years before I went in. 51 Q. As a matter of fact, is it not less than twenty years ago? A. I believe it is. Q. The personal assessment-roll ? A. I believe it is. By Mr. Creamer. Q. You can suggest nothing to remedy the fact of the difference between one thousand, five hundred million and three hundred million; has nothing occurred to you during all those years; there must be some suggestion that you have often thought of that you can give to this committee as to what remedy there is for this wholesale evasion of the law by persons claiming to reside in an adjoining county or adjoining States, or not paying taxes any- where, or having, as you say, two or three residences; is there nothing you think of now to suggest to the committee? A. I can not give you anything to change the present system that would in my judgment result in any benefit other than to radically change it as I have said. Q. As regards the assessment of real estate you have a general rule in the office, I suppose; what is the character of the rule that you adopt to govern the deputies; that seems to be a subject here to inquire into by the committee; I mean applicable to the entire county? A. There is no special rule; under the statute the depu- ties make the assessments. Q. The commissioners, of course, revise and instruct the deputies what the law is? A. Yes, sir; give them general directions each year for equalization, and so forth, and the deputies make their reports and swear to the returns. Q. Is there any difference in the course pursued between dwell- ings and business properties, or other properties, unimproved, business or dwellings; is it equally applicable to all alike? A. I know of no distinction. Q. Is there any suggestion you have to make in regard to the assessment of real estate? A. Any difference in the methods? Q. Is there any suggestion you want to make to the committee on that subject? A. I don't think there is anything I can suggest. Q. I notice that the resolution refers to assessments for improve- 52 ments in different sections of the city; is there any suggestion yo desire to make to the committee as regards that? A. No, sir; tha is a kind of independent body, although we have the power c appointment, as we are an independent body. Q. There has been a wholesale depletion of the treasury a regards those assessments in the last ten years; has that ceased A. That seems to have ceased. Q. That continued many years, and according to your knowledg it has ceased? A. Yes, sir; they meet the question now before i becomes practically an assessment in the board for the confirms tion of assessments. By the Chairman. Q. This question of assessment for local improvement is regu la ted largely by the local authorities, is it not? A. Yes, sir. By Mr. Creamer. Q. Have you any idea as to the amount of personal property exisl ing in this city held by residents abroad who rarely exercise thei citizenship by visiting the country? A. I know that there ar such, but how many I would not be able to say. Q. What method have you adopted the present year towards mak ing up or correcting your personal tax list? A. The deputy of thi personal department takes all the information that he can get either through the system of directories or knowledge that 1 brought to him by individuals or otherwise in making up hi lists year after year as to residence and nonresidence. Q. Your deputy having charge of the personal tax bureai makes up the list, generally taking the old list as a basis? A The old list as a basis and the directory or other information tha 1 may be given to him as to individuals. Q. Has any effort ever been made to ascertain who the non paying personal tax people are outside of the State, outside o1 the country, still having property within this State? A. W< very often put them down on the list and make an examinatioi if they turn up; if they do not, we find an affidavit from then: claiming nonresidence; we may give credence to it, or maj 53 hold them and let them go into court and determine the question, of their liability; it depends upon what facts they may give us showing the question of residence in their affidavit, in other words, how full it may be. Q. Some members of the committee did not hear your answer as regards what remedy you would suggest to reach those people, those nonresidents, both in respect of counties and in respect of countries? 'A. I have not considered that question sufficiently to be able to suggest a remedy to-day, because it is a very difficult subject to be able to overcome, I think, the question of residence; the fact of the matter is, for a number of years past, I never dreamed it worth much to send any suggestions to the Legislature, because I felt that the Legislatures were not inclined to support whatever might be suggested coining from the city. By Mr. Quigley. Q. Have you any right, now, to collect any personal tax on personal property in this city which is owned by a nonresident? A. Invested; yes, sir; we have. Q. Uninvested? A. Uninvested; no; to keep within the lan- guage of the statute itself, it is sums of money invested in busi- ness; that is the Statute of 1885. By the Chairman. Q. You think injustice has been done the city by reason of the failure of the Legislature to act in the particulars you have just been discussing? A. Yes, sir; I think the city has been suffering under injustice a long while. Q. Your board very frequently meet, don't they? A. Yes, sir. Q. And yet the commissioners of taxes have satisfied them- selves that they have done their part simply because the Legis- lature they did not believe would act if they made any recom- mendation? A. I do not speak for the board; I am speaking for myself; we might disagree in the board what would be best to suggest. Q. The board has not in recent years made any recommendation to the Le-gislature ? A. No, sir. 54: tty Mr. Coggeshall. Q. Did they ever as a board? A. Yes, sir; but not in my time. Q: You have individually? A. Yes, sir. Q. You may have made suggestions to individual members Df the Legislature; but have you made any communication to the Legislature? A. Yes, sir. Q. That is, as to the law of 1854? A. Yes, sir. Q. The bill you submitted, you submitted to some one who represented the city? A. Yes, sir. Q. And it was introduced and that was the last you heard of it? A. Yes, sir. Q. So that the only effort that you know of made by your department was when you tried to have that law changed A. No; I don't think that is the only effort; I think Mr. Coleman made one or two suggestions at different times; I don't know as I agreed with him as to the facts. Q. Don't you think that with the consciousness that the law was defective, and that the interests of the city were suffering, it was the duty of the tax commissioners year after year to have insisted that the Legislature should afford relief? A. That is, if we agreed; yes. By Mr. Coggeshall. Q. The trouble was that the House has been divided against itself; the commissioners have not been able to agree upon a plan? A. No, sir. By the Chairman. Q. Are we to infer from your statement that the board of commissioners do not agree that the law is defective? A. No, sir. Q. Then you disagree as to the remedy? A. Yes, sir. Q. You don't know where that bill that was introduced by Connelly came from, do you? A. No. Q. It did not come from the board? A. No; from the single tax body, I understand. 55 By Mr. Quigley. Q. I understand you to say that you have the right to tax per- sonal property invested in this state belonging to non-residents; now, what is the use of a non-resident claiming} to be a non-resident in such a case? A. There is not any in such a case. Q. What does your board do in case you find property invested in business? A. We hold them; that is partly the sum I have given of |9,000,000. Q. I understood you to say that as soon as you discovered such property they came in and claimed non-residence. A. That is the question of the residence, if he don't have any property here; if we are claiming him as a resident we are putting him on the roll as a resident no matter where his property was; taxing him as a resident. Q. You have a right to tax property no matter to whom it belongs? A. Yes, sir; if we assess him as a non-resident; non- residents within the state too, by the way. By Mr. Creamer. Q. Have you read the recent report of the State Board of Equalization their last report? A. I don't think I got that; I am not sure whether I did or not; I think I did. Q. From your experience what do you think of their claim that there is four thousand million of personal property in this State escaping taxation; what proportion of that four thousand millions escapes in this county? A. I can not say that there is any of it escaping taxation ; what proportion of that four thousand millions you eliminate the question of debts entirely then you may be able to geFa very large amount of person property taxable. Q. You don't think there is any escaping? A. Under the law, no; whatever the law allows to escape in the way of debts and transfer of securities temporarily and so on. Q. And sworn off? A. By which they are able to swear- off; there mi^ht be many millions escaping and no doubt there are. 56 By the Chairman. Q. If personal property fails of assessment by fictitious debt> ifi not that escaping taxation? A. The Court of Appeals don't say it is fictitious debt; it says the authorities have no right to inquire into the indebtedness so long as a party swears it is a debt; you may, and the conscience of the man may say it is fictitious debt, but the Court of Appeals has sustained that. By Mr. Guenther. Q. What do you think as to an amendment to the law per- mitting you to inquire into the nature of the debt? A. We do that, and we claim, notwithstanding what the Court of Appeals says in regard to it we claim that we have the right and do inquire into tli^ kind of debt> and very often hold people on debts which they claim to be debts, and which we say are not debts, but merely a liability. Q. How do you get at the amount of bonds and mortgages held in New York city? A. We do not gtet at bonds and mortgages personally, because bonds and mortgages are no different to us than any other personal property; we assess the individual on his personal property. -Q. You get at the facts as near as you can? A. Yes, sir. By Mr. Creamer. Q. Does the record in the census reports treat of bonds and bond and mortgage is on record don't make him liable, bond and mortgage is on record don't make him liable. Q. Don't make him assessable? A. Yes, sir. Q. When you find parties swearing off on the ground that they have a certain debt, do you make any effort to find out by whom that debt is owned? A. Yes, sir; we have sometimes, if it amounts to anything. Q. Do you assess that against that party? A. We can not unless he is on the roll; we do next year; the time has gone by. 57 Q. If a man came in there and made a statement and perjured himself, are there powers vested in you to hold him for perjury; wouldn't it have a tendency to keep those people from coming there and making those statements? A. It might be. Q. If the law was changed, giving you power to hold him crim- inally? A. It might. By the Chairman. Q. Are you not authorized by law now to administer an oath? A. Yes, sir; and examine. Q. Then if you have reason to believe that a party has sworn falsely, all you have to do now is to make a complaint against him? A. Yes, sir. Q. So that as a matter of fact the law is broad enough to-day on that point? A. As to that question I am not versed enough to be able to say as to whether it is broad enough or not; I um not in the criminal law business and never have been; I don't know how far the criminal statute goes in that respect. Q. Have you ever known of any case where any party has been punished? A. No, sir; I never have. Q. Has it been your practice to assess those debts on the parties holding them on the next year's roll? A. We have done it. Q. Have you been successful in collecting the tax on that debt in the following year? A. I don't know whether we followed it up so closely as that; we give the names to the deputy and it goes in. Q. Then if the parties should come in and claim the debt was canceled on the following year, would he evade the payment on that account? A. If the debt actually was canceled on the second Monday in January; our taxable condition day is the second Monday in January; whatever the condition of the indi- vidual is on that day he is liable for. Q. Have you any suggestions to make by which you can get at that amount on property by any amendment to the law? A. As it is, the assessment is against an individual; I don't know what I could suggest to cover the point as to holding an individual that is non-resident. s By Mr. Coggeshall. Q. Would the general listing law, such as I have referred to, such as the laws of Ohio, Pennsylvania and Massachusetts, reach those people and their assets? A. Of course that would bring out whoever were indebted to them; in that way it would be of service. By Mr. Quigley. Q. You say that at a certain period you make up this roll? A. Yes, sir. Q. What would you think of an amendment to the law which would allow you at any time within a year to place the name upon the assessment of the individual to whom this debt is owed, and collect the tax accordingly; what would you say to such an amendment as that? A. It would not do at any time within the year, but it might at any time which we have for making up the roll, which would be up to the thirtieth of April; for instance, I think such an amendment as that would be good, because what information we might derive from examinations of individuals we could add to our lists in the meantime. Q. Would not that enable you to collect upon a great deal of this property which represents the difference in the amount you name and the amount you collect? A. I don't think it would make a wonderful difference in the amount ; I do not. Q. Why not? A. That would only apply to debts; I don't think we find out anything additional of any account other than indebt- edness owed by somebody to somebody. Q. Is It not a fact that a large amount of the personal tax avoided in this county is avoided by swearing it is a debt? A. Yes, sir; and practically two-thirds of this indebtedness in the city of New York will be indebtedness on bonds and mortgage which are not taxable because they are in the hands of a non- taxable organization. Q. Then this amendment to the law would be no remedy at all? A. I think it would be an improvement. 59 By Mr. Creamer. Q. You say they are in the hands of untaxable corporations? A. Yes, sir; I mean banks and life insurance companies. Q. Surely life insurance companies and banks can not commence to hold one-tenth of the bonds and mortgages in the city? A. Yes, sir; 1 think so, and a good deal more. Q. What is your idea of the total amount of bonds and mortgages in the city of New York? A. I think it amounts to nearly our whole assessed valuation. Q. One thousand five hundred millions,? A. Yes, sir. Q. You know that the bonds and mortgages held by banks and life insurance companies would not cover over one-third of that? A. We are drifting into figures which I am not familiar with; I would have to look that up; if you want it looked up I will give it to you. By Mr. Hamilton. Q. The State board of assessors, in their last annual report, sub- mitted to the Legislature in 1892, make the following statement: "The following cities have increased their real estate valuations last year $103,395,195; in personal property New York loses $2,703,979, Brooklyn loses $628,469, Buffalo increases $747,115, and Rochester $369,317." How do you account for that? A. I think it is partly accounted for by the fact the law of 1886 exempted insurance companies upon their assets, and you know this year the act was amended by which they were made liable again; that will fully account for it; if I had the figures here of our department I think I could explain it; I have not got the figures of 1890; our figures of 1893 are not complete yet. Q. You estimate 1893 at $323,000,000? A. No, sir; that is 1892 fixed. Q. Then the year previous was that? A. Eighteen hundred and ninety-one as compared with 1892 was 321,000,000 as against 323,000,000. Q. You don't correspond with the official paper here? A. That may happen in this way: The corporations that are directly liable 60 to the State Comptroller for their tax, the amount that we assess upon them is taken out of the general total, because they are already assessed directly in the State board's figures, and might not agree with ours in that respect; do you see what I mean; that increase may be greater. Q. Why would not the same cause operate then in other locali- ties, Buffalo for example? A. We have started with about 128,000,000 of deduction from the State as corporations liable directly to the State, and now we have got up to f 78,000,000 of val- uations in the city of New York, so that you can see that a difference of one or two millions would not make much so far as this State is concerned in assessing its valuation upon the personal property of the city. Q. Now, this is for general purposes, these statistics here show that in that year New York city lost the amount I have stated. A. I can not give you any better illustration than this; we have raised for 1892, |323,000,000 of personal property, which will go into the figures that the State board will fix our tax upon for next year; of that sum, 323,000,000, seventy-eight, about that, will be taken out for State purposes, because H represents the value we have fixed upon corporations that have already "paid a tax to the State Comptroller, now the more that valuation is increased, the less it makes a balance for the State to collect this general State tax upon, and it is in that connection we may have lost something for the State to assess State taxes upon directly than it is upon the loss of a total valuation in the State ; do you see what I mean? Q. Will you furnish for us at the next hearing the number of persons assessed for personal estate? A. It is about 22,000 outside of the bank shares, and that is about twenty odd thousand. The committee then went into executive session. The sergeant-at-arms reported that he had conferred with Mr. Gilroy, the commissioner of public works, but that an arrange- ment had not been definitely reached as to the assignment of a room in the city hall for the future meetings of the committee. Mr. Quigley moved that the stenographer be directed to fur- nish a copy after each hearing of the minutes taken to each member of the committee and also to each of the counsel. Carried. It was moved that when the committee adjourn it be to meet again on Tuesday, December twentieth, at 1.30 p. m., at a place to be agreed upon hereafter. On motion the meeting adjourned. Meeting of Joint Committee on Taxation. New York, December 20, 1892. Superior Court, Part 2. The committee met pursuant to adjournment. The meeting was called to order by the chairman. Thomas L. Feitner, being recalled, testified as follows: By Mr. Creamer. Q. The committee requested you to bring certain papers at the last meeting; have you broaght them? A. Yes, sir. Q. The first request was in relation to assessments on personal property; what was the assessment in 1872? A. The comparative statement of the assessed valuation on real and personal estate, on page 471 in the report of the tax commissioners of the city of New York, shows that in 1870 the total personal then was $305,317,000. Q. What did that include at that time; has anything covered by that assessment been since exempted by law? A. I don't remember anything that has been exempted specially since then; the true situation is this, at least that is what I have been informed; of course, it was ten years and over after that that I asked the department, but the city then had put on a very large number of individuals, and although they did not appear and had nothing in the way of personal property, they allowed the record to go against them, and the loss to the city was large. Q. The loss? A. The loss to the city was very large because 62 they were not able to collect as those individuals did not hj any personal property. Q Was it larger than if they had not been put on at all? A. Yes, sir; because they allowed the assessment to stand. Q. How did the city lose? A. Because they were not able to collect. Q. Suppose the names had not been put down? A. If they had not been put down then the assessed valuation would have been so much less whatever was assessed as against those indi- viduals. Q. What was it the next year? A. Three hundred and six million dollars; I gave the round millions without the thousands. Q. Your answer would indicate that there was a large busi- ness in the office of the counsel for the collection of arrears in the tax; does the record show that? A. I understand it does. Q. You have no figures on that? A. No, sir. Q. Notwithstanding, this defect in the enforcement of the law was apparent from the manner in which it operated; the same amount was still continued in 1871? A. Yes, sir; and 1872. Q. With the same result? A. Yes, sir; and 1873; then they began to fall off. Q. What was the assessment in 1872? A. Three hundred and six million dollars again; about the same amount; and 1873 it was 1292,000,000; then it began to fall off. Q. That was the year of the panic? A. Yes, sir; that may account for it partially. Q. The law was the same concerning what you would place on the assessment-rolls of personal property then as it is to-day, to your knowledge? A. Yes, sir; to my knowledge; I do not remember any difference. Q. No difference? A. No, sir; I think we were acting under the laws of 1851 the general provisions of that law. Q. What was the assessment on personal property in 1891 twenty years later? A. Three hundred and twenty-one million dollars. Q. In 1890? A. Two hundred and ninety-eight million dollars. 63 Q. Less than it was twenty years previous? A. No; it was $305,000,000 in 1870; $306,000,000 in 1871; it is $323,000,000 now. Q. T am speaking of 3890; what was it in 1890, twenty years later than 1870? A. $29 has he not? A. Yes, sir. Q. But the value of the real estate, at least the amount of the real estate, is not diminished any by the fact that the lien is put on it? A. Not at all. Q. Then after the lien is put on the real estate we have a certain amount of real estate and a certain amount of personal property, which is a debt owed to somebody? A. Yes, sir; and it could be made on chattels as well as on real estate. Q. Keal estate is the security for the bond? A. Yes, sir. By Mr. Coggeshall. Q. Bonds as a matter of fact, while they are an evidence of indebtedness, as a matter of fact, they represent and are really so much money? A. Yes, sir. Q. And upon those the parties owning them, in your judgment, should be assessed? A. Yes, sir. Q. And under our present system we are not able to reach them as they should be reached; now, can you suggest any legis- lation that will reach those bonds and mortgages? A. By assess- ing them and not allowing any deductions for debts, no matter in whose hands they are, no matter whether a resident or non- resident. Q. We have now a law which undertakes to reach them but does not? A. No, sir; now you allow a deduction for debts. Q. That you would remove? A. So far as such capital is con- cerned, then you are assessing only two or three lines of capital in which you do not propose to allow any debts; determine first whether or not you shall allow any deduction in collections on personal property, or do not assess personal property at all. By Mr. Creamer. Q. Are you familiar with the amount of personal property entering this port in the shape of imports year after year? A. 1 had the figures before me. Q. Say in round numbers f800,000,000 annually, personal property imported to this country, principally entering this port, 75 or two-tMrds of it at least; are you familiar with, the sum raked tariff tax ranging since the origin of the country from ten per cent tariff up, as high as sixty the amount the national govern- ment collects on that f 800,000,000? A. I can not give you figures on that. Q. We will say it is $200,000,000; why can not laws be passed by the State of New York to collect a much smaller percentage of the value of personal property, just as well as the government of the United States have passed laws to reach the same; why can not the State of New York pass a law that will reach personal property? A. That practically comes down to a listing system, because that is made upon an invoice of valuation. Q. A listing system? A. Yes, sir. Q. Not absolutely; you have public records here which if con- sulted would enlighten your office? A. You are comparing one line of administration to another; as I understand, the taxes raised by the general government are based upon the invoice by the customs officers, and that is practically a listed system, is it not? Q. Yes; there is a listing system of nearly all the mortgages made in this State, and also there is a law requiring all corpo- rations to make annual reports, is there not? A. Yes, sir. Q. That would cover the same ground almost, would it not? A. But when you find an individual that owns a mortgage he has gone and prepared himself for that assessment by contract- ing debts, and comes in here and swears it off, and the man who ow r es the mortgage, he comes in and swears it off on the other personal property that he may own, because of his indebtedness on that bond and mortgage; as an illustration, I am informed that a very large business house in the city of New York went into the purchase of real estate and bought a very large piece of property on Broadway; they put in $50,000 capital, and raised a mortgage of $150,000 on their building, and swore off on their capital tax on account of their indebtedness on bond and mort- gage; you see how that works in that case; that is all valuable information coming in our system of taxation in the city of New York. 76 By Mr. Creamer. Q. Coming back to imports, a great part of it is located in this city, and the inquiry is natural why it is not taxed when it enters the port; we know what it is in part by what the customs records show, if at least the same proportion was assessed, there would be a much better showing than there is to-day? A. I suppose you are aware that so far as any goods coming from the other side are concerned, unless they are changed* as to their condition, they are exempt from taxation under our national laws; that is to say, goods in original packages are all exempt, but if they change their situation, that is to say, become partially broken, then they are liable. Q. Was there ever a case when you were informed that they did break them open? A. Yes, sir; many. Q. They always inform you? A. No, sir; we have them swear to it; we assess them upon their capital invested in that business, and they say that their capital is invested so much in goods in original packages, so much in broken packages, so much in bank, etc. give a statement in that way upon inquiries that we make of them, and then we strike a balance allowing them the deduc- tions that the law allows. By the Chairman. Q. That building that you refer to on Broadway, was that an actual incident or were you just referring to that as an illus- tration? A. I was informed some time ago it was an actual incident. Q. You say they invested f 50,000 in land and then borrowed f 150,000 and put it in a building? A. Yes, sir. Q. And then they used that indebtedness on the land and building as an offset against their personal property? A. Yes, sir. Q. Can you tell the committee what that laud and building was assessed for? A. I have not any particular land or build- ing in my mind, or any particular firm in my mind now, but I was informed that was don*. Q. You simply referred to that as one of the methods used to escape taxation? A. Yes, sir; on personal property; that is all. 77 By Mr. Creamer. Q. Come to the corporation tax; are you familiar with the workings of that and the reports? A. Somewhat. Q. The amount collected in our State last year was about how much? A. In the whole State on corporations? Q. Yes, sir. A. A little over $1,000,000 under the act of 1880. Q. Are you familiar with the operations of a similar tax law in other States, Pennsylvania, for instance? A. I know there is such a law in existence, but as to how it operates I don't know ; I understand it is very favorable. Q. It is stated that it is close to f 5,000,000; can not the same law apply in our State without detriment to commerce or manu- factures or business generally, if it operates and works in the State of Pennsylvania? A. I suppose it could; I don't know of any reason why it should not operate; the only question ?>etween us and them is this, I think; there they exempt entirely from local taxation their corporations, while we assess them for State purposes and leave them still liable for local purposes. Q. They are liable, but not taxed? A. We tax them here in the city. Q. We know that; but owing to the looseness of the law they are not reached? A. No, sir. Q. Can you tell the committee as to the working of the inheri- tance tax, whether it should be increased or decreased; you come into contact with the law of the State? A. Yes, sir; but :is to how it operates so far as the inheritance tax is concerned, or that act taxing corporations upon their franchise, the surrogate and city comptroller would be able to tell you better in relation to those; we don't undertake to say anything about the operation of those because we find no objection to those; nothing has been said against them so far as I have ever head on the part of any- body coming in and being reassessed for local purposes before us; I am not disposed to favor a line of thought that corporation! should be entirely assessed by the State, and free from local taxa- 78 tion, because there are many corporations that are entirely local, and should be assessed entirely by the local authorities; for instance, why should the elevated railroad be assessed by the State when their whole revenue is derived in the city of New York, and their franchise is entirely in the city of New York, and so on with other corporations that are entirely local? Q. As a financial officer of the city government, what is your judgment concerning the increase or decrease in the inheri- tance tax now collected by the State as suggested by the comp- troller recently; light is needed on that subject in view of legis- lation for the future; you meet ten thousand people a year in your department, taxpayers and non-taxpayers? A. I am not disposed to favor any inequality in the law so far as the rate of taxation is concerned upon any individual's property, no matter whether he is rich or poor, or to make an exception by adopting any such rule as one per cent on $100,000, two per cent on $200,000, and so on; that creates inequality by law. Q. It is already in existence? A. I know; because a man hap- pens to be wealthy, that is no reason why he should pay at a greater rate for the protection of his property than any other man. Q. You don't believe in increasing the amount beyond the pres- ent figure? A. I can not say as to whether the rate now fixed on the collateral inheritance tax is sufficient or not. By the Chairman. Q. "You believe that the rate ought to be uniform without regard to the man? A. Yes, sir. By Mr. Creamer. Q. Now, as regards the amount exempt, $10,000 in one case, and $500 in the collateral inheritance, what is your opinion of that? A. I think that is fair enough. II By Mr. Coggeshall. Q. Should that be deducted from the estate originally, or from the amount coming to the heirs; what is your opinion with refer- 79 ence to that? A. At present, under the inheritance tax laws, lineal descendants are not taxable to the amount of $10,000, and over that they are taxable, whether it is real or personal no; only on personalty, I believe; now, your question is what? Q. As to whether the amount of tax should be taken from the estate itself or from the respective shares coming to the heirs in either case, either the lineal inheritance law, or the collateral inheritance tax? A. It seems to me it would be more favorable as it is now, taken from the legatees or heirs, whoever is the one entitled to it, because it might create a burden by taking it from the general estate upon somebody that would not desire to be taxed; it would affect the interest on $10,000 that you practically exempt by taking it from the whole estate. By the Chairman. Q. You think the beneficiary ought to pay it>? A. Yes, sir; it makes it more satisfactory ; the beneficiary is always willing to pay, while the estate might very much object as a whole. By Mr. Coggeshall. Q. You think the amount of $500 is sufficient, do you ; you would not increase the amount of the collateral inheritance exemption? A. I think that is very small; I would be inclined to increase on personal property to $1,000; that is about how we feel in the city; 1,000 don't do much more than bury a man respectably nowadays. By Mr. Creamer. Q. What is your judgment concerning an income tax in this State similar to that prevailing in other States on sums say above 10,000 a year as a means of creating revenue ? A. I think an income tax as a system would produce more beneficial results than our present system, but I think it is a very objectionable system. Q. Take it separately, leaving existing tax laws just as they are and having on income above $10,000 a year a tax, what is your opinion? A. I am not inclined to favor an income tax. Q. Why? A. I think it is generally objectionable to the people, ind generally objectionable to good government, because it creates 80 as much inequality in that way as you do under the present sys- tem; it gives people opportunities to do that which they ought not to do, although I am not one that believes in a great amount of perjury going on in relation to this or any taxation system, yet people can; whenever you fix a definite time for the purpose of raising taxes, you will find that the people will always regulate their affairs for that definite time. By the Chairman. Q. You think that such a law would invite evasion of it? A. I think it would in time; it might not for one or two years. Q. I had an Utopian idea at one time in connection with this system of taxation, and that was to allow the tax commissioners; have three systems adopted by the law, your present system, your listing system and your income system, and give the tax comitjis- sioners the right to initiate, without their knowledge as to \vhich system was to be initiated, on the second Monday of January, either one of those systems, so that they would not be prepared to over- come the difficulties in relation to the situation. A. I have often thought of that as an idea, but I have never thought well enough of it to recommend it to anybody; but to capture personal prop- erty which is so shifting, to capture the individual who is liable to change, those two elements, with the element of indebtedness enter- ing into the whole of it, is such that it is next to impossible to be able to obtain a tax upon personal property. By Mr. Creamer. Q. Have you furnished the committee with those statements concerning the returns made by certain corporations? A. I have a number of statements here, but I want to call your attention to this while you are on the subject, and which is quite interesting to me, and that is that our department have been disposed to try to equalize valuations in relation to corporations, so far as those corporations were competitive; take, for instance, the capital of a corporation that had a franchise, it would not compare to a manufacturing corporation, we would take as a basis of value UNIVERSITY 81 |RH\^ for a franchise corporation a five or six per cent dividend ais a par value, while a manufacturing corporation universally is recognized as a ten per cent dividend par value; now, here is one line of competitive corporations that seem to be getting a benefit which they should not have, and that is trust companies. Q. Would it not be better to amend the law so as to get at the full amount of those corporations for taxable purposes? A. It is not only amending the law that will cover it; the Court of Appeals decision recently made in the case of the Union Trust Company, has helped to strike off in this county at least eight to ten millions of assessable valuation and practically made it exempt; under the statute, a shareholder in a corporation is exempt; the owner or holder of the stock in any incorporated company liable to taxation on its capital shall not be taxed as an individual for such stock; the Court of Appeals, in the Union Trust Company case, says that the value of the capital of a trust company is based upon its assets; now, as an illustration, the assets of one corporation are worth f 500, while the market value of its stock is |1,000; there is a difference of $500 in actual value; the decision of the Court of Appeals says that the assets of that corporation must be the determining value of the capital, and that extra $500, on account of this provision of the law, is practi- cally exempt, the corporation paying taxes upon its capital and the shareholder being exempt, the corporation can only be taxed upon $500,000, while the shareholder has in his possession a valua- tion of $1,000,000. By Mr. Coggeshall. Q. It is absolutely exempted under the law? A. No, sir; but there is a difference of $500,000 valuation that you can not get at under the present decisions. By Mr. Creamer. Q. Have you those reports from the corporations that we asked for? A. Yes, sir. Q. Take life insurance companies; you say they have been exempted by law; in what year? A. The law of 1855 made the 11 Mutual Life Insurance Company liable on f 100,000 only; accumu- lations in any life insurance companies held for the exclusive benefit of the assured are not liable to taxation; that is the law of 1S57; then, the law of 1884 states: "All moneys, benefits, charity, relief or aid received or collected by any corporation, association or society doing a life or causal ty insurance business, or both, upon the co-operative or assessment plan and which money, benefits, charity, relief or aid are derived from admission fees, dues and assessments or any interests or other accretions thereon, and which are to be used for the payment of assessments or for death losses or for benefits to disabled members shall be exempt from assessment and taxation." Q. Do you remember as to the local authorities here asking for that law? A. No. Q. The law of 1884? A. No, sir; we had nothing to say about that. Q. Who represented the city at the State capitol at that time; the law department is supposed to represent your office? A. I don't think the city, then, had any representative directly that I remember; I mean from the corporation counsel's office. Q. After 1884? A. That is the last act affecting life insurance companies. Q. Then, that exempts them from all taxation except on the realty? A. Yes, sir. Q. All life insurance companies? A. Yes, sir. Q. What is your judgment concerning that state of affairs; A. I am not in favor of that; I don't see why life insurance com- panies should exempt, because they are money-making associa- tions generally. Q. Are you familiar with the fact that some of their profits are so large that they give their agents as high as thirty or forty per cent commission? A. So I understand. By the Chairman. Q. Do you know anything about it as a matter of fact? A,, Just from general knowledge and inquiry made of some of those agents. 83 By Mr. Tierney. Q. What return, for instance, does any of those leading corpora- tions make to your office concerning personal property, if any? A. Here is the largest of them, the Equitable Life Society; capi- tal stock actually paid in and invested in United States bonds $100,000; net surplus earnings belong to stockholders; rate of dividend limited to three and a half per cent serni-annually on the capital sock of $100,000; assessed valuation of real estate, $3,800,000; amount invested in stocks of other corporations which are taxable upon their capital $1,299,300; amount invested in United States securities, $790,000; capital of the company, $100,000, invested in government bonds and deposited in com- pliance with the laws of the State of New York with the Superin- tendent of the Insurance Department in Albany; accumulations are held for the exclusive benefit of the assured. Q. Is that report made in compliance with the law concerning such companies? A. Yes, sir; I think so. Q. Then outside of their realty they pay no tax to the city government? A. No, sir. Q. That assessment on the realty, what proportion does that bear to the amount they certify to be its value in making up their assets in the report to the Superintendent of Insurance? A. I think it is very small. Q. What reason is there then that in that case there should not be an adjustment? A. The old Marine Bank made a state- ment of something like $370,000 or $400,000 as the value of real estate, and we had it assessed at $300,000, and when it came ! to sell it sold for $250,000; we had to reduce it; on that general condition of affairs we don 1 take the statement of the corpora- j tion as to its valuation; wa have to use our own judgment as to the fair valuation, in comparison with all other property sur- rounding it. Q. You estimate it by comparison? A. Yes, sir; as well as the general valuation itself; this building is somewhat exceptional. Q. Is it assessed differently because it is an exceptional con- struction? A. In cost only. 84 Q. A residence may foe an exceptional residence, but a man required to pay a reasonable proportion of its cost? A. The element that enters into this is the element of what it would sell for. Q. Is that the manner in which you arrive at your conclusion in this city what it will sell for? A. What it will sell for. Q. Not the amount that the books show was expended upon it? A. No, sir. Q. If the books show that that building cost f 14,000,000 it should be assessed for more than $380,000? A. I don't care to dwell upon this particular building; there is a constant uneasiness in the lower section of this city owing to favoritism, as it is alleged concerning certain classes of real estate to the injury of the neighbors. By the Chairman. Q. As you understand it, isn't it a uniform rule adopted by the assessors to fix the value of real estate at what it would bring at a forced sale? A. No; we don't have that rule here; the Consoli- dation Act provides our rule for assessment, and the language of the Consolidation Act is what it will sell for under ordinary circumstances; whether you consider that a forced sale or not is a question; I don't consider it so; what it would sell for under ordinary circumstances; the definition of that rule that we use is what would fairly be loaned by a careful conservative cor- poration upon property, so that they would not lose if the market should go down to any ordinary degree; that would be what would be termed an ordinary valuation. Q. You don't, of course, go into the question as to whether or not there has been extravagance in the construction of the property? A. No, sir. By Mr. Quigley. Q. In looking over this report of the Equitable Life Insurance Society I notice "Accumulations of the society are held for the exclusive benefit of the assured and are exempted from taxation 85 by section 4 of chapter 45G of the Laws of 1857 ; " now, what are included in those accumulations of the society? A. As we under- stand all their assets are included in accumulations for the benefit of the policy holders. Q. Then virtually all the assets of such a corporation are exempted under the law? A. Yes, sir. Q. Would you favor an amendment of the law which would take the accumulations of the society out of that exemption act? A. I don't know why we should not; yes, sir; I would favor it. Q. Would not that have a tendency to increase the income of the State and cifcy from those corporations? A. Very much indeed. Q. Have you any idea how much the accumulations of the Equitable Society are at the present time? A. I think it runs to 130 odd millions. Q. And those 130 odd millions are held for the benefit of the assured in the society? A. Yes, sir. Q. In what way do they receive the benefit? A. I can not answer that question, except just as ordinary life insurance com- panies do; these accumulations are for the payment of the life policies; the assured get the benefit of it by then* policy being paid when it becomes due. Q. Those accumulations are not used every year to pay accru- ing policies, are they? A. I suppose not. Q. They are drawn upon, are they not? A. Part of them, I suppose. Q. Have you any knowledge as to the amount of the increase in those accumulations within the past ten years? A. I think ,they are very large. Q. What is the situation to-day as compared with ten years in the amount of the accumulations of the Equitable Society? I could not give you the figure, but from my general knowledge the situation I suppose it is $75,000,000. Q. Have you any idea in what direction those accumulations invested? A. Yes, sir; some in real estate. 86 Q. And then the Equitable Society owns real estate as part of those accumulations? A. Yes^ sir. Q. Don't that take them out of the category of personal prop- erty? A. So far as that is concerned. Q. Then they are assessed as real estate? A. Yes, sir. Q. Has the real estate of the Equitable Society increased per- ceptibly within ten years past from the accumulations that have been changed to real estate? A. The only real estate that we know that the Equitable owns is the real estate that that assess- ment is against, which is their principal building at Cedar street and Pine. Q. If the Equitable Society should have placed a certain por- tion of those accumulations in real estate in this city, there would be no doubt but that the tax gatherer would reach the real estate? A. They would reach it, no doubt. Q. If the Equitable Society had more real estate than $3,800,000 in the city of New York, its report would show? A. It ought to show, but they may consider the balance of that real estate as a part of the accumulations as you .put it, and claim exemption, although it is assessed as real estate. Q. Is it possible under our present law for the Equitable Society to own real estate in the city of New York that would be exempt from taxation because it is accumulations for the benefit of the assured? A. No, sir; I don't think so; it is not possible so far as their real estate is concerned. By the Chairman. Q. Now, commissioner, you say that so far as your information gx>es, the holdings of the Equitable Life Insurance Company amounts to f 137,000,000 I think you said; these holdings, so far as you know, are not all located within the city and county of New York, are they? A. No, sir; I suppose not. Q. Nor in the State of New York? A. Nor in the State of New York. Q. So that so fsr as you know you have reached all the property of the Equitable Life Assurance Society located within the city ami county of New York? A. So far as we know. 87 By Mr. Guenther. Q. Those holdings might perhaps be in some other name; they would not be in the name of the association? A. They may be. By Mr. Creamer. Q. This is the only information you have of this Equitable com- pany? A. That is all for 1892. Q. It runs along the same every year? A. Yes, sir. Q. Are you familiar with the report they make concerning the amount of real estate that they have to the State ?*- A. No, sir; I am not. Q. They pay no personal taxes? A. No personal taxes. Q. Has your office over sent a bill on this subject including them in the list? A. No, sir. Q. What other reports have you there? A. I have the Mutual Life and a few others of the insurance companies and the telegraph companies under that question brought up last session, that they are only liable on their poles and wires; I have the corporation counsel's opinion at that time if you want that given to the depart- ment as to their exemption upon their capital. Q. Exemption of whom,? A. Telegraph companies. Q. What year was this? A. Eighteen hundred and eighty-five, and it says that the capital stock of telegraph companies can not be assessed. Q. Which counsel was that? A. Judge Lacombe he is judge now. Q. That is under the law of 1857, is it? A. Eighteen hundred and fifty-three or 1854. Q. The law don't reach them? A. The law don't reach them. Q. Was there an effort made to change the law? A. Yes, sir; upon a suggestion I made. Q. To whom? A. Senator Cullom; I found a copy of the bill in the office; in 1886, I think, he presented it in the Senate; it was printed and that was the end of it. Q. Sent 'where; to the committee on grievances? A. I don't know what became of it. By Mr. Ahearn. Q. The corporation counsel basses his opinion on the law of 1854? A. Chapter 471 of the Laws of 1854. By Mr. Creamer. Q. That exempts the Western Union, as I understand? A. Yes, sir; the Western Union has been paying an assessment of $100,000 on their capital by consent a great many years. Q. What is their capital? A. Some eighty odd millions, I believe; I think it has lately been increased to $100,000,000. Q. Is your office cognizant of the history of the company con- cerning its movements as regards claiming a heavy indebtedness at the tax office and then within a very short space doubling their capital on the surplus and all such transactions in the face of high Heaven, and still being exempt on the tax books? A. No, sir; I don't know of any such claim. Q. This telegraph company owns to a capital stock of $360,000 and it is now over $100,000,000; do you think it is the duty of some branch of our government to look into the affairs of such a corporation from a business standpoint and see how much, they can contribute towards the city whose streets they have used and monopolized for so many years? A. Yes, sir; I don't see why they should not be put on a par with other corporations; I want to suggest as an amendment we attempted to hold the express companies, which are associations, and the Court of Appeals determined that they were not liable as corporations; now, they practically have all the attributes of a corporation, and it seems to me the law ought to be amended by which they would be made subfect to the same laws as any other corporation; I have spoken to you on the subject of the trust companies, and I think they ought to be put in the same position, as they are competitive with banks by assessing them not as corporations, but assessing their shareholders, giving them the same privileges as shareholders of banks; the banks are constantly complaining that those trust companies are in competition with them, and they have an oppor- 89 tunity given by law of making investments in non-taxable assets ; we found them a valuation for this year of 6,694,944, out of a pos- sible assessment of 46,000,000 on their capital and surplus, deduct- ing 4,000,000 for their assessed value on real estate, and if they were on the same basis of banks they w^ould be liable to $42,000,000 in place of f 6,000,000, subject to deduction by debts; if we assume the deduction on trust company shares would be equal to bank shares, we would have an assessment of $32,000.000 as against $6,000,000 in the city of New York; on account of that decision of the Court of Appeals, as I said, compelling us ,.co take the assets of trust companies, when their valuation is so far above their assets, in every instance almost, because of their earning capacity, which is the true theory of making assessments practi- cally upon all corporations. By Mr. Coggeshall. Q. You stated that it was difficult to reach bonds and mortgages for the purposes of taxation; what legislation do you suggest that will be more successful and certain in reaching them? A. As in connection with the present system, I know of no reason why bonds and mortgages should not be assessed as against the bond and mortgage and not as against the individual, so that if it was a non-resident individual we would hold the bond and mortgage; the difficulty would be in adopting a system that would be able to carry that out. , By Mr. Creamer. Q. There is a commission now I believe, at the State capitol, authorized by the Legislature of last winter, revising the tax laws; are you aware there is such a commission? A. No; I was not aware of it. Q. There was one created last winter; they have been in exist- ence for eight months past; they have not consulted with your tax office here, to your knowledge? A. No, sir; they have not. 12 90 Q. Have you consulted with, them, or made any effort in that direction? A. I was not aware that there was one in existence. Q. Isn't there an officer in your department who reads the laws of the State concerning your department? A. The com- missioners do, and I do as a lawyer, but I have not had an oppor- tunity to do it myself, because the session laws did not come out until about two weeks ago; they have been very late this season. Q. Supposing a law went into effect concerning the assessment of real estate? A. We expected to be able to do it; I have par- tially gone over it; in fact, the corporation law has raised this very question; Mr. Paris and I were talking about it the other day as to whether the definition of what a corporation is may cover this question of the express companies that I have been apeaking about; we propose to try it on this year as to whether or not they are a corporation under the law now for the purposes oi taxation. By Mr. Quigley. Q. Have you got that definition here? A. No, sir; I think it is transportation companies; it says railroads or other transporta- tion companies; now, as to an insane person or lunatic, the courts have decided that you must assess an insane person, because the* committee, under the law, is not given the title absolute to his property; he is only for the care and protection of the property; we assessed a committee, naming the person in that connection, and found our assessment was not held, and now to assess an insane person, that practically shuts him off from any hearing; there is an inconsistency in the condition of affairs, and I make a suggestion that the law ought to be amended so that the com- mittee would be assessed in place of the person. By Mr. Coggeshall. Q. I suppose the committee would be entitled to act for the person befoiv tin* commissioners? A. They don't attempt to act; now, we have assessed one insane person, John Brown, or whatever it is, by so and so, a committee, and attempted to show 91 in court that so and so was mere surplusage, and merely for the purpose of locating the individual; that has not been settled. Q. As the law is now you assess the lunatic ? A. Yes, sir. Q. What law is that? A. Under the General Statutes, they provide that in case an assessment has been made as against an executor or trustee, etc., that it shall be made as against them with their designation of office, but it don't include the com- mittee of a lunatic, and, therefore, they come under the General Statutes as to individuals; now, the act of 1883, which was passed for the purpose of obviating the difficulty of peopie carry- ing their evidences of indebtedness, bonds and mortgages and things of that sort, and leaving them over in New Jersey, and then claiming before us that the property was not under our jurisdiction, did not cover executors and trustees under the Court of Appeals decision; that only refers to persons, and those per- sons the owners of the securities; now, executors and trustees, the Court of Appeals has held that that act did not apply to them, and, therefore, it ought to be amended and made to apply to them just as well as anybody else, because the question arises with them as well as it does with individuals. By Mr. Ahearn. Q. That is with reference to where one of the executors is not a resident of the State? A. Even whether he was a resident or not, so far as this act is concerned, if they brought the securi- ties to New Jersey and left them there they might not be held liable. Q. Then, you suggest there should be a change in regard to the lunatic system, and that the committee in a body or indi- vidually should be held; which do you mean? A. The committee, whoever it may be; there is generally only one. Q. What I meant by that was that the individual picked out on that committee might be a resident of the State of New Jersey, and you would be in the same position? A. That may luippen, of course, if the lunatic was a resident here the prob- 92 ability is he would have a resident committee; those are some of the things that happen, you know. By Mr. Creamer. Q. There seems to be some doubt as to the Western Union company; do you say that the entire amount that they are assessed on in personalty is embraced in this return of $98,000,000 ? A. One hundred million dollars. Q. And that they are exempt from taxation on the capital? A. Yes, sir; that is supposed to be their poles and wires alone. Q. That is their capital? & Yes, sir. Q. They pay no taxes then on their real estate to the city treas- ury beyond this sum? A. No, sir. Q. This construction of the law then concerning their exemp- tion from assessment on capital exempts the individual stock- holders as well? A. I don't know as that question has ever been raised; I don't think it does. Q. If it did not, you would assess them? A. Yes, sir. Q. Take this case where you say that there is 100,000,000 of personal property floating around somewhere? A; Now, let me see; I think it does exempt them, because their capital is assessed, but under the law it is assessed at the valua- tion of the construction or reconstruction of their poles and wires ; now, if the poles and wires are assessed, as they are assessed, as real estate, since that act of 1853 the law has been amended by which poles and wires are determined to be real estate for the purpose of assessment, and so the real estate is assessed, and because the real estate is assessed you can not get any valuation upon their capital for the reason that the law makes the basis of it the valuation of their poles and wires which are already assessed as real estate. Q. Well, do you remember about how much this corporation pays in this city on its real estate? A. I believe their building is assessed about 1,300,000. Q. Outside of the building? A. They only pay on that $100,000. Q. Nothing then on their plant here in the city? A. Yes, sir; 93 their plant; their poles and wires are separately; they have another report for that which I did not bring. Q. You have not got that here? A. No, sir; they have to render that every year. Q. From your recollection how much is this company assessed at; this is an exceptional company? A. I have not got the figures. Q. About how much? A. I think it is about that; that amount they put in there, $98,000. Q. For all their plant, their poles and wires? A. Yes^ sir. Q. A corporation with a capital of |100,000,0()0 not assessed altogether in the city here more than f 200,000? A. I don't give you that positive; I would have to look at the report on poles and wires. Q. What is your best recollection? A. I have not looked at that assessment as made by the deputies on poles and wires by a sworn statement made to them; I know they are assessed on their poles and wires, upon a separate statement rendered about this season of the year and sworn to, and divided among the different deputies. Q. Then you no doubt recommend a change in regard to those companies? A. I think Senator C alien presented the bill and had it printed and fought for it, I suppose; he happened to be the Senator of the district in which I resided at the time. By the Chairman. Q. I find here a bundle of statements of assessments on news- paper publishing companies; the Sun Printing and Publishing Association assessment fixed at f 199,000; Tribune Association, assessment fixed at $3,400. Mr. Creamer. I desire to state that there is no record of the gentleman on the stand having been asked to produce those papers. The Chairman (continuing). Evening Post Publishing Company assessment fixed f 100,000; the Mail and Express Publishing Com- 94: pany, |10,000. Will you explain to the committee, if you please, how there comes to be such a variance? A. The capital stock of the Mail and Express Company is |10,000; the Court of Appeals has held that we can not get over that; the capital of the Evening Post Publishing Company is |100,000; they are assessed at $100,000; the capital of the Tribune Association is $200,000; they have a building $540,000 valuation; so they swear to $754,000 of assets and we give them a deduction of the real estate $540,000, and their debts which leaves them liable for P,300; the' Sun Printing and Publishing Company have a capital of $350,000; their assets are sworn to as $590,000; their real estate $153,628, and their debts $238,000; $391,000 from $590,000 makes an assessment of $198,543; the real estate is deducted from each of 1he valuations; the Tribune swear to $720,054; that the Court of Appeals says we must take in all corporations as the basis of valuations; then we deduct the real estate value $540,000, and their debts, $211,000, leaving $3,356. Q. Take, if you please, the report of the Evening Post; do they return any real estate? A. No. Q. Do you know as a matter of fact whether the Evening Post Publishing Company own any real estate as such company? A. I don't know whether they do or not. Q. Do you know whether the Sun Publishing Company owns any real estate? A. As a company? Q. Yes, sir? A. I do not By Mr. Creamer. Q. I don't believe that the newspaper people should be sub- jected to analysis unless it becomes general? A. The same rule applies to them as to all corporations. By the Chairman. Q. As chairman, speaking for the committee, I desire to say that those reports were not selected only for the purpose of ascer- taining the method used in assessing those corporations, a* the committee has questioned the witness in reference to other cor- 95 porations; I see in one case that a large deduction is made for real estate as an offset, and in the other cases there are no such deductions; that is the reason for asking the question as I did; if the Sun Publishing Company owns real estate, they have not used it for an offset; in the case of the Tribune they have? A. That is true. Q. Now I desire to ascertain whether the witness can give us any information as to whether the real estate is used in all instances or only in certain instances as an offset; I don't know of any particular reason why the committee should be afraid to inquire in the affairs of the publishing corporations any more than any other? A. So far as we are concerned, you can inquire into anything and everything; the Sun Publishing Company has used real estate to the amount of $153,000, leaving them liable for $198,943. By Mr. Creamer. Q. Why not assess that building at its proper valuation, and deduct all the personal the same as others; the assessment there is away out of proportion to what other buildings' in Printing House square are assessed at; why does not the rule apply in all cases? A. As to the valuation of the buildings? Q. Why not wipe out personal altogether by a proper valuation of the real estate? A. The statement as to valuation on that uilding may not be altogether correct; the deputy always goes ver those cases; we grant them nothing more than they are ntitled to; there is no statement of a corporation so far as real state is concerned that is ever taken as absolutely correct, >ecause we require them to furnish us the ward and block num- >er, and then give the deduction of the actual assessed value, whatever it may be. By the Chairman. Q. Can you tell the committee what the real estate of the Mbune is assessed for? A. It is estimated at $540,000. Q. And the allowance is the same as the assessment? A. Yes, ir. 96 Q. You recommend that the levying of taxes for State and local purposes ought to be separated? A. Yes, sir. Q. You also recommend that there ought to be a system adopted so as to relieve real estate of a tax for the support of the general State government? A. That is it. Q. You also recommend that there ought to be a tax upon bonds and mortgages? A. Of a very small amount, and relieve them from local taxation. Q. Did I also understand you to recommend that property of estates should be exempted from local taxation? A. I propose that as another line of capital which is fairly certain for the State to be able to raise its necessary amount; I have selected that as an additional certain line of capital as well as bonds and mortgages. Q. You also recommend that a system ought to be udopied whereby property held by executors, if to be taxed at all, bhould be taxed where it is rather than where the executor lived? A. In line with the State system upon estates, then it would be assessed, I suppose, at the State capitol, no matter where the property was in the State, and in that way you would relieve us of the difficulties that now exist of determining where it should be valued. Q. The executors, as I understand you, sometimes live out of the city? A. Yes, sir; and then to cover that, I say it should be taxed within the State, if the decedent died within the State. Q. You further recommend that there be no deduction for indebtedness on personal property? A. As to those two lines of capital. Q. What would you raise money for local taxation on if you take bonds and mortgages off? A. My own thought about that is that if the State gives the city an opportunity to raise its taxes as it pleases, we will be able to get up a revenue code; it will not be the suggestion of myself alone or anybody else, but the com- bined suggestion of the mercantile interest, so that it will be a complete code affecting the business interests of New York, and , the probability in my judgment is that a considerable amount of this pereonal tax business will be gat through and a certain and greater portion of it will be obtained by tbe city. 97 Q. How would that affect the rural parts of the country where they have not those mercantile interests such as the city? A. They will settle themselves on the interests that they have. Q. If you take the bonds and mortgages out what is there left to tax but the farms, hens and chickens, cows, etc. ? A. There are many other cities. Q. There are many localities where there are no cities? A. And their expenses must be necessarily light. Q. How would you raise it, from a tax on real estate and what else? A. It would come to that for local purposes; it comes practically to that for local purposes. By the Chairman. Q. Your idea would be to leave it to the local authorities how to raise it? A. Yes, sir; suppose we might determine to make a poll tax in the city of New York. By Mr. Gifford. Q. Suppose New York city and other cities formulate such laws that would virtually exempt personal property from taxation, what effect would that have on the country districts adjoining cities? A. I don't think it would have any. Q. Would it not have this effect that if you decided in the city of New York to exempt personal property from taxation, and lete the adjoining county supervisors decide for themselves, wouldn't it have this effect, that capitalists in that county would say to the supervisors, "You must follow in the line of New York city, or capital will go from here to New York or Albany or Rochester," wouldn't it have that effect? A. It might. Q. Wouldn't that work a great injustice to the rural districts? A. No* any more than it does now ; if we attempt to assess a very wealthy man, the first thing you know he skips off to Westchester IDT to Dutchess county, or some such place as that where they ! won't assess him probably so much as we would. 13 98 Michael Coleman, being duly sworn, testified as follows: By Mr. Creamer. Q. You were tax commissioner of New York for how many years, deputy and commissioner? A. Deputy and commissioner for twenty years. Q. We desire to inquire concerning the effect of legislation, particularly as regards personal property, in recent years, during your term of office as commissioner, as to whether it had a ten- dency to send capital elsewhere; what effect generally it has had? A. In my opinion it has had a very serious effect. Q. Give the committee an illustration of what you think. A. My first experience in relation to that matter was in 1869; prosperity had been throughout the country after the war, and those seeking homes who had accumulated wealth faced towards this city for the purpose of purchasing sites and locat- ing here; the only location at that time where they possibly could locate to be satisfied for their future residence was along the easterly side of the park and the upper part of Murray Hill; we had several come here who leased their houses before purchasing such sites, and before they were here a year the tax department pounced upon them with such enormous figures for personal assessments that outside of two or three the balance flew to other parts; that property has never recov- ered from the boom at that time up to the present time; I don't know as I can give you anything except the experience I have . had year after year of seeing the tax assessments diminishing upon the records of the tax department, of individuals who had become versed in the law of how to evade taxation; a large amount that was upon our books from 1869 to 1874 was shown to be upon a false basis, and it was exposed by the Hon. George H. Andrews in his address to the committee of ways and means in the board of aldermen, when he delivered an address there showing the amount of personal property exempt from taxation; that was the cause of the falling off of some seventy to ninety millions. Q. What years? A. Eighteen hundred and seventy-four, which 99 we had to make up by putting on a new list of names, the assess- ments on which we have never been able to collect; I might go on in detail in regard to my reasons why I think so; I have always thought that the assessment of personal property has been detri- mental to the city. Q. It has been detrimental ? A. Yes, sir. Q. When was it? A. It always has been since the law of 1857; we are now acting under the laws of 1857 and 1859. (2. What do you think of the statement of the State assessors as to the amount of personal property in the State? ^. They claim it is four thousand millions; A. That may be. Q. If there is only one tenth of that on the books, how can you say that it has been assessed; how much of that four thousand million is assessable under the law; all except what has been exempted, I suppose, by special legislation; why is it from your experience that they can collect on personal property on other Slates without it being detrimental or injurious? A. It is according to the laws of other States. Q. Do other States pass injurious laws? A. Some of them do. Q. WTiat State; Massachusetts? A. I think personal prop- erty taxation has been detrimental to the success of Boston as well as New York; in Philadelphia, it is a different law. Q. In Boston, they assess personal property? A. I know they do. Q. Isn't it fair to presume that the Government of Boston and Massachusetts are as fully informed on those questions as our people? A. They can enforce the personal law tetter than in New York; they are not contiguous to another State lying three minutes' sail away, like New Jersey. Q. They enforce it there; that shows it is not detrimental when they succeed in having the property assessed? A. I still claim that, in my judgment, it is detrimental, not so much to them as it is to us. Q. Has there been any issue made in their State as regards that question that throws any light on the subject by which iron judge? A. I made an examination of the tax records in 3oston, in 1886, and, in my judgment, after the examination was made, I came to the conclusion that the assessment of personal property there was detrimental to the success of Boston; natur- ally, 1 do not class New York with Boston; New York is a great financial center; we should attract capital here instead of driving it away; it is so easy to go over night to other places, and what we can not hold within our grasp, we might as well let it come in free. Q. Can you show where capital has been driven away by personal taxation generally? A. It has been my experience to meet the best class of people who have lived in the city of New York for years, where they were put under a heavy assessment on personal property and the following year they placed them- selves in a position to evade it under the law. Q. How is that detrimental to the State to have a nontaxpayer here? A. It would be much better to have that man have all his money here so that it would be free for business purposes. Q. Don't you believe in the broad principle that every resident should contribute his share for the government? A. They do. Q. Does this gentleman who dodges to another State? A. We can not prevent that. Q. Why? A. No; he takes advantage of the law; if you could make a law that you could enforce; don't place us in a false posi- tion though. Q. Why is it an injustice;? A. It is an act of injustice when they can offset it that way. Q. Every resident should contribute his share; now, if the law is defective, commissioner, those people who can afford to go to other States and have several residences, but can not afford to contribute their share towards the support of the government, in your experience in connection with the tax office, do you know wherein the law is defective in not reaching such people? A. I only know from a practical view that for the last twenty-five years they have gone to New Jersey and built up along the road of the Delaware and Lackawanna, the Erie, the New Jersey Central and other railroads, the New York and New Haven and the Long Island railroad- wf " ^ave compelled them to increase the capacity 101 of their roads nearly four times what it was twenty years ago, and along those roads are men who are in New York, but are now claiming residence there, doing business in New York; we have not added to our wealth for the last twenty years; we have added to our population, but the people who have come here are not as good, as those driven away. Q. What has driven them away? A. Taxation; that has not been the most serious thing; in 1869 along the easterly and west- erly shores there were large factories employing at one time a hundred thousand skilled workmen; the first case that ame up was the Singer Sewing Machine Company; for three years they conferred with the department as to what their taxes would be; finally they moved to New Jersey, and from that time up to the present time they have been going almost every year, and to-day there is only one large establishment that was here at one time, and that is Hoe's establishment; now, the class of people that follow those factories are skilled workmen; they are the very best class of citizens; they are men who have pride in their fami- lies, and just as soon as their work is moved in a little time they settle there. Q. Does not the price of land in other States affect that any? A. We could have gone to the twenty-third and twenty-fourth wards and held them here. Q. In 1869 there was no twenty-third or twenty-fourth wards? A. The room was there at the same time. Q. In recent years have you known of capital departing from the State? A. It don't come here. Q. Has recent legislation since 1880 affecting property, affected capital sufficiently to drive it from the State? A. There has been a reorganization since 1889 up to the present time of nearly one thousand million of organized capital, a majority of which was located in different businesses in the State of New York, who have combined together and organized in adjacent States, Connecticut, New Jersey and other States; in regard to Mr. Feitner's statement that organizations in this State that it gives them a better standing. I will say at the same time the 102 reorganization of those corporations of one thousand millions are in good standing; their earning capacity shows that; they are con- trolled by the very best class of citizens we have. Q. What class of corporations? A. Well, American Type Foundry, H. B. Clanin. Q. Have Claflins incorporated in another State? A. In New Jersey. Q. And still the goods they sell to the retail dealers; those are taxable as personal property? A. The chances are that ninety per cent of their receipts are taken right in New York. Q. They are not exempt altogether on their personal property, are they; is not all their capital here? A. Over and above their indebtedness; are subject to whatever part of the capital is located here over their indebtedness. Q. We know H. B. Olafiin & Co. are here in the city? A. We see the sign up, but we don't know how much goods is consigned to them exempt from taxation. Q. Why do they incorporate in New Jersey? A. Because I suppose they are not annoyed every year; they are not obliged to make returns eveiy year. By Mr. Coggeshall. Q. They have to pay a tax every year? A. Yes, sir; a small tax. Q. How much? A. A very small; I think it is one-eighth of one per cent here in New York, and the reorganizations over there, I think it is very low indeed. By Mr. Creamer. Q. Do you know that the law has been changed as to filing annual statements? A. Two years ago. Q. They have to file annual statements in New Jersey now, don't they? A. I don't know. Q. They are exempt from liability, that is, the shareholders, in New Jersey, are they? A. Yes, sir. Q. They went there to avoid the corporation tax, is that what you think? A. I don't believe that. 103 Q. What benefit do they get; what benefit do they derive by going to New Jersey in view of the fact that all their capital is located here, and their business is all done here, except their books may be kept over there; what benefit do they derive by incorporating over there? A. Their capital stock would be liable to taxation here. Q. Aside from the corporation tax? A. That is a very impor- tant thing; it pomes up almost every day. Q. Do you know how much that is? A. I don't know. Q. Do you know whether it is any more here than ove there? A. It is a very small fraction over there to what it is here. Q. Do you know anything about that? A. No, sir. Q. Do you know they went there for that purpose? A. Yes, sir; from my experience talking with parties who were con- tinually changing. Q. About this company; do you know of your own knowledge? A. No, sir; I do not. Q. Do you think the corporation tax is too high here; is that rour idea? A. I think the tax upon all personal property is altogether out of proportion to what it should be. Q. And yet it is much less than the real estate tax, is it not? A. Same rate. Q. But it escapes taxation; the property that is in the city Dersonal property does not bear its just proportion; and you think that it should bear still less? A. I think that so far as New York city is concerned there should be no such tax. Q. Would you increase the tax upon real estate? A. That is well enough as it stands. Q. If you reduce the taxable personal property your idea is ;hat there would be more of it remain here and by a less tax upon personal property you would raise more money for State mrposes? A. I would guarantee that if the tax was removed Torn personal property altogether, and a small tax put upon corporate property, that in less than ten years we would collect :our times as much as we collect now on. corporate property, and the assessed value of real estate would run up to f 2,000,000,000, without increasing the present rate. 104 Q. Do you refer to the county of New York? A. Yes, sir. Q. You don't mean that generally? A. No, sir; I am talking about the city and county of New York; if such a thing was done, that the receipts we are entitled to, the sinking fund, which amounts to ten or twelve million; we could raise 40,000,000 a year. Q. Why should not personal property pay some taxes? A. They will pay it by inviting them to come here. Q. If you had more stringent laws, what then? A. You would drive them away faster, that is all. Q. By undertaking to collect personal property, you think the city and county is going to the demnition bow-bow r s, is that it? A. Not at all; we would not reduce our tax upon real estate; it would be as cheap as now, and we would have so much wealth here from all parts of the world it would more than compensate it three to one. By Mr. Gifford. Q. Would not such a condition attract capital from ill over the State? A. From all over the world. Q. Then wouldn't it damage the rest of the State while bene- fiting your city? A. No, sir; whatever benefits us benefits the rest of the State. By the Chairman. Q. What effect do you think that would have in Chautauqua county? A. It would increase the real estate in the entire State. Q. Give us an estimate? A. I have destroyed all my records for the last twenty-five years; I hare been a sort of star witness on every kind of investigation coming up, and when I left the office I destroyed all my papers; I didn't want to hear anything more about it; I have left it behind me. By Mr. Creamer. Q. You made a statement that something would increase the assessed valuation of real estate to two thousand millions; what do you think would have that tendency? A. By relieving indi- viduals from any tax upon personal property. 105 Q. There are about 11,000 of them now? A. I don't care; that would bring in 100,000 more; we have chased them away. Q. Driven away capital? A. Individual capital. Q. Mr. Claflin is not a case in point; he has not been chased away? A. He might have a residence here. Q. He is a very prominent exile so far as New York is con- cerned? A. Very well. Q. For a number of years they have had personal tax laws in Pennsylvania and Connecticut; they raise on corporations alone in Pennsylvania enough to pay their State taxes? A. I -recom- mended the State committee that was sitting at the Union Square hotel, on Fourteenth street Mr. Plunkitt was one of them to follow out the Pennsylvania tax law by taxing corporations upon their gross receipts. Q. Has that had an injurious effect in Pennsylvania? A. No, sir. Q. They collect much more than we do here? A. A great deal aore. Q. Five million dollars against our one? A. Yes, ir. Q. That shows a rather healthy state of affairs as regards cor- porations? A. Yes, sir. Q. Why can not we have the same? A. We are not located the ame as Philadelphia; remove Jersey or connect Jersey to New fork. Q. It is a matter of location and not of principle? A. It is ocation; I am talking for New York city. Q. WTiat would you suggest that will give us taxes, because the government must have taxes; your great financial center needs aoney to support it? A. Our great financial center is the best ity in the world where property can be. protected at a much ower rate than any other; let them locate here; invite them iere. Q. Those men that are here, and who are accumulating millions >y being untaxed; should not they pay taxes? A. You can not inswer those questions now, when you have silver certificates U 106 and government bonds, and all those things, allowing those people to hold those things over night. Q. Do you not think this personal property that has .^rown up in your day that had no existence when you went into the tax office, but materialized 50,000,000 during your administration should contribute? A. What property? Q. Take Western Union or Manhattan? A. They could locate in Jersey City. Q. Possibly people would not like to have the elevated road in Jersey City? A. You take Western Union, you could drive that away if you wanted to. Q. Don't you suppose a rival company would spring up here in twenty-four hours? A. Not if you are going to tax them to death. Q. We have not taxed them at all; is there any danger of the Manhattan Elevated railway leaving this city? A. They can not. Q. Then why should it not be taxed? A. It is taxed. Q. In proportion to its cash capital? A. In proportion to what it cost. Q. Is it taxed in proportion to what it would sell for to-day? A. Certainly it is. Q. I don't see any reason that you can not be a little more frank. A. The Court of Appeals has decided that, and I am not going to criticize their decision. Q. I am not asking! you to do that; should not this property be taxed at what it would bring in the market; that is what your successor Mr. Fietner states? A. The structure is taxed what it costs. Q. Then the elevated railway is taxed what it cost? A. Yes, sir. Q. But the Equitable Life building is taxed what it would bring, and not what it cost; you laid down a precedent, and it seems they have followed your rule since you left the office; the, Equitable building is assessed what it would bring and tho elevated railway what it would cost? A. The' Equitable build- 107 ing is assessed what it would bring in proportion to the assess- ments of adjacent property; what it cost by the different altera- tions made to suit their business their improvements down there where they have located have made values large through the second, third and fourth wards, which we have reaped the benefits of ten times over. Q. Should not those men who have accumulated those large amounts in your day, commencing with small sums, not much over $100,000, that has run up to millions and millions would it not be justice to the people of the city and State to require those people to pay or contribute a small moiety some percent- age of their vast earnings? A. If you can possible make a law by which personal taxation will be so light that it will be no bar to our prosperity, that it will invite capital here and hold it among us I would be in favor of it very much, but when you try to tax a thing that can go away it will be an injury to us, and if you can hold that thing here it will be a benefit and assistance, then you had better try to hold it here. Q. The question is this, that where you see property increasing year after year, by doubling their capital stock, based upon their Surplus earningjs, don't you think it should be taxed.? A. Then let them go in the gross receipts, then they all pay their share; the millionaire who owns those things pays his share. Q. But some of them now pay nothing? A. You can not reach hem ; how can you make them pay under the law ? Q. Those personal tax laws have been changed many times rhile you were commissioner? A. You can see how difficult it when the first suit of the Williamsburgh railway v. the ciby f Brooklyn, nearly compelled them to take out their plant and heir holding; and then the Twenty-third Street railroad com- piled the commissioners to take that and take only the assessed alue, and then the Union Trust Company decision came, you can ee how difficult it was. Q. They changed the law while you were a commissioner, did tiey not? A. In what way? 108 Q. I asked that question? A. Not while I was commissioner; no. Q. While you were in the office the law was changed? Yes, sir. Q. You were consulted with everything in connection with the office, more or less? A. Not on personal taxation. Q. Not on personal taxation? A. No; I was always opposed to that. Q. While you were deputy? A. While I was deputy I don't think they ever consulted me after Mr. Andrews' death; the other com- missoners didn't think I was worth while. Q. We understand here that it is the deputy that makes the assessment on personal taxation? A. Well, that has not been the custom for many years. Q. What is the law? A. The law says that the deputy shall make the assessment on real and personal property within the- confines of his district, but we appointed a deputy at large for personal property and gave him what we thought discretionary power to make the assessments in every ward. Q. What would you suggest now as a remedy towards reorgani- zation of the staff; is there a sufficient staff there in the present office? A. There is not Q. What do you suggest in regard to the system that prevails; what would you suggest as regards a reorganization of any depart- ment or bureau in connection with that office, as to the system? A. The system is all right, except to abolish the personal department Q. Have no personal? A. The' personal department; the three commissioners can fairly do the work, and no less than three should be appointed ; there should be at least seventeen to twenty deputies, and they should be fairly paid. Q. Seventeen to twenty? A. Yes, sir. Q. Divide it into districts? A. Into wards; some wards are large enough for two deputies; the twelfth ward, for instance, two men should be appointed there with two clerks. Q. Where there are but thirteen now in your judgment it would be better to have seventeen to twenty? A. Yes, sir. 109 Q. Would you combine the personal with the real estate? A. I would not advise anything about the personal assessment ; I would have it separate. Q. Those deputies would apply to real estate? A. Yes, sir. Q. As to personal? A. I would have sufficient help; the personal department as it carried on and at the present time should have five men. Q. Five deputies? A. No; one deputy with one assistant and three clerks. Q. What would be their duty as regards making up the*, assess- ment-rolls? A. One would have charge of the corporations and the other three should have charge of the personal assessment books; the other should have charge of the non-resident personal book, all under the supervision of this one man, of course. Q. Do you think that one man could very well look after such an immense field? A. Yes, sir. Q. What duty would you prescribe for him as regards correct- ing any failure to have the names on the books that were off a year ago, to have them added on? A. I would not have the law changed as regards that. Q. I mean as to his duty? A. Do the very best he could. Q. What does that consist of? A. Getting all the information >m the different directories, business firms and all that. Q. How could a man do that? A. He can by a system very Q. Tell us how. A. I could not tell you; it is a matter of detail I am familiar with ; from my experience I only say I think it can done. Q. Then, you think you could do it if you Avere there? A. I ink I could, and I think others could do it as well as I can. Q. Is it not true that the rolls are left to a considerable extent j | just as they have been year after year? A. They look over the rds in different papers; they have men pretty well drilled n regard to that; whatever information is to be obtained they *o and get it; of course, dealing with individuals, you have to 110 deal with them lightly, or they will take wings and fly like the rest of them. Q. As regards property exempt under the law, your attention has been called to that? A. Yes, sir. Q. Was any effort made while you were commissioner to per feet the law? A. I have several times protested in regard to resolutions introduced about tax matters, because I have alwayn thought that patching this old machine up with a rivet here and a rivet there was doing us more damage; I have been in- favor for the last twenty years of revising the tax laws of the State, but in looking back I can not see where we have made any progress by any laws that have been made. Q. You did not have anything to do with the making of those laws? A. I say, in looking back, I can not see that it has been of any benefit. Q. Has the department done anything? A. If you will remem- ber, Mr. George H. Andrews, from 1867 to the time of his death, never left a year go by without an appeal to the Legislature showing the condition of affairs here on account of our tax laws. Q. In what respect did he complain of them? A. The manner in which the laws were administered here, in which they were obliged to be adminstered under the law. Q. As regards real estate or personal? A. Personal and cor- porate property. Q. He' kept complaining? A. All the tune. Q. What was he complaining of specially ? A. About manner in which he thought capital was being driven out of the city. Q. You and he agreed? A. On many points we did. Q. He was always complaining that capital was being driven away? A. Yes, sir. Q. Has the result proved that he was right? A. Yes, sir. Q. It is rather a healthy city, financially? A. Ves, sir. Q. He was not a good prophet? A. I think he was in regard to < the stand he took, about forcing capital out of the city. Ill Q. Real estate that has been taxed has increased, and personal property not taxed at all has decreased? A. Yes, sir. Q. Therefore, Mr. Andrews could not have been a very good prophet? A. Yes, sir; he was. Q. Real estate has doubled since the time he was a com- missioner? A. Yes, sir. Q. And it has been taxed? A. Yes, sir. Q. And personal property has decreased, and that is not taxed at all; why is that? A. Because the law allows it to be decreased; it allows it to be changed; people are becoming more clever every day; for many years it was a tax upon ignorance and honesty; that day has gone by. Q. This personal tax is a tax upon ignorance and honesty? A. Yes, sir; and has been for many years. Q. Should not that be abolished by changing the law? A. Abolish it altogether. By Mr. Coggeshall. Q. Has capital been driven out of the State, do you think, by e tax upon personal property alone, or has it been more on 4 {account of the corporation tax, so called? A. Both. Q. Has it not been more by reason of the corporation tax that capital has been driven out of the State? A. Not out of the State altogether, but it has partially out of the State; it seems me we have suffered severely on account of the taxes; indi- 7iduals have located outside of the county; they come here and in the hotels in the winter; we have increased the hotels ^Jrwenty times to what it was twenty years ago, and apartment louses one hundred per cent. Q. Do you attribute it to that? A. I do; millionaires don't ome here. Q. Is it not a desire to go out to the suburban country? A. b, sir; they can make better arrangements in the country than ere; they can make no arrangements here except through davit. Q. In other words, they go to the suburban towns and over to ew Jersey to escape taxation on their personal property? A. I certain of it 112 Q. Do you think that is right? A. It is not right; I want to have the law changed to hold them here, so that they can build their residences here. Q. Where is there a city or State that imposes no tax on per- sonal property? A. I don't know of any, but we can afford to do it here. Q. I think it will be a mighty dangerous experiment? A. That is where I differ with you. Q. Great minds sometimes do differ? A. I think we are more prosperous every way than any other city in the United States. Q. What do you say as to the prosperity of this great metropolis compared with any other city in the union? A. I think we are greater. Q. Have you not increased as rapidly as the city of Philadel- phia ? A. More rapidly. Q. Are you not satisfied with the growth of New York? A. Not in comparison with its natural advantages. Q. We are getting along better than the others? A. Why shouldn't we? Q. We had better let well enough alone, and those fellows that are so unpatriotic that they want to leave New York for the purpose of obviating the duties that rest upon them as citizens in helping to pay to support the government of the city, I think we had better let them go? A. Then stop the subject of agita- tion on this subject of taxation. Q. You object to the agitation; if the people stopped agitation you would think we were all right? A. No, sir; I say we could do better to bring capital back here as long as we can not tax it; we would all benefit by their residence here. Q. If you take the tax off personal property? A. Put it on the buildings. Q. When you go up the State, how will that affect the farms; that would throw the burden upon the farms, would it not? A. It would make it a little heavy, but at the same time our values would increase so much more rapidly. Q. You would increase here to the detriment of the people in the country? A. Not to their disadvantage. 113 Q. Most assuredly it would be to their disadvantage if per- sonal property was exempted? A. The small amount we lost in personal property would be made up in the increase in value. Q. How about the country? A. Then put it upon us; we can afford to do it. Q. It is all right as a theory, but in the language of Grover, you would be confronted with a condition; if people found they were required to pay the local taxes in Oneida county they w Mild remonstrate; another thing, I don't believe you could pass a law that the Court of Appeals hold constitutional? A. What is the small local tax now compared to what it was in 1865 to 1873 ; what is the small local tax in the different counties? Q. What is the relative value of real estate in the country now compared with then? A. Two or three times over. Q. It is at least fifty per cent less? A. I mean the assessed value has been raised. Q. And the actual value has been decreased? A. In certain farming countries it has; our city debt is now very low. Q. We ought to take care of ourselves by taxing those cor- porations; your city pays a large share of taxes because she is wealthy? A. Yes, sir; and she would be more wealthy if the law was changed; that thing has been gone over for twenty years; we have shown that our proper proportion was twenty- eigjht instead of thirty-eight. Q. What do you think of the listing system? A. I atn opposed to it; it would drive people away to other States; it has hurt some of the best citizens of Philadelphia. Q. You mean the wealthy citizens? A. Yes, sir. Q. Are they the best citizens? A. People who are prosperous are generally the best people. Q. You estimate a man's comparative merit by the amount of money he owns? A. Not at all, but a man who works up from a poor boy and is prosperous, I think he is a good man. Q. Should he not help to pay taxes? A. They all help, but they don't want to be continually picked up and fired at all the time. 15 1U Q. If this law has been in vogue in the State of Pennsylvania, Massachusetts and Ohio and elsewhere for several years and has been successful, why do you object to it? A. Because in every one of those places you get the report of the tax gatherer and he will tell you that they are losing the best quality of their people; look at the result in Chicago. Q. Chicago seems to be all right; you say that the listing system is driving wealth out of the State of Illinois? A. It is claimed so by those who are administering the laws. Q. You claim here that taxing personal property drives wealth out of the State? A. Yes, sir. Q. Now, what further remedy would you suggest excepting to leave taxation entirely off personal property and put it on to real estate? A. In the first place, separate New York from those other States; don't compare us to Philadelphia or Boston or Chicago; they are not in it with us at all, providing you give liberal laws. Q. They are no* in it with us? A. No, sir; not even with all the disadvantages we labor under in repard to capital; but it seems to me when you find the best class of people going out, and two classes coming here, one living in hotels and apartments and the other in tenements, we are losing our best people; the people in hotels all live in the country and have then* mansions and they take a suite of rooms when they live here. Q. If you listed them you could reach them? A. They would go to Europe then. Q. Do you think New York would be absolutely deserted? A. No, sir; there is nothing that would destroy New YorK. By Mr. Creamer. Q. Bank shares, they pay? A. They do. Q. Any of them run away? A. No. Q. That IB a fair criterion, is it not, as to what effect taxation would have on citizens? A. Of course. Q. A majority of our bank presidents are intelligent citizens and reputable citizens? A. Certainly. 115 Q. Isn't that a fair criterion to show that it is not oppressive? A. Where does it come from; it comes from all over the world. Q. It shows prosperity in the city of New York? A. I know it does, but it comes from all over the world; the depositors don't all live in New York. Q. Now, during the time of your experience as city official the prosperity of the city has increased, and you have had a fair opportunity to judge, you have seen this city grow up in its various sections, east and west and north ; have you not noticed a remark- able increase in population per square mile in certain ^locations of this city? A. Yes, sir. Q. Owing to this taxation on real estate? A. Not altogether to that, owing to rapid transit. Q. The rapid transit saved the population from becoming more dense? A. It is pretty hard to become more dense. Q. It has during your term as tax commissioner? A. Yes, sir. Q. How as regards those people that you said are leaving the city owing to personal taxes; how many are compelled and dis- possesed from their residences on account of inability to pay the high rents that the high taxes on real estate require; are you aware that the records show that there were 30,000 people dis- possessed in this city last year on account of non-payment of rent, the landlord having to have his taxes; did you ever give that branch of the subject any thought , while you were looking after the interests of those successful people? A. I was not looking after the interests of those successful people. Q. I mean as you noticed those people growing richer and richer you certainly must have noticed that this system of dispossession for non-payment of rent owing to high rent and high taxes was affecting a large class of people who can not help themselves? A. Unfortunately I did not know there was as many as 30,000; I didn't know that those people came into the subject of taxation at all. Q. What people ? A. Those people dispossessed. Q. Who said they were? A. You spoke about it. 116 Q. They are dispossessed because they don't pay their rent; you know that they assess land on which those double deck tenements have been constructed and have been increased year after year, and that system is increasing here owing to the unequal system of assessing the wealth of this county. (No answer.) By the Chairman. Q. You heard Commissioner Feitner say that he favored the divorcing of the collection of State and local taxes? A. Yes, sir. Q. What do you recommend in that regard? A. I think that would be a step in the right direction. Q. Then you recommend that there should be a eparation? A. Yes, sir. Q. That would do away with this question of equalization? A. Yes, sir; and this friction year after year in regard to counties. Q. Now, one of the questions that this committee is considering is not so much what can be done under the present law, but what recommendations can make as to modifications or amend- ments to the existing law; I understand you, I think, to recom- mend that you would favor the repeal of the law which justifies the assessment of personal property altogether? A. In the hands of individuals. Q. But not as to corporations? A. No, sir. Q. Do you intend that that recommendation should apply generally throughout the State of New York, or only to the county of New York? A. It ought to apply throughout the State. Q. In your opinion, you think it would have a beneficial result throughout the State? A. As far as New York 'is concerned, I am certain, and I think it would be a benefit throughout the State. Q. Then, in your opinion as a tax commissioner, do you think that personal property in the hands of individuals in the city of New York has borne a fair share of the expenses of government? A. Not a fair share, but it has borne all we could get under the present law; there is no place that the tax commissioners have 117 striven so hard to obtain the tax as they have in New York on personal property in the hands of individuals. Q. Then, you think that if the policy of taxing personal prop- erty is to continue, that the present law is defective? A. I am certain of it. Q. In what respects do you think the present law defective so far as it applies to the assessment of personal property? A. I am so utterly opposed to any tax upon personal property that even if I knew some suggestions to make by which you could take and oppress people a year or two by more taxes 'upon per- sonal property, I don't know as I would suggest it to you, because it; would be injurious in the end; you take and put a tax upon mortgages; twenty-four hours after the tax would be put upon mortgages, every blank would be filled out that the party borrow- in- : lie money should pay the tax, and it would be only an oppres- sion upon the poor man. Q. Aside from your personal view; suppose it should continue to be the policy of the state to assess personal property, in whtit respect do you think the law is defective now? A. The value of money in New York will not allow it to come here and have a personal tax upon it at the same rate as real estate; you can make the law so light that it will come here instead of going away; you can bring it here and make the tax so light that it will attract it here, of that I am certain; perhaps, one- tenth of (me per cent, or even one-fourth of one per cent, and inside of ten years you will collect ten times the amount that you collect to-day on personal property. Q. You still hold to answering upon the basis of your personal view; suppose that the State should continue its policy of assess- ing personal property; it is conceded now that under the law it can not be reached; what suggestions have you got to make, if any, as to how the law should be amended in order to reach this personal property? A. I would have to write that down; 1 would have to embody that in a note; I would have to go over that very carefully. Q. Suppose the State should continue its policy as to personal property, would you recommend an amendment to the law so 118 as to disallow indebtedness claims for indebtedness? A. I think I would prefer the law as it has been changed lately, because it was disgusting the way the la.w was before, by which people could go down in twenty-four hours and charge their assets, go up and get their assessments oif, which was sustained by the Court of Appeals; the law ought to stand as it has been amended By Mr. Quigley. Q. When was it amended? A. This last year, I think. Q. What is the effect of that amendment? A. I don't know; I have not been in tke tax otfice Q. You say that the reason this capital is driven out of the State is because of our existing law? A. Yes, sir. Q. Is it not virtually the same law we had in 1857 ? A. Yes, sir. Q. })o you mean to s'ay that capital has beon driven on*: because of that law of 1857? A. The laws of 1857. Q. Didn't they live under that law for a number of years in this State? A. We have changed so wonderfully in our business and wealth has accumulated so rapidly since the war. Q. When was the change so wonderful that they had to get out? A. In 1869, when they came here; we never knew the damages of a personal tax until then. Q. Is it not more because of the effort of the authorities to enforce the law that they get out? A. Yes, sir. Q. Why was that movement made in 1869? A. Because the papers announced that so and so was worth so many millions, driven from California by this man Dennis Kearney. By Mr. Creamer. Q. How many names were added to the books that year that had previously escaped? A. I could not tell you how many names; we took the newspapers that year, 1879 and 1880; from the information received all those men were placed upon the records; they only stayed there a year. Q. Is it not true that on several occasion special corpora- tions and large capitalists have had those laws amended to suit 119 themselves at Albany; and that that does not reach; whj is it this State is so many years behind in its tax laws, and it seems to be impossible to do any thing with them; is it not owing to those immense corporations who have such power to prevent it? A. The only law that has been changed that has been detri- mental to the city's interest at large was the law saving the capital of fire companies; as soon as I saw that bill I went to the governor; I appealed to him and he sent to the attorney-gene- ral; he said I was wrong as to the construction of the bill, but the Court of Appeals declared that the $72,000,000 was not liable to taxation. Q. All the legislation that has been proposed to bring them within the limit of taxation those corporations that were exempt when in their infancy was thirty years ago, and every time there has been a movement made at the State capitol to change the law as regards such corporations their attorneys succeeded in defeating the law? A. That I do not know; I went to Albany on taxation matters. Q. Have you not an opinion about this thing as to the way this gross inequality grew up? A. Not a thing; I was rather liberal in regard to those mutual corporations; about that $72,000,000, three-fourths of the money that flow into their assets here come from people outside of the State. Q. I mean the people who are already in the State and flourishing? A. I mean the great men who support those cor- porations, that come here and build their elegant buildings and raise our values; I would like to see a thousand more come whether they are moral or not Q. What is your opinion on this inheritance tax question? A. I have not given that any thought. Q. In your connection with the taxation of this city you must have an opinion? A. No; it was not in existence when I was in the tax office at all; I understand it is $500 and $10,000; I understand those are the sums; I have not bothered about it at all; in fact, I have left all matters municipal go behind. 120 Q. All you wanted was the benefit of your great experience? A. I am willing to do anything. The committee then went into executive session. On motion the committee adjourned to meet in the Superior Court, Part 2, on Wednesday, December 21, 1892, at 1.30 p. m. New York, Superior Court, Part 2, December 21, 1892. The committee met pursuant to adjournment. The committee was called to order by the chairman. George S. Coleman, a witness called, being duly sworn, testified as follows: By Mr. Creamer. Q. You were formerly connected with the corporation coun- sel's office? A. Yes, sir. Q. During what period? A. From October, 1885, to the 1st of June, 1892. Q. October, 1885, to the lirst of June, 1892? A. Yes, sir. Q. What was the branch of duty in the corporation counsel's office that you occupied? A. I had charge of all matters relat- ing to taxing, which included advising the commissioners of taxes, or advising the heads of city departments, under the direction of the corporation counsel, and of representing the city in tax litigations. Q. Had you exclusive charge, or did all matters concerning taxation in regard to this county and its relations with the State come within your observation? A. I think so; in some cases there were other counsel employed, but in those instances I worked with them. Q. During that period there was legislation on the subject of taxation? A. Yes, sir. Q. Each year did that legislation take place, and what v/as the character of it? A. I could not say offhand; I know there were tax bills introduced almost every year, and the connection of the 121 office with them would be generally only in those cases that apparently affected the city of New York; the representative of the law department at the Legislature would submit to the corporation counsel a bill as soon as printed, and the corporation counsel would refer it generally to me to see whether it aifecied New York county; if it did, why we would consult as to vhether or not it would seem for the interest of the city to favor or oppose the bill, and if it did not affect this county we paid no attention to it. Q. During the year 1885, do you remember of any bill emanating from your office to send to Albany the following session in the following year? A. I don't recall now; I went there in October, and the gentleman whom 1 succeeded was taken ill, and threw the work of the department on my hands; I have no recollection of legislation. Q. We will take the first year of your administration of the duties of the tax branch of the corporation counsel's office to this city; what do you remember as being your first experience? A. The first bill that I recollect now was an act in 1886 with respect to insurance companies. Q. Fire and marine? A. Fire and marine insurance coin panies, domestic and foreign. Q. Did that cover life insurance? A. No; I think not. Q. Fire and marine in 1886? A. Fire and marine; I think it was chapter 679 of the Laws of 1886 ; it regulated the taxation of those companies, and took away the right of the municipality to tax anything except real estate. Q. Previous to that the municipality had the power to tax them the same as other personal property? A. Yes, sir; the sam. as other corporations; it had the right to tax the capital slock. Q. It affected the insurance companies of the entire State? A. Yes, sir; that affected all of them. Q. Did that bill emanate from your office? A. No, air; but it was submitted to the office, and a suggestion made with refer- ence to it. , Q. Who submitted it to your office? A. I do not know; but I do know that it was submitted to me. 16 122 Q. By whom? A. By Mr. Francis M. Scott, who at that time had charge, I think, of the law department interests at Albany. Q. Well, what was done in connection with it? A. I remem making a suggestion to put in three words in that bill, the wo " for State purposes," which would remove any doubt as tc whether or not we could tax those companies legally. Q. On real estate? A. If the words, "for State purposes," had been put in in a certificate, under the decision of the Court of Appeals, which was known at that time it would show the inten- tion of the Legislature to allow the State and county to tax those corporations just a* before on their capital stock; the only differ- ence would have been that they would have been taxed at a lower rate, because their franchise was being taxed, but if those words were not in it might leave doubt as to whether or not the Legislature intended us to tax anything except the real estate, because the provisions were very sweeping. Q. Do you remember who introduced the bill? A. No, sir; I simply saw the printed proof as it came from Albany. Q. Did you ascertain how much of a revenue the city was to lose by the passage of such an act? A. Only in a general way; I knew at that time what the insurance companies were assessed at; it was over $50,000 a year this tax; the tax would be something more than $50,000 a year. Q. Well, what was done in connection with it by your depart- ment? A. I think Mr. Scott called the matter up before the committee that had charge of the bill and wanted those words inserted; that of course is purely hearsay; my recollection is that he made that statement to the committee and it was represented that the words were not necessary; that it was not the intention of the act to exempt those companies from local taxation on their capital, and that even if those words were not put in, the result would be as they intended; my impression then is that the billl went through; it was passed by both Houses, signed by the Governor, and that then there was considerable criticism through the newspapers by the commissioners of assessments here; it got into the press of the city and it was called to the attention o the Governor and the Governor submitted the question to the 123 Attorney-General; the Attorney-General wrote quite a long opinion stating that it did not affect local taxation, and that I believe for a time quieted the apprehension; that was the opinion of the Attorney-General, but it was since overruled by the Court of Appeals four years ago, so that a few years ago those companies were assessed when by the court's construction of the law there was no authority to assess them. Q. Then the Attorney-General was wrong? A. Ye^ sir. By the Chairman. Q. What act was that? A. I think it is chapter 679 in relation to marine insurance. By Mr. Creamer. Q. During your administration or the subsequent incumbency of your position in the corporation counsel's office, what other matter of importance was your office consulted in relation to? A. Legislation? Q. Yes, sir; in reference to this subject of taxation? A. I might say the act of 1886 was modified in 1891 so as to affect of the decision of the Court of Appeals. By Mr. Guenther. Q. To what extent? A. By putting in the words " for State purposes." Q. Then you can tax them now? A. You can tax them now; I can not recall now specifically the matters that were introduce] for the purpose of legislation; I simply thought from time to time, bills would be submitted, and I would make a memorandum in pencil, and either send them to the corporation counsel or confer with him, personally, or with the party who had charge of legislative matters for the law department at Albany; I do not now recall the particular acts. By Mr. Creamer. Q. What has been the experience of your department the corporation counsel's office representing tax office affairs as far 124 as the interests of this mumcipality is concerned as to the pas- sage of bills affecting the interests of this city in connection with its system of taxation? A. Well, I have not really had much practically to do with that. Q. Well, outside of this act of 1886 you do not remember any other legislation in relation to this question? A. I presume I could; I presume I could go over my memoranda and over the statute and find others that have been passed, but I do not recall any other. Q. I want to ascertain whether any effort has been made on the part of the local authorities through the office that you were connected with to change a universally admitted weakness of the laws on taxation; what effort, if any, has been made on the part of the taxation branch of the corporation counsel's office to bring about a change, if any whether your movements in that direction have been countenanced in Albony at the State capitol, and what remedy there is in the future? A. I can not answer that very thoroughly, as I said before, my personal connection with those matters was only In cases where specific matters were submitted to me; my duties there were such that they required nearly all my time, in fact> quite all my time in the particular things I had in hand; I do know that in 1885 the Consolidation Act was amended with reference to the method of reviewing the methods of taxa- tion, so as 'to make a differences between the method of this county and other counties in the State in this respect; the law of 1888, chapter 69, provides for a certiorari to review illegality, inequality or error; now, in the county of New York, if people were permitted to review inequality, the result would be such a crop of litigation that it might tie up taxes for an indefinite period, and put a good deal of expense and burden on the city, and the Consolidation Act was so amended, though the act of 1880 does not apply in full to the county of New York, but in this county tax can be reviewed only when it is illegal, or when it represents an overvaluation of property, and it is not possible; only in this county to review a tax on the ground that jour neighbor has been taxed lower than you, or that you have 125 axed higher than your neighbor; you are confined as to the emedy as to the legality of the tax or to the overvaluation of four property ; that has been decided as to whether it is coustitu ional, and the courts have affirmed it; I would say it is an admin- strative measure which saves a good deal of litigation. Q. When was this decision of the Court of Appeals in relation o business associations? A. Insurance companies? Q. Business corporations joint-stock companies? A. There ivas a decision of the Court of Appeals last June in connection vith joint-stock companies which practically exempted :ibont 10,000,000 of capital in this city alone from taxation; that 'epresented. I think, simply the capital of the express companies, ind did not include any of the other joint-stock companies. Q. The decision ? A. The decision affected a particular express company, but the principle of that decision affected every joint- rtock company in the State that was not a corporation. Q. Previous to that decision those corporations had been pny- ng taxes? A. Yes, sir; they had been assessed and paying ;axes on that large amount, 40,000,000; they had been treated as corporations, and many of them had property out of the State, ind many had their capital in non-taxable securities, and a good leal of the property represented real estate, and the assessment uld not be, of course, anything like 40,000,000, but that was "heir capitalization, and the property was worth that, and the lecision of the Court of Appeals necessarily took them out of :he jurisdiction of the tax commissioners. Q. What was the language of the decision? A. That decision leld that a joint-stock company formed by mutual agreement nstead of by act of the Legislature was not a corporation within ;he meaning of the Revised Statutes authorizing taxation on their capital; in other words, the Revised Statutes say that the capital stock of every corporation shall be taxed so and so; they do not nclude joint-stock companies; consequently, as you now tax ;he company, and as there is no law requiring a list of the stock lolders to be filed anywhere or made public there is no practical means to reach the assets of this company unless they happen to in the form of real estate. 126 Q. That is a case requiring future legislation? A. I think so; I think those express companies and other joint-stock companies which issue certificates of stock and have the practical powers of a corporation should be put on the same plane as a corporation. Q. Otherwise those organized under the general law may dis- band and form a new company with articles of association, -with- out being incorporated, and be exempt from taxation? A. Under that decision, if they were simply formed by agreement and not incorporated, you could not tax them as a body. Q. Would they lose any rights that they now possess by making the change as owners of the stock or anything? A. They would be liable individually for the debts of the company unless the statutes are modified. Q. Are they not liable now? A. The shareholders of a corporation? Q. Yes, sir. A. No, sir. Q. Not liable for the amount of their stock or holdings? A. Not if they have paid in; the assets of the company would be liable but not the individual stockholders; whereas in those joint stock companies, particularly the express companies, the individual liability of the stockholders remains in full, but that, of course, was easily obviated in many companies by having dummies own shares of stock. By Mr. Guenther. Q. Have you seen the revision of the corporation laws passed last winter? A. Part way through I have. Q. The term "joint stock corporations," does not that include those express companies now? A. I have not read that within some time. Q. I believe it is under the head of the transportation com- panies? A. I read that thinking possibly it might have changed the laws, but I don't think it does; they are taxed by the State under the act of 1880, and this amendment which taxes every | franchise and business; they are taxed there as if they werej corporations. 127 Q. You don't think this revision includes them as corporations for the purpose of taxation? A. I don't think it does; that is my impression in reading the revision. By Mr. Creamer. Q. As regards telegraph, telephone, subway and other such companies, what has been the experience of the office as regards the collection of taxes and assessments? A. I believe that in respect to telegraph companies it has been satisfactory; a we understand the law the amount of assessment would have to be small, and seemed to be measured by the value of their poles, lines, and so forth; capital stock equal to the value of that plant practically; if you applied the law strictly you would have to deduct that same amount because it was to be assessed as real estate. Q. What law was that? A. There were several laws; I can not tell the exact chapter of the law: I know it came that there was so little derived from them under the usual laws that most of them made application to be stricken from the rolls, and one or two cases taken to the courts where we tried to hold them, the court decided they were not liable beyond the extent they had claimed beyond $500; that was the assessment, $500. Q. Has any effort been made to amend the law in that respect? A. I don't know ; I might say here that I have had very little to do with the legislative part of the business, or even to the extent of suggesting it. Q. Mr. Scott attended to that, and Mr. Blandy? A. Mr. Scott while he was there and Mr. Blandy subsequently; I don't know whether Mr. Blandy attempted to initiate legislation, but I know he represented the department there. Q. As to telephone and subway companies, what is your experi- ence? A. I think the telephone companies practically come under the provision for telegraph companies. Q. Has the law been amended so as to exempt theni|? A. I don't know how the law originated, but as I remember the law related to the taxation of their poles and wires. 128 Q. What law was that? A. I can not tell you now when that law was passed. Q. Eighteen hundred and fifty-three, was it not? A. There was a law of 1853 amended, I think, in 1871; I have had very little to do with the taxation of telephone and telegraph companies; >t has not come under my observation. Q. Who in your office did? A. I mean to say there has been no litigation since I have been there that would bring that question up; I think there was before my time, but not since 1885, with the exception of this one case. Q. That js, the tax commissioners have not asked for inter- ference on your part in connection with the non-collection of assessments on their property? A. I do not remember; there was i-|New York, it would seem like a large loss, but it is put down s I as the statutes are constructed by the Court of Appeals; there the I is a case where something should be done, either make the trust companies taxable like banks, on the sjhareholders, or em I else change the system of taxation and tax them as to their not I revenues, because the largest part of their assets belong to the 0s, I depositors, but the trust companies, so far as complaints have been made show that they have the advantage of banks in that mils- they practically escape taxation by holding so large a portion of their depositors' money in a form which can not be reached paying on $1,000,000 capital while they 30,000,000 assets and 134 surplus; all they would have to do would be to buy 4,000,000 of bonds; you can not reach it. Q. Can not a law be passed that would affect that? A. I think it could; I have no doubt a law could be passed which would meet that difficulty; of course, if you should tax a share- holder in a trust company, then they would be on a par with banks. Q. I suppose much of the difficulty arises from the fact of upholding those people in the intercommunication with States; has anything of that sort ever been called to your attention non-residents residing in New Jersey, Connecticut, Rhode Island, which have recently attracted some attention? A. Yes, sir; the non-resident holder of bank stock has to pay a tax here, but a non-resident of other personal property is not liable here except for money invested in business or in the hands of an agent here; now, a person living here six months of the year might be traveling the rest of the year; perhaps have a domicile in some other State; perhaps in Westchester county, New Jersey or Khode Island; he claims exemption here on his personal property; that case is now before the courts, the question whether because a man has his domicile outside of the State as distinguished from his residence he is liable to taxation here upon his personal property; we can not say what the result will be until we hear what th* court says, but it seems to me that the same objection in a lessor degree applies to the law where the party has two residences in this State; we had a great deal of trouble in trying to fix a. proper residence for taxation, and as the committee knows the suburbs of every State, sometimes called the taxpayers' paradise, has a large number of wealthy people who claim residence in the suburbs rather than the city. Q. Taxpayers' paradise? A. I think it is usually called that. Q. And those people who pay this personal tax are called the honest ignorant? A. That I do not know. Q. That is the phrase that Commissioner Coleman used yester- day? A. I don't know about that. 135 By the Chairman. Q. Have you ever made any comparison between the rates of taxation in those suburbs and the city with a view to ascertain ing where the advantage was? A. Not so much about the rates, but I have with reference to the amounts of the assessments; sev- eral cases have come under my observation where parties have told me how much they were assessed in the country; I never knew it to come nearer than fifty per cent of the amount assessed in the city. Q. You think the proportion of valuation is higher in the city? A. Yes, sir; I think so on people who are wealthy. Q. What you say relates to personal property? A. Yes, sir; real estate is another branch. By Mr. Creamer. Q. Many of those birds of paradise live abroad and have per- sonal property invested in this county; have you ever had any cases with them? A. You mean by "abroad," outside of the State, or other countries? Q. In other countries; it is estimated that in every European city there is an American colony with their property vested in this city, principally in first mortgages on our real estate; have you had any experience with the taxation of mortgages in cases arising from that? A. Yes, sir; I have had this experience, which I think it is anomalous, and I think it ought to be corrected; a per- son residing in this State, and having invested his money in mort- gages in any part of the world, is taxable upon the value of those mortgages; now, if that person happens to be a trustee and he happens to have a co trustee who lives in New Jersey, all ho need do is to send those papers to New Jersey, and put them in a safety deposit vault, and under the law of the State as declared by the Court of Appeals it is not taxable, even one-half of the estate being his proportion; I think that it is outrageous; either the law should be changed as to the resi- dent, or modified as to the non-resident; the same person might 133 be taxable in his individual capacity, when if he simply represented his dead brother, property in the same situation exactly would escape taxation; I can not see any reason for that; I am not saying now whether even the individual should be taxed when he has invested his money out of the State, but in my opinion there should be no distinction between a trustee and an individual owner which arises out of the construction given by the courts to the law of 1883, which makes the provision for taxes on bonds and mortgages owned by residents in this State, but representing investment outside of this State; they unfortunately use the words " owners or owner," and did not qualify it by saying both beneficial and representative, or something to that effect, and the courts have derided it did not include trustees. Q. In connection with this matter of taxing mortgages, have you heard of any cases where people refrained from investing in bonds and mortgages in this county on account of taxation; do you know of any such case? A. I do not myself. Q. What you have heard was mere hearsay? A. Yes, sir. Q. You know of no case? A. I do not myself. Q. Where capital has fled from this city or State on account of taxation and mortgages? A. I do not. By Mr. Gruenther: Q. You stated a few moments' ago in relation to trust companies that they do about the same business as banks do; can you make that more plain? A. What I mean is this: A trust company is the depository of funds, in fact, I think, in many cases has more than any bank in deposit; it has the privilege of loaning those moneys, and making large interest on the money loaned; it has a right to act as trustee, guardian, executor and committee, and that is another field of operation which is not usually enjoyed by money institutions; now, the owner of bank stock is liable personally for the actual value of his share of stock, and the bank is exempt from temptation on its property, except real estate, owing to an act of Congrms that is, a national bank, and our State law has made the sam<* provision practically as to other banks; now, the 137 shareholder of the bank can not escape taxation unless his debts allow him to wipe it out, consequently it puts a premium on the ownership of trust company shares to make people inclined to invest in them as against banks, because there is no taxation on the shareholders of the trust companies. Q. You don't think they ought to enjoy that privilege? A. It does not seem to me right and proper; a trust company I would not look upon as savings banks, and in respect to savings banks, I think it has always been supposed that the deposits in savings banks were exempt from taxation; the attorneys-general of the State have given various opinions on that subject, but the Court of Appeals within two or three months, speaking through the chief judge, has said that savings banks deposits are not exempt from taxation; I believe some of the judges would not express an opinion on that point but if there is any doubt about it, it would seem to me that some provision should be made to exempt a moderate amount of savings in banks. Q. Do you know of any attempt ever made to tax those trust companies as trustees or executors? A. Yes, sir; there are thirty such cases on the books this year, I think, where we have taxed one company as executor or guardian or trustee. Q. Do they pay their tax? A. I presume they always do; they never object to paying taxes as trustee, because that, of course, does not come out of their shareholders. By Mr. Gifford. Q. How about non-residents claiming exemption on account of indebtedness? A. Our only tax against them is under the act of 1855, where we tax parties for sums of money invested in busi- ness, and that question is before the court, whether a party engaged in business here, perhaps a corporation, claims to offset their indebtedness against property in this State, and they claim to offset their entire indebtedness, whereas they may have at their home office more than enough property to meet their engagement; tihat is a question that is before the courts now, because the law says that they shall be assessed and taxed as other persons resid- 18 138 ing in the State; taxed as if they were residents, in other words; and the question then is how would a resident then be taxed; we have had a recent decision of the Court of Appeals again, which has given rise to speculation as to which would be the proper to assess a non-resident having money invested in business in tl State. By Mi*. Creamer. Q. Take the case of the National Cordage Company, a non- resident corporation; has that company been called to your attention? A. I think not. Q. Let us understand how these people evade all taxation; at least two-thirds of the capital stock of this non-resident corpora- tion is owned by citizens or residents of this State; their corpora- tion is exempt because their business is not in this State, as I understand it. Mr. Feitner. They are assessed at f 50,000. Mr. Creamer. Their capital is what? Mr. Feitner. Ten or twenty millions of dollars; I don't remem- ber; something like 15,000,000. Mr. Creamer. 'It has recently been increased, I think, to 30,000,000. Mr. Feitner. It may be. Mr. Creamer. How do they claim, exemption that they not only escape as a corporation but also as individuals as well, still dwelling among us; now, that f 50,000, is that personal? Mr. Feitner. Personal. Mr. Creamer. Does that exempt the individual owners of this stock? Mr. Feitner. That is a question not well determined; that is a question to come under the provision of that section that Mr. Coleman refers to in the act of 1885. Mr. Creamer. Does the payment of an assessment on this |50,000 exempt the owners of a corporation who owns shares amounting to fifteen or twenty million, and how and why, and what is the remedy? 139 The witness. If it is a corporation the assessment of the capital stock under the Revised Statutes of 1857 does exempt tine holder of shares, because the Revised Statutes say and expressly provide that every person who owns a share of stock in a corporation which pays taxes on its capital is exempt from taxation on the theory that it would be double taxation; is this ;i trust or a, corporation? Q. It is a trust. A. If it is a trust, there would be then a question as to whether or not they would be exempt; there may be a question as to whether or not we can tax them on their capital; I was assuming in my answer that it was a corporation, but if it is a trust, there is a question whether you could tax a shareholder of a trust which is not a corporation, because under the law as to the separate corporations which go to make up this trust, each corporation would be liable to taxation as long as it continued in existence; I was assuming it was a corporation. Q. Is a trust untaxable ? A. I do not think our tax laws recog- nize trusts as such for the purpose of taxation; they recognize simply individuals and corporations. Q. Trusts were not anticipated under the law? A. I hardly think so. Q. Still, they are a larger factor in the business affairs of the city and State; take, for instance, the Reading Trust, with a com- bined capital of 500,000,000, I believe ; a t rust that affects the inter- ests of every man, woman and child in this State; there is no way for the laws to reach that trust, as they reach the tax on tin* people here? A. I don't know how that trust is made up, but t assume a trust made from corporations of this State; suppose ten corporations of this State, each preserving its cor- porate existence, may form a trust; now, I think each individual corporation would still be liable on the value of its capital, and if that were so then the shareholders of the corporation would not be separably assessed for their interest; they may be share- holders originally, and they are now certificate holders, the cer- tificates taking the place of the shares of stock, but each corpo- ration preserving its identity and liable to taxation; in that case, 140 I do not think that the holder of the trust certificate would be liable. Q. You could not give the committee anything from the records as regards the exemption of those individual owners of the stock of a corporation who exempt themselves through some proceed- ing, by paying a small amount on their capital stock? A. I don't know that I quite understand the question. Q. What difficulty is there in the law that permits the indi- vidual owners of a corporation the individual owners of shares amounting to say f 15,000,000 to become exempt by the corpora- tion itself paying on an assessment of $50,000? A. Well, we will assume that that $50,000 assessment is all that is permitted under the law as it stands, because they have put their property out of the State. Q. You are not familiar then with a law that would cover this case? A. I don't know any law that would cover a trust; I am familiar with the law in respect to corporations or individuals. Q. Then, the law is defective because they are outside of the law? A. I think they would be outside of the law as a trust. By the Chairman. Q. The purposes of this inquiry seem to be divided into three heads; the first is as to the propriety of modifying the present law relating to taxation, discount and interest so far as they affect the agricultural, manufacturing, commercial, laboring, banking and other interests of the State; can you briefly suggest any such modification of the existing law, beyond what you have already stated? A. There is one matter relating to taxation generally, which affects the entire State, and that is the present arrangement of distributing State taxes in the various counties. Q. What modification would you suggest in that regard? A. It; would be quite radical, and that would be to do away entirely with the State taxes on land, which would remove all friction between the counties; that would amount, of course, to a large? loss of revenue, which would have to be made up, and so far as 1 have been able to give it attention, it seemed to me the 141 way to do that would be from a corporation, through taxing, not their property, but their revenues, and make the tax on corpora- tions a State affair entirely; not local, except on real estate, with this exception, that where a corporation held what you might call an exclusive local franchise, such as a gas company, a surface railroad, or a corporation of that character, in some way a com- pensation should go to the city which gives it that, but in general corjK>rations the State should derive the revenue alone; now, the trouble about the equalization; it is impossible, it seems to me, for any three men I know nothing about the personnel it is impossible for them, in their limited time, and having their other occupations to make anything more than a guess at the comparative valuations in the various counties; it would take a man a life-time, I would say, to do that thoroughly, and give his whole time of it, and if the State law was changed, as it has been in Pennsylvania, it would do away entirely with that ele- ment of friction; I am not prepared now to give statistics as to how much can be raised from corporations, from licenses, inheri- tance tax, etc., but I know it has been done. Q. What do you say as to the continuation or extension of the present method of collecting a collateral inheritance tax and direct inheritance tax? A. I believe in it myself. Q. Do you believe in continuing it about as it is, or in extending it? A. I am not familiar enough with the particulars of that legislation in its present form to say, but I think that the present exemption, $ 10,000 for direct, is proper enough, and I believe $500 for the collateral seems to be fair. Q. Now, the second branch of the inquiry seems to be whether capital has been or is being driven from this State by restrictions affecting corporations, and if so, as to the remedy therefor; now, in your opinion, has capital been driven from the State by reason of taxation on corporations, and if so, what remedy would you suggest? A. I might say tbat most of the objections that I have heard about incorporating under the New York law at present were from lawyers who said they would not attempt to guess what those laws might be some day held to mean; so far as the taxation is concerned I am not prepared to say they would be benefited in the least as to the organization tax, but as to the tax on their stock I think that a domestic corporation would no1 be assessed any higher on the same property by the State than iion-resident corporation, as I understand the law. Q. You believe and you recommend a modification of the exist- ing laws to such an extent as to divorce the question of raising money for State purposes trom local purposes? A. Yes, sir; it might be necessary as a detail to still make the county act as collecting agent for the Stale; I think it would be better if they could, without increasing the force of officials, to have it entirely separated, but I certainly believe in removing this State tax on land as it stands now, between the counties, so that no question of equalization would have to be considered at all; I would like to express my views on this question that has been agitated for some years by the State board asking not to restrict their powers but to enlarge them; it seems to me that that would be worse than to attempt to tax lands guess at the value of the land but not personal property; I think I heard in thi very room where one person made a guess where the personal property that escaped alone amounted to 1,600,000,000; that is pre- posterous; a great portion of that is in a form not taxable at all, certificates of stock and those things which go to make up wealth to a very large degree; I don't think that they escape as much as we think they do. Q. The committee has had one witness on the stand who expressed strong views in opposition to the taxation of personal property; what have you to say on that point? A. I think this, that it is impossible to even approximate the value of personal property under our present laws, even if you should increase the force of officers tenfold. Q. What do you say as to the wisdom of taxing it at all? A. lit is a very large question, Mr. Chairman; my mind at present is shaping itself towards a conclusion which is adverse to taxing personal property except in the form of direct taxation by the State upon corporations, which is a tax really on gross receipts; 143 as to personal property held by individuals at present, as far as my mind is made up, it is against it; .1 do not see how it can be removed at once, but gradually without interfering largely with the revenues, if I may not be considered too heretical, I would say that the fairest tax upon an individual is a tax according to his income which does not put a tax upon a person according to what he has and has paid for and produces no revenue, like works of art, furniture and things of that kind, but apportion his tax according to his ability to bear it; when he makes little he pays little; when he makes much he pays much, and ought to. Q. Do you want to be understood that you arc in favor of what is known as an income tax? A. Yes, sir; I am at present in favor of what is known as income tax; of course, their are a great many kinds. Q. If the policy of taxing personal property is to continue, what do you say as to the present method of allowing an offset by indebtedness? A. I do not believe in it; I think there should be no such thing; as it is taxed now, AVC tax credits; a person owns a mortgage, and the person to whom he has loaned that money lives in the State, there has been no increase of property; one man loaning to the other, and it would not be right to tax a credit, and tax the money in the hands of a debtor; that would be a double taxation; so that if you tax credits, theoretically you should exempt debts, but I do not believe in taxing either. Q. Now, I didn't quite catch what you said on the subject of the taxation of bonds and mortgages; are you in favor of tax- ing mortgages or not? A. As a separate piece of property, or as a credit? Q. Taxing a mortgage, the holder of the mortgage? A. It really doesn't make much difference which way you are going to do it; if you are going to tax the mortgages and not the mort- gagor, he would pay more interest; the only way, if you tax income; of course, the man holding the mortgage would be in receipt of a certain income from it. Q. Under the present system, the holder of the fee is assessed on the basis of the value of real estate, without regard to the incumbrances? A. Yes, sir; of course, that is logical in one sense, because it does not diminish the value; but it is not to the owner of the real estate who does not happen to enough personal estate to offset it, if you are going to continue that system of deduction by debts. Q. Assuming that the policy of the State should be to continue to assess the holder of the fee for the full value, would you then, in addition to that, recommend the taxation of the mortgagee the owner and holder of the mortgage? A. I do not think T would; if you are going to keep up deductions for debts on per- sonalty, you should allow it on realty; of course, it has got to be very carefully guarded to show the good faith of the transaction; it would open the door to a good deal of evasion. Thomas G. Sherman, called as a witness, being duly sworn, testified as follows: By Mr. Creamer. Q. Have you read this resolution? A. I have. Q. Will you please give the committee your views concerning the same? A. I refer to two or three papers, but not to read literally from them; I understand the question to be mainly the question of the taxation of personal property. Q. And equalization? A. Yes, sir. Q. And also as regards the loss of capital to the Stair by reason of the enforcement of our tax laws in relation to personal property property of corporations principally? A. With regard to that last point, I will take that up first, because it is, so far as my general views go, very briefly disposed of; in proportion ;is any State has inefficient tax laws upon personal property, it will invite the immigration of capital, and the wealth of that State will be thereby increased; in proportion as it has efficient tax laws upon personal property, it will drive out wealth, and the wealth of the State will be, therefore, diminished; this is proven by the experience of all States which have tried it; every- one who is at all familiar with financial affairs, so far as they are affected by taxes, knows very well that all men who have, say over 145 $ 100,000 in value are constantly on the lookout for places where they may invest personal property free of taxes, or under a low tax, and for every change which is made in the laws of a State concerning the taxation of personal property, there is a change in the situs of that property; when the change is in the direction of easier taxation property flows into that State; very few such changes have taken place; the only one that I can recollect now is the exemption of mortgages from taxation in Massachusetts, which took place about ten years ago, and which resulted in a large increase of investment in mortgages and a reduction in the rate of interest; almost all changes in the last ten or fifteen years have been in the direction of severity, and in every case capital has either actually or nominally fled from the State; I recollect a very striking instance of that land when the new constitution of California was adopted, which was framed by a farmers' convention; it was the object to reach every kind of personal property, and accordingly they provided, I think in express terms, in the constitution itself, that the stock of a cor- poration should be taxed as well as the property of the corpora- tion, and they expressly overruled a decision of the Supreme Court of the State, which held that taxation on mortgages was double taxation; they provided that mortgages should be sub- ject to taxation; the first Legislature to meet under that under- took in good faith to carry out that scheme, and my attention was called to it at that time; I was not so much interested in matters of local taxation, but it happened in this way; I don't mind telling incidents in my own experience, although I should not like to tell them in regard to a client; I happened to buy for the first and last time some Central Pacific railroad stock, which was paying dividends regularly; I thought it was a good invest- ment; when the certificate was delivered to me by the broker, I found that instead of the broker's name being on it, which I should not have minded, or may name, there was the name of I forget what John Smith will do as well as anything else so I called in the broker and said, "How is this, I don't know who John Smith is, and he will colled the dividends" I think 19 146 quarterly dividends were paid then " and how am I to get them from him;" the broker laughed and said, "You will see; there are coupons for the dividends; " I said, " Whoever heard of coupons for dividends; " he said, "Nobody until this new law was adopted in California; " then he explained that as soon as this law was passed the Central Pacific Railroad Company put all the stock of their corporation which they could get hold of and it was in very few hands into the names of five clerks of the corpora- tion; they passed a by-law by which dividends were to be paid only upon presentation of coupons, and the registered holders were not to get the dividends; then they sent those five clerks out of the country scattered them around, and gave them instructions that they would receive a salary, and they were to report to some person whose address they had, and to take good care never to report to the head office; all the stock was put in their names; they disappeared; the assessors came around at the proper time to the office, found the names of all the stockholders, and then asked their addresses; the officers gave them their last address which the men had given them ; the assessors came back and said they could not find them; the officers smiled, and said they could not either, and the result was that the State of California i never got one cent of tax on the stock of the Central Pacific Rail- road Company, representing a great many millions of dollars, and I have known other cases. Q. That corporation paid no dividends at that time? A. It did pay dividends. Q. The stock is not worth over thirty? A. That is a very true thing ; I paid ninety for that stock and sold it again. By the Chairman. Q. What did you do about the payment of the tag on the stock that you owned? A. I never paid any; no officer of California ever suspected that I held it, and I was not going to volunteer the information, Q. You were conscious of the fact that you were the owner? A. I thought I was as long as I had those coupons; I got my divi 147 dends clear of all taxes; the State of California tried that for sev- eral years, and every other corporation that was paying dividends adopted this same plan, and after the first year the State of Cali- fornia did not get one cent out of this tax on the stock of cor- porations; there were no California stockholders; that was a case where the entire capital emigrated either in form or in fact, the result of which was that notwithstanding the explicit declara- tion of the constitution, the Legislature finally passed an act, with a preamble, which is quite unusual in those days, declaring it was unjust and impossible to collect a tax on the stock of cor- porations, the property being taxed, and therefore they repealed the law which the constitution required them to pass; that is an illustration of the very strongest kind as to the way in which capital will actually or ostensibly emigrate when it is taxed by the most ingenious devices; the State of California has had some other remarkable experiences; it undertook to tax honey and butter, and required a return, and although there was a return in several hundred thousand cases there was the most ^reat scarcity of butter ever known, and only five or six counties had any honey at all; there were forty counties that had bee hives; the bees could be seen flying around, but honey was returned by a separate return, and there were only four counties that had a. pound of honey; so you can see that the honest farmer is quite as shrewd in evading taxation as the dishonest citizen ; I suppose the bees flew off with all their honey; Ohio has tried this experiment for forty years; it has had one of the most stringent systems ever devised for personal property; the result of it is extraordinary; carriages are set on wheels, and they seem to fly from the State every year, and watches which, like French clocks, are supposed to go, have manifested their power to go every year since, and most particularly in the large cities; it is affected with a destitu- tion of watches calamitous to think of. By Mr. Creamer. Q. How about Pennsylvania? A. Thje city of Philadelphia returns watches. 14:8 Q. I mean the State in its collections for personal property on corporations A. I have not studied that. Q. The aggregate is $5,000,000? A. Of course, you can get a great deal from personal property; the State of Massachusetts gets a great deal from personal property. Q. Does it on mortgages? A. Yes, sir; Philadelphia I don't know about ; Boston I understand something about. Q. The State of Massachusetts is rather a fair example for us to follow in many case; they have nearly as large a sum on their personal assessment-roll as this city? A. Over 200,000,000. Q. And this city about 300,000,000? A. Yes, sir. Q. It has been less than that? A. Yes, sir. Q. In proportion to the population and wealth there should be a much larger sum on the books in this city? A. Yes, sir; very much; they get it, and the only way you can ever get anything Me a full statement of the amount of personal property; after they send out lists all around to all the taxpayers, some of whom return and some do not; the assessors are remarkably intelligent and trustworthy, and one body of men have been in office for a long time; I am not saying anything against the men; as compared with all cities, the assessors of Boston stand high, particularly Mr. Hills, who has been in office for many years, a man entirely unsuspected of anything crooked, and the system has therefore been administered by thoroughly honest, upright and efficient men; it has had an ideal enforcement. Q. How large a force have they; have you any knowledge? A. I am not sure, but I think they have about fifteen who might be called head men under Mr. Hills. Q. The same as our deputies here? A. Yes, sir. Q. We have thirteen; do you think that is sufficient? A. I don't believe that makes any difference; you might employ 300 men, and I think the result would be you would be no better off. Q. Do you think that one man taking a district embracing six wards of this city to assess the property of those six wards from, say the first Monday of September until the second Monday of January do you think one man can cover that ground suf- 149 ficiently well to give satisfaction? A. You mean to assess and ascertain personal property? Q. No; real estate and personal as well? A. I think one such man, by devoting his entire time, could ascertain the value of the real property fairly well; it is impossible for him to ascertain the value of the personal property or come anywhere near it; but the gentlemen in Boston do not attempt that; the way they do is, they send out lists, and each of the taxpayers is required to sign it, but the assessors are very glad if the taxpeyers do not sign those lists, for this reason, that if they do sign them, they are bound by that evidence unless they can produce positive evidence as to their falsity; if they do not, the assessors estimate for themselves, and there is no appeal, and they meet in what is called the dooming chamber very properly too and there they sign the doom of every man and estimate the value of his property, without any evidence, a statement or anything at all; I was most surprised to find that the assessors of Boston have actually evidence as to only $40,000,000 of personal property in the entire city; that is all they have any evidence of; they pro- ceed to that $160,000,000 by pure guesswork; in that way they get up a very creditable showing of $200,000*000; of course, if you put in the hands of the commissioners here similar powers, I suppose they can add three or four or five hundred millions to the personal property of this city. Q. Does an income tax still prevail in Massachusetts? A. Yes, sir; and it is admitted by everybody to be a farce; it is only paid by exceptionally honest men. ' By the Chairman. Q. What do you think of the law that gives such discretionary powers to assessing officers? A. I think it is grossly unjust; it is better suited for Turkey or Russia or Tartary than it is for the United States of America; now, speaking of Boston reminds me of another instance of emigration of capital ; the Boston people know there is an abundance of that; Nahant is full of people who have gone there to avoid taxation in Boston; Cottage City, 150 which is perhaps the wealthiest town or little village on Martha's island, is one of the wealthiest towns in Massachusetts, becau people keep their summer residences there, and return themselves for taxation; but the most remarkable instance is the little town of Lancaster; two-thirds of all the expenses of that town art 1 paid by a single man, who left Boston because he was assessed at a very high rate, and he entered into an agreement with the village of Lancaster that if they would always put his assessment down at a very low rate they had to return something 011 .account of the State officers he would pay about two-thirds of all the expenses of the town, and when they want a new bridge-, or to repair one, they go to this gentleman; he has his ow r n con- tractors estimate for the repair, and asks the town authorities in what style they want it restored, and he pays for it, and it does not appear in the town bills at all; he saves about $25,000 on these taxes in Boston; Mr. Weld was in Boston; they assessed him, I think, some three or four million dollars; he protested; they gave him the option of swearing off; he refused to swear off, paid the taxes that time and went to Philadelphia where he died; his estate amounted to $20,000,000; he had done nothing since the time he left Boston. Q. Did he fare any better on taxes? A. Yes, sir. Q. By fixing it with the officials there? A. No; he was not particularly known, and lived in modest style; he was wise enough not to improve the front of his house. Q. They have very stringent laws there; you say he did not improve the front of his house in Philadelphia? A. Yes, sir. Q. That was one reason he was not taxed? A. Yes, sir; any man is a fool that improves the front of his house. Q. Isn't that a law generally in Massachusetts? A. Yes, sir; but it is administered by different men, and Mr. Hills and hi associates are men of remarkable efficiency in every way; in the town of Lancaster they would vote any man out who interfered with this gentleman's taxes; they would not have it; 4ie mighl emigrate. 151 Q. He was a public benefactor? A. Yes, sir; a philanthropist. Q. In Boston is it not a fact that the assessment is higher in proportion to the value than any other city? A. Not to any other, but very much higher than in the city. Q. Isn't that a safer rule than the one that now prevails? A. Well, I think it would be a good rule 'to assess all real estate at its real fair value; I do not think it would be right to assess it for more than it would sell for at auction, because if the State enforced those rates it could only do that. Q. Of course, the rate would be much less, perhaps one-half; it would be safer? A. Yes, sir. Q. Do you think it would give better satisfaction than to enforce the law as it is now? A. If you speak of real estate; yes, sir. Q. In every county? A. Yes, sir. Q. To what do you attribute the loss of population in nearly one-half of the counties of this State during the last twelve years, because the census from 1880 to 1890 shows a decrease in population in twenty- three counties of this State? A. I believe it to be mainly the result of systems of taxation in this country, but I do not confine it to the system of taxation in this State, taking the whole system of taxation in the United States, I think the pressure is constantly greater upon the rural districts than the city. Q. You mean the national taxation? A. Yes, sir. Q. That the national taxation is the principal cause? A. The whole system of national taxation, which is indirect taxation, I think bears with peculiar severity upon the farming population. Q. Take Lewis county in this State, how would it affect that? A. That is a farming poulation; you ask me the questions; understand I did not volunteer to talk about national matters. Q. We would like to know; there must be something wrong? A. I am very well satisfied that the effect of indirect taxation is to decrease the price of everything the farmer sells; and to increase the price of everything he buys, and as our national revenue is collected entirely by indirect taxation he suffers most. 152 Q. Does that decrease the value per acre of his land? A. Cer- tainly, because his produce sells for less, and there is less encour- agement for people to go there. By the Chairman. Q. Were you familiar with the terms of the biti which was before the Legislature last winter known as the Connolly bill? A. Yes, sir; I had something to do with that Q. What do you think of the provisions of that bill, as to the methods of taxation proposed by it? A. I thought it was a very fair and just compromise between the interests of the State and the city, or the supposed interests of the State and City, recognizing the fact that farmers everywhere are bent upon taxing personal property, and can not be convinced of what is undoubtedly a fact that the more we tax it the larger will be their share of the taxes; it appears to me that the best solution is to separate the methods of taxation and to collect the State taxes in a way satisfactory to the interior of the State, and to collect the local taxes in a manner satisfactory to the people of the locality; that it would avoid this constant friction, the waste of time in every Legislature, and the attempt to pass laws which if passed would be entirely ineffective, and which if effective would produce very little difference in State taxes, because State taxes are relatively small, and that the farmers might have any kind of taxation they wanted for State purposes, and the city could have any kind they wanted for local purposes. Q. Counties, not cities? A. Yes, sir; counties; of course we had to make it for counties, because there *w as some doubt as to whether the Legislature would listen to a proposition to enable cities to separate themselves from counties. Q. You said the farmers could have such taxes as they wanted for State purposes? A. Yes, sir. Q. Didn't you intend to say for local purposes? A. No, sir; I will re-state it, as far as the interests of the farmer conflict with the interest of citizens, as I might call them; that is, men living in cities; the farmer's interest and the fajnner's wishes would be 153 abundantly protected by a system which should be uniform all over the State so far as State purposes were concerned, but as far as the taxation of those counties which include large cities is concerned, there is no reason why the farmers should trouble themselves about the method of taxation which we adopt in those large cities, and the counties which include them; therefore it seems to me that if New York and Kings and Erie, for example, which are substantially large cities, that if they should wish to exempt personal property, as I believe they would, there is 110 reason in the world why the farmers should not allow it as long as those counties pay as large a share of the State tax as they would if they tax personal property. By Mr. Gifford. Q. If a law of this kind had the effect to exempt personal prop erty in the city, what effect would that have on the county adjoin- ing the city; the idea is local option, I believe, to give the bo: in I of supervisors of rural counties the right to fix their basis of taxa- tion; now, suppose you do exempt it in the cities, what will be the demand of the capitalists in the rural districts adjoining those cities? A. If he is a sensible man he will say in Westchester: " It is a very good law, I want you to follow it." Q. Would not that system in the end spread over the entire State? A. I think it would; I think the people would see how good it was. Q. You mean the personal property owners of the different counties would see how good it was to avoid taxation and place it all on the real estate? A. No, sir; I mean that the real estate owners would see the advantage of having an honesit system of taxation efficiently collected by exempting personal property. Q. Please give us your reasons? A. With pleasure; in the first place, there never was, and there is not to-day, and there never can be, a system devised by which direct taxes on personal prop- erty can be honestly and efficiently collected. Q. That simply shows that there is a method through which they can evade the law, but would not a law requiring the col- 20 154 lection of taxes from that property be just; that is the point? A. I question nothing about that; I am a good deal of a man; there are people who think I am a theorist, but they ar< much mistaken; I believe that that which can not be done is a, thing which is not right to do; I believe that is what nature tells, us; we do not know what is right or wrong; we try to do by experience the things we run our heads up against. Q. Would not the relieving of all personal property from taxation increase the taxes upon all real estate? A. Yes, sir. Q. Is it not a fact that the records show in this State that agricultural property is only earning about three per cent while your personal property is earning double that amount? A. That I do not know ; I should think the fanners would all sell out. Q. Don't you know that five-sixths of the costs of all suits in the civil courts are incurred for litigation in defense of personal property, and the additional fact is that that burden is assessed upon real estate, ninety per cent of it, on account of the evasions of capital? A. I have no figures in my possession with which to contradict the statement, I would be willing for the purposes of the present discussion, to concede it, though I do not think it is quite so, but I am prepared to let it pass without dispute; I am willing to proceed upon that assumption; I have said it always has been impossible to collect the taxes honestly upon personal property; eighteen years ago, Mr. George Andrews, chairman of the board of assessors here, I think, cer- tainly a prominent officer conected with taxation, reported that which is just as true now, that nobody need pay any taxes on personal property except widows and orphans and other people whose property was held in trust; the property of widows and orphans is held by trustees, and a good American is never willing to perjure his soul when there is nothing to make out of it, and when trustees can not make anything out of it, they are liable to tell the truth. Q. Do you think that a law to reach personal property is temptation to men to perjure themselves in making their returns? A. I do, universally. 155 Q. Do you think it is any worse for a man to be a perjurer than it is to be a thief? A. Yes, sir; I think it is the distinction of this country and of one or two countries like it, and the race to which we belong; I don't want to be invidious about other races, but it is a distinction that as a race we are more truthful than other races, and I think that is the secret of the primacy that America is retaining, and when it leaves its truthfulness it will go. Q. Do you not think that everything that demands protec- tion at the hands of the law shall be compelled by law to pay its share of the burden? A. I think it does; to proceed with the reason why it is unjust to tax personal property; there is a very great mistake as to what personal property is; two-thirds of all that is commonly called personal property is nothing but a revision of real estate; here Mr. Gould died the other day, and he is reported to have had f 70,000,000 of personal property; if by personal property you mean what the law means really, chattels and things not attached to land, he had not $70,000,000; he may have had $700,000; he may have had two or three millions dollars of property in chattels; I doubt very much; he had nothing like $70,000,000; what did he have? he had large quantities of stocks and bonds secured by mortgage; what is stock? every farmer thinks stock is personal property; the law calls it so, but you can not make a thing personal property by calling it so; stock is nothing but a title to a piece of corporate property, which in nine cases out of ten is real estate; take stock in a railway company; the stock of every railway company in this State represents nothing in the world except the right to run its road over a piece of land; the value of the privilege; in other words, the land value or the ground rent; that is all there is to the stock of any railroad company in this State that I know of ; that is all there is to the stock of nine-tenths of the railroad companies in the United States; the stock represents nothing but the franchise, and that is the privilege of running over a piece of land; all the equipment is paid for in bonds; the depots, the rails, even the gradings are paid for in bonds; the certificates of stock, 156 therefore, represent nothing in the world except the value of the strip of land; take a telegraph company; you would think that is surely a specimen of something that is all personal property, and the telegraph companies are sharp enough to persuade you that the whole franshise of a telegraph company, the whole value o the $80,000,000 of the Western Union stock is nothing in the world but the value of stringing those wires over people's laud. Q. No value on account of the dividends? A. It comes out of that land value which it owns. Q. It is the earnings of the people that pays dividends? A. They are taken out of the people who pay the high prices ro the Western Union company, because the Western Union company owns a practical monopoly over those pieces of land; it is really a real estate value; but when you come to the railroad com panies, every man knows that the stock of nine-tenths of the companies of the United States does not represent one dollar of furniture or equipment, or anything that a business man would call personal property; it represents nothing but the long strip of land over which they have a right to run their cars; take all that out of the list of personal property. By Mr. Creamer. Q. Did you read the will of Mr. Gould? A. No, sir; I did not. Q. I call your attention to it; you say he was not worth any such sum as $500,000 or $700,000; he left $5,000,000 to his sou? A I said he was not worth $700,000 in strict personal property. Q. And $15,000,000 to the other members of the family; it said dollars? A. If you suppose when he died he had in his own possession $500, I know enough of his habits to know that he did not. Q. He always had in his reach? A. How many dollars? Q. He had enough to command all the best attorneys when he wanted them? A. Very true, but not with dollars; I never knew Mr. Gould to pay a lawyer one dollar, but he did pay them with a piece of paper which represented property. 157 By the Chairman. Q. I will ask you to state as briefly as you can whatever would suggest in response to the first purpose of this inquiry; the first purpose of this inquiry is to inquire into the propriety of modifying the present laws relating to taxation, assessment and interest so far as they affect the agricultural, manufactur- ing, commercial, labor, banking and other interests of the State; now, what I would like to have you state to the committee is what modification, if any, you can suggest for the purpose of being embodied in proposed legislation? A. It seems to me that the practical thing to do is to provide a system of taxation of the rural counties which will be satisfactory to them, and a taxation for the city counties which will be satisfactory to them ; it is my belief that if you were to poll the citizens of New York and Brooklyn, a majority of all the electors in each county, a majority of the tax- payers, and a majority of all the owners of real estate in each county, whether counted by the head or by value, would vote tr exempt in those two cities all personal property from taxation, and would be perfectly willing to leave the question to real estate; I am myself much more interested in real estate than in persona) property of any kind, two-thirds of all that I have is invested ir land, but I would vote to-day to abolish all taxation upon persona 7 property of every kind, and put it on my land; now, it seems to me that is the proper thing to do; if the people in the country can not be convinced that is a good thing to exempt it all over the State, and the people of the cities are convinced that it is a good thing, why not collect the State tax in another manner, and let the cities collect their tax from real estate alone as they will choose ; of course I have no authority to make the offer, but it is my belief that if the Legislature of this State were to give to the people of those two cities the choice between the present system or between the expediency of a law which should enable the two cities to exempt personal property from taxation upon condition that the value of real estate for the purpose of State taxation should be increased by one third in order to equalize it with the 158 taxation on personal property in the interior, that the people of those two cities would accept such a law as that. Q. Would you be in favor of a law which would give to the local authorities the power to raise taxes for local purposes in such a way as to them seemed best? A. Within a reasonable radius; I would give local authorities the power to collect taxes by direct taxation only upon the value of real and personal property together, if they saw fit, or upon the value of real property alone, if they saw fit, or personal property alone, if they saw fit, or finally upon ground rights if they saw fit. Q. You are in favor of local option? A. Yes, sir; entirely. Q. How would you propose to raise taxes for the support of the State government? A. As a compromise, by continuing the assessment on personal property in the cities, or by adopting some additional estimate of the value of personal properties in the two cities of an arbitrary character which would assess them at a larger amount than they are assessed now ; for example, here in the city of New York, |320,000,000; I can not state for New York as I can for Brooklyn, but I feel very confident that the people of New York city would rather accept an arbitrary esti- mate of |500,000,000 for their personal property and submit to an assessment as far as State taxes were concerned, but limit this entirely to real estate, than go on under the present system; I am sure it would be wise to do so and I know I can speak for some real estate owners. Q. How would you divorce the two? A. We don't make it up in the city; it is made i^p for us and sent down; the. State says you must collect so much money; why not collect it as you see best. Q. Would you levy that as a separate assessment or embody it all in one? A. It would go to the officers of this city as a separate matter, and then let them collect in the way the people saw fit. By Mr. Hamilton. Q. The total equalized value is fl, 545,000 real and personal? A. The State equalizes realty, I believe, and does not personal. 159 By the Chairman. Q. It has been suggested here, and I think agreed upon by all the witnesses who have preceded you, that the expenses of the general government of the State should be raised from sources other than real estate; what do you say to that proposi- tion; in other words, that real estate should be relieved altogether Tom a tax for the support of the general government? A. I think that would be better than the present .system; I don't think .t is the best system. Q. You think it would be an improvement? A. Yes, sir; a great improvement, provided the country members do not insist upon forcing us in the cities to go on pretending to assess a tax on personal property, when we can not do it and don't want to do it. Q. We are trying to get at the best method of raising money for the expense of the government, without any regard to the views of the country members or city members? A. Then the best method is to make up an assessment for the cities based upon such an estimate of the personal property in the city as the officers shall make, and then to leave us to collect it as we see proper; that is to say upon real estate. Q. The next purpose of the inquiry seems to be as to whether capital has been or is being driven from this State by restric- tions affecting corporations, and if in your opinion it has been what remedy do you suggest? A. In the first place, I think there can be no doubt that a very large number of corporations have, in recent years, been created in other States, which really do business in this State; it seems to me that there is an increasing tendency to that; the reason of that is partly that the taxation is lighter in those other States, and partly for a reason not affected by taxation; that the laws of New York, with regard to corpo- rations, are in some respects very severe and needlessly so; for example, it is the law that every corporation organized under the manufacturing law must have all its stock paid in; every stockholder is liable over again for the amount of his stock, although he has paid in every dollar; I have had several cases 160 of that, separate clients who were sued and who had paid in every dollar; one gentleman we appeared for had paid in $12,000 in actual cash for 120 shares of stock ; the officers of the company- had failed to issue a certificate declaring that the stock was all paid in in cash; my client knew nothing about it, so the creditors of the company held him liable; no stockholder who is not an actual officer of the company can know whether the certificate is true or not; that does not prevail in any other State that I know of in the Union. Q. Has not the stockholder access to the books? A. What does that prove; what do the books prove; the books may contain the lie, as in this case they did; the books had a record of the payment, but it was not true; why should a stockholder be com- pelled to hunt up the books and trace the payment? Q. You can not guard against dishonesty with any oth( method? A. Here is a Legislature that puts a penalty on an honest man; no other State in the Union does that that I know of. Q. You think that is one of the causes that lead to the incor- poration in other States? A. I am sure it is. Q. Do you think it is the main cause? A. No, sir; I thin the lighter corporation tax is the main cause. Q. They pay taxes here? A. That depends upon the shrewd ness of their management; but the tax would be two per cenl here, and two and a half per cent in Brooklyn; whereas it it very easy to settle over in New Jersey where the tax is o three-fourths of one per cent. Q. Now, if the present laws regulating all corporations anc the taxing of corporations are so oppressive that they have drive: corporations into other States, what remedy or modiflcatio under the existing laws, do you suggest so that they would no feel it necessary to go to other States, beyond, of course, wha you have already stated? A. Except the abolition of the on personal property, I think nothing more is needed, excep some greater leniency as to their organization; I think no stock holder should be liable to pay more than the full amount for hi: stock,, particularly those who pay in cash; I think that a mai 161 who can prove he has paid dollar for dollar in cash should be exempted from all further liability, no matter what swindle has been perpetrated. By Mr. Creamer. Q. How is it that the bank shareholders can pay it; would you favor the abolition of the tax on f 73,000,000 of shares? A. I think it is wrong. Q. They pay; the Government must be supported? A. It might be supported by a tax on real estate. Q. Do you think that a tax should be imposed on dwelling property and the homes of the poor, and that the shares in banks should be exempt? A. I think that the tax on the shares of the banks eventually falls on the poor. Q. They have no business with any banks other than savings banks; have they? A. No; it is a tax upon commerce, and every tax upon commerce is indirect, and every indirect tax falls upon the poor. Q. What do you call a tax upon a tenement? A. If you mean a tax upon the dwelling, that is an indirect tax; a tax on the land is not indirect. Q. A tax on sleep and shelter, and a tax on sleep and shelter | should be imposed, and a tax on commerce should not? A. My belief is that all taxes on dwelling houses ought to be abolished. Q. And placed where? A. Placed on the land only, then the | landlord will pay it and the tenant will not. Q. The tenant pays it back to the landlord in the rent. A. The I landlord can never increase his price for the rent no matter how much tax he pays; I know that to my sorrow, because I am a land- lord; if you tax the rent of his house he can increase his rent, because unless he does he won't build any more houses, but no landlord makes land he makes houses; if you tax houses and the (landlord can not get that back from the occupants he will cease. Q. Will it not increase in value year by year? A. It does, as [long as you relieve it from taxation. 21 162 Q. It would still under that system you propose increase in value, would it not, then he could increase his rent in a sum to suit himself; this is your single tax theory; I am not as familial' with it perhaps as I would like to be; I would like to be enlight- ened; will not the value of land increase year after year all over the State as it has done in New York city? A. I hope so. Q. That giftves the power to the landlord to increase the rent A. In increase in the value of land means nothing except an increase in the rent of the land; there is no other value. Q. Then the man paying the rent is again paying the tax because he is liable to pay more rent on that increased val A. An increase in the value of land has not the result of addin taxes to it; the more you tax it the less can the landlord sell it for. Q. Oh, no. A. Excuse me, it always does. Q. You can better pay a high tax than valuable property where there is anything taxed in this city except property that can be sold; often the highest priced property here is the least f] taxed, do you know that? A. In some particular cases that be, but I should not think so generally. Q. It is often the case; yours it but a theory; I would like i the champions of the single tax theory would give us any proo how they get at practically that they talk about so much? A. Th theory of the single tax on gjround rents is very simple; every land| Kl lord charges for the rent of his land as he can possibly get; if is required to pay tax out of that he can not charge any because if he does the tenant can find plenty of other land people won't charge any more; he can not destroy his land he is taxed, and therefore when you tax land, there will alwa be the same amount of land; if you tax houses there will fewer houses, but if you tax the land valuation, there will be ji as much land as before; now, the landlord levies this rent, becaui the population crowds in, and because government and good go ernment has come to that neighborhood; good government is mu*| more the cause of the raising rent, and consequently the value A land, than any other cause; it is very much more important thijU 163 the agricultural value of the land; wherever you find government you find the value of land high; wherever you find good govern- ment you will find the value of land very high; the best kind of government there is in this State is around Wall street, men are safer there than in any other part of the State. Q. You mean their lives? A. I mean their lives and property. Q. How about the lambs? A. The opportunity of shearing them constitutes something of the value of land in Wall street; there are opportunities of making wealth there on Wall street; there are facilities for doing business, and there is almost an ideal government. Q. Good opportunities to lose wealth down there, is there not? A. Yes, sir; there is under every government; that is the reason why the land is so high; the rent of land around Wall street rep- resents the value of the advantages which society gives to chat particular district, and the rent of land is the natural tax which nature itself provides for making all men pay for the advantages they derive, and every good thing that nature does provide; you will find everywhere that the annual rent of land alone without the houses is sufficient to cover the expenses of all kinds of govern- ment, national, State and city and everything else; now, our theory is that this being the natural tax, by which men are com- pelled to pay what they ought to pay, the men who collect the rents are nature's tax gatherers, and it is the duty of the State to go and say: " You have collected much more than you require; we want out of it enough to pay for the cost of government; " the landlords, that is, the owners of the land, receive compensation from the people that live on the land sufficient to cover, and much more than cover all the expenses of all kinds of government; that is the reason why 1 ! think taxation of personal property is unjust; when you have the landlords, and you protect them as you ought to in collecting the taxes from the whole people, far more than necessary for the government, I say it is unjust to turn upon any man, the holder of personal property, or holder of anything, and say: "Pay taxes to us over again;" they have paid their taxes once; they have paid enough to support the general government, 164 State and city governments, and I hold that all double taxation is unjust; may I be permitted to say a little as to how it would bear on general classes; I know the farmers are very much preju diced against this, because they think they are to be taxed so many pennies on each square acre of land; the idea is that the ground rent shall be ascertained, and the tax apportioned to the ground rent in this State in order to get the revenues of ths State and city, you would have to take twenty-five to thirty per cent of ground rent. Q. Is not that the idea of the State owning the land? A. sir; we are entirely opposed to the State owning land. Q. That is socialism? A. Yes, sir; and I do not believe In tha Q. When you say our theory, to whom do you refer? A. I mean the multitude of gentlemen with whom I have the honor of acting; single tax men, and among them are men very prominent in public life, and presidents of great institutions in these cities, and I violate no confidence by saying that General Christian of Brooklyn is in thorough accord with me in those views; we include among our number men who own land, and men who own person: il property of all kinds; I am glad to say also that we include in our number a very large number of the poor people of this country; that is the people I am interested in; in my judgment we can get a majority of the people of New York and Brooklyn to indorse ou views to-day. Q. A majority of the committee desire to adjourn at 5 o'clock, if you have a statement, would you give it to us to put on record? A. I want to say as to the farmers that this form of taxation would fall upon the farmers in this State at the rate of about one dollar per acre per annum; for the prosperous farmer that would represent all his taxes; that is a great deal*too much for the], farmer, because he would not have anything like that; a farmer could afford to own land within the limits of a city, and would not have to pay that; in the country it would represent a tax oi about thirty cents an acre for all his taxes; that would cover everthing, his school taxes and everything else; in the city, the tax on a business place, such as that where I carry on my busi 165 ness, would be at the rate of, instead of thirty cents an acre, about $3,000 an acre; that is the difference of the bearing of this tax upon the farmer and property in the cities; of course, in the outskirts, those taxes would be perhaps only $100 an acre; nearer the center it might be $500 an acre; I do not think there is a farmer in the most prosperous part of the State who would be called upon to pay more than one dollar an acre for the best farm in the State. By Mr. Gifford: Q. Are you aware that if he was called upon to pay that it would be double his present taxes? A. Not a very prosperous one; JI mean land that is worth $100 an acre; it must be remembered ..., uu . the farmers' house would be taken out of the valuation; all his improvements, his fences, his grass, his crops; everything f that kind would be exempt; now, the taxes would be in the anterior of this State from one-half to three-fourths of one per cent; n the cities it would be about two to two and one-half per cent; i/ou can estimate what it would be without crops, fences and every- v ing of that sort. Q. What value would land have without any improvements m it? A. The value of the land on the corner of Pine and r illiam street, if you would tear down the building, which repre- mts only one-eighth part of an acre, would be $250,000. Q. Is 'it not the buildings upon land that have made the value this city, or is it simply land? A. No; it is the people that jome to the land; if you swept the whole of this city with fire, as uick as the land got cold we should begin to build again, and the fand would be worth just as much, rather more, because there r ould be an opportunity to put better buildings on it; after the Lty of Chicago was burned down the value of the 'land was greater after the fire than it was before; that was notably the after the great fire of London 200 years ago. Q. Are you not willing to admit that any good farm with splendid mildings would be worth less if all those buildings should be lestroyed? A. Certainly. 166 Q. There is a value in the buildings? A. Yes, sir; and there is a value in the New York buildings ; we are talking of the value of the ground underneath; I will submit my views in regard to this whole matter as follows: The invitation to appear and testify before this committee, which has been extended to me, I under- stand to be given to me, not especially as an individual, but as a representative of that very large and increasing class of citizens who favor the abolition of all taxes upon personal property andj upon improvements on land, and the collection of taxes exclu- sively from ground rents; but I also understand that, as this com-| mittee is appointed for the purpose of framing and submittm* to the Legislature practical propositions for Immediate actionl you desire to receive information as to our views concerning questions which are to-day within the range of practical politics;] we freely admit that our opinions do not yet command to then full extent the conscious assent of a majority of voters in anyl county in the State; although we know that they are held byj a very large and constantly increasing minority, but upon on< article of our fiscal creed, namely the abolition of all taxation! upon personal property, we believe that a large majority of all the people in New York and Brooklyn, who have any opinion| upon the subject, agree with us, we are well convinced that, if popular vote could be taken upon that issue, the abolition of taxa-l tion upon personal property would command the support of a large! majority of all the electors in each city, a large majority of all the taxpayers, a decided majority even of the owners of real estate, and an overwhelming majority of all intelligent citizens who have given any serious consideration to the subject; now, ad a matter of immediate practical politics, we are not even asking that the Legislature shall abolish the taxation of personal prop erty throughout the State; our demand is limited to the simplt proposition that each county and possibly each city ii the State, should be left free to decide for itself whether per sonal property shall be taxed or not, while we are preparecj to assent to any arrangement of taxes by which the taxpayers oi counties who choose to assess personal property shall be assured 167 that counties which do not assess it, shall continue to bear the same share of State taxation which they would bear if they did. We are not asking that taxpayers in cities shall be relieved as a whole from any share of tax burdens which the State for its p. own purposes of revenue, has put upon them in the past, or may a choose to put upon them in the future. Our only request is that each locality should be allowed to decide for itself how its quota d of taxation should be raised. But, before taken up this question, it seems absolutely neces- sary to state some of the reasons why the people who live in the large cities are opposed to taxation of personal property, and \i why the owners of real estate in those cities have concluded that i|it is better for them to pay all the taxes assessed upon those cities, rather than to attempt to collect any part of them from ir I personal property as such. In order to talk to each other to any purpose, we must first jy agree upon the meaning of the things which we are talking about. ie|What do we mean by personal property? How do we propose to discover it? What success have we had in discovering it in the past, and what success can be hoped for in the future? Personal property may be divided into two classes, chattels and credits. Under the name of "credits" are to be included, not only book accounts, bills, notes, bonds, mortgages, bank deposits and the like, but also shares of corporate stock and ill) probably shares in any partnership. Our chattels, properly speaking, are only those things which we have in our own imme- diate custody, or on special deposit, in the custody of our agents, who have no right to use them, even for a moment, for their own purposes. It is universally admitted that, in all civilized countries, "credits" form by far the larger portion of personal property. It is easy to see why this is so. Credit may be given for more than two-thirds of the value of both chattels and real estate; and it is continuously given to the extent of at least half the value of both. There are many who believe that the wealth of the community is actually increased by credits, to their full JOS amount. This is a doctrine dear to the farmer's heart, as justify- ing all his favorite theories of taxation. It is easily tested. Let the owner of $2,000,000 worth of land mortgage it for half itn market value. That will add $1,000,000 to the national wealth. As loans might safely be made upon this mortgage to the full face value, let the first lender pledge it as security for another loan of a million, the second lender pledges it for another 1,000,000, and so on, until promissory notes are outstanding to the amount of $100,000,000; all secured by the original mortgage for $1,000,000. All this is an actual increase of national wealth on this theory; for every note is perfectly good. It would only require a hundred loans to increase our wealth fifty times over. The philospher's stone and Fortunatus' purse are completely outdone. But what says plain common sense? Debt can not increase the general stock of wealth. A loan secured by the pledge of a chat- tel, divides the real title to that chattel between the borrower and the lender, giving to the lender the meat and leaving to the borrower whatever may cling to the bone. The mortgage of land, under the common law, transferred the actual ownership of the land to the mortgagee; and although this rule has been nomi- nally abolished, the bottom fact is that a mortgagee still has the better half of the ownership. He is the real owner of the land, to the extent of his loan; although he can only enforce his owner- ship through a sale of the land. Or, to put it in another form, the title is divided between the mortgagor and the mortgagee; the latter having the cream and the former the skim milk. The same thing is true concerning every form of debt. Promis- sory notes, book accounts and debts of every kind, are of no value whatever, except so far as they constitute a good and readily enforceable claim against visible, tangible things, in the hands of the debtors. And to this extent, property in the hands of debtors really belong to their creditors, although the latter have no right to seize anything, until the debt is due. If the debt stands against no tangible things, it is worthless. If it does stand against such things, it diminishes the general wealth as much by 169 its lien on those things, as is adds by its own face value, and therefore it still adds nothing to the general wealth. Considered from the tax collector's point of view, it may be conceded that, as he has a fixed amount to collect, the total burden of taxation will not be increased by counting wealth twice over. It may therefor be further conceded that, if all forms of credits could be effectually reached, and taxed, the tax would simply be divided among those who divide the ownership of things, and so no injustice would be done. Assuming, for the moment, that any form of personal property ought to be taxed, it may also be assumed that the double taxation involved in the taxing credits would do no harm, if they could all be reached. On the other hand, what advantage is there in doing this, if it can be done? Why take the trouble to collect taxes from two, three or four persons, on account of one piece of property? It increases the cost of collection, without the slightest benefit to the State; and it confers no benefit upon the taxpayers. "The borrower is servant to the lender." He must eventually repay whatever tax the lender is compelled to pay upon the loan, if the tax is impartially laid and fully collected. But is it possible to collect taxes upon credits, impartially and fully, or even to approximate to such a result? It would at first seem possible to ascertain the amount and value of the stock and bonds of domestic corporations, especially of railway companies; because they can be compelled to make full disclosure of their aff aii-s; they must keep regular and full books of account; and their officers have not usually such an overwhelming interest in their finances as to make them willing to run great risks eivly for the sake of evading corporate taxation. This is far too iberal a concession; because immense blocks of shares are now O f|owned by individuals, who either personally manage the corpora- )rg |tions in which they are interested or would make it a condition f the appointment of managers that they should commit whatever ount of perjury could prudently be used for the purpose of ading taxes. It is idle to say that managers of such easy con- -Jences will not be trusted with the administration of great 22 170 affairs. It is notorious that bribery, upon the most extended scale, is habitually practiced by managers of corporations, con- ducted otherwise with more than average integrity; and we are all familiar with the story, undoubtedly true in substance, of the railway president, who told all the other members of a presiden conference that he would take the word of any of them, as a gentle man, for a million dollars, but, as a railway officer, not for cent. . Assuming, however, that the direct taxation of corporations could be successfully enforced, this could only be done in those States in which their business is and must be carried on. The stock and bonds of a New Jersey corporation are often owned entirely in New York; but in nearly all cases they can only be taxed in New Jersey. If the corporate property is situated in New Jersey, the same result would be secured by taxing the property itself. If that is done, the stock and bonds should be exempted, or else, if they are taxed, the visible chattels and real estate of the corporation should be exempted. Is not the natural and sensible method to tax the things and exempt the stock? The federal constitution stands in the way of taxing corporate bonds, by confining local taxation to bonds held by citizens of the taxing State. If such taxation became heavy, it would soon be found that all bonds of New York corporations were held outsid of the State of New York. Turning now to the case of individuals, it is certain that a ve large majority keep no detailed accounts of their property o income, and that a majority of those who do would cease to do so, if by that means only they could avoid excessive taxation. The owners of credits everywhere use their utmost efforts conceal them from the assessor. Where the law requires swo returns, creditors very often make no returns, submitting to a] arbitrary law which may be imposed upon them. In the vas majority of cases, the returns are false. Some, knowing that th< assessor would not believe them, if they denied the possessior of any credits, admit a part of their holdings; others deny then altogether. 171 If is true that large amounts of credits are reached by taxa- tion in many States; but the assessment is generally made by guesswork; and it is nowhere made with any fairness or equality. By far the larger part of all credits everywhere escape from taxation; strictly honest holders pay outrageously disproportion- ate share of the taxes; the timidly dishonest or highly ingenious pay a small share; and the utterly unscrupulous practically none at all. Taxation of Visible Chattels. Some writers on the subject, who fully admit that invisible personal property ought not to be taxed, nevertheless insist that everything should be taxed, which can be seen and touched. They see clearly that mortgages represent real estate, that promissory notes and book debts represent the dry goods, groceries, metals or the like, for which they are given, that the stock of a railway company represents the railway and its equipment, and that there is no sense or justice in taxing both the things which are represented and the pieces of paper which represent them. They see, too, that bonds and notes can be hidden, and that any attempts to tax them must result in doubling the burden of simplicity and honesty and exempting shrewdness and roguery. But they insist that personal property, which can be seen and handled, ought to bear its share of taxation and can be reached effectually and equally. Let us first consider what articles of personal property can be seen and touched, so as to be reached by faithful assessors. The results of actual assessments, in States which adopt stringent methods of personal taxation, show that these "visible things" are principally animals, stock on hand of merchants and manu- facturers, household furniture, farm implements and carriages, in the order named. As the only reason for taxing these things, while letting invisible property pass, is that the assessment of invisible property must depend upon the oath of the taxpayer, we must inquire how far those visible articles can be fairly 172 reached and valued by assessors, without depending upon the statements of their owners. Judged by this standard, it is manifest that the property farmers would be more easily reached and more accurately value by honest assessors than the property of any other class. F; animals and implements are always readily open to inspectio: Their value is generally nearly uniform. Most farmers pay about the same prices for their horses, cattle, plows, tools and furniture. A few own highly expensive cattle; and these will escape full assessment, just as the very rich will, in any line of business. But the mass of farmers own things which their neighbors ciu value easily. Very different is the case of merchants. What assessor, however honest and competent, can personally value all the stock of even one grocery store, not to say the stock of all stores in his district? Fancy an assessor, making a persona) appraisal of the stock of fifty drug stores, a hundred dry goods stores and as many groceries. In one store, there are hundreds of different articles, at different prices, by the yard or the pound or the gallon. Bales of goods lie side by side; some worth four cents a yard, some ten cents, some two dollars. The differ- ence between goods worth one dollar a yard or two dollars is often imperceptible to the eye of any one but an expert But how can an assessor have time even to open all these bales to look at them, much less judge accurately of their value? AH the assessors of New York city could not approximately value Clailin's stock alone, without relying upon the word of Claflin's clerks. Therefore the stock of merchants and manufacturers would be assessed upon the valuation given by themselves, as in tact it is now. Thus the assessment of " visible and tangible property " ID these important cases is made and must be made in exactly the same manner as the assessment of bonds, notes and other invis- ible property, resulting in a double or treble burden upon the simple and truthful, as compared with their unscrupulous neighbors. The same thing is true as to household furniture. Farmers 173 have a certain average quality of furniture, the value of which can be ascertained far more nearly than the value of that of well-to-do city residents. In proportion to the wealth of the taxpayer would be the failure of the most honest assessor to estimate the true value of his property. Anybody can estimate the value of a two dollar chair, but few indeed can tell the difference between a chair costing fifty dollars and another costing 150. To many assessors there would be no apparent difference in value; to none would the fair difference seem to be more than twenty dollars or thereabouts. In many household articles, such as bedding, for example, a difference of 200 per cent in cost is attended with no outside indications. Many honest assessors would reckon the value of a f 15,000 set of furniture as no greater than that of a set costing less than half the price. Testimony of Experience. These theories have been fully proved by actual experience. European governments, for several centuries, persisted hi the efforts to appraise and tax all classes of property, real and per- sonal, upon an equal footing. The ancient tax-rolls of England enumerate the precise number and value of beds, tables, chairs, pots and pans of each taxpayer. The English tax, now called the land-tax imposed in the seventeenth century, was in terms a tax upon all real and personal property just like that of New York. As late as 1827 a trifling amount of personal property was assessed and taxed under this law. The only reason why such property dropped out of the assessment -rolls was that it became increasingly impossible to reach it. Practically it dropped out at a veiy early day. A similar experience in all Europe led to similar results, and the attempt to assess personal property, whether visible or invisible, otherwise than by means of an income tax, has been universally abandoned. But the citizens of our own favored land, confident in tlie power of the American eagle and of Kepublican institutions, despise the teachings of European experience, and resolutely per- 174 sist in the taxation of personal property. They have achieved a certain measure of success. The official assessors estimate that they have reached nearly sixty per cent of such property in New England, fifty per cent in some western States and fifteen per cent in New York. If, by "personal property" only visible chattels were intended, this estimate might be correct. But, as this is not intended, the estimate is excessive. In no large State 1 does the assessed value of personal property materially exceed half the assessed value of real estate or amount to one-third of its actual value. In some States, Alabama for example, the roll of personalty is swelled, by including in all its railway values. But it is everywhere conceded that personalty, if defined as including all forms of liens and loans, fully equals realty in value. It would be strange if it did not; because such a definition includes all chattels, all debts incurred in the purchase of chattel?! and all debts which are made a charge upon land. This is the value which our legislators strive to tax and it would be too liberal to allow that they reach one-third of it anywhere. Long study of all accessible statistics has convinced the writer that the real value of the bare land is almost exactly equal to the value of all improvements upon it, attached to the ground, and that the value of actual, visible chattels is about the same. In other words, the wealth of the country is divided into three nearly equal parts, land improvements and chattels. This appears to be the fact in every civilized country; and the reason, in part, may be readily discerned. The value of land consists of nothing whatever, except a power of exacting tribute from those who labor on land. The fruits of labor, in which alone this tribute can be paid, consist solely of improvements and chattels. It is impossible that the value of land should exceed the other values combined; because that would mean that the landlords gctj more than there is to get. In the struggle between the landlords, j the capitalist and the laborer, we might reasonably anticipate that the landlord would not get more than one third the whole net] produce; and this appears to be the actual average. The reason! for an equal investment in land improvements and in chattels] 175 is not so easy to see; but the fact is verified by all accurate valuations. But nowhere are actual chattels found by assessors, to anything like the value of the land. Taking only places in which there are assessment laws rigidly enforced, Boston discovers visible chattels to the amount of only two and one-half per cent of its real estate, Ohio to only fifteen per cent, Minnesota to only twenty per cent; whereas, in each case, the proportion should be fifty per cent. Here, as in every other instance, it is noticeable that the proportion of chattels discovered by the assessor is greater and greater, as the proportion of farmers to the entire population increases. The utter failure of the American system of taxing personal property was conclusively shown by our illustrious friend, David A. Wells, in his New York Report of 1871. The writer has taken up the thread, since that time, in various papers, especially in an address before a legislative committees in Ohio, .in 1889. It was there shown, from official figures, that the rigid tax laws of Ohio and California ridiculously failed to reach personal property, except in the rural districts. The sworn returns of taxpayers showed that, in five years, Ohio had lost 4,000 watches, 30,000 carriages and f 11,000,000 in cash; the inroads of poverty were most marked in Cincinnati, which lost one-fourteenth of its watches, nearly one-third of its carriages, one-fourth of its cash and one- eighth of its credits. In like manner, the adoption and stringent tax laws in Cali- fornia, resulted, after six years, in apparent loss in San Francisco, of two-thirds of all its cash and one-third of all other personal property. Nine-tenths of California, while abounding in cows, did not possess a pound of butter; fifty counties had crowds of bee- hives, but only four had any honey; and four-fifths of that State so falsely reported by the census as a great wool-growing region, did not produce a pound of wool. Experience of Boston. According to unanimous testimony, the city of Boston is so fortunate as to possess a board of assessors, in whose honesty and ability every one has confidence. Those assessors are armed by 176 law with almost despotic powers of search and with absolutely despotic powers of valuation. They can ransack every man's books, and they can disregard all the evidence when they have finished. After exhausting all their powers of inquiry, chey are allowed to meet in secret, to go through a progress of arbitrary assessment, fitly known by the name of "dooming." All these powers are fully exercised. Their last return of details, being ior the year 1889, shows that the whole amount of taxable personal property which they were actually able to discover was $39,000,000, exclusive of bank stock. Being dissatisfied with this estimate, which was all that was justified by any facts which they can state, they proceeded to multiply it four and a half times by a nitre guess. In their dooming chamber they guessed that personal property, other than bank stock, ought to be valued at $186,000,000' and the citizens of Boston were compelled to pay taxes upon thai amount. Could anything be more monstrous or more absurd than a system of taxation which, even when administered by phe- nomenally honest and competent men, produce such results? The items of which the $39,000,000 actually discovered consist are in the following proportions, in round numbers: Visible to assessors, $14,570,000 or thirty-seven and one-half per cent; invis- ible to them, $24,650,000, or sixty-two and one-half per cent. Almost the whole of the things visible to Boston assessors consisted of merchandise and machinery. Taxes upon these, of course, if equally distributed, simply increased the cost of goods to consumers, just as excise duties on whisky increase the cost* of whisky to drinkers. But, it is manifest from the arbitrary increase made by the assessors, these taxes were not equally distributed; and, therefore, one large section of taxpayers was robbed for the benefit of the other section. For unequal taxa- tion upon producers makes it impossible for those who are taxed beyond their just share to recover such excess from their cus- tomers, while those who are taxed below their share recover all which they would have paid under strictly equal taxation. It fol- lows that those who are taxed most are simply plundered, undor forms of law, for the profit of their competitors who are tax^d 177 least. If Havemeyer and Spreckels were the only refiners of sugar, and both were taxed equally upon their production, both would recover the tax from their customers; but if Havemeyor should be taxed while Spreckels went free, Spreckels could under- sell Havemeyer, who would be practically robbed for Sprockets' benefit. Now this result, in a greater or less degree, invariably follows every attempt to tax personal property. Passing to the invisible property assessed in Boston, we lind that |4,000,000 consisted of cash, $7,700,000 of stock in foreign corporations and $12,000,000 of debts, of which two-thirds were secured by mortgage on real estate. Thus more than one -half of all the personal property returned for taxation consiste-1 of mere paper titles to or liens upon other things, which were taxed somewhere else. If this is not double taxation, what is? See how the system works. Smith forms a little corporation to own a railroad in Vermont. The railroad is fully taxed there. But Smith lives in Boston; and, as he owns all the stock, say f 100,000, and stock in a foreign corporation is assessed there, he is taxed on the whole amount a second time. He mortgages the road for $100,000, and spends the proceeds on improvements. This additional value is taxed in Vermont. But he sells the mort- gage bonds to Brown of Boston, who is then taxed again upon the whole $100,000 there. Brown pledges the bonds to Jon-^s as security for a loan of $100,000, and forthwith Jones is taxed upon the whole amount. This makes three taxes upon only one piece of real property. This is the way in which the wise men o"f Massachusetts mean that their laws shall work; but, as the tax- payers revolt against such injustice, and protect themselves in the only way open to them, to wit, by hard swearing, Massa- chusetts counteracts that evil by increasing everybody's taxes fourfold, on the assumption that all have made false returns alike. At all events, this is how they do it in Boston. Summary of Practical Objections. All that we have said will be doubtless dismissed by some members of the Legislature with the remark that we are mere 23 178 theorists and not practical men. The truth is precisely the oppo sife. It is the advocates of the personal property tax who are theorists, and we who oppose it, are the practical men. Not only do we include among our number a multitude of persons whc own more real estate than they do personal property, and far more taxes upon real estate than they ever did or ever will pay upon personal property, but even those of our number who pay no direct taxes at ah 1 are thoroughly practical in the true sense of the word. Thousands and thousands of men, and hun- dreds of legislators, insist that personal property shall be taxed and can be fairly and equally taxed. But this is all theory upon their part. Not one of them can devise any plan by which half of it can be taxed at all, or by which any of it can be taxed with even a decent approach to fairness and equality. Nobody ever succeeded in doing this, and nobody ever will. The idea of an/ decently just system of taxation of personal property is a theory which stands no more chance of ever being put into practice than a railroad to the moon. Our first objection, therefore, and one which to our minds is conclusive, is that the thing can not be done. We have stated a few of the reasons why it is impossible to collect a tax upon personal property, bearing with uniformity and equality upon all such property; but it ought to be enough with all sensible men to show that universal and unbroken experience, extending over many centuries, has proved that it never was done and never could be done. It is known with certainty that the experi- ment had been persistently tried for nearly 2,000 years, and that it has always failed to accomplish anything but gross injustice to develop fraud and perjury, to relieve liars and bribers from taxation and to cast its burdens mainly upon those who too Jionest to lie and too poor to bribe. The Romans had tre- menduous advantages for the efficient collection of personal taxes, such as our Legislatures can never have. The Roman governors had sense enough to know that such taxes could never be coli lected w r ith any approach to efficiency, without the use of tht scourge, the gridiron and the cross; and they used these gentle 179 appliances freely. The Egyptian ta,x governors collected all their taxes by the use of the lash and the bastinado until brutal England tyrannically interfered and deprived these persons of the privilege of annual scourging. In these United States, we are too squeamish to flog each other into the payment of taxes; and, therefore, our Legislatures have exhausted their ingenuity in inventing schemes for the punish- ment of our souls by putting a premium upon perjury, official and individual. The personal property tax is not collected with the slightest approach to equality, justice and fairness, in any State, county or town in the Union. It remains just as true now as when it was declared in the Constitutional Convention of 1867: " There is not an assessment-roll made out in this State that does not both tell and work lies." But what is true of this State is equally true of other States. There are other States in which the assessments of personal property is very much larger than it is in this State; but that result is gained by relieving a few officials from the disagreeable necessity of telling lies, and involving many thousand citizens in that predicament. And when all is done, the testimony of assessors throughout the Union is unanimous to the effect that a large and constantly increasing proportion of personal property escapes taxation, and that, more and more every year, the burden of taxation falls upon widows and orphans, or upon those who are too honest or too ignorant to make out false returns. It is roughly correct to say that the amount of perjury increases according to the square of the increase of efficiency in the law. This leads us to say in the second place that we object to all ,ttempts to tax personal property, upon the ground that they result in enormous perjury and fraud, most frightfully corrupting and demoralizing to the whole community. We are opposed to any method of taxation which can only be enforced by giving payers a choice between payment or perjury; because every- [y knows that under such circumstances perjury will become wide-spread and truthfulness which lies at the foundation of uman society, will become undermined. 18) In the third place, we maintain that an immense amount of what is called personal property, is nothing in the world but a v paper title to real estate; and there is no more sense in taxing it, than there would be in first taxing real estate upon its value-, secondly taxing the deed to the real estate over again, as an independent piece of property and of the same value, and thirdly, taxing the record of the deed in the register's office, as still another independent piece of property of the same value. Every- body sees the absurdity of this; but few appear to see the equal absurdity of precisely similar methods of taxing personal property. Thus while every State taxes the actual possessions of railroad companies within its borders, many States tax, in addition thereto, the pieces of paper which are called certificates of stock in these railroad companies, and all the States tax pieces of paper j called bonds of these companies, which represent nothing but a lien upon the real estate which has already been once taxed. The obvious fact is that all the stock and bonds of a railroad j corporation, other than those which have been issued for itsj rolling stock and furniture, represents simply and purely real estate. The stock of more than nine-tenths of all the railroad companies in the United States represents nothing but the value of the right to use the strip of land over which the railroad runs. All the costs of the improvements upon that land, including not merely stations, rails and ties, but also the embankments and gradings, have been paid for out of the proceeds of mortgage bonds. Where is the sense or justice of taxing the stock and bonds over again, if the lands, improvements and equipment] have been once taxed? Precisely the same thing is true about telegraph and telephone companies. The vice of the present j system of taxation is that, while these corporations have enor mous privileges over land, which represent land values or ground;] rents just as surely as does the ownership of a lot of land in the city; the farmers, in their wild anxiety to tax personal property never think for a moment of taxing the telegraph and telephone companies, as they ought to be taxed, upon the value of theii privileges in passing over land. Every lawyer knows that th< 181 air above the land is in law a part of the land itself; and the telegraph wire, which hangs in the air, is as truly making use of land underneath, as if it were laid in a subway. Street railways have enormous privileges over the lands of cities ; which constitute the entire value of their stock and a large part of their bonds; and they ought to pay regular taxes upon these land values. But the farmers never think of this; because they are simply bent upon making stockholders pay larger taxes upon pieces of paper, forgetting that these little pieces of paper can not readily be discovered, while the farmers' own horses, cattle, plows and tools, are easily found by the assessor. In the fourth place we maintain that money ought not to be taxed, and that any attempt to tax it is especially injurious to farmers and other residents of the rural districts, who are the only persons that desire to tax it. So far as what is called money consists of paper, it is clear that all this paper is mere evidence of debt. Treasury notes represent a debt of the United States; and bank notes represent debts of the banks. If the property, which is represented by these notes, is taxed, it ought not to be taxed a second time by taxing the notes themselves. If that property is not taxed, that only proves that the Legisla- ture, with the strongest desire to do so, has never been able to invent any method by which it could tax that property; and if the Legislature is not able to find and tax the houses, merchandise, food and furniture against which these notes were issued (these being things which can not be put out of sight), how absurd it is to try to tax the notes themselves, which can so easily be put out of sight. Gold and silver coins ought not to be taxed, because they are as important to the prosperity of the community as blood is to the life of the individual. Taxation tends to drive coin out of the State, and if any successful method of taxing all the coin and other money in the State could be invented, all our money would be driven out of circulation and a frightful prostration of business would ensue, in which none would suffer more than the farmers. Farmers always want to get high prices for their produce; and 182 no more effective scheme could be devised for cutting down the prices of those products to the lowest point, than a tax which should really reach every dollar of money in the State. Even under our present imperfect system, the banks, in whose hand 3 are substantially all the coins, have been driven to reduce their stock just as much as possible; and a really effective and uniform system of taxation upon money would ruin every farmer in the country. Moreover, money of every kind, including coin, is nothing but a representative of wealth and not wealth in the best practical sense. Gold, in the form of coins, is of no earthly use, except for the purpose of exchanging one kind of merchandise for another Nobody can eat gold coins, or wear gold coins, or build a house with gold coins, or make a chair with gold coins, or, in short, pin them to any use of any kind whatever, so long as he keeps them The only purpose for which money is any good at all is the pur pose of getting rid of it as quickly as possible, for something more practically useful. Accordingly, no man who is not partially insane, ever carries any large amount of money with him, or keeps it in his house. The very richest men have the least amount o: money. Mr. Eussel Sage, who is reputed to be worth $50,000,000 never possesses so much as five dollars in actual money, if he can help it. He is supposed to have a largje amount of money in banks, but he does not have a dollar of his own in any bank. All which he has, is the promise of banks to pay a large sum to him whenever he wants it, but, as a matter of fact, he never doee want it and never takes possession of it. In the fifth place, we maintain that as nothing remains in the way of personal property, except animals, merchandise, furniture and the means of transporta,tion, such as wagons and cars, there is no sense in attempting to tax these things. We have showi that merchandise can not be taxed with any kind of uniformity justice or equality. Even if it could be so taxed, the tax woulo be added to the market price, and it would be distributed aiuon< all the people in proportion to what they use, and not in propor tion to what they own. Farmers mechanics and laborers generally 183 would, therefore, pay a vastly larger proportion of such a tax than would rich men. Every loaf of bread would be made to cost more, and since poor men eat as much, or more, bread than rich men do, poor men would pay a larger proportion of such a tax. It is obvious that a tax upon animals and wagons would bear very much more severe upon farmers than upon any other class in the community; and, in experience, this is found to be a fact. Taxes upon furniture also, as we have (already shown will always be laid much more heavily upon farmers than upon other people. But it is hardly necessary to say more upon this point for there can be no doubt that if the farmers of this State once understood that the only kind of personal property which could be taxed was furniture, animals and wagons, they would be unanimously opposed to any such tax. The Question of Justice. I have been asked by one of your committee whether justice does not require that personal property, which gives rise to most of the litigation in this State, and which otherwise requires the service of the State for its protection, ought not to pay its shares of tax accordingly. This raises the question of justice, and, of course, leads us at once into that region of theory for which most advocates of the personal property tax express great contempt. We, however, do not sympathize with this contempt and therefore believe that the question is a fair and important one. Our answer is that the laws of nature take care of this matter of taxation, and that personal property is taxed to the very last cent of all which it ought to pay by a natural law which needs no statute for its enforcement. Nature compels every owner of personal property to pay a tax, which is called rent, and which everywhere, at all times, and under all circumstances/ exacts from every owner of personal property the full cost and value of all the benefits which government can give. Wherever personal property accumulates in great masses, the rent of land is exceed- ingly ,high. Wherever there is very little personal .property rent is very low, and where there is no personal property at all, 184 there is no rent. The difference between the enormous annual value of the land on Manhattan island, and the small annual value of the land in Schoharie county is proportioned with wonderful accuracy to the difference between the values of personal property in the two counties. Land has no other value than such as rent, either collected in the present, or expected in the future gives to it. And every penny of rent is collected out of personal property, since there is nothing else out of which it can be paid. Personal property, therefore, not only pay its share of taxation, but it pays all taxation. Nature takes care of this, and the interference of Legislatures only spoils the work which nature has already done. Personal property, we repeat, pays a t which is more than equal to all the taxes which this, or any other government, requires. It pays them to the owners 1 of the land; and all which the State has to do, is to collect from the landowners enough of the tax which the owners of personal property Mve paid to them to defray the expenses of government. Our Practical Proposition. We have thus answered very briefly all the reasons which, we have ever heard assigned for any attempt by Legislatures' to collect this unnatural tax from personal property. Nevertheless, if the farmers enjoy taxing themselves over two or three times, it is not for us to object. All which w r e ask is that the people of those counties which do not take the same view, shall be left free 10 choose for themselves; and at the same time, we do not ask that their burdens shall be lightened in the smallest degree. We are willing that they should pay any proportion of State taxes which the people of the entire State may think fair and just. We only ask that, when their quota of taxation is assigned, they shall be allowed to collect it in their own way. Our proposition, then, is that each qounty be left free to decide by a vote of its own citizens, whether the taxes which it raises for local purposes shall be collected from both real estate and personal property, or from real estate alone. What reasonable objection can there be to this request? It makes no difference, 185 whatever, to the taxpayers of the interior, how we in New York nd Brooklyn collect our local taxes. They will neither ain or lose one dollar, whether we collect our taxes rom real estate alone or from personal property alone, or rom both real and personal property. Our local taxes constitute robably nine-tenths of all our taxes. So far as the portion which we ought to pay to the State is concerned, we are willing that that shall be ascertained in the present clumsy fashion if you gentle- nen of the interior prefer; or we are willing that it should be iscertained in some other manner even more favorable to you. Since you believe that you can put thumbscrews in effective opera- ion in the interior, so as to discover a large amount of personal )ropt-rty and tax it all over again, we would be willing to com- >romise by adding for State purposes as large a proportion to in local yaluations of real estate as your interior valuations of )ersonal property bear to your valuations of real property. Thus, o illustrate, let us suppose that New York and Brooklyn should vote to exempt all personal property from taxation, while the est of the State pursues the old law. Let us suppose that in he interior counties, where personal property is assessed and axed, it appears that, taken together, personal property is valued at twenty per cent of all the real property. We should be willing o have twenty per cent added to the value of real property in ew York and Brooklyn, for the purpose of ascertaining the hare which we should pay of State taxes, provided we were eft to collect these taxes in our own way. Under such an irrangement, it is perfectly certain that our two cities would >ay a, larger share of such taxes than they do at present. And 'et we taxpayers would be glad to accept such an arrangement, )erause we know very well that the business of the two cities would so greatly prosper and value of real estate increase so much that we should be benefited quite as much as you would be. Although we have undertaken to answer at such length the question so constantly put to us, "Why should taxation upon )ers<>nal property be abolished?" yet our real answer is to ask another question: "Why should the citizens of New York and Brooklyn be compelled to tax personal property for local pur- 186 poses against their will?" Why should the farmers of the interior compel us, who live in cities, to maintain a system of taxation which we do not believe in, which greatly injures UB, and which does not benefit them in the smallest degree? Conclusion. In conclusion, therefore, we ask that the local authorities of each county be left to decide for themselves how they will col- lect their own taxes. We do not ask for any lessening of the share of taxes which we now pay; on the contrary, we offer to pay more to the State than we do now pay. We ask for the right of home rule and self-government. We ask that methods of taxation, which may perhaps suit the people of other counties, shall not be forced upon us to our great injury, and without any benefit to them. In this demand, we represent substantially all the wealth and intelligence of these two cities; all of the taxpayers who have given public expression to any views upon the subject; all per- sons who have given to it any careful study; a large majority, at least, of the owners of real estate, and finally, that great mass of intelligent laboring men, out of the fruits of whose labor, in the long run, all taxes must be paid. We admit that there are many among all of these classes who have paid no attention to this subject, and who have suffered from the present unjust and barbarous methods of taxation without knowing what oppressed them. But we can assure you that the number of those who are awakening to a comprehension of this subject, is continually growing, and that there is no party in opposition to those views, to be found in these two cities, except those who have given no thought to the subject, and who are simply opposed to a change which they do not understand. We ask you to frame a measure which shall put an end to this incessant conflict between the city and the country, by doing justice to both; and leaving each free to decide according to its own convictions and its own interests. And we assure you that no measure could possibly be more popular and at the same time more states- manlike than the extension of the principle of home rule and self-government to matters of taxation. 187 George S. Coleman, recalled. By Mr. Guenther. Q. In view of those corporations incorporated in other States and doing business here, which are assessed upon personal prop- erty to the extent say of $20,000, they having a capital of $100,000 in other States, can you suggest any amendment to the present law whereby we can reach them for the full amount of their capital stock for the purposes of taxation? A. I can not suggest a method that would be consistent with the way we assess our own corporations: I understand the law which says that the tax on property nm?t be on property within this State; if one of our own corporations had invested half of its capital in New Jersey in a plant there, that plant would be exempt; the State in taxing the franchise might tax it upon the full value of its capital, but I think that has been construed as unjust and has been modified so as to tax it only on the capital invested in the State; I might have expressed myself clearly about that when corporations went out of the State to evade taxation, I understood you to mean corporations simply organizing in another State, but doing business here, that is what I meant when I said they could be taxed here. The committee then went into executive session and on motion decided to meet again December 22, 1892, at 2 p. m., same place. Superior Court, Part 2, New York, December 22, 1892. The committee met pursuant to adjournment. TV. H. Wood, called as a witness, being duly sworn, testified as follows : By Mr. Creamer. Q. Mr. Wood, your full name? A. Q. H. Wood. Q. You are chairman of the board of assessors? A. Chair- man of the State Board of Assessors. 188 Q. How long have you been a member of the board of asses- sors? A. Since the 28th of June, 1892. Q. Previous to that did you have any experience in connection!^ with matters of taxation in our State? A. Not particularly with reference to the State; I have served in the board of super- visors in my county, and on the committee of equalization, which ^ has something to do with tax laws. Q. Have you read the resolution? A. Yes, sir. Q. Will you please give the committee your views concerning the taxation of personal property? A. Well, I think the laws should be amended so as to repeal the exemption of debts on personal property. Q. As against real estate and personal property? A. As against real estate and personal both; I think that there is the main avenue through which a great portion of the personal property of Ihe State escapes taxation; there should be a certain amount of personal property, or personal property of a certain class, exempt; in some localities the assessors now follow the plan of assessing the farm stock and implements as personal property. Of couse, under the statutes all forms of personal property are taxable and I think a reasonable limit of exemption should be made by the law, but all above that should be subject to taxation just the same as real estate. Q. In your last report, I believe, Mr. Wood, you state that it is the judgment of the members of the board that there is some 4,000,000,000 of untaxed personal capital in the State? A. That is the report of the former board, but I believe that that is the fact, that there is about that. Q. What proportion do you know this county would include in that sum? A. I am unable to state; I have made no persona] examination of that, but I should assume that it T^ould have al least forty-five to fifty per cent, perhaps more, as there is a largei amount of corporate property in the city and county of New York. Q. Are you familiar with the views of the previous board, 01 any members of it, concerning how that property should be 189 peached and placed on the rolls and made subject to taxation? A. Only as expressed in the report for 1890, the last report made. Q. Please give it? A. Their view was the adoption of a listing system similar to that in the State of Ohio and Massachusetts, a/nd also the repeal of the exemption of debts on personal prop- erty that provision which permits an individual to swear off the personal taxation on the amount of his indebtedness. Q. I think there is a doubt in the minds of the people as to whether it is the intention to tax all personal property, sudi as lefined in the statute, including household furniture and other property of somewhat similar description; I take it that the main )bject of the committee representing the Legislature, and all Jiose who are interesting themselves in relation to this question, .s to reach first of all interest and dividend paying personal property, which, I suppose, this 4,000,000,000 covers, without xmching household goods? A. That has no reference, I think, ;o household effects. Q. I state that in order to get an expression of the opinion )f the State assessor as to whether that was covered by the 1,000,000,000, or whether that 4,000,000,000 figured up that sum without including those ordinary effects of every citizen? A. I lave not any knowledge as to the statement made by the pre- dous board, other than that gained by inference, reading the eport and conversations with the gentlemen who drew it; my mpression is that it is intended to convey the idea that there ire 4,000,000,000 of personal property that escapes taxation with- >ut including such items as household furniture, or items of :hat kind, or ordinary personal property; it is intended to convey ;he notion that that is represented by what you call dividend mying personal property, stocks in corporations, etc. Q. Now, what is the theory of the board of assessors, as far as pou known, as to how this property should be assessed per- jonal property all alike at an equal percentage of taxation? A. Chat is a subject to which I have given very little reflection; the 190 duties of the State Board of Assessors have very little to do with personal property as a rule; we are confined to the equalization of assessments between the various counties the assessment of real estate and the equalization, on review, made by the various boards of supervisors wherever there is an appeal made; my own opinion is that some' form of taxation of corporate stocks, somewhat similar to the method in which bank stocks are taxed at present, would be advisable. Q. Could you reach trust companies and express companies by the same method ? A. You could not reach express companies. Q. It was stated previously by Tax Commissioner Fietner I understood him to state that it was their intention, and I was a afi little in doubt myself as to whether that could be done; I wish you could enlighten me? A. I don't think you can reach an express company in that way, or a trust; you can only reach a corporation where the books are subject to examination, and most of the express companies, as I understand it, are not really corporations; they are in the nature of partnerships joint- stock associations. Q. What was the plan suggested of taxation? A. The plan that I suggest to reach a certain class of corporations is similar to that employed in the taxation of bank stock; to have the stock assessed to the corporation, and paid by it as upon each individual stockholder; in a national bank the stockholder does not pay the tax upon his stock; it is assessed to the bank, aod the bank pays the taxes. Q. What law should be amended to reach that result if so desired? A. I don't know the specific statute, but it is an iincad- ment of the statute in relation to the taxation of corporations. Q. As regards personal property, can you inform the committee h when it was that the laws were amended exempting some of those corporations entirely from all taxation, other than what they contribute towards the State? A. No; I am unable to give you the dates, because those exemptions have occurred a/t different times, not all at one time. \ K ank shares are now assessed to the bank? A. Yes, sir. Q. All corporations or)anized specially and under the general aw? A. That is a subject that I should want to study a little s, more before I give an opinion as to that; you might be able to Q. Would that include business association? A. I think it > would; I see no reason why a business corporation should not pay Q. Did this decision in the National Express Company's case a affect any State taxation as well as local? A. Well, it affected ih n this way, that the State taxes are collected as a rule with, the ocal taxes, in the same levy, in most of the counties. Q. The State will lose? .A. Yes, sir. 191 Q. Do you remember any time? A. No, sir; I do not. Q. Well, you would assess the corporations the same as the each some; it is more a matter of detail. fair tax upon its stock as well as any other. Q. Have the State Board of Assessors taken any action as egards removing the effect of the law as contained in that deci- ion? A. Nothing except in the general recommendations that have been made by the board in their former reports, and such in is we will make to the coming Legislature; there is no other step a r we can take. Q. Did they consult with the Attorney-General about prepar- h ing an act to amend the law affected by the decision, seeing that State loses revenue? A. That hardly falls in the province of 3 lithe State Assessors. Q. Your board has been subject to much criticism from the soknanner of alloting certain sums to different counties in your annual equalization? A. Yes, sir. Q. Will you please give the committee some opinion on that ubject which no doubt will clear up much doubt concerning it? L The duties of the State Board of Assessors are to collect first information from each county and determine the rate of assess- nent as to true value that is, the ratio that the assessment aears to the true value. They gjet that information in various svays, by conference with the boards of supervisors, by lists of Dona fide sales, excluding all judicial sales, and all sales between 192 members of the same family, and determine from that mass of evidence the rate of assessment in each of the various counties in the State, and when that rate is once determined for each county, the equalization table of values is simply a matter of arithmetical computation. Q. Wherever the assessed value is a smaller percentage thaa you think it should be in proportion to other counties, you do that? A. No, sir; that is not the way in which an equalization table is made. Q. Does not that govern you at all when you see property assessed at a small percentage? A. I will explain how an equali- zation table is computed, and then you will see it is not a matter of taking off or putting on by the board ; the assessors deter- mine as soon as they can from the evidence they are able to gather of this kind that I have detailed before, and^the rate of assessment in each county of the State, and with that as a basis the first step in the table is to find what the full value of every county would be if it were assessed at full value, which is a simple operation of dividing the assessed value by the rate it is assessed at, that gives you the full value of the county; the sum total of that will be the full value of the State, and the full value of each county divided by the full value of the State will give you the equalized percentage of the county, and the total assessed value of the State multiplied by that ratio will ftve the total equalized value of the county; that is the way in which this table is arrived at, and the result there where it says so much added or so much taken off those columns are simply to show plainly what the result is and not the addition of an arbitrary sum at all. Q. On this basis it shows there has been no dereliction of duty on the part of the assessors, but they have lacked informa- tion. A. There is a variation of opinion; some counties assess at seventy-five or eighty and eighty-five per cent of the value and some counties as low as fifty per cent. Q. Take the agricultural lands; how do you find them; uniform? A. It is not uniform, but it will go nearly seventy-five per cent. Q. As high as that? A. Of its true value. 193 Q. What it will bring at a sale? A. Yes, sir. Q. Seventy-five per cent? A. Yes, sir. Q. As high as that in St. Lawrence county? A. I think it is higher in St. Lawrence county; St. Lawrence is credited with a higher percentage than that. Q. Can you give us from memory what the rate of taxation is at present in some of those counties where the assessed value is as high as that? A. I can give you St. Lawrence, I think that is eighty. Q. The assessed value is eighty? A. Yes, sir. Q. What about the rate of taxation? A. It is assessed at eighty r cent. Q. What is their county tax? A. I could not give you that from memory . Q. Do you know what the rate runs at on such a valuation? A. o ; I could not tell you as to that. Q. Two or three or four per cen^? A. I could not tell you as o that, because the rate varies in every town. Q. Isn't there in your knowledge any case, or any town, that ou can give the committee so as to form a conclusion as regards hat agricultural land is bearing in the way of taxation? A. have not the report of the board. Q. There is no one case that occurs to you just now? A. No, sir. By the Chairman. Q. Could you give us the rate of any agricultural town in Kit chess county? A. It varies there; it is impossible for me to you the rate in any town. Q. I didn't know but what you would be able to tell me for >ine one town in your own county? A. It varies from year to ['ear in proportion to the increase or decrease of town expenses. Q. I didn't know but what there might be some one town in >utchess county with which you were more familiar, last year? .. For instance, I can give you the county of Columbia, that was dollars on 1,000 last year, and the county of Chautauqua was iree dollars and eighty-one cents; that was the general rate. Q. On $1,000? A. Yes, sir. 25 194 By Mr. Guenther. Q. What is it in Erie? A. I don't know what it is in Erie; we only get that when they bring an appeal. By the Chairman. Q. Don't you consider that a very low rate of taxation compared with the taxation rate in cities as you know them to be? A. Yes, sir; ,the rate of taxation is lower, of course, in the agricultural counties than it is in the cities, because there is not so uiuch.1 local expense. Q. What is the rate, for instance, in the city of Poughkeepsie? A. About two dollars and fifty cents, I think. By Mr. Creamer. Q. On $1,000? A. Two dollars and fifty cents a hundred. Q. And in the county? A. I think I was in error in the other, counties too; I don't recollect the exact figures. Q. Is there any town in Dutchess county that you can give the committee what the rate is? A. No, sir; there is no town there that I can; I live in the city of Poughkeepsie; I don't pay any taxes. Q. The county of Dutchess, according to the census, lost popu- lation from 1880 to 1890? A. Yes, sir. Q. To what do you attribute that? A. I think it is th tendency of modern civilization for people to go to the cities to drift away, and the change in the manner of local employ ment; there is not as much profit in smaller farms; the competi tion of the large farms in the west has brought down the retur for agricultural labor, so that men are seeking other employmei Q. And the wages, how are they? A. And the wages remai not much different from what they were ten or fifteen years aji Q. You think then that it was principally on farms that thei decrease occurred? A. Yes, sir; the manufacturing villages and cities increased. Q. This decrease then in Dutchess is purely an agricultural case? A. Yes, sir; there are these facts that you want to take 195 ito consideration, that the rate of taxation in country districts city districts depends very much on the cost of local govern- en t that the rate of State taxation for the country is pre- sely the same as it is for the city, but the cost of county or )wn government makes the difference in the rate; it will vary ae dollar in different towns; some towns in the counties of utchess have a very high rate and some have a low rate; some ave a big village in them with a great deal of expense; I know rming towns where the total expense of the town, county and tate tax is not over $2,000. Q. The injustice to the agricultural districts would come in le equalization, supposing that the values are not uniform? A. he purpose of equalization is to provide against that injustice a the part of the State taxes. Q. Suppose that the basis of valuation in St. Lawrence county eighty per cent and in Westchester county it is only forty- ve per cent, when the State assessors come to equalize how do on settle that apparent inequality? A. That was the matter int I was explaining; the State Board of Equalization (the State oard are a part of that body) they take the State throughout Qd find the rate of assessment in each county, and then from lat rate of assessment and its assessed value we find what we nu the full value what it would be if assessed at 100 per nt of its value; then the sum of the sixty counties will be the )tal full value of the State, and the full value of the particular ounty divided by the total full value of the State will give you ratio that that county ought to bear; it is simply an arith- letical computation. Q. Do you mean to say that after the board of equalization leets for the purpose of equalizing among the several counties tiat you ascertain the full value in each county, compare it with tie value actually made up by the assessors? A. Yes, sir; we scertain the full value in every county in the State. Q. Can you furnish the committee, at the next hearing you ttend, with a statement showing the last ascertainment of the alues fixed by the assessors in the several counties, and the alues reached by you as being the full and true values? A. 196 Yes, sir; I think I can get that to you this afternoon; I have memorandum, I think, in my valise in my hotel. Q. I think almost every witness that has preceded you has indorsed the proposition of divorcing the State taxes fro local taxes altogether; in other words, collecting them separal what have you to say to that? A. That is a question as to tl convenience of taxation; I don't see any particular reason having the State taxes collected separately, or why they shoi not be collected and levied at the same time. Q. In that connection the witnesses have advocated that estate should be relieved from taxation for general and Si purposes; now, in that connection you see this question of zation among the counties would be done away with altogether what do you think of that proposition? A. Well, if it is poll sible to raise the revenue of the State by fair taxes in othN forms to the relief of real estate, I see no objection to it; it wouli remove the question of equalization as between the counties, bul you would still have to provide a court for the review of equa|| zation made by boards of supervisors, which is at present th State assessors. Q. That would be entirely a local matter? A. Yes, sir. Q. The Legislature could lay down a line of procedure fl local authorities? A. Yes, sir; if you could get the boards ( supervisors to overlook the local advantages in making up th table of equalization. Q. Of course, they would have to follow the law? A. Yes, si Q. Now, to make it plain, suppose that ways and means caN be devised for the support of the general government fro]< sources other than levying a tax on real estate would you recori mend that? A. Well, I should if those means can be devise* in such a way as not to drive capital and business corporation and the other species of property upon which the revenue of tl State should be raised, out of the State. Q. In that connection do you recall any instance where, your judgment, capital has been driven from the State by restri tions affecting corporations? A. I know of one instance whe a corporation was organized under the laws of the State of Nc York and reorganized under the laws of West Virginia for tl 197 rpose of avoiding the stringent tax laws of the State of New irk. Q. Now, can you tell the committee what particular pro- sions of the tax laws, resulted in the transfer of that corpora- >n from the State of New York to the State of West Virginia ? They desired to reorganize and increase their capital stock think from 1,000,000 to 3,000,000, and one of the things that jy sought to avoid was the payment of the fee on the incorpora- m of the company; I think it is one-eighth of one per cent. Q. Would you suggest any modification of the law in regard to e levying of that tax on incorporation? A. I think you would rive at the same result if it was lessened; my belief is that the nnation of large corporations in the State of New York has very uch decreased since the passage of that act on account of that ovision; wherever it was possible for them to organize under e provisions of the laws of another State and do business here ey have done so. Q. Would you lessen the rate of one-eighth of one per cent, wipe it out altogether? A I would not wipe it out altogether, cause there should be some revenue derived from it; West rginia, I think, charges a fifty dollar fee. Q. Upon the filing of the certificate without any regard to the aount of the capital stock? A. That is what I understand from e counsel that drew the papers. Q. You believe it to be a specific sum? A. Yes, sir; it was a ecific sum. Q. Do you think it would be better on the filing of the articles charge a specific sum in this State? A. I think the sum ght to be graded in proportion to the amount of capital stock. Q. Would not that reach just the same result? A. Yes, sir; would reach about the same result except if it was less than it at present why more corporations would be formed. Q. How much less woul.I you make it if you had your way? That is a subject upon which I have not reflected; I don't IOAV; I have very little knowledge of the amount derived >m it. Q. One-eighth of one per cent don't seem like a very large sum 198 to charge, does it? A. No; but if you were organizing a $3,000,00 company it is quite a little item of expense to pay; they seem try to avoid it at all events. Q. What would you think of a change in our sitatutes whic would make corporations organized under the laws of oth States, doing business in this State, liable to taxation, inasmuc as they enjoy the privileges of doing business within the limits ( this State? A. I think that some statute of that kind should passed; I don't see any good reason why a corporation that do business and is protected in this State should not bear its shar of the burden, but of course in taxing that form of property is called personal we always have to bear in mind the fact th it will escape more easily than real estate, and every man will escape taxes if he can. Q. What is your opinion generally on the question of taxing personal property? A. I think that personal property should bl taxed. Q. Do you go so far as to recommend tihat property in an ore nary business ought to be taxed? A. Hardly that; I think therj should be a reasonable exemption of personal property; a certaiil amount of stock, or all of the stock of a firm certain stock il business might be exempted. Q. Now, to give an illustration, you find in the country on| man has got $10,000 invested in a house and lot, and his next doof neighbor has got $10,000 invested in business we will assume t good paying business the man who owns real estate is taxed o* its full value; the man who has $10,000 invested in business escapes taxation altogether; what do you say to the proposition of taxing him? A. I never saw any reason why he should na be taxed. Q. Then you think he ought to be taxed? A. Yes, sir. By Mr. Gifford. Q. Is it not a fact that this $10,000 owned by the one in personal property earns more than the $10,000 owned by the other in rest estate? A. I think it is so now if the testimony of farmers is $ be believed. 199 By the Chairman. Q. You said something a moment ago about fixing a limit, in stock. A. It is a very difficult subject to say what the limit, should be; I have really no opinion, but I know in some counties I can not specify any particular one, but we receive inquiries all over the State as to what is personal property; in some places they seem to follow the practice of assessing farm stock and implements as personal property, and other places they do not, and in some places they assess stock of goods in stores as personal property, and in other places it is not done at all ; there ought to be a uni- form rule in respect to it; and the statute exempts certain goods from execution, and it exempts the property purchased by pension moneys, in the language of the statute, from execution and from sale for taxes; the Court of Appeals have decided that that exemption of pension moneys carries the exemption of real estate from levy and sale under an execution, and I don't see any reason why the principle does not apply to exempt it from taxes. Q. What do you say about the proposition about taxing bonds and mortgages? A. I think they ought to be taxed. Q. Did you take into consideration the question of the real estate being assessed its full value without repard to indebted- ness? A. Yes, sir; I know tlhat is the rule. Q. You would tax the holder of the fee for the full value with- out regard to the mortgage, would you? A. Yes, sir. Q. And then you would recommend also the taxing of the holder of the mortgage? A. Yes, sir; tax it as personal property. Q. Would or not that, in your opinion, be double taxation? A. Well, I don't think it would operate as double taxation for the holder of the mortgage; it would be made a condition, perhaps, of the loaning of the money; it might bear as double taxation then upon the individuals who own the property; I say that 1. think bonds and mortgages ought to be taxed for the reason that I never could see any justice in making the holder of the fee pay a tax upon the whole property and the owner of the bonds and mortgages escape entirely. 200 Q. I think you said that you were in favor of taxing the owner of the fee without regard to the indebtedness? A. I am, unles you continue the system of allowing holders of personal property to swear off on account of debts. Q. I am dealing now entirely with the question of real estate are you in favor of assessing the owner of the fee of realty without regard to whether it is encumbered or not? A. I think that is a question I should rather reflect on a little before I gave you my opinion; I have not considered it very much. Q. You say that to tax the owner of the fee the full value, and the mortgage as well, would not in your opinion be doubl< taxation? Now I cite an instance: A house and lot in the city of New York is assessed for f 50,000; it has on it a f 25,000 mort- gage which pays four and one-half per cent; that lot and building is assessed for its full value, and the rate of taxation in New Yorl is one dollar and eighty-five cents per hundred; now, if you assessed the owner of the mortgage on $25,000, and his rate is one dollar and eighty-five cents, you see there is three dollars and seventy cents on the hundred, so that there is not mueJi left of the rate of interest ; now, I ask you, after considering it in that line, whether you think both ought to be taxed? A. I don't know that I do; of course, the taxing of the bond and mortgage would make it more difficult for purchasers of real estate to obtain loans upon real estate, and it is to the advantage of the real estate owner to be able to get a loan readily on his property. Q. Do you think that loans could be obtained for four or live per cent as they are now, if the holder of the mortgage was assessed anywhere from one dollar and eighty-five cents to two dollars and twenty-five cents? A. No; they could not be obtained as readily, because men would seek investment of their money where they did not have to pay taxes; perhaps the exemption of bonds and mortgages would enable holders of real estate to borrow money more readily. Q. Do you think that such taxation would have a tendency to drive capital out of the State? A. I think it would; there are 201 many States where they do not have to pay taxes, and of course every holder of personal property, or of any kind of property, seeks to evade all the burden that he can. Q. The last two Legislatures have considered the question of reducing the legal rate of interest from six to five per cent; the same question will probably be discussed by the Legislature of 1893 ; now, what do you think the effect would be of passing two bills, one reducing the legal rate of interest from six to five, and the other taxing bonds and mortgages? A. It would make it more difficult to obtain loans on real estate. Q. Would you recommend the adoption of both propositions? A. Speaking hastily, I do not think I would. Q. Would you recommend either one? A. I do not think I should recommend either one at present; no. Q. Do you think there would be any direct relief to the farmer by the reduction of the rate of interest from six to five per cent? A. Hardly so; because, as a matter of fact, to borrow money you could get all you want at present on good farm lands at five per cent ; it is not necessary to pass a statute for that. Q. That applies to the country district? A. Yes, sir; so far as my experience extends. By Mr. Gifford. Q. Then why would it do any harm to reduce the legal rate? A. I do not know that it would do any harm except that there are kinds of loans where the risk is greater that perhaps a person loan- ing the money should have a larger percentage; it is only on good loans I am not much of a believer in the doctrine of con- trolling the rate of interest by statute; I think the supply and demand does. By Mr. Guenther. Q. Now, in the event of reducing the legal rate of interest from ix to five per cent, or in the event of taxing bonds and mortgages, who would be the sufferer, the loaner of the money or the borrower? A. The borrower; he always has to suffer. 202 By the Chairman. Q. The first purpose of this inquiry I will read to you: As to propriety of modifying the present laws relating to taxation, as? ment and interests, so far as they affect the agricultural, manufa turing, commercial, labor, banking and other interests of State; can you suggest any modification of the existing laws would give relief to either of the interests I have enumerated? A. The principal suggestion I have is that one that was embodied in what I said before, the repeal of the exemption by debts on personal property so as to reach more effectively the personal property of the State; I believe the changes in tax laws should made very carefully and slowly; you can not tell what the effec of the statute is very well until you have had a year or two experi- ence in its operation; I am opposed to radical changes. Q. Without qualification, you recommend the modification the existing law so as to prevent any offset by indebtedness o the taxation on personal property? A. Yes, sir; I think you will reach more personal property if you do that. By Mr. Guenther. Q.. Would you also recommend a revision of the tax for the purpose of incorporation? A. I can hardly say that I would recommend that; my notion is that the State does not derive any additional revenue, but my opinion is very limited on that subject; I do not know what revenue they get; the Comptroller or some of those officials in Albany would know better about that. John Connolly, called as a witness, being duly sworn, testified as follows : By Mr. Creamer. Q. You were a member of the Legislature last year and some years past, I believe? A. Yes, sir. Q. And you introduced a bill on the question of taxation; will you please state to the committee what it was? A. I introduced two bills; the one which has attracted the most attention is tlie one known as the local option bill, which I will first speak of, if yon wish. 203 Q. Explain to the committee the provisions of the bill? A. The local option bill provided that for local purposes the question of taxation be left to the counties all of the counties of the State, the board of supervisors there to have the power to adjust taxes as in their judgment they deemed best, not interfering with the quota that each county was obliged to pay for the maintenance of the State government; the purpose sought by that bill was that in the larger cities the vexed question of what class or classes of property should pay, or what class or classes should be exempt that the sentiment of the various localities would govern the question, by the board of aldermen in cities and the board of supervisors in the counties; for instance, New York city, if in the judgment of the board of aldermen, whose judgment would be governed by public opinion, and the advice of the tax commission- ers and the sinking fund commissioners, it were deemed advisable to abolish taxes on personal property, and oblige real estate to bear all the burden that would be in the interest of the people by relieving personal property, it would attract capital that is not now invested; and, furthermore, it would prevent that lying and cheating that is going on and which it is impossible to prevent. Q. Wherein does that differ from the present law; will you pleaste explain what amendments you make? A. Under the present law nothing but chaos exists, in my judgment; for instance, the tax commissioners now have the right to tax per- sonal property and other k'nds of property that they see fit. Q. Under the law? A. \>g, sir; but the difficulty they have in getting at it permits personal property to escape and the timidity of capital injures the city and prevents capital being invested here. Q. What do you propose to do to bring order out of this chaos? A. I propose to leave to the board of aldermen, which under the circumstances is the board of supervisors in counties, the power of ascertaining what class of property should bear the taxes. Q. By instructing the tax commissioners? A. Yes, sir; I believe in Mr. Feitner's suggestion, which I wanted to incorpo- 204 rate in my bill, and that is that the tax commissioners and the sinking fund provide a coda if the tax commissioners and the sinking fund commissioners have the power to get up a code and get a concensus of views of all interests they could then readily get at how to apportion and distribute the burden of expense of government. Q. You might give some power to the board of apportionment? A. That would have to be submitted to the board of aldermen in the city or the supervisors in the country localities. By Mr. Guenther. Q. If such a precaution was necessary for New York county why should not it be -necessary for the different counties of the State? A. Have the mayor or the president of the village designate some officers who should submit to the board of super- visors some such code, and that would be governed largely by sentiment; take the county of Westchester; there are many towns in Westchester well adapted for manufacturing purposes; suppose the board of supervisors there had the power to say that a meeting for a concensus of views should be had; that it would be a good thing to abolish taxes on personal property, the effect would be it would attract capital to Westchester county for manufacturing purposes that would enhance the value of real estate because the value is regulated by the demand for it, and as soon as you attract capital you enhance the value of real estate enhance its value and it can pay readily and increase its taxation; this city if real estate had to bear all the expenses of government it would only increase the total amount about five per cent, but still the tax commissioners under my bill would have the power under a code to be submitted to the board of aldermen to compel corporations to pay a share, if public opinion thought it would be for the best interests of the people. Q. Did your bill propose to amend the Constitution? A. You would not have to amend the Constitution to provide that because the code would provide subject to the approval or dis- approval of the board of aldermen. 205 Q. Does it prevent a subsequent Legislature from affecting your code? A. The tax commissioners in cities and the sinking fund commissioners and the board of apportionment; the bill could provide that they prepare a code of taxation regulating and apportioning the respective portions of real estate and per- sonal property that corporations should pay, subject to the approval or disapproval of the board of aldermen and which would not violate the spirit of the Constitution. Q. The original law of the State was uniform concerning all counties of the State; that uniformity was in existence here many years ago until special exemptions w r ere made to particu- lar interests in different counties, more particularly in the metro- politan counties; how did you provide against that? A. By having the bill applied generally. Q. The original tax laws of this State applied generally? A. We never had a system in this State, and with the exception of Pennsylvania, where the expense of the State government is defrayed entirely by taxes on corporations, we never had such a system as we would have under this bill. Q. What your bill would get at would be to allow each county to decide for itself as to the assessing of personal property or noiiassessing? A. That is it exactly. Q. If the people in the different counties saw fit to exempt it, they could have the privilege to do it? A. Yes, sir. Q. That is the marrow of the bill you proposed and that is known as the Local Option Tax Bill? A. Yes, sir. Q. Still, if there is a special act exempting corporations from taxation those laws would have to be repealed as well, or else this local option bill would not affect them? A. Yes, sir. Q. In case there is a uniform system of taxation aimed at, would not that largely lead up to a constitutional amendment? A. My judgment is that the inheritance tax is becoming so great and from other sources from which taxes are raised for the maintenance of the State government, that it will be seen that the State assessors will have very little to do as to appor- tioning for State purposes taxes on real estate. Q. What is the tax for State purposes? A. New York city pays forty-five per cent of the entire tax for this year. 206 Q. Can you inform us what the cause of the increase of the allotment to New York was? A. I think it was a falling off of what was supposed to be the inheritance tax which did not realize so much; Mr. Wood, I think, is more familiar in that respect than I am myself; of course, we always have to pay more than our share in New York; though we pay forty-five per cent of the State tax, we do not represent forty-five per cent of the real estate valuation; I do not think we represent over thirty-five per cent and the other thirty-five per cent we give for the benefit of the country; we are rather philanthropic. By Mr. Guenther. Q. By referring to the bill you introduced, is it not your opinion that the ultimate object of that bill was to exempt entirely per- sonal property from taxation? A. No, sir; I do not think so. By Mr. Gifford. Q. Do you not think that if the cities under that law were granted the right and saw fit to exempt personal property that it would have an effect to bring about the same exemption in rural counties adjoining cities? A. They have their own interests to serve and would be governed by their interests; if it was for their interest to exempt personal property they would know what to say. Q. I think you said in your former testimony that the attrac- tion of capital to any locality enhanced the value of property in that locality? A. Yes, sir. Q. Now, suppose we pass this law which brings about a with- drawal of capital, as I apprehend it would from the rural dis- tricts, what effect would that have; would that appreciate or depreciate .the value there? A. I believe that the supervisors in each county would be governed entirely by what would be for their best interests and could have a system for their best interests and much better than the present system. Q. But, suppose that any one of these outlying counties would have a number of capitalists who were escaping taxation who desired to escape taxation on personal property and they know 207 that the effect of this Local Option bill is to exempt it in the cities, what will be their position towards the board of super- visors in making up their basis of taxation; would it not be natural for them to say: "Now, you must follows suit and tax upon the same basis that the city does, or we will withdraw our capital and invest in New York, Buffalo or Syracuse, or in any city where there is exemptions?" A. That will be regulated this way; suppose John Jones in your county should appeal to the board of supervisors where they are severe on him and say that unless they let up he would move to an adjoining county where personal property was exempt so that you would be com- pelled to adopt a different system; the people always, if left to themselves, do what is for their best interests; I find that while the Legislature at Albany are in the main governed by good principles, yet, if the localities had something to say in the gov- ernment of themselves, they would be much better governed. Q. You call this local option, but if the action of the city brought about this result, and forced the boards of supervisors in the rural counties to adopt the same basis, would it amount to local option; does it not amount to the rule of the cities over the counties? A. No, sir; how could this city rule the board of supervisors of Chautauqua county? Q.In this way, our capitalists would say: "Unless you fix on the same basis that they have in Buffalo and New York, we will withdraw our capital and invest it there;" what recourse have we? A. You would have the recourse of acting as it was best for your interests. Q. The final result then would be to release and exempt all personal property throughout the State in a few years? A. Not at all. By Mr. Creamer. Q. What was the result of the introduction of your bill? A. Lake all good measures, when first introduced it met with tem- porary defeat. 208 Q. In the committee of the whole? A. No, sir; I succo^ded in getting it before the House; there is no committee of whole under the new rules. Q. Did it pass the Assembly? A. No, sir. Q. Was there a vote taken? A. No, sir; I believe though t] with the coming Legislature, with the increase that the citi< have, and in view of the fact that the minds of the rural legis- lators are being disabused as to the effects of this bill throuj education, that it stands an excellent chance of becoming a law the next session. Q. Did it clear the way of those exemptions? A. No, sir; Ih would be left to the local authorities. Q. It left them a clear field to exempt whom they saw fit in the respective counties? A. Yes, sir. Q. It supplanted all other legislation on that subject? A. Y sir. By Mr. Gruenther. Q. Are the single tax people opposed to or in favor of yoi bill? A. I can not say positively; I think some of them were. Q. Opposed to it? A. I can not say positively that they were unanimous for it; Mr. Shearman favored it; I do not know whether the single tax people were unanimous in regard to it or not. Q. Who drew the bill? A. Mr. Hall of New York, Mr. Shear- man and Mr. Claflin John Claflin they were instr amenta! in preparing the bill; it was favored by the New York press unanimously; I recollect very well that the Times had a number of editorials, and the Advertiser and other papers strongly urging the bill. Q. Isn't Mr. Hall one of the principal advocates of this single tax theory; has he not written a book on the subject of single tax; have you seen a copy of such a book? A. I believe he is- a very well informed man of some literary reputation; what sub- jects he has written on I do not know. 209 John D. Ellis, called as i witness, being duly sworn, testified is follows: By Mr. Creamer. Q. You can enlighten the committee on this question of taxa- ioii from your experience; have you read the resolution in elation to the creation of this committee? A. Yes, sir. Q. As to recent legislation, has it been the cause of driving apital from the State; have you any knowledge on that subject? 4.. Well, the work of the State Assessors, of course, so far as hey judicially work, they have no jurisdiction except to equal i/c he realty; they have nothing to do with personal property, so hat in the official work of +he State Board of Equalization tln-y ire called assessors, but aiv a board of equalizers. Q. What has your observation been concerning personal prop rty generally, not in connection with your duty, but information ivhich you must necessarily acquire in dealing with the subject ? \. I will give you my obser/ation and the opinion I have formed ipon the general methods of assessment and taxation, and then will answer any questions; if I were drafting a bill I would first issess property where it is located, realty and personal property dike the property wherever it is; for instance, a stock of goods n Jefferson county; I would assess that property as I do the ealty there without regard to the ownership where the prop- >rty exists; so in the city of New York I would assesvS all stocks >f goods; if the owner chose to reside in Westchester let him do t, but I would assess it where the city has got to protect it, vithout regard to where the offices are; I would assess it whriv t is protected. Q. Would you assess the citizen? A. Whether the owner of he property resides in some other county or outside of the State; would assess it where the property has the protection. Q. Then you would not follow the Massachusetts law and issess a citizen or resident outside the State limit? A. I would issess that property in the county where it is protected. Q. Outside of the count 7? A. Without regard to his being mteide of the State. 27 210 Q. The property not in the State? A. I mean the property j being in the State. Q. You would not assess a resident unless the property within the State? A. I think we would reach a very mi larger per cent of personal property, to reverse it and assess property where it is located; I am not talking about evidences ol debt; I am talking about property that is property. Q. Evidently you have not given this Massachusetts law thought, because otherwise you would see the purpose of the question, which is this; a citizen residing in the State and having property in Connecticut, you would assess that citizen on hii property no matter where it was located? A. I do not think yoi understand me. Q. Suppose you are a resident of this State, Jefferson counb you are interested in property in Connecticut; would you in ma ing a return for personal taxes when you were asked what yi were worth in personalty, would you include your property oui side of the State; would you enforce a law that would includ< such property? A. I would let that property if it is in Conm cut pay its taxes there. Q. Suppose in Connecticut that the return is that the citis makes a return in Jefferson county and therefore is exempt? The difficulty is that class of property, nine-tenth of it, does pay anywhere. Q. Would you follow the citizen or the property? A. I w< assess the property where it is, not the citizen. By Mr. Guenther. Q. Suppose it is a line of steamers that do traffic on the lake A. That you have got to assess as corporations; I am talkii about property that has a legal existence. Q. Suppose a corporation has its main office in a small toi outside of the State and it has all the protection of fire and poJ from that State what would you do? A. For instance, you got H. BJ Claflin; '-if they have a half dozen stores in diff* wherever the property is, not in New York; TS 211 ties of the State; when we hare been talking with local assessors nany times we find here is a very large corporation or a very nrgo business and we ask why is not that found on the assess- IUM )l>roll; well, the owners have an office in New York or Boston Philadelphia, and all that property goes soot free from taxation n consequence. By Mr. Creamer. Q. The law allows you to tax it as non-resident property; if it s I here in Jefferson county can not the assessors assess it in Jefferson county? A. They do not do it; I am talking about >oL'sonal property. Q. Personal property as well? A. No, sir. Q. Even a stock of goods? A. No, sir; the law says you assess Tsoual property wherever the owner resides; I live in Jefferson ounty; if I am doing business in the city of New York and have |100,000 in ^oods here you can not assess me here; you have ;oi, <<> assess n IP in Jefferson county; now, I would change that; would assess that property in the county that protects that property in the county where the business is done. By Mr. Gruenther. Q. Is not that the law now? A. No, sir. Q. Did not the revision of the corporation laws last year make provision to that effect? A. I am not talking about corpora- ions now; I am talking about individuals, partnerships. Q. It seems to me that the property we have referred to in IK.- first instance is clearly assessable in Jefferson county unless hero is an office somewhere else. A. I would do away with that llico; that is what the dodge has been, and the assessors there io not know anything of the existence of the business. By Mr. Ahearn. Q. Suppose that man manufactured goods up there and they v r ere then delivered to the principal office in this city, how would r ou tax him? A. I would assess the average amount of goods here. 212. Q. In both, counties? A. Not necessarily. Q. Suppose as soon as they were manufactured they brought here, how would you get to that? A. Here is a con< we will say, manufacturing goods at Watertown, and they averi about $20,000 worth of stock a year, or around that aver* $20,000 a year and have their office here; I would assess that; if there is a riot in Jefferson county and that property is burned up, Jefferson has to pay for it, then why not receive the of taxation? By Mr. Guenther. Q. Do you believe in taxing bonds and mortgages? A. I very much in favor of taxing property. Q. Both personal and real? A. Yes, sir; property. Q. Do you believe in taxing bonds and mortgages? A. I woi not say about that. Q. What is your idea about reducing the legal rate of interc from six to five per cent? A. I am not; in favor of it; I think would drive capital out of the State. By Mr. Gifford. Q. Do you not consider bonds and mortgages property; y< say you are in favor of assessing property? A. I have always favored assessing mortgages, but I am somewhat doubtful as tJ the amount; we get so little of that it has been a query to mJ whether the rate of interest would be cheaper; I don't think one! twentieth of them is ever reached. Q. Your opinion is that if the legal rate of interest were reduceJ from six to five per cent, and a tax put upon mortgages, that the borrower would have to stand the burden of that taxation? ^U Yes, sir; I think so; I am positively in favor of making som& exemptions for debts upon realty that we have now on personal^ property, or else I would do away with the exemption of debtft in both cases, which I think would be still better; I would ta| property with no exemptions, the personal property the same asJ we do now the real estate, making no exemptions for debts. 213 By Mr. Creamer. Q. Do you favor the taxing of personal property? A. All prop- erty that is property, without now having reference to evidences >f debt Q. Do you favor continuing the deduction from personal as the law is now unless it is deducted as well from real estate? .. I would give the same exemption to each class. Q. Or otherwise repeal the exemption for personal property? .. Yes, sir; I think there is no justice in that; you have $10,000 u mortgage and your neighbor has $10,000 on a farm; he Is not exempt on his debts though he may owe three-quarters of it, but you come in for exemption so that you pay one-quarter of ;he tax. Q. As regards taxing mortgages, what is your judgment? A. I lave felt that unless there is some way to reach them so that it ?an be collected would be better not to tax them. Q. Has the effort generally been made to reach them? A. The issessors claim so. Q. What is your opinion? A. I think ill many cases they are jry diligent. By Mr. (jueuther. Q. Is it not the most simple matter in the world to go to the egister's office or county .clerk's office and ascertain the amount >f mortgages on record? A. Yes, sir; you loan $10,000 and you lave a mortgage made, some party in New Jersey, the moment t is recorded you take an assignment of it. Q. Would you amend the law by compelling him to pay a tax it the time it is left for record? ' A. If you make it so that it can i reached I say amend it, but not as it is now. Q. If you could amend the law so as to tax bonds and mortgages rou would favor it? A. Yes, sir. Q. Who would ultimately pay that tax, the borrower or the ender? A. Without regard to that, that is a theory that the people would differ about; if there is any way of reaching inort- gage so that a large percentage of them were taxed I would be in favor of taxing them. Q. Taxing the mortgages? A. Yes, sir. Q. Supposing I come to you and wanted to borrow $5,000 there is a tax on that of say ten dollars, before you would give that money wouldn't you have some arrangement made with your attorney to have that money paid as attorney fees or some way before you advanced the money to me? A. That might be (oi in some cases. By Mr. Gifford. Q. Would that depend largely upon the question of supply and demand in money? A. Doubtless, it would. Q. Have you any apprehension it would have the effect of makij the borrower pay any more; if it was generally understood that a parties must follow the same rule and we are to put taxes upon tl mortgages, do you not suppose there would be just as many inoi gages accepted as there are at the present time? A. As a bor- rower, I would take my chances. Q. As an attorney, would you not include the amount of that in the disbursements, such as making a search, and so forth? A. That would be the case, doubtless, if money was very close: would make the board of supervisors a board of equalization t<. personal property as well as realty; there is always a very gr< injustice between the counties; for instance, in Albany counl banks are assessed on personal property at 100 per cent; and Oneida county they are assessed at fifty, and in consequence th< banks are paying on the same surplus twice the amount they are Oneida county because the board aii not equalize. By Mr. Creamer. Q. As regards the listing system I see you recommend it in report to the Legislature? A. Yes, sir; two years ago. Q. Was any action taken subsequently in relation to it? No, sir; nothing was done. 215 Q. No vote taken? A. Our board recommended it the oard of State Assessors. Q. What system did you recommend; that in vogue in any ther States? A. In Pennsylvania, Massachusetts and Ohio. Q. Ohio as well? A. Yes, sir. Q. How has it operated? A. They claim that the law has roven satisfactory, and that there is a very much larger per- mtage of personal property on the assessment-roll. Q. The system is old in Massachusetts; it is more recent in ther Stated? A. In Massachusetts the personal property is bout forty per cent of all; in the State of New York it is about in. Q. How as regards Pennsylvania? A. In Pennsylvania it is hirty-eight per cent. Q. In Ohio? A. Forty-two per cent, I think. Q. Higher in Ohio than elsewhere? A. A fraction. Q. Illinois has it? A. I think so, and Indiana; I think they ave the listing system now in a majority of the northern tates. Q. What is the system in Connecticut? A. They have a isting system there also. Q. Do you know the percentage there? A. The percentage lere is about forty-two per cent. Q. Then evidently there is no danger of property escaping from is State to those States? A. The tax commissioners in those tates say it has not operated that way; they are not conscious : having lost anything in consequence of it. Q. What is the law in "New Jersey? A. I am not certain bout it. Q. Not a listing law? A. I think not; we corresponded with lie tax commissioners of some eight or ten States, and, in \ ery instance, they claimed that the effect had been to increase le amount of personal property. Q. In those States there does not seem to be the difficulty we ave here? A. No, sir; they say not; they think that no such rouble as that would occur here. 216 Q. They demonstrate it ie possible to enforce the tax law? A. Yes, sir. Q. And in this State it is 'ten per cent while in other States it is as high as forty-two per cent? A. Yes, sir. Q. Da you remember how stringent was this listing system proposed by the bill your board recommended; was it as inquisi- torial as it is generally believed in its features as regards persoi rights? A. That is not the complaint where it is in effect; the is no complaint of that kind. Q. It is simply a blank sent out to each individual? A. Y< sir; they list their own property. Q. Explain that? A. Each individual taxpayer is furnishc with a blank classifying different classes of property; if a farm< he puts the number of cows, horses, sheep and his farming dairy tools; if a merchant he classifies his goods; if a broker o:c any individual- if he has bonds, mortgages, notes and accounts, he puts them into the inventory. Q. With an affidavit? A. Yes, sir; it has to be sworn to in all cases. Q. Before a notary public? A. Or some person authorized to administer an oath. Q. And that is returned to the tax office? A. Yes, sir. Q. By mail? A. Or in some other way. Q. A failure to comply with the notice sent you is treated how ? A. Then the tax commissioners in their jurisdiction can assess; J think they have a right in many cases to double the amount that they can get hold of. Q. And that holds as against the property? A. Yes, sir. Q. Is there a review of the amount returned in the office; it can be reviewed? A. Yes, sir. Q. Penalties attached for false swearing? A. Yes, sir; very severe. (). Severe penal! ies? A. Yes, sir. (>. Have you any knowledge as lo how that part of the law* operates; as to whether it is necessary to punish people? A. l\ don't think it is so. 217 Q. Has there been so general as to make it something for which to fear, this listing system? A. I don't think so; I think it operates as in this State where an individual comes before the assessors and swears off his personal property sometimes; the neighbors think he has sworn pretty strong, but they ran n<>1 always prove it. Q. Your opinion concerning this 4,000,000,000 was made, up in what way; you made that report, I believe, while you were u member of the board of assessors? A. Yes, sir. Q. How did you reach that estimate? A. hi relation to the equalization of realty or personal? Q. Personal? A. From interviews and the property itself; from the banking and corporate property of the State; the lists of mortgages in the different counties we found as being recorded, and various ways. Q. That does not include household furniture or anything of that sort? A. No, sir; we do not include anything that would be exempt from execution. Q. That is a fair estimate in your judgment as to the personal property in this State now exempt that should be assessed? A. Yes, sir. Q. What proportion of that 4,000,000,000 would you estimate would apply to New York county? A. Well, I should say sixty per cent of it, or sixty-five. Q That would be about 2,500,000,000? A. Yes, sir. By Mr. Guenther. Q. Do you claim that amount of personal property now escapes taxation? A. Yes, sir. Q. Is it not a fact that a considerable amount of that is already exempt from taxation as United States bonds, etc.? A. There is a very little proportion of United States bonds in existence now; another thing I would recommend particularly, and that is, 1 would require that the true consideration be expressed in every deed for the conveyance of real estate and the grantor and grantee to swear to it; we come here to New York and make a list of the 218 sales, eight or ten or twelve thousand sales, and the claim at once is that the true consideration is not in the deed; but if you make it a misdemeanor and require the parties under the penalty of the law, and a fine to place the correct value thei then when you have got the sales list made up it is some us for an equalization table. Q. As regards the inheritance tax, have you given that any attention the operation of the present inheritance tax? A. think that law is a good law; there is one feature that I objed to, and that is paying the county treasurer five per cent which they receive to-day for doing nothing; the surrogate does the work and they get the five per cent; in some of those large counties they double their compensation. Q. Isn't that compensation for their responsibility? A. There is not a national bank in the State of New York that would not be glad to do it for one-eighth of one per cent it is an outrage. Q Do you think the fixed amount of f 10,000 is a correct amount, about? A. I would not make it lower than that. Q. Would you make it higher? A. You tax all you can get now; I mean you do not tax small estates in a direct inheritam tax. Q. All above $10,000; do you think that is a fair sum to exempt, or would you exempt more? A. No; I think that is about righ! Q. Now, as regards the collateral inheritance tax, f 500 I believt is the amount? A. I think that is about right. Q. You would not make any change? A. No, sir. Q. How about this grading of the direct inheritance tax abovi a certain sum, increasing it $100,000 over $500,000 and ovei $1,000,000? A. From my own observation I would not reooin- mend any changes in that. Uy the Chairman. Q. How long were you State assessor? A. Something or< nine years. Q. Will you tell the committee something of the method of the work of your board; do you divide the work or work together? 219 We usually went together in visiting the counties; that was ur general rule. Q. Now, what proportionate part of the year did you sp 3ad in dsiting the counties? A. We usually commenced our work of "isiting the counties about the middle of April, and took the nost of the time until October or September. Q. How many days did you sit in each county? A. We were n each county with the board one day, but we usually spent a od deal more time in each county outside of that. Q. What was that time devoted to? A. Outside of the meeting ?vith the board? Q. Yes, sir? A. We would see individuals and see property tself, and gather such information as we could. Q. What was the purpose of that inquiry ? A. It was to estab- ish the fact whether property was increasing in value or deoreas- ng; whether, for instance, in a village, if we found a great many -acant stores and houses, and former factories shut up, we could see that property in that town was worthless; and if we found all the villages of the county were going backwards; if we found arm property depreciating; if we found the fences tumbling lown, and in a poor state of cultivation, the farmer was going to lie wall. Q. Would not the fact that the fences were tumbling down be in evidence of a lack of industry on the part of the farmer? A. That might be in individual cases, but the property was worth less im way; if the fences were up, and the houses painted and shade Drees set out, and evidences of thrift, we found that property was worth more. Q. In traveling around in that way, did you make any com- parison between the reports or information that you had of that property and what you found it to be? A. Yes, sir. Q. What, was the uniform finding as to the actual value coin- pared with the valuation fixed by the assessors? A. In many cases we found the assessors candid and truthful, and in other cases not so much so. Q. What was about the average proportion of the value for 220 assessment purposes compared with the true value of the land itself? A. We found the average property of the State of Nei York assessed at sixty -five per cent of its full value. Q. Was the basis of valuation uniform, or was it lower in 01 place than another? A. Why certainly; you are from West- Chester; in Westchester county, we count that one of the poorest assessed counties in the State, and we equalize it accordingly. Q. They assess on what basis? A. A very low basis; in the city of Albany they are assessing property all it is worth; some cases more than it is worth. Q. How did the rate of taxation in Westchester county coin- pare with the others even on its low valuation that you speak of A. Our reports as they are published each year have the fill amount of State, county and local tax paid by every town in ti State, so that it is a clerical matter that can be readily got at your board quicker than I can tell you by memory. Q. You assume, of course, that Westchester county is expensive to run as any other? A. Yes, sir. Q. And if the basis of valuation is so low the rate must be consequently high? A. Cm-tainly it is; so fair as the State taxes are concerned it pays a higher rate of tax just as much as the State Assessors put on and take off some other that iaj assessed too high. Q. When you find lluil a, county has used a low basis of val- uation, when you come to make your equalization, you increase it without regard to what they have done? A. Yes, sir; we bring it to the average of full value. Q. The rate would be the same? A. Yes, sir; the rate would be the same on the full value, but not on the assessed value; it is the same on the full value all over the State. Q. Now, I see that you join in a recommendation to adopt the listing system? A. Yes, sir. Q. Will you kindly tell the committee what investigation you made before making that recommendation? A. We wrote to* the tax commissioners of Pennsylvania, Ohio, Indiana, Massachu- setts and the different States, or quite a number of them, where 221 that system was prevailing, asking them for their methods, and also asking as to the effect it had upon increasing the amount of personal property, and the general satisfaction the law had given. Q. And the only information you had come from assessing officers? A. Largely that; of course, where we had an acquaint- ance with the individuals in different States we interrogated them also. Q. You did not go into the several States to make inquiries? A. No, sir; we wrote to individual acquaintances that we had in many of the States; some of them practical men; I know I wrote several letters to some in Ohio and some in Massachusetts. By Mr. Creamer. Q. Where did you get your figures as to the percentage? A. From the State officers; in nearly every case they sent us their pamphlets showing the percentages, etc. By the Chairman. Q. Now, your experience was that the proportion of personal property since the adoption of the listing system in those several States had increased materially? A. That was the invariable report in every case. Q. Now, the assessment of personal property was pretty gene- ral in those States? A. It was increased largely after the law went into effect. Q. For instance, in the State of Massachusetts; they have a 1 is ling system, I think, thai, requires a return of all kinds of personal property, including farm stock? A. Yes, sir. Q. And implements? A. Yes, sir. Q. Do you mean in recommending the adoption of a. listing system in this State to favor the assessment of farm stock and farm implements, for general government purposes? A. For State purposes; yes, sir; as I said in the beginning I am in favor of assessing all property in the State that requires the protection of the government. 222 Q. You would not exempt from any kind of taxation of soiial property? A. I am not prepared to say as to savi banks or life insurance companies. Q. I speak now particularly with a view to the interests the rural parts of the State the agricultural parts of the Sta are you in favor of including the stock and implements of t farmer? A. Yes, sir. Q. For assessment purposes? A. Yes, sir. Q. You think the farmers generally would be satisfied wit- that? A. I certainly think they would if all the properly of th State is assessed, because the little fraction of one per cent that the farmers would be increased look at the millions now going scot free; you couldn't find a farmer with any intelligence that couldn't see that. Q. All of the witnesses, I think, who have preceded you have been in favor of divorcing the collection of taxes for the expenses of the State government and for local, town and county purposes; what have you to say to that proposition? A. I think it would be well if the State tax was wholly collected independently and outside of the local taxes. Q. In other words, they favor relieving real estate altogether from the tax for the support of the general state government; what do you say to that? A. I think that the sooner it can be done the better; there would be no need of any State board of equali- zation, or any friction between the counties; each county would take care of itself, and there w r ould be no feeling that one county was equalized too high or too IOAV. Q. If that system was adopted that would have something to do with the general proposition which you make about the assessment of personal property, would it not? A. Then the supposition that I make would be a good one, but it would only affect county and town taxes ; it would not affect the State taxes. Q. If means could be devised by legislation whereby the expenses of the general government can be borne by a general tax on other property than real estate then you would be in favor of leaving it to the local authorities to determine what property they shoi 1 223 assess for local purposes? A. No, sir; I would not go so far as I that; I would have a general law that would apply to the whole [State; I would not make a law that would apply to one county; I 1 don't think we have boards of supervisors intelligent enough to I draft such laws. Q. But you can understand that what might be good for Jefferson [county might not be good for New York county. A. So far as [Xow York is concerned it is very true; if New York wanted some- thing for the city itself that did not affect any other interests, I would not interfere with it. Q. Suppose that the authorities of the city of New York should want to open a field that would invite capital and that they should conclude to relieve personal property altogether in the county of New York that it would be the best means of inviting that capital, would you be in favor of vesting the local authorities with that power? A. Certainly, if the people wanted it and if they paid their taxes I do not see why outsiders should interfere. Q. Assuming that the State tax is provided in some other way? A. Yes, sir. Q. You think it would be well to leave to the county of New York the right to determine by what means it can raise its tiix for the expense of local government; why would it not be good to leave it to the other thirty -five counties of the State? A. Because largely the same law would not apply, New York is a commercial city; its interests are different from any other in the State; there is not but one New York in the United States; and what might be a good thing hereafter it should be determined by its citizens would not apply at all to the rural counties. Q. You think that the average local legislative body of the county is not as competent as the local Legislature of the county of New York to take care of their own interests? A. I would not recommend to have every local county legislature tinkering every year with the subject; I would not give him jurisdiction to change the method of assessment and taxation ; I think we would be in confusion all the time. 224 Q. Then you think that while it might be safe to extend to New York the right of local self-government on the question of taxation it would not be well to extend it to the other counties of the State? A. I don't think it would. Q. How would it in your judgment apply to the other counties containing larger cities; Kings county, Erie county, YOU own county? A. The only one county in the State aside, from New York that can be considered a commercial city is Buffalo ; Brooklyn is not a commercial city except as tributary to New York, and the same laws that would be .fairly applicable might not do in the assessment of the country. Q. Don't you find that after conferring from year to year with the local body of Westchester county that they have a verv superior class of men in that board; I mean, as a whole, not indi vidually? A. I should say as a whole they average with the other counties of the State. Q. The people of the county having faith in the integrity and good judgment of that local legislative body, why should not they be entrusted to do business for the best interests of th< constituent? A. I do not think that at present they have electe< men that are qualified; there are many bright men in the boai of supervisors; some of them quite equal to the men that meet in the Assembly or Senate, but they are not all of that character; the average in the State Legislature is above the average of the coiiiilj legislatures; in Chautauqua county we find men iii the county boa,rds that had formerly served the State in iho Legislature, and also St. Lawrence county. Q. In a general way, what modification would you suggest ii the existing law other than you have suggested, which would be for the better interests of the agricultural, manufacturing, ^orn mercial, labor, banking or other interests of the State? A. ] would recommend that the property of estates should be assessed where the property exists where the decedent dies; I would not allow an executor living in another town, county or possibly out- side of the State, to take that property away with him. 225 Q. You would tax the property where it is? A. Yes, sir; take I personal property where it is; you can not say where it is, but I I would let that property be assessed where the decedent dies. Q. What do you say in connection with the taxation of bonrtt* jnnd mortgages? A. I have already said that unless there can be I some method devised for reaching them all I am in favor of not I taxing any; unless we can have better laws than we have now; I don't think we get five per cent of them now. Q. Would you be in favor of taxing the owner of the fee as I now upon the full value without regard to the mortgage, and then in addition taxing the holder of the mortgage? A. Of course. Q. Wouldn't that be double taxation? A. I know it is a very common saying that is double taxation. Q. Do you think it would be? A. I think it is a relief to the owner of the realty if he is assessed at 100 per cent, and an indi- vidual holds a mortgage for half of it; if that mortgage could be assessed, the owner pays so much less taxes. Q. You know that under the present system in valuing realty, no allowance Is made for an incumbrance? A. No, sir; they have no right to. Q. Suppose we go on and assess the realty without regard to the mortgage, and that in addition to that, having assessed the land for a full value, you also assess the owner of the mortgage, his capital being invested in this piece of property which is already assessed for its full and true value, do you not consider that double taxation? A. Yes, sir; but that would apply to any evidence of debt we have got just the same. Q. But the debtor gets no benefit under the law as it stands; now, would you tax both the debtor and the creditor? A. He does get the benefit if the mortgages are all assessed, because the rate of taxation is reduced just as much as you assess property. Q. Would not that be taxing capital twice? A. But you reduce your rate accordingly. Q. My question is, do you not consider that would be taxing capital twice? A. Yes and no both; in one of our reports I 29 think we recommended to rebate in the payment of interest; for j instance, I buy a farm worth f 10,000, and you have got a mortgage j on it of $5,000, when I pay the interest, then I am allowed as rebate to charge against the holder of the mortgage one-1 of the tax that I pay. By Mir. Creamer. Q. Providing he is taxed on the mortgage? A. Then he woi not be taxed at all ; then do away with the tax on the mortgage, but let the holder of the mortgage consent to reduce his interest; let that be a rebate for the proportion that that mortgage to the farm; whatever the value of the mortgage is to the whol< value that to be rebated in payment of interest. By the Chairman. Q. In the county of New York there are a large number loans on real estate where the rate of interest is as low as thr and a half and four per cent; now the rate of taxation in county of New York this year I believe is 1.85; now, what eff< do you think that would have? A. That is 1.85 upon the value. Q. But the loan there can be no question if you assess the mortgage as to the value; it would be assessed upon its face value. A. Certainly. Q. Then a mortgage that paid three and a half or four per cent if you assess it on its full value and the rate was 1.85 what effect do you think that would have upon the outstanding mortgages that have matured; for instance, do you think that the mortgagee would be apt to allow the loan to remain or call it in? A. Call it in if he could do better with the money; if he could find a better place for it he would do that anyway. Q. Taking it at four per cent under the circumstances I have spoken of, his interest on his money would be cut down from fourt to two fifteen, would you consider that a fair yield for his invest- ment? A. No; I don't know as it would operate that way really. 227 Q. Why not; he gets four per cent interest on 'his money, and the county of New York requires him to pay a tax of 1.85, why would not that increase the earnings of his mortgag'e to 2.15 per ccnl.? A. It would unless you so largely increase the property on the assessment-roll that you made a low rate; if the rate was made lower it would not be that way; the tax would be lower if you increase the amount on your tax roll; you have got the Kline amount to raise, but you have double the amount on your assessment-roll. Q. But I speak now of a county where the tax rate is exception- ally low the county of New York; now, we will assume that it is the county of Kings, where the tax rate is very much higher, and the rate of interest over there we will say is four and a half, and tax a mortgage for its full amount, what effect would that have on the investment? A. If the mortgage is not paying any tax now under the present law the mortgag'e should be assessed; the law is not changed; all the difference is you are proposing a law to impose a tax; the present law calls for the assessment of that mortgage. Q. I am trying to get your views ,on the wisdom of either con- tinuing the law to assess mortgages or to so fix the law that they will not be assessed at all. A. All the difference is the present law assesses those mortgages every dollar, but the assessors can not find the mortgages; this is a case where the mortgagor knows where his best interest is. Q. Suppose the Legislature could devise a means that would make it definite and certain to the assessors as to who were the owners and holders of mortgages, what do you say then about tlir wisdom of assessing them for their full and true value at the same rate as real estate is assessed? A. If there can be any way devised to locate these mortgages then I say assess all the prop- erly, both real and personal. Q. Notwithstanding the fact that real estate is assessed to its full value you would also assess the mortgage? A. Yes, sir; you simply let each man pay his proportion; if you doubled the prop erty on the assessment-roll you reduce the rate one-half; the county and State won't take any more when each man is paying ihis full proportion of it. 228 By Mr. Stranahan. Q. It is more equitably distributed? A. Yes, sir; that is all. By the Chairman. Q. As a matter of fact, now, does not the owner of the fee pay the tax upon the money invested in his property whether by himself or the mortgagee? A. I don't think he does in all cases. Q. We will assume the assessors make oath that they have assessed every piece of property contained in their assessment- roll for its full or true value whether they swear to the truth or not I am not responsible; we will assume they tell the truth; I pick out a piece of property valued at $50,000, which has $25,000 mortgage on it; it is assessed at $50,000, and the owner of the fee pays a tax of $50,000; I ask you whether he is not paying one tax upon all the money invested in that realty? A. Yes, sir; he pays and the mortgagor pays what is invested in the mortgag( Q. Does not the owner of the fee pay upon the full and tru< value of that land, and all the money invested in it? A. Yes, sir. Q. Now, suppose you also tax the man who gave him th( $25,000 on bond and mortgage; do you not consider that interest is being taxed twice? A. The same indiivdual is not paying 11 Q. But isn't it two taxes upon the same capital? A. No, sir: I do not look upon it in that way; it is a very common way reasoning, I know. Q. The owner of the fee only has a $25,000 interest in it? A. That is all; if you can devise a way of reaching the mortgage you might assess the owner his equity in it; that, of course, would get at it exact. Q. I want to get at your views as to the wisdom of a policy that would assess the owner of a fee to the extent of his equity and then levy a tax upon the mortgagee to the extent of his interest? A. If you can devise any law to reach the mortgages I would say do it. Q. Do you think that would be just? A. Yes, sir. 229 By Mr. Creamer. Q. If the $2,600,000,000 were placed on the tax-books the rate I of per cent, instead of being 1.85, would be something like two- thirds of one per cent; that would be deducted from the interest I of the mortgage? A. That is right. Q. Therefore, there would not be anything more except an I equality of taxation? A. That is right; you will find in many I of the rural towns, when you come to school purposes, the mort I gagee does not live in the town, and you would have but very I little property to assess in some cases. Q. But on your theory we tax the property where we find it? I A. I would not favor taxing evidences of debt wherever you found I them? A. I would assess evidences of debt where the owner I resides and property wherever it is located. Q. Wouldn't it be just as equitable to assess evidences of debt I where they exist? A. Not at all; they do not require the pro- tection of government; if I have got a mortgage in Jefferson county collect that in Jefferson county; in the Supreme Court, can &ue a man that lives in the adjoining county. By Mr. Guenther. Q. You say evidences of debt require no protection? A. Not in the way that it is liable to be burned or destroyed; it cost Alleghany county and Pittsburgh f 2,000,000; if it was in this city the county would have to pay the loss. Q. How about the holder of a mortgagor living in another State? A. I guess you can not reach them. Q. Don't you think it would be as well to so amend the law that he might be reached if mortgages are to be taxed? A. An international policy, perhaps, would conflict there; if we have a law in the statute-books that assesses all western mortgages if we assume to do that in the State of New York may be we have got to allow some privileges to other States. Q. That is the same theory you advanced in the first place as to taxiug property wherever it exists? A. I make a difference 230 between evidences of debt rind property property that requires the protection of government is different. By Mr. Creamer. Q. I ask with regard to your observation as to the rate gent rally in agricultural counties; what is generally the rate on $100' A. The rate, of course, in rural counties varies, but as a rule it is very much less; in the town where T live the tax rate is sixty- four hundredths. Q. The assessed valuation? A. The tax rate. Q. Sixty-four hundredth^? A. Sixty-four cents on $100 of valuation; in New York it is one dollar and eighty-five, and in the town where I live it is sixty -four hundredths. Q. Is that high? A. It is about the average. Q. In agricultural towns? A. Yes, sir; it is a small village. Q. That is a fair criterion? A. About the average. Q. It will average about one-third of what ours is? A. Yes, sir; we have no privileges to be taxed for; a farming town has no sidewalks or gas or lights in the street, and all those things that -make your tax heavy they do not have. By the Chairman. Q. Do you know what the average rate of taxation is on $1,000 in St. Lawrence county? A. I could hardly tell you; I should think it would average aboat seventy-five cents to the dollar. Q. That would be seven dollars and fifty cents on a thousand? A. Yes, sir. Q. How does it average in Jefferson county? A. About that; in the town where I live it is sixty-four cents this year; that is about the average; the city of Watertown would be higher; I think in Watertown it is nearly two per cent. Q. Have you ever made any calculation as to the proportion of State tax that is paid by i:he farmers of the State the total? A. Our reports will show That; we print that each year in our reports. 231 Q. I think I have heard it asserted that the agricultural lands in the State paid about eight and a half per cent of the total tax? A. I should think more than that; on the valuation of course every $100 of the State tax on the actual valuation is the same whether it is found in the rural towns or the city of New York. Q. One of the purposes of this inquiry is to see what means we can devise to relieve the agricultural interests of the State from their present taxation burdens; now, if they only pay eight and one-half per cent or about that, of the total expense of the State government; now, do you see any way by which it could be decreased other than to drop the system of taxing real estate for general State purposes? A. The different ways that have been suggested I think would do ; anything by which you would increase tihe amount of personal property in the State relieves realty to that extent. Q. Does it not appear to you that the burdens that fall upon the agricultural counties of the State are largely due to the expense of local government? A. That is very true. Q. The proportion of the total State tax paid by those inter- ests being very small? A. It is not only farmers, but in every village and every city you will find mechanics and thrifty individuals that are trying to pay for a house and lot; the burden on that individual is just as burdensome as to the farmer; it is to the real estate of the country. Q. Do you remember approximately the proportion of the total State tax paid by the counties of New York, Kings, Erie and Westchester? A. The county of New York pays about forty-five per cent of the entire State tax. Q. I am advised that the 'our counties I have named pay about seventy-five per cent of the total State tax? A. New York and Kings pay fifty-six per cent of the entire State tax. Q. And Erie and Westchester, I understand, make up the difference between that and what I have said? A. You will find with the comptroller last year that our report shows the full value of every county and the amount paid. 232 Q. My purpose in making this inquiry is with a view of ascer- taining whether the burdens which are oppressing the mi counties of the State are not the result of local govermnei rather than the expense of the State government; now, if burden of taxation of the rural counties is largely owing to tl expense of local government, how can the Legislature relieve them' A. If you get all the personal property. Q. If you reach the personal property in those rural counti( A. That is it. Q. Is not the law such to-day that they can reach the bulk ol the personal property in those counties if they want to? A, They fail to do it. Q. Is not that rather the fault in the execution of the law tha: in the law itself? A. I thiuk the assessment laws we have g< now we have had not had any practical change for sixty years: I think the wisdom of those days should make some improv< ment. Q. For instance, in the city of Watertown have not the Iocs assessors the right to assess personal property money invest* in business stock? A. The difficulty has been to find it; w< want more thorough laws to give better opportunities to find them. Q. Supposing you knew a man in the city of Watertown that had $25,000 invested in business; he could be assessed? A. No, sir; he would claim to be in debt. Q. Then you think the difficulty now is the right of offseting by indebtedness? A. Yes, sir. Q. You are in favor of wiping that out? A. Yes, sir; that is the most radical change I would make. The committee then went into executive session. On motion the committee adjourned to meet on Tuesday, December 27, 1892, at 2 p. m., same place. OF TSB UNIVERSITY 233 -* " Superior Court, Part 2. New York, December 27, 1892. The committee met pursuant to adjournment. Alexander E. Orr, called as a witness, being duly sworn, tes- fied as follows: By Mr. Creamer. Q. Have you read the resolution authorizing this committee o make inquiry on certain points? A. I can not say that I read t all; I looked over it. Q. You understand principally the object of the inquiry here 3-day? A. Yes, sir. Q. You have been in business in this city for many years past? L. I have. Q. What is your judgment concerning the taxation of personal roperty as affecting the progress of business of our State during le last ten years? A. The taxation of personal property has een very light; my opinion is that if it had been enforced it r ould have been exceedingly disastrous; it would have driven ipital away from the State. Q. What character of capital? A. Capital not permanently >cated; capital that was movable. Q. What would you describe as movable property that would affer in case of the tax being enforced? A. What you term personal property of citizens, money, securities, mortgages, le evidences of debt. Q. As regards corporations? A. No; corporations receiving tieir authority from the State that have a location must make *turns. Q. Do many corporations change their location in your experi- nce on account of the tax laws? A. No; I don't think they do, >ut I do believe that because of the tax laws a great many cor- xxrations that would have been bom in New York State, as it ^ere, have received their charters from other States. Q. And continued to do business in New York? A. And do msiness in New York. 30 234 Q. Outside of the reduction in the amount of the fee charged for filing articles of incorporation; that is an advantage, I believe; it is much less in the State of New Jersey than in this State; what advantages have corporations in other States; have you any; knowledge on that subject? A. I have not knowledge enough express an opinion. Q. Take a case, for instance, that has been quoted here (and there is now nothing private about it) the case of Mr. Clatlin, tnough the Claflin company is organized under the laws of Ne^w Jersey, still the corporation pays on a far greater sum of per- sonal tax this year than it did previous to being incorporated m New Jersey; there must be some advantage therefor; there must| be something; possibly it would be well to look to the firm for information, unless you have some knowledge as to the advan-- tages obtained? A. I am not a stockholder of that corporation,!, and never looked into it, and therefore don't know. Q. We only mention that as one of no doubt many; it there- i fore could not be on account of the taxation, because they pay a>| larger tax than before? A. I think the inducement was 10 incor- porate because of the reduction in the incorporation fee that was** charged. Q. That is but bagatelle in comparison with the increase in-i the amount of tax that they pay on their personal property; the amount that they pay on the one-eighth of one per cent woulc be a trifle in comparison with the large increase in the amount that is agreed upon by their own consent at our tax office here I simply call your attention as a business man to that state oi things, Mr. Orr; now, you think that individuals, as a general thing, evade the tax laws on personal property by taking up resi- dence in other States; that is, that the tax laws have affected people to that extent? A. No; I can not say that; I think thai is as I said before; if the tax upon personal property was enforced! it would have that effect, but because it is known that effecl would be the result, personal property has not been taxed. Q. Then the fault is not so much in the law as it is in the on-enforcement of the law in not having personal taxes assessed lid collected? A. I think the fault lies entirely in the law, and lie remedy has been in the non-enforcement. Q. What is your judgment as regards having a similar tax w to that prevailing in other States on personal property; say e-tenths of one per cent? 'A. I believe this, that in the first ace, if the tax was to be enforced, those persons who were oon- ientious would absolutely leave the city or State and select a fferent location; those persons who are not conscientious would ade it; I think if you could arrive at a system of taxation I ean personal taxation which would prevent a man who will vade through misrepresentation, from taking that position, jcause of the moderate rate of taxation imposed, and the man to is conscientious and will not allow himself to evade it from at standpoint will prevent him from going away, that then you ill have reached a point when you will derive a great deal more an from the taxes as now collected, and it seems to me you ould avoid the evil influences of what we term now the tax xm personal property the possible evil influences, Q. As regards a tax on mortgages, Mr. Orr, generally speaking, making up the assets of large corporations; do you believe in ^plying similar tax to such catpital, as is applied in other large bates? A. I don't know what the tax is in other large States. (2- About one-half of one per cent? A. I am absolutely' opposed taxing mortgages; I believe it would be a very disastrous ling to insist upon the assessment of mortgages. Q. it is done in other States; some States take much more than ne-half of one per cent; in some States it is the full amount of In 1 rate of taxes. A. I look upon the taxation of a mortgage imply to be an additional tax on the real estate. g. In what way? . A. That the lender of the money would 11 si si upon a rate which would pay the ordinary rate of interest .nd tkc additional tax he would have to pay upon the mortgage. Q. Has that been the experience as far as your knowledge goes vith the lenders of money in States like Pennsylvania and Mass- 236 achusetts? A. I have never loaned money there so I could tell. Q. Have you any knowledge of the transfers in other Statd where there is such a law? A. No, sir; I would like to go i little further, if you would allow me; I think that the absoluft elimination of the law whereby mortgages could be taxed woulc ultimately result in a less rate of interest to the mortgagor. Q. Why? A. There is an uncertainty existing, and there ad persons who are sometimes taxed upon mortgages, and especiallj estates; now, if it is absolutely known that that was eliminate* instead of taking into consideration the rate of interest upoi money loaned upon real estate with the possibility of the tax upoi the mortgage, the money would be forthcoming at a lower rat^ of interest. Q. But if the mortgage is taxed even one-half of one per cenil that is a relief to the mortgagor in making up the tax roll; Jj course, if the mortgagee is paying part of the tax why the morfcl gagor is not paying. A. If you will establish it absolutely tha the rate of personal tax upon the mortgage can not be more thai one-half of one per cent, it would have its influence to that effedj in the direction which I state, of reducing the absolute rate ojj interest upon the mortgage. Q. If they understood what it r was to be, one-half of one pel cent, would that be a better state of things than to have ail uncertainty as regard the 1.85 that prevails in this city? A j There is no doubt of it; I think so. Q. You think so? A. There is a great deal of sentiment aboul this question of taxation of real estate; if I make an investmen j in a piece of property I take into account, first, what it is goinj I to pay me; now, as one of the charges I take the tax upon tbJ property; I eliminate that from, the net result; I take also ti insurance upon the property, and I eliminate that from the ne result; I take the expenses of keeping it in repair, and then find what the income is and call that the net result; if you di away with taxes upon real estate, you simply give me as agains the man that sold it to me the advantage between non-taxes an< 237 that when you talk about it not being fair to tax real rtate and not personal property, I say that is entirely wrong. Q. The existing state of things is, under the law, that when you irchase the property you expect to pay your share in prosperity id adversity as well, as regards the general condition of things, iitih all other citizens; that is, the owner of real estate; the w says that he is no more at a disadvantage in the case of panic an the holder of a mortgage. A. But the holder of the mort- ige has already invested in that real estate, and already paid xes. Q. It is supposed to pay taxes but it does not-. A. The real tate does. Q. The argument that is used that it would be double taxation, is that any weight in your mind? A. Yes, sir; I chance to be esident of a savings bank; I think to-day if you tax a mortgage >on real estate; we have loaned on a very large portion you low the law allows us to loan sixty-five per cent of the amount our deposit upon real estate; now, the result of that is that those towns here real estate derives the benefit of the money aned, and it holds to creditors a portion of its value; now, if >u tax a mortgage I merely make this as an expression of hat I believe would be the result Q. Do you mean as regards savings banks? A. As to all ortgages. Q. Because we disclaim at once any desire to interfere with .vings banks; Mr. Chairman, do I represent the committee ght on this? The Chairman. Yes, sir; I believe so. Mr. Quigley. A question may arise as to the unclaimed ^cumulations. The Chairman. I think the counsel is quite right, but I don't low as there is any objection to Mr. Orr's view as to that. The witness. My belief i 3 that if you enforce a tax upon mort- iges that you would have a universal calling in of loans and the amediate effect of that would be upon real estate, and an imediate depreciation of value of, I would say, at a rough guess, 238 from twenty-five to thirty per cent; I really think it would exceei that. Q. What becomes of all these profits that savings banks accul mulate from interest on money loaned? A. As savings banks! you know, from the wisdom on the part of the Legislature, ara| surrounded by almost absolute protection when the trustees honest men; the mortgage is really the element which enabl us to pay to the savings bonk depositors a reasonable amoi upon the amount of their deposit; in the first place, we are allowed to take any of the bonds of corporations or of cil outside of the State of New York; we are confined to the city New York and the cities of the State of New York, the State New York and other States, and United States bonds, and addition to that we may invest in bond and mortgage in State of New York; now, the volume of money in the savii banks, and perhaps, gentlemen, you don't know this there a savings bank account to represent every five persons in State, one savings bank account for every five, and in the of New York one for every two and a half; in Brooklyn is about three one in every three; of course, there are a gr< many duplicates in this case, but I give you that to show y the volume of persons interested in the outcome of the saving banks; now, the city of New York is able to borrow its mom and mainly because the savings banks have so much money them it can borrow money from two and a half to three cent, and the State of New York can borrow it at a little less that if it needs it, and almost all the towns and cities in the Sts of New York are able to borrow money at the same rate tl money which we invest in those bonds in the cities eviden< of debt pay only what we receive for the money that we upon bond and mortgage, plus what the taxes would be in place where the savings bank is located; the average of savings bank bond and mortgage loan is about four and a hi per cent; the bonds that we are obliged to buy under the lai in the State of New York will not average more than three cent, perhaps a little less than three per cent; so you see 289 ifference ig represented really by what the nominal tax would e between the two, so that I hold that the city of New York, le city of Brooklyn, Buffalo and the city of Rochester are abso- iitely borrowing their money free of taxes from the savings nstitutions. Q. As I understand it, savings banks do a great deal of waning on bond and mortgage? A. Yes, sir; we are allowed to ran sixty-five per cent. Q. On your deposits? A. Yes, sir. Q. On that sixty-five per cent of the deposits you receive at ast five per cent interest? A. No, sir. Q. I mean to say that savings banks loan to individuals at mr and a half per cent? A. I don't think the average of savings anks loans would be over that. Q. I mean this sixty-five per cent that is loaned to individuals not that at the rate of five per cent? A. No, sir; sometimes ?low four and a half, and a good deal below four. Q. Do you mean to say that an individual can borrow of a avings bank at the rate of four and a half per' cent? A. I link so. Q. Do you know of any such? A. Yes, sir; a great majority in ur banks are such; we are debarred under the laws of the State mm loaning money upon real estate that is not double the value f the property loaned upon, and that value must be certified by wo of the trustees who have made a personal examination of it; lerefore those are what you call very choice loans; the life Dsurance companies, fire insurance companies and trustees of states are allowed to loan what they consider is a fair, reasonable mount, and you will find that those loans generally run from ixty to sixty-five per cent of the value, and parties will pay a igher rate of interest for loans of that character than for a avings bank loan, which must be of necessity a very choice oan. Q. As I understand it, sixty-five per cent of your deposits can >e loaned by the bank? A. Yes, sir. 240 Q. And thirty-five per cent must be kept by the bank for purposes of business? A. We can not have more than ten cent of our deposits in money on hand, but the balance must invested in such securities as the law allows. Q. Sixty-five per cent of your deposits would be loaned on estate, and twenty -five per cent on securities that were availal at any tune? A. Yes, sir. Q. And ten per cent would be in cash? A. We are not c< pelled to keep ten per cent in cash, but we can not keep m< than that. Q. Do* you do that? A. I think from five to ten per cent. Q. What would be the average of the earning power of money of a savings bank? A. If you will look at the returns will find that the amounts paid by the savings banks will averag about three and a half per cent. Q. I don't mean paid to the depositors; I mean what is average per cent on the moneys in the hands of the bank? A. don't think it would be more than four per cent, and I think in great many less than that. Q. They don't pay more than three and a half per cent in an; A. Some three and some three and a half, and the old banl where they have a large accumulation, some pay four. Q. Do you know whether or not they loan the accumulations deposits which have been unclaimed? A. I think they are v( light; I think there is a mistaken idea about that. Q. If there is such a fund, they are loaned with the oth< funds? A. Yes, sir; and the surplus all the savings bnnl aim to have a surplus we ought to have that for the protectic of the savings with us, but after that arrives at fifteen per c< of the deposits, it must be distributed among the depositors. Q. By what means? A. Increased interest; we rather pref it in a yearly distribution, so that if one year we do not mal quite so much as another, the interest rate does not vary. Q. Is there any power under the law for any one to find out the condition of those accumulations in any of those banks 9 241 Yes, sir; we have to publish at each of onr annual returns to the department a statement of the number of accounts that have not had any deposits or withdrawals during the last twenty years. Q. Do you give the amount of those? A. Yes, sir. Q. How often are those statements made? A. Every year. Q. Is that compulsory by any law now on the books? A. We understand it to be. Q. Is that sworn to by any officer of the bank? A. Yes, sir; the bank officers the president and the treasurer, I think, swear to it. Q. From what fund do savings banks build those enormous expensive buildings that they build frequently for their own purposes? A. I don't think they build very enormous ones; the bank that I am in, we have between twelve and thirteen millions on deposit, and we estimate the value of our building $75,000; I think they are all built out of what they term the surplus. By the Chairman. Q. That is as good an investment as it has? !A. I think it is; that investment must be returned and it is returned each year to the department a statement of it. By Mr. Quigley. Q. Do you not know of your own knowledge where some banks have built extravagantly in that way? A. If a bank had a very large surplus and was doing a very large business, I think it could afford to build a large building; therefore, the amount would depend something on the size of the bank; I should say, if you take the Bowery, or Bleecker street, or the Greenwich bank, or any of those old ones, they could afford to build a better building than a newer bank with smaller surplus. Q. That surplus put in the building really earns no money for the depositor? A. Yes, sir; some of them do not, but others do. Q. From what source? A. As to the bank that I am in, we hav(! surplus rooms rented that give an income in the same wav as those banks do on deposit on discount* 31 242 By the Chairman. Q. Then, you do not have to pay any rent? A. No, sir; take that new building of the Greenwich, which is a very service- able building I suppose, if they had to pay rent and get I lie same accommodations, it would cost them a good percentage on the cost of the outlay. By Mr. Quigley. Q. What is the name of this one right opposite the court-holism? A. That is the Emigrant; a very fine bank. Q. They have a very fine building? A. Yes, sir; and I suppose! a very good return for the investment. Q. Have you any idea how much that cost? A. No, sir; thei return would show it. By the Chairman. jl Q. The bank only occupies one floor? A. Yes, sir; I think so. Q. And rents out the rest at a high rate to the tenants abov( A, I think so. By Mr. Quigley. Q. Did you ever see any report from the Emigrant bank of th accumulation from unclaimed deposits? A. I am in the habil of looking over them all, but I can not remember any particular item of that one; I presume they make the same report that w< are all required to. By Mr. Creamer. Q. About buildings, would not that be better illustrated reference to the Dry Dock Savings Bank which has been so mucl talked of for a number of years past? A. I would like to sal this, that I look upon the time given to the operation of th< savings bank as the most philanthropic that I give; I also lool further upon the character of the savings bank depositor as one that can not be argued with much; if he wants his money yoj have got to give it to him, and you must keep your bank in a ; 243 Condition that commands his respect; I presume that is very |>fteii taken into consideration in investing in buildings; I do not jf deposits, for instance, in the bonds of Chicago, Boston or Phila- lelphia; it was growing this way that the United States bonds disappearing, and we have more money than is wanted tthin the State, and we wanted authority to go outside of the ite and make some investments, equally on a par with, our By Mr. Creamer. Q. I would like to ask what can you suggest that will increase le dividends to the depositors in savings banks; there has been complaint for some years past as to the amount of interest you depositors. A. The passage of the bill just alluded to I would help the interest earning power of the banks with- it in any way interfering with their conservativeness. By .the Chairman. Q. In other words, a wider field of investment? A. Yes, sir; lere is real ignorance on the part of the community as to the banks; there is nob a single person connected with the Lvings banks in their management except those employed actually officers, who receive remuneration; I and my twenty-six col- ies in the management, except one or two who have to be iere every day the financial officers who receive a fair emolu- 244 ment, but all the time and intelligence given to the managenn are by boards of trustees, who are generally men past the of life who have been successful in their own business, an evidei to the community that they are cautious; that a.nd the prol elements around the savings banks by the Legislature lead me believe that it is impossible for the savings bank to absolui fail; they may be in the time of panic unable to realize upon; their securities, and people may have to wait a little while, but; it would be absolutely impossible for the depositors to lose unless j there is fraud on the part of the trustees. By Mr. Quigley. Q. If that bill had become a law allowing them to invest in bonds outside of the State of New York would not that prevent j individuals from as readily getting! money from banks? A. No, I sir; if you read the law you will find that only five per cent of the savings bank deposits is applicable to put into the seeuritiejl of any one of those places 1 , and we can not put more than twenty! five per cent in the whole aggregate; we must preserve seventyl five per cent for the State of New York. Q. You mean twenty -five per cent in the aggregate or five differ! ent investments? A. You can not take first of all more than fivi per cent of the deposits in any one city or town ; I wish you would! read that law, because it received a great deal of attention on thl part of the savings bank presidents met in convention, and I thini with the exception of one or two it was unanimously approved of! By Mir. Ahearn. Q. Two-thirds of the depositors were against it; they claimed that if you were successful that you would do the same with thlj money that yon are doing now, putting up fine buildings? A. Nj sir; there is no such desire at all. Q. That is what they claimed. A. Do you speak of depositor*] tihat complained. Q. Yes, sir; and the city authorities were opposed to it. A. M great many of the city authorities did not understand the pifl visions of the bill, and after you voted upon it I spoke with somej 245 the gentlemen who were representatives in Albany and they Id me if they knew as much as they did then they would have jed for it; I hold that the fear of the authorities here, particu- rly our comptroller here, that it would result in preventing our vestment in the bonds of the city of New York was absolutely ong ; there was no such idea or expectation. By the Chairman : Q. There was, of course, a spirit of selfishness actuating the icers of the city of New York and they wanted to get money low as possible,? A. And they always have. Q. And they thought if your field was widened they might have pay three and a half instead of getting it for two and a half? A. t me ask what would a constituent of the comptroller say if should say to him that the reason why we can not pay more than vo and a-half or three per cent on his money is that the Legis- ture recognizing the ability of the comptroller to judge instead our trustees, prevented us from having a larger scope. By Mr. Quigley. Q. Was that the only reason you wanted a larger scope? A. ntirely; we have been investing in government bonds and they ill soon have expired; we were looking for something to take e place of those bonds. By Mr. Creamer. Q. Does the non-taxation of trust companies generally affect rings banks in any way? A. No, sir; not the savings banks. Q. What is the cause of their being able do you say they 3n't interfere with the interests of the savings banks? A. T m't think they do; trust companies are of great use to the rings banks; if you take up their reports you will find that a >od deal of the idle money of the savings banks is deposited the trust company and earning an income. Q. Money where you can not make a permanent investment? A. 'e must keep some loose; you take the Bowery Savings Bank ith its forty to fifty millions deposits, it must have a certain 24:6 amount of money idle ready to take care of contingencies, and they have that in a trust company, and they pay them interest. Q. Does that interfere with the rate of dividends of the banks? I A. No, sir; as a rule we get a good rate. Q. What is the average? A. About three per cent; a saving*-. bank deposit with a trust company is better than an ordinary; deposit with a trust company, for this reason, it is permanent;] it is there to take care of a contingency; meanwhile it is earning something and the trust company has a right to consider they can i bank on it no longer. Q. Then in your judgment the small rate of interest paid by a trust company does not have a tendency to keep down the rate o interest paid by savings banks to the depositors ; does the operation,] of the trust company interfere with the savings banks depositors?; A. No, sir; it is a great benefit to the banks. Q. I mean as to the relation of the community generally, you can not see where there is any interference? A. No, sir; it is a benefit j the savings bank is a protected depositor with the trust* company in this State; in case there is an accident to the tri company the savings bank is paid first; it is a preferred creditor. Q. Now, as regards taxation of trust companies and their ass* what is your judgment; are you connected with any trust company Yes, sir; I am a trustee of the United States Trust Company. Q. Are you connected with any life insurance company? A. am not connected with any. Q. What is your judgment concerning life insurance companies of our State; are they not as well able to pay a tax as in other Statesi? A. I presume they are; 1 don't know what the taxation Is in other States. Q. One-half of one per cent, and in some places larger? A. I think most of our life insurance companies here are mutual com- panies; there is no one derives any benefit except, the persons who insure them; they are not stork companies; Iliey do not pay dividends; if 1 am insured or you are insured, the out come acorneN to us; 'it does not accrue io anybody else; I don't know of any slock companies in the life insurance 1 nisi ness in New York. By the Chairman. Q. The policy of the State has been against a stock system? L Yes, sir; everything goes in for the benefit of the assured. By Mr. Tierney. Q. As regards their abilitv to pay their share of taxation? A. think there is no doubt of it. Q. You think they should pay their proportion? A. What- ver you can show to be their share. Q. Now, the banks they pay their share of tax the share- lolders? A. I think the banks pay a larger share of tax than my other interest that I know of; the bank pays its tax upon ;he assessed value, and the assessed value is usually what they ;erm the market value, and that market value very often predi- cated upon what is termed the good will. Q. Do you not think than the banks that their stability in :he State of New York is owing much to their readiness to com- ply with the law as regards their obligations to the national government, State government and local government? A. I do lot think if it was left to them that they would like to pay the ate of taxation at which tliey are taxed, but their charters compel iieni to make their returns, and they are based upon sworn statements and there is no escape. Q. They as you say no doubt would like to keep company with :hose not taxed? A. They would like to be relieved of a portion )f the law, as I say; I think the banks of the State of New York ire taxed more in proportion to the absolute value, the market Lue of their stocks, than any other interest that I know of, ind I think that is not growing out of the desire of the bank ;o be so treated, but the compulsion of the Bank Department, I Which compels them to make returns upon which those taxes uv levied. ! Q. The duties of a bank director are far more responsible and bnerous than the director of a life insurance or trust company? A. I think they are; our actions are more controlled by law, and Binder the responsibility resting upon us in case we overstep that authority. 248 I By the Chairman. Q. They are both liable for punishment for misconduct? Yes, sir. By Mr. Creamer. Q. The opinion is that if our banks can pay a fair equitabl tax other money institutions should also pay their share? The banks enjoy privileges which others do not; you will seldom find a bank paying interest upon deposits; for instance, if I have a bank account in a trust company I receive interest; if I have an account with a bank I receive no interest from the bank; at the same time, if I want money upon my note and go to the bank, I expect to get it; I have no claim upon the trust company. Q. But often the rate allowed by trust companies is very small? A. It is generally predicated upon what the trust com- pany considers the value of your account. Q. And a good deposit in any bank the depositor generally receives favors that will compensate him for any loss of interest that he might get from a trust company? A. We all want bank accounts; it is very convenient to operate our business through them; they expect to derive benefits and we expect to derive benefits. Q. Now, as regards the taxation of corporations generally, have you known of any cases where they have been driven from this State on account of threatened taxation? A. I don't think I have; I can not recall any particular instance at the moment; as I said before, I think a great many corporations have been organ- ized in different States because of the different cost attached to incorporation here. Q. You are an officer in the chamber of commerce and produce exchange? A. I am a vice-president of the chamber; I have been vice-president of the produce exchange. Q. You do not recall any corporation having been driven out of this State on account of taxation on personal property? A. T do not remember any. Q. What would be your judgment concerning deduction for debts for personal property on non-residents who were supposed 249 j to have left the State with a view to avoiding all taxation? A. I I presume they would carry their personal property with them. Q. It has been discussed here as to whether those who leave [the State with a view to avoid the payment of taxes, whether I when they do appear to avoid all taxation, or at least the larger rate imposed in this county, whether when they do appear at the tax office they should not be allowed equal privileges with resi- dents of the State as regards making a deduction on any capital they admit in their possession? A. I think it would be just and equitable in all instances to allow a man to deduct his debts from the gross value of his assets. Q. From personal property only? A. Yes, sir. Q. From real estate? A. No, sir; real estate is entirely different. Q. As regards this popular error concerning double taxation of real estate, when you tax the mortgages as well as the mortgagor, do you share in that opinion with others as to its not being a just tax because it is a double tax? A. I think it is an unjust tax. Q. Is it a double tax? A. I think it is. Q. Isn't it rather two persons paying one tax instead of one paying all? A. No, sir; I think not. Q. Suppose the annual budget of this county is next year 75,000,000? A. That is all they are to collect; no more and no less. Q. How can there be 70,000,000 imposed, no matter how large the sum is placed upon the tax book of real or personal property: if, for instance, the amount of the mortgages was placed upon the tax books as well as the value of the real estate, that would reduce the rate of taxation on the real estate owner, and there- fore would be a reduction of the tax on the real estate, and adding it on to the owner of personal property; that would not be double taxation? A. My idea, which I tried to make plain to you iirst, was this, that if you tax the mortgage this year you might get it, but next year the mortgage wouldn't be in existence; if it was policy to call in the mortgage it would be called in, and the result would be it would reduce the value of the real estate; it would 32 250 act two ways; it would hurt the man who owned the real estate and would destroy the value of it as a means of raising revenue to the city, because it would reduce its value. Q. Take it with the rate one-half of one per cent on mort gages; you have said in your judgment that won't serioi interfere with the borrowing or loaning of money? A. Whal said was that under any circumstances a tax upon a mortgage would be an additional tax upon the real estate, but that the lower that you fixed the tax upon the mortgage the less the amount of interest and the volume of the tax including the interest would be to the owner of the real estate; if you leave it as it is now, an uncertain quantity, entirely at the discretion or diligence, whatever you please to call it, of the assessor in getting at the present tax, under any circumstances, it is in my judg- ment that whatever rate you are fixing upon a mortgage you absolutely fix that as an additional rate upon the real estate. Q. In view of those facts, do you not think that personal prop- erty embraced in mortgages should pay a reasonable amount of taxation towards the support of government; you have already stated, I believe, that one-half of one per cent would not be onerous? A. I did not state it exactly in that way; do I under- stand your question; do you mean that the real estate should be assessed to the owner of the real estate less the mortgage? Q. No, sir; let the assessment go on as it is now, just the same, fifty per cent of its actual market value or its actual value? A. That is an unknown quantity; now, my house that I pay my tax upon I think I pay ninety per cent of its market value. Q. You reside where? A. In Brooklyn; I think I pay ninety per cent of its market value; as to the question, do I think that the tax assessed upon real estate and then a tax assessed upon the mortgage is a single tax or a double tax; I consider it a double tax and an unfair tax. Q. You pay on $90,000? A. No, sir; ninety per cent of t cost, I said. Q. What is the tax rate? A. Suppose I bought that house for $50,000; I am assessed for $45,000; suppose I bought thai 251 house and gave back $25,000 mortgage on it; before I started in upon this deal the city received a tax of ninety per cent upon f.~iO,000; now, after I had completed the deal the city would receive this ninety per cent upon the $50,000 and place the same rate of taxation upon $25,000. Q. Hut the city don't want to receive more than it should; 1hal is whore the mistake is made; suppose all the tax is raised in the county from real estate and mortgages on real estate, and that your piece of property say, in round numbers, is worth 1 (-0,000, and there is a mortgage of $50,000 on it; now, if ninety on the hundred was the rate if you are assessed on that and tin* holder of the mortgage is also assessed, yon see you have more money than you require; therefore, the money that is raised from the mortgage is deducted in a revised tax rate from your house assessed at ninety per cent, and the rate would be so much less than the amount raised in the mortgage; therefore, where is the double tax? A. Perhaps, you have got the theory of the thing and I have got the practice of the thing. Q. Suppose, for instance, that your piece of property was mort- gaged and the mortgagee was paying his share, then the city would not require it from you; they would deduct it in the next annual budget; where is the double tax? A. I find that though the volume of taxable property is increasing our rate of taxation remains the same; the practical side of it is mine; the theorHiral side of it is yours. IQ. For instance, if in the county of Kings, the amount of the mortgages on the realty there is the same as it is held to be in this county and other counties, fully equal to the assessed value of the property, and all those mortgages were placed on the Kings county tax-list, that, of course, would reduce the rate of taxation from two dollars and seventy-five cents to one-half of what it is to-day; it is a double tax only in the sense that the mortgagor and the mortgagee both pay where now but the nioHgagor pays; there is no double taxation in that; there is a reduction of taxa- tion for the owner of the property, and, therefore, wherever (here in a reduction of taxation there is a benefit to the owner as 252 well as to whoever rents the property? A. That has not the experience, Mr. Counselor. Q. As regards the tax on inheritances, what is your opinio] as to the operation of that law the collateral inheritance tax' A. I believe in it myself thoroughly. Q. And also tbe direct inheritance tax? A. I believe in the inheritance tax. Q. Would you modify it in any respect as regards the amount to be taxed; it is now limited to property above $10,000; would you increase or decrease that amount; there has been a difference of opinion as regards the effect of that law and what the views of citizens were in regard to it? A. I think the provision is a fair one as it stands now. Hy the Chairman. Q. Some of those city officials that insist that two and a half per cent is sufficient earning for your savings bank money do not hesitate to get five per cent for collecting this inheritance tax; what do you think of the liberality of the spirit in that con- nection? A. I don't think it is liberality. ;! Q. In other wordsi, they want the use of ibKeir money for two and a half per cent for a term of years, and for the mere collec- tion of this money passing through their hands for a very short period they want five per cent for the trouble of collecting it; do you think they exhibit a great degree of liberality? A. No, sir. Q. Do you not think that five per cent for the collection of that tax is altogether too much? A. It is not the collection of it; it is the contribution from the State to the maintenance of the government. Q. I am talking now about the percentage that the officer getB for the mere handling of it. A. That is outrageous; I did not understand the counsellor's question; I thought he meant the levying of the tax for the government's purposes. Q. That is what he meant; my question went to the fee of the officer who collects the tax. A. There is no question about that; it is outrageous. 253 Q. You think that without doing any injustice to an officer already salaried tha/t percentage might be cut down? A. I do. Q. The purposes of this inquiry as you may have learned from the resolution are as to the propriety of modifying the present laws relating to taxation, assessment and interest, so far as they affect the agricultural, manufacturing, commercial, labor, banking and other interests of the State; now, I think .all the witnesses who have preceded you on the witness stand have united in the expression that real estate should be relieved from taxation for general State purposes, if means can be devised by the Legislature for the support of the government otherwise; what do you think of that proposition? A. I think it would create a great feeling of satisfaction, and it would do away with a great many errors that creep into this whole question; I think it would be a great benefit if the State government could be maintained by taxes outside of this question of real or personal taxation, and leave for the localities themselves in which the people live to decide those questions of taxation from the real estate or personal standpoint. Q. That would do away with all this question of equalization? A. Yes, sir; it would do away with a great deal of this haze that really surrounds it now; if the State should obtain its taxes through the inheritance tax and through coiporation that derive their existence and benefits and favors from the State, then leav- ing the other questions of local taxation to the local authorities, it would be a great point gained. Q. Can you suggest any additional channel through which revenue could be obtained for general State purposes if real estate is to be relieved from a general tax? A. I stated that I thoroughly believed in the inheritance tax; as I look upon it it is not onerous to the persons receiving something that they have not earned themselves; it is something that they have had no direct influence in the creation of, and it is absolutely all profit to them. Q. Would you be in favor of increasing it? A. I think I would; the more I have thought of that the more tbaf piecing out the budget by the income tax; the direct inheritance tax here is very moderate, and it seems to me that could be increased materially without being onerous to anybody where you relieve the very moderate amounts coming to persons in moderate circumstances. By the Chairman. Q. You think it might increase above one per cent and yet not to be a hardship? A. Yes, sir; in Great Britain I think'it Is live Q. You think we might increase the direct inheritance tax to two and a half? A. I do. Q. Do you recommend that? A. If I was in a position like you I believe from the light I have now I would be in favor of looking to that for a means of income. Q From the standpoint of relieving real estate from taxation for State purposes, if you were searching around for something you would recommend the idea of increasing the direct inheritance tax to two and a half per cent? A. Yes, sir. By Mr. Hamilton. Q. And including also real estate? A. Yes, sir; it must be on all; it seems a fair way and also a way that everybody has to pay his proportion; there is no evading it. By the Chairman. Q. You said that you favored the tax upon corporations? A. I favor a tax; I don't believe in corporations relieving themselves of taxation; of course, T mean a tax that is in proportion to the 256 benefits they receive from rights derived from the State and tb.< protect ion of the State. Q. What do you say of I he lax of one-eighth of one per cemi do you Ihink Iliai is loo Mgh? A. My idea is this: That I wouli try to get the corporation and I would keep the tax so low untm I got the corporation. Q. Then you would tax them after you got them;? A. I woulrf tax them in proper (ion to (he benefit; you would very soon lind out what that is. By Mr. Creamer. Q. Do you think that a law that would work well in Pennsylvanii| and Massachusetts as regards corporations might be tried nere in safety? A. If I knew what these were I would be willing express an opinion; I would not tax them in their inception to pie-| vent them organizing; I would rather make the tax in such a pro- portion as to ask them to the State of New York and place themd under your own supervision; imaginary lines, you know, are very] easily crossed. Q. With regard to the incorporation of those companies? AJ Yes, sir. Q. Your opinion is that a company can not afford to pay one- eighth of one per cent on a capital of say $200,000 must be very! short of funds? A. They ought not to be. Q. There has got to be a line drawn somewhere as to the privilege of forming companies? A. If you are going out tc shop and find two stores equally advantageous, one charges yorj one price, and the other charges the other, you will seek the one! Mi at charges least. Q. What is your judgment concerning the incorporation oil this company in Jersey City doing business in the State of Ne^vl York and organized in the State of New Jersey recently? A I Which do you refer to? Q. I do not know; it is a corporation recently organized there! including a safe deposit company, to have a branch in the Statcl of New Jersey to represent corporations doing business in thiil State, incorporated under the laws of New Jersey, to give them tl 257 usiness standing in that State, principally to avoid taxation r liability under our laws not existing under the laws of New ersey; have you noticed the existence of that corporation? A. To, sir. Q. As regards an income (^x what do you think of an income ax as being a solution of taxation of personal property as has een suggested; what is your judgment concerning the effect n income tax would have? A. I think it would be exceedingly nfortunate for the State to have that; if you have one which s national in its character and 'drawing an imaginary line does tot prevent its being operative, it might answer, but if you mean State tax it only means the building up of adjacent States vhere they do not have it; you would be depriving the State of ew York of that portion of its citizenship that spends a great cal of money here in New York; you can not control private jeisonal property; it will get away; it is not the question of its ight or wrong; it is an inquisitorial tax which is exceedingly inpopular; it will be evaded by unconscientious men and it will Irive away the conscientious ones. Q. I ask you now as to whether or not a change should not made now as regards the question of assessing personal prop- k rty? A. You must bear in mind that we are the Empire State or all that; the State of New York is not dead; I would like to epeat what I said before that in this question of real estate here is no injustice done to the owner for he purchases it with he understanding that there is a tax against it, and just the ame with insurance, just as much as there is to keep it in repair. Q. I understand you to say that you are unqualifiedly opposed ;o the taxation of personal property? A. I am; I believe that it B detrimental to the interests of the locality. Q. For all local purposes at least real estate should bear the mrden of taxation? A. Yes, sir; and the corporations that are enjoying the benefits. Q. Of course, corporations having local franchises ougjit to pay? A. Yes, sir. 258 Q. Are you in favor of lowering the legal rate of interest; the agricultural people of the Slate seein to demand that the legal] rate of interest be lowered from six to five per cent; are you in! favor of keeping it as it is or lowering it? A. I am not in favtiil of lowering it; the meaning of lowering it is to send capital off, and the result would be very disastrous; the question of lowering or raising does not benefit the country at all; money will always find its level. Q. We must out of respect for the farmer presume that he knows what he wants; he says he wants a lower rate of interest] and Avants it fixed at five per cent; I want to get your judgment' as to the wisdom of that reduction? A. I think it would be very unwise; if the State of New Jersey can give me six per cent! when the State of New York will only give me five my capital* will go to New Jersey. Q. Won't it be a benefit to the farmer? A. No, sir; I don't see how it could be. John A. Mason, called as a witness, being duly sworn, testified as follows: By Mr. Creamer. Q. You are a State assessor? A. Yes, sir. Q. How long have you been a member of the State Board of Assessors? A. I qualified on the second day of July of the present year. Q. Had you any experience previously in connection with this subject? A. No particular experience. Q. Except a general knowledge? A. Except a general knowledge. Q. What has been the result of your experience since as regard; the assessing of personal property, whether it has driven capital out of the State, either corporate or individual? A. I ha/e not secured any special knowledge with reference to that branch oft the subject of taxation, and T have simply my personal opinion; the duties of State assessor have not as yet brought me in con- 259 I tact with the industries of the State or the question so as to give me specific information. Q. You have read the resolution creating this committee? A. Yes, sir. Q. Can you give the committee any information in compliance with that resolution? A. My opinion is, it would be conducive to the prosperity of the State if personal taxes were abolished, except such as may be paid by corporations which receive their life and value from franchises. Q. Does that include joint-stock associations and firms? A. Joint-stock associations engaged in ordinary business. Q. You would exempt those? A. Yes, sir. Q. When you say, tax corporations, what do you mean, incor- porated by special law or under the general law? A. Incor- porated by the law of the State giving to the corporation fran- chises or special privileges which make the corporations institu- tions of value. Q. Would you include also joint-stock associations without being incorporated; there are such in the State business associations making large profits even beyond those incorporated? A. I think that capital employed in productive industries or as a convenience to trade and commerce, whether it be the capital of individuals or corporations, should be relieved as far as possible from burdens of taxation. Q. Then what would ther.3 be to tax? A. Corporations which operate on franchises giving to them special privileges rail- roads, gas companies, telephone and telegraph companies. Q. Telegraph companies? A. Yes, sir. Q. How would you tax telegraph companies? A. Upon their earnings. Q. At their principal office in every county, or how? A. Upon their earnings within the State; upon their gross earnings; in other words, it seems to me that whatever may be given by the people to a corporation in the way of a special privilege should be paid for by the corporation, but that capital employed in 260 ordinary every day pursuits, open to every day competition, should 1 be relieved as far as possible from taxation. Q. Have you read the tax laws generally during the last ten or twelve years? A. No, sir; not during the last ten or tweb years. Q. I mean have you read during the last six months since yoi have been in office the laws covering that period? A. To somi extent, yes, sir. Q. What is your opinion as to the exemptions placed upon the statute books from time to time to exempt from all taxatioi such as life insurance companiesj express companies and oth< joint-stock associations? A. It seems to me that an expi company should pay a tax to the State; the nature of its busiiu does not admit of that open competition which is possible in life insurance companies. Q. As regards those laws exempting those others which I just enumerated? A. I think they are wise. Q. In exempting them? A. Yes, sir. Q. Would you exempt a trust company? A. Yes, sir; its capital is used; it is a convenience to trade and commerce, andi whatever is conducive to trade and commerce adds to the general] prosperity. Q. Should not general prosperity contribute its share towards^ the support of the State; the government guarantees its pros- perity? A. It seems to me that is done by making real estate] the basis of taxation real estate and the improvements. Q. What benefit is it to real estate to have a trust company exempt from taxation, particularly real estate used for dwelling purposes? A. Whatever adds to the volume of commerce gives. it seems to me, an increased value to real estate. Q. In what way? A. By adding to the population; if I ma; explain myself I think, so far as I have studied the subject that if personal property should be exempt from taaxliou, i would result in greater prosperity to the city of New York, t\\ ances should be made 271 Q. Then, if you are in favor of allowing such deductions to bo made in regard to personal property what do you say as to real property? A. It ought not to be. Q. What, you make an allowance in the case of one and not in the other? A. I consider real estate the best basis of a sys- tem of taxation; it is immovable and permanent, easily found and should be assessed at its value without reference to amounts which may be owing by the person who is occupying it. Q. Put it in this way: If one man is indebted to the extent of |100,000 on his real estate, his equity being only f 50,000, but tie pays on the full and true value of f 150,000; now, another man is in just the same plight except that he has got $100,000 invested in some good paying business; he offsets the $100,000 indebted ness as against the $100,000 that he has invested in his business, and he escapes taxation on that money invested in his business; what do you say to that? A. I say as a principle that the money nvested in* his business ought not to be taxed. Q. I put it on the assumption that the policy of the State to assess personal property should be continued; then, what do you say as to the equity of the course as between the two? A. That would seem to be unjust; if the personal tax is to be continued ;he law should be enforced as it stands upon the statute book, and he should pay a tax upon the $100,000 invested in his business. Q. That is the reason why I propounded the question that I did; the law to-day allows an offset of indebtedness against the >ersonal assessment; some of the committee at least appear to be of the opinion that it is not right to allow offsets of indebted- ness against personal assesments; that the rule as to personal >roperty ought to be the same as it is to real estate? A. I think if that were the rule real estate would loose its value. By Mr. Ahearn. Q. I think that the chairman means to say that a man comes >efore the board of assessors and he is down on the tax books for 1100,000 he borrows $100,000, and he swears that his indebtedness 8 f 100,000 and that wipes out his personal tax. A. Yes, sir. 272 Q. He means to ask do you think that is fair? A. The question is should a man be taxed upon his business debts? Q. Whether in your judgment you think they have the right to go before the board of assessors and swear that off? A. 1 think a man has that right. By the Chairman. Q. We had two statements of the tax office here the other to make it plain they were statements of two publishing corpora- tions; they both owned real estate; the holdings of the one are of much more value than the other, but the one that has the greatest holding of real estate paid a tax on $3,400, while the other one with the lesser holding paid a tax on $199,000 ; now, the reason that the one with the larger holdings escaped the payment of tax except upon $3,400 Avas that the mortgage indebtedness o i the real estate was offset. A. I think that the law which makes such 'seeming inequalities ought to be repealed. Q. Then you favor the disallowance of the real estate indebted- ness as against personal property? A. I am sorry to say that I can not follow you closely enough" to make plain to myself the distinction you are making; I state it as my opinion that the taxing of personal property should be stopped. Q. The committee fully understands that you are in favor of the non-assessment of personal property. A. Yes, sir. Q. But I ask you the questions that I have asked you, assum- ing that the policy of the State to assess personal property shall continue, then and in that event are you in fa\ r or of allowing the holder of real estate to offset his assessment on personal prop- erty with the bonded indebtedness on real estate? A. No, sir. By Mr. Quigley. Q. Wha/t would yon think as to the assessors keeping theirj books open a little longer, and after discovering an indebtedness to tax that in the case of the parties who hold it? A. I that would be wise if the personal tax is to be continued, 273 Q. At the present time the assessors make up their list tit a, certain time of the year, and at that time a discovery is made of j those offsets; \vihat would you think of increasing that time so as to reach the party in whose hands the indebtedness is and put jhim on the list, and tax that indebtedness in the hands of the [party who holds it? A. It would seem to be judicious. Q. Wouldn't that remedy this evil of offsetting bonded indebted- Iness? A. I think so. By the Chairman. Q. You know that a large proportion of the tax collected by the State goes to the support and maintenance of the canals, which ive been free for a large number of years; do you think that the (benefit derived from the people of the State justifies the con- tinuance of that general tax for canal purposes? A. That is my )inion with the light and information I have; the opinion is tost general. Q. In what direction do you think the benefit comes? A. By lulating the growth of the cities, and more especially the >wth of the city of New York. Q. Do you think the canals have much to do with the city of Tew York? A. Yes, sir; whatever may tend to legitimately icrease the population and commerce of the city, and I should jify to make it plainer, Buffalo and New York, increase the meral prosperity of the State. Q. Then you think the large proportion of benefit derived from maintenance of canals by public expense goes to those two les? A. I think a very large portion, but I tihiink the benefits diffused through the State directly and indirectly. Q. Now, suppose we divorce the two systems of collecting bte and local taxation, and bearing in mind that the benefits canals largely go to New York and Buffalo, how would your nroportion the expenses of maintaining those waterways? A. I ;ant to say that as I view it the canals as they stand are a to the State at large, and as such they should be a State irge; I doubt very much whether there is a section of the State 35 that is not benefited by the existence of the canals, just as the entire State is benefited by the existence of the Hudson river; 11; is not only the benefit to Yonkers and Newbiirgh and New York and Albany, but to the entire commonwealth; if the Hudson river should be filled in to-morrow it would be a disaster shared by every' resident in this State, and I think the same holds true as to the canals. Q. I do not suppose you can recall the conditions that prevaile before the tax was taken off the canals? A. No, sir. Q You can not say that the condition of canals is any botl than it was before the canals were made free? A. I have knowledge at all upon the subject. Bj Mr. Creamer. Q. Are you familiar with the legislation of other States o:a this question of taxing corporations? A. No, sir. Q. When you say exempt all mortgages from taxation you are not aware then of the law concerning taxation of mortgages in other States? A. No, sir; I am not, Q. You have not any other information? A. No, sir. Q. You express that as your opinion? A. As a principle. Q. As your opinion? A. Yes, sir. Q. Based upon what? A. Upon my thought and reading, and:| upon my belief that if mortgages should be taxed the tax would'] eventually fall upon and be paid by the borrower; it would itheri be paid by him in some way direct or indirect or would affect th&j rate of interest. ( Q. Do you not suppose that those large corporations loaning] on bond and mortgage understand what the contract is, and] the other understands full well when he agrees upon the rale of interest? A. Yes, sir; but I assume that in all transactions] covering the borrowing and loaning of money, the net resull is the deciding factor. Q. Suppose a . man in this community is financially able toj invest $10,000,000 in first mortgages paying five per cent and get $500,000 income out of that investment, so you do not tliinh ho should pay any tax towards the government where his money is invested; suppose a man has $10,000,000 invested in first mort- gages in this city and has an income from that of f 500,000 a year, do you not think ho should contribute his share towards the support of government? A. I think he should pay upon the real rstate he may own; I think, if the effort should be made to tax tiiui upon the mortgages, that he would eventually compel the umncnt of that tax by the person who borrowed fi-oni him the noney secured by the mortgage. 2- We are looking at a condition of things, not a theory*; do you lot think that a man who gets an income from his mortgages of K)me half a million a year should pay some share of the expenses if government? A. It would seem as if he should. The committee then went into executive session. On motion it was decided that the committee should h'.id he next meeting in Syracuse, at the Yates House, December 9, 1892, at 10 a. m. Syracuse, N. Y., December 29, 1892 T The committee met pursuant to adjournment. E. S. Bartlett, called as a witness, being duly sworn, testified s follows: By Mr Hamilton. Q. Where do you reside? A. Seneca county. Q. What is your occupation? A. My occupation for a long me has been farmer and some incidentals outside, at present oldinjr the position of school commissioner. Q. How long have you been a farmer? A. i have managed a arm since 1858. Q. Principally in Seneca county? A. Yes, sir; entirely in teiieca county on the farm on which I was born and on which I ow reside. Q. Have you at various times held public office in that county? L Yes, sir. Q. In what capacity? A. I have held nearly every position a the gift of the town except poor master and constable. 276 Q. What position have you held? A. Supervisor, justice inspector of election, assessor. Q. And your position as assessor and supervisor has brouj you in connection with the question of taxation? A. Yes, sir. Q. What have you to say as to the propriety of amending 1 present laws on taxation, assessment and interest, so far as affect the agricultural interests of the State? A. My idea regard to that is that the assessment laws should touch equally upon all real and personal property, and that each person should pay his proportion for the support of the general government 0^1 the State government, as hi-s interest financially appears, whethei| it be in personal or real property. Q. Is it your experience as supervisor or assessor or both tha such is not the present condition of affairs in your county? Yes, sir Q. What class of property is it that escapes? A. Oftentiinet it lias been mortgages thac escaped and general money matters that are laid out at interest on either note or other collaterals ~ other obligations, Q. Is this property that escapes to your knowledege the prop erty of individuals or principally that of corporations? A. think that that has come into my immediate knowledge has been more individually, but I think there is quite a good deal of corpo ration or company matters that escapes in our manufacturing villages. Q. What has been the rosult of this escape of personal prop erty from its taxation that you have described upon the rea estate of your county? A. It necessarily makes the real estate pay a larger proportion of tue tax. Q. Now, has that effect on the market values of real property in yum- country? A. You have reference to farm lands? Q. Yes, sir. A. It has also a great effect upon the village property as I learn, and I don't know as I can attribute it wholl; 1 to the effect of assessments or the amount of tax which the indi <; viduals pay, but the real estate in the county of Seneca is verj much depreciated in value. 277 Q. Can you tell us for how long a period that decrease has een extending? A. There began a marked decrease about six ears ago; it has been more rapid for the last three years so far s my observation and knowledge goes. Q. That necessarily means a decreased market for the sale of arm lands? A. There is very little market for farm lands; there ias scarcely a farm been sold where a purchaser has come in and mught it out and out; unless it is on the verge of being sold nder mortgage or the necessity of selling it in order to save it eing sold that way. Q. Outside of forced sales is there any other extensive market or farm lands in your county? A. No, sir; I only know of two lat have been sold for three years. Q. How long has that condition existed? A. About the last iree years it has been more marked than at any time previous. Q. Can you describe to us what way personal property escapes axation in your county; what methods are resorted to? A. Vhen the assessors make their annual rounds they deny having ny property in their possession and unless the assesors can find ut by any means outside of the person they are trying to assess lat he has holdings against other parties they fail to get it; they ail to get any amount against them; some will give a portion of it. By the Chairman. Q. I would like to ask you whether you have in mind any mendment or modification to the existing law that in your pinion would cure that defect? A. I don't know of any but one, nd that would make each individual his own assessor under oath. By Mr. Guenther. . That is the listing system? A. 1 know of no other way to neet it otherwise; if a person whom I 'might approach to find out he property he had for the purpose of assessment would deny aving it, and I, as assessor, had no way of finding it out, and the ifficulty of finding out who owns the obligations, I can not see ny way unless you have the man himself testify. 279 By the Chairman. Q. You say that those people deny having the property the assessor comes around? A. Yes, sir. Q. Do you think that with such people you would reach property if they were called upon to make a sworn statemei A. I don't know as they would; you might meet them too late. Q. Hasn't your experience taught you that a man who will tei a lie would just as soon swear to it? A. I was going to add that to it if I had had tune enough ; I don't know as it makes much dif- ference so far as the tax law is concerned whether they de or swear to it. Q. I was only trying to ascertain what your views would be .8 to the benefits of the listing system as to the class of people who evade taxation by lying? A. I will give you a man; when I was assessor he gave in $20,000; he had 350 acres of land; the nex year he said he had increased that amount $1,000, and gave $21,000; I said to him I thought that was quite a small increase on $20,000, with interest; his presentation of that case was that his children had become owners of quite a proportion of his income and that he himself only increased $1,000; he was a member ol the church, and considered a very moral man and a great tern perance man, and after that he died a few years ago anc his personal estate amounted to over $40,000, and if it was true that he had but $21,000 when he told me he made $19,000 in two years; I don't know how we are going to meet them; it is a question beyond my ability to decide how it is to be met. Q. Do you think the result would have been different with that man if he had the listing system? A. Yes, sir; I don't think he would have sworn to a lie ; I think that as far as that man is con- cerned you would have got the tax, but there are some others that would do as you say. By Mr. Hamilton. Q. Is the sentiment of your county in favor or the adoption ol the listing system? A. I have heard but a very few express- themselves in regard to the matter, and I don't think over ter 279 persons in the county that expressed themselves to me, and they were generally more in favor of it than otherwise; I think a majority are in favor of it Q. Are you a member of the State Grange? A. Yes, sir; but not an official. Q. Have you ever canvassed the opinions of the members of the State Grange as to the listing system? A. I think it was dis- cussed at some time at the State Grange session when, as I remember it, I think there was quite a sentiment in its favor, but I don't think there was any vote taken on the question. Q. That sentiment was based upon the idea that it would be beneficial to the agricultural interests of the State? A. Yes, sir. Q. How is it in regard to mortgage indebtedness in your county; does that bear its share of the tax under the present law? A. I think quite a little of it, as I remarked before, escapes quite a percentage of it; the difficulty is that a great many persons have their property mortgaged that the assessor has not an} knowledge of and they don't inquire of each and every one whether they have a mortgage on it or not, and consequently it Y'ts passed by; when I was assessor we had a meeting of the board of assessors before we commenced our work; we passed a resolution to ask every man whether he had any indebtedness on his farm in a mortgage, and who*had it; after we got started to work we found that some people were very cranky on that mat- ter thought it was none of our business; and even when we explained that it was to have those persons who held the mortgage pay taxes it did not make any difference; my other two associ- ates failed to carry out the program after they got rebutted several times, but the result was that we increased our personal property from $175,000 in round numbers to, I think, $218,000; T know the amount on the part that I did the assessing of I got |10,000 more than on the previous year. Q Is h not your experience that a great part of the difficulty that arises is owing to the lax administration of the law rather than to the administration itself? A. No; not as far as the assessing is concerned. 280 By the Chairman. Q. Lack of sympathy with the law on the part of the people? Yes, sir; that will do; I don't know ai 1 would like to answer il on that construction either; I think that the fact is that oacl: individual assessor feels that he is not equal to the occasion; think there is some of it in consequence of the ignorance of tin assessor; I am quite well satisfied that as far as Seneca county is concerned that we do not get as good men for assessors as we ought to get; there is no man too good to be an assessor, while we have some men of very small capacity. Q. Isn't that attributable in a measure to the fact that assessor does not get a fair compensation for the service he called upon to render? A. I don't think that has very much do with that, as long as he can get only two dollars a day, I don' think it makes any difference whether he does a big -lay's v/ork or a little one, but I think he 'is a little longer doing it. Q. Do you not think if they were paid more they would get a j better class of men? A. That point I think you are right .in. Q. How does the provision of the law allowing a deduction for just debts as an offset operate in your county? A. It operates that in some instances they will make an indebtedness; 1 have heard of several instances so that they can say they are in debt, and they will tell you they owe such and such a man $300, and that included about the tax on the farm, and will say I have no money at interest, but I have got my personal property, horses and things of that sort, and, I think, the amount of my debt would cover all that with the reasonable allowance that T ought to have; I have heard j of several instances of that kind. Q. On the question of the present rate of interest; is the present rate of six per cent high enough? A. As far as I have had coi vernation, and that is quite a good deal on that question, and the question has been quite generally discussed in our meeting the idea is that the interest is too high for the agriculturist to pay; he can not afford to pay six per cent interest. Q. It was stated in New York that there was not any difficulty in procuring loans upon real estate at from four and a half to 281 five per cent ; has that been your experience in your county? A. have heard perhaps twenty-five persons say that they could not get any money upon mortgage at that price; they could get >erhaps twenty dollars an acre; it would not perhaps, in some ases, be more than two-thirds the amount they desired; they xmld get that amount at a less per cent, but to get such amounts is they desired to borrow they could not get those amounts for lour and a half per cent. Q. "What percentage of the value of the lands were they seeking o procure loans on? A. Some of them wanted to get thirty ollars an acre. Q. What would be the value of the land? A. On land worth fifty dollars. Q. Three-fifths? A. Yes, sir; and some wanted to get thirty dollars an acre on land worth sixty dollars. Q. Have you found that where an attempt has been made to jrocure a loan on three-fifths of the value it was impossible to >rocure money at less than six per cent? A. I have been told so. Q. Do you say that paying that rate it is impossible to produce a, fair income on the farm? A. Yes, sir; take such farms us are necessarily mortgaged; there are some farms where they are ufficiently good , and the farmers upon them are sufficiently good, ;hey can live upon them, but they are not generally the farms overed with mortgages. By Mr. Guenther. Q. You are then in favor of reducing the legal rate of interest rom six to five per cent? A. I should be if the law remains the same as to the person oAvnmg the property paying the whole iinount. Q. You are in favor of taxing bonds and mortgages? A. Yes, r; and releasing the farm on which the mortgage is to that unount. Q. You are not in favor of changing the law which permits the 'eduction of personal tax in consequence of debt? A. No, sir; here are some questions connected with this matter; a man is in iebt on his farm; he is paying upon this amount; he ought to be 282 released from that; I don't see anything wrong in that; if I have farm worth $6,000 and am in debt upon it $3,000; I have personal property, horses, cattle, farming utensils, etc., amount to $1,000, I ought justly to be assessed for $4,000 only, and other man ought to be assessed for his amount; I ought not to assessed for the $6,000, and not be relieved on account of th personal property and also assessed $7,000. Q. Eeferring back to the general problem of reduction of legal rate of interest, and taxing bonds and mortgages, in yo opinion, what would be the result; who would pay the tax ou the mortgage, or who would be the sufferer by reason of the reduction of the legal rate of interest from six to five per cent and by reason of taxing bonds and mortgages; would it be the borrower or the loaner? A. I thing that the loaner would be the sufferer. Q. If you w r ere to loan me $1,000, would you not put in tlif difference of the tax on the bond and mortgage and the difference in the rate of interest from six to five per cent in your disbu ments, as you would the costs of a title search or the cost drawing the bond and mortgage and other incidental expenses; do you understand the question? A. I do not. Q. In case you were to loan me $1,000, would you not put in your disbursements the difference in the legal rate of interest and the -difference in the tax on the bond and mortgage the same as you would put in your disbursements the cost for a title search, the costs for attorneys' fees and other incidental expenses, youi being the loaner? A. I might do so if I could get you to be satis- fied, but I don't think it would be justice on my part. Q. You would naturally do that? A. I would naturally do that Q. I would be the sufferer? A. I could not get six per cent out of you; I would have to pay this amount that you speak of out of my six per cent. Q. Would you not, as a mntter of fact, if I was your attorney. call my attention to this fact that you have to pay this as a tax and that you are only going to get five per cent interest instead of six woujd you not ask me to put it in the disbursements th same as the cost of a title search, etc.; and who would bear t burden in case we were to change the existing laws in the maitei 283 I of the legal rate of interest and the matter of enforcing the tax ?on bond and mortgage? A Whatever expense there might be (to the changing of the obligations, etc., that would be paid. Q. By the borrower? A. He might be obliged to pay that; (that would depend upon the desire of the person loaning it; it would depend upon the transaction of those two individuals. Q. And the man borrowing has generally to cater to the man oaning? A. I think the time is past when they have got to cater as much as that; there is a little more personal property and a ittle more money seeking outlet. Q. Do you know this fact that you can borrow money in certain >arts of this State for four per cent? A. I have heard so; you can not do it in may county. Q. Can not you get money for five per cent on a piece of property say at fifty per cent of its valuation? A. I have not heard of anybody doing it; they won't loan it at that per cent unless they get a larger margin. By Mr. Hamilton. Q. There is no margin for it at fifty per cent? A. No, sir. Q. Do you believe that a system of State taxation by a specific /ax would relieve the necessity of raising any tax for State pur- K>ses by the various count fes would benefit your community? I would hate to answer that question, because the conditions ;hat would bring about a result of that kind I don't know what provisions would be used, and I would not like to pass judgment ipon it until I saw the p/ovisions; they might hurt us more iian the condition. Q. It is real property that is suffering under taxation? A. 5Tes, sir. Q. If means could be devised for raising sufficient revenue )ther than upon real property to pay all the State disbursements, nrould that be a desirable change so far as your knowledge is concerned? A. I would like to answer it the same way as before; I am firmly of the opinion that taxation sooner or later comes from the productive interests of our State, and I believe from |my study of the statistics that the productive industry is largely 284 agriculture, and what provisions might be made in the law to bring about a result of that kind ipight work upon us very differ- ' ently from the anticipated result when we first thought of the? question, consequently I would hate to give any opinion u] that question. Q. Would such a specific tax if raised principally upon what is known as the direct succession tax be beneficial to your munity? A. I think anything raised in that way certain! v must reduce the amount to be raised from sources that w< have not got anything from before, and it would not affect principal I have suggested; of course, upon that basis it woul< very likely be a benefit to us. Q. And desirable? A. Of course. Q. Is there any complaint in your community in regard the question of inequality as to taxes between the various coi ties? A. Yes, sir; I think there are quite a number of our peopl< think that Seneca county, owing to the general depreciation farm lands, is standing rather high in the scale. Q. The average rate in your county is eight per cent? A, The average rate of valuation? Q. Valuation. A. I think it likely stands that way upon the books; there are three or four towns that pretend to assess at the full value of the property, and then there are other towns that vary; I did not average that up yesterday. Q. If there was no State tax to be raised by the counties there would be 110 occasion for this inequality, would there; the present inequality arises entirely from the necessity of raising in each locality so much for State purposes, and if that was raised by a specific tax and each locality then simply supporting its own institutions, then the question of inequality would be entirely removed? A. It would under that plan of taxation, c< the purpose of examining you gentlemen interested in the agri- cultural pursuits is to ascertain to what extent you are burdened j 287 by vStuie taxation, and to what extent we can relieve it; now, if [you are relieved entirely from those figures as to State taxation, [you would be relieved to the extent of one-fifth of what you now consider it; now, what would you say to the proposition relieving jreal estate from taxation for the support of the general State ^government, if such a thing can be done? A. As far as it goes, of course it would not be any detriment to the farmers to be fettered, but the great burden conies in upon the disproportion of the amount that the real estate and personal property pays for local expenses; that comes in all the way through, as far as local school tax, and everything, is concerned. Q. Suppose the Legislature can devise means to raise sufficient Revenue for the support of the general State government without levying a tax upon real estate; would you favor the adoption of such a proposition? A. I should want to know in what way it pro- poses to do it before I did it the means that you are going to use for that purpose. Q. Suppose the Legislature should conclude to so relieve real estate and to raise money for the support -of the general State government from a tax upon the earnings of corporations, from bollateral inheritance and direct inheritance and such other sources? A. I think as far as the inheritance is concerned it should no doubt work very well; as far as the corporations are X)ncerned there would be a reaction that would come upon the Drincipal this gentlemen speaks of; they would have to receive nore revenue to pay that amount, and it would arrive at a heavier ;ax upon transportation; corporations always have some way by which they get in the amount of revenue ne<3 ; :t< the amount in those industries it is a great benefit, but I thir that each industry should stand upon its feet; that is the <>n difference; I am very glad that this money comes into our vicimt but I do not want to pay them for coming there. Q. Is it not a fact that the general benefit derived from the coming there, and from the circulation of the money that the presence brings into the community, is more benefit than 1} amount of tax you get out of it? A. That does not alter tl justice of the tax; if they find a community in which they loca it ought to have the benefit of it; they know the benefit of the location and the benefit of their industry, and if we receive ai benefit by being in proximity why it should be our good fortui we should not be obliged to pay their taxes to receive t| benefit. By Mr. Guenther. Q. You are familiar with the tax laws of the State? A. Fail familiar. Q. You have no suggestion in mind beyond the listing as to an amendment to the present tax laws? A. I only heai this committee the day before yesterday, and I have not look* up in a manner to form any particular idea of that. By the Chairman. Q. I understand you to recommend that there ought to be allowance for indebtedness both on real estate and pers property? A. You did not understand me correctly; I thoi that all personal property and all real estate should be for its value. 291 > Q. Suppose that your farm is worth $10,000, and there is an jmcumb ranee of $5,000 on it; do YOU consider that you ought PJIV on the value of $10,000, or on the value of your equity 55.000? A. I think I ought to pay on $5,000. Q. That is what I mean by allowance for indebtedness; you ,hink that indebtedness ought to be taken into consideration, and S r ou ought to be allowed for it? A. I do not understand the meaning of it the same as you do; as I understood it in the past, ft 'was that if I was in debt on my personal property I would be released for that amount; on that basis I understood your Question. I Q. You recommend that the law ought to be so fixed that a \ lan would only pay on the basis of the value of his equity in the unl? A. Yes, sir. 1 Q. Suppose your neighbor had $10,000 worth of personal prop- jrty, and when the assessor came around he could truthfully : that he was indebted to the extent of $5,000, do you think mat in assessing his personal property he ought to be allowed a lioii (if .^.I.OOO? A. If he had paper in his possession worth 00, and he was worth only $5,000, certainly he should not jay only $5,000; he had $5,000 in his paper; I had $5,000 in my i Q. You think there ought to be an allowance for debt in either A. Yes, sir; I say that nobody should pay a tax twice. Jy Mr. Hamilton. Are you proceeding upon the theory that that is paying the :wice? A. If it is assessed once on the mortgage on my of $5,000, and it is worth $10,000, and the assessor assesses ;ie $10,000, and turns around, assesses him $5,000 for his mort- ige, I think you get a tax twice on that $5,000 ; he pays a tax and do upon the $5,000. Q. Examine the question a little farther; you start out and have 10,000 in money and I have $10,000 in real estate; under the nt law they are both subject to taxation, are they not? A. es, sir. Q. And you believe properly so? A. Yes, sir. 292 Q. You loan me $10,000, which is a taxable asset, from whicl the State has a right to derive its share of support, and I give yoi a mortgage, do you believe that you should therefore esca] taxation? A. I should think I should be made to find out became of my farm; you started upon the proposition that tki farm I have possession of is mine in fee simple. Q. I give you $10,000 in cash, and I take the farm myself? You said I had the farm, and you had the $10,000; that is understood your proposition. Q. I want to see how you make it double taxation; you liai $10,000 in cash? A. Yes, sir. Q. I have a $10,000 farm? A. Yes, sir. Q. Your idea is that both of those kinds of property shoi pay their share towards the support of the government? Yes, sir. Q. Yon lend what you have and take security for it? Yes, sir. Q. ShovJd that $10,000 cease to contribute its share towai the support of the government? A. You give me to understai the position; how do you get the farm? Q. Any way that you propose; I might have inherited it bonjxht it? A. It is yours in fee simple. Q. Yes, sir. A. Now, the question is if you had that in simple. Q. 1 borrow your $10,000 and that fund which was taxable th< after escapes taxation; is that right? A. They should both be taxed for the reason that you are hiding the farm undd cover of the mortgage. Q. T borrow it to go into business. A. Then you should assessed for the $10,000 that you have got. Q. The law says it shall be declared an offset and I should not assessed. A. That is -all right. Q. You believe that the two funds whether they are real o| personal property should be assessed wherever they are found' A. I don't think you can change that in that way ; it is possible yoi may do it, but in justice it ought not to be allowed. 293 \. Do you believe that personal or real property should be wherever it is found? A. I believe that the amount |f personal or real property should be assessed; now, you change the matter; you take away a $10,000 farm and turn it over to lim for his $10,000, then you retain possession; it is the jioney that is being assessed; it is not the individual. Q. Whose money is that has gone in the business? A. After m have had it in your business it is yours. Q. P it is mine I can give it away? A. It is yours as far as >ise \\ concerned in that way; I don't think you can hide property [iirly and justly. Q. Are there any instances in your community where capital is been driven from the State by taxation affecting corporations? "Not that I know of. Q. Ha\e you any suggestions to make in regard to existing laws new laws which will increase the revenue of the government? [ No, sir. Q. Have you any other suggestions to make on any question i'hieh hav f not been called to your attention by the committee jliich will affect taxation? A. No, sir. Newton H. Green, called as a witness, being iiuly sworn, testi- as follows: Ify Mr. Hamilton. Q. Whore do you reside? A. South Byron, Genesee county. Q. Hov long have you resided there? A. I was born there. Q. What is your occupation? A. Farmer. Q. How long have you been so engaged)? A. All my life. Q. Do you own a farm? A. Yes, sir. Q. More than one? A. Only one. Q. Have you been in public office connected with the question of tat ion? A. I was assessor, quite a good many years ago I was ipervisor. Q. How long were you supervisor? A. Five terms. Q. And assessor ? A. I was assessor, I think, two terms six a good many years ago. 294 Q. Have you given attention to the question of taxation? Somewhat so. Q. Art 1 you a member of the State Grange? A. I belong subordinate grange. Q. And have for how long? A. Two years. Q. What have you to say as to the propriety of modifying tl present laws relating to taxation, assessment and interest, so as they affect the agricultural and other interests of the State A. L should say this, modify the existing law so as to raise a stu sufficient to pay the State tax by the modification or contiu^ ance of the collateral inheritance tax or corporation tax, ai leave the question of local taxation to each county; then, I thiij we can correct the question of equalization, Q. Does that sentiment prevail in your county? A. I thidj so; it is growing; the question has not been discussed until quj recently, but it meets with general favor. Q. They recognize the fact that the inequality which oecud now would thereby be abolished? A. Yes, sir; we feel that m our county, particularly where the State Board of Equalizati< added to our county something like 3,000,000, a small county lil that Q. It is charged that you are assessed about fifty-live p<] cent? A. Yes, sir. Q. What cause, if any, can you ascribe to the depreciaticl of i'arm land in your county during the past twelve .rears, aboij one-third? A. It is to tUe lessened receipts, I suppose. Q. How far has the question of taxation contributed to effect? A. Not so seriously, I think; taxation is not opprc| sively high in our county. Q. How is the market for land in your county? A. Practical] no market; in fact, none except an occasional case \vhere a f and \ve would correct that inequality. Von believe that would be the solution? A." I think so. 1^ the sentiment of your community in favor of the adoption | of the listing system? A. It lias its advocates, but not a majority of our people. O. What 'is your opinion? A. I should not favor it as applied to an agricultural community. O. As to the question of interest; what is your idea as to the presi-nr rate? A. The opinion prevails that the earning power of money at live per cent is greater than an investment in farm- in:-: lands; a majority of the farm lands in our section do nor pay tlm-e per cent on the value; they do not pay live per cent on th- assessed value; [ can safely say iliat. Q. Xet or gross? A. Xet ; I have heard people say that is only about: fifty per cent of actual value. 296 Q. How does the present rule allowing the deduction for indel edness in your community take in regard to the question taxation upon personal property? A. It has its influence, I si pose, to reduce the amount. Q. Is it used as a shield to evade the payment of taxes? Not particularly. Q. Why is it that personal property escapes in your count/ if the law is ample and if evasive means are not employed? A.< It is inherent in human nature, I suppose, to escape payment of taxes on personal property it has always been so far as my observation goes. Q. Your idea is that eacli county should raise its tax for its own need; would you include in that what is known as the local< option law? A. No, sir; I haVe never given that my observation^ Q. That is a law which provides that each county shall deter^ mine at what rate it shall be assessed? A. I suppose that might follow when the State tax was paid by collateral inherit-, ance and corporate tax; each county would certainly know who paid it. Q. Do you believe that the community in which you liv would be in favor of an increase of the inheritance tax TO a sufficient degree to pay ail the taxes for State purposes? A. I don't think I should favo^ that wholly, because I should think there would be some derived from the corporation tax which would be as just as the other. Q. Do you think that a proportionate increase in the inherit! ance tax together with oilier interests would be desirable in your community for the purpose of paying the State tax? A Yes, sir. Q. Do yon believe that the sentiment of your community would support a tax upon inheritance on real estate which is now exempt? A. I should question that; my attention was called yesterday by the county clerk; he called my attention to a case where it was being passed upon where I thought it was practi- cally an injustice; I should hardly want to commit myself in favor of that. Q. Are you giving us the result of your conversation with, your neighbors or the community, or simply your personal idea on that question? A. I should be in favor of increasing the tax; for instance, these large estates I think they could afford to pay more than they are now paying. Q. You believe in what is known as a graded tax? A. I should. Q. The present inheritance law exempts real estate in the direct line of succession; would your community favor an amend- ment imposing some tax upon that? A. I hardly think it would. Q. Do you know of any case where capital has been driven from the State in your community by reason of the restrictions affecting corporations? A. No, sir. Q. Have you any suggestions as to amendments to the present law or new laws which will increase the revenues of the govern- ment? A. Only so far as I have outlined in regard to the mheritance tax and corporations. By Mr. Guenther. *Q. Do you believe in taxing bonds and mortgages? A. I can | not say that I do. Q. In the event of reducing the rate of interest from six to | five pei' cent who could stand the burden of that reduction; I would it be the lender or the borrower ? A. I would say the borrower will always be a slave to the lender; of course, the same objection was made when they reduced it from. seven to six that [they make now in going from six to five. Q. It depends largely on the maker of the loan and the value lof the risk? A. Yes, sir; if a man has ample security he can in |a measure dictate terms. Q. Is there any difficulty for you to go to Buffalo or Rochester get a loan of fifty per cent value of the farm, the interest being ivc per cent? A. Except they are a first class loan and at a valuation. Q. Yon do not think it would be advisable to lower the rate 38 298 of interest five per cent and then tax the mortgage as well? I don't believe that would work to the benefit of the man tl gave the mortgage, as a rule. Q. Then you would recommend that the system of collect! State and local taxes be divorced? A. I think so; I think 11 would be a benefit. Q. What would you say to so amend the law that real estal would be relieved entirely from taxation for State purposes a] also for school purposes so far as the State was concerned, ai leave the expense of the education of the children to the locali ties? A. Well, perhaps that might be unfair; of course, theoret- ically, perhaps, it would be fair, but practically it would be unfair; I think it would. Q. Suppose that the real estate of the county of Genesee wa? relieved from contributing anything towards the support of tin State government, would it not seem to be fair and equitable that | they should defray the expense of their own local government, including their school system? A. Yes, sir; as I said before, it; would seem so, but practically whether it would be so or not I somewhat question. Q. I did not ask the question with a view as to whether i would be satisfactory to the people of any particular county; I asked it with a view of getting' your better judgment as who then it would not be fair and equitable that each county should take care of its own local affairs, and should bear whatever burden such care devolved upon it? A. I think if that condition of things existed we should correct many inequalities of the present system of taxation. Q. In other words, if we are to raise revenues for the supp-rt. of the State government from sources such as we have discussed tax on corporations, inheritances, etc., can you conceive of any idea why the county of Westchester should contribute any more school purposes than is actually necessary to maintain her own school system? A. Just as much as you could with the same propriety whatever she now contributes to the support of the State government ; what I mean by that is that certain localities, by being centers, accumulate wealth ; for instance, by the power or rights or privileges of certain franchises, and that the whole State is interested and the earnings or dividends should go back over the whole State. Q. But we have proposed to tax those corporations and com panies for the support of the general government? A. As to local expenses each to pay its own. Q. You agree, however, that the State educational institutions, normal schools, for instance, the State ought to pay for them, because it is for the general good; but the education of children in the public schools is entirely a local matter, is it not? A. You may take the district school as it is, but when you go to those union schools expensive schools almost universities, you might say I don't know that they are legitimately and properly a local tax. Q. But are not the union free schools expensive simply because the people living in the district have so willed? A. It is notorious to-day that the maintenance of a little district school in our dis- trict that had pupils not to exceed ten for the entire season cost more to maintain than it did thirty years ago for our county and State taxes. Q. Then your idea would seem to indicate that if the expense of maintaining the school system was entirely a local one that it would lead to economy ? A. I think so. Q. And that this idea of leaning upon other communities for support breeds extravagance? A. I think so. Q. Do you think the people of Genesee county would be entirely satisfied if their real estate was relieved from the burdens of taxation for State purposes, and if they were also left to main- tain their own schools? A. That is an open question; I do not know as iliry would be satistird. because there aiv always chronic grumblers. By Mr. Stranahan. Q. Would not they regard it as a bad trade to get rid of the payment of State taxes and assume the burden of their own schools? A. I am inclined to think they would; yes, sir. 300 Q. You spoke of a large portion of the mortgages being held by the savings banks in your county; what have you to say wi1 reference to taxing deposits in savings banks? A. I don't knoi as that would be advisable; we have no savings banks in oui county. Q. What is your idea with reference to the popular sentiment upon that question; should they or not be taxed? A. I hardl: think that would be the sentiment; you mean the deposits? Q. Yes, sir. A. I hardly think that would be the sentiment. Q. What would you think of a policy of raising the money necessary for the State government by putting a small tax upon the bonded indebtedness of corporations, say one mill on a dollar, ten dollars on ten thousand? A. I don't know anything wrong about that. Q. Do you think that would be a proper place to impose an additional burden for the purposes of taxation? A. I think it would reach a large block of money that escapes now. Q. Are you at all familiar with the bill that has been favored by the comptroller for the last two or three years on that subject? A. I have not given the subject a great deal of thought. Q. In what direction do you think the present inheritance laws should be amended in reference to taxation? A. Increase it on large sums. Q. Direct inheritance or collateral or both? A. Both; that is, on personal. Q. Now, I believe the direct inheritance in cases of over $10,000 is taxable one per cent? A. That is so. Q. What would you make that? A. I would graduate it. Q. Do you think that smaller sums than $10,000 should be taxed? A. No, sir. By Mr. Guenther. Q. What do you think about taxing the surplus of savings banks? A. I think if you did they would build less palatial insti- tutions throughout the country; I think the surplus belongs to the State in one sense; if you can not get it any other way tax it. Leonard Burdtt, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. Where do you reside? A. Spencerport. Q. Monroe county? A. Yes, sir. Q. And your business? A. Farming. Q. How long have you been so engaged? A. A great many years. Q. You have also been a member of the board of supervisors of your county? A. Yes, sir. Q. For what tune? A. Nine or ten years. Q. Have you acted as assessor? A. Yes, sir. Q. How long? A. That might have been ten years. Q. You also acted as representative in the House of Assembly A. Yes, sir; some years ago. Q. How many terms? A. Three terms. Q. Are you a member of the Sta>te grange? A. I am a member of a subordinate grange. Q. Have you given attention to this question of taxation in any of its various forms? A. Y^es, sir; perhaps as much as the average farmer; I don't claim to be an expert, however. Q. Your experience has called you directly in contact with the question? A. Yes, sir. Q. What have you to say as to the propriety of modifying the present laws regarding taxation, assessment and interest so far as they aifect the agricultural and other interests of the State? A. If the commission will allow me I will say that from my study of the question I should adopt either one of two plans that I should get the Legislature to carry out; as I read the tax laws now they appear to be explicit and plain, and if I could by any influence induce the assessors to assess all property of the State of New York, I do not think the farmers would complain of the assessment laws or of taxation ; if that could be done under our present law I should favor that; let all the property of the State of New York pay its proportion of the burdens of the State; if that could not be done under the present law; I would favor cor- porations of the State of New York paying the State taxes, and let the counties take care of their* expenses as they saw fit. 302 Q. Is it your experience that a large portion of the property in the State does not pay its share of taxation? A. I am not financial man, but I must say when the financial officers of th( State of New York tell the Legislature in about as plain languaj as it can be put that aboat two-fifths of the property of State of Xew York escapes taxation I am inclined to believe it. Q. You are referring now to the report of the Comptrolh and State Assessors who claim that the amount of persoi property in the State is practically equal to the amount of real, estate assessed? A. I have perhaps no better evidence than their report. Q. Does this properly escape owing to the present condition of the laws or to the lax administration of them by the assessors and other officials? A. There has been an encouragement in my view on the part of the Legislature to allow business interests to escape; it is one of the ideas that not only pervade the Legis- lature, but it pervades the Communities: it is thought that any- thing that can be done to encourage the building up of business for the benefit of the country and perhaps the general com- munity; there has been a disposition to give that particular encouragement by escaping all assessment and taxation until the assessors perhaps have had a disposition to slide over a class of assessments, and the general community, because they are looked upon as a particular encouragement to their village or general community. Q. Then your view is it is owing to an insufficient enforcement of the law? A. Yes, sir; that is it in a word; it is a matter of a good deal of doubt in my mind whether a full assessment of all the property in the State that may be liable under the law can ever be enforced under this system; in order to do that you must start anew. Q. What methods occur to you to bring about the necessary exchange in lhat respect? A. I don't think it can be done. Q. You do not. think that legislation could cover that? A. Ko, sir. Q. As to the taxation of mortgages, what is the sentinien: of your community as to that? A. I think the general sentiment of Western Xew York is that they should pay their share. 303 Q. What is your opinion as to whether or not they do pay ilieir proportion? A. As remarked by Mr. (liven, there is quite a largo proportion I scarcely know just what proportion held , i vin^s banks; the Rochester Savings Hank must be holding 15,000,000. I should think, of real estate securities. Q. Apart from the mortgages held by savings banks? A. The loan associations of Rochester have been loaning money more than the savings banks for the last five years; I don't think they are assessed; possibly they may be assessed for local improve- ment's, but I don't think they are for general purposes, and the individual mortgages, possibly, ten per cent of them are assessed, and the others escape one way or another. Q. What are the sentiments of your community in regard to the present rate of interest as to whether any change should be made in the rate? A. The general sentiment would be that there should be a change. Q. In what direction? A. To five per cent; I don't think any- other change is contemplated, is there? Q. A change was suggested by not making any legal rate, but leave it to private agreement; how would that strike you? A. Twenty years ago it would have been a good thing. Q. Considering it from the standpoint of the present day, what do you think of it? A. Well, it is a fact that good security now secures money at five per cent; if a gentleman successful in business in this country can secure money at five per cent, why should not a farmer, W 7 ho is struggling along under a load which it is a question whether he can get out of or not why should he not have five per cent? Q. But my question was, what would you think of wiping out the question of legal rate of interest altogether, and leave it to the borrower and the lender to fix it by agreement? A. I am speak ing as a farmer. Q. I ask you as a fanner? A. As a farmer, I don't think the farmers would approve of it at present; it is a fact well known that the general farming interests, in Monroe county for instance, 304 and as you gentlemen know Monroe county is as good an agri- cultural county as there is in the state; it is so good a counl that the farm lands of Monroe county are assessed to-day .seventy dollars an acre throughout; I give you that fact; n< withstanding that there are a great many of them who are iu debt, and wherever there is a chance for the lender to call in his obliga- tions he is quite liable to do it, because he wants better security: you can readily understand that all that kind of securities are at six per cent, and all that kind of men want five, and they are a pretty large part of the man. Q. You think if the law did not fix the rate that the fanner would have difficulty in obtaining a loan at even the rate of six? A. Yes, sir. j Q. And that it is to the interest of the farmer that there should be a fixed rate, judging from the present day? A. There are so many of the securities against real estate to-day that the local institutions and the lenders would a great deal rather have the money than the securities; that it would not be possible for a man for one-half of his farm value to get any kind of a loan on that security. Q. The condition of the farmer to-day in the State of New York is not as good as it was some years ago, is it, upon an average? A. Just as good for living, but they can not pay any debts; we raise all we w r ant to eat, and buy as good clothes as we can, but we can not pay debts, because our income is so reduced, owing to the question of competition perhaps more than anything else. Q. That is why I asked you whether the condition of the average farmer was as good; I had in mind of course his financial situa- tion whether he is as prosperous to-day on the average as he was fifteen or twenty years ago; is his earning capacity as great on the same farm as it was fifteen or twenty years ago? No, sir. Q. The indebtedness of the tanner has increased? A. I doi think farming indebtedness has increased within five years mu< 305 By Mr. Guenther. Q. Is it not the case that the condition of the farmer to-day financially is not as good as it was fifteen or twenty years ago; I that it cost more to run the farm than it did fifteen years ago? A. No ; it don't cost any more. Q. Machinery, etc.? A. Yes, sir; we pay more for machinery, but by machinery we employ less. Q. Is that a fact? A. Yes, sir; if it was not a fact, at the present wages we could not do it. By the Chairman. Q. Has not the farmer in the State of New York suffered some- what from the tendency of the boy as soon as he grows up to go to ie large business centers? A. They do go. Q. Has not the farmer suffered somewhat from that tendency? Well, as I said before, the improved machinery for working te farms has measurably compensated for the loss of the boys; we have much of a boy he don't stay there. Q. There is not that working together on the farm to-day on part of the family that used to be years ago? A. Not with American born citizen. Q. The farm is getting a little too slow for them ? A. The f arm all right, but the products don't bring much. Q. My opinion was that by reason of that tendency of the boy leave the farm and go to the business centers that the farmers fered by being compelled to hire labor in his stead; what is opinion as to that? A. You are correct in that view of it> ly as this deficiency is corrected by more improved machinery. By Mr. Guenther. Q. Does that improved machinery cost so much that it takes much of the farm's earnings, and the continual repairing of it? Yes, sir; it is one of the items of expense, and a very import- one, but we are getting machinery cheaper as the years go ind. 39 306 Q. Is it not a fact that the reasons enumerated by the Senator that as to the son goingj away and the fact of western competi- tion have more to do with the depreciation of the farm property than the tax levied by the State upon them? A. That may be in individual cases. i By the Chairman. Q. You think that the present condition of the farmer is attri- butable to the fact that he has been compelled to contribute towards the support of the State government? A. No, sir; not to any great extent. Q. Suppose that for the past twenty-five years a farmer had not been called upon to contribute anything to the general State government that there would have been any perceptible chang in his financial situation to-day for the better? A. I don't why it should not have had the same result as it would by th increase of an income from any other source to that extent. Q. But the average annual contribution of the farmer towarc the support of the State government is so little that I suppos that he would not at the end of a period of years be very muc: better off; that this small amount he would have contribute would have been swallowed up by some other means? A. It mi-gh have been swallowed up by some other expense. Q. And if he had the aggregate of all he had paid toward the support of the State government to-day it would not reliev him very much? A. It would pay so much debts with three fourths of them. Q. You don't think his present condition is attributable to tha to any extent; it is not the burden of State taxes that has pn him where he is? A. Not wholly; but there is just about th same principle, just about the same principle that governs o actuates the human nature of a farmer as it does with some othe people. Q. Don't the other people pay their State taxes? A. Certainty but the Comptroller says there are two billions of it don't pay we know we have two billions of property in this State whic 307 is Jiable and if you people down there can make it pay it relieves our burden two-fifths. Q. One of the witnesses who preceded you testified that his contribution towards the support of the State government was about six dollars on 110 acres of land? A. It must have been mighty poor land. Q. I find that the taxation in your town is very low in 1890 in the town of Ogden; what have you to say about the valuation of land; it was valued at what? A. Seventy dollars an acre. Q. Now, what is the average basis of valuation by your assessors on the dollar? A. Fully up to eighty per cent eighty-five perhaps. Q. I find that the rate of taxation is not much over one-half of one per cent in your town. A. No; we have no complaint to make about our county; I think there are but two counties in the State that are lower; we have got Rochester in with us too. Q. Do you not consider that is an exceedingly low rate of taxation? A. Yes, sir. Q. Are you familiar to any extent with the rate of taxation paid in the cities of the State? A. Only as I have noticed it from the reports; I see the counties run all along from six dollars on a thousand up to twenty. Q. You know that in the city of New York the present tax ratp, while it is the lowest in a great many years, is now 1.85.? A. Yes, sir. Q. And in the city of Brooklyn 3.25; do you not think the burden falls much heavier in cites than in the country? A. I don't know that they pay any more State tax than we do on a dollar, and if they are paying eighteen dollars on a thousand that is because they may be considered very largely in the nature of assessments for their own individual benefits. Q. Do you own any other real estate than your farm? A. No, sir. Q. How many acres of land have you got assessed? A. From 150 to 160, I guess Q. Are you valued ^ the basis of eighty dollars an acre, or is it an aggregate SUL N A. The general rte of the assessors 308 is to assess farms by the acre; that is, they value them by acre. Q. How is it in your case, do you know ? A. By the acre. Q. Do you know what the aggregate valuation fixed by assessors is? A. Fifteen thousand dollars or $16,000, perha] something like that; my farm lies in a pretty good location ai they put it up. Q. Do you remember the amount of taxes you paid last yeai for all purposes? A, I think it was a trifle over sixty dolki: last year; I will be compelled to pay twenty-five dollars nior< this year. (>. According to the table laid down by tbe board of Stuti assessors, your contribution to the State government last year was about twenty-one dollars; the rest of your taxes was for local purposes? A. A good deal more than that; last year was a remarkable year; I hesitate to base any evidence in the interest of farmers upon the last year's statement, because, as you know, the State tax last year was remarkably low ; this year it is about $100,000 more on Monroe county. Q. Can you recall what you paid in 1890? A. It was about ninety dollars. Q. A difference of $100,000 added to the State tax of Monroe county would not add one-third to your taxes? A. No, sir. Q. It would not make the difference between sixty dollars and ninety dollars? A. Last year it was something over sixty dol- lars, and I think it was a dollar or two below ninety dollars the year before; I have not made any figures about it, but I think the addition this year in the State tax over last year is in the neighborhood of twenty per cent. Q. Now, my purpose for asking you those pointed and personal questions is with a view of taking your own case for the prrpose- of ascertaining what relief the farmer can have provided all this property that you say is escaping taxation should be actually taxed; now, on the basis of the highest assessment that you have mentioned that 3 r ou paid your contribution to the State would be about thirty-three dollars; now, what would you favor, 309 a continuation of the tax upon real estate for the purposes of the general government and assessing all this personal property that YOU speak of, or would you favor releasing real estate from the purposes of taxation for State government altogether; in the one case you would be relieved to the extent of thirty-three dollars in your case, and in the other by taxing two-fifths of the personal property that escapes you would be relieved to the [extent of about thirteen dollars; now, which would you favor? . You put it as a financial question? Q. Yes, sir; which would give you most relief; which would you |prefer? A. I should say, let the corporations pay the State ses, provided the State expenses remain as they are now; tat is, with the general expenses and schools, canals, ttc. Q. Now, you did say something about the school question; rould yon be in favor of making that entirely a local question, Ting the localities to support schools and educate its own children? A. Some of the central counties, perhaps, pay more ian their share of the school tax, and the balance get the advan- ige; in those particular counties there might be some advantage we should pay all the school expenses, but as a financial ques- ion, so far as I am concerned, I should say, if those corporations II take care of the State expenses we will take care of our local affairs. Q. Including schools? A. Yes, sir; I want to qualify that in ds way; I am speaking for Monroe county when I say that; we ire about up and up even on that question; it would not make difference to us. Q. You give about as much as you receive? A. Yes, sir; but can readily understand that there are many counties in the tte that would make serious objections to that, because they are Diving more than they are paying. Q. Getting something for nothing, in other words? A. No, ; do not get that idea; there are a great many expenses of New r ork city, for instance, as a city of the State of New York, that ie in as State expenses. 310 By Mr. Guenther. Q. For instance what? A. I won't attempt to name them. Q. They build their own armories? A. Certainly. Q. What is there that the State contributes towards Ne York city; they maintain their own normal school; they nial tain their own public institutions; their asylums for the care the insane; you have State care for those everywhere else bul not in New York? A. Perhaps I was hasty in making that si gestion, but that was my impression. Q. You said you were in favor of reducing the legal rate ol interest from six to five per cent and also in favor of taxing mortgages? A. Yes, sir. Q. In the event of changing the law reducing the legal rate of interest and in the event of mortgages being taxed, who would stand the burden, the borrower or the lender; oufc of whom would that come in your opinion? A. That would be governed entirely by the circumstances of the loan; as a gen- eral principle, the lender would have to stand it, but the bor- rower has generally to pay for the loan. By Mr. Hamilton. Q. Is the sentiment of your community in favor of a listing system? A. No, sir; I would like to say a word to you on the question of listing; now, it is a most remarkable fact that the 1 farmers who have a dollar's worth of personal estate, it is run- ning over their place where every assessor can see it, and could not possibly escape under the listing system, while a man who does not own cattle and hogs, has got it in his pocket out ol sight; the experience has been wherever they have adopted that listing system that the farmers are the ones that have paid, and they can not escape. Q. Is the sentiment of your community in favor of the con- tinuation of the allowance of personal indebtedness as an offset on the tax on personal property? A. I should have to ask TOUB indulgence to say a word about that; if you gentlemen or the gentlemen in Albany can tell me any reason why personal 311 lebtedness should be exempt for taxes any more than indebted- on real I would like to hear it; I don't believe there is any advantage in the owner of real property over those that own personal. Q. Then your view is that the sentiment of the community is opposed to the continuation of that exemption? A. We are in favor of the exemption for indebtedness on real property if it can be done, but I can readily understand that under the present system of assessment it coul$ not be done. Q. You believe that if allowed on one it should be on the other, or not allowed on any? A. Yes, sir; that is one of the points on which we fanners ask to be placed on a fair basis with the other business interests of the State of New York; we do not feel that under the information we get and the reports that come to us officially that we are on a fair and equitable basis as regards this question of taxation; we simply want to be put there, and anyway you people can do it will be satisfactory to the farmers; there will be no cause of complaint; and this old question com.es up when you say the State tax is a very small matter; that prin- ciple holds good when this other fellow escapes and we pay, and we are very liable to sit on the fence and speak of it. By the Chairman. Q. Does not the farmer lose more by giving his time to the agitation of this question and discussing it than the amount of tax that he has to pay? A. I admit it, sitting on salt barrels. Arvin Rice, called as witness, being duly sworn, testified as follows : By Mr. Hamilton. Q. Whore do you reside? A. Fulton, Oswego county, New York. Q. And your business? A. I am a lawyer. Q. Are you also connected with the savings banks? A. I am, willi the Fulton Savings Bank. Q. How long have you been so connected? A. Ten years. Q. In what capacity? A. I have been a director for that time and vice-president. 312 Q. Have you read the resolution under which, the committee now acting? A. Yes, sir. Q. Have you at any time held public office where the questic of taxation was drawn to your attention? A. I was supervis in our county for several terms. Q. What have you to say as to the propriety of modifying tl present laws relating to taxation, assessment and interest so fa< as they affect the agricultural and other interests of the state? I speak mostly from my own knowledge and opinion formed, as have been in business and done public business, more than do fvoir the opinion of others perhaps; my own opinion is that personal property is not taxed to any amount in our vicinity; national banks, the stockholders pay larger than any other kind of personal property, that is the bulk of personal property in our county that pays tax. Q. What is the cause that produces this result of the escape of taxation on personal property? A. It is largely due perhaps to the inefficiency or inexperience of the assessors, and the ten- dency of people to shirk it; if the assessors put it on a man he will come in and swear it off. Q. AT hat remedy can you suggest to avoid that difficulty? A. I do not know of any remedy; I can not think of any law that would make a man swear to the truth. Q. Does no remedy suggest itself to you whereby the extent of personal property could be ascertained without the necessity of ivMng solely upon the oath of the party interested? A. I have not thought of any. Q. In regard to the question of taxation of mortgages, what have you to say? A. This question of whether the owner of the land and the owner of the mortgage should both pay? Q. Yes, sir. A. Well, the general opinion of peopL?. especi those that owe the mortgage, is that it is unjust, and that : there is an exemption for taxation on personal property becai a man owes debts it should be on real estate also. Q. And that feeling grows out of the fact that personal indebted- ness is allowed as an offset? A. Yes, sir. 313 Q. And if it were equalized by applying the same rule to both, cither have no exemption or both exempt, that evil would be corrected? A. I do not think that would satisfy the people who b\ve the debts; it would satisfy the lenders but not the borrowers. Q. "Would not that relieve estate very largely? A. I don't ;hink so, I do not think that would be the result. Q "Would it not have that result if that amount were deducted? That might relieve real estate some; yes, sir. . On the other hand, if there were no exemption allowed, T personal debts, would it not so increase the tax rates as lereby to decrease the taxation on real estate? A. You can not personal property except one or two classes in our vicinity. Q. What classes are they? A. That is the national banks. Q. What other class? A. You can get visible personal property stocks of goods and things of that kind; the merchants in mr town are assessed as personal property on their stock. Q. Is the sentiment of your community in favor of the listing r stem? A. No, sir; I do not think so. Q. And still no remedy suggests itself to you by which that can be corrected? A. I don't know of any way; I can not k of any way; you never can get personal property and make it id its proportion or share; I am personally of the opinion that had better leave it off entirely and tax the real estate that can see. Q. In your experience with savings banks what have you to ty as to the present rate of interest in this State? A. I hardly ik the tune has come yet for reducing it; of course, if the igs run for the next few years as they have for the last three four it will come to be reduced to five per cent. Q. The law of demand and supply will of itself cause the reduc- ? A. Yes, sir; I have a personal view about that too; my would be to make a rate that you can not go beyond, and let tern fix the rate by agreement, say ten per cent; that should be .e legal limit, and let them agree upon the terms according the security they can give. 40 .mie id a r in ft?r 314 Q. What is your experience in regard to the interest that is paid upon mortgages on real estate in your locality? A. All small mortgages pay six per cent; a mortgage of f 5,000 and upwards can be placed at five. Q. Any lower than five? A. I do not know of any; I presume if a man wanted $40,000 or $50,000 he could get it at four an< half. Q. Explain what it is that holds the rate of interest higher the case of small loans? A. It is the trouble of looking aft?] them and taking care of them; it is just as much trouble for a man to have a $500 mortgage as a $5,000 mortgage, and a $5,0ther part of the taxation; my judgment is it will always be a ground of complaint as long as we have to do it. Q. Then your judgment is that some means should be devised that would avoid the necessity of raising in different localities any tax for State purposes? A. Yes, sir; our county would be 'pleased to have the State tax taken care of in some other way. Q. In the event of that result being reached, what is the senti- ruent of your community as regards the local option tax law? A. That has not been discussed and was not at the time I was with fehe public officers. Q. Based upon your experience, what have been your views in ^regard to it? A. I think the feeling is they would like to try it. i Q. What is the sentiment of your community in regard to ;he succession or inheritance tax? A. Bather unfavorable; the people are not used to it, and when you come to a tax on direct succession they are inclined to grumble about it; the law is ;jincertain yet; there are different constructions placed upon it, ind they do not understand how it is going to hit. Q. That is the reference to the law of 1892? A. Yes, sir. ! Q. Do you know of any instance where the cpaital has been or is driven from the State by reason of the restrictions affecting corporations? A. No, sir; I do not know as I do; there has quite a good deal of capital gone from, our vicinity to western States to be invested. Q. Owing to the higher rate of interest? A. Yes, sir; and getting rid of their personal property taxation; they hide it that way. Q. But as peculiarly applicable to corporations you know of no (instance? A. No, sir. Q. What have you to say as to a change or modification in the existing laws for the increasing of the direct revenues of the State government? A. I don't know in what particular line the tax should be increased. Q. The suggestion which has been frequently made by the Comptroller of the State; tax corporate indebtedness which would 316 bring some $2,000,000,000 within the range of taxation by th.e| State laying a light, specific tax? A. I think that the people rather favor something of that kind; my own idea had been tlu.t perhaps some sort of income tax, or something of that kind, could be made. Q. Is the sentiment of your community favorable to an incoi tax? A. Perhaps not; but my own thought on the subject ha< been it was a very fine way to get revenue; small incomes no and as they grow larger, tax them heavier. Q. Have you considered the question of taxing savings bank deposits? A. Yes, sir. Q. In your experience in connection with such banks what Is your opinion in regard to that question? A. I think it would injure the banks, and I do not think it would produce such revenue. Q. In what way would it injure the banks? A. People would put their money in some other way and would withdraw it from the banks. Q. You think it would tend to decrease the habit of savings on the part of the people? A. I do. By Mr. Guenther. Q. For whose benefit is the surplus held in a savings bank? A. For the benefit of the depositors, I suppose. Q. Bo you know of any case where the depositors ever received any benefit from it? A. I never heard of such a thing. By Mr. Hamilton. Q. What disposition, if any, is made of the surplus? A. It is simply kept invested by the bank as far as I know. Q. And the only use to which it is put is on addition secui for the depositors? A. Yes> sir. By the Chairman. Q. Is not that the best possible use to which it can be pul A. I suppose so, perhaps. 317 Q. Suppose I make a deposit in the pulton bank; I know when it in that bank I am to get three and one-half or four per and that the bank will not hold out that it will pay any re; well, my money remains invested in your bank and I get ee and one^half per cent; when I get ready I draw it out; I ,ve got all that I am entitled to, have I not? A. If the money earned more perhaps you are entitled to more. Q. The bank does not agree to pay any more? A. As I under- d the law the bank can not agree to pay anything. Q. It is well understood that the banks are paying so much terest on deposits? A. As I understand it unless they earned they could not divide four per cent. Q. Do you hold then, that they have got to divide all they ve got? A. No, sir; I do not think the law says so, but I think y can not exceed what they do get; they are not obliged to de it all. Q. If the depositor gets his interest semi-annually what prop- y interest has he got in those surplus earnings beyond the urity that it gives for his deposit? A. It is his money that ps to earn it. . The same as parties forming a partnership? A. Yes, sir; is his money that has earned the surplus and he is more entitled it than anybody else; that is all. Q. He gets interest for the use of his money, and his money n safe keeping for the time being; he does not do anything ards running the institution except making his deposit for own especial benefit? A. There is no one else more entitled it than he is, or as much; there is no bargain when he puts in that he shall be satisfied with four per cent, as when I put mortgage on my house. Q. But the institution itself must be run; its operating expenses .ust be met; there is not any agreement with him that he shall tribute to those; at the same time they must come out of the of those deposits; now, why do not the surplus earnings to the bank? A. There is nobody represents the bank the people of the State of New York. 318 Q. It has a board of .trustees? A. They have no property in it; they put no money in it. Q. But it is an institution? A. Yes, sir. Q. They are authorized to do business created under the law* of the State of New York, and authorized to hold property' A. Yes, sir; as a bank; but supposing the bank was to go out ol existence they could get no money out of it; there would to nothing for the trustees to divide among themselves. Q. I suppose the bank did go out of business and had a surplus do you think it would be an equitable thing to distribute the existing surplus among the then depositors? A. I do not thinl it would be equitable, but it might have to be done. By Mr. Guenther. Q. Why would it not be equitable? A. Because every mai who had even been a depositor had helped to earn it. Q. Take the other side of the question; if a man deposits hii money in the savings bank, as we have had a case in Buffalo, rii bank fails and he loses fifty per cent of the amount deposited why should he not be entitled to half the surplus if he is liabl< to lose half of his deposit? A. I think the surplus belongs ti the parties whose money earned it, but how they can arrange i under any law to get a cent what would be equitable I can not set By Mr. Hamilton. Q. Have you any other suggestion to make to the committe touching this question of taxation to which your attention ha been called? A. There is one thing about taxing deposits; som ; suggestions have been made some time about not taxing thj small depositors, but taxing the large depositors in a bank; can not see how that could be done, because the large depositor j would divide it up among their families and put it in othe banks, and it could not be reached. By the Chairman. Q. Your opinion about it would be that if personal propem is to be taxed at all, that it ought to be all taxed? A. Yes, sill but I do not know of any way under Heaven you can do it. 319 Q. You would not say because a man has only $500 he ought escape and that a man who has got $100,000 ought to be taxed? A. No; and still there are a great many depositors in the savings >anks that scrape together a little and ought to be encouraged n getting small deposits, as a matter of public good; habits of ;hrift and industry to get together a little ought to be encouraged; when a man has got $3,000 he has got his habits established and ought to begin to pay taxes. Q. You ought to punish him because he has succeeded in securing the sum; because he has been more thrifty than his neighbor he ought to be punished by a tax? A. I do not know ihat I would call it "punish." By Mr. Hamilton. Q. Should any personal property of any kind escape taxation n this republican form of p;overnment of the people? A. Not as an abstract question; as a theory; as a practical question there should. Q. Is there anything in the present law which exempts a sav- pngs bank depositor any more than another bank or any other form bf asset for paying taxes? A. I am not able to say just how the law reads, but there 'is 1 a section that says something about ^deposits of savings banks. Q. It does not say that they are exempt from taxation? A. It is claimed by officers of some banks that it does; my theory i&bont taxation is that after the thing gets adjusted and running lit makes no difference what particular property is taxed; it will be spread amongst the community and the whole people and adjust itself; for instance, if the whole tax were placed upon dry goods merchants they would spread it upon the community that dealt with tli em and in the end it would average itself; it might be a ong time. l*y Mr. Stranahan. Q. You have seen the resolution of the board of supervisors of ego county passed yesterday? A. Yes, sir. (}. What do you think of the suggestions contained in that resolution? A. In regard to the question of State taxes, I think 320 favorably of it, letting the counties determine for themselves about the balance of the taxes. Q. You think favorably of that part? A. Yes, sir. The resolution referred to is as follows : "Whereas, There is now in session a joint committee of Legislature of this State investigating the operations of the laws with a view of reporting to the Legislature such change as are necessary in said laws, and '* Whereas, In the judgment of this board the present laws upon the subject are inequitable in their operation, therefore " Resolved, That we urge said committee to report some plan of raising the tax for the purposes of state government from a tax' upon the bonded indebtedness of corporations and on inheritances and thus entirely relieve the counties of the State as such fro'ii raising any money for State purposes, and "Resolved, That inasmuch as there seems to be irreconcilable differences between the counties of the State as to the wisdom ofj taxing personal property that we favor the passage of a law giving the local authorities power to determine the manner of raising^ the money for the purposes of the government of each county. "Resolved, That the clerk of this board be authorized tiudj directed to deliver a certified copy of this resolution to said] committee. u This is to certify that the above is a true copy of a resolution as passed by the board of supervisors of Oswego county, December 28, 1802. "W.E.LEWIS, Clerk." Q. You say if you place a tax upon one line of business they would raise the price of what they sold, and would in that way receive the money back again after they paid it? A. That would be the result in the end. Q. If you place all the tax upon the real estate how are the< owners of real estate, if fanners, going to raise the price so as to get it back from their consumers; how are they to get the advanced value of their products, because they do aot make the marker? A. Perhaps in this State our farmers having to compete with fanners in other States they might be at a disadvantage. Q. You think the farmers have the power to raise the price of their products? A. Yes, sir; it would not be produced after i awhile; the question of supply and demand fixes the price of whvat. Q. What do you say about the present method of taxing collat- ieral and direct inheritances; do you consider the policy a wise one? A. To tax inheritances? Q. Yes, sir. A. Yes, sir; I do, personally. Q. \Vhat have you to say as to the present rate of iiva per cent an collateral inheritance and one per cent on direct? A. I. do not ;hink it is excessive. Q. Would you increase it in either one? A. I would not until the thing got adjusted, and I knew what was coining; there is a great dispute now as to what inheritance is taxable; I re.id ;he law that unless a man inherits f 10,000, he pays no tax, and the State officer comes and says if a man's estate is fl(>,000 and le has got ten children, it is taxed. By Mr. Stranahan. Q. The general term with reference to the collateral inheritance ;tax have decided both ways, I understand? A. Yes, sir; it has been held in our county, under an old law, that unless they got $500 each there is no tax. By the Chairman. Q. Leaving the amount of the legacy out of consideration, what do you say as to the rate one per cent on direct inheritance? A. I don't think that is excessive. . Q. Direct personal inheritance? A. I don't think that is excessive. Q. What would you say about increasing it? A. I should want to look over the question as to the necessity of paying it iu order to avoid some other form of taxation that I did not want to go into, or something of- that kind. 41 322 Q. Suppose that the legislature should determine to relieve real estate from taxation for general State purposes, we would have to look for some other sources of revenue to make np for the loss that would be sustained by relieving real estate; now, would you faA T or, in that event, increasing the rate of taxation upon direct inheritance? A. That is just the point; if I did not find any other place that I could place it as well, I would. <^. Is there any other that occurs to you? A. There is nothing that occurs to me except some form of taxation of corporations or their indebtednes, or something of that kind. Q. Do you think that a tax of two and n. half per cent on legacies to each individual of over $10,000 wo aid be in any man- ner oppressive? A. None below that to be taxed? f Q. I say, a tax of two and a half per cent on inheritances above $10,000 to the individuals? A. I don't think that would be a hardship, but I should not want to fix that rate until I had studied the question in regard to those other matters; I don't feel competent to give an opinion on that. Ey Mr. Stranahan. I Q. Don't you think that a tax on the bonded indebtedness of corporations of whatever may be necessary within reasonable limits, say one per cent or two per cent or one-half one per cent would fall as lightly as any other form of personal taxes; would! fall, in other words, upon individuals who would be as well able I to pay a portion of taxation as any other part of the community? A. The corporation owing the bond would pay this tax, or would they take it out of the interest? Q. They would take it out of the interest, I suppose? A. I should think it would be much more satisfactory to the people at large than it would be to increase the inheritance tax' considerably. Q. Are not those bonds as a general thing in your judgment held by people who would not feel it a very great burden and who ought to bear some part of the expenses of government? A.1 Yes, sir; they are not held but by people who have got several thousand dollars. Q. Lots of moneys? A. Yes, sir. Oscar H. Hale, called as a witness^ being duly sworn testified as follows: By Mr. Hamilton. Q. Where do you reside? A. Norfolk, St. Lawrence county. Q. Your post-office address? A. North. Stockholm. Q. What is your business? A. Farmer at present. Q. How long have you been engaged in that pursuit? A. For the last twenty or twenty-five years. Q. Have you followed any other business? A. Not in that time. Q. Have you been connected with public office in any capacity iiat brings you in connection with taxation? A. I have been member of the bo'ard of supervisors for the last seven years. Q. Have you had the question of taxation under consideration? A. Yes, sir; quite largely; so far as it related to our own county. Q. You are chairman of the committee on equalization? A. Yes, sir; I was last year; this year I am a member of the committee. Q. What have you to say as to the propriety of modifying the wesent laws relating to taxation, interest and assessment so far sts they affect the agricultural and other interests of the State? In my opinion the law should be modified so that more of the property of the country can be reached for the purposes of ;axation. Q. What property do you refer to? A. Personal property. Q. Is it your experience in your county that personal property "enerally escapes taxation? A. Quite largely. Q. Does it do so by reason of the evasion of the law or the axity of the administration by the officials? A. Well, it is jairtially both; as Mr. Rice just said, it is a pretty hard matter to nake a man swear to the truth. i Q. And it is pretty hard to make some officials do unpopular iwjts? A. Yes, sir. Q. What remedy have you to suggest to cover those defects in instance or both ? A. It is a difficult question to answer. 324 Q. You are unable to suggest any remedies? A. Yes, sir; that are really satisfactory to myself; I am frank to say that I have thought on the subject for the last six or seven years, and I really have not reached any conclusion that is satisfactory to my ow:a mind; I know what ought to be done, but how to reach that is altogether another question; if we could compel the assessors to assess every dollar of personal property it would be all right, how are you going to do it? Q. Would your judgment be in favor of the adoption of wl is known as the listing system? A. Not altogjether; it is most too inquisitorial to suit me. Q. It has worked well in western States? A. It has worked well in Pennsylvania and in Ohio, and I should be glad to see it; tried here, but I say I think it is prying into a man's individual affairs too much, a little more than I would like to have them pry into mine. Q. What is the sentiment of your community in regard to the question of taxation of mortgages? A. They should be taxed; I thing that is the general sentiment; that they should be taxed; the holder of the mortgage should pay taxes upon his mortgage. Q. What is the sentiment in regard to the present rate of interest as affecting the agricultural interests? A. The impres- sion generally is in our section that a lower rate of interest ought to exist. Q. What is the occasion for the demand for that lower rate of interest in that community? A. Because real estate is not pay- ing to-day to exceed four per cent interest upon its assessed valuation. Q. Net or gross? A. Net; much of it is not paying that; I am speaking of well managed farms. Q. Are the average farms in St. Lawrence county paying four per cent? A. No, sir. Q. What is the average? A. Lots of them are paying nothing, but much of that is due to the management, and they are no* entitled to any income; they do not manage their business in a businesslike way. 325 Q. Is it your judgment that well managed farms in St. Law- irence can be made to produce four per cent? A. Yes, sir; 1 I think with the same business principles applied to them as are ^applied to other business they will pay four per cent. Q. Net? A. Yes, sir. Q. In regard to the question of allowance for deductions of per- sonal indebtedness, what are your views upon that question? A. ?If they are to be allowed upon personal property they ought to be fallowed upon realty. Q. If they are not to be allowed on realty they should not be fallowed on the other? A. Certainly not; I would make them pqual. Q. Is it your view that personal property should be taxed [where it is located rather than at the residence of the owner? A. No, sir; I think it should be taxed where the owner resides. j Q. In the case of manufactories located in towns, would you lieprive the county towns of the benefit of taxing the personal (property accumulated there? A. That is a difficult question for [pie to answer; my reason for making that answer was this: We pave very largely with us and quite generally through the State [people who send money largely west to escape taxation partially |iere, and for the sake of a high rate of interest; we have a good joiany of them; moneyed men ought not to be allowed to sit down 'in our town and pay nothing for the support of our municipal government, schools, etc., it seems to me. i Q. That would operate to the extent of where capital was ! employed within the State? A. Yes, sir. i Q. Do you believe that if a plan were devised by which the entire State tax could be raised independent of the counties that jvould be advisable? A. The objection I see to that is in relation tao our schools. Q. I am not supposing now that there is to be anything omitted by the State that is now performed by it; I mean that the State Shall perform all the paternal duties it now assumes, and to raise its tax, and the State taxes as now raised by counties to be entirely abolished; would that be desirable to the agricultural communities? A. I think it would. 326 Q. If such, a plan were devised, what are your views the a in regard to the adoption of the local option tax law? A, There would be nothing else left for them to do; the counties would hav<; to provide their own living entirely amongst themselves. Q. I mean to permit localities to determine upon what prop- erty they would raise their local taxes, so that St. Lawrence county might adopt one schedule and the neighboring count;p another, according to the views of the officials? A. So far as our county is concerned, I think we would be ready to accept it; it might make a general commotion throughout the State; I don't know. Q. You think you could manage your affairs that way? A. We should try. I By the Chairman. Q. Would not that commotion be confined within the limits of the county? A. I think it would, quite generally. Q. What is the sentiment of your community in regard to the inheritance tax as to whether the present law is sufficient, or whether an increased tax for State purposes should be had? A. Generally, they think it is large enough. Q. What is the sentiment as to what is known as a graded tax raising the tax as the amount of the inheritance increases? A. That should be done in my opinion, and it is quite generally the opinion of the leading men. Q. What is the sentiment of your community in regard to the question of taxing not only personal estate in direct inheritances, but also the real estate? A. Not in favor of taxing real estate. Q. Can you give the reason upon which they base the dis- tinction? A. No; I can not. Q. Is it not generally based upon the idea that personal estates escape their just share of taxation during the life of the possessor and thereafter, the first opportunity that presents itself they try to get even? A. That is about the result of it; that is about it. Q. That cause ignores the true ground upon which the inherit- ance tax law is composed? A. I do not understand. 327 Q. Does not that reason ignore the true ground upon which the i inheritance tax is imposed? A. It does. Q. The theory upon which the inheritance tax law is imposed is that there is no natural riirht of inheritance; that it is entirely I a creation of government and is maintained by the government, and therefore, since the government creates and maintains that Bright, it has the right to take its share for the purpose of main- Itaining it. A. The protection that th.3 State exerts over personal property [is a great deal more than over real; they claim that personal | property should pay for the protection. Q. Now, do you know of any instances where capital has been [or is being driven from the State by reason of the restrictions (affecting corporations or the tax imposed upon them? A. No, sir. Q, What do you say as to new laws or amendments or modi- fications of the existing laws to increase the direct revenues of the State? A. Some means should be devised to reach more ijof the property of the State to reach the personal property. Q. In New York the witnesses that were called before the i (committee, including many large owners of real estate, expressed the opinion that personal property should be practically relieved from taxation; how does thai, view compare with the sentiment of your community? A. They are not in sympathy with it. Q. Have you any suggestions to make to the committee to which your attention has, not been called during the course of this examination in regard to the question under consideration? A. No; I have not. Q. What is the sentiment of your community in regard to the taxing of savings bank deposits? A. Well, savings banks are not taxable and should not be taxed; the sentiment is that the surplus should be, but the question presents itself as to where the surplus belongs; in equity the surplus belongs to the parties whose money helped to create it; I should hold that surplus whether it was $100 or $500 should pay its proportion of taxa- tion; taxation should be equal, and whether it is great or small it should bear its just proportion of taxation. 328 Q. You don't believe in the view then that by removing all taxes upon personal property the amount of it that would flow into this State for investment would be so great and the increase of the value of real property would be so great that the object o:t the reduction of taxation would be thereby accomplished? A. No, sir; because that money would naturally center in the com- mercial centers; I don't know how it would help a purely agricul- tural community in the least. Q. You believe it would be to the detriment of the agricultural part of the State? A. I do; that is my first impression; I had not thought of that particular point. By the Chairman. Q. How do you think the reduction of the rate of interest from six per cent to five per cent would affect the farmer in obtain- ing a loan? A. I don't know as it would help him a particle. Q. On the contrary, do you think it would embarrass him? A. Hardly that, either; I don't think it would affect him either way; gilt-edged securities can get all the money they want now. J>y Mr. Guenther. Q. What about other kind of securities? A. Not gilt-edged? Q. Yes, sir. A. You can not get money any time whether the rate of interest is six per cent or ten per cent. IJy the Chairman. Q. Do you think that the banks, as a rule, look upon farm mort- gages as gilt-edged, do they seek for them? A. No, sir; they do no i. Q. The question I asked had special reference to loans and farms? A. The banks do not as a rule seek loans upon farms any- where; the farmer's loan almost invariably comes from private individuals. Q. Jn their own community? A. Yes, sir; in their own com- munity locally. Q. Somi of the witnesses who have preceded you said that in their locality the savings banks held a large proportion of the 329 A. That is not time with us; we have several loan ife:sociation& who loan money to the farmers, but, as a rule, our farmers get their money largely from private individuals. Q. What is the standard rate of interest being paid on farm [mortgages now? A. First-class and in sums of $5,000; it pays iibout five per cent. j Q. I mean average farm property ? A. Six per cent. I Q. Do you think that if the legal rate of interest was reduced from six per cent to five per cent that the average farmer could liilna-in a loan as readily at five per cent as he can now at six per cent? A. The way the money is coming from the west I should Jay, yes; money is good for nothing only as it is invested; lying Idle it has no value at all. I Q. Do I understand you to say that you were in favor of taxing port gages? A. I should- tax mortgage; here is a difficulty under I he present law and a wrong; when the real estate and mortgage j ,re both taxed it is an injustice; I am not in favor of taxing mortgages and real estate both; that should be remedied. j Q. Your idea would be to tax the holder of the fee for the equity jjhat he has, and then tax the holder of the mortgage for the jiraount of his loan? A. Yes, sir; you then only tax the mortgage Ince and each person pays his just proportion. Q. Suppose that both of your views were carried into execution >y the operation of law; that the rate of interest is reduced from six o live per cent, and that then in addition you tax the mortgage, f vhat effect do you think that would have upon the farmer in 'braining a loan, bearing in mind that one per cent of the earning apacity of the mortgage has been taken away, and that it is then axed in addition, say one per cent or one and one-half per cent, rtiich cuts it down to three and one-half or four per cent? A. T util it adjusted itself it might be a little more difficult for him o secure a loan, but in a very short time, I think, he could secure #* loan as readily. Q. What do you think money ought to earn as a fair result of nvestment? A. It ought to earn five per cent. Q. If your views were carried out and the rate of interest was teed and the mortgage taxed, you can see where the investor 3:50 would not receive any such income as that from his money? JL That is true; it would adjust itself very readily; really the rate of interest is controlled quite largely by supply and demand; as a gea- tleman said here about reducing or increasing farmers' crops the farmer can not change the price of his crops, to adjust these different modes of assessment and taxation; the merchant can, the farmer can not; it is an utter impossibility. Q. The merchant can not only to a limited extent? A. They can a great deal more easily concentrate their united efforts and control it, but the farmers are so scattered and isolated that it is pretty difficult for they to combine. By Mr. Guenther. Q. If supply and demand regulated the amount of interest what object would there be in urging the reduction of the lei.;a; rate of interest to five per cent? A. As it is now, it would lie] the borrower somewhat, Q. Then, supply and demand would not enter into it there A. Not wholly, but supply and demand has a good deal to with it. Q. Don't you think, in the case where the real estate owiu, would pay his proportionate share of the tax, and the holder o the mortgage was supposed to pay his share, that the man >v holds the mortgage would demand of the man that owns the lam first the amount of the tax that the holder of the mortgage wonl have to pay? A. Very likely, because capital can and will prc tect itself always; capital needs no protection; it will take cap of itself: the law is supposed to protect the weak. By Mr. Hamilton. Q. In your estimate that a well managed farm may be to produce a net income of four per cent in your county, you made any allowance for the compensation for the daily labc of the owner? A. Yes, sir; I would not like to have that however, as universally true; I think Mr. Dibble will bear me oil and Mr. Green here, and any first class farmer; the owner of tba 331 farm would not be compensated for the amount, of brain work that he would put into it what he ought to put; the day has gone by when a man can be a successful farmer without having brains, and he is very poorly paid; the same amount of talent directed in almost any other occupation as successfully as a fanner has to bring his business to produce its four por cent is far better paid than the farmer. : Q. Would St. Lawrence pay four per cent net after the farmers bare paid all expenses and have received say two dollars per lay for each day's labor they have given? A. The best of them svould. By Mr. Guenther. 1 Q. He has to live meanwhile? A. Yes; that is where a great nany farmers forget to figure; they forget how often they hitched ip and drove to the town ; they forget how many dishes of ice {ream and strawberries they have had; don't give the farm credit for that. Ij ,Q. Talking about the mortgage paying its proportionate share if taxes upon realty; take, for instance, the basis of real prop- tPty in a city worth f 10,000, with a mortgage on it of $5,000; he tax on that each year, perhaps, would amount to say $160; :hen, that same year the local improvement is put down there, ! or paving, amounting to say $400, and a sewer put in there; vould you ask the holder of the mortgage to pay half of that tax, vhen the tax is for a permanent improvement, and that property liter the mortgage has been paid off will have that benefit? A. ttiere is the difficulty; if any of you can devise a tax law That von't be unjust in some way, I will go a long way to see a man capable of doing it; I acknowledge I am not smart enough to lo it; we have very much trouble with equalization. Q. You mean as between towns and counties? A. We only Dualize between the towns, but take a county with thirty-one xnviis and four wards, it is almost equal to a state; there are hirty-five supervisors on our board. .me. At 8 it 332 Q. Can you give a statement of the approximate amount of mortgaged indebtedness on farms in St. Lawrence county? A* My opinion is that they are not far from between tvernment for many years. Q. You include in that transactions in Wall street? A. sir; everything personal; all dealers who make it a isiness as dealers ought to pay this tax, and in order to effected any tax must be put in such shape as not to be isily evaded, or in other words to place people so that they |ould not be under temptation to evade it; now what is at in iis system that will prevent men from avoiding or attempting avoid taxation; now, take a merchant; here is Mr. Day, and is probably as prosperous a merchant as there is in this city; ible >* oen 336 supposing his sale of $500,000 a year; one-twentieth of on; per cent would be $5,000; probably his present taxes are doubli that; it would result as a benefit to him, and there would not any temptation to evade it; I am an advocate of having good mei and women; I believe that we can have men that would tell tb.e truth and tell it under oath, but I think it is judicious to avoid placing temptation in the way of people, especially where they ai?e interested; it tempts them into an evasion of the law; this would avoid that temptation; now then, as to the equity of the thini*;! of course if you tax all sales, wholesale and retail, you tax the same article over and over again; that is to be expected, but that is not an uncommon thing; now, you take the tariff; that taxes the goods when they come from foreign countries; then the jobber, if he is honest, he reports to the local assessor the full amount of his goods; the law says he shall report the full amount of Mg stock, although they do not conform to it probably; there is a second tax ; then the country jobber that he sells to at Buffalo anc other places, he has to pay his tax on it; then he sells to the retailer, and the retailer pays his tax, but the taxation on sale* would permit of putting the rate of taxation so low that it would) not be oppressive; that is the way I look at it. Q. Would it not be necessary to have inquisitorial laws, ai| they are called, in order to ascertain the amount of sales? A, No, sir; I think that the oath of most people would be allowed aij to the amount of the sales, and in my experience with dealers should say there would be more liability for them to overstatj their sales than to understate them; you might ask me why, ato- my answer would be this, that most dealers want to stand welj in the commercial world, and they would be willing to pay large taxes for the credit it would give them ; I have known men to that for the commercial standing it gave them; and as v^ell a that there would not be that temptation to avoid it; it woul not be inquisitorial only so far as this it would give th' amounts of their sales, and their books would show it; now, how it would operate in our little town; the shoemaker who d< $1,000 worth of business pays fifty cents tax; our grocers have seven or nine of them, and their sales are from $9,000 1 110,000 a year; you see what their taxes is at fifty cents on the i.,000; then our manufacturer, Mr. Warner, who manufactures I lon't know how much, probably f 100,000 a year, but I can not jell you a great deal about that. 1 Q. Have you any other suggestions to make to the committee \p. regard to this? A. Yes, sir; I would like to have our laws in legard to the assessment of real estate altered; I would like ID have the assessors empowered and required to administer an lath as to real estate, and as to the real cash value of the estate; t think we are more likely to get a just valuation of our realty pan we are under the present system, leaving it alone to the judgment of the assessor, because then we would have the sworn Lidgment or estimate of the owner who knows more about it than laybody else, and then the result would be that the assessor iould put it down as he chose, but he would have the benefit of lie sworn statement. Q. Not to make it binding on the assessor? A. No, sir; but fcvisory; then I would tax banks and banking offices on the nount of their loans and discounts, or in other words just as T iould the merchants on their business; so I would telegraph and Kephone and railroad companies, and if the principal of a grad- ated tax is sanctioned ultimately by our higher courts, which I have some doubt about if that is sustained, then have a faded tax on incomes and a graded tax on inheritances, : md I Mink that would be very equitable and a desirable way of taxa- m; I am in favor of the principle of a graduated tax, but my Bar is that our higher courts would not sustain it. Q. It might be held to be unconstitutional you think? A. Yes, *|P; I am afraid they would say it would be inequitable to tax Tainan because he happened to have $10,000, a higher rate than 'other who had $1,000, but there is one thing about it, taxation i confiscation of private property any way you put it. f jQ. It is when you tax the owner but it is not when you tax the feeritan.ce, because the law creates the inheritance. A. I think Rat is an equitable thing; I would carry it a little farther than wual; I would carry our legacy tax on large amounts far higher 43 than you do; I see the Comptroller Campbell is in favor of a much larger rate on large amounts a graded tax, and if it Ls so to the financial officers of the State, I think he must have had some consultation with the higher courts or the judges, in order to come out in that way; I had questions about that; I believe in the principle; I think it is just and right; but so long as property can be concealed men will be found mean enough to conceal it; I 1 think we ought to take things as we find them, and practically, not more for the miserable pittance of ten per cent or fifty per cent or thirty-three per cent as they have in Pennsylvania of> personal property; for that meager amount I say exempt it all- only in this indirect way, and it will be found more equitable and more satisfactory to everybody concerned. 3 Q. Every time it made its appearance you would tax it? A. Yes, sir; every time it changes hands; I would have bonds and securities of no use unless they were stamped. Q. Whenever it shows its head hit it? A. Yes, sir; Senator Low asked me this question: How could you enforce this oni sales ; I told him I would make every transaction in New York or j on any exchange, whether New York or elsewhere, and any debt that migjht be contracted, have it non-collectable in any court unless it had the stamp equivalent to this one-twentieth of one pen cent on the certificate of stock or note or whatever it was that! was transferred, and in case of option and such straddles and! things mentioned in the exchange 1^ would have attached to the I receipt the stamp that is required for the amount of the trans- 1 action; a great many say some brokers have said that would navel the effect of driving our business to Jersey City; I say, no, sir;! it was tried during the war; how did that operate; that taxi was paid by the man that bought the bond of the stock; it was! added to the percentage that, the man charged for doing busi-j ness; so it was not any detriment to the broker; he would consent! to it; I think so far as my observation is concerned that tliei people are now ready for something more effectual to reach perl sonal property; I have utterly lost all hope of reaching personall property by any direct effort; I don't believe it is possible; l'| 339 think if every assessor could do as they did in old Borne, put the thumb screws on them, and draw it to make a man divulge what he has got> it would not be effectual any more than it was then; hence I would not undertake, while it is perfectly just that he should do it; I would not undertake an impossibility; but in this way by taxing sales, you have a reasonable and effective mode of taxation, and it will reach every single man; no man so rich or shrewd or unscrupulous that he will escape it; he pays a tax on every bit of clothes that he wears, every harness for his horse and all he squanders. Q. Have you any authentic figure as to what the transactions are in stocks on Wall street? A. They vary from year to year, but they are as high as 60,000,000 in a single day; you can multi- ply that by 300; it is called small business down there to do fifteen or sixteen millions a day; then there are the cotton exchange, the produce exchange, and all other exchanges would be added to it. A. 0. Brundage, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. You reside at Bath, Steuben county? A. That is my post- joflice; T live in the town of Urban. Q. Your business is what? A. Farmer. Q. How long have you been so engaged? A. I have been | twenty- nine years in the conduct of a farm myself. Q. Have you pursued any other business in connection with it? A. No, sir. Q. You have represented your county in the State Legislature? ;A. Yes, sir; from my district. Q. How many times? A. Four times. Q. During what years? A. Eighteen hundred and seventy- ight and 1S79, and again in 1887 and 1888. Q. Have you also acted as supervisor or assessor? A. No, sir. Q. Are you a member of the State Grange? A. T am a mem- of a subordinate grange. 340 Q. Are you a member of the Farmers' Alliance? A. No, sir. Q. Have you given to this question of taxation some study a: attention? A. Yes, sir; some years ago; not very recently. Q. I believe you are the father of what was known as tl Brundage Tax bill? A. I had the honor to introduce it. Q. Which included what is known as the tax listing systei A. Yes, sir. Q. From your experience and examination, what have you to say as to the propriety of modifying the present laws relating to taxation, assessment and interest, so far as they affect the agricultural and other interests of the State? A. I believe it to be a fair proposition that all property should pay its share; make no exemption except such as naturally and necessarily belongs to the State; T think some system should be devised by which not only shall real estate pay taxes, but that all per- sonal property should pay its tax; I say this as a rule that per- sonal property is more remunerative as property and more expense to the State to take care of it and protect it, and I know no reason why a man that chooses to invest his money in bonds and mortgages on somebody else's real estate shall be guaranteed- a specific net income, while he who has some other property shall take his chances in the scramble for position and profit; so that I see no reason why a gentleman who owns a bond and mort- gage, if he should happen to have one on iny farm or business, should be exempt from paying his share of the tax, as I am required. Q. You know of the very wide-spread opposition to the listing system? A. I know there is, coming principally from the fact- as a gentleman said before, they would be hi favor of a listing system if it could be effective, and it seems to me a scheme can be devised to make it effective; it seems to me that the Legis- lature might enact a law which will provide for the listing sys- tem in the customary way, and that when in the judgment of the board of assessors any person fails in their judgment to give a fair return of the personal property in his possession, that that board shall be empowered by the law to make a report to the 341 judge the county judge or Supreme Court judge asking for the appointment of a referee to take this question into considera- tion here and determine the facts; if this property can be dis- covered, I think the objection to the inquisitorial system to which the gentlemen so much object would apply not so much from the fact of the public knowing their financial position, if they understand their neighbor is to be known too; you have no objection to it being known that you have $50,000 or 10,000; I should certainly not object to that to have it known that I was worth $25,000, when my neighbor's affairs were to have^ the same light turned on to them. By Mr. Guenther. Q. In the city of Buffalo, I run a place and carry a stock of $50,000; I have paper outstanding for $50,000; nobody knows it except the man I borrow money from; what effect would that have on my credit if it was known that 1 had this amount of $50,000 of debt? A. I don't know that I have considered that question far enough to say, but I am not making any exemptions on any sort of property, and right there I want to say that one of the reasons why this discrepancy in the assessment of real estate exists conies from the fact of there being under the law this exemption allowed for debt resting against personal property; he is allowed exemption to the extent of his debts; it is absolutely indefinite; if a man holds one or two thousand dollars in government bonds, exempt under the law from taxation, he allows it to be understood by the assessor that bis personal property is all invested in government bonds. Q. The ultimate object of having this listing system would be reaching personal property and decreasing the tax upon real property so far as State purposes only are concerned? A. I don't quite understand why we are obliged to use that term for State purposes only, for the reason that there is just as much difficulty in the other. Q. It has been suggested by some of the witnesses to have a divorce of the State and county to permit local option; now, if we had no State tax, could you allow each county let the super- 3,42 visors provide a listing system if they wanted to, and put it on personal property or real property; and in that case would you be in favor of local option for each county? A. Possibly to extent that the board of supervisors could determine whc or not a listing system shall be in vogue; it should be uniform. Q. Do you think the condition of the farmer to-day is owing the tax upon his property? A. Only in a very moderate degree. Q. It is very moderate is it not? A. I say it is moderate; course, the figures that have been shown here to-day show that would simply go to pay some of the interest on his indebtednc By Mr. Stranahan. Q. When you were in Albany giving some attention to subject of taxation, did you discover that your ideas as expressed in your bill were very strongly combated by all people from the different cities of the State? A. From banking institutions? Q. I mean by the representatives in the Legislature; did you find that those from the cities were unanimous in their opposition? A. Largely so. Q. isow, you have watched the operation of the Legislature on this subject since that time and know if that opposition still continues? A. Yes, sir; very largely. Q. Has it occurred to you that since the recent apportionment giving a larger representation to the larger cities of the State, New York, Brooklyn and Buffalo, that that element representing the opposite idea from your own are nearly if not quite sufficiently strong to enact such legislation as they see fit upon this subject? A. I think that would be the case. Q. Does it riot occur to you at that time in view of what I suggested that there are irreconcilable differences in certain counties in the State with reference to the method which shall be pursued on the subject? A. Yes, sir; I think so. Q. If that is true, and those differences are irreconcilable, and that which is desirable in one community is not in another, is not the most reasonable solution local option? A. Yes, sir; in that view of the case; this question of local option I never considered until I heard it discussed to-day. Q. It means that the board of supervisors in the county of Steuben. if you please, shall have the power to say upon what species of property and in what manner it shall levy taxation for local purposes, and in the county of New York the board of aldermen may say there that they will levy it only upon real estate and exempt personal property entirely; how would that system operate? A. I can see where there might be some satis- faction come out of that, and it seems to me that it might be somewhat popular in the county. By Mr. Guenther. \ Q. Supposing that in the county of Chautauqua they should tax both personal property and real for the purpose of meeting the local expenses, and Erie county should say they will tax only real estate, would not that be the cause of taking all the personal property out of Cliautauqua and placing it in Erie; what is your opinion? A. I am of the opinion that when we come to tax all property we find the taxes so modified and smaller in proportion than we have been in the habit of paying, that there will be less objection; public judgment and patriotism would lead them to regard it in a proper light; as has been suggested by some gentle- man preceding me, there ha* been considerable sentiment in the direction of exempting certain classes of property, so that you are enacting laws each year exempting certain classes of prop- erty from taxation; people seem to be drifting that way; if you turn and say that all property shall be taxed, that every man shall be considered a good citizen if he stands up like a man and pays his tax there will be less disturbance. Q. Have you ever figured out what proportion in Steuben county your State tax is to your local tax? A. I have known it but I am not able to give it now. Q. It is one to five. A. That is one of the fallacies of the farmers; they fail to take that into account; our grievance is not between the several counties one as against the other but because my neighbor does not pay the tax that I do; my neighbor who owns a farm immediately adjoining me has succeeded in 344 having a great amount of personal property and he pays a mej bagatelle. Q. Farmers overlook the fact that the greatest burden local taxation? A. Yes, si*. Q. So long as this present system of taxation is in vogue tl will consider that it is Stare taxation that is the burden? Yes, sir. By Mr. Hamilton. Q. Could not the objection that in case of local option personal property would seek to avoid localities where it was taxed be in a large manner overcome by giving the right to the localities to tax personal property where it was located without regard where the owner was ? A. It seems to me that would obviate the difficulty. Q. What do you say as to the approximate amount of niorfl gage indebtedness on farms in your county? A. I have no definite information on that subject, but my judgment' is that it is not large ten or twelve per cent. Q. Do you know whether such indebtedness is increasing oiH decreasing for the past few years? A. In conversation with gentlemen who have some right to know, I am of the opinion thatj there has been no increase and in some instances -there has beettj some decrease, more especially during the last year or two. Q. Do you know the comparative value of real and personal] property in your county? A. The assessed value? Q. No, sir; the actual valae? A. No, sir; nothing very definite! except the general opinion that the personal property is seventy- five or eighty per cent. Q. And yet as it appears on the assessment-roll it amounts toj how much? A. About one to eleven. Q. Now, of late years has farming property in your county] been increasing or decreasing in value? A. There has been increase, and our county I think is somewhat an exception becauii of the character of the products; we have a large grape growii country generally and it i> holding its own; we have la potato growing sections and they have been very remunerative; we produce a very fine quality and great quantities of them in some sections, and in no sections are the highest priced lands in the county to-day outside of the vineyards. Q. The vineyard is practically a new industry in the last decade? A. Yes, sir. Q. What have you to say 'is to the increase or decrease of well managed farms or vineyards in your county? A. My impres- sion is that farmers are generally very widely astray in their estimates for the reason that they do not conduct their business properly, and do not give their farms correct returns of the products from them. Q. Do you know of any instance where capital has been driven from the State by restrictions placed upon corporations? A. No, sir. Q. What is the sentiment of your community in regard to the question of taxing mortgages? A. Very generally in favor of it Q. What is it in regard to the question of allowing an offset for personal indebtedness? A. There is opposition to that among the most intelligent people; they believe it is not right, and that it has led to such abuses in its operation. Q. What is the sentiment of your community in regard to the present rate of interest? A. So far as I have heard expressions of it I hardly dare answer that question; I hear expressions both ways; I think among the lighter class of borrowers and the people of more moderate circumstances the disposition is decidedly in favor of reducing the interest, but among the better class of farmers, and I live in a community where I am largely surrounded by a very good class of farmers, the general feeling is that it would hardly be to the advantage of the farmers to reduce the interest. Q. Do you believe it desirable that the State tax should be collected solely by the State? A. Yes, sir. Q. And thereby to avoid the question of difference in equaliza- tion between counties? A. Yes, sir. 44 OF THE TINT VlPTP QTT- V Q. Do you believe as a result of that, if it can be satisfactorily established, that a local option law would meet with the views ot your community? A. I regard that as a new question; it is to; me; I have never heard it discussed in that form. Q. What is the sentiment of your community in regard to the inheritance tax? A. Very largely, I think, in favor of it, ;md of the improved scheme suggested by our comptroller, a gradu-| ated tax, and some increase in the line of putting some further taxation on corporation, and as has been suggested to-day, taxing the bonded indebtedness of corporations. Q. And in regard to savings bank deposits? A. We have veryl little to do with them; we have no savings banks in our county. Q. Have you any suggestions to make to the committee to which your attention has not been called on the subject of ation? A. I had but I don't recollect them now. Q. Do you regard the difficulty as it exists to-day in the collec- tion of taxes as owing to the condition of the law or to the laxity of its administration? A. Growing out of both there is a long- continued abuse in that direction; a precedent has been so well established the scheme by which a man may claim that ho is in debt and get off from his assessment and that very fact has resulted in a different rate on the real estate so that in some counties it is forty, fifty and seventy-five per cent; I apprehend that came from the system of making an allowance on personal property for the indebtedness; the disposition to even up with the man holding real estate is the result, because his neighbor had an allowance for personal debt. Q. What remedies, if any, occur to you to overcome these difficulties? A. I don't regard it possible to secure a proper enforcement of the law as it now stands; it seems necessary that some radical changes shall be made, and extending the power and authority of some of the officers, so that personal property shall be more effectually secured. Q. You think that, together with the adoption of the listing system, would accomplish the desired result? A. In view o$ this condition of affairs that exist on Mr. Stranahan's suggestion, the opposition to that sort of legislation which conies so largely from the cities, and they are now more than ever in the pre- ponderance, the necessity is suggested of going still farther for |a, remedy; I have been thinking over the subject since my xperience with the tax bill in the Assembly; the more I have seen nd heard of it the more I have become convinced that there is no ther way; it seems to be inevitable that either one or other Iternative'must come; I have been trying to educate myself that personal property were entirely exempted from taxation, benefits rould result to the farmer, so that they would be able to get Dans more readily; I say that one or the other is inevitable. Q. You were present during Mr. Carr's examination? A. i'es, IP. Q. You heard his scheme relative to the taxation of sales? A. r es, sir. Q. How in your judgment would that meet the requirements? L It seems to me to be wholly impracticable. Q. Why? A. For the reason that it depends entirely upon the onor of the man making the statement; you must have his oath, ind have his statement that way, and he is no better off than he 8 under a listing system or under the present system even; you ake his statement and that is the end of it; it is really a vision- wry scheme so far as I can see. By the Chairman. Q. You think that the successful carrying out of a tax law lepends entirely upon the ability of the other fellow to grasp the jroperty? A. Yes, sir; find it first, then you can assess it easy Jiough. Q. Wouldn't it be safe to depend on the owner? A. No, sir; )ur experience has taught us that. By Mr. Guenther. Q. You think a considerable amount is not collected on personal roperty by reason of swearing it off by indebtedness? A. There a a very little of that done by swearing off; it is done by persuad- ng the assessors by one scheme and another. 348 Q. Your assessment books for the purpose of taxing personal property are open up to a certain day in your town? A. Yai sir. Q. What do you think of extending the power of the assessor! in the case of a man who comes in and swears off a certain amount of his assessment, to allow the assessors to place that against 1i person who holds that indebtedness? A. I think it will bo good idea; any scheme that will help to discover personal pro] erty would be. The committee then adjourned to meet December thirtiel 10 a. m. Syracuse, N. Y., December 30, 1892. 1 The committee met pursuant to adjournment. Edward F. Dibble, called as a witness, being duly sworn, tests fied as follows: By Mr. Hamilton. Q. Where do you reside? A. Honeoye Falls, Livingjston coun|j but the post-office is in Monroe county. Q. What is your business? A. I am a farmer. Q. How long have you been engaged in that occupation? Since I attained my majority. Q. Are you engaged in any other business? A. No, sir; make a specialty on my farm of seed growing, still I am strict! speaking a farmer. Q. You are a member of the Fanners' Alliance? A. I am pree dent of the State alliance. Q. Are you also a member of the grange? A. I have not tha honor; no, sir. Q. Have you been connected with any public office beariB upon the question of taxation? A. I have not. Q. In your capacity as president of the alliance have yo investigated the subject of taxation? A. I have. Q. What have you to say as to the propriety of modifying present laws in relation to taxation, assessment and intern 349 far as they affect the agricultural and other interests of the ? A. They would be changed most decidedly. Q. Can you give us the approximate amount of the mortgage idebtedness on farms in your county? A. Well, I could be able give 3 r ou the exact amount if the United States government rou Id enter the amount on its census report; our government took air counties in this State and took the mortgage indebtedness; ie\ took the town of Lima four different times but they have |ever yet reported; the mortgage indebtedness was; so alarming ley were afraid to report it; in the town of Lima every farm |i the township but twenty -five is mortgaged and Lima is one of best townships in the State of New York, situated in the icsee valley, the center of a fertile country; in this township are mortgaged but twenty-five and fyalf of them are mortgaged all they would sell for to-day under the hammer; Livingston unity is mortgaged, in my opinion, for more than $6,000,000; .Uejzany county, upon the authority of a Eepublican Member of 'mbJy, is mortgaged for eight and one-half million dollars, more than it would sell for if all the property was put up at iction to-day at public sale; Judge Lynn, ex-county judge of Monroe, a good Democratic friend of mine, and an old school-mate, that at least more than half of the farms in Monroe county are rtgaged, and half of them for what they would sell to-day at iblic sale; it is safe to say that all the counties of western York are heavily mortgaged; I would not be surprised if it found that fully one-half of the farms are mortgaged, and ips one-third of them are mortgaged for their actual value Lay. Q. What have yon to say as to whether such indebtedness is creasing or decreasing? A. If you give me a period of ten years; ing the last ten years the mortgage indebtedness has steadily rented. Q. Can you tell in what ratio? A. No, sir. I Q. Can you give us the comparative, and the proportion of each ng on your assessment-rolls? A. The assessed value of il estate in Livingston county is $23,712,650; th3 assessed line of personal property in Livingston county was $3,142,567, or about between eleven and twelve on personal to eighty -seven on real; there is no question in my mind but that the value of personal property in Livingston county is fully equal to chat cf real; and then in regard to the way it is assessed; many of our farms are assessed for their full value, and the railroad property i is not. It was proven that the actual value of the 'Delaware, Lnekawanna and Western throughout our county was $80,000 per mile, and it was assessed at $20,000 or one-fourth; and what is truo of that road is true of all the others that go through the county, whereas the real estate of the farmer is assessed at very nearly its actual value, and the real estate of the railroads is not assessed for more than one-fourth. Q. What is your opinion in regard to the increase or decrease in the value of farm property generally in your vicinity for the past ten years? A. The value of farm property for the past ten years has steadily decreased, not only in our county or township, but throughout western New York, with the exception of Steuben county, which, I believe, has, as was stated by Mr. Brundage, yes- terday, increased in value on account of the grape-growing inter- ests and the large potato interests which have been developed within the last ten years; in Livingston county the decrease in the past ten years has been fully forty per cent; I will illustrate that by two farms that have recently been purchased by our 1 own family, one of which sold ten years ago at ninety dollars per acre, and was purchased last season, although it has been greatly improved, underdrained and fenced, and is in far better condition than then, at fifty dollars an acre; it is a portion of the farm known as the famous Sackett farm in G-enesee valley another farm, on which I now live, the owner was offered $120 an acre for it eight years ago, and was purchased four years ago for seventy-eight dollars; another farm sold last spring; the gentle- man was offered for it six years ago $115 per acre, and although it has beer greatly improved it was sold at eighty dollars; I could go on and give instances of that sort by the score. Q. Then you disagree with the claim of the State Assessors that in Livingston county lands are assessed only sixty-eight per; cent of the actual value? A. They are assessed more than that; 35] !the actual value of a piece of property is what it will sell for in the market. Q. The standard is what it would be taken for in the payment of a just debt; in the report of the State Assessors of 1889, which tactically represents the percentage which governs to-day; they say it is sixty-eight per cent : your observation is different from ;hat? A. I believe it is assessed at fully eighty per cent of the actual value. Q. What have you to say as to the revenue of the farming ands in your county; have they increased or decreased the past ;en years? A. The revenues have steadily decreased; one of our chief industries is that of wheat culture; my father, my brother and myself, farming together we raise 200 acres of wheat per year, and have done so for the past ten years; we keep a minute account of the cost of raising wheat and we iind that the revenues have steadily decreased, until to-day wheat at seventy cents a bushel is very unsatisfactory; I see that the average field of wheat in the State for the last ten years is between eleven and twelve bushels per acre. Q. That result is due not to taxation but the competition from lie west? A. There are many reasons; we have decreased the price of wheat by the destruction of 1,400,000,000 of the people's money by cremation. Q. What? A. Burning up the greenbacks; demonetization of silver and opening up the great west. Q. WTiat have to say of the laws which are necessary to secure more equitable distribution of the burden of government to elieve farming lands from the burdens under which they at present labor? A. Farmers as a rule do not realize that of the tax collected from their farms but a small portion goes to the State government one-fifth I think; but still I have measures >y which we could spread the burden of taxation out and do it nore effectively; I am in favor of making mortgages under the aw real estate for the purpcse of taxation; that law is in effect in California and is very effective; again, in order to enforce uch a law and to tax all personal property, I would have every >ond or mortgage or a note or any paper in any such form bear an official stamp, or the value of the paper would .be vitiated, unless it bore the stamp say of the assessor; such a law was in force during the recent unpleasantness with our southern brethern; I would have every man his own assessor the listing bill, and if any person swore falsely in giving the value of his estate, and if it was proven by any person that such an omission was made intentionally that the property be confiscated, th fourths of it to go the State, and one-fourth to the party parties that proved the guilt, of this man; I have an impressi that a very few instances ;f that sort would have a salu effect upon making men honest. Q. What is the sentiment of your community with regard taxa- tion of mortgages? A. The general sentiment is that they should be taxed; that can be very easily done also. Q. What is it in regard to the question of adopting the listing system? A. I have just spoken of that; the general sentiment of the thousands of farmers I might say here that I have been getting the sentiment of 20,000 farmers in western New York and we have consulted on Ihe question; we are in favor of the listing system, with such regulations as I have just stated here. Q. What is the sentiment in your vicinity and in your asso- ciation of the Farmer's Alliauce upon the question of the allowance of deducting on personal indebtedness? A. The sentiment is among oar people that every man no matter whether he has one dollar's worth of personal property or f 10,000 should pay his just and equitable proportion of tax upon it. Q. What is the sentiment with regard to the present rate of interest and the necessity of a reduction? A. We are united in favor of reducing the interest to five per cent for the reason that w r e believe it would be beneficial to a great majority of our farmers; it was argued a few years ago when the rate was lowered from seven to six per cent, that it would drive capital out of the State and that farmers would be unable to get loans, but the fact is that in th^ course of a few years after that reduction we were fully as able to obtain loans as before at seven. Q. What is the sentiment of taxing savings bank deposits? A. We are in favor of it; it represents personal property. Q. Do you think that the raising of the entire State tax by [the State independent of the counties would afford a measure |of relief to the agricultural interests of the State? A. It depends great deal upon what expenses were to be placed upon the [counties in such a case. Q. Assuming that all those which are at present borne by ie State will continue to be so borne by the State 9 A. Assum- ig that, it would be beneficial to the counties. Q. In the event, then, of such a scheme being devised, Avhat 'oiild be the sentiment of your comnunity in regard to the adop- ion of what is known as the local option tax law? .A. We would t be in favor of that; I base my reply upon this, because the seal system of this State as we have it now devised is the most .inportant factor in the education and development of a free and itelligent people,, and I believe that all possible means snould devised and a liberal amount of money expended for the further- ce of our fiscal system. Q. You do not understand my question; my question has rela- n simply to the local option tax law which allows such county regulate for itself what shall be subject to taxation; we do not >pose to interfere with that system or with its development or ress? A. I am not in favor of a local option tax law. Q. What reasons are there to sustain your views? A. Here two counties adjoining, Monroe and Livingston; Livingston we will tax real estate and personal property and the other we will tax real estate alone; it would have a tendency pur our personal property to Monroe at the time the assessors ent along. Q. Could that be overcome by changing the tax laws so that le tax should be laid upon personal property where it was ted without regard to the residence of the owner? A, It tight be. Q. In that form, would -the local option laws be satisfactory the people in your vicinity? A. I would not answer that before 45 giving it more careful consideration; we have not discussed il in our conventions. Q. What is the sentiment of your community in regard to inheritance tax? A. We are in favor of its continuance believe it should be a graduated tax. Q. What is the sentiment in regard to its being levied upon real estate in the same instance where it is now levied upo:t personal property? A. It should be levied upon real estate as well as upon personal; althoagh a farmer, I am in favor of having the same laws govern both real and personal property. Q. Have you any suggestions to make to the committee, to which your attention has been called? A. I believe not. By the Chairman. Q. Do you think that the present condition of the farmers froii the standpoint of indebtedness is attributable to the burden of the State taxation? A. Only to a very small degree for th simple reason that but one-fifth of the tax raised in our count; goes to the support of the State. Q. One of the main purposes of this inquiry, what, if anything can be done to relieve the condition of the farmer by a chang of the tax law; now, have you anything to suggest by way o amendment as it applies to the collection of the tax for th general State government? A. Well, I have offered my sug gestions that all personal property, such as bonds, mortgages and the like, should bear a stamp of the assessor to be airy value; that would place every single particle of personal property of that nature before the assessor which would have to be taxed more than that, I would have, if possible, all stock in stores taxed: now, in Rochester, I am familiar with a gentleman, a friend of mine, who carried a stock in some eight or ten stores probably $200,000 on which he pays not one cent of tax; whal is true in his case is true of a great majority of the merchant* in Rochester; this personal property is their capital that the? are doinjr business on. Q. Suppose that property of the character you have just men- tioned was uniformly assessed, do you think that would afford any visible relief to the farmers of Livingston county? A. Most assuredly. Q. Do you think that the condition of the farmer would be relieved to such an extent that a year of two hence he would feel the effect of it ? A. He might feel the effect of it ; it might reduce his taxes a little; I had a very interesting talk with Governor Flower; he said the laws were all right if they were enforced; he said he was going to have a talk with the comptroller, and I would find that it would be different. Q. You can not see anything that the comptroller 2ould do towards remedying the existing difficulties in the administration of the tax laws in the county of Livingston? A. The Governor said so; I am quoting him. Q. I am asking you now ? A. No ; I told him I didn't have any faith in it at all, and he said it would be done. Q. You mentioned here a little while ago that the lands owned by the Delaware and Lackawanna railroad were assessed, you thought, for about one-fourth of their actual value? A. Yes, sir. Q. That is not attributable to the present law, but to the method of its execution, is it not ? A. The method of its execu- tion; yes, sir. Q. Now, the fault lies entirely with the local officers of the towns of Livingston county in that respect? A. The fault in that regard lies with the men that can be bought and sold by | railroad corporations. Q. How can we remedy by legislation that unfortunate condi- tion of affairs? A. If you will just submit a paper to that cor- poration, and let them swear to the value of their property in I Livingston county, if it is proven afterwards by competent experts, j then have one-fourth of it and the balance will go to the State; I j have an impression that railroads are not anxious to lose their I property. Q. It is your opinion, is it, and you seem to evidence it, that I the average assessors in Livingston county are corrupt? A. Xo. isir. Q. What do you mean by saying that o Vmg as the laws are 350 executed by men who can be bought and sold? A. I know that people are influenced a great deal by money throughout this country in politics; don't you think so? Q. No; it has not been my experience that the average man can be bought and sold? A. I don't think so either; the average man is an honest man. Q. Is that basis of valuation that you have referred to, o fourth on lands owned by railroad companies, uniform in yo county? A. Yes, sir; I believe that of the actual value of rail- roads in our county but one-fourth of their value is assessed; that is my opinion. Q. Has that subject agitated at all among the people the subject of the failure of the assessors to perform their duties? The assessors have performed their duties and assessed one ticular railroad up to $64,000 a mile, I think, and the rail companies appealed from the decision you know, or the as ment, carry it to law one year to another, and then at the nex election you will see the board of supervisors elected, a majority of them railroad men. Q. Then the fault lies with the people of your county? A. In what way? Q. For electing men that are well known railroad men? A. They were not well known railroad men before they were elected, but it panned out that way when they came to sit on the board. Q. Do you find that condition of affairs to obtain year after year; that men are elected to office in Livingston county and proved false to the interests of the pople they represent? A. In some cases it is so; there are some men elected upon a purely political platform, and have no connection with railroads, and when it comes to treating a subject like this in some way or other they will vote in the interests of the railroad and against the people. Q. Can you say how the Legislature can remedy that unfor- tunate condition of affairs? A. Not with the present laws; no,, sir. Q. What suggestion or modification would you recommend that would remedy that evil? A. I believe I have briefly out- lined it n 357 Q. Other than the listing system? A. I would not suggest a remedy other than that; let them swear to the value of their property; let their books be opened what it cost to build it; then compare it with what the road is worth ; then confiscate part of it if they have sworn falsely. Q. You suggest a rather severe penalty? A. Yes, sir. Q. Under the proposed listing system, viz., that of confiscation? A. Yes, sir. Q. Have you given the question of such a radical change as that serious thought? A. I have. Q. And you really believe that the penalty for that ougfit to be the confiscation of the property covered by the statement? A. I do; for the reason that the tune has come when the owners of personal property take advantage of the present law and evade the collection of tax upon it to such an extent, that the time has come when radical measures must be employed to collect taxes upon that property. Q. Judging from the experience of the past, is it your opinion that men can be made honest by operation of law? A. Not honest in their hearts, but honest in their outward actions by fear of the property being taken away from them. Q. You think that to take a man's property would have more effect in making him comply with the law than the risk of losing 'his personal liberty? A. Yes, sir; certainly; lots of men will lose their liberty for a year or two for the sake of making a few thousand dollars; it is no disgiace to be a jail bird if he is a big thief; it is an honor; look at them in Canada; they are high mucks mucks ; but take their property away that will tend to make them honest outwardly. Q. Don't you think they would be willing to run the same risk of losing their property that they would of losing their liberty? A. No, sir; I will admit that my suggestion is a drastic one, but I think it is required. Q. I did not notice whether you expressed an opinion as to the wisdom of the proposition to relieve real estate from taxation for State purposes? A. I had not given that serious thought, but the question as put to be by the judge was with the assumption that the State funds will still be used in taking care of all the different objects that they are at present^ and I -would be in favor of it; I might change my mind by looking into it more; if there was no tax levied upon real estate, and the tax levied upon cor- porations by the State, and still the school moneys be distributed throughout the counties as they are it would seem on the face of it very favorable to real estate owners; but still I am willing to be an advocate of any law that will be for the welfare of a majority of our people, whether they be owners of real estate or personal property, and I have great hopes that this committee is going to get some feasible measure into shape that will be for the benefit of the many and not for the few. Q. Have you made any investigation or inquiry with a view of ascertaining what per cent of the taxes for State government purposes are paid by the agricultural interests of the State? A. I do not just remember the statistics, but I believe that in the cities of New York, Brooklyn and Buffalo I can not give you the figures; I can not think of them now. Q. About sixty-five per cent? A. Something like that I believe. Q. Haven't you noticed that it was reported that the agricul- tural lands of the State only paid about eight and one-half per cent of the total taxes for the State purposes? A. I had not seen that. Q Now, is it not a fact that the burden of taxation that falls upon the fanner is largely local? A. No, sir; the fact is that the farmers the consumers throughout this State pay all the taxes the common people; for this reason you tax a farmer upon his real estate; you tax him upon his personal property that you can see, his horses and cows, and so forth, and you go and tax a railroad company, a merchant or commission man, or anything as that, and the prices of his commodities are raised, so that they all come out of the people. Q. Directly they are paid by the owner of the property? A. Yes, sir; but indirectly. by the common people; they pay all taxes. (2- Are you assessed for any personal property in Livingston county? A. No, sir. Q. II ow many farms do yon ownj? A. I don't own any myself; ! I live on a farm that belorgs to my father. Q. Your father is the owner of the farm that you live on? A. Yes, sir; my father owns about 1,000 acres in the county of Livingston. Q. How many farms altogether in that thousand acres? A. Four i different farms; it is a consolidation of really seven farms in four. Q. Do you know whether your father pays any personal tax for the stock and implements on those farms? A. Yes, sir; I pay taxes upon the farm I reside on, and my brother on the farm he resides on, and my father pays the balance. Q. Your father is assessed for the land and you are assessed for the stock on the farm? A. There is no assessment upon my stock on my own farm; my father is assessed but I have forgotten the amount of the personal tax. Q. Is it not a fact that our local assessors in making up their estimate of the valuation of a farm estimate it very largely upon the amount of stock it will carry? A. It is not so in our county; we are not dairy people. Q. You say that you are not assessed for any of the stock on your farm? A. No, sir; I am not. Q. Now, under the present law it is assessable, is it. not? A. Yes, sir. Q. Have you made any complaint to the local assessors that they hav<> not performed their duty in failing to assess you? A. No, sir; I have not; I told them at the time they vere at my farm this summer; they just simply drove through there and talked a few minutes; I says: "1 suppose you have got all those people's farms assessed, haven't you, and all their stock?" They said : '' Yes, we have not got their stock; do you owe any money? " I says : " Certainly, a few hundred dollars ; I don't understand that is an excuse for assessment on personal property ; " they seemed to think so; my brother has been fanning longer than 1 have and has accumulated more personal property around him and he is assessed upon his personal property; I. suppose because I was comparatively young in the fanning business ihey did not assess me, I told them at the time I thought it was no excuse because I owed a few hundred dollars. Q. After they had seen you and given notice that the assessment- roll \vas complete and open for inspection, did you go to examine the roll and see if you were assessed(? A. Not until the other day. Q. You have made no complaint that the assessors have not performed their duty? A. No, sir. Q. How many years have you been paying taxes on this farm? A. Five years. Q. You have not been assessed for any personal property during that time? A. No, sir. Q. Yet you have made no effort to make them perform their duty by assessing you on personal property? A. No, sir; just on the principle if they did not assess other people they should not assess me. Q. Did you never stop to consider that you could compel those officers to perform their duties? A. I suppose I could go and swear I was worth so much personal property and they would assess me. Q. Recognizing the fact that the assessment-roll was incomplete, did it ever occur to you that you might have instituted some proceedings to make the assessment-roll complete? A. By swear- ing to my own value of the personal property. Q. Yes, sir; and that of others? A. It is a question under the present laws whether you can prove that other people have per- sonal property if they swear they have not. Q. What effort have you made to compel the assessors of your town to discharge their duty under the law? A. I have not made any fo? the reason that I believed the law is so inefficient that any attempt would prove a failure. Q. You understand the law and what it provides for as to personal property? A. Yes, sir; to a certain extent. Q. It has not been complied with in your case? A. No, sir. Q. Have you made any effort to have it complied with? A. I have not. Q. Then the fault in that case would seem to be with the execu- tion of the law and not the jaw itself? A. Yes, sir. 361 Q. Don't you believe if you had gone to the assessors and I insisted upon your assessing your personal property they would 1 have done it? A. I think they would; Mr. Flower talked just as strongly in favor of assessing personal property as I did. By Mr. Hamilton. Q. Do you know of any effort made to raise the valuation of the Delaware, Lackawanna and Western's property to its true standard? A. I said that the assessors did assess it f 64,000 a imile and they appealed from the assessment and it was put afterward back down to I think $20,000. By the Chairman. Q. By appeals to the c-uirts? A. Either the courts or the Stale Bojird of Assessors; I have forgotten which, it was a year or two ago, and the exact facts have slipped my memory. Q. Can you tell the committee how they arrived at the value of this railroad land? A. "No; I can not tell you how they arrived at it, for that reason I would be in favor of having a railroad company swear to the value of the land themselves, with the penalties attached as 1 havo stated. Q. Now, after the courts had decided that the lands were properly assessable at $20,000 a mile were you still of the 1 opinion that the assessment was unjust? A. I have forgotten whether they appealed to the courts or to the assessors of the State. Q. The proceeding is by writ of certiorari in the Supreme Court; I now, in view of the fact that the court decided that the claim lof the railroad that the land should be assessed at $20,000 a imile was sustained, are you still of the opinion that the assess- ment was wrong? A. I am, most assuredly. Q. Do you think the railroads controlled the judges as well as the assessors? A. I would hate, you know, to state that the I! railroads controlled the judges as well as the assessors, but I I have an impression to-day (hat the railroad control the entire I 1 country and therefore I a-u v< j ry much in favor of government 362 ownership of railroads and having railroads under the ownership or direction of the government, the same as in Australia, New Zealand, Switzerland and Austro-Hungary ; in Switzerland when you pay three cents for a ride on the street cars you are contri- buting to the support of each child in the schools. Q. Why not have the government control everything that obtains a franchise; why pick out railroads and telegraph com- panies? A. I would say railroads, telegraph companies and! telephone systems; for instance, our postmaster-general stated once that he could build a line of telegraph connecting every post-office ancl send twenty-live words for ten cents and fifty or 100 words for twenty-five cents and make a profit at that. Q. I presume the government could run farms and compete with the farmers; why not go as far as that; if it is good in one case why not in all? A. Because those companies obtain their charters under the supposition that it was for the welfare of the public; they have the right of eminent domain given to them to acquire property and if those corporations are started for the pur- pose of promoting public welfare they should be managed and controlled by the government', it is the people for whom the corpo- rations are supposed to work and labor and not for themselves; then I speak further in regarl to the plan, knowing there are a half a dozen different countries where the railroads are owned by the ^overameiit ; take Belgium, for instance, there is a Astern whereby you can ride from two to six miles out of Brussels for two rents; from six to twelve miles for four cents, and those rates have been- a very paying investment; in Australia, a thousand-mile coupon?! for six dollars and eighty-one cents; the railroads, after paying operating expenses, turn in the excess of revenue to the govern- ment: the rates of New Zealand are quite low, not quite as low as those of Australia, as I remember, and yet those are very profitable. Q. Do you think that the fanners of the countries to which you referred are in a better condition, generally, than the Ameri- can farmer? A. 1 do not. 363 J*y Mr. Stranahan. I Q. Have yon been in the habit of appearing before the legis- lative committees on those subjects? A. T appeared before the loimmttee on general laws last year on the legal rate of interest. I Q. Have you appeared before the committee on taxes relative o the laws pending? A. I have not; no sir. By the Chairman. I Q. Have yon, in connection with the amount of tax paid by he agricultural interest of the State, taken into consideration the umber of appropriations that are made by the Legislature for fcrming interests? A. Such as the appropriation for the State lair and the experiment station, and all those? I Q. Yes, sir? A. Yes, sir; those are -very good things, but as n offset to that we have got a building down at Albany that lost |20,000,000 appropriated by the State Legislature, part of J/hich was paid by the farmers for building a monument to the fclossal folly of this State. r Q. You don't think that the people of the State of New York thould have such a capitol? A. I hate to say it. Q. Don't you recall when that was started that the farmers lontrolled the Legislature, and that it was their votes that put there? A. On a f 4,000,000 basis. I Q. In my seven years' experience, the farmers' vote for every I ppropriation? A. It is very strange; I don't think the fanner lirho represented me voted for it. | Q. Who is that? A. Koberts. i William Sweet, called as a witness, being duly sworn, testified III follows: Py Mr. Hamilton. Q. You reside in the city of Syracuse? A. Yes, sir. Q. And your business? A. Steel maker. Q. How long have you been engaged in that business? A. 1863. 364 Q. You employ a number of hands in your business? A. Yes,] SIP. Q. Have you given any attention to the question of taxation^ A. Very little. Q. Have you conversed with people in your employ, or pecp|jj of your acquaintance in your vicinity with regard to that qu< tion? A. Very little, indeed. Q. Have you any suggestions to offer the committee in to this question under consideration? 'A. I can not say that ]| have very much; had I known for a week or two what was wanted I should have liked to have read up on the question and prepared myself to answer all questions with a good deal of satisfactioij I think to myself, if not to you; I only knew abonr this the before yesterday afternoon, and really don't know or dido't kno^l what was wanted or expected; I should have very much liked to have posted myself to have answered yon intelligently; mj ideas of taxation would be that it should be listed, have every) man assess himself; that is a broad statement of it. By Mr. Guenther. Q. You favor the listing system? A. I don't know what call it; every man should have a ticket sent to him, assess hii self and send it in. Q. And swear to it? A. Certainly. Q. You are in the steel business? A. Yes, sir. Q. You have a largie capital on which you do your business' 1 ! A. Yes, sir. Q. As a business man you know it to be a fact that a goocj many people do their business entirely on paper; what would lx< the effect if a, man had to list himself, showing his indebtedness 1 ) which would be very near the amount of capital involved; wouldn* that drive him to the wall? A. Not necessarily, you need not pub lish it Q. If he makes that and files it with the assessors anybody can see it? A. If the law was made so; the assessors conl sir; on $200,000 Q. Can not you tell just how some other man can do the same Business? A. Yes, sir; I can; I have told it to a great many mng men; commence to save; the first dime you get put it in savings bank; when you get another put that there. By the Chairman. Q. Have you given such attention to the interests of the farmer you are able to say anything to the committee as to whether is unjustily burdened with the expenses of government? A. bte government? Q. Yes, sir. A. I say most emphatically he is not; a year ago last ier I was president of the road association; I used to say to tie farmers in undertaking to get through the Richardson road bill if that became a law that for every dollar expended ninety- cents would be paid by the cities, and the farmers would pay eight cents or eight and a half cents of it, and they were the one* that ould not afford to be against the Richardson road bill; il should have been a law; all the money could have been earned and paid back to the farmers by working on the roads. Q. Do you believe the legal rate of interest should be reducec from six to five per cent? A. I am a borrower of money, and ai a natural inference I should say yes, but as a broad principle -3 hardly think I should say so; I think six per cent is about right Q. For the general good would you say no? A. I would &&) no; I borrow large amounts of money all my credit can stan< sometimes. Q. Do you believe mortgages ought to be taxed? A. Yes, sir there is no capital except a man's brains; the money is th<| savings of capital, and all savings should be taxed an equal portion! of taxation; if I and my brother had been left by our father wlti $10,000 and a farm worth $10,000 and he would say "'You take tb $10,000 and I take the farm;" I can not see any reason wh; $10,000 should not pay taxes as well as the farm. Q. If you loaned him that money and took a mortgage, there i no reason why that mortgage should not be taxed? A. Ther- is no reason; I am situated just as I am talking; I left the fara and he is on it; I have been pegging away and he has been; think he has worked harder physically than I have, but I hav worked hard with this thing, and there is very little hair on i now. Q. While producing good results for yourself haven't you als* done more for the general good than he has? A. I am a littl modest on that; let somebody else tell that. Q. Take two other men similarly situated? A. I supposa th. world would say : Yes ; I have just done all I could. Q. You have been a public benefactor with the great busines that you have built up here, which has been a public benefit, an to a greater extent than from the standpoint of taxation; don' you think so? A. I think so. Q. As a practical proposition, what would you say to the advis* bility of the amendment of the statute which would raise tb 367 entire expense of State government independent of real estate from the bonded indebtedness of corporations and coll at nil eritance laws? A. That would be in the same road that I I have been traveling bonded indebtedness; if a corporation Jissues bonds, they are usually bought by wealthy people, and ]there is no reason why they should not pay some tax upon them, d if through that means the State taxes could be all raised, 1 .ould say, do it by all means. Q. If it could be raised on a tax of less than half a mill, you ould think it was onerous? A. No, sir; I think it would be ust. Q. Don't you think it would be a long step in the direction of lution of those questions if the people could be given to under- nd that all the taxes they had to raise at home was for the ocal government? A. I should think so; they would begin to lize then what the taxes were. Q. And that economy began at home ? A. Yes, sir. Q. As a manufacturer, what would be your views as to the ption law, in the event that the taxes raised by a county would applied solely to its own expenses? A. I have not given that y study, but it seems to me it would make a kind of con- omeration of business in the State; on the moment, I would say to that; there had better be a system; if the State tax was ised by other means then there should be a general system t would have a proper supervision by the comptroller. Q. Would not the other plan give the localities that perhaps not have natural advantages, by relieving manufacturing blishments from taxation, it attracts such establishments them? A. In some places it might. Q. Would not that operate directly upon your own inter .?sts; cuse might encourage manufacturers either by levying no or putting a small specific tax? A. It might, of course; '. there are a good many people that have written to our association and wanted to know if we would not give them some money; I think two have come here by giving them land but it would not 368 make much difference one way or another; if so much taxes ought to be raised in this county and there is property exempt, others would have to pay it just the same; we might just as well give them five dollars apiece. By Mr. Gifford. Q. Wouldn't it haVe the effect to centralize capital at the* expense of the rural districts? A. Usually the supervisor of the towns would have to look out for that; now we have got more supervisors than they have in the towns; we have nineteen now; I don't know whether that would work or .not; it seems to me it : would create controversies. Q. Suppose that the city of New York exempted personal prop- erty from taxation, and the board of suprvisors in counties adjoin- ing had the right to assess personal property or exempt it, what * would be the effect then, would it not force the board of super- visors in those adjoining counties to follow suit? A. I think it would. I By the Chairman. Q. Wouldn't that seem to be an argument in favor of exempting property? A. It would to a certain extent. Q. Can you give any reason why you think personal pr>perty ought to be exempted ? A. No, sir; I take the broad ground that everything should pay an equal amount of taxation, even to railroads. Q. If properly protected by law they ought to pay for that? A. I should think so. A. P. Potter, called as a witness, being duly sworn, tes tided as follows : By Mr. Hamilton. Q. You reside in Syracuse? A. I do. Q. What is your business? A. Printer. 369 Q. How long have you been engaged in the business? A. Twent3'-five years. Q. Have you given attention and investigated the subject of taxation? A. I have. Q. Examined it in its various details? A. I think I have. Q. And also discussed it with the people of the city? A Very largely with certain classes of them. Q. With what classes? A. Working classes mostly. Q. Are you a member of the various societies? A. The Federa- tion of Labor, the Knights of Labor, and also a member of the Grange. Q. In your meetings have you heard those questions dis- cussed and taken part in the discussion? A. Very extensively during the past two years. Q. What have you to say as to the propriety of modifying the present tax laws so far as they affect the agricultural and other interests of the State? A. I think they should be modified. Q. In what respect? A. To bring about a just basis of taxa- tion to find a just basis. Q. In what way do you suggest those modifications? A. I think taxes in the place should be taken from personal property. Q. You think personal property should be relieved from taxa- tion? A. Entirely. Q. Then how would you receive the necessary revenue for the support of the government? A. On the unimproved value of land. Q. You are an advocate then of what is known as the Single Tax system? A. I am. Q. What do you say as TO whether capital has been or is being driven from the State by restrictions affecting corpora- tions? A. Any such restrictions I think would result that way, undoubtedly so. Q. Then as a necessary result of your views you are opposed to the taxation of mortgages are you not? A. Yes, sir; I would be opposed to the taxation of mortgages. 47 Q. Is that view generally entertained by members of those organizations to which you belong? A. No, sir; I don't think they have any view on the subject at all; there are a great many of them talking of it and inclining in that direction. Q. That has been recent? A. It has been going on for two years; many are changing Ibeir opinion upon it and many have >no opinions upon it at all. Q. Have you discussed or heard discussed the question ot^ raising the entire State tax by a specific tax other than by coun- ties? A. I do not exactly understand your question. Q. That the entire tax for State purposes should be raised by the State by a specific tax? A. On what? Q. Such as the inheritance tax, corporation tax, bonded indebt- edness of corporations and the like, and relieving the counties from all necessity for contribution for that purpose? A. You reach a conclusion by your question which I should question; ; would question whether that would relieve the counties from necessity of contribution. Q. I mean direct? A. It might relieve directly, but the would be an indirect construction, which would be the thing. Q. If the tax was laid specifically upon inheritances? A. would be raised by people in the counties. Q. Have you considered what is known as the local option law? A. Yes, sir. Q. What are your views" A. That local option should permitted in any locality. Q. Have you any other suggestion to make to the commil in regard to this question of taxation? A. I think that local opl should be made a law ; that localities should be permitted to how they shall raise their taxes provided they raise enough; tl the amount that is apportioned to them shall be guaranteed, the mariner in which it is to be raised I should leave to c county on this ground, that these new systems of taxation would! then be tried and the result good or bad could be definitely set- j tied before it was tried by the State or larger divisions; it would 371 give opportunity for the trial of such a system, which ^eenis to be needed; the present system is undoubtedly wrong; the taxation here shows it; I examined the books before I came here, and I found that there is $52,000 less personal property than last year; ;he assessors' books for 1891 show that personal prope.rty was essed $3,380,389; in 1892 it is less by over f 52,000, or .32^,296, when it can not be possible that the personal property as decreased; it has largely increased. People conceal their rsonal property; they swear it off; I think the amount of per- >nal property on the assessors' books will be found to increase ch Tear. ]>y tlie Chairman. Q Is it your opinion that the average citizen is opposed to the ^dea of taxing personal property? A. No, sir; I don't think he i; I don't think the average citizen has inquired regarding it. Q. Do you think there is any sympathy with the average holder >f personal property with the law which calls for the taxation of ich property? A. Well, the average holder I should say that [;h.e majority of the holders don't know much about it; but I should &ay there is a very large growing sentiment in favor of fhe abolition of taxation of personal property that is increasing h j ear ; I think there was an organization here among business a year or so ago looking towards that end; and then this (tort to get the listing law, that was fought extensively by the lerchants of this city. Q. Are you in favor of reducing the legal rate of interest from LX to five, per cent? A. Under present conditions I don't see ut that might help some; I don't see why there should be a legal te of interest at all; I would be in favor of leaving it to the grower and lender. James Carroll, called as a witness, being duly sworn, testified follows: By Mr. Hamilton. l. You have been a member of the board of assessors of the of Syracuse? A. Yes, sir. 372 Q. For how long? A. Two years. Q. What is your business? A. Mason and builder. Q. What have you to say as to the propriety of modifying the present laws in relation to taxation, assessment and interest so far as they effect the general interests of the State? A. I should be in favor of taxing bonds and mortgages, because I consider it the grossest outrage that the great masses of the people suffer under at the present time; I consider it unjust where a man buys a house for $3,000 and pays $500 down, to have the man \vho has got that mortgage in his pocket come in to the assessors' office and swear, in violation of the truth in many cases, and go out, withouc paying his proportion of the public burden; I say that a man should pay in proportion to the interest he has got in the property. J Q. Is it your experience that that character of indebted escapes payment of its proper proportion? A. I should say teen-twentieths of it. Q. Is that owing to any deficiency in the law? A. One re is the assessors do not perform their duty; they do not wish assume the responsibility of making enemies of those men, and of course, they let it go by. Q. How could it be overcome? A. By making this man swear, and the assessors, if they act in a judicial capacity, might send a few of them to State prison occasionally. Q. Are you in favor of adopting what is known as the listing^ system to correct that defect? A. I don't know as I would. Q. Would you be in favor of allowing an offset for personal-. ^ indebtedness? A. I should allow him no more privileges than the man who owns real estate; my idea would be when the assess- ors inquire who owns the mortgages, the owner of the mortgage y is so and so, and I would take his name right on the book; it,.j is a simple matter. Q. Would you relieve real estate by a deduction for its indebt- , edness? A. I should; yes, sir. Q. Have you any other suggestion to make to the committee? A. There is another suggestion that I have that L think is quite ( a grievance to the labor element, and that is where parties buy ( large tracts in the suburbs of the city with the intention of 373 caking twenty-five to fifty per cent, who go to the assessors nd use all means to have this tract assessed as farming land, nd the parties who try to build up a home for themselves and hildren, the whole responsibility comes on them; I consider that gross outrage on the people; they have great tracts of land nd a million in moiiey; who pays that; it is the parties who are rying to buy homes for their children; it is a jrross outrage. By the Chairman. Q. Where r"oes that i.ome in? A. Those parties who buy tracts f land in a great many cases they do not pay one-tenth of what t is worth; then, when they sell a lot to mechanics or others, ley charge them exorbitant prices. Q. A purchaser is not bound to pay that? A. He is to a ertain extent, because those parties will take 500 on a house rorth $2,500. Q. Do you think they ought to be compelled to sell their land or less? A. No, sir. Q. Where is the remedy? A. Those parties that have the nortgage make them pay. Q. Don't you think that the gross outrage is here, that men tiat take the position of assessors, take an oath to perform their uties and fail to do it in so far as they assess that property nstead of city property? A. Yes, sir; I know that to be a act, and a man that assumes the responsibility of living up to lie strict letter of the law is placed in a false position. Q. How many assessors are there in Syracuse? A. Four. Q. Are you one of them? A. No, sir; not now; the law can >e violated with impunity; I have known bankers come into our ffice who sold property for $14,000 and they want that appraised or $1,000; a gentleman came and stated that he sold off a por- ion of the property to a certain man; I saw the man previous o that and I asked him how much did he pay for this; this man ame in and says: "I want this portion of the property stricken mt." "What did you get for that?" He says: "It is none rf your business; it is outside of your business." "Well," t says, 374 "It seems to me it is necessary we should know." He says, "Yon take $1,000, that will be all right." I says, "I can not do that." I asked him, didn't this gentleman pay him $14,000; he went out of the office in a huff and refused to pay, but ho had to come to time to a certain extent. Q. How much did you deduct f 14,000? A. Not quite thi we trimmed it down a little; there are thousands of men in same way, and your experience going around the State mi show you the same thing. Q. You say that one of the great difficulties is that the ass ors don't enforce the law? A. Yes, sir; I say so. Q. How do you remedy that defect? A. It is a pretty matters; of course, we all have our friends more or less, and thei wheedle us, etc. Q. Of course, the Legislature can go on passing laws yt after year, but if the officers created under the law will not enforce the law, then the remedy does not seem to be with the Legislature? A. Then create a good wholesome public opinion; have those men held up to public contempt and send a few of them to Auburn once in a while. Q. Have you made any effort to do that? A. Yes, sir; I have tried it and made enemies by doing so; I have made enemies by doing so; I have had a banker invite me over to his office to try and coax me out of it, and I said "no; you can not do it; you had better go over and talk to the board;" it is a pretty trying position. Q. How are the assessors created here; are they appointed or elected? A. They are elected; they try to do what is right, I suppose. Q. What is the difficulty that confronts a man that tries to do his duty; is the difficulty in trying to get a nomination or an election? A. You can not get a nomination unless you will allow yourself to be made a catspaw for some party or other; a man who goes in there entirely independent and tries to act just in accordance with his conscience is in rather a peculiar position. Q. Can you suggest a remedy? A. I should be in favor of 375 taxing mortgages; I should be in favor of having the assessors brought up once in a while and made examples of. Q. Don't you know that can be done now? A. Yes, sir; of course the assessors can act in a judicial capacity, but you know the onus they assume if they do it. Q. Don't you know that every act of theirs in fixing value can be made a subject of review now by the courts? A. It is occa- sionally; it is a very rare incident when they go to the courts,, very few cases. Q. You think there is a very general and strong ground of complaint in that direction in the city of Syracuse? A. I am ;i!t | confident of it. Q. Have you made any effort at all, other than by your acts f|as assessors to have those conditions remedied? A. I have in public meetings and in societies that I belong to; it is generally understood to be a gross outrage; parties that speculate and buy land and parties that try to buy a home to avoid paying rents,, in some cases where they don't own over one-tenth, I say it is a gross outrage that they should pay the whole of it and the parties owning the mortgage not pay a cent. Q. Your suggestion is to remedy that case would be to allow the holder of the fee of the property a reduction to the extent of the incumbrance upon the property he holds? A. Yes, sir; and reach the man that owns the mortgage; just take a memo- urn of the name; it is 7ery simple; of course the influence is too powerful; the influence of the concentrated wealth of this State is too much in Albany for my understanding. , Q. How a,bout Syracuse? A. The same thing holds good here; ou can not reach those men. Q. How many years were you assessor? A. Two years. Q. One term? A. Yes, sir. By Mr. Guenther. Q. Have you ever thought of this proposition, you say a man ibuys a house and lot for $3,000 and pays $500 down, and tiiere a mortgage on for $2,500 ; the person that bought the property |should pay ;i tax on $500? A. Yes, sir; on his equity. Q. Don't you know it to be a fact that lie is enjoying that entire property and why shouldn't he then pay for it? A. is enjoying it but he has njt gotfthe interest; he can be put 01 at any time, but this man that has got three-fourths of interest in his pocket is not paying a cent of tax. Q. This other man is getting off from paying rent? A. does this to avoid paying rent, but in a great many cases thej pay a certain amount and the a they can not meet their obligatioi and the result is they lose it all. Q. In your opinion the whole trouble is that the people who are entrusted to perform a certain duty fail to perform their duty, and not with the law and public opinion is very peculiar and those men don't want to make enemies. Q. Then the trouble is that men entrusted with this do nc perform their duties? A. They trim with the public to a cert extent. By the Chairman. Q. What do you think tiie earning capacity of money ougl to be not in business, but as an investment, what do you thi it ought to produce; the rule is to have it produce all they get, I suppose; but I suppose five or six per cent ought to reasonable but in a great many cases they realize twenty cent. Q. I mean money invested for the interest it would bring, nc in an every day business, but as a solid investment; what intei do you think it ought to pay in order to compensate a man his money? A. The legal rate is six per cent, Q. I ask you what you think it ought to produce to compens a man for the loan of his money? A. Where a man loans a amount of money for a long term he can afford to loan it cheaj I should think five per cent. Q. If you had $25,000 to loan on bond and mortgage it ougl to produce what; there are money lenders that realize eight ten per cent; this city is infested with that class of men tl take advantage of the poor and realize twenty-five per cent, an< you have gK>t it in New York and Brooklyn. 377 Q. A good rule is the golden rule; put yourself in the other's place, what would you like to receive, and what do you think vould be a fair compensation for a loan of $5,000 that you would make? A. If I had that amount of money I think six per cent hrould be reasonable. Q. It ought to bring you six? A. Five or six, human nature a rule is selfish and we try to do the best we can; when you right down to the practical application we will get all we Q. You would do the same thing wouldn't you? A. Yes, sir; think I would. Q. But when we criticise and find fault we are not so apt to link what would be our personal view if we were in the other lan's place? A. No. Q. You think if you had money it ought to produce at least five cent? A. Yes, sir. Q. What do you find to be the average rate of interest in the ty of Syracuse on mortgages? A. Some of our large business Blocks recently built have borrowed money for a long term I under- id at four per cent, a large amount. Q. What is the rate of taxation in Syracuse? A. It is nomi- lly assessed full value. Q. I mean the rates? A. I should judge about seventy-five cent. Q. What is your tax rate; you don't understand? A. I think is a little over one per cent one dollar and eighty cents. Q. You say those loans are paying four per cent? A. I have lerstood so. Q. You would be in favor of assessing those mortgages one lar and eighty cents? A. I should assess them a reasonable iount; I would assess them so as to make them pay in propor- to the interest they have got in the property. Q. How would you distinguish between the assessment on and other property? A. Suppose the assessors went >und and said : " We have assessed you so much ;" they would 48 378 say: "Here, I have got a lien on this," say f 250,000; "What do you pay on that;" "four per cent," and then the assessor could: take a memorandum of it and look at it and say: " Let us equalizer that matter." Q. Do you mean to have them maintain a distinction to a value on the mortgagye or to lower the rate on the assessmt A. I don't believe in allowing the assessors too much discretion; I would want a uniform rule. Q. Wouldn't you have the mortgage assessed for its full valu( A. Yes, sir. Q. Wouldn't you have the same rate of taxation on the mort< gage that you had on the real estate? A. It seems to me that ought to appear the same. Q. Inasmuch as you say that the amount of the mortgage ought to be deducted from the value of the real estate itself shouldn't f the assessment rate be the same? A. I think so. Q. You think then that it would be fair to assess a mortgage I that was paying four per cent one dollar and eighty cents? A. Of course those matters could be adjusted by a little judgment j and discretion; there would have to be some discretion with the I assessors ; I would prefer to have manufacturing establishments I assessed at a very low rate, such as the Sweet works and all those k large interests, I should be in favor of touching} them very lightly in | the matter of assessment. Q. That would be in valuation? A. Yes, sir. Q. }>at the rate would be the same? A. Yes, sir; it would be| virtually the same. Q. Your mortgage of |5,000, what would you think of it when j they came to assess your mortgage? A. If there was a uniform j law the assessors could have some discretion and adjust them all : |? in an equal and proper manner. Q. What would you suggest? A. I should prefer to have a uniform law, but, of course, the assessors will have some discretion- 1 ary power; you can not avoid that. Q. What discretion could be given to the assessors to fix the! value of your mortgage less than $5,000, if it was a good loan? A. 379 |[ should think it ought to be the same thing, but you get a man [in a false position; YOU would have to regulate that by some dis- rretion; you can not have iron-clad rules in those matters; the treat thing is each man to pay in proportion to his interest in the public domain. I Q. Your recommendation was on condition that mortgages ought to be assessed? A. Yes, sir. Q. Now, you say that your money ought to pay you five per cent? IV. T think about that. Q. 2sow, if you are going to assess that mortgage, one and eighty- Limdredths, how are you going to get your five per cent? A. Of course, you would have to trim those matters dow r n; you would ive to use some discretion. By Mr. Stranahan. Q. The people say that if we got it all on the roll it would be uch less than one and eighty -hundredths? A. The more property j. ou reach the cheaper it would be. Q- Might it not be the fact that what you have been complaining bout as to the conduct of the other assessors in Syracuse might t not have been the exercise of that same discretion which you ink ought to be given them? A. I don't wish to say a thing hurt their standing in the community; I say that public opinion a certain extent has run in that direction, and the assessors merely the representatives of public opinion to a certain tent; they try to do what is right. By Mr. Guenther. , Q. When you first took the stand you found fault with the discre- mary pow r ers exercised by the assessors and claimed that they mid not have that power; now you claim that the assessors have that power? A. The fault lies in allowing those nen to deduct indebtedness assumed before they go to the assessors [ice; they assume fictitious indebtedness; this is a notorious t patent to everybody that has studied the question. 380 Q. You say you think your money ought to produce five per cent, and by saying that you must mean that it thereby should be exempted from taxation? A. Oh, you can not get me in that posi- tion; those things would eventually adjust themselves; you have ; got to allow some discretion to the assessors, but this is a gross outrage that stands out as a prominent fact; it is a gross outrage. By Mr. Gifford. Q. You say that your $5,000 in capital ought to earn you aboi fire per cent}? A. Yes, sir. Q. If you had that same amount invested in farming lam what do you think it ought to earn you then; would you like have it earn about the same? A. It should, but they say they don't earr over three or four; why shouldn't it be as protital there as anywhere else? Elisha Cooke, called as a witness, being duly sworn, testifi* as follows : By Mr. Hamilton. Q. You reside at Poplar Ridge, Cayuga county? A. Yes, Q. You are a member of the State Grange? A. Yes, sir; the executive committee. Q. Are you also a member of the Farmers' Alliance? A. I when it was in running order in our country; I have been member. Q. What is your occupation? A. I own a farm and have carried on ; my son is farming it ; I am a farmer. Q. Are you also engaged in any mercantile business? A. ~ particularly; I am agent for fertilizers. Q. Have you occupied the office of supervisor? A. Yes, sir; I have been supervisor of the county. Q.*For how long? A. I think it was seven years I was in t!ie board. Q. In those various capacities and as a member of the Grange and Farmers' Alliance, have you had any discussion and given any consideration to this question of taxation? A. Yes, sir. 381 Q. Wliat have you to say as to the propriety of modifying the present laws relating to taxation, assessment and interest, so far las they affect the agricultural and other interests of the State? I A. My opinion is that it is unjust to exempt debts upon personal property; I can not see the justice of printing them that way. Q. Is that opinion generally entertained by the people in your I community? A. I think it is as a general thing. Q. In what direction should relief come in your judgment by empting it in either case, or refusing to exempt it in either? If it was practicable to do it, I think it would be proper to :empt it in both cases, but owing to the difficulty of getting any perty to tax under such a law, I think it would not be advis- ble to exempt in either case, because there would be so many umped-up debts on the road that there would be nothing to tax. Q. Is the sentiment of your community in favor of the listing lystem? A. It is amongst part of the people; I don't think it is versal. Q. Is it Ihe prevalent sentiment or the exception? A. I ould judge that it was the prevalent sentiment to a certain tent; I don't think it would be the sentiment to have the listing tern just as the laws are, for the fact that I think the fanners ould have an idea that everything they had could be seen, and t would be worse than it is now. Q. How could that be avoided under the listing system? A. I that if the law was changed so as not to allow exemptions personal property for debts; couple the two together would Ive the question. Q. And would be beneficial to the agricultural community? Yes, sir. Q. What is the sentiment of your community as to the present ,te of interest? A. Well, I think farmers would prefer to have reduced; I don't know; there has been very little said on that t in my hearing but personally I think it should be. Q. Can you tell us the approximate amount of mortgaged btedness on farms in your county? A. It is a pretty hard to get at practically to make any more than an approxima- 382 tion; since I received Mr. Gifford's letter I looked over probably within say two miles of our town where I live, and I know pretty much the incumbrance on that; it might compare with tho property in the rest of the town, and I found about one farm in three had a mortgage on it. Q. To what extent? A. Of course some are more than others ; in estimating the number of acres and the amount of mortgages as far as I knew, I figured that it would average about ten dol- lars an acre. Q. What would be the average value of that land per acre? A. Ours is one of the town^ which is bonded for a railroad and property is not selling now at all, the town of Venice it is assessed I think at about twenty six dollars or twenty-seven dollars an acre. Q. That would be a little more than the assessed valuation! "A. Yes, sir; 1 don't think it would sell for much more than it is assessed on an average; the railroad facilities are limited and the bonding makes it dull; really the land is worth more; we are equalized to thirty-six dollars. Q. Do you know whether ihat percentage is a fair average fo|l your county or not? A. I should think it was. Q. During the period of the past ten years has this mortgaged indebtedness of your community been on the increase or decrease? A. I should think it had been a littJe on the increase; not much difference; I think it has been on the increase to a certain extent. Q. How about the earning capacity of farming lands in your county? A. That has beon decreasing very much in the last ten years on account of the prices. Q. What is the relative proportion of real and personal estate in your county as assessed? A. I think our roll amounts to between $600,000 and $700,000 in our town and the personal about ninety odd thousand; that would be about one-seventh. Q. Is that the average a.\n of your county? A. Very nearly; there is some $27,000,000 assessed valuation of real and 3,500,00n? A. My judgment would be that there was about half as tuch personal property as there was real in our town, including te stores, mortgages, on the farm personal property. Q. So that the true proportion of personal property upon which ixes should be collected, would be about thirty- three per cent of te entire tax, where to-day it is in the neighborhood of twelve cent? A. Yes, sir; take it in the county entire I think it rould be about fifty per cent. Q. I believe you stated that the value of farm land in your mnty has been steadily depreciating? A. Yes, sir; it has. Q. To what cause is th-it attributable? A. More particularly the prices of produce. Q. How far has the quesiion of taxation, if at all, had any feet upon that decrease? A. It has had an effect on our own >wn, and taxes have been very high, paying interest on the mds, that has affected it locally more than outside. Q. That was owing to foo voluntary indebtedness assumed by te town for railroad properties? A. Yes, sir. Q. What the general State tax and the general county tax has )t produced those difficulties or contributed materially to them? No, sir; I should not think it had. Q. What do you think as to the propriety of modifying the mt laws relating to taxation, assessment and interest, so as they affect the agricultural and other interests of the ite? A. I would say than there should be some way devised which personal property could be reached; the assessment to be governed by a different rule in each county. 384 Q. Would* the relieving of your county from the necessity of raising any part of the State tax be desirable? A. It would to those who live in the county, of course. Q. If it were raised by this specific tax levied upon inheritance^ bonded indebtedness and the like? A. Yes, sir; it has already affected our State tax. Q. And in the event of such a scheme beini; 1 devised, wh would be the impression in your community as to the enactment of the local option tax law by which each county then wou* be at liberty to establish a rule upon the question of taxation and the property which should be subject to it and the proper] tion? A. That is a point that I have never tlurijrht of; I didn know there was any such idea; I kind of think that would m a good way to do it. Q. What is the sentiment of your community in regard to the inheritance tax? A. So far as I have heard, it has been adverse; there has been a good deal of fault found with it. Q. Of course, you know it has relieved the county from a great! proportion of the State tax? A. The fault was found that ra are affected by it without reference to its effect upon other people,! Q. I am speaking now as to the general sentiment of your com-f munity as to the present law? A. I think the general sentimenu would be favorable. Q. What as to the increase of it having what is known as 8* graded tax; the larger the bequest the greater the tax? AJ could not say as to that; I would not know hardly what to say.u Q. What would be the sentiment of your community as to thr levying of the same tax for inheritances on real estate nov ; levied under the law as to personal? A. My opinion would b that they should be placed upon the same footing; I don't seay any taxes; it seems to me that something should be done catch those high-salaried fellows that don't pay any tax but ive easy too. T5y the Chairman. Q. A farmer is taxed upon the amount of property he holds? i. Yes, sir. Q. Whereas, the other man who has an income may not have [ny property at all, either real or personal. A. What differ- ice does that make? Q. You would tax the man's brains? A. The income which is produce; it takes a good deal of brains to run a farm, much in a certain way as any other business. Q. In the one case you would be taxing capital and in the ler case you would not? A. Well? Q. If you taxed the farmer upon his brains or his income, would not have the right of taxing him upoii Ms capital? No, sir; not both; a business that produces something is to pay taxes; farmers have got to pay taxes if they do not a dollar out of the farm. 49 386 Q. Suppose a man has no business other than he may be employed by some one else? A. Tax him according to what he earns; it may be only a theory; it might not work practically, but I think it is right in theory. Q. What is the sentiment of your community upon the question of taxing saving banks deposits? A. I never heard that dis- cussed. Q. What is your own individual opinion? A. I think there might be a tax on their income or something; it would not do to tax them on all their deposits; I don't see why they should have some tax on them; it would be my opinion there should Q. Suppose the farmers in Cayuga county were relieved enti from taxation on the real estate, do you think that within a y or two years there would be any visible improvement in th condition on that account? A. Yes, sir; I think there would. Q. Of course my question only relates to the State tax, State purposes? A. It would be to a limited extent; of co there would be more inducement for people to buy land and would be better for farmers to own land. Q. How many acres do you own? A. One hundred and fifty. Q. What is the basis of valuation for assessment; what is valued an acre? A. The average of the town is twenty-seven; my farm alone I think is averaged about fifty; they reduced it some; it was fifty; about forty-five they have got it, but then that is higher than the proportion, because I have got more buildings and improvements. Q. Have you any idea what proportion of the tax that you pay on that land goes to the State? A. I never figured it out. Q. In 1890 you paid a tax amounting to about ninety-five dol lars, didn't you? A. Yes, something like that; our town and railroad tax is about six dollars on 1,000 the interest on the bonds, and they have been paying up some. Q. The report of the State assessors shows that in your town the amount paid to the State for school taxes was $1,134; that 387 the amount paid to the State for other purposes was $1,417.50; the total amount of taxes collected in your county; the total amount contributed by you towards the State would be between one-fifth and one-sixth, and on that basis it would seem that the proportion of taxes that you paid that went towards defraying the expenses of State government was about sixteen dollars? A. [I suppose that would be about it. Q. Now you don't think that in the same proportion such a con- Itribution as that from the farmers of Cayviga county has very much to do with the present depressed condition; it is not burdensome is it? A. No, if that was all it would not be a [great deal, but taken in connection with other taxes. Q. The other taxes are your own fault; you put them on your- >lf? A. Yes, sir. Q. Is it not a fact that the burden of taxation in .the town of r enice and in Cayu^i county generally is largely of a local nature? . Yes, sir ; of course it shows that from the amount. Q. And that the burden is in a very small part, that of the State the expense of State government? A. Yes, sir; of course it is a small part in proportion to the other. Q. The contribution of the taxpayers in Cayuga county to the State government can not in your opinion be considered burden- >me, can it? A. No, not burdensome. Q. And the present depressed condition of the fanner and the former's interests are attributable to other causes than that of ftate taxes? A. Yes, sir; but still that has got to be taken with modification from the fact that the farming business has to >mpete with other business. Q. Hasn't every other kind of business to do the same? A. ier kinds of business do not pay the taxes that the farmers r, even in proportion. Q. Do you think that the proportion of tax that the farmer paying for the support of the State government is a good cause complaint? A. It would not be if it was necessary for them do it, but the fact is that so much of the property escapes tara- that is in competition with the farmer in business, and conse- 388 quently it works against the fanners, because their property can be taxed, whereas the storekeepers and merchants get rich by not paying any; the fanners pay more than their proportion, that is where the fault is. Q. You mean that the farmers in Cayuga county pay more than their just proportion of State tax? A. Yes, sir. Q. Have you considered that only from the standpoint of Cayuga county, or the whole State? A. I suppose the whole State is probably the same way; I don't know much about it, but I know that I don't believe there is a storekeeper in Auburn that pays one cent on his stock. Q. Do you think they ought to? A. Y^es, sir; I think th< ought. Q. Suppose they did, in what measure do you think it reduce the burden of taxation; take your own case for ii instead of paying ninety-four dollars and fifty cents a year h< much do you think you would have to pay? A. Of course, coulc not tell without figuring it out; I think it would reduce about half; it would reduce the State tax and the town county tax in. the same proportion; it is not so much the State par- ticularly, as it is the whole thing. Q. Don't you think that the present law, as you understand it, if properly executed, is broad enough in its terms to reach all this property that escapes taxation,? A. I don't think it is the way it is interpreted, because I know cases in my village, where a mcrchani he is not living now he had quite a stock of goods, probably |3,000 or f 4,000 worth of goods; he bought government bonds, gave his note and turned the note against his stock of goods, and was exempted; a farmer can not do it. Q. You believe that all personal property ought to be assessed? A. Yes, sir; I do. Q. Including stock and implements on the farm? A. Yes, sir; I would not ask that they should be exempted; if they took other personal property, I don't believe in class legislation. Q. Ha?e you made any effort to have the law executed so far as personal property on the farm is concerned? A. I have never been an assessor. 389 Q. You are a citizen of Cayuga county, interested in the enforoe- ment of the law ? A. All the fanners owe more or less outstanding bil 1 ^ and they turn the personal in against it. Q. Are you cognizant of the fact that you have been escaping taxation? A. I have on my stock and tools. Q. Have you made any effort to have them taxed? A. "No; because 1 didn't think they should be; I know the other fellows didn't pay any on personal property, and I didn't want to pay on real and personal both. Q. Suppose you had gone to the assessors and told them, you had so many thousand dollars worth of stock on your farm, sub- ject to taxation, and insisted upon their assessing it, don't you I think they would have done it? A. I presume they would. Q. Don't you think if you had gone to the assessors and said | that your neighbor had also a certain amount of personal prop- erty on his farm not taxed, that they would also have taxed im? A. I suppose they would; anyway if they could i.ot show ley had offsets, but most all farmers have offsets. Q. Don't you think it was in your power to secure the enforce- tent of the law, so far as the taxation of personal property was mcerned, on farms at least? A. Yes, sir; it would be on farm?, nit not on personal property of the other class; that is what I corn- tin of. By Mr. Guenther. Q. Personal property held by you escapes in proportion taxa- >n to the same extent as personal property held by some one the city; aren't you getting the benefit as well as those in the Ity? A. We might be getting some, but nothing like the lount they escape. Q. The only benefit you would derive would be the reduction this sixteen dollars? A. No, sir; on the whole. Q. Then it would come down that the people would elect people rho would take care of their interests? A. They can not take of their interests under the present law. Q. Don't you make your own expenses in the town? A. We :e the expenses but we can not make them pay in proportion the value of the property in the town. 390 By the Chairman. Q. Have you ever stopped to consider the amount of personal property of farm stock and implements that escape taxation in Cayuga county? A. To tell the truth I don't think there is any escapes of any amount but what the parties owe; there is hardly any of us but what have more or less floating indebtedness, notes or something of that kind. Q. What proportion does the value of your personal property on your farm bear to your real estate; your farm is valued at $6,750; what proportion would your personal property bear to that? A. They do not assess real estate what they consider its real value; I should think about one-tenth would be as a general -thing an average. Q. You think you have got $ 1,000 worth of personal property on that farm that could be subject to taxation? A. It would bo if I had no debts to offset it; of course that would be it if I had no debts. Q. Do you think debts should be allowed when they come to assess personal property? A. No, sir; I don't think they ought to be. Q. Do you believe in assessing bonds and mortgages? A. Yes, sir. Q. Do you also believe In assessing the owner of the land without regarding whether 11 is incumbered or not as to its full value? A. I would be in favor of exempting indebtedness on real estate providing you could get enough to assess on to raise your taxes, but if it was allowed on real estate, there would be very little real estate assessed, just the same as personal now; consequently I would not be in favor of it, but I would be in favor of assessing everything, real and personal, without exempt- ing debts. Q. In other words, if your equity in your farm was only I $3,000, and you had a mortgage for the balance, do you think I you should be assessed for $3,000 or the full value? A. If you I could get $3,000; I think you ought to exempt indebtedness on real estate, but you would not have anything to assess I am 391 afraid; I think it would be just but not practical, but I think it would be practical to equalize the thing by assessing all prop- erties, personal and real, without exempting either for debt. By Mr. Guenther. Q. Take Buffalo, for instance, a man owns a thirty-foot lot 100 feet deep and has a little cottage on there that cost him perhaps $700 or $800, and he pays about twenty-two dollars to twenty-five dollars annually for a tax; you only pay ninety -five dollars for 150 acres; where do you think the unfair discrimina- tion conies in? A. He don't pay that on county and State. Q. City, county and State the same as you pay your tax? A. That is a city tax. Q. Isn't it just as burdensome for him to pay that on a little lot as it is for you to pay ninety-five dollars on 150 acres? A. I suppose it is, but still he gets the privilege of living under the benefit of those taxes. Q. For instance, what? A. Stone pavements to walk over the streets and to drive over. Q. What good is that to a man who don't own a horse? A. It is better to walk on. By Mr. Gifford. Q. Wouldn't the taxation of all the personal property in the city of Buffalo relieve him of a portion of the tax on that real estate? A. Yes, sir; I think it would. Q. Have you read the last report of the State board of assess- ors as to how much property is escaping taxation in the State personal property? A. I don't know r whether I have read the last Q. The last report states that 4,000,000,000 of personal property is escaping taxation; suppose we could reach that, do you con- sider it would reach the taxes on every real estate owner; we won't say anything . about the farmers; don't you think that would reduce the rate of taxation on all real estate fully one-half? A. Yes, sir; I think it would; that affects all kinds of tax, not only the State, but all. Q. Don't you think that the farmers would be perfectly willii to pay their tax on personal property on the farms, provide all other personal property could be reached and taxed? A. I know I would personally, and I think a majority of them would; I think they don't understand it. Q. You stated something in regard to the local option tax law; have you ever made any examination of that law or heard it discussed to any extent? A. A T o, ^r. Q. Do yon know it is a fact tl at the claim was made in the Kew York State Legislature last winter, that the final effect of] that bill would be to exempt all personal property from taxation? A. No; I didn't know. Q. The intent of that law, as I understand it, was to give the cities the power to assess as they chose, and the board of super- visors in the counties as they chose; make the basis whatever they chose, either on personal or real, or both; and the idea would be this, that in the city it would be natural that they should desire to exempt property with a view to drawing capital in the city; if it was a fact that the law would have this effect, what effect would it have on the outlying rural districts? A. I think it would be to diminish the value of it. Q. Would you then be in favor, if it would have that effect, rural districts to the city? A. Yes, sir; no doubt. Q. Would you then be in favor, if it would have that effeor, of a local option law; the counties in which these large cities ^ire located would naturally exempt personal property from taxation; if they did so, what would the capitalists in your county say to you if you were in the board of supervisors; what would they say as to that assessment; would they demand that you follow in the wake of the others and exempt personal property* in your county? A. Yes, sir. William Steele, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. Do you reside in Oswego? A. Yes, sir. Q. You are a lawyer? A. Yes, sir. 393 And have always been connected with banking institutions? Yes, sir. Q. And interested in the insurance business? A. Yes, sir. |. You represented your county in the Legislature in the years 179, 1880 and 1881? A. Yes, sir. ). You acted during those years upon the committee of tsxa- m in the Assembly? A. In 1881, on the special joint committee. >. In 1881, you were the chairman of the Assembly committee taxation? A. Yes, sir; both years, 1880 and 1881. Q. It was in those years that the laws known as the corpora- ion tax law and the inheritance law were introduced and tended? A. Yes, sir. Q. It was in 1881 that the advisory commission was appointed Jy Governor Cornell in connection with the subject of taxation? Yes, sir. Q. And that commission acted in [harmony with the coni- ittees of the Senate and Assembly? A. Yes, sir. Q. You necessarily then became conversant with the subject of ition and gave considerable attention to the examination of question? A. Yes, sir. Q. And you took part in the preparation and introduced several affecting taxation? A. Yes, sir. Q. You introduced among others one to provide revenue for 5 State by a tax on savings banks and institutions for saving,? Yes, sir. Q. Seven hundred and sixty-four printed bill 764 of 1881? Yes, sir. Q. Will you explain to the committee what was the purpose and it would have been the working of that bill? A. These bills j found in the joint committee of the Assembly and Senate, our idea of introducing, bills into the Assembly, or before iucing bills, was to make the bills so that every one of the litbee could support them when they came into the several ., consequently we made them just as moderate as we it possible to make them; of course some of them were ided and made stronger after they came into the house; but 50 394 the idea of this savings bank bill was to place a small tax upon property protected by the laws of the State, on the principle that all property was protected; not the individuals but the property was protected, and that the widow who had |300 in the savings bank, getting three and one-half per cent or four per cent, could afford to pay a small tax on her deposit just as well as the widow who had a small home could pay the full tax both State, county and municipal, that was our idea, and we deemed it nothing more than just, that all of this property should contribute a cej* tain amount towards the government that was protecting in another point is this; it was well known by correspondence with Massachusetts, Pennsylvania and Ohio, that the same thing wi going on in other States as in our own, that about one-half ai least of money in the savings banks was put in by parties who had no other place to put it, and I am satisfied that at least half thf money in the savings banks in this State belong to people who 01 have it there until they can draw it out and place it in mort people of independent means; for an estate I have over |2,( invested in this city, that I have put in there during the last thra or four months, because I had no other place to put it; I have hat charge of the estate for nineteen years; it could not be dividec until the young^est child came of age and he was only two yean of age; I know a great many instances where a large amount o money is put into the savings banks that way and it was thJ intention to arrive at some way to make that contribute toward, the support of the government. Q. Explain to the committee what is the practice as to placing those deposits by people of means? A. The practice is, since the have been limited to $3,000, to put in $3,000 in each bank the can reach; for the father, $3,000; for the mother, $3,000; for tb. sisters, $3,000, and the brothers and their uncles and their cousin and their aunts, etc.; that is the practice throughout the Srat< they carry it into the different banks; parties in Syracuse, I hflfl no doubts, may have money in those banks and also in Kome. Q. You determined that fully one-half of the deposits in saving banks represented the means of people of independent wealth 395 |&. Yes, sir; people who were amply able to pay their proportion If tax. Q. What did you propose to tax them? A. We proposed to them twenty-five cents on every f 100 and make the bank pay ;; that was drawn entirely to apply to large savings banks, over ),000, although the sense of a majority of the committee was make it apply to all saving's banks; there is not so many that ve $500,000, but of course with those enormous savings banks New York, the Bowery and Dime; they thought they would a tentative bill that would start in that way. Q. The result would have been simply to take this tax out of the )lus accumulations? A. Yes, sir. Q. What were the further provisions? A. The further pro- jions were to compel banks to give an account to the State, and the further provision that if a party was assessed on money bank, if they could say that was all they had, there should be further tax upon the personal property; the assessors should :e a certified receipt from the bank as evidence that they had Id, and that was what they paid upon their property towards te support of the State. Q. One payment, under the provisions of this bill, was to release from all others ? A. Yes, sir ; no double taxation. Q. You also introduced a bill, printed No. 706, to provide for the ilization and to reduce taxation on real estate? A. Yes, sir. Q. Explain to the committee the purpose and effect of that .? A. The idea was that the assessor should tax everything it he could find, whether real or personal, in his jurisdiction, then leave it to the party in possession to fight it out with actual owner, or the parties who might have the claim dnst it, what proportion of the tax each one should pay; not the State a detective, but make those parties determine the ig amongst themselves. Q. How did you propose to bring about that result? A. It simply for the assessor to assess everything he could find, real and personal. 396 Q. And then to have the party in possession pay the tax? A. Yes, sir; and give him a certificate, showing the amount he had paid, and allow him to offset that against the indebtedness that might be upon the property, which made the party who held tt.e indebtedness a virtual owner with himself. Q. He could present that as a receipt to the owner of the security and claim a deduction to that amount ? A. Yes, sir. Q. Believing the mortgagee from all contribution? A. Yes, sir. Q. For the reason that the mortgagor had an allowance in the reduced amount? A. Yes, sir; we thought it was nothing moi^j than just and proper that arrangement should be made, and it! could be made; I had had instances where I know that I have I been very glad to loan money at a lower rate of interest than be charged with any taxation. By Mr. Guenther. Q. Supposing a local pavement or a local improvement wad to be put down to cost f 400 or $500, would you make him pay the same proportion of that? A. No, sir; that would be municipal; that is an increase of the value of the property; I would have to stand that. Q. Because owning the fee you get the benefit of the increased valuation? A. Yes, sir; it is a perfectly proper agreement to be| made between the borrower and the lender; it has been my business for thirty years, has been loaning money, not only in the banking business, but also for other parties; of course I know the sentiment that people have, but as a man and as a citizen 1 felt that any bill that was presented here should be carried out under the principle of the golden rule to do as you would be done by; I am part owner in the store in the eastern part of the county, and I believe the assessor should go into the store and assess me for every dollar it is worth; we are assessed now in the town of Sand Banks, and there is not another case in the countv where thev assessed in the store: but if we said to the 397 leople of the village: Assess us full value for your village, but p is unjust to assess us wEen it is not done in other localities, lecause they are making us pay part of the State tax. By Mr. Hamilton. I Q. What became of this bill? A. It was lost by a vote of sixty- re to some fifty. Q. What became of the bill in regard to the deposits in savings nks? A. I don't remember. Q. Did it fail to pass? A. Yes, sir; the New York press made great kick on that, of course, because there was heavy savings ks down there, and had a great tenderness for the widow and an. Q. What is your opinion as to the reception of the bills by pie who are not well-off depositors? A. I don't think they ould object; the tax on that bill is only seventy-five cents on )0; we figured up with the average amount of deposit it is r now. Q. We had in evidence already that the average deposits now $350? A. I don't doubt that; the commission in the report y made to Governor Cornell very strongly favored that savings ilk tax; I remember I read the report last night before I came 'n; I am sorry I did not bring it down; they thought that no in this State who had |300 in the savings bank was so poor purse or mind that they would not be willing to pay that. Q. Was there any calculation made by you as to the amount of enue that could be made from such a tax.? A. I can not ber. By Mr. Gruenther. Q. Don't you think it would be a still better proposition to tax surplus in the savings banks? A. Taxing the surplus in the iks would not be consistent; I don't know of any principle which we could tax the surplus in the savings banks. It is supposed to belong to the depositors and they never 398 get a cent of it? A. Then you would want to make it at least one dollar,; you would want to make them sweat; I would add ths.t to the bill; in addition to the other tax I would put a tax of ore per cent on the surplus. JJy Mr. Hamilton. Q. There was also introduced an act to provide further revenue for the State, No. 387, which appears to have been a substitute for Assf-mbly bill 690; will you explain the provisions of that bilJ? A. This was a pet of the commission; it was suggested by the commission and our committee drew up the bill; the idea w4 putting- a tax or a license fee of twelve dollars and fifty cents annually on the business of selling at retail ardent spirits, malt liquors or any mixture of them, and on the business of selling malt liquors only, five dollars per annum. Q. A State license? A. Yes, sir. Q. In addition to the local licenses? A. Yes, sir. Q. What became of that bill? A. That bill did not receii| very much favor; after it got into the house it seemed to be looked upon as a very good thing to talk about but not veiy practical thing to carry out. Q. What did you provide for the collection of the five dollars and the twelve dollars and fifty cents, where was it to be paid?j A. I think some one was designated to receive it, a commissioner j of re venue; the commissioner was to pay it over to the comptroller.! Q. It created a new office? A. Yes, sir. Q. You also introduced a bill printed bill No. 766, to provide for the taxation of life insurance companies? A. Yes, sir. Q. Will you explain the provisions of that bill? A. I could] not do i( as concisely as I could write it. Q. What became of that bill? A. That bill, if my meinorj serves me right, did not pass. Q. You also introduced Assembly bill, printed No. 779, from th<, special committee on joint taxation and assessment to provid*,* revenue for the State by a special tax on sales by brokers? A 399 'li;i{. wa. a lill very strongly recommended by the commission and Lnng enough for it. Q. Explain the provisions of it? A. The provisions were to Jut a stamp, two cents for each $100 the same as we used to ive on our receipts; I didn't like that bill very well, but at the te time it was parties thac seemed to know more about it than did, who claimed it would bring in large amounts of revenue id not injure any one in pavlicular; but those that went through jtith it as I did and stamped all those things, would say let us iv for the whole thing at once; we don't like that class of busi- we would rather pay a direct tax than be bothered; but ley claimed this was the only way you could reach those; we id another bill; I have a ^opy of it at home, where the broker to pay a license of twenty-five dollars and then he was to >rt all those sales; well, that would be so much worse than ; you would have had to provide a new department and take of it. Q. That bill was a substitute for Assembly faill No. 724 which introduced by yourself? A. Yes, sir. '! Q. You also offered from the joint committee on assessment taxation, Assembly bill printed No. 261, an act to equalize ition? A. Yes, sir. Q. Explain to the committee the purpose and effect of that - 400 bill? A. This was a Till presented, and ruy dairy says it was unanimously voted favorably by the committee, upon taxing the bonded indebtedness of municipalities and I think there never was a more just bill or one that would create less friction pre- sented to the Assembly, or any legislative body, than this veiy bill, but the trouble was with a good many of those bills April twentieth, you see the date of that; it came in about the time we were having quite a little contest that kept us very nearly the last of July, and those bills suffered terribly; there were parties that would fight against their own grandmother because they happened to be on the other side; it was the old Senatorial fight. Q. That bill provided similar to another bill that you have called our attention to, that a tax might be paid by the municipal- ity and then would be regarded as a valid setoff? A. Yes, sip; there is a loud call in this State for a bill of that kind; I don't think there is any subject of taxation that could stand it better than bonds that were issued twenty years ago, now drawing seven per cent interest and not paying a cent of tax. Q. Could you tax a bond issued ten or twenty years ago? A. It was taxed then; we are only enforcing it; in reference to that question, of course I have had those objections; when those bonds > were issued they were a subject of taxation; this bill was simply j to collect the tax that they owed this State just as much as IJ owe a tax on my house and lot; it is a copy of an extract of the! Albany Evening Journal; the old man was very much interested! in those matters, and they used to give quite a little space ini the Evening Journal to those bills and this was taken from the paper and sent broadcast through the State at that time; thej plan of the bill was this; here was a town that was assessed for |700,000 and bonded for f 80,000; that is the town ol of Sandy Creek in Oswego county; of course, you people of the tuwr taken up and they had nothing left them on which to levy this $80,000; now, that $80,000 They were paying seven per cent or! when the legal rate was six; they could not get at it; they were! lying their own taxes and this was going scot free; the idea to have the assessor add |80,000 to the assessed valuation of the town; then assess the whole $780,000; I mid write it better because I figured this thing out at tat time; there is nothing unconstitutional about it, because lose bonds were taxable and should have paid their from th*e very inception of the business; they simply escaped;: ?hen we say we are passing a law to tax those bonds we are not r it providing a method to gather the tax already provided for; understand the laws of Switzerland, when a man dies his >perty is all appraised; the appraisers then figure over the estate; they take his books and figure back and see how inch he has defrauded the government for years back; they ten assess him the amounts he should have paid from year to and five per cent is the penalty, which is one of the most arrangements ever originated; they make him pay what he Id have paid; of course the parties are sworn every year; len the man dies, they seize upon it; they figure back how much should have paid in 1880 or 1881, and charge to the estate also charge five per cent as a penalty besides; now that :es everybody in Switzerland pay his tax, and it should be done this country too. Q. This bill is in line with the recommendation of the Comp- iler for the taxation of corporations? A. Yes, sir; with one option; in the operation of this bill in 1880 we were defeated luse a great many of those corporations claimed that the bill not reach them, so that in 1881 they amended it so that it Id reach them; and we added a saving clause Whereby we Id get the tax of 1880. Q. What are your views upon the question of the listing system? It has too much friction about it. In what respect? A. I think there is nothing that would the ire of a free born American citizen, or even an acclimated more than the listing system; in Ohio where they have the system some claim it is a benefit, and others claim it is a 51 402 great injury; there is too much, espionage; too much coming down- to the secrets of a man's business, that he will avoid even if h> iias to swear to a lie too inquisitorial. By the Chairman. Q. A man may be willing to tell you as to his condition in a:a- oral conversation, but he don't want to make a record of what he says? A. I saw so much of that in the income tax, and in the internal revenue; there was so much pressure in this State and everywhere in the Union. Q. Such a law would not have the sympathy of the people! A. No, sir. By Mr. Hamilton. Q. What are your views upon the present law, allowing a d< tion for indebtedness as an offset? A. It is very unjust becai it don't apply to real estate; you have just as much right to takjjj' indebtedness off my real estate as you have on personal property. Q. Were you asked in regard to your views on the question of the present rate of interest? A. I was not. Q. From your experience as a banker and otherwise, will youl give your views on that question? A. My idea may not be aji very popular one, but it would be not to interfere for the present! with the rate of interest; when the interest was reduced from,, seven to six per cent my ideas were all borne out by the results r afterwards, and I don't know why the same results should not,, follow; when you reduced the interest in 1879 from seven to sb... per cent I opposed it for quite a while and quite a number of us opposed it, and having been in the banking business and loaning | money at that time, of course I had quite a number of peopl< . that believed the same as I did; my views were these, that i would not be any especial benefit to the people who had propert;, that was not gilt edged; whether certain lines of boi rowers who need money it is difficult to get monej HIT 403 ithout paying what is called a shave on it; and also a irge amount of money would be taken out of mortgages and at into speculation, buying stocks or sending it into western linns, Kansas and Nebraska mortgages; we finally compromised p patting it off until the first of January following-; the original II was to take effect immediately; Sherrott, who had charge of o bill in the Assembly, on consultation with the gentleman tho had charge of it in the Senate, finally agrxed tc. put it off |itil next January, and the bill was passed, and T found my ws to a large extent were correct; about that time they com- nced sending money west; for several years afterwards stocks nt up throughout the country; people were investing money stock; any stock that offered to pay seven per cent or eight r cent was sought by those people who felt they had been ured; I also found that those people who needed money badly uld not get money without paying a large shave, and you your- f have seen the result; it was about that time that so much mey went into those western mortgages, and even at the sent rate of interest in Oswego, we had an experience that t the city of Oswego f 75,000 to f 100,000, in the Winner Invest- nt Company; some widows, I understand, had as high as ,000 or $5,000 in bonds; the loaning of money is a subject t is very apt to control itself; if money is plenty, a party with d security can get money at almost any price; A No. 1 urity to-day you can get money at five and even at four; I ow a block in Oswego that was sold two years ago and a rtgage put on it at five per cent with the privilege of pacing sooner; last year it was put into four per cent, but it is gilt it is as certain almost as if it was pure gold; I find ughout the country plenty of people who want to borrow fcney, but the rate of interest at six per cent even now, and IB fear of usury keeps a good many of those people from getting mey; if the interest was reduced to five per cent after a while IB good securities would get it for four per cent, but there would | the same disposition with people who have money to loan, 404 whether it is the rich man or the poor widow; in fact the poor widow is anxious to get the largest rate and take the most chances, and those are the people who are being swindled through- out the country, and will be as long as the world stands, because they don't learn anything by their past experience; as Napoleon said about the Bourbons: "They forget nothing and learn nothing; " directly it is a matter of no interest to me whatever; if it will help the people throughout the country, help parties who are anxious to get money to go into business and help them to carry on their farms, or pay up their mortgages on their place; it seems to me that one-half of one per cent a month is as low as people can afford to do it; there are a large number of people in this country who have nothing but their interest to live oaj and just as fast as the interest is cut down just so fast theiii means of support are cut down; I don't know but you gentlemen! may have heard a great call for lowering the rate of interest but I am loaning money all the time; I don't do anything else for estates, and I have not found any call for a lower rate o interest. Q. What are your views upon what is now the inheritance ta> in regard to the question of increasing it by imposing a grader tax? A. My views are, I should let it alone until the thing ha* been thoroughly tried; I think there are other means of obtaining money to carry on the government that have not been properl> worked, so as to let them get thoroughly settled and let tht system get more thoroughly digested. Q. You are not opposed in principle to the i ID position of sucl a tax, but deem it not appropriate at the present time? A That is my idea; we are starting on something entirely n throughout the country; in some cases it may perhaps mak< hardships; we ought to have had this in years gone by; we ar simply getting what we should have had before; that is the poin I have in both collateral and direct inheritance tax; the Stat is deriving some contribution for support given to those estates 4:05 in times gone by which should have paid year after year, the same as real estate and tangible property has to. Q. Estates that amount to less than flO,000 in personal property we are not receiving any benefit from? A. That is only $500 a year; that limit is low enough it seems to me; if that |10,000 was left to children, or if it is left to a widow, if she pays her taxes on that after it comes into her hands, as she should do, and the law should be made to make her do, that is all she ought | to do ; I believe, as far as possible, in making this assessment, but make each one pay a little, but not to distress any one; I look upon all money the same as I do upon property, for what it would bring in for trade and barter; there is nothing else to go on; if there was a war I would be willing to pay a couple of dollars more [on my watch, as I did in 1863 or 1864, but it is not necessary. Q. Would it be in line with your views to make all pay the Jsame proportion tax real as well as personal property under ithe inheritance law? A. Yes, sir; make every class of property ty something; it seems to me that would be open to this objec- that the real property has been paying, very likely, because it is the only property you can get at; if I was going to introduce bill I don't think I would favor a tax upon real estate, because re know that is paying if anything is paying; we know there are ly quantity of classes of property that are paying nothing, and ive been for a great many years; it would seem to me more in ie province of legislators to arrive at some means of compelling just contribution from those branches of industries and proper- is that have not been paying. Q. You were one of the originators of the collateral inheritance laws? A. Yes, sir. Q. Wasn't that law passed upon a broader principle than the iere attempt to collect from personal property on account of its ivious evasions? A. The principle, of course, was the prin- )le of equity, but that was one of the points brought and very mgly argued, that it liad escaped for years, and that vas the ly way to get at it. 406 Q. Wasn't it the principle, since sustained by the court, that the right of succession was created by the law; there was :ao natural right; the right to devise and give by will was also a creation of the law, and that therefore the law had a right to tak a percentage for the support of government? A. I think if thai idea had been advanced I should remember it; no such idea was ever advanced in our committee, because if I was not there there was no committee ; we had to amend the corporation law bj putting in the words "upon their corporate franchise and bus! ness ; " it was simply splitting hairs. Q. Assuming it is that broad principle which controls, woulc there be anything unfair in asking in the distribution of th estate of the assets largely invested in real estate some con tribution as well as from the estate of Mr. Gould, which is large] in personal property? A. As I understand the estate of th Astors, it is nearly all real estate; holding property, and the] leasing the property and having buildings put upon it; that what I understood in 1858 and 1859, when I lived in New York; suppose that is all taxed, and taxed as thoroughly as other classe of property that was there to be taxed ; not that property Has pai its taxes from the time it came into the hands of the Astors, h has paid this tax the same as the other property, but when you g to personal property you are striking a class that never has paid tax; bring out the Swiss idea, and commence and pay now. Q. I asked you to assume that the inheritance tax was base* upon the principle I had stated, which has been sustained by th; courts, would it not be fair then that real estate shall contribut the same share proportionately with the estate of any person wh had invested in personal property? A. Yes, sir; to follow out tha theory, but I don't believe in the theory; I don't think the theor is correct. Q. Gould the other theory be sustained in law as a theory ? Yes, sir: I think so. Q. The theory that you are getting even ( ? A. It is not gettiB even; it is only taxing now what we should have taxed long ag* 407 Q. Is it not a theory that you did tax years ago, but did not collect it? A. Nothing is taxed unless it is assessed; it was sub- ject to taxation. Q. And it evaded it? A. Yes, sir. Q. And for that reason you propose now to get even? A. I think it is perfectly just too; I think it is [Republican-Democratic principles; there is no doubt about it at all; the Swiss government has followed that for years, and that thing would certainly have been decided there if it had been unconstitutional. Q. They are not acting under the same constitution that we are? A. No, sir ; but on the same principle all the way through ; there is- little difference in the way of officering their government. Q. Was not that ground you gave rather used as an argument to induce support rather than to sustain the reason why the tax was imposed? A. We had the worst quibbler of all the lawyers I ever saw; I might say worse in one sense and best in another; that was George H. Foster, and even his fertile brain didn't bring that up; his idea was that property should be taxed by the State, and that the State had a right to tax that; they taxed it one year anyway whether they ever get it again or not. Q. If you learned that was the theory upon which it had been sustained by the various courts, and the theory upon which it was advocated in other countries, would that change your views? A, Certainly it would' change my views in a legal way as a lawyer, but it would not change my individual views. Q. Wouldn't it give you an idea that it would be equitable to lay a tax upon both classes of property? A. Yes, sir; followed out in that view, Q. Have you any other views to suggest to the committee in regard to the subject of taxation to which your attention has not been calied? A. Xo; I don't think that I have; I think the ques- tions on those bills and upon the general subject of taxation, is,. as far as I can think of at present. Q. Would you favor the plan, raising all the money for State purposes by a specific tax and relieving the counties? A. Yes, sir;. by all means. J 408 Albany, N. Y., January 24, The committee met in the Senate Chamber, Albany, to call. Nathaniel Gr. Spalding, called as a witness, being duly swoi testified as follows: By Mr. Hamilton: Q. What is your full name? A. Nathaniel Gr. Spalding. Q. Where do you live? A. Schodack Landing, Eenssel county. Q. What is your business ? A Farmer. Q. How long have you been engaged as a farmer 9 A. So twenty years and over. Q. Are you also a member or the Farmers' League? A. sir. Q. An officer of that body? A. Yes, sir. Q. What office do you hold? A. Lecturer. Q. How long have you been so engaged? A. About thr< years. Q. Have you also held public office? A. Nothing very mil no, sir. Q. One that has called you in connection with the levy and collection of taxes? A. Nothing n ore than, a matter of my own town; my own town matters. Q. In your town matters you have given attention to that sub- ject? A. Yes, sir. Q. Have you also given attention to the subject of taxation? A. Yes, sir. Q. In connection with your relations to the State League? A. Yes, sir. Q. What have you to say as to the propriety of modifying ihe present laws relating to taxation, assessment and interest, so far as they affect the agricnlhiml. manufacturing and other business interests of the Stafv? A. I think they sh.mld be -much modified. .roe : ^^A 409 Q. Will you give the committee what information you possess in regard to that subject, and specify wherein you believe a modi- fication is warranted? A. I will state that as farmers we take the ground that equal taxation is just taxation; and as far as we can reach that we think we have reached a poiixc of justice: we feel this as farmers that our present system of taxation works very injuriously to the farmers especially; in the first place, you take our mortgaged real estate; we are paying a double tax, and I think it is fair to say that nearly one-half of the roal estate of the State of New York is mortgaged; there is hardly a poor man's house but what is mortgaged, and lie is paying a double tax. Q. Do you believe that that is the rule also in the case of farms? A. Yes, sir; particularly so with farms. Q. Fully one-half? A. Yes, sir; of course I can not gi'/e you exact, but as far as I can ascertain I think that half of the farms of the State of New York are mortgaged; now you see the [point; the assessor conies to a farmer, and he says: *'How much ) is your farm worth? " Well, it is worth $10,000; " " Well, then, I will tax you 10,000; " but the former says: "I have got a mort- gage of $5,000, and I have got also a debt that I have in making [improvements of $1,000 more; 1 actually owe 6,000 on my farm;" j " I can not help that," the assessor says ; " you must be taxed for I the whole face of it; " he goes to a merchant, and he says: " How much goods have you got in your store?" "I have gjt $5,000;" "Well ] will tax you $,000;" "No," the merchant says, u I owe if 2,500 on this stock of goods; " "Well, I will take it out,'' and the [merchant is taxed $2,500, and we poor farmers pay the whole tax >n the $10,000 while we only own four; those are living facts; now, ; the point is here; of course the farmer lives on a very narrow irgin; he makes but very 11 r tie profit; probably the average j farmer does not make three per cent on his farm; he is close ; always, and $100 is a good ue.n.1 to him; fifty dollars is a great ideal to him, or thirty dollars is a good deal to the fanner; it is it the margin between profit and loss with the farmer; lie is so 54 410 near that it is just between solvency and insolvency, that thirty or fifty dollars is to that farmer; what is the point? That thirty dollars don't amount to a great deal, we will say; yet what is th fact? It depreciates the value of that farm just so much; I will give you an illustration; my farm forty years was taxed fifteen dollars. any By the Chairman: Q. An acre? A. No, sir; the whole farm; nobody paid ai taxes forty-five years ago. Q. How many acres? A. Now 250. Q. How many did you have at that time? A. The same amount; now I pay $140, and that farm wouldn't sell to-day under fore- closure than it would forty years ago. Q. You mean the .total tax forty-five years ago was fifteen del- ; lars? A. Yes, sir; that is including my school tax; it is now $140; I can pay $140 we will say, although it conies pretty hard; you gentlemen ^ay to me what is $140; it is^$125 more than it was forty years ago; what does that represent; it represents a capital at five per cent of $2,500, and my farm with that $140 drawn off back to fifteen dollars would be worth $2,500 more than it i to-day, and so would yours or any other man's; there is the point; it is the depreciation of our real estate that we are looking! after; now. suppose a merchant, a banker or a manufacturer, II don't care who, if he has got personal property, suppose he paid! his phare with me, what would be the result; I contend we would j go right bark down to fifteen dollars; I think I can demonstrate! ti) you to-day that while we are paying two per cent, if the tax}. was equalized and placed on all classes of property our tax would r be five mills; can't the banks stand that; can not the savings' banks pay nve mills on an average; we don't ask those men tc; pay two per cent; I don't ask them to do it, bat we say th should come down fairly and squarely on all the personal propnt? of the State of New York, and it would be only five mills; anybodi .< can stand that: now what other facts what are the facts; th< facts are those as near as I can learn; our State Assessors tel ' ill us that there are 4,000,000,000 of personal property imtaxed; our real estate is taxed, I believe, about 3,500,000,000; now we con- tend, and we think we can demonstrate the fact that the actual wealth the taxable property of the State of New York, if you take everything: is 12,000,000,000; we don't know anything about this wealth, Mr. Chairman there is over 1,000,000,000 of dia- monds and gold and jewels in the safe deposits of New York city that never see the eye of an assessor; we poor fellows back in the country pay for everything that is in sight; you see the difference? Q. Are TOU sure that is so that last statement? A. I think. I am; J have been told so. Q. (Jo ahead. A. The assessors never go there to the safe deposits; now just look at it, we are paying a tax on our farm lands an excessive tax; take the property of New York city, and that city is an exception to all rules; it is growing beyond all accounts; ro matter what you do; no matter how corrupt your laws are, real estate booms there if it does not anywhere else; it does not here in the city of Albany with its wonderful capitol; real estate sells to-day here and has for the last three years for less than its assessed value; you can not sell property on the market; why; it is overtaxed and personal property is free; you go to a man and ask him if he wants a farm or a lot and he says no. Q. What is the taxation in the city of Albany? A. I think it is about LSO or 1.81; if we tax personal property in New York city and in Albany and in all our cities 5,000,000 it would bring it down to n basis equal to all; we contend that this lot of money hid around our millionaires live simply nomadic lives; with their millions in their saddle-bags they start and go from one State to another whenever there is any sign of taxation; do we want any such class of men; our success as a nation depends upon a system of legislation that makes it for the interest of every man to have a home to build up a fireside; that is what makes a great country; how are we to-day; the millions are in the saddle- bags going around over the country to avoid taxation ; the millionaire, as a rule, is a consumer and not a producer. 4:12 Q. To get back to the question; \vliat remedy do you sugg( for that alleged evil? A. I am reaching a point of great interest: I am in favor of a listing bill; I will tell YOU why; I believe thai there is and that there has been patriotism enough in the Stai of Xew York when a law is once passed to carry out the system listing; I wo aid exempt say $2,000, so that a lawyer would exempted on his books, a doctor on his library, a poor man 01 his tools and a farmer for his tools; all above that a man is able to pay on; then tax it about five mills, which would be probably enough; I believe a system of listing would reach it honestly and squarely; we are told if you start a listing system a man will commit perjury; I don't believe it; I don't believe there is a man in this room that would commit perjury; that is simply a cry raised by the objectors; I remember some years ago of seeing a cartoon that illustrates this forcibly to me; it was Mr. Twe< in his prime represented as a great giant; a little policeman as pigmy stood by his side and held his baton up and it only reach( to Mr. Tweed's waist; and under it was this emphatic senten< "Can the law reach him;" the law did reach him, and the will reach every single millionaire in the State of New York if you will always put a just, square, honest, equal tax based on system of justice to all. Q. What do you think would be the result if the present law faithfully executed? A. I think if the present law was faithfulb executed with the amendment proposed by Mr. Deyo, it woi cease; I think this, if our town assessors were made amenabl to some higher court, for instance, to the State assessor; have noticed how beautifully this has worked in our board oi health; you take a town board of health; a cry is made to remove a nuisance, and they pay no attention to it; that man goes to. the State Board of Health, and they send down and say: "Look here, if you don't move that we will call you up;" now, the town assessor is in a very unfortunate condition; everybody is on to him if he does the square thing; we all know that; well, if ho could go to those gentlemen whom he is assessing ;mtl say: "I have got to do the square thing; if I don't the State board is after me, 413 and they will impeach me;" lie can get out of the difficulty to a certain extent I think, and in that way, I think, we might reach more personal property than we do. Q. Do you think, under the law, as it exists to-day that a town assessor can not be reached for non-performance of his official duty? A. I don't know but he can be, but our whole system of taxation is demoralized; we have got to start anew; there is no rone in it; we have got to start anew; every man seems to feel around in the country and everywhere else that it is an honest thing to escape taxation; he will chuckle over it and have a good time; I think we ought to go back and adopt an honest, square system of listing. Q. Don't you know that every assessor in the State of New Yoik to-day, whether a city assessor or town assessor, is required to swear when he has completed the assessment-roll that all the property, real and personal, is therein contained and assessed for its full and true value? A. Yes, sir; and for that very reason I would not be an assessor; you could not get the office on to me; I would not take that oath; they would run a man out of town if he took it and carried it out square; we are so demoralized; we can not tone this up without starting de novo starting anew, in my judgment; I will express my ideas in regard to certain plans that have been suggested; take, for instance, our State tax; sup- pose you make corporations pay the State tax, that would be a great relief; there is somewhere in the neighborhood of 12,000,000 ' r you throw that on to corporations, and by so doing they pay more than they do now; in that way you relieve 12,000,000, but we have about 65,000,000; now, take 12,000,000 out; we have heard a great deal about this collateral inheriiance law as being a wonderful relief to the farmers; how much do we get? Not quite 2,000,000; but, suppose we get 2,000,000 collateral inheritance; say that the corporations pay the 12,000,000 State tax; we will put 2,000,000 on to the inherit- ance; now, we have got 14,000,000; well, in that 12,000,000 include what we raise now by the organization of corporations, and so forth; that all comes under that; we will say 12,000,000 4:14: is thrown on to the corporations; they are relieved from all other taxation; we have got 12,000,000 and we have got 2,000,000 out of our inheritance we will say; now, add to that some have suggested an income tax, to the amount of 2,000,0( more we will say, and by and by that income tax is precisely tl listing bill; what else is it? Assume that you pass that, you hai got 16,000,000, and you raise 65,000,000; that leaves yc 49,000,000 to raise and how are you going to raise it* We are relieved a little, but fairly and squarely; we want listing bill that will cover the whole field; that has been my id< in regard to our system; but I feel as a rule that the farmer is the ditch; there is not a farmer, L don't care how successfi he is, that is much more than paying his way, and he makes hard living at that; now, if we can relieve him from this excess! 1 tax; if we can throw it on to the personal property what will the result? A man that has got taxed personal property wi say: "Here, if I have got to^pay taxes I will go to work with the personal property; I will buy a farm; I will start a manufactory; I will build houses; I will go to work with the money, and this vast amount will go to work, and my farm and every man's house will be worth more than it is to-day, and we have restored the normal relations between the different classes of industry which to day I affirm is abnormal; there is an abnormal condition to-day between real estate and personal property; make the tax equal and everybody has got to go to work and the result is our holder of vast wealth of the State of New York it is like a bee-hive and every man has to work, and every man's farm is worth some- thing and every man's little house will sell for something more than the mortgage on it, and a general and healthy boom will be the result all over the country of just legislation. Q. Is it not a fact that the bulk of taxation of the farmer is local in its nature? A. Well, he pays his share now of the State tax. Q. But if you consider the proportion of the amount that he pays that goes into the the treasury towards the support of the State government have you considered the proportion of the tax paid 4:15 by the farmer which goes toward the support of the general State government? A. 1 know that it is small, but it is in proportion to the amount that he pays for anything else. Q. I am not saying that he does not pay his fair proportion? A. I am aware that the farmer does not pay all this 65,000,000; I am fully aware of that; he pays only a small share of it; but that don't affect the robbery. Q. My question is not intended to belittle the farmer as a tax- payer, but with a view of ascertaining from yon whether or not the burden of taxation, such as it is, is largely of local character? A. Ye*, sir; J think it is largely; but here is the point; I live in a town where we have two railroads, the Boston and the Hudson river; they are taxed very heavily; now you throw this tax on to the corjK>rations to pay the State 12,000,000, and you take them right out from our town; they pay this and they won't pay any more in proportion than they do to-day; there is our point in regard to the lisling bill; you say our tax is local; so it is; but we demand that every railroad shall pay a local tax too. By Mr. Guenther, Q. 13oes it not on its real estate? A. A trifle; what is the real estate compared to the value of the road; a mere bagatele. By the Chairman. Q. Do you know how much a mile either of those two railroads is taxed in your town? A. I don't know exactly. Q. My experience has been that the railroads are taxed very heavily on the real estate? A. I concede all that; but what becomes of the stock and bonds; the real estate part of a rail- road is a very small thing. Q. The stock and bonds represent the capital invested in the road? A We claim that they should be taxed; and all we get now for the local lax is the tax upon this real estate, which is really a small part of the value, but it helps us. Q. You complained a moment ago about what you understood to be double taxation; are you sure that what you suggest now 416 would not be double taxation, remembering that the capital is invested in the real estate and the company's rolling stock? A. Yes, sir. Q. You are in favor of assessing all of the real estate and of the stock and bonds; wouldn't that be double taxation? I think it would not; in this way; we figure that a mile of road is worth about $30,000 or thereabouts; I think that is fair; we figure that a railroad is worth about $30,000 a mile its real estate, its rolling stock might be included in that but don't think it is; I think that is what they figure the real of the railroad; now you know that is nothing compared to the stock that represents. Q. Does not this stock already contribute its proportionate share in meeting the State expense? A. I think not. Q. None whatever? A. Corporations pay a little here in this corporation tax; about $1,600,000, I think; we raise in that way and the railroad gets in there; I don't think any of those cor- porations pay half a mill. Q. Do you complain that they are not taxed sufficiently high on their real estate? A. I think that $30,000 on the real estate ( is perhaps a fair assessed value of the real estate, only that does not represent the real value of the road; you see outside of that no stock. Q. How do you think the Legislature could provide for the fixing of the true rate on real estate of railroads by an assessor? A The same as you could on a farm. Q. Does not the same rule apply now? A. It does to a certain extent. Q. Is not the present law, so far as the real estate of a rail- road is concerned, ample? A. E think that the assessed value of $30,000 is a fair statement for that part of the road. Q. The law does not fix that; I am. talking about the statute; is not. the statute broad enough now to insure by its faithful execution the full value of railroad real estate? A. As I said before, we don't, reach it. 417 Q. If it is not assessed properly is it not the fault of the local assessor? A. Yes, sir; you understand this road is a very strong corporation, and there is a very strong pressure brought to bear on the assessor, and the whole system of taxation is demoralized; jit is demoralized as much on a railroad as anywhere else. Q. If they influence every assessor of the State why is it not . i fair presumption that they iii ftu once everbody liert, and how lire you going to get relief? A. It is strange that a man can not bet help because every body does wrong; I think that if that K30,000 was fixed as it is and that the bonds and the stocks Imtside of that were taxed proportionately and fairly, it would be Ibout the fair thing, but that is not taxed. Q. What is the railroad tax per mile in the town in which you Ive? A. It is estimated f 30,000 a mile; I have not got the ires. Q. You do not know what the assessment is? A. No, sir. Q. Can you suggest any legislation whereby you can Compel assessor to assess the real estate of a railroad higher than rhat it is now? A. I know of no other except by making him tenable to the State assessor as a higher court. Q. Wouldn't the large corporations be as apt to reach the State sessor as they would the local assessor? A. Well, there is the it; I don't think they are us demoralized as we fellows in the Q. Bearing in mind the fact that the State assessor does not ive to go before the people, and the local assessor is amenable the taxpayers of the town in \vhich he lives, now is not lie more to do what the people desire than a man who gfHs his power 17 appointment? A. I think not ; 1 think I illustrated that by the ite Board of Health; they ara a body away up here above the and they can say to a little town board, do your duty; so this t State Board of Assessors can say to those little fellows ind in the towns, do your duty, or we will take your head off; in that way we may succeed to a certain extent; 1 uoir't lool, rever, for anything but a slight improTement in the system 38 we adopt an honest, square system of listing. 53 418 Q. Copied after the Ohio statutes? A. Something like that] Vermont has this bill; I met a gentleman from there tli other day, and he told me it v/as astonishing what a change the system of listing has shown; in Ohio there may be more ililft culties into the bill; I don't think it is necessary to follow tht Ohio or Massachusetts bill exactly, but have a bill of our own: they are all around; there are some fourteen States that hav already adopted a listing bill, and [ think a time will come wher every State in the Union will have it, and then I would like to know where the millionaires will go with their saddle bags. Q. You are not going to get any benefit from this system of local taxation; if taxation is a burden to the farmer at all, the gre&i bulk of it is on account of expenses of local government ? Aj Yes, sir; but we hold this, that a listing bill will create a gene? tax which will cover the taxes of every county to a great extent. Q. Take Kensselaer county, within which you reside; any bene derived by reason of the operation of this system in anotlj county won't do you any good as far as local taxation is cc cerned? A. Take our merchants, and all that class of infere* located in our towns; they will bear a higher rate and in that we will be relieved, and that i-ouies by listing. Q. Won't the farmer be assessed upon his horses and his and oxen and upon his farming implements? A. If you gentleni don't make any limit; I suggest $2,000 exemption, which cove the poor man, no matter who he is. Q. You are in favor of taxing deposits in savings banks? Yes, sir; I think a man that has money in a savings bank \V has an exemption outside of that the same as everybody else could with the same propriety pay it as if he had a little home. Q. Would not that reach the poorer classes? A. Wouldi it cause that man to run out and buy a little lot and build little home? That is what we want; I think there is a gre deal of money to-day in our savings banks simply because it not taxed; I think if it were taxed it would get out of there. Q. What would you make the limit in the savings bank? A think, perhaps |500, something like that; I think any man th 19 has got money about that can afford to pay., a tax; the great itroubie with our listing bill heretofore has been we have brought | it in and it has been crude; some men wanted to load it up with taxes on churches; other men wanted to tax everything, horses, [dogs and cats, simply to make it ridiculous, and the bill every is hurt in that way; give us an exemption fairly and squarely I covering the necessities of life, and a man to-day who has $100,000 [hid in New York in diamonds, let fiim pay it. Q. Don't you think it would be well to fix a limit on the exemp- Ition of churches? A. Yes, sir; I 'don't believe in taxing churches; my idea would be to make out a bill that is not objectionable any more than it is possible; reach the class of property that is in the liiindb of men who are able to pay, and not come right down Jin a picayune way and make the bill ridiculous ; give us an honest, inare bill, statesman-like, and I believe it would pass and be umored in the State, and put our State in a condition of prosperity [paralleled, by giving every man opportunities which to-day are mly in the hands of the few. JJy Mr. Hamilton. Q. What are your views in regard to the present rate of interest? II have thought of that a good deal and I have not pressed in my [own mind the idea of charging the rate; I think that six per cent a rate which anybody that has poor security perhaps could ford to pay, and anybody to-day that has gilt-edged security in get it for four or five; I have never been much of an enthusiast >r lessening the rate. Q. Do you believe that your sentiments are the prevailing (sentiments among the farming community? A. I think they are; ,1 think I voice the sentiments of 100,000 farmers in the State 'to-day. Q. What are your views in relation to the collateral inheritance tax? A. I think it is a good one, but I don't want it to take the jplac-e of the listing bill; I think Mr. Campbell's idea is a good one, sa grading system; I am very, much in favor of it; I am in favor ,of a bill like that and also an income tax bill; I am in favor of that; 420 men with great fortunes can afford to pay something; at the same time we want to strike taxation honestly and squarely; we have got to tax every class of property honestly and squarely. 3>y the Chairman. Q. You say that people who have great fortunes ought to pay an income tax; where will you draw a line, because if you are going to confine it to people with great fortunes you would not get so much ? A. I would grade it ; a man with $10,000 income or 5,000, I would not object, tax him; and if a man gets a million a year let it be graded to meet it; I would not object to that; my idea is this, gentlemen, let our corporations pay our State tax and our income tax and our collateral inheritance tax, and our little tax that we throw on corporations don't let that be considered sufficient to relieve the great taxation question with the farmer of the State; go farther than that; that is my idea. Q. Does you information also call for the abolition of what is now known as an allowance for indebtedness as against assess- ments on personal estate? A. I am in favor of abolishing that distinction; that would be a great point; yet you observe there isi an objection to it; unless you establish a listing bill you simply array the mortgagee against the mortgagor and he says to the mortgagor, " Here, if I have got to pay this tax, you agree to pay it, and then you can have the money;" but if we have a listing bill you remove the mortgagor from being under the tyranny of the mortgagee, and you don't any other way; now, I want to say one moi'o word, and that is this; a year ago the Democratic party passed in its platform this resolution: "We believe in equal and just taxation; we believe that corporate stocks and bonds should bear their share of the public burden; " that is about the idea; r.ow the farmers of the State of New York took that; they believed it; they believed the great Democratic party was sincere, ;nid \*e rolled up what; an unprecedented majority for our Governor; it was the farmers of the State of New York thafc gave ^lr. 3-lowc-r that, on the belief that they were going to have an honest tax law, and last year we came forward; the I^egisla- 421 Ifcure did not give us this bill, but what did they do; the t v appointed tlus honorable commission, and we have looked to this Isommission with a great deal of interest. By Mr. Ahearn. 1 Q. Tb.'i*j vas Governor Flower's suggestion? A. Yes, sir; wo lave looked to you with a great deal of interest; the farmers of his State hate all looked to this commission and expected a >road, Hi.uest, statesman-like tax bill. By tlio Chairman. I Q. What do you think of the idea of relieving real estate jbsolutoly from taxation for the purposes of the general State* )vernment, and thereby doing away with this much mooted |uestiy the Chairman. Q. In other words a man ought to be taxed for all he holds ai owns? A. For what he holds. By Mr. Hamilton. Q. What have you to say as to the present rate of interest' A. I never was much of a croaker on interest; I never said mu about the interest at all; I sometimes have said that money wj like any other merchandise. Q. Regulated by supply and demand? A. Supply and demand; there is one thing I would like and I look to this Legislature get up a bill; I know it is a knotty question; I know it is a qucs ( tion a great deal easier to talk about then to sit down and draw it to meet all classes, because you will meet some of thosey "I told you so;" you have brains enough here; you have got the power to give us a bill very near right, and I expect you to d. Johnson, called as a witness, being duly sworn, tesl fled as follows: By Mr. Hamilton. Q. You reside in Albany county? A. Yes. sir. Q. You are a farmer? A. Yes, sir. Q. How long have you been so engaged? A. All my life; ever .since I was big enough to work. Q. Have you given attention to the question of taxation? I have paid some attention to it. Q. As it affects the agricultural interest of the State? A. Yet sir. Q. What have you to say as to the propriety of modifying tl present laws relating to taxation, assessment and interest far as they affect those interests? A. I believe that the lai should be changed so that all kinds of property should bear 51 equal burden. Q. In what respect do you suggest those amendments a: necessary? A. Well, I don't know hardly how to suggest any because this law in itself, as it is to-day, ought to act properly; the law stands that all men are taxed alike, but there seems t< be a way that people get rid of paying a tax on property thi they own. -Q. And your criticism is that it is owing to evasions of thi law and not to defects in the law? A. That is it, because, I understand the law, it says that all property, but people hav( become accustomed to get rid of the law either by perjury some other form, hiding their property, etc. Q. It is generally brought up that the farmers object to th< escape of taxation by bonds and mortgages; what are youi 429 views? A. T claim that all property should be taxed alike; if there is a double tax paid on bonds and mortgages, there ought to be a double tax paid on indebtedness, as far as personal prop- erty is concerned, but it looks to me that there should be but a single tax on any kind of property; wherever there is an indebt- edness on n mortgage, a party ought not to pay for that which they don't have. Q. What do you say to the present rate of interest? A. I don't think ii would be consistent or to the best interest of the country to change the rate of interest. Q. What do you think as to the taxing of savings banks depos- its? A. I believe that all money above a certain amount, which would benefit the poor, should be taxed in banks as well as in other places, for the reason that the rich take the benefit of the [banking system as well as the poor; I know a case where the man put $0,000 in a bank and he was not taxed one dollar; another poor person, under the law, worth $400, with $200 mortgage on, [was taxed, and the other man not taxed a cent. Q. What is the prevailing sentiment in your community in [regard to the inheritance tax? A. I think, as a general thing, is indorsed, but I must admit that I do not indorse it; I say tat there is an injustice; I say that a man can, in his life-time, dace his property so that the inheritance tax don't touch it; he tay assign it: he may sell it; he may get rid of it; and then, on ie ether hand, you might be worth $1,000,000 at your decease ind pay your tax regularly all your life to the amount of a great iany thousand dollars, for fifty years, and the other one never lid a cent of tax, then, according to this inheritance tax, your lildren are taxed just as well as the other; it looks to me iere is an injustice there. Q. What are your views on what is known as the graded leritance tax increase, according to the extent of the inheritance, ie greater the amount of the inheritance the greater the rate? That would bear equally upon all alike; there would be no ice of getting out; for instance, a man could not sell his >perty during his life-time; or assign it, and get rid of paying 430 a tax; it \vould be an equal burden, as I understand it; thai would indorse. Q. The comptroller recommends that the inheritance tax amended by providing that the rate fixed, say at five per cent f< a certain amoiint, shall be increased six per cent for a large amount, seven per cent for a still larger, and, in that way, carrying it to the highest amounts, so that those who leave the largest es1 will pay a higher rate than those who leave smaller estates? A. don't see why; if you accumulate $10,000 and I only five, you should pay any more in proportion than the increase of tin sum; say, if I had f 5.000 and you had f 10,000, why should you pat- ten per cent and I only five. Q. To make the illustration more striking, in one case f 10,< and the other case |500,000, that there should be a different rate' A. I don't think that is fan' play; because I had been more serving and had accumulated twice afe much money, I don't see w) I should pay ten per cent and you only five. Q. Have you any views to state to the committed on this forro. of taxation? A. There is this point in the question of taxation; a question was put to the different gentlemen, as regards their opinion, if it would be better to take the State tax levy the State tax in some other form, and relieve the real estate from taxa- tion; only the local taxation; I don't indorse that theory; I think that I can safely say almost ninety per cent outside of our public offices the tax that, comes into existence from the courts; I should say that ninety per cent is for the protection of personal property, and why should real estate bear the burden, which they derive but little benefit from; now you know as well as I do that as far as my farm is concerned it is safe from theft; they might steal my horse; it is personal property; if a burglary is committed he breaks the lock; but what does he break the lock for; to steal my money to steal my personal property; if there was none in the house he would not commit burglary. Q. Would you favor the adoption of the local option system by which each locality can regulate the proportion of tax to be paidj by real estate and personal property? A. The principle of the bill, 431 as I understood it, last year was that eack county, through the action of the board of supervisors, the State tax should be levied upon the same principle that it is now, but as far as the local tax is concerned they should have the right to say whether it should be upon the land and its improvements or upon the land alone, or upon the same principle that the tax is levied now upon the real and personal property; now, in certain counties, it might be very improper, and I would say right here in our own county; this board of supervisors is largely in the city interests, and thus they could, if they saw fit, put it upon land alone, and then what position would we occupy in raising the taxes to defray the expenses of this county? It would be the Henry George principle precisely; that is, taking the local option bill that was introduced last winter. Q. You think that in a county like Albany, where there are two cities like Cohoes and Albany, they could combine and impose a heavy burden apon the country towns? A. Yes, sir; I am for a uniform State law; if you leave it to counties, how long would it be that a town would want the same principle the control by their town board, that the people should levy their taxes as they saw fit; no; I think the wise principle is that the State of York shall have one general law for the State. By the Chairman. Q. Have you given any attention to the amount of tax that the county of Albany really contributes to the support of the State government? A. No, sir; I have not paid any attention to it. Q. The county of Albany last year contributed towards the support of the State government $125,513.82; it received back from the State, for school purposes, $91,474.80, thereby showing that the total amount contributed by the county of Albany was only $34,039.02? A. But did you substract the difference as regards the State tax when the county of Albany paid in her amount towards this school fund; is that the difference from that? Q. Xo, sir; altogether for school purposes, and all she paid was the first sum named bv me; then she received back the second, 432 showing that the amount not contributed by the county of Alb was only f 34,059.02? A. That does not change the positic supposing the county of Albany was only worth f 1,000, when paid her proportion of tax she paid just as much as the city New York if the city of New York was worth 1,000,000,000,000. By Mr. Ainsworth. Q. If the balance of the tax which the county of Albany was a tax created by Albany for local purposes, and the gr mass of personal property which escapes taxation is situated the city of New York, if you eliminate the State tax you niig tax all you have in New York city and not reduce your local t in Albany? A. No, sir; not a bit; our local tax is raised by ou own corporations; as far as that is concerned we claim that the city of Albany does not pay its just proportion as far as our local tax is concerned; we claim as to the city of New York, or Kings, or any other county where there is a city that the city does not; pay its proportion of the tax with the county. Q. Take Warren and Delaware and Lewis, where there are cities; would that help those counties where there are no citi A. It would to this extent; here is Mr. Collins; has $10,000 bonds and mortgages, and he doesn't pay any tax; if those bonds and mortgages were taxed to him it would be an alleviation of the principal of taxtion as it is to-day; your son starts out and buys a farm worth $10,000, and your means are limited; you give him as good a team as you can, with two or three cows, to start him on the farm; Mr. Collins has a farm right adjoining worth the same money; Mr. Collins has $3,000 worth of personal property, and your son only seven or eight hundred dollars, and your son has to pay as much as he has. By the Chairman. Q. So far as the difficulty lies in Albany county is it not large! due to the failure to properly execute the laws as they wtand on the statute books to-day? A. That is it precisely; but there comes another point in, and that is this; there ought to be, and seems to me there could be, some law that would reach a 433 and I know of nothing to make a man come up to the rack unless you operate on his pocket in some way or other; I know an ^instance right in niy town from my own knowledge that would Jcouie right up there and swear as regards bonds and mortgages; Ley would swear off one-half. Q. Why don't you pursue them for perjury? A. There is the juliarity; why don't this man or that man all over the country; rhy don't they shove everybody that violates the law? Q. You own personal property on your farm? A. Yes, sir. Q. Are you assessed for personal property? A. No, sir. Q. Have you ever gone to the town board of assessors to com- lin that they did not execute the law properly? A. Yes sir; I ive complained to the assessors that they did not put up our town it its full valuation. Q. Have you ever gone to the board of assessors and .said: Here I am, Mr. Johnson, and I own personal property, and I iist that you perform your duty by assessing me?" A. They rould think I was an angel if I did that. Q. Would not that be a fitting example, and have something to with making them perform, their duty? A. I don't know as it rould; the point is this: The assessor is sworn to do thus and so; is sworn to tax to the full amount ; it has not been done. Q. Have you ever heard the objection raised that if they *ed personal property locally that it would draw to your town county an added proportion of the State and county levy; is >t true that if the assessors of the town in wnich you live mid assess every dollar of personal property that it would 'Iraw your town a larger proportion of the county and State tax, hich is placed arbitrarily upon this personal assessment without i.v regard to equalization? A. That is a fact. Q. That being true, is it not a strong temptation to tin- local jsors to avoid the assessment of personal property because brings an added county and State tax to that town to be paid? To a certain extent, for this reason; for instance, I will illus- ite: it is only a few years ago that the town of New Scotland - - iey c;ime rijiht here to the county clerk's office and looked over 'c bonks and put everybody on thai was on record I g 434 everybody; I have heard how much they raised from personal property; I think William H. Clark kicked over it; I never of any other town in our locality only the town of New Scotia of course, their taxes were higher, but if this was a gem principle of law so that it would bring that whole thing all o 1 the State, taxation would be less than it is to-day. By the Chairman. Q. Do yon know as a fact that the large majority of the counl receive more money back than they actually pay to the State! A. I guess they do, some of them. Q. For instance, the county of St. Lawrence, last year, con tributed toward the State government $36,647.98, rind receive back from the State for school purposes $80,007.73; in otl words, they received back $43,359.75 more than they paid? Xo\\\ then, suppose that St. Lawrence county pays a tax: on personal property, wouldn't she add nearly one- third more t she paid last year; there is the point; I think I could safely that if Albany county paid her tax upon her personal propei that she would pay considerably over one-third more. Q. Do not those figures indicate that whatever burden qfl taxation there is, it is all attributable to local conditions, and th it is not the State that is punishing those towns? A. The StatH tax is not so large as the local tax. Q. Now, the city of New York, to whom every man looks who has a grievance on the subject of taxation, paid to the State) $1,694,054 more than she received? A. How much more would *he pay, suppose she paid taxes upon all her personal property on the same basis. Q. What benefit would that be to this burden on counties j that we speak of? A. On their local taxes it would not be any, benefit. Q. As a mauer of fact, forty-five out of the sixty get back \ than they pay to the State, so that is conclusive proof of tUej fact that whatever their burdens are by way of taxation all from local causes? A. Exactly so. 4:35 Q. Don't yon think that the real cause is the failure on the I part of the officers to execute the laws that exist? A. The point I is, there is not anybody can find any fault with the law, because I it says that all property shall be taxed on a fair basis, but there I is something needed to bring men to that standard to make them pay on the property they own. Q. Don't you think that thy Mr. Hamilton. Q. You reside in the town of Watervliet? A. Yes, sir. Q. You are a farmer? A. Yes, sir. Q. And have been for a number of years? A. Yes, sir; fifty years. Q. You have heard the views expressed by Mr. Spalding and Senator Collins on taxation? A. Yes, sir. Q. Do you concur in their views? A. I do in all except the Senator's canal ideas; I don't agree with him. Q. You believe that such views are very generally entertained by the farming community? A. Yes, sir; I think so. Q. Have you any particular views to express to the committee? | A. Not any; I think. My the Chairman. Q. What do you think if farmers would organize in their [different localities and insist upon the performance of duty upon ie part of assessors? A. I think it would be a good idea; I think nortij'ages should be taxed. Q. Do you believe that the holder of the fee as now should be upon the full value, and that the holder of the mortgage mid be assessed? A. No, sir. Q. You think that the holder of the property ought to have an llowance equal to the indebtedness? A. Yes, sir. Q. And do you believe in allowing for indebtedness on the nation of personal property; for instance, a man owns $10,000 forth of personal property and he swears he has an indebtedness )f $5,000, would you tax him for five or ten thousand dollars? A. would tax him for five. Jacob Waterman, called as a witness, being duly sworn, testified follows: By Mr. Hamilton. Q. You reside 1 in the town of Watervliet? A. Yes, sir. Q. You are engaged in what business? A. I hate to say that am a farmer, because they all do; I am a tiller of the soil. 438 Q. How long have you been so? A. All my life. Q. You have heard the testimony of Mr. Spalding and Senator Collins and Mr. Johnson and Mr. (love in regard to the question of taxation under investigation by this committee? A. Yes, sir. Q. Do you concur generally in the views expressed by them? A. I do; with the exception of Mr. Gove, I can not indorse his a theory; I indorse Mr. Collins 7 theory. Q. Have you any other views than those they have exprc to this committee? A. I don't know that I have; they have expressed it quite freely. By the Chairman. Q. Did T understand you to say that you indorsed Senator Collins' idea about the canals? A. Yes, sir. Q. You believe in filling them up? A. Yes, sir. Q. They have outlived their usefulness? A. Yes, sir; I lived in sight of them for forty years. Jason V. Haswell, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. Where do you reside? A. Bethlehem Centre, Albany county. Q. You have been engaged as a farmer? A. All my life. Q. Have you heard the testimony of Messrs. Spalding, Collins, Johnson, Gove and Waterman? A. Yes, sir. Q. Do you believe that they have truly represented the sentiments of the farming community of your neighborhood? A. Yes, sir; as far as they go. Q. And also you concur in those views? A. To a large extent; in a general way. Q. Have you any particular views to present to the committee in regard to the question? A. Yes, sir; I will say that I have heard a general complaint for many years, that the existing laws either do not give assessors the proper source of information to tax per- sonal property in the way it should be to make it bear its proper burden as compared with real estate; and those who look at it fairly do not claim that the owners of real estate in the country are the only sufferers; they claim those in the cities are the same, 39 I only that the burden can be shirked more on tenants in the cities than it can be in the country; the general complaint is that the better class has to pay taxes on what they owe and own on their own property and their debts; I could not say how the law of last year operated in regard to swearing on* a certain class of personal property; he has to get exemption by debts; the general belief has been that there was an inequality between rsonal property and real estate; -that is a question generally dis- .ssed in our league and the general conclusion has been just as saj in that particular. By the Chairman. Q. Outside of the discussions in the league, have you made any forts to have the law enforced, defective as it is? A. Yes, sir; spoke to the assessors last year, and they told me if a listing v was passed it would give them more information, with proper ueguards, that they could assess a much larger percentage of mal property. Q Did they ever put the question to you as to whether you >wntd personal property? A. Yes, sir; I have had them propound it question to me; all I could say I owned was such as was iccestary to operate my farm; if the law required it, I would be to pay it, provided all other classes of people should have sane exemption not a large amount; I would not object to law tiat would tax all personal property, but I would want it be aplied. Q. Di( you ever make any effort at those meetings to ascertain I whether such property was liable to taxation? A. I have; there (are so many I can't remember definitely. Q. Ebn't you remember as to getting information as to whether was taxable? A. 1 do remember having gained information, 'but it 3 several years ago; I don't know what I learned at that Itime. Q. Dd the assessor say to you that such property was not tax- )le? ^. I don't know as he did. Q. Yu appear to have been very easily satisfied with their (answer}? A. I concluded we had to take the law just as it was. uo Q. But you do not appear to have made any effort- to ascei what the law was? A. Not of every assessor every time he cai around. Q. You have never read the law, did you? A. I have raid som parts of it, but I have not had the la\v furnished to me i<> real thoroughly; that is, not all the laws. Q. What do you think of the idea of divorcing- State and loi taxation by relieving real estate of all taxes for Stale purp< A. I have thought considerably upon it and read upon it and L hardly prepared to say that I would favor that plan; I have gener- ally considered it was best to make all kinds of property contribute to every branch of government outside of the federal government where they do not assess directly; I am not sure which would be best in that case. Robert A. Van iMizon, called as a witness, beingr duly s\vo Testified as follows: By Mr. Hamilton. Q. Where do you reside? A. In the town of Berne, All county. Q. You are a farmer? A. I rent a small piece of land. Q. You have been so engaged for a number of veal's? A. Y<-s ( sir. Q. Have you heard the testimony of the several win esses? A. Yes, sir. | Q. Do you concur in the views that they have expressed to the committee? A. I do in all excepting selling the canals o- filling them up; I think the railroads have quite a monopoly ;iul they would be still more so. . Q. Would that not help the fanner? A. In one sense ir might. Q. If it raised th** transportation of western product*? A. ir would; and the fanners in this part of five country have <> buy a good deal of it. Q. You know that the State has, by statute, regulat'il the amount per mile that a railroad corporation can charge ir tin? transportation, can charge for a. passenpxr? A. I know hat. ( v >. Don't you think that the State could just a< well rpihn 441 the amount per ton that the railroads Avould chargp? A. Exactly; they could in case the railroad did not control legislation. Q. Then you are one of that kind of men who believe that public officers can not be trusted? A. They can be trusted; of course they can; I don't believe that men have got so that they can not be trusted, but I tell you what, if a man has got a dollar in his pocket, he had better keep his hand in it. Q. Suppose that simultaneously laAvs could be passed to do aAv:iv Mith the canals, and one to regulate the carriage of freight, Avhat would you say then to that joint proposition? A. I would say, if the hnvs could be made to regulate the carrying of freight, by railroads and the railroads had the capacity to do it; I would say it Avould be well to do away with the canals, because there is a great deal of expense to the taxpayers of the State by reason of the canal. Q. I don't believe there is anybody in the State that w r ould favor doing away with the canals and giving the railroads) license to charge what they saw fit; coupling the two together, would you be in faA T or of doing away Avith the canals in case the railroads Avere regulated? A. In case the railroads were regu- lated; yes. Q. You would not eA^en be Avilling to have it done at the saint 1 time? A. No, sir; I would want to know that the railroads \\ere fastened first; in regard to bonds and mortgages, I would say that is a certain fact that there is an unjust discrimination in taxn- m between real and personal property; that the money lender iving on the interest of his money, which he has a right to do, id under the law it is considered property I think but very ittle of any man or set of men that wants to live under a govern- ment and be protected by the laws, that is not willing to pay anything to Avar ds the support of it. Q. What have you to say of a man Avith seven or eight children who contributes nothing but gets them educated at the public expense? A. In the first place a man that has got nothing, th"iv is not anything expected, either under the moral or political laws; sins of the ignorant should be winked at, my bible teaches 56 me; it is right that the public is willing to educate our children if we are not able to educate them; I believe in compelling them all to be educated. Q. What would you say of each county in the State educating its own children? A. I would be opposed to that; I do not believe in cutting those things up; I would have a general tax law; I would not cut that up. Q. You are not in favor of relieving real estate for State pur- poses? A. I don't think that would work very well; it looks as if; it would be a little schemy. Q. Suppose we could get money enough from taxing corpora- tions, and collateral and direct inheritance to support the govern- ment? A. Then I propose to divide up with the poor counties. Q. You would be in favor of taxing property in New York for the benefit of the men who reside in Wyoming county? A. Yes, sir; to that extent; how many dollars did you say was raised the city of New York; something over a million more than received back; if the money that is employed there in bonds an< mortgages if the tax had been paid on that, how many million : | more surplus would we have had in our State treasury to-day than we have got now. Q. Would you be in favor of taxing that 1,000,000 and over and applying it to the local purposes of Wyoming county? A. I would if Wyoming county is not able to support her local government, 1 would be in favor of doing it. Q. Suppose that you lived in the county of New York and were paying taxes there, how would you feel about contributing to\\ ard the support of the local government of Wyoming county? A. I should feel it was just if I was worth a million to help to pay the taxes of a man worth fifty dollars. Q. Would not that lead to abuse in Wyoming county? A. No, sir; I don't think it would; it is not large enough and not large enough population to lead to very great abuse. Q. Wouldn't that lead them to engage in extravagant expenses? A. No, sir; not if properly controlled. 443 Q. Yon concede that you can not control those local offices now? A. That is very true, because the law seems to be lax; we had a man in the town last year, the day before it was the first time for the board to meet he found out that he had been taxed for $40,000 in bonds and mortgages, and he simply moves out of the town fmd aA T oids it. Q. It was the duty of the assessors where he went to assess him? A. By the time that they get ready to assess him he is over in New Scotland. Q. It was not the fault of the law? A. The assessors had to (meet on a certain day to fix it; he ascertained the assessors had to meet that day. Q. He was somewhere that day? A. Yes, sir. Q. Wherever he was it was their duty to assess him? A. Yes, sir; he moved to Schoharie county to avoid paying taxes cm that | $40,000. Q. What remedy do you suggest that would catch such a man I as that ? A. About the best remedy would be to lock him up (awhile, I guess. Q. Tell us how to reach him to lock him up? A. Notify him I that he has been assessed for that amount of money and to appear such a day no matter where he was, anywhere within the bounds of the United Srates, and if he did not appear that the tax should be levied against, him if he had any property in the town, no I matter what it was, or any in the State, no matter what it was. Q. You think you ought to reach him anywhere in the United IStates? A. Anywhere in the State. Q. You would do away with the present political divisions of [comities and towns? A. That would not do away with it any tore than it would do away with me if I lived in Erie county, it* was an officer and had a warrant to come down here to arrest man here in A Ibany county and take him back there; that would )t make any political division as I see; if it works well in one ise it would in another. Q. Would you take him where they had jurisdiction over the )ffense? A. Yes, sir. nti- 444 Clinton Fonda, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. Where do you reside? A. Town of Water vliet. Q. What is your business? A. Farmer. Q. Ton have been engaged in that for a number of years? A. .All my life. Q. You have been present at the examination of the otlic: witnesses? A. Yes, sir. Q. Do you concur with the views expressed by the witnessed generally on the question of taxation? A. Yes, sir. Q. So far as they affect the agricultural interests of the Sta A, I do. Q. You be]ieve the sentiments expressed represent the sen ments of the farming community? A. Yes, sir; I have heart! this thin^ discussed at our leagues, and those men who have talked this afternoon; I think it is generally understood t what they said is indorsed. Q. Have you any particular views to add to those that y have stated to the committee? A. No, sir; I think they ha been fully expressed. The committee went into executive session, and on inotiol decided to meet in New York, January 23, 1893, at 11 a. ID. Meeting of the Joint Taxation Committee. , New York, January 28. lsO.>. Superior Court, Part II. The committee met pursuant to call. Theodore W. Myers, called as a witness, being duly sworn, testi- fied as follows: liy Mr. Hamilton. Q. You aiv comptroller of the city of New York? A. Yes. sir. Q. You have been such for how many vears? A. Since ! 445 Q Your duties call you in charge of the matters of the raising I of taxes? A. In the matter of collection of taxes; not raising. Q. And also investigation of the sources of supply? A. Hardly I tli at; we shnply have the collection of the taxes. Q. 1 H) you not, as a member of the board of apportionment, determine on the amounts to be raised? A. No, sir; simply the I amounts of expenditures, (-J. Have you read the resolution under which this committee is appointed; have you read the resolution contained in the |snbpeiia? A. Yes, sir. Q. What have you to say then to the committee as to the ropriety of modifying the present laws relating to taxation, ssinent and interest so far as they affect the various business terests of the State? A. I agree with a great deal that has n said to the committee as to the modili cation and rearrangc- ent of the tax laws, in so far as I think the county taxes shouJd separated State and county taxes should be separated. Q. You mean you are in favor, if possible, of a system by which e counties will be relieved from the necessity of contributing to e State taxes ? A. I believe that the State should collect its tax rect by a. direct tax. Q. Have you examined or formed an opinion upon what is own as the local option tax law, by which the localities would permitted to determine the extent to which personal property ould be assessed, if at all? A. Yes, sir. Q. What are your views upon that question? A. As far as ew York county is concerned, I think personal taxes have been ved to be a great failure; that we are unable to collect them; fact, that the law in that respect has been a dire failure. Q. Is the failure owing to the insufficiency of the law or to lax enforcement? A. No; it is owing to the impracticability the law; it is an almost impossible law to enforce, and as long there are people who make up their minds to evade it it is a w that can be easily evaded, except by the poorer class of people ho can not evade it. 446 Q. Do you believe that the business interests of this city would be promoted by the removal of the tax upon personal prop- erty? A. I certainly do. Q. Do you believe that to be the prevailing sentiment of the business community in this city? A. I am certain it is; I not only think that this city would be benefited by dividing the lc from the State tax, but I believe the counties would be benefit Q. Would you explain where the benefit would follow to counties largely engaged in agricultural pursuits? A. Simpli that the tax where the tax would be collected by counties, th( tax on agricultural lands should be collected by the county itsel and the tax on city lands would be collected by the county which the property was situated, and that the tax on farmnij land is easy to follow, whereas the tax on city real estate 'u impossible to follow; it is paid by the tenant and not by 1lie owner; if the tax is higher on a piece of city real estate, natural the landlord puts up his rent, but if it is the same on the fai land, the agriculturist that produces a certain amount sends it the market; he can not put up his product; it has got to bring market price. Q. Except in localities such as New York and large commercial centers, what benefit, if any, would follow from the removal of tax upon personal property? A. The tax for the State should be a direct tax, and the State should derive its income from sources such as by a tax on inheritances, which is a very successful tax now, and a tax upon corporations, and naturally the relieving the tax on personal estate would unlock capital and bring it to the State. Q. Bring it here to the commercial centers? A. I don't know as it would any more than what it is now. Q. In your opinion the removal of tax upon personal property would not increase the commercial importance of the city of New York? A. Simply to open the doors and give it a freer vent, and it would not be obliged to secrete itself; it would have more con- fidence; that is all. Q. You believe that the capital is aU here but it is hidden? A. Yes sir; it would give more confidence to capital. 447 Q. Your argument in favor of relieving it from taxation is simply on acocunt of the impossibility of enforcing the law? A. Yes, sir. Q. Upon the broad question whether it should in justice bear its proportionate share of the public burdens, your opinion is that it should be taxed? A. Naturally in relieving the tax on personal property, it would be raised from other sources real estate. Q. Have you any suggestions now to make to the committee I in regard to any more modifications of the present law upon any of those subjects based upon your experience? A. I made out a little brief which I believe would be a great advantage and which would bring revenue to the State; I will read it: [Proposed Scheme of Revision of the Tax Laws of the State of New York. 1. A complete separation of State from local taxation. A. Advantages. The chief advantages to be derived from this are: (a) Simpler methods of taxation. (b) The abolition of the clumsy and frequently unjust methods the State board for the equalization of taxes, to whose pro- ceedings many counties notably ^ew York have frequently tised their voices in protest; and the consequent doing away ith the inducement to county tax assessors to place upon prop- erty an abnormally low valuation. B. How accomplished. The amount of State tax assessed [against the several counties of the State has been steadily lecreasing of late years. This has been due chiefly to the icreased amounts received directly by the State from the corpora- ion and succession taxes. It would therefore require a compara- ively small increase in State tax to entirely relieve the counties un contributing directly for the support of the State >vernment. The following should be the source of State revenue: (a) Succession tax. The rate of tax should be the same as that LOW in force, but all exemptions should be abolished. When the 448 collateral inheritance tax was first passed it provided only for tax of live per cent on legacies to collateral heirs and strangei Under such a system there might be some excuse for exernpti] religious and charitable institutions from the tax and preferrii them to ordinary strangers in blood. Now, however, the tax been extended to direct inheritances, and under the act of 1892 is the estate of the decedent which is subjected to the tax. N( only is it most incongruous and unjust that colleges, charil churches, cemetery companies, bishops and so forth, should preferred by the law to a decedent's own sons and daughters, such a provision greatly increases the complexity of the laws and adds to the difficulties of its collection, besides causing an immei loss of revenue to the State. The law should not be considered as a tax upon legatees, but as a deduction which the State makes from the entire estate of decedent before allowing them to be distributed according to the provisions of its laws. 2. As to foreign corporations, by the passage of a law compelling them under adequate penalties to file certificates of incorporation with the Secretary of State as a necessary prerequisite to doing business in this State, and to pay a fee upon the filing of such certificates equal to the amount which they would have had to pay incorporated in this State. The tax is one-eighth of one per cent in this State; they go to other States and incorporate, thereby depriving this State, say on a capital of f 500,000, of six hundred and odd dollars. Those foreign corporations have all the advan- tages that a domestic corporation has, and therefore they should be compelled to file for doing business a certificate of incorporation equal to the amount that they would have to pay otherwise. By the Chairman. Q. So far as the act of incorporation is concerned it will derive no benefit to the corporation under the laws of the State? No, sir. Q. It would answer the question thai the incorporation ti drives capital out of the State? A. Yes, sir. (c) Tax on franchises of corporations: (1.) Fire insurance companies. Eequire the officers of all domestic insurance companies other than those conducted on a purely mutual plan, to make report with State Comptroller on first days of January and July in each year, stating amount of gross premiums upon which such a rate should be fixed as the Legislature may determine. Foreign insurance companies should be required to file similar reports and to pay a fixed percentage of gross premiums received from busi- ness done within the State (a two per centum tax of this character in Pennsylvania realized $395,307.97 in 1891). (2.) Transportation companies, including railroads, surface lines, cables and electric lines, express companies, pipe line companies, telegraph and telephone companies, based on actual value of capital stock plus indebtedness, fixed at a certain rate (to be deter- mined according to the fiscal needs of the State) and assessed in the proportion which the length of the line in the State bears to the total line operated (a modification of the Connecticut law). (3.) Banks. By passing a law bring foreign banks on a parity domestic banks, i. e., compelling them to file reports with the Banking Department of the State and provide for State control (and investigation, similar to that now undergone by similar domes- Itic corporations. This having been done both domestic and foreign jbanks might be made to bear their quota of State taxation, or the ilwhole matter might be left to the local authorities as is now done the case of domestic banks. The present preference and Lvileges of foreign over domestic capital should, in any event, be dished. (4.) Manufacturing corporations, same as now existing, except it when not based on dividends the tax shall be assessed against tual value of capital stock plus indebtedness instead of simply capital. By Mr. Ainsworth. Q. I wish you \vould explain what you meant by capital stock indebtedness; do you mean the tax upon the indebtedness? On the bonded indebtedness; the stock plus the bonds; tax bonds which we rarelv do now. 450 Q. Governed by the rate of interest which they pay? A. No; similar to the method adopted in banks. (d) Each county should be allowed to raise its tax for local purposes, in a manner its own citizens prefer; this would be the most satisfactory and popular step in the direction of home rule that could be devised in relation to taxation. The State tax having been provided for, no county could feel that it was being unjustly treated by the methods of taxation in> another county. The overwhelming demand in New York county! for the abolition of the general personal property tax could bei accomplished without friction or criticism. At present New county is assessed at three^sevenths of the total real estate valua- tion of the State, and at but one-sixteenth of the total per> property valuation, a fact which is so absurd on its face that it- should convince the rural communities that no tax can be enforce! by laws however stringent which, do not meet with the app of the subjects of taxation. Many trust funds now held for the benefit of widows auj orphans do not bring in an income of more than four per reifl pei 1 annum. At our present rates, the general personal propcrfl tax would, if enforced, deprive these beneficiaries of almost onl half of their means of subsistence. This amounts 10 coiiilsvl tion, and is repugnant to the moral sense of the cornuiuniifl Such a, law can never be enforced and its present existence on statute books result merely in a more or less efficacious stifling) of the political conscience of the people. The laws of taxation; applicable to agricultural communities are absolutely antago- nistic to those relating to cities, and when once the complete separation of State from county taxation is made, each county will be free to adopt such a system as will best meet its and be most successful in operation. Provision should be made giving to each county the power t< collect revenue from the franchises of corporations exercising monopolistic privileges within the confines, based on grants o a public character, such as elevated railways, gas and el- light companies, telegraph and telephone companies, streei face lines, etc.. etc. The amount of tax paid by them di; 451 to the State should, of course, be deducted from the local rate just as is done at present. The method of taxation should be the same us in the State tax on corporations i. e., based on actual value of capital stock plus indebtedness, fixed at a certain rate (the annual rate) and assessed in the proportion which 1he length of line in the county bears to the total value. Nearly all such corporations carry on their business wholly within the limits of a single county, but this rule would, in any event, pre- vent double taxation. There are certain ' things so noticeable in taxation. For instance, I will just give you an idea. I have gone over this thing with some little care. In 1891 the tax: collected by the Stale on insurance companies amounted to $121,840.23. The tax on similar corporations collected by the State of Pennsylvania, in the same year, was $407,386. It is believed that tin se figures are too eloquent to need further comment. The State tax in New York on transportation companies, including express companies, steamboat companies, palace car companies and pipe line companies, for the year 1891, was $795,257.90. The State tax of Pennsylvania on railroads alone, for the same year, was * 1,1 20,751. (This excludes $38,741 paid for account of taxes*, and $549,535 paid for city, township and borough taxes.) The State tax on telegraph and telephone companies, for the \ ear 1891, in New York State, amounted to $22,615.53 on earnings, and $2^,224.88 on capital, making a total of $51,840.41, In Pennsylvania, for the same year, though the tax regarding the amount of business done and value of property invested should have been very much less, it was in fact almost as much, namely (excluding county and local taxation), $49,619. The Xew York tax ou foreign and other State banks, for the year, amounted to tlw miserable pittance of $36,182.02. The causes of this failure of the law have been so completely stated in the annual report of Oomp{ roller Wemple, for the year 1891, as to neei no fui'ther commentary on my part. The State tax of New York on cor- porations, for the year 1891, amounted to $1,350,338.53. In the same year Pennsylvania (excluding tax on organizing and other I items not included in the New T York estimate) collected 5,227,S;;4.67. The only tax law of New York State affecting 452 personal property of corporations which has operated with even moderate success, is that taxing the shareholders of banks, and this is a tax made to operate locally and assessed and collected by the several counties of the State. IVv* Ihe Chairman. Q. To what do you attribute this difference? A. To thJ unfortunate condition of the law; in the jumble in which the present Jaw is it is most confused. Q. ]s the rate about the same here as it is in Pennsylvania? A. No, sir; it is less here than there. By Mr. Malby. M Q. Would you advise increasing the rate and also the facilities? A. No, sir; I would not advise an increase of the rate; our oppor- tunities of collection are so much greater than in Pennsylvania that with the rate one-half we ought to collect as much. By Mr. Ainsworth. Q. The trouble is with the method of taxation? A. Yes, sir; and with the unjustness of the tax here, the discrepancies; the law is so mixed and so confused that it is very easy to evade; Connecticut has a very valuable law as far as corporations are concerned; they tax the capital plus the indebtedness. Q. Would you make a difference in the rate as to stock which paid dividends and that which does not? A. That is regulated by the value of the stock; we only tax upon the value; a stock that has not paid a dividend does not bring the same price. Q. That presents a great many difficulties as to what the value of stock is that pays no dividends; stock not listed on 1he exchange; how do you arrive at that value; the earnings to the company must go to improvements and not pay a dividend? A. Yes, sir; and therefore the bonded indebtedness should be taxed, because a great many companies make their bonded indebtedness so heavy that their stock is comparatively worthless, and therefore they evade taxation. Q. Would you make a difference between the stock of a cor- poration extremely profitable and one that owing to its exigencies 453 of business can not pay anything; how would you arrive at that [value? A. By the value of the stock; we only tax on the value of ; that is how the tax is raised, not on the value of the corpo- ition; it is raised on the price of the stock. Q. But you and I and the chairman are three stockholders; a corporation which pays no dividends; how would you arrive it the value of the stock, it not being quoted? A. By the sworn iflidavits of its officers; that is all; and if the bonded indebtedness the corporation were taxed then the stock would be of minor iportance. By the Chairman. Q. Don't you think there ought to be a right in inquiry on the irt of the State Comptroller as to the value?- A. Yes, sir; there ight on all corporations. By Mr. Hamilton. Q. What do you say as to whether capital has been or is being iven from the State by reason of the existing laws affecting porations? A. I don't believe it has. By Mr. Ainsworth. Q. Have yon seen the report of Governor Abbett. of New Jersey, regard to the organization of corporations in that State where stockholders reside in this? A. I did not read it; I think I ird something about it, where he intended to increase the >rporation tax. Q. I think it is a report he has recently made to the Legisla- in which he gives the figures of capital represented by cor- itions in that State where the stockholders reside in this, and which he argues that capital has been driven from this ite by taxation? A. That he will drive it from that State and will go to Connecticut or Virginia.. Q. You are not familiar with it? A. No, sir; I think the whole stion should be evaded by having a franchise tax on all cor- itions doing business in this State, deriving their protection >m the State; I think it is very unjust that foreign corpora- 4:54 tions should have the same protection as a local one; if they choose to adopt that method of incorporation in other States, they should be required to have their franchises taxed in this State. 1 which would greatly increase our revenues and bring an immense! 1 revenue to the State. By Mr. Hamilton. Q. In the paper which you read you speak of the succession tax; are you in favor of what is known as the graded succession tax recommended by Comptroller Campbell? A. No, sir; I think the tax as it is at present will prove a great source of revenue to the State, and I think if the tax is increased it will as this personal tax is done be a tax that will be difficult to collect, and it will be the cause of attempting to evade the tax; the tax is now collected;; it is a tax that is collected by personal effort. By the Chairman. Q. Do you think that the present rate, five per cent on collatenw inheritances, is too high? A. No, sir; I think that the five per cent on collateral inheritance is a just tax, becomes a man comes comparative stranger. Q. What have you to say as to the rate of one per cent on direct inheritance? A. It is not so much, I suppose, considered by the State a tax as it is a tribute to the State for the distribution op the money, and the only objection I have to it is that there should be no exemptions from it. Q. Would you say that the rate was high enough? A, I think so. Q. You do not think that it is too high? A. No, sir; I think ! it is a fair tax ; it is a slight compensation to the State for prop- erty or money that has evaded taxation ; it is not excessive. Q. The State Comptroller recommends, as the counsel has sug- gested, the grading or, in other words, the exempting of certain amounts, and then the fixing of the rate on other amounts in proportion to the size? A. The laws have been changed so fre- quently that our law now is almost a perfect law, and, I think, it would be unwise to change it just at present; I think I would giv the present law a chance and see how the income comes to the State. Q. Do you think that an inheritance over $10,000 ought to pay the same rate without regard to the amount it may be above that. A. Yes, sir. Q. Suppose the inheritance was f 10,000,000, do you think the rate should be the same? A. I don't think it should make any difference. By Mr. Hamilton. Q. What is known as the bonded indebtedness of corporations would you extend that to the taxation of the bonded indebtedness or municipal corporations? A. I don't think so; municipal cor- porations should be entirely exempt from State taxation; the State should derive its income direct from corporations. Q. You exclude municipal corporations and their indebtedness? A. Yes, sir. By Mr. Malby. Q. By taxing the corporations which you have named here, would it, in your judgment, reach nearly all the personal property in that way, or a large percentage of it? A. I think it would. Q. So that personal property would in that way be paying quite a proportion of the State taxes? A. I want to say before leaving that I am in great sympathy with the agricultural dis- tricts, and I think that the large municipalities should bear a great amount of tax, as they do, and I think by separating tlie State from county taxes you will effect that and there will be no longer this difference of opinion between the counties, and you can see the thing is so immensely unjust; we ought to have almost the whole personal property of the State, whereas we have a large part of the real estate value and hardly any personal. Q. The bulk of the testimony shows that the burdens in the agricultural districts are largely of a local character; how do you think AVG can remedy the local burdens of taxation in the agri- cultural districts? A. That is a subject that I have not studied. Q. The committee have ascertained upon examination where fanners were present as witnesses, the extent of their contributions 456 toward the State government, and they have invariably turn* out to be very light, showing that the burden of taxation of th( farmer is largely of a local character? A. I would not attempt to discuss local taxes in agricultural districts. Q. The difficulty is that while the general sense seems to be in favor of relieving the agricultural districts, that where the bur- dens are of x a local character it becomes more difficult to devii a scheme for a relief as you can see? A. Yes, sir. By Mr. Ainsworth. Q. If you raised the State revenues by a tax upon corporation* and then granted local option to the localities as to wfiether would tax personal property or not, have you not given an; thought as to whether the stock or bonds of corporations whi< are taxed for State purposes should be exempt if a locality shoulc decide to tax personal property? A. That is, so far as the cor- poration or the company trades in that locality; in that county each county should have the right to tax the bonded indebted and the stock pro rata to the amount of business operated in thl county. Q. But many corporations have their home offices in counti* entirely different from that where they do any business; foi instance, a stoauier company on Lake Erie, whose business done at Buffalo, has its home office on the Hudson river here? A. They do their business in that county, though: it does not inak( any difference where the office is. Q. Fndor existing laws they would be taxed at the place whei the homo office is? A. That is not just; they should be taxed ii the county whore thoy do business; if they do business in Eri< and havo tlioiv offioo in Now York, why should they not p.iy theii tax in Erie? Q. Would a company that is taxed for the maintenance of State, and if Now York county should decide to tax person? as well as real property, should the bondholders or stockholders oi the corporation which has boon taxed pay their proportion 9 457 sir ; there should be no double taxation ; every corporation bays to the State and that is always deducted in the Bounty Itaxes. Q. Would not that as a result deprive the localities of the taxes which they should derive from personal property, if they tould decide to tax personal property? A. If the county r.nd ite taxes were separated the counties then would make their laws for the protection of their own counties, and would ike their taxes upon corporations doing business in their mnties; they would have the right to make their own local laws. Q. If they should make a law which would decide to tax per mal property, then a stockholder of a New York corporation it has once been taxed for State purposes would then be taxed local purposes? A. No, sir; we have that same question here, rat the State tax is deducted; it is deducted from their local taxes tere they pay to the State. Q. Has it ever been suggested to you that the present tax on iccession, what is known as the succession tax, has a tendency concentrate wealth in families, because the owner of the >perty prefers to leave it to his children directly where it %\ill but one per cent tax rather than to distribute it generally tere it will have to contribute a share of five per cent under the of 1892? A. I think that is very remarkable; I have never it presented that way. Q. The question has been suggested by a gentleman present? I think when a person wants to make a gift, whether it pays re per cent or one per cent after he dies, it does not make much ference to him. By the Chairman. Q. Do you think that the natural tendency ought to be to keep money within his family? A. Yes; I can not see anything in it argument. |Q. You hardly think a man would disinherit anyone to save per cent? A. Hardly; no, sir. 58 458 Abram B. Tappen, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. Where do you reside? A. New York city; since the annexa- tion of lower Westchester to New York I have been a New Yorker. Q. You have been judge of the Supreme Court? A. Yes sir. Q. For how many years? A. One term. Q. Have you investigated and examined into the question of what is known as the succession law of this State? A. I have! thought of the subject for many years before it was adopted. Q. You have some views to present to the committee on than- question, I understand? A. I have always been in favor of an' inheritance or succession tax after learning of its success in oud State. Q. What have you to say as to the present law; any sugges- tions in regard to its modification? A. I think that collateral and direct^ both real and personal, should contribute a certain sum of? money upon the demise of the owner to the State treasury; as ouci probate and surrogates courts are now organized they are sup- ported entirely by taxation in the several counties in which they.' are located; an estate to be administered whether under a will or in case of intestacy goes through the surrogate's court ; ii con- tributes nothing in the way of fees or charges in any respect to the support of the tribunal which had to pass upon its settlement ; some time ago 1 had an estimate made in the Xe\\ York MUT gate's court of the number of letters testamentary, letters cl administration, letters of guardianship, annually issuing out of that court; the number was in the neighborhood of 5,000; many of those estates amounted to hundreds of thousands of dollars; twenty years ago or more, a fee of five dollars was attached to any issue of any letters where the estate was over $100 or $500, and that was abolished by subsequent legislation, and uo fee reserved to those courts; I estimate that one-half of those 5,000 lettJ issued in the New York probate court could pay a fVe of fi five hundred dollars, simply for the grant of letters alone, which should go into the county treasury, anil which would form a vewj 459 considerable fund for the support of the court itself; that rule should be applied in every coimty of the State; now, coming to the succession tax, I communicated my views several years a$o when Mr. Edward Donnelly was one of the commissioners of taxes in Xew York city, an intelligent, ' retired merchant, and I could not persuade him as to the tax; he says it would be a tax on the dead; I said: "You can not tax the dead; that would be beyond all human control; the tax would go on the estates which the living were inheriting;" and it is the only \vay gentlemen, by a direct and collateral inheritance tax that you can reach personal estate; there is no doubt of that; when I see the estate of Mr. Astor passing from him *to an only child, which the newspapers value at $100,000,000 I don't know what the real value would be I say he should pay five per cent to the common treasury; that rule should apply to every county in the State, and to every estate over $10,000 in value; you might exempt that, or you might exempt $10,000 in behalf of each of the children, or something like that ; one of the chief weak features is it exempts so much in the way of charitable, literary, benevolent and other institutions; 1 say to you that there are institutions in this State receiving hun- dreds of thousands of dollars in bequests which are exempt from I this tax; can you tell me why those institutions should enjoy all the benefits of the laws and the features which civilization brings should be totally exempt from contributing some small I sum of money when receiving a large gift. By Mr. Guenther. Q. They are exempt to the extent of $3,000,000? A. It is I very large; now, that applies to the inheritance tax; it is one per cent on direct inheritance and five per cent on collateral [inheritance; I recollect in the Legislature reading some of its debates; one of the members said: "If we enforce a law of that character the State will receive money than it needs for its annual expenditure," and that seemed to strike him as one of the worst objections to a law of that character; well, gentlemen, my own judgment is that when the State receives more than it needs, it can very easily and very properly restore to the county the 460 surplus which each had contributed to make up the sum total, and in that way the counties will be relieved from their expendi- tures; several years ago I made up a statement to show the amount of money in the tax levy paid by New York city to the State Treasurer for a period of 'ten years, and during that period it was $70,000.000; the difficulty with our State organization is that it has now to go into every county in this State, and each of those counties has to go to every township for the pur- pose of receiving contributions for the support of the State; th< State should have on independent source of revenue of its owi it should leave every county out, unless it is necessary to colle< something to make up a deficiency; but tiie wisdom of the presei Legislature will be best shown by devising a scheme of incoi which will relieve it from going to the sixty counties, and tuos counties going to 1,200 townships; now, in respect to persoi taxation, I will illustrate to you by the township of Youiwri where I did live and where I have taxable property four towi ships embraced in the city of Yonkers; the result of the sonal assessment law, as now sought to be enforced, is that doivt get the money; a man worth $5,000,000 of personalty wi compromise for $500,000, as was the case with the late Mr. Gould; I recollect when the assessment of the Vanderbilt estat came before the commissioner of taxes and assessments several years ago, the trustees said: "We will compromise with \on:" the trustees came before them and said: "If you insist upon that amount $15,000,000 or $20,000,000, we shall certainly remove the location of this estate to Long Island, Suffolk county or Queens county, but if you will accept a valuation at the hands of the trustees of one-third of the amount which the tax commissioners thought it ought to be fixed at we will pay it;" I find that the real estate of the city of Yonkers, for the year 1891, is valued at f 2 1,000,000; the values are up pretty well, and they contribute a fair share to county and State government; Yoiikers is high as to valuations in real estate; the personal estate amounts to three per cent of that valuation of real estate the wealthy oity of Yonkers, having some of the largest owners of personal property in the State among its residents, returns personal taxa- 461 tion, for the joar 1891, at $600,000, less than throe per cent of the valuation of its realty; now, there is in the city of Yonkers undoubtedly half as much personal estate in value as there is of realty, and if the realty is $24,000,000, there is $12,000,000 in that city personal estate, producing income escaping taxation; it is no use to talk about listing law or anything of that kind; it is simply an inducement to perjury; a man without a con- science will escape taxation; T would be glad to see the law MS to personal tax thoroughly enforced; Governor Hill said personal property must be taxed; I agree with him, and everybody else, if you can reach it; but the consequence of the present law is that the honest pay and all others escape. ry the Chairman. Q. Then, the proportion of the honest to the jjreat whole is very small? A. They don't go up and swear it off; it was so during the war with the income tax; a man that had $100,000 a year would swear it down to nothing; it is a war tax, like the fax on the conveyances of property; it was essential to the sup- port of i he government during the war; as to this question of [collateral and direct inheritance, I remember sett 1 ing an estate the surrogate's court of Westchester for $70,000, which went to |the testator's widow and children, and the government tax of one cent was cheerfully paid, amounting to $700 without demurrer the collector of the government revenue, John Mason; you ee how easily this can be collected if we once adopt a proper law; tut of all things strike out this terrible exemption feature; recollect reading in some history of English literary people an lote touching Charles Lamb; he collected a legacy of thirty for his sister, who was in an asylum; the government tax ten per cent was exacted on that thirty pounds; three pounds had to pay to the government; I don't advocate that; that is ig too far, but I do say that all estates on the death of the rner, without any reduction, except in the case of the widow md children, should be assessed, and the revenue should go to State and the counties would feel a wonderful amount of tent; this State Board of Equalization could be wiped out; 462 every board of supervisors has a committee on equalization, which they take so much for the town of White Plains and pi it into the town of Bedford; there is too much exemption property of all kinds throughout this State in this inherita] law; real estate I am talking about now, and no one knows bett< than Commissioner Coleman who made up a table; he said th( were 200,000,000 that escaped in this State. By the Chairman. Q. What would you say about limiting the amount of chui property, for instance, that ought to be exempted? A. It ougl to be; I would not give any educational institution with income of $20,000 any exemption whatever; let it pay taxes anybody else would. Q. All church property is exempted; now, what do you about fixing a limit? A. There must be a limit. By Mr. Gruenther. }| Q. Do you refer to chapter 553 of the Laws of 1890 as to exemp- tion? A. It is the law of 1892; I am in favor of the State obtain- ing a revenue by its own mode of taxation, which would relieve it from going into the sixty counties. By the Chairman. Q. Outside of the question of exemption, the present law con- templates the assessment of all personal property; judging from your experience with the taxation of personal property what do you say of the wisdom of continuing to tax personal property at all? A. The effect of the present system is that personal pvop- erty escapes in a large measure, and only the honest few iind themselves obliged to pay. Q. What do .you say as to the wisdom of continuing to tax it at all? A. I think I would allow every county to determine for itself whether it would have personal property added 10 the tax- rolls or not. Q. Then you are in favor of separating State and county taxes and allowing local option largely through the counties? A. I 408 thiuk it would be wist 1 to try it for a time; we could iry it to a limited extent; now, another suggestion has been made that when we put personal property on the tax-roll you can by legisla- tion say that w T here the amount is reported by the owner, or any v%ay you like to get an honest return, the tax thereon should be only one-half the tax on real estate; that would have a tendency to bring out a great many million dollars by people that don't want to pay a large per cent; for this reason mortgages are live per cent; the taxes are two per cent; if a man has $25,000 in mortgages and has to pay one per cent or one and a half per cent in tax he can not afford to pay it; no one can; there is a popular feeling on tliis subject which controls assessors and lawmakers and all people charged with the administration of the law, and the feeling is that you can not reach it, By Mr. Ainsworth. Q. The idea in the agricultural districts is that if all that property was taxed the rate would be very much lower? A. I agree that all property should be taxed if you can reach it, but it is impossible; now r , a large amount of the personal property I am not familiar with the workings of the tax commission here in New 7 York, but I do know tliis an estate of land was con- verted by the executors into personalty by a sale to the amount of |200,000; they rendered their account to the probate court showing that sum of personal estate and declaring the executors who held it under the provisions of the will; the assessors have the right to go to the probate court and to the register's office and any other place, and the result is that this estate of $200,000 was put down on the assessment-roll, and in that way the assessment- roll of this city has been increased while the living owners have had quite a time to keep it out of the tax-roll. Q. You justify the levying of a tax upon direct and collateral inheritances upon the theory that the counties are put to an expense in administering the estate? A. Yes, sir. Q. If you justify it upon that ground, in order to be logical, why ought not those taxes go to the localities that are at the expense of maintaining the court? A. I should not have any objection 464 to their going to every county in which the tax is collected, but the State ought to have some independent source of revenue which, would keep it out of those counties every year. Q. Then you justify the tax on the needs of the State rather than the expense to the localities? A. Out of justice to all the coun- ties; it is very disproportionate in some counties compared with others. Q. Some States have a listing law, Ohio, for instance; have you ever examined the question as to how much property was added to the rolls by that law? A. They have it in Connecticut too; the assessor comes along and hands a printed list to the persons: who have to answer them, and according to that person's con-j science he may expose his poverty or his richness; it is an inquisi- torial law, and as I said before, about the government income] tax during the war, it is largely evaded. Q. Have you ever examined the question as to how much it added to the rolls? A. No, sir; I have not gone into that in other States. Q. So that it is a matter of opinion as to whether it works in. those States rather than a matter of knowledge? A. I don't! favor the assessor going to every person and saying: "I want youj to swear how much you are worth;" I think you can do justice| to the taxpayers and to the public treasury without going into that system. By the Chairman. Q. Your theory is that the county would be compensated for maintaining the probate court by a tax upon a granting of the letters? A. Yes, sir. Q. And that the other would be a contribution to the State treasury? A. Yes* sir; that is my idea; I would have a little sys- tem of fees for the benefit of the county treasurer, which would 4 certainly pay all the expenses of the court. By Mr. Malby. Q. Do you agree with Comptroller Meyers with reference increasing the tax on corporations, and so forth? A. I have nc 465 given any attention to the subject of corporation taxes, although I admire the wisdom of the law that provides an income to the State. By the Chairman. Q. I should like to get your opinion as to whether you favor jthe taxation of personal property at all, or whether you think all the revenues ought to be derived from real estate and from cor- porations? A. Well, personal estate is in New York city ||243,000,000, that is on the tax-rolls; I compare that with the ssessment of real estate .and I find it to be sixteen per cent ; I mid scarcely favor the striking of that off; I should feel reluctant to say that it should be stricken from the rolls. By Mr. Hamilton. Q. Under the present inheritance tax law real estate passing the direct descendants is held exempt; would you favor the mtinuance of that exemption,? A. I would not favor any exemp- Lor, I should impose a very moderate tax upon real estate, cause that has contributed its share of taxation every year; m the succession tax I should favor its, being taxed and not [xempted real estate as well as personal ; when you say that the bate may receive f 10,000,000 a year when it only wants 5,000,000 it is an argument in favor of this tax, because that excess can returned to the different counties in the proportion which they mtribute. Q. That excess could well be applied to the education fund of State? A. It could be applied to the different counties to general reduction of taxation. Q. At what rate do you believe real estate passing to the direct jcendants should be taxed? A. One per cent is enough, but you >uld devise some simpler form; you want a much more simpli- form, and it is easily done by anyone who is familiar with the ting of laws and questions of evidence. By Mr. Ainsworth. [Q. How large a proportion of the transactions in the exchanges New York do you think represent actual transfers intended to followed by delivery? A. In trade and commerce generally? 59 Q. On the exchanges, produce and stock and oil? A. I shoul say seventy per cent of them were speculative or marginal. Q. When those are speculative to so large an extent, would not be as equitable to make a tax upon those as upon inheritan< A. I think that law would have more tendency to restrict trade I don't believe that the government cares to go into that; I wi tell you why; I have no very close knowledge of this question, bi it would show that the speculation in grain in Chicago put th< prices of grain up, and it has benefited the farmers who have ha< the grain; I don't believe you ought to tax any of those. Q. Would that be any more restraint on trade than a upon corporations? A. A tax upon a legitimate value is vei different from a tax on a stated transaction; I buy wheat at 01 dollar a bushel, and I don't take it; if it comes up to one dolls and five cents I pay the difference. Q. The ownership may be only for a day? A. Yes, sir. Q. If it is a shady transaction how is that a restraint: on trade? A. If they had to pay this tax they would stop speci tion; I buy 100 barrels of sugar and contract for it for futu] delivery; I buy it and take it; are you going to tax that? Q. No? A. Why not? Q. Because that is an actual transaction and the other is no1 A. If I don't want to take it I will pay the man the difference ai I will be the loser. Q. One is an actual transaction in the necessities of life a the other is gambling? A. How are you going to follow tl difference between the two? Q. By the question of delivery? A. Who is going to do il That law would be a failure and not only a failure, but it woul throw a cloud upon the success of some other forms of taxati< which we all approve of; if people want to go down on exchange and bet with each other that stocks will reach certain price, and they don't reach the price, let them go ahead. By the Chairman. Q. Wouldn't the tendency be to drive exchanges out of New York altogether? A. Yes; talk about putting one on cotton 467 and they would move the market to Liverpool; Liverpool is as [great center as New York is. Q. It would be very unfortunate to drive those exchanges out? | A. Let me explain to you; I read that some two or three hundred 'ears ago that some of the countries in Europe it was deemed >est to raise the revenues of the government by putting a one per jent'tax on all sales, both retail and wholesale; now, then, the pro- lucer sells to the storekeeper; he was taxed; the wholesale dealer )ld to the retail dealer and he was taxed one per cent, and when the retail dealer distributed the article among the consumers he to pay his one per cent, and the whole thing resulted in bank- iptcy ; you can not tax everybody and everything. Q. In that case the consumer paid all the tax really? A. That is what it came to; the consumer was taxed three per cent. Q. The small men paid all the tax? A. Yes, sir. By Mr. Ainsworth. Q. That would not apply to exempting everthing that showed ictual delivery? A. I do not want to tax the current trade and ie business of the country, whether it be speculative or mer- cantile; transactions are the same and to some extent speculative; buy a cargo of tea in China, and you don't know when it >mes here how the market is; you might have to hold your tea id sell it at a loss; leave those transactions alone and then you in get revenue from other sources to meet all the expenses of ie government. Q. I(; seems to be that it is illogical if you are going to exempt >rsonal property from taxation and then tax a direct inheritance jausc it has escaped taxation? A. An inheritance is a gift; rtthin common law no man could make a will: tlm power to kfl a will and dispose of estate after death is a purely statu- |:ory power to give certain people certain property; now, why should not the recipient contribute something out of property 'hich he has not earned and which he may not be in need >f for the general welfare. Q. Do you base it upon that ground or do you base it upon the jround that the property has escaped taxation while in the 408 hands of the owner; I don't think it is logical? A. I have said at the beginning, I want the State treasury to be filled from othor sources so that it need not come here to this city for six or seven miliion dollars every year and go to other counties every year. By Mr. Malby. Q. Would you increase the percentage as the estate increased? A. I would make it reasonably moderate so that it could be surely collected; if you make it unreasonably there will be some mode of escaping or evading it; I would exempt estates of $10,000 for the benefit of widows and children only; the personjjl estate in New York city on the tax-roll at two per cent or less will produce about the sum contributed by the city to the State treasury, and so long as the State needs five or six- millions from the city every year it will not do to exempt personal estate; New York and other counties, when authorized by law. can dispense with personal taxes when the State, from the other sources I have indicated, obtains a sufficient amount for State purposes. Edgar J. Levy, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. You are ir the comptroller's office of the city of New York/ A. Yes, sir. Q. And you have charge of the department for the collection of the collateral inheritance tax? A. I have. Q. You are familiar with the operation of the law? A. Ye sir. Q. Have you any suggestion to make to the committee as tc its operation or as to any of these amendments? A. I h,'iv< heard the testimony of Judge Tappen on the point of exernptioi from the act, I want to indorse most heartily everything he hai said and 1 think perhaps I can show the committee ways ii which thfi State suffers by reason of the exemptions in additioi to the amount it loses by not collecting this tax; the second sac tiou of the present tax provides for a tax on direct inheritaiiC' and right at the end of the section there is a sentence: "But no j; legacy heretofore or hereafter given to any person who is a & bishop or to any religions corporation shall be subject to tax;" j|now, it is a fact that in large estates it is a favorite method I for testators to leave their property to somebody for life, with the power of disposition by will. In such a case the State can tnot collect the tax when it passes through the surrogate's court, for the reason that the executor n>ay say: "This person to whom I' the power is given is going to bequeath that property to some fl person who is a bishop, or to a religious corporation;" conse- quently, as regards that remainder, which may be the principal part of the estate, no tax can be collected, and as a practical matter it probably won't be collected at all, because the only reason why this tax is easily collected is it goes through the surrogate's court, and you can tell just how much property there is there, but if you are to rely upon the honesty of the legatees, OTI are brought down to exactly the same position that you are n v. ith regard to the taxation of general personal property; I ;all the attention of the committee to the language of the General .Vriii in this department in the matter of Wolff, recently decided n which they call attention to the provision in the act as most ncongruous; they say that evidently the Legislature must have bought that a person who was a bishop was entitled to more foil icnsiueration from the testator than his own children; that is he act of 1892. liy the Chairman. Q. Who do you say should pay that tax; the man having me life estate or the remaindermen? A. The remaindermen hould pay the tax upon their own interests; under the act of 885 and 1887 the statute evidently contemplated taxing the Bjiacies in the hands of the legatees ; last year an effort was made [Breach the body of the testator's estate as a whole; now, if it 'ere not for those exemptions you could simply deduct one per trom the net amount of the decedent's estate, and that would ie end of it; but as soon as you have to ascertain the amount to each distributee you are met with great practical dim- les. 470 ; Lil.A : was :enip Q. Would you favor the imposition and collection of the tax without regard to where the money was going or to whom it wn given? A. If you had no exemptions it would to a very gi extent make the collection of the tax .simpler. Q. You would be in favor of doing away with all those exc tions? A. Entirely; I don't think there is any justification for Bolton Hall, called as a witness, being duly sworn, testifi< follows : By Mr. Hamilton. Q. You reside in New York? A. Yes, sir. Q. What is you business? A. I am a lawyer. Q. You have given considerable attention to personal taxatic A. Yes, sir. Q. You are a member of the Tax Reform Association of Nev York'? A. Yes, sir. Q. And secretary of that body? A. Yes, sir. Q. And are also the author of several literary productions up the question? A. Yes, sir; I am. Q. Including the work known by the title of "Who pays yo taxes?" A. Yes, sir. Q. Are you familiar with the present laws with regard to t levying, assessment and collection of taxes in the State of York? A. As regards those upon real and personal estate, I au to the matter of corporations I have not given so much attentio Q. Are you also familiar with the systems in other State A. Yes. sir. Q. And in regard to the operation of the listing system? Yes, sir. Q. And also the Massachusetts plan? A. Yes, sir. Q. And. the Pennsylvania law? A. My information being in genera! way. Q. Have you anything to say as to the propriety of modifyu the present laws relating to taxation, assessment and interest far as they affect the agricultural, manufacturing, commerci laboring, banking and other interests of this State? A. Yes, s: I think it would be for the prosperity of the county and State New York to entirely exempt personal property from taxatk 471 and to raise our whole revenue from the value of real estate and from taxes v upon the special privileges to corporations; our real derives its value principally from the presence of the per- sona) property on and about it; the world is large and any dis- crimination that lie may make of the nature of a personal tax lias a tendency to the concealing of personal property, and to the driving of it away and the driving of the payer of it away from the State; were the sixteen per cent, or thereabouts, now assessed upon personal property in New York, which includes assessments upon banks were that added to the tax upon real estate and exempt the personal property, it would so increase the value of the real estate that real estate owners could well afford to pay the extra burden upon their real estate and, in fact, that is the sentiment almost without exception of the largest real estate owners in this city; in that all the great land holding estates occur; the larger manufacturers and merchants would advocate such a thing and the small shopkeepers want the same thing; verage citizen is willing to pay his fair proportion of taxes; the reason that he wants to evade is because he knows that most other citizens evade and he knows that if he does not join in the iniquity he will be unduly assessed; whereas if I pay so much tax on a positive basis, there are very few who woidd not be willing y : " 1 will pay my share ; " the attempt in other States to col- -ersonal taxes by listing bills has had the effect of driving out of those States large payers of taxes those who have large i amounts of personal taxes; I have a client, for instance, who | resided for many, years in Ohio; he fought the listing system in ] the courts, and when the highest court in the State decided |j against him he removed to New York and he still remained here: 1; he lias invested his money in real estate and in insurance stocks hi New York, and from this of course his investments tended to raise the price of real -estate; upon those he pays his taxes; he is glad to pay them; I think that represents the sentiment of great mass of New York business men, large and small, as well as of New York real estate owners. Q. Let me ask you right there; where would any advantage flow from the exemption of personal property in agricultural* commii- 472 be nities? A. Because where we do succeed in asseessing persona property, the farmer's personal property which can not be co cealed, is got to a much larger proportionate extent than that the merchant or the banker, and therefore it is hard on farmer ; everyone knows if the farmer has saved a little money anc loaned it on a mortgage the assessors get that sure; if he has an expensive machine the assessor gets that sure; but the city mai knows the legal devices can pay for the legal devices for- evading that sort of thing, and knows the methods of moving his place of business or his headquarters or summer residence to Jersey or Tarrytown or Connecticut, or wherever he thinks they would be most easy with him; the farmer is stuck right there, and assessor hits him every time. Q. In large cities like New York you justify your position upon the ground that it would be a benefit to the city? A. Yes, sir. Q. But when you come to the agricultural community you do not justify it upon any such ground? A. I do; at present it is very difficult to borrow money upon mortgages at less than from five to six per cent in country places; I never heard of one at less than that, and usually it costs more than that, because the mortgages are made for a year and there is the expense for searching, com minions and so forth; and it will run up to seven and a half, and at the end of the year there is another; it is very well for lawyers; why then do they pay that? Because my clients can not loan in the country; because they know that the assessor ia going to catch them; I had a client who wished to borrow $40,000 at four per cent; I had borrowed for another client that amount for one of the companies here ; I went there the other day and said to the secretary: "Have you got any money to lend?" "Yes, sir; we have got about $40,000 we would like to put out;" I thought I was all right then; I said: "I have got a first-class mortgage for you at four per cent;" he says: "We can not do that now;' he says: "That loan we made before, when we came to figure we had to pay a tax," I think it was 167 or something like that for that loan, and now we must get six per cent; if you have t< pay a high rate of interest on the mortgages it decreases the valu of your peal estate as an investment; if the mortgage were exemp- >va not only in the city but in the country, we would be able to boiTOw money on mortgage, I think, at a rate not exceeding four per cent, and that would be a great help to the farmer; it would bring him considerable prosperity; it would make his property available for use and furnish the capital necessary for it. By the Chairman. Q. Was that loan on city or country property? A. It was city [property; but the same thing would apply with more force on country property ; he would say : " We are sure to be caught." Q. Is it your experience that mortgages are universally taxed? | r A. No, sir; by no means, but there is always the fear that the I assessor will catch them. Q. They are taxed in exceptional cases? A. Yes, sir; private I individuals solicited to loan their money upon mortgage will (always say: "Well, I would sooner have some stocks, because it any time the assessors may catch that mortgage, and either | com pel me to pay U or do a/s the prudent ones do now;' 1 all pru- it investors put in a paragraph saying that should the lender of us money be at any time called upon to pay a tax upon it, or tould it be returned by the borrower for taxation, or any attempt k on his part to have that money taxed, that the mortgage 11 immediately become due; that is the printed form of mort- ige used by most of our lenders now. By Mr. Hamilton. Q. Do you regard the income of property as a/ fair basis of taxa- A. No, sir; I do not; because a large amount of property held either vacant or with deficient improvement, bringing no icome but held because' at some future time the owner expects get a large premium by holding it out of use; I think that the j plan would be to separate the values of the improvements the value of the land and to tax them for what it was worth it income could be got out of it by its best use. .Q. What are your views upon what is known as the local option A. I think that would be an- excellent thing; I think it mid result in some out of town county putting their tax wholly upon personal property and exempting real estate, and I think thai would happen for just one year; they Avould see that it prompt drove all the personal property practically out of the county the next year they would repeal the w r hole thing; it would be, appears to me, a method of getting some one to make, at their owi expense, and to make thoroughly, an experiment which would invaluable to us; it would be the best object lesson that ever v had; suppose Westchester county exempted all real estate and it all on personal, we would see a visible stream coming to 1 York and Kings county; the most foolish county would be ficed and I think that is the best one to sacrifice. By the Chairman. Q. The sentiment of Westchesteiv county is very much against the taxation of personal property? A. I believe that; I took ifi for that reason. By Mr. Grueiither. Q. You think local option is a good thing? A. Yes, sir. -f Q. It virtually means the exemption of personal property? A, I think it would be the ultimate result; in New York city tha would be the immediate result of it. By Mr. Hamilton. Q. What have you to say in regard to the question of levying an excise tax by the State for State purposes as it is done in Pennsylvania? A. I an 1 here to some extent as the representative of the New York Tax Reform Association; we have taken n< position upon that, and anything I should give you upon that sub ject would be merely my personal opinions; I do not think epeak for any united body of citizens in that way. Q. Is there any united opinion in regard to the present rate o interest amongst the members of your association? A. Theiv i; not, Q. Upon the queslion of taxation of savings bank deposits? A All' these things are outside of our platform; this subject of taxa tior. is a A T ery larc;e one; it has numberless ramifications and i 475 any one knows one branch it will keep him very busy; the best thing is to try and find governing principles; every man says: "Would this be expedient?" "Would that hit that man hard?" "W r ould this strike this part of the country?" The tendency of legislators as well as others is to try to tax this \vay instead of saying: "Find out what the principle is." By Mr. Guenther. Q. Will you tell me why, if I have f 50,000 and no real estate, and you $50,000 real estate and no money, my money being loaned out on bond and mortgage, why I should not contribute a fair proportion of money to meet the expense of the government as you do? A. Because even as a holder of personal property you must use real estate, and there you will pay a fairer proportion of taxes than can be collected from you in any other way. Q. Suppose I live in Pennsylvania and my money is over here? A. Even so, your money in one way or another will pay that tax; what are you going to invest your money in? Q. Government bonds, manufacturing or railroad bonds? A. Let us take that separately; we encourage government bonds may be floated at a low rate of interest, and that was a war necessity, but under any system which you gentlemen may propose you can not tax those government bonds so that we need hardly consider that matter; that is a United States law at present; you can not tax those. By the Chairman. Q. As all the earning capacity of money loaned on mortgage is fixed by statute, is it not a fact that the earning capacity of improved real estate is largely fixed by necessity? A. I think that the earning capacity of money, although it is nominally fixed by statute, is actually fixed by necessities; as a lawyer, for instance, if I have money to loan and I can not loan it at six per cent, and the rate is higher, in some way or other, as exemption from taxes, I think that a man will pay the price. Q. Is it not a fact that owners of real estate in a community New York fix their rental for instance upon the theory that 476 taxation and interest must be taken care of? A. I think it mi be fixed entirely outside of the owners; I think the rate is fixed the competition in the markets; I do not think the owners cj fix the rate; if they could they would charge us all for the privil< of living on the earth. By Mr. Ainsworth. Q. Here is a farmer that barely makes a living; by the side him is a money lender, with $100,000 invested in bonds and mo gage; he lives in a house and lot that is worth $2,000; you sa; that this thing is equalized by his having to pay a larger ren because of the land he occupies; between the farmer and the man who has $100,000 and lives in a place that costs $2,000, where is the equalization? A. In the first place, the rich man is usually a large owner of real estate; when a man has $100,000 he doe not live in fact in a $2,000 house, and even if he did, his $100,000 has got to be somewhere or other; there are only two possible ways; either it is invested in something where it is producing o,? else it is loaned to this farmer next door; if it is loaned to this farmer next door you tax it. 3T- By Mr. Guenther. Q. Would not the ultimate result be that if you exempted per- sonal property from taxation there would be a great desire for all owners of real estate to dispose of that real estate and get ready money, thereby reducing the value of farms throughout the State? A. No, sir; I think the effect would be the contrary; that wherever personal property would be exempted that personal property would be attracted to that place, and that would raise the price of everything. Q. You don't think the rich man in the city would be attractive to a farming community? A. I do; I would like to attract Jersey capital or Ohio capital. Q. You do not anticipate you can attract by the moving taxa- tion upon personal property wealthy men from the city to live in the country because there is an exemption from taxation? A. No; I don't think I could attract them to live, but I could attract them to invest in the country. 477 Q. If the f .inner was necessarily a borrower, but till farmers are not? A. No, sir; but he gets an indirect benefit. By the Chairman. Q. The testimony of the former witnesses that we have had has been to the effect that at least one-half of the farms in the State are not mortgaged? A. I suppose there is no doubt that is true. By Mr. Ainsworth. Q. You made a statement that the tax apon personal properly injured the farmer from the fact that his machinery and stock were "visible and tangible and therefore assessed; do you base that upon a knowledge of the fact? A. The farmer does not ordi- narily pay under our present system any personal tax to speak I of, because he elects the assessor, and he says to the assessor: " If you tax me on personal property I won't vote you next year/' but under the listing system, as in Ohio and California, the farmer | does pay a proportion of the personal tax. Q. In this State he does not? A. In this State he docs nut. Q. Have you given any attention to the effect of the listing law in Ohio as to the effect upon the assessment-roll? A. Fes, i sir ; the experience in Ohio has been that the first year they got [a great deal of personal property, and every year it slips down and less, not as much as one would expect, perhaps, because ja State like Ohio will grow in spite of anything you may do, but it checks the natural increase of personal property. Q. It is now in use in sixteen States? A. About; if all the States 'ere to adopt the listing system, there is no doubt it would tax 10 personal property more than you do now. Q. After you have adopted it in the forty-four States, have an idea that the people would live in the jungles in Africa ither than in free America? A. I do not think it would tend to ease the American colonies in London! and Paris; they are rery large colonies there now. Q. There is a feature in the Ohio law that if a person does correctly return his personal property there is not only an -1-78 arbitrary assessment within the power of the assessors, but fine also? A. Yes, sir. Q. Is riot that a sufficient answer to the objection that peo] would not correctly return? A. They do not correctly r-l:ui wo know very well that the most they have gotten is forty r.ent on personal property and that the universal testimony that the value of personal property is at least equal to the vali of real estate, and then a part of that comes from things whicl under our state of affairs, would be taxed; for instance, ban* stock; those would be taxed anyway; there is a very radical dil fereuc between the conditions of real estate in the city where i.1 is active and the conditions of real estate in the country wlu real estate is good for nothing, except to raisa wheat on: one ii an investment for revenue and the other is his business; if \< increase the tax upon real estate you consequently increase tl tax and his revenue does not increase in proportion; while here the city, if you increase it you add to the productive power; farm that is worth $150 for taxation will raise forty bushels ,>f wheat to the acre; a farm that could be bought for forty dollars an acre would raise just as much wheat; I think if you raise the selling value of that farm you would raise its practical productive power; that is to say, your friend has a farm and we make our laws so as to attract a manufacturing establishment within a mile of his farm; it will only raise 150 bushels of wheat j\?st the same, but he has a market right close now, and he can sell t far- income -would you not? A. You mean to say that in spite of the tax laws it has doubled? -: O. As a matter of fact, it has doubled per capita since 1850; is not thai The controlling feature in his income rather iban ihe taxation; the acreage per capita has actually doubled since JS50;- is not thai the controlling feature rather than the question of taxalkn.' A. I would not want to pronounce upon that question offhand; the machinery enables the cultivation of larger areas than it has been previously; that is the question I am not posted on; it is a subject that should be considered to what extent that is duo to the fact that a man car. now cultivate three acres whore he could cultivate one. Q. He can not increase his own acreage, can he? A. No, sir. Q. The criticism which I make upon the theories is here right | hi the city of New York where increased business adds revenue to real estate; the subject of taxation of personal property I conceive affects the income of real estate here, but I think that if you were in the farming community and saw the utter impos- |sibiliiy of increasing the production or the price per acre of the ier''s land, that you must take a different view of it? A. Tf farmer thinks that it would help him to tax the personal )perty, we have the county option bill proposed; under that he tax it. Q. Must not he necessarily think that if he lives in a given irea that must produce towards the county expenses a iixed sum, [that you as a money lender living in his community, whatever pay decreases the amount that he must pay; I mean county (taxes? A. Yes, sir; it is an argument that strikes as a practical nnonstration, is it not; whatever the city pays towards county ixes comes off him. 480 Q. Or whatever the personal property holder living in his locality pays reduces the amount he pays? A. That would b; true provided it could be got. Q. Whatever he does get reduces it so much? A. No, sir; nol if the result of getting more personal property results in gettii more of his personal property. Q. He has none? A. He has his machines and cattle and gr; there, all personal property household furniture. Q. But the other man has that also; I am speaking now the surplus; but if there is a net result in your plan for increas ing the tax on personal property and getting more of it; if ii results that you get ten per cent more of the city property am thirty per cent more of the county property I don't see where th< farmer is benefited. By Mr. Hamilton. Q. Under the present law personal estate when taxed is allowed a deduction for the indebtedness of the owner; does your associa- tion favor the continuance of that exemption or offset? A. It does. Q. Notwithstanding the fact that complaint is made that no similar allowance is made in the case of real estate and that there- fore there is an inequality? A. It does, notwithstanding that fact. Q. Do you believe that it should be refused to real estate and continued in the case of personal estate this allowance? A. Yes, sir. Q. Upon what ground? A. Because any attempt to tax mortgage really gets to the borrower; it would simply result in having to pay six per cent instead of having to pay four; Dr. Beeks has proposed year after year in the Assembly a bill exempting mortgages from taxation; last year it never got out of the committee; only last year he modified it by proposing the exemption of mortgages bearing four per cent or less from taxa- tion; I am of the opinion, and most of those with whom I have talked coincide in the opinion, that the passage of that bill would reduce the rate of interest upon mortgages to four per cent, and that it would extend to the country as well as to the city, and it 481 seems reasonable, because it is sensible and it appeals, I think to the farmer constituents; it would hardly be sensible when a man loans his money at the liberal rate of four per cent it would hardly be right to tax him one and a half per cent. By Mr. Ainsworth. Q. Jf you double up property you cut the rate in two, do you not?' | A. If doubling the property you decrease the value of real estate, jthen do you not cut the rate in two? Q. Real estate, farming property, is simply worth what it will produce? A. If by taxing personal property you reduce the value the land Q. You don't reduce the value of, the land unless you reduce its reducing value; the city property has another value than a L, lias it not? A. That is only true within limits; even the farmer occasionally sells and occasionally expects to sell; there is now a considerable demand all over the country for residences ind estates and places even at a distance from the railroads; all iat affects the value of farms. Benjamin F. Komaine, called as a witness, being duly sworn, [;estified as follows: By Mr. Hamilton. \. What is your business? A. I am a lawyer and also a real ite owner improved and vacant property in the city of York. Are you a member of the Tax Reform Association? A. I not an actual member; I am interested in its work, and have led them in various ways; last year I appeared with others behalf of the local option bill, and I have appeared before legis- ive committees; I opposed with other members of the Real ite Exchange, the so-called Dempsey bill. Q. You are a member of the Real Estate Exchange? A. sir. You have given attention to the question of taxation? A. lewhat so. Q. Have you any views to express to the committee in regard modifying the present laws on the subject of taxation? A. I 01 482 should say most decidedly that the local option bill should become a law ;" I do that for the reason that it may not be thought proper thai ideas emanating altogether from residents of large cities should be inflicted' so to speak, on rural communities ; I feel that a bill like that is fair, and that the rural counties will eventually see the justice of it, in securing the abolition of personal property^ tax throughout the State; I believe that personal property taxaJ tion is radically wrong in any community; I consider that in almost! every case personal taxation becomes double taxation; as a real^ estate owner I am very anxious that personal property taxation] should be abolished, specially for this reason; in New York city, for instance, very large sums of money are loaned by saving* banks and life insurance companies on bonds and mortgages; they aro exempt; individuals are threatened with a menace of taxation/: also executors and trustees and others; they do not loan at tb.e rates at which they might loan were they free from this menace of taxation, as I stated to Mr. Eyan's committee last year; it is a menace more than anything else, as the law can not be enforce! and no listing bill can be enforced, but the menace is held over all owners of real estate, and in all probability life insurance companies and savings banks get a higher rate for that very reason; competition should be made very much greater between the savings banks and life insurance companies on the one hand and individuals on the other, provided personal property taxation were abolished. By Mr. Guenther. Q. Do you know of any reason why a bond and mortgage held by a life insurance company should be exempt from taxation anc one held by an individual should pay? A. That is an illustration of my theory of the injustice of the present taxation. Q. You don't know why it should be continued? A. I do not that i? in support of my argument in favor of abolition of persona taxation; we have those enormous exemptions such as you hav< stated all savings banks, all life insurance companies, when the money is in the shape of accumulation of policyholders, ai was testified at a former meeting of this committee. 4S3 By Mr. Hamilton. Q. Is the value of all city property determined by its revenue the same way that country real estate values are fixed? A. is determined by supply and demand. Q. Is it different from the law fixing the value of agricultural >perty? A. There are economic questions involved in the use agricultural property that are perhaps hardly within the scope this present committee, but I know they are always brought when a discussion of this kind occurs; Mr. Coudert, who is e an authority on economic questions, raised that argument fore General Curtis' committee in opposing the Dempsey listing [; he said he would be very glad to give them his views on that it; his brother is a large farmer, and I think they are both * familiar with the subject; economic questions naturally at the same time with discussion of taxation By Mr. Malby. |Q. Would you confine the taxes exclusively to real estate? A. to individuals ; I am in favor of a greater tax on certain classes corporations than now exist; for instance, I think all of us very much, who are not Western Union stockholders, that Western Union Telegraph Company pays so little in the city. You think that the tax on corporations might be properly A. On certain classes of them. Religious corporations? A. I do not believe in any collateral iptions; I believe that every corporation should be taxed the law. I have reference to business corporations? A. Excuse me; not say that with reference to business corporations; I am not to say except in specific instances; I know that corpora- have been largely increased in the State of New Jersey on mnt of certain discriminations in this State. Could not that be overcome by taxing foreign corporations business in this State the same as you tax domestic cor- ms? A. Possibly so; that has been the subject of recent idication; that rnigrporation we would be; the reason why I feel very greatly iterested in this matter you asked me if I had looked into te subject of taxes; I have made a good deal of study of the quos- m jof co-operation; I am now conducting two manufacturing iblishments, of which I am president, where we have intro- iced co-operation, and I believe that corporations are in a sense >perative concerns, and in my judgment co-operation of labor id capital will go farther towards settling the differences which ist between labor and capital than any other one thing that can done; last week we had the annual meeting of one of our cor- ^ations; I am not going to stop to tell you what our co-opera- ive system is; we pay our operators the going wages; there are my of them skilled men, some of them receiving as much as three lars and a half a day and from that down to a dollar and a half; 'hir-h was probably tin- least sum paid to any out 1 nialo operative; 490 they all have an interest in the earning capacity of that factors ; it is divided once in six months; it is based upon a percentage oi the earnings; which is paid pro rata to the employes that hs been with us or are with us at the time of the division; it purely a division; the men understand that the more money th< corporation earns the more money they get in addition to iheii wages; they get the same wages that are paid to other peopl in the same positions, and they get this bonus, whatever it may be, in addition; last week, at the annual meeting of one of thosJ corporations, I stood before 100 or 150 men, and when 1 say tfl you that some of those men are receiving three dollars and fifty) cents a day, you will readily understand that they were inteM gent, and the bonus was divided among them; and 1 do not belie 1 "* that there is another establishment in the country where employer and employe get as near together, not socially, but in intered| man to man, as they do in that establishment; 1 believe that COM porn lions that can be continued beyond the life of one man or two men, or any set of men, should have as great advantage in conducting business, whether it is commercial, nmnufacturinl oi 1 banking, as the same persons who compose an individual T believe it to be very much to the advantage of the State of York thai those laws should be so favorable that such covpoia- tions can be formed under those laws here, instead of seeking birthplace in some other State, and therefore the point that I want to make before the committee is, not dealing with the] subject of taxation generally, but simply confining my attention and leaving those other gentlemen to speak upon the subject in its broader sense, to the fact that corporations which are in a sense co-operative should be attracted rather than repelled, and that to do this the laws of the State of Xew York should 1 favorable as the laws of sister States, and that corporations hav ing no larger amount of assets should not be taxed simply because they are corporations, when if they were individual firms the.v would largely escape the taxation which is levied upon them as corporations; I thank you, gentlemen, very much for the kind attention which you have given to what I have had to say. 491 G. Waldo Smith, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. What is your residence? A. New York city. Q. And your business? A. My business is a wholesale grocer. Q. How long have you been a resident of New York? A. A little over forty years in business. Q. That period in business? A. Yes, sir. Q. You are also a member and officer of the board of trade and transportation? A. I am a member. Q. What office do you hold in connection with that board? A. 1 am one of the board of directors. Q. You are also a member of the wholesale grocers' association? A. 1 am president of the wholesale grocers' association; that includes all the wholesale grocers in this State and four New England States. Q. You are also a member of the State board? A. Yes, sir; I am chairman of the executive committee of the New York State Board of Trade; I am a member of the chamber of commerce; I have a resolution from them, but I do not represent them officially. Q. You appear here officially for the board of trade and trans- portation? A. Yes, sir; and the wholesale grocers' association and the New York State Board of Trade. Q. Have you given attention to the question of taxation? A. Somewhat; as to corporations more particularly than anything else; my main thought was in relation to the interest question; Mr. Parsons has gone into the other matter more fully, and I would like to make most of my statements in relation to the interest question. Q. Will you give your views to the committee on that question? A. My views are embodied very largely in the resolution passed at the last session of the New York State Board of Trade; the following resolution was unanimously passed, I think, by that body; it is as follows: " Whereas, An effort is being made to reduce the legal rate of interest in the State of New York to five per cent per annum, therefore, 492 " Resolved, That the passage of a law making five per cent annum the legal rate of interest in New York State will not benei an}- class of our citizens, but will injuriously affect all classes be most disastrous to those who are obliged to seek loans, and New York Board of Trade most earnestly but respectfully protest against the passage of such a law for the following reasons: "The character and quality of an article, together with tl demand for it, regulate the price for which it is sold, and in like manner the character and quality of any security regulate the rate at which loans thereon are sold. Unquestioned security to-day readily commands loans at rates ranging from three and a half to five per cent per annum in this State while poorer secur- ities must pay higher rates, competition among members reducii the rate as low as is consistent with the nature of the security ; law fixing the rate of legal interest at five per cent could compel the loaning of money at that rate, but would make it impossible to affect a loan where the risk was worth more than tl legal interest limit. Capital seeking investment involving ris worth more than the legal rate can procure seven and eigfct cent elsewhere, and in some States as high as ten per cent ai would not, therefore, accept five per cent here for like risk. Exist ing loans worth six per cent would be called in at maturity ai could not be replaced at the proposed legal rate. Thus woul follow innumerable foreclosures and general distress among classes in this State, especially among owners of mortgaged far lands. The present system of advancing on consignments of gooc which enables manufacturers of limited means to carry onextei siA r e business operations, would be seriously disarranged. The lower rate would not be in proportion to the risk involved. The loans made thereafter would be of a much smaller proportion of the value of the goods than at present, and manufacturing operations conducted under this system would be necessarily cur- tailed." Now, that is the whole story in that resolution; if I should enlarge upon that for an hour I could not state any more than is in that resolution ; my whole experience as quite a large dealer in New York and a member of all the commercial bodies proves con- clusively that every statement made there is true; I remember hearing a good many years ago of a raei'ciful man who wanted to cut his dog's tail off but didn't like to hurt it by doing it all at once, so he arranged to cut off an inch a day, and every day an inch was cut off until the whole job was done, and the dog, he thought, didn't suffer as much; my theory is a very simple one and a very just one and it is simply repeal the usury laws and the establishment of a rate of interest; I introduced a resolution a year or two ago in the board of trade and transportation and to my -surprise it was unanimously carried; I brought the same reso- lution to the State board last year and introduced it there and made an argument which I have in my hand, and to my great surprise it was voted for by every single man present except one; only one man voted against it; many and many came to me after- wards and said they had never given that question any considera- tion; they supposed it was part of holy writ, and had to be main- tained, but when they came to think of it they w T ere ready to vote for the repeal of the usury laws; I will give you gentlemen a copy of my speech; the speech is as follows: "Gentlemen, I fully recognize the fact that in trying to secure the adoption of this resolution I have a difficult task to perform; this law is strongly entrenched in prejudice and sentiment, and it is a well- known fact that these present an obstacle difficult to overcome; I well remember seeing a shipload of negroes leaving the port of Charleston, bound for the wilds of Africa, leaving a country in which two or three generations of servitude had made them fit to enjoy the privileges of American citizenship, and returning to the wild and barbarous country from w^hich they had come, impelled alone by a sentiment; Louisiana was ceded to the United States in 1803, and yet old men in the Creole quarter have ,told me that neither themselves nor their fathers, nor their grandfathers, nor any of their farnDy had ever crossed Canal street which divides the American from the Creole quarter; a large proportion of the people of Nova Scotia have descended from royalists who fled from this country after the close of the Kevoluntary war, and who preferred to seek new r homes in that cold and weary land rather than dwell where the stars and stripes could be seen waving over their heads; indeed, the history of the world is filled with instances 494: of great sacrifices made in order to gratify a sentiment or a prejudice; I will now address myself to the task of trying to remove from your minds the sentiment in which this ancient law finds its only support; a strong prejudice against exacting interest existed in early times, arising from a mistaken view of some enactments of the Mosaic law, and as late as the reign of Edward VI there was a prohibitory act passed for the alleged reason that th( ' charging of interest was a vice most odious and detestable, and contrary to the word of God ; ' the Hon. Andrew D. White, in the Popular Science Monthly, says in relation to the struggle that went on in England with varying fortune, statesmen on one side and theologians on the other; we have seen how under Henry VIII interest was allowed at a fixed rate, and how the developmenl of English Protestantism having at first strengthened the ol< theological view, there was under Edward VI a temporary su< cessful attempt to forbid usance by law; the Puritans, dwelling on old Testament texts, continued for a considerable time esp< ially hostile to the taking of any interest; Henry Smith, a note preacher, thundered from the pulpit of St. Clement Danes ii London ' against the evasions of Scripture' which permitted men to loan money on interest at all; in answer to the contention that only biting usury was oppressive, Wilson, a noted upholder of the strict theological view in political economy, declared : 'There is a difference in deed between the bite of a dogge and the bite of a flea; and yet, though the flea doth less harm, yet the flea doth bite after his kind, yea, and draweth blood, too; but what a world is this, that men will make sin to be but a flea-bite, when they see God's word directly against them; ' the same view found strong upholders among contemporary English Catholics; one of the most eminent of these, Nicholas Sanders, revived very vigorously the use of an old scholastic argument; he insisted that 'man can not sell tune/ that time is not a human possession, but something that is given by God alone; he declared, 'time was not of your gift to your neighbor, but of God's gift to you both;' in the Parliament of the period we find strong assertions of the old idea, with constant reference to Scripture and the fathers; in one debate Wilson cited from Ezekiel and other prophets and 495 attributed to St. Augustine the doctrine that 'to take but a cup of wine is usury and damnable; ' Fleetwood recalled the law of I King Edward the Confessor, which submitted usurers to the ordeal. Following the thoughts suggested by these quotations, I have care- j fully examined every text of Scripture in which the words usury or interest occur, and failed to find anything therein that by a fair construction would censure the loaning of money at four per cent, or six per cent or eight per cent, according to the class of security offered; indeed every such allusion has reference to (benevolence and aid afforded the poor and needy, and has no' bearing on business transactions whatever; Calvin, the famous [reformer, was one of the first to expose the error and impolicy )f this view, although a series of enactments, known as the usury rws, to some extent perpetuated it by an attempted restriction the maximum rate to be paid; in England this rate was fixed >y Act 21, James I, at eight per cent; during the commonwealth was reduced to six per cent, and by the Act 12, Anne, c. 16, five per cent, at which rate it stood till 1839, when the law was e-pealed; in Scotland any charge for interest was prohibited if ore the reformation; in 1587 the rate was fixed by law at ten cent; in 1633 at eight per cent; in 1661 at six per cent, and by act of Anne, as above noted, at five per cent; it is now mitted that the operation of such laws tended only to raise the real rate of interest by driving men in distress to adopt travagant methods of raising money the bonuses thus paid ?ing really and in effect an additon to the nominal interest; I )k upon the effort to secure the repeal of the usury laws as a lovement wholly and only in the interest of the impecunious and ifortunate borrower, a class to which I have never yet belonged id trust that I never sha-11; thus it will be seen that I have no to grind except to wipe from the statute books a law that ices them, and one that has brought great hardship to my unfortunate borrowers in their hour of greatest need; it is difficult to conceive of anything more absurd than the effort ) fix by statute the value of the use of money, and to make one lard of value for this use apply to the various circumstances ler which money is loaned; the value of the use of money 496 depends, first, on the relation of the supply to the demand relation that is constantly changing from day to day in all money centers; second, upon the class of collateral offered as security for the loan; while for the past ten years the fluctuations on the price of money have been very great, and there have been many times when borrowers with first-class collateral could not secure funds, even when offering enormous rates of interest/ yet there has not been a day in all that time when large sums could not have been secured at five per cent, or less, if. the borrower had good rented property to offer as security: the following, from the Commercial and Financial Chronicle, will illustrate the enormous changes in the rates for the use of monew from day to day: 'In the year 1890, the rates for call loans several times reached 186 per cent per annum (that is the regulajji six per cent per annum with a commission of one-half of oim per cent day), and on August 21, 1890, that rate was quoted; tlm next day the rate varied from 143 to three per cent; in the month preceding (July) 'bankers frequently loaned their balances ol|i call at two per cent, and the highest figure for the month of Locke, Hume, Adam Smith and Benthani did much to se truth in a clear light; more and more the legislation of the world, in respect to this subject, is advancing toward an unreserved \ nition, of the principle that the rights of capital and labor rest upon one and the same foundation, and that the money lender is not any more than the money borrower necessarily a wrongil<-- England, as long ago as 1854, all laws intended to pre\vu taking of a higher than a legal rate of interest \v. borrowers and lenders being left free to make such agreeinei might be mutually satisfactory, and it is a well known fact +ha,t 499 since the repeal lower rates of interest have prevailed in England than anywhere else on the globe; of our own States, Maine, Massa- chusetts, Khode Island, Connecticut, Colorado, Florida, Montana, Nevada, Calif ornia, Arizona, Washington and Utah, have no usury laws, and I am assured that in the four New England States men- tioned the prevailing rate of interest is lower than in any other part of the Union; there are twenty-five States where the usury laws provide only for forfeiture of excess of interest, and the remaining States have laws somewhat similar to those of New York which work a forfeiture of both principal and interest, and in some States even imprisonment of the usurious lender; of course if this ancient law, which is being constantly and necessarily evaded and broken, is repealed, then there must be a fixed and definite rate of interest that shall be known as the legal rate and that shall be binding upon all parties in the absence of a special contract; this rate should be neither high enough to oppress the borrower nor low enough to work hardship to the lender; there are vast sums of money owing and always at interest where from the very nature of the case, no agreement can be made between the borrower and the lender; some of these are found in past due accounts, estates in the hand of an executor or administrator, assets of a debtor in the hands of an assignee, a referee or trustee, advances on consignments, and cases pending in courts where vast sums remain unpaid for a long series of years; these are in all in effect forced loans where the interest is not payable semi- ammally, and where the lender is compelled to await the slow and tedious process by which he seeks to obtain his own; it would be a great hardship for him to be forced to accept less than a fair and reasonable rate of interest; take the last few years as a basis, with tunes of great abundance of money, and times of great scarcity; I will venture to say that, outside of money loaned on first mortgages and on call loans, ninetcen- ! twentieths of all the loans have been made at six per cent, and at this rate has been perfectly satisfactory to both borrower and lender; I am convinced that a lower legal rate would work I great hardship to those who are compelled to loan their money 500 without their consent, sometimes for long periods of years; I am well satisfied that if this Legislature will repeal the absurd usury laws, and will establish the legal rate of interest at six per cent, in the absence of an agreement, it will confer a great benefit upon the people of the State." I move the adoption of the resolution. The resolution was adopted with but one dissenting vote. In 1854 England repealed her usury laws. At one time it was thought that to loan money at interest was contrary to the teach- ings of the holy scriptures; I say that I have carefully and reverently searched the holy scriptures with the best concordance I could find, and have been a teacher in a Sunday school for forty years, and I can find nothing in any way bearing on loanii money; it all has reference to benevolence; all the mention usury in the holy scriptures has relation to benevolence* anc nothing to do with business transactions of modern times, anc can not be construed to have any reference to it whatever, and tl best minds in the country have come to that conclusion, althougl 200 years ago there could be no more heinous offense in minds of biblical scholars than loaning money at all; I have got many of the best authorities on the subject; in one day in New York, according to the Financial Chronicle, money was loaned at four per cent at 10 o'clock, 186 per cent at 12 o'clock and six per cent at 4 o'clock ; would any sane man invest his money in an article that fluctuated as much as that; and all that time a man could go in an open market and get money on first class collateral at five per cent, or from a savings bank on mortgage at four and a half any time that day; for any man for a moment to think that money should always be loaned at one rate of interest is absurd; I know a woman that was left f 4,000, all she had when her husband died, which she loaned to some person at seven per cent; she did not know anything about this usury law; she loaned it at seven per cent on the face of the instrument; he took advantage of it and she lost it all ; the simple solution of this interest question is right here; draw a paper so as to say: " Section 1 of title 3 is hereby amended so as to read as follows: Where 501 there is no agreement for a different rate of interest, interest on money shall be at the rate of six per cent; it shall be lawful to pay a higher rate, but no greater rate than that above nientionod unless the agreement to pay such greater rate is in writing; all acts or parts of acts inconsistent with the provisions of this act are hereby repealed ; " simply pass a little act like that and the whole question is settled forever; sixteen States in the United States have repealed those laws, some as long as thirty years ago, and Rhode Island was the first to do it; money is as free as any merchandise, and I am told by brokers that the city of Providence is the cheapest money town in the United States; we all know that England repealed her usury laws in 1854, and her money markets have always been the cheapest; I was not aware that Khode Island was the cheapest until a little while ago; a gentleman stated to .me that the city of Providence has cheaper rates than any other city in the United States; I wish you would read this; I have no personal interest in it; I can borrow money to-day at much less than the interest quoted, right in Wall street, for any amount; I never paid a usurious rate of interest; I am a considerable bor- rower, not lender; I never made a dollar in my life of anybody; it is entirely in the interest of the unfortunate and impecunious borrower, who has got poor collateral or poor credit; it works untold mischief and injury to the unfortunate borrower; upon this corporation law I should like to say a few words; I have an extract from a paper in my hand which says : " The organization of a somewhat novel corporation was completed last evening in Jersey City, by Dill, Chandler & Seymour, lawyers, of No. 31 Nassau street, this city. It will be known as the Corporation Trust Company of New Jersey, and it has a capital of $100,000, which will soon be increased to f 1,000,000. Its present offices will be at the corner of Greene and Grand streets, Jersey City. " The object of the new corporation is to some extent apparent by its name; it will in effect be the trustee of corporations organ- ized under the laws of New Jersey, but really doing business outside of that State, its organization having been brought about on account of the existence of great numbers of such corporations; the new company will act as the local agent for, and, to a cer- 502 tain extent, as a trustee of trusts, furnishing an office for all such corporations and acting as register and guarantee of their stock debenture, and doing a general trust company's busint the new directors of the Corporation Trust Company of N( Jersey are: Gov. Leon Abbett; Charles Kelsey, Secretary of State; Allan McDermott, chairman of the Democratic state committee; Henry S. White, United States District Attorney; Jo] McAnerney, president of the Seventh National Bank of this James B. Dill, Charles King, Vincent H. Lamarche of Brookl^ and T. N. Jordan, comptroller of the Equitable Life Assurance Society; the president of the company is Mr. McDermott, the vice- president is Mr. White, the treasurer is Mr. McAnerney, and the secretary is Mr. Lamarche; besides the directors there are six other men of almost equal prominence politically who are stocl holders, but their names will not be made public for the presenl in order to provide offices for companies the new corporatio] pending the erection of a building for its own especial use, h; hired the premises at the corner of Greene and Grand streel Jersey City, and fitted up offices with all the necessary coi veniences; such corporations organized under the laws of State of New Jersey, and doing business out of the State, wi thus be able to comply with the law of that State, which requii all such corporations to have an office, and to have a person in charge of it during the business hours of the day; in this building, facilities are offered to corporations to hold their meetings, elec- tions, etc., and to transact all their business which the law requires them to transact within the State of New Jersey; there are deposit vaults in the building in which each company can have a separate safe to keep its documents; the corporation, by its charter, has power to act as agent for non-resident corpora- tions, and to be designated as the person upon whom tbe service of papers within the State of New Jersey shall be made; it is expected that the new company will also do an extensive business in guaranteeing the regularity and legality of the issue of stocks, mortgages and bonds of New Jersey cor- porations, and will stand in the same relation to these securities as the various title guarantee companies do to the purchasers 503 of real estate; tlit- courts of several States, including the State of New York, have decided that New Jersey corporations which do not strictly comply with the law that requires them to have an office and an agent in New Jersey continuously are not shielded by their charter, and that the stockholders and officers of such companies are copartners, and liable for the debts thereof; the extent of the field open to the new company is also shown by the figures published some months ago in the Evening Post in relation to the great number of corporations which are organized under the laws of New Jersey, but which really do their business in this city; in two years alone, for which the statistics were obtained, 1,(?26 such companies, with a capital stock of $600,000,000 were organized under the laws of New Jersey; in explaining the object and purposes of the new corporation organized yesterday, one of the directors, alluding to the decision of the courts above referred to, said: "This corporation will enable those corporations to meet that criticism in two ways; in the first place, in the very strictest sense, it will enable such companies to comply with the laws of the State of New Jersey, as to having a local office, and iii the second place, it will financially guarantee the legality aud non-liability of the stock; the company proposes to take such a stand that their guarantee of the legality and non-liability of the stock and debentures shall be as necessary to parties seeking to borrow money on such collateral as is the certificate of a title guarantee company as to the title to a piece of real estate, in case a borrower wants to realize upon it; there is likely to be some legislation in New Jersey the coming winter more strictly enforcing the rule that corporations must maintain continuously an office in the State of New Jersey and have as well a person designated upon whom service of papers can be made within the State; all companies such as those referred to will therefore, undoubtedly, find it to their advantage to rent offices in the build- ing of our company and take advantage of all the facilities afforded by it; the most profitable part of the business of our company, however, will probably be in guaranteeing the stocks of these foreign corporations, rather than in renting offices to them and providing them with a legal representative upon whom 504 papers may be served, so that they may keep within the law of the State and the terms of their charters." The New York counsel to the new company are Dill, Chandler and Seymour, and Mr. White will be its counsel in New Jersey. Q. Those corporations organized there do business in this State; they have their money here? A. Yes, sir; they are taxed here, and some of them are mighty sorry they ever organized. Q. They pay taxes over there? A. Yes, sir; and they pay them hero in both places ; now, here is another little paragraph I cut out of a paper: "Reginald P. Kowe was yesterday appointed receiver of the National Lead and Oil Company by Judge Landon, in the Supreme Court, Brooklyn. The appointment was made the request of Elihu Boot, who appeared for the board of directoi in a petition for a voluntary dissolution. This petition w< signed by Reginald P. Rowe, vice-president, W. P. Thompsoi R C. Webster, J. G. Steenken and John L. Steen. It was statt tha t the corporation w r as entirely solvent, but that the stockholders desired to organize under the laws of New Jersey." I am not very familiar with that company, but it shows that our corporations are being driven away; I am at the head of a concern where li have a partner of about my own age; we are no longer young; we wont remain on the stage of life a great while longer, but I hope to live quite a while yet; I have had a pretty good time for sixty years, but we can not reasonably expect to live a great while; we have sons in business; I thought of incorporating; I went to the head of a corporation that was formed under the laws of New Jersey three years ago and stated our position; he says: " You haA r e got a pretty good right to live five or ten years yet; I will giA'e you the advantage of my experience; keep on as you are; it is altogether probable that the merchants will induce our Legislature to adopt liberal measures towards corporations, and the time will come when you can organize as you should be organized;" I made up my mind that I would take his advice, and having had experience in the red tape, and cost and expense and bother, and I said: "I will have a chance of living five or ten years, and will hope the Legislature will give us more favorable laws:" I have been studying ihe question of taxation from the 505 >ks; 1 have read several books lately, and I have come to this mclusion, that there is but one thing- to be taxed, and that is >al estate, when you tax real estate you tax everything else, id that is all there is about it, and you can not reach anything all the statistics of all the States and their efforts to reach >perty prove it, and when a little child goes into a candy store buys a penny's worth of candy, he helps to pay the tax, and ''hen a millionaire buys a $2,000 carriage, he pays a tax exactly the same proportion to his wealth; when the lodger in a ten- ant lodging place comes and pays ten cents, he helps to pay the x, and when a man pays twenty-five dollars for a suite of rooms a hotel, he pays a tax. Q. Then yon really believe that personal taxation drives capital of the State? A. There were 1,600 corporations driven out lere in two years. By Mr. Malby. Q. Do you think it would keep them in if foreign corporations rere taxed? A. I would not tax any corporations; I would iply tax real estate; T might have a small tax for incorporation t would not be objectionable. Q. They haA'e that in New Jersey? A. Yes, sir; and I think small tax for organization would bring those 1.600 companies ick. and would return more income than v/ould.the personal returns now; this is the Empire State; all that makes it 10 Empire State is our p-eat harbor, our Hudson river, and the ; nothing else on earth makes it the Empire State; New r ork city to-day pays over 1,000,000 towards the support of the lools; it could not pay a cent of it if it was not a great com- nal port. ,Q. What is your idea of the inheritance tax? A. I think, if are very large, it would be a good thing; it seems to me that in or twenty millions is enough for anybody; but it don't seem to J that when a man dies and leaves ten or twenty, or even $100,000, a large family that are expensive, that the tax gatherer ild gather it in; he is the bread winner, and he is gone; on i ates of 1,000,000 and up, I say it is all right enough, 64 506 because it don't make much difference whether a man is wortij 1,000,000 or 10.000.000; there is no difference; but those smal estates, I think it is an act of cruelty; with, collateral relation it might be different, but my own children what T have be able to save for them; I think it is a cruel act, because there wa not be enough to take care of them in the way they have accustomed to live; it depends upon how much I leave al that, or how long I live and how successful I might be. William H. Parsons recalled: By Mr. Ains worth. Q. You stated that stockholders under our laws were Half for the entire indebtedness, regardless of the amount of stock: that would be true if you conducted your business as partneif A. Yes, sir. Q. Why do you urge the change when you do the same business by the same men under the form of a corporation? A. Like mj friend, Mr. Smith, I am not as 3 r oung as I once was; I wantB leave my capital in my business; I want to perpetuate that busi ness, but if I have a private estate outside of my business, I d< not want to make that necessarily responsible. Q. But if you had conducted that business as partners yot would have made that responsible? A. I would have probabl; gone out of business. Q. \ T ou get a greater advantage than you would doing busine&j as partners; is it not equitable that you should pay the Stat'j something for that advantage? A. I am perfectly willing t< pay the State, and I think it is perfectly equitable that the Stat should be paid on the same basis I would have paid it' I lia- continued the individual firm. Q. But you get greater advantage, don't you? A. Personal! I do not. Q. Then there is no object to incorporate? A. Perhaps thos that succeed me may get the advantage. Q. You do it because you think there is an exemption ti private estate from the liability which you incur as a corporation now, if the State gives ypn that advantage, which you won! 507 lossess as a private individual, is it equitable for the State to ilax you for that which it gives you? A. If I had not had in mind |jen years ago the idea that at a period in my life I would put my lusiness in a corporation it would not be one-fourth its magnitude >-day; I should have ten years ago commenced to curtail my Business, rather than commence largely to increase it. I G. Waldo Smith, recalled: I The witness. In order that a solvent concern should be will- lig to pay the State for exemption from liability, would infer that I man has not much confidence in his business, and it seems to me that would not be a proper motive, and the State should not jfcact remuneration for that. I Q. I was not questioning the motive ? A. It seems to me a very Improper motive for the State to exact money for; this gentle- ilan I spoke of took a paper out of his pocket and says: "Here, latil I formed this corporation, myself and partner paid a per- nal tax on $15,000; now I am assessed at a million dollars; it I now $19,000 whereas the tax before was $600; I have offered jf pay on half a million as a compromise; don't you form any cor- ttration this year until after the Legislature meets;" I have I resolution passed by the New York State board of trade when r enty-eight bodies from the interior cities of the State were isented; it is very short and I will read it: "Whereas, The present laws of New York State governing the ition of business corporations are so extensive, technical onerous, when compared with those of adjoining States, as to ive our citizens to those States to transact their business, with j consequent loss of revenue to this State; and "Whereas, During 1890 over 500,000,000 was forced out of New k and reorganized in New Jersey and other States by the laws of this State; therefore, Kesolved, That the Legislature be requested to correct the pres- unjust statutes governing the formation of business corpora- in order that the laws of a great commercial State like New should offer, at least, as favorable opportunities for the ative employment of capital as those our sister States offer, we commend this subject to the consideration of our public 508 authorities and the Legislature with a view to their niod'ii- cation." I have a resolution offered by the chamber of commerce, of which 1 am a member; it is as follows; it was adopted January 7, 1892: "Whereas, The present laws of New York State governing tm formation of business corporations are so extensive, technical ail onerous, when compared with those of adjoining States, as 1 drive our citizens to those States to transact their business, with a consequent loss of revenue to this State; Besolved, That the laws of a great commercial State like N M York should offer at least as favorable opportunities for the co-operative employment of capital as those our sister Stall offer, and we commend this subject to the consideration of ow public authorities and the Legislature with a view to their modifi- cation. Eesolved, That the co-operation of other commercial bodies am] particularly that of the New York State board of trade, is hereby solicited to accomplish this desired end." Our secretary sent a copy of that to Mr. Farquhar. W. H. Arnoux, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. You are a resident of the city of New York? A. Yes, sir. Q. A practicing lawyer? A. Yes, sir; and have been for fort;i years. Q. Also a member of the New York board of trade and trans portation,? A. Yes, sir. Q. And attending here as a member of the committee sen to appear before this committee? A. I was requested to com by the other members; I was not originally appointed with tha view. Q. In your practice you have had considerable opportunity o examining the present tax laws? A. I have. Q. 'Their enforcement arid the various criticisms made upo them ? A. Yes, sir. 509 Q. Your firm is also very largely interested in the loaning of loney on mortgage? A. Very largely. Q. About what amount annually, would you say? A. There tve been passing through our hands very nearly a million dollars month; I think about f 10,000,000 a year, and we have to examine Itles for the loaning of money, on sometimes as high as f 2,000,000 month. Q. What have you to say as to the propriety of modifying the nt laws relating to taxation, assessment and interest as they feet the agricultural, manufacturing, commercial, laboring, bank- and other interests of the State? A. In my judgment, from ly experience in my profession and intercourse with business ten, I think, that the taxation of personal property in the hands individuals, is unjust, oppressive and tends to defeat the object which it is intended; I think it should be the duty of every iture to seek to make the laws just, equal and enforceable; this State the taxes on personal property have never been Lected in a way to do justice to the community, and in my tent, the law should be abolished; contrary to the opinions some of the others who have spoken to you, I think that the islature has adopted the wisest course that could be suggested its taxes on corporate franchise and its taxes on collateral ieritance, for those taxes can always be collected; in my judg- it, looking at it as a matter of business experience, I think an >r is committed in the State in making the tax too large on orations; we are constantly incorporating, gentlemen, in >us forms of enterprise, and, I think, in the last three years o has never been one that had a choice of incorporation that not incorporate in another State than the State of New York; st Virginia, I believe, is the most favorable, because West inia, while it imposes a tax for incorporation, which is much rev than the State of New York, permits the holding of the lual meeting and the meeting of the board of directors outside the State of West Virginia; New Jersey requires that the mal meeting of the stockholders shall be held in the State of Jersey, and consequently, the annual meetings are held ly at Taylor's hotel, Jersey City; by this means New Jersey 510 collects a revenue of considerable amount from business conducted wholly and entirely in the State of New York, and New York lose* it; what is the best course to pursue; the tax itself is a wise one in my opinion; the same is true in regard to the collateitj inheritance tax, and I think it was wisely extended to make it 1 succession tax; the amount is not large one per cent as the 1* stands, and if that law could be recast because in its present form it has been condemned by the Court of Appeals as a very intricate and hardly comprehendable law, but they have laid down rules for the assessors and the surrogates; there is a tax which, in my judgment, is a model one; no one can escape it; it is pro vided that every executor is personally liable for that tax, and therefore if he permits an estate to escape he himself become* personally liable, and as long as the property is in the State it if subject to the tax and is enforced and collected. By Mr. Coggeshall. Q. What do you think that to the direct inheritance tax? That it is a fair and just tax; I think that for the protection that the State gives every man's property and every man's family, it haj a right to say it shall be paid; I had an occasion to argue tin I question in the Court of Appeals in the Prime case, a case whicl| has just been decided; I find that tax first imposed in Kom<| by Augustus, and Gibbon in his history of Rome called England'! attention to it, and in the latter part of the last century, Low' North, then the prime minister, brought in a bill under which tha: tax had been collected in some form to the present day; it is knowi as the succession tax, I think, in England; they tax as we d< to-day, the collateral as well as the direct; the third tax, I think] is an excise tax in some form; I think that is a just tax; I thinl in those three forms the State of New York should collect all o the personal t&xes which it expects to collect; I had occasion nin years ago to make a study into this matter, and I then found b, research that the personal taxes in New York amounted 1 1197,000,000; in Brooklyn to f 13,000,000 ; in Buffalo to $10,000,00( making a total of 1221,000,000, and in the rest of the Stat $03,000,000, and by the previous census of 1880 the capital of th 511 II ate of New York alone amounted in value to $108,000,000 more in the entire personal property as taxed in the county outside the three that I have mentioned, and in that investigation I made discovery ; in one county, I think it was, or perhaps it may have -en one township one district, whatever it was there were vo individuals only who were taxed for personal property and one vas a widow and the other was an executor; in another county in ic State I found that by the census "of 1880 the poultry in the nmty was worth more than all the assessed personal property; >w, when a law is enforced like that it is wise to abolish it; f am believer in a single tax; that is, with the exception of those three vhere you get personal property that there is no escape from, and [vhere it is uniform, universal and equitable; for all the rest I relieve that you should tax real estate, because it comes from the msumer eventually exactly as does the tariff of the United States ; ie merchant who imports the groods don't pay it out of his pocket ; is the consumer who pays the tax, and so it is in regard to all il estate taxes. By the Chairman. Q. You are quite satisfied that the foreigner does not pay the ; it has been asserted that the foreigner pays the tax? A. lere are certain taxes that the foreigner certainly does share; am looking at it as a home question; whatever tax is paid eventually paid by labor, and it comes to that in every stance, and must eventually reach it, and if you tax the real ty nobody escapes; everybody pays his just proportion of ie tax, and that I think ought to be the real question for the legislature to investigate how they can impose the tax so that shall bear equally, universally and justly upon all citizens, and it put the burden upon one and another escape; now in regard the personal tax; there is another consideration; in the State York figures show that for the last three years on the re it has cost seven and a half per cent to collect the personal in one of the years it cost ten per cent, and I think that does represent the entire cost of its collection; the real estate in the aggregate, of course, costs more, but when you come to 512 distribute it, I think, you will find that it is much less, and when you abolish all the machinery of personal taxation in the Stat<^~ and deliver the State from so many tax gatherers, the savings of the State would make another item which would amount to a great deal. By Mr. Coggeshall. Q. Would the effect of levying the taxes upon the real esta alone, except in those three instances that you have mentioned^ be to increase. or decrease the tax upon real estate? A. Perhaps in the beginning it might increase it a little, but the benefit ^o the real estate would be, I think, much larger than the cost wouiB be; in this way, if it were known to the world at large that a man could bring any amount of personal property into this State,*; money, bonds, or any other form, was absolutely free from tad it would increase loanable funds of the State to such an exteiM that the diminution of interest would far more than equal the amount of tax that would be added. By Mr. Ainsworth. Q. How would that affect the farmer; he could not raise added bushel of wheat or potatoes? A. I think the amount would pay would be a very trifling addition; but, of course, if man owns nothing except real estate and has no debts whatever i and no desire to borrow any money, it might add to his burden;; of course, it must in some respects or in some direction add a| burden to some; you can not get an increased tax: in one direction; without imposing an additional amount on some; I am speaking,! of course, of the general community; the community at large,! in my judgment, who pay taxes, would pay less money in the' course of a year in paying all the tax upon real property. By Mv. Coggeshall. Q. How much is the aggregate amount, or about, of taxes paid upon personal property, aside from those three that you speal of; that is, the excise, inheritance law and the corporation A. I have never been able to get at the figures; I suggest thai the committee might wisely endeavor to ascertain what was 513 I total amount and what was the total cost of its collection; your I committee has the power to ascertain that; a private individual 1 would find it very difficult to go through sixty times and do it. Q. As to trust companies, so called; that is, companies organ- ized by special act doing business as trust companies; do they pay taxes or not? A. I am not positive about 1hat; my recollec- tion is that the trust companies do not pay taxes; I know that |is the case in regard to the savings banks; for instance, the imotint that a savings bank will take without the reduction of ;heir interest, it is cheaper for a man to put a thousand dollars In a savings bank and take four per cent than it would be for urn to invest that amount in bond and mortgage and pay taxes, 'hich he wouJd have to pay. Q. Most of the bonds and mortgages escape taxation? A. I think they do ; because there comes the thing right before every- me' s mind ; it I, as a private individual, put out f 100,000 on bond id mortgage and get four and a half or five per cent, and I am liable to be taxed two per cent on my |100,000, my income is H! need to three per 'cent or less; if I put that money in the ivings bi-nk, they can make the same loans and do not pay a it. Q. I spoke of trust companies? A. I think they stand in the position as savings banks; I am not positive. Q. They are made largely of individuals who organize thein- jlves as trust companies? A. Yes, sir. Q. And they do a general business, do they not; a good many jf them? A. In one respect they do not; in another they do; ike the United States Trust Company; they will not receive ['hat they call "open accounts;'- that is, account that you can leposit your money and draw it out from day to day, and be [pedited with interest on your balance; the Union Trust Company ill. BQ. They loan a good deal? A. Certainly they do. j]Q. And they do a general banking business except that they J> not receive deposits? A. They do not receive them to be against the way a bank does. They pay no taxes? A. I think not. 514 By Mr. Ah earn. Q. There is no reason in the world why they should not? A. I think it would be most unfortunate to impose a tax upon them because it would immediately drive millions I think.it would be safe to says hundreds of millions of capital out of the State, if the trust companies had to pay taxes upon their loanable fundj as a private individual those funds would not be deposited with; them. Q. One of the differences between a trust company and a bank: is that the trust company pays interest on the deposit? A. ThalJ is one 01' the main differences, and that grows out of the facij that; they have a certainty that the funds are going to remain a certain time, and therefore they can pay interest where banks can not. Q. Is that in your judgment the principle upon which they exempted from taxation? A. I think so; an account agai] which you check from day to day is technically known as active account, and such accounts, as far as I am aware, Union Trust Company is the only one that takes. By Mr. Coggeshall. Q. You spoke of the corporation tax being reduced; have any suggestion to make to the committee as to how much and in what way it would be proper to modify them? A. I could not offhand say that, although I have had occasion to look into the law in New Jersey to see how much they paid, but I have forgotten what it is; it is so much less than the State of Xew York as to make it advisable to 1,600 corporations to organize there and pay their taxes there. By the Chairman. Q. What would you say to so amending the law thai corporation would be subject to the same payment upon nling its certificate in this State that a domestic corporation is required to make when they organize? A. It would bfing additional revenue to the State of New York for the time being, but I think it would have a tendency to drive it out of New York. 515 ) Q. I speak now of foreign corporations that do business in the State of New York? A. If you are aware, that is a law in regard to the manufacturing corporations; I have had occasion | to act for several recently before the Comptroller to have the taxes adjusted; if you remember under the manufacturing law | a corporation which does its manufacturing out of the State of New York is bound to pay its tax upon the amount of business [which it does in the State of New York, and upon the amount of capital here in the State of New York, and a large revenue >mes to the State from it. Q. I refer particularly to those corporations that go to West Irginia and New Jersey and organize and do business wholly this State, although going to those States to form, for the mrpose of escaping the tax on their creation? A. Undoubtedly ley do; avowedly they do. Q. What would you say to the proposition that they pay upon filing of a certificate in this State a tax equal to what they rould pay in this State? A. I think it would have the effect as state. By Mr. Coggeshall. || Q. You speak with reference to the collateral inheritance law that it should be recast; what would you suggest with reference to any amendments, if anything? A. I think that if the jftommittee should take the English law, which is admirably llxpressed, as a guide, they would simplify the thing very much; lint the Court of Appeals has made that law pretty certain; we Iftad this question come up as to whether any gift in a foreign Benevolent, religious or charitable corporation this State could tax It, and the Court of Appeals has held that under the law they mst pay their tax; we represented the Fairweather estate; he istributed several million dollars to colleges, without regard to Hpeir geographical location, to the principal institutions through- Hut the United States, including New York; the Court of Appeals ivs those inside of New York get theirs without paying their per cent and those outside had to pay. 516 By Mr. Guenther. Q. You /said you favored the single tax idea? A. Yes, sir: taxing real estate alone, excepting the three things I spoke of. Q. What would you do with the improvements? A. I am not an advocate of Henry George sufficiently to say that if a man chooses to get a building worth f 1,000,000, and he gets a rental out of that of |250,000, that he should only pay a tax that his next door neighbor pays that only gets an income of $20,000, or has a vacant lot and has no income. [asscr By Mr. Coggeshall. Q. What do you thnk of the listing system? A. The Mi chusetts system? Q. Yes? A. I have studied that; I will tell you a little fact in regard to it which is this; Senator Vedder asked me this question: "Are you aware that the laws of Massachusetts read as this proposed law does?" I said to him: "I am aware of that, and also aware of the result which perhaps may not he known to you, and which confirms what I have said about the evasions which will be practiced under such a law; the day fixed under that law for assessment is the first day of May, and on that day merchants will have on hand only about* one-quarter of his average amount of stock they carry; they sell through the latter part of March and all of April, and on the second day of May the railroad depots on the first of May are filled with goods, the bills of which arrive on the second, and the goods themselves are removed as early as possible on the morning of that day. By Mr. Guenther. Q. Couldn't you reach that by some provision of law? A. The ingenuity of the human mind to escape taxation is far superior to the ingenuity of the Legislature in collecting taxation, whenever you discover a loophole and fix it up it is only to that they have another one. 517 By Mr. Coggeshall. Q. What have you to say as to the income tax? A. I believe u that an income tax that can be fairly collected is a wise tax, but the jl difficulty about it is abhorrent to the American mind to have to i> go through an inquisitorial process of disclosing all the income | a man gets and where he gets it; I think the experience of those I who remember the time of the war when the United States inter- 1 posed an income tax, will know that it was the most frightful I source of perjury ever in the world; there was a man who boarded at the Fifth avenue hotel, and under the provision of the law a man may deduct from the tax the rent of the building that he occupied; that man deducted the rent of the Fifth avenue hotel. Q. Explain what you mean by an excise law? A. I mean in some form or other a license for the sale of liquor, whether you call it, as in Ohio, a direct tax on liquor itself, or, as the State of [New York, imposed upon the permission to deal in the article; t becomes a tax which the State gets the benefit of. Q. You are in favor of what was known as the Vedder Tax Law >rnc years ago? A. Not necessarily that; I don't care what form it is in; whether from license or any way, the State is going to t the benefit of the revenue from that traffic whether from the cle or the business; my idea is to derive as much as would be just; those three sources you can fix it so that the tax can be itly collected from all; from corporations, from inheritance and in liquors; out of those three I think the State can collect ts just proportion of the tax on personal property. Q. Your objection to personal property is rather as to the defects the enforcing of the law? A. It is a fact that the State has rver been able to collect it so as to bear upon all equally. Q. There is no question but that personal property pays a larger te of interest than real estate? A. I think so. Q. And that if it could be reached it would be a more equitable s of taxation ? A. No, sir ; I think real estate is the best form tfe have, because you can see it; there it is; you can not see a nan's personal property; he may^ take it away; he can not take lis real estate with him. 518 Q. But he can try to dispose of it for the purpose of getting personal property,? A. No matter; somebody will get hold of it. Q. Assuming personal property is to continue to be taxed, whafc have you to say as to not allowing any deductions for indebtedness ; we have had witnesses who have testified that they thought it was better that personal property should be assessed without any/ deductions for alleged indebtedness? A. Now, would that be fair? Q. I am asking you? A. I am putting it to you as a thing that carries its own answer; for instance, I own a piece of real estate; 1 pay the entire tax on that real estate; it is mortgaged at sixty per cent of its value ; I am thereby paying the tax for that personal property and I ought to, I think, but if personal property is to be taxed I ought not to pay for personal property independent of that, and not have any benefit, and this man who loans me the money benefits, because it seems to me that a tax law to tax person} property with no deductions for indebtedness would be a law for the rich and against the poor. Q. What, in your judgment, would be the effect upon the valuis of real estate, if taxation was confined to that alone? A. It might perhaps before the tax was fairly adjusted affect the price j of real estate, but when it became adjusted it would not be* noticed. Q. It would depreciate it, you mean? A. I think it mighl don't know as it would. Q. It would increase the tax also? A. Yes, sir; that is wl mean; it might depreciate the value of the property temporal a little, but in less than five years it would adjust itself. Q. Do you know any State where that law exists? A. I don't remember that there is any. Q. Or any country? A. I don't remember how the tax law is in England; my recollection is that England does not tax personal property per se; it taxes certain articles like liquors, and then hasi an income tax and gets its revenue from personal property. Q. Isn't there a different rule to be applied to agricultural lands than city real estate; would it adjust itself to the altered 1 conditions more rapidly than farming lands? A. Probably Hj would. 519 Q. JRents might be increased in the city, while a farm would not produce any more because it was taxed? A. No, sir; it would not enhance the productive capacity. Q. The man on the farm, the result would be that he would be paying a larger part of the public burden while his income was not increased? A. In niy judgment, the amount that would be added would be insignificant; for instance, if the net revenue returns from a piece of property would be less the value would be less; as far as the State tax was concerned there would be a diminution in the assessed value of that property, and there would be therefore less tax. Q. The great tax is the local tax; if you exempted personal property in that location from taxation you would be placing upon the land all the tax now derived in that locality from per- sonal property, and you would not add by any possibility to his [income? A. Can you tell what is the assessed value of the igricviltural lands of the State? Q. No, sir. A. Because as I have it here in 1884 all the interior Lties'of the State and all the agricultural districts except New r ork, Brooklyn and Buffalo, the entire personal property is 13,000,000; now. that must be a very small part of the taxable ilue of the State; I suppose of that $93,000,000 it would be safe say that Albany, Buffalo, Syracuse, Utica, Binghamton and all e cities of the State would pay two-thirds of it, and that the m lands themselves probably did not pay on over $30,000,000 personal property; now, the amount derived on that would be small. By Mr. Hamilton. Q. Would not the results which you say would follow the imation of the tax on personal property be practically accom- shed by the laying of a specific tax, very light, say three-eighths ft a mill, such as prevails in Pennsylvania, which would be iccepted by the owners of personal property as a fair contribu- [ion toward the government of the State and its expenses, and by avoid the claim that it was being unjustly taxed, and no just cause of driving it from the State? A. That of 520 course would be a matter of experience to determine; if you made it sufficiently small whatever rate you fixed and made it so that it would be universal, there would be less complaint; but the difficulty that the State labors under is, I think, an endeavor to kill the goose that lays the golden egg; the prosperity of the State of New York is due more than anything else to the fact that personal property is not taxed; there was never anything that was. so detrimental to the wealthy and the poor of France as the revocation of the edict of Nantes; it drove out tens of thousands of the best of France into England, Germany and Holland; a law that would tend to drive out the capital of New York woi be as disastrous to the true interests of the State as that edict. Q. What are your views in regard to what is known as local option bill suggested, by which each locality can detenni what shall be taxed and to what extent? A. I think it is an admirable law; if a county tries it and they find it is a benefit, the other counties will be ready to adopt it. Q. It would have the effect of at once exempting all taxation on personal property, would it not? A. I think it would; I think as soon as they saw how it operated in one county they would immediately want it themselves. Q. If one county adopted a system of not taxing personal property, would it not of necessity drive other counties to d< same thing whether they thought it prudent, or not? A. I think it would; I believe that the sentiment of New York city that If the city authorities have the power to exempt personal property they would do it; I think it would immediately show by the result it was so wise, that every other county would adopt it. By the Chairman. Q. Considering the amount of personal property assessed wiihin the limits of Now York is it not practically untaxed now'. Very nearly; there is one gentleman owning a costly estate in New York and also a beautiful residence on Fifth avenue, who says, according to the papers 1 don't know anything about it personally that he Avould submit to personal taxes on f 8,000,000, but he said, as soon as they put him any higher than tha 521 would make his residence in Newport; now, you and I would be perfectly willing to retire on the balance of the personal property he has got over the $8.000,000. Q. What have you to say as to the changing- of the rate of interest as fixed by law now? A. I don't quite agree with the wise men on that, but still T A\ould rather not complicate the question; in the last two years in all the amount of money that has been loaned to our office, I only know of one instance where the loan was made at six per cent; we have no regard to the rate of interest that Hie State fixes in making loans on real property; if it is a good piece of property and a suttick-nt margin; that is, sixty per cent, you could not by any possibility get over five per cent; we are making loans at five and four and a half where they are exceptionally good, and sometimes as low as four; now, without reducing the rate of interest by law it is being reduced by virtue of 1he amount of capital which is seeking investment. Q. Arc you familiar at all with the conditions in agricultural districts as to loans? A. No, sir; because capital is so timid that any that we have to do with we can not get anybody to look at a piece of property if he has got to cross the Harlem river or East river; every man wants to be able to go and see it; the capitalists in Brooklyn make their loans there and the capitalists in New York- make their loans in New York, and I suppose it applies to the country as well. Q. Assume that the farmer uniformly has to pay six per cent a loan, what would you then say as to the wisdom of reducing from six to five? A. I think a good deal of what Mr. Smith ys of the ingenuity of the human mind and especially of the pitalist to get his income; I think they would find some w r ay or er to evade the law; I mean the great bulk of the money t is loaned. By Mr. Aiusworth. The great bulk in agricultural communities is loaned from mey centers? A. Yes, sir. Now, would a State law, reducing the rate of interest, in ir judgment, benefit that class" of loans? A. The only thing 66 522 ' to do is this; if you give with one hand and rake with the other ,^ perhaps you would equalize the thing pretty well; I think capital would make no complaint if the law was made as Mr. Smith hajl suggested; if you say we will exempt all personal property froir.^ tax, and on the other hand when there is no agreement in regardf to the rate of interest as he suggests; I think that capital woulfl not be half so reluctant as it is to-day. Q. If you had a client who had $50,000 to loan and somebody wanted to borrow it on a farm in New York State at fire per cent, and you could loan it in New York at four and a half, when! would the money be probably loaned? A. So far as it woulfB pass through our office, in the city of New York. Mr. Parsons. It seems to me that if you reduce the legal rate of interest to five per cent, the result will be that the loans wl are now existing upon the farms which are made from the tenters will be called in. The Witness. I suppose that this question of six per c< is a question that does not amount to anything practically to the people who borrow on bond and mortgage. So far as the savii banks and life insurance companies are concerned, you might ttell hare a law of the State that is should be seventy-five cent. By the Chairman. Q. What have you to say about doing away with the fixed altogether? A. WTiat has been the result in regard to the amendment to the law which yjou made a few years ago, in which you provide that call loans can be made at any rate of interest that they pleased? Hasn't that been shown to be of great advantage, and hasn't it always been shown that the rate of interest has declined in Wall street under the operation of that law? When a man was in a tight place and wanted to bor.- row money, he had to pay one-half per cent a day and commission; in the panic it went up to a higher rate and went down again; that abolition of the usury law has proved to be of the greatest benefit to the borrower and not to the capitalist; see the busi- ness with the banks; we all know in New York ihai in ordinary I times in the last five years the banks have not been able to get I all the discounts there were from the customers and have to go I out and buy it. Q. But the borrowers in the country have to pay six per cent I at the banks the farmers and country merchants; it is from 1 that class of people very largely, I think, that the demand for the reduction in the rate of interest comes? A. You see in connec- tion with that they can make what arrangements they please; if capital will flow in, the rate will go down just as it did in Wall street; last week I recovered a verdict in a litigation which has been pending since 1876; we could not tell how much the jury would find we were entitled to, and therefore instead of saying the interest on such a sum would be so much, I put a clerk on the stand and had him make a computation of the percentage, and it was exactly 100 per cent, and the jury came in and said: "We find for the plaintiff f 10,500 and 100 per cent interest ;" now, [that was from 1876 to 1880, at the rate of seven per cent, and 1880 to 1893 at the rate of six per cent, and of course if we had just so much money we could have been collecting our interest and compounding it, and it made it less than five per cent would I have been. John Gr. H. Myers, called as a witness, being duly sworn, testi- fied as follows: By Mr. Hamilton. Q. Where do you reside? A. In New York city. Q. What is your business? A. A practicing lawyer. I Q. Your present occupation is what? A. Attorney for the receiver of taxes of the city of New York. Q. What suggestions have you to make to the committee in I; regard to the existing laws affecting the collection or levying Jjof taxes? A. First, I would like to make a suggestion with ref- 1 erence to the remedy under the law; at present there are two remedies afforded to the tax department for the enforcement and collection of personal taxes; one is by a summary proceeding ) punish the debtor for the non-payment of his taxes, which Its in committing him to the county jail; the other is the 524 remedy of action to recover the amount by an ordinary common- law action; the severer remedy for punishing for contempt, it seems to me, should be abolished; that is the first suggestion I have to make; I find that in my three years in charge of the office that practically imprisonment is very harsh, because it simply reaches the poorer class who happen to be on the tax list; they are frightened into coming to pay because they lii that threat over them, and I have known instances where tin have gone off and put in pawn personal property in order raise the money to pay the taxes; I have also had one or V widows come to me, and not knowing what the law was, having disposed of what was left to them by their husbands, th< found themselves in difficulty because they had not gone to surrogate, and have gone off and in some way by borrowii and what not have obtained money to pay that tax; now, man who can afford to pay has evaded it by going away, so we could not serve a paper on hirn; in the ordinary proceedii of acquiring by a suit within the last year I find that it woi much better; those who can afford to pay and ought to pay reached by judgment and execution; the poorer ones we sej a summons and complaint on, which results in a judgment; it returned unsatisfied, and an examination under supplemenl proceedings shows that they can not pay and never can pay. Q. And never ought to have been taxed? A. And never ought to have been taxed; I, therefore, make a suggestion to the com- mittee whether it would not be wise to abolish that; a man who wants to hold his position in that office is obliged to follow up that BiDumary proceeding first, because there is a limit, of tune *n which you have to commence it, and the financial office expects,. of course, you will to your duty; I have verf often found myself very much embarrassed by having people taxed who never ought to have been taxed ; the second suggestion I would like to make is this: I find that under this collateral and direct tax law the inheritance tax estates very frequently are taxed twice; the husband or whoever it is dies and leaves an estate, probably f 10,000, or just n little over |10,000, just so it comes within the 5^5 inheritance tax law; he is taxed by the State tax directly, and the executor finds that he is also taxed on that same amount by the local authorities, so that for one year the executor is taxed twice on the same estate, and it does seem to me that this is unjust, and that the law did not intend that; the remedy that I suggest for that if it is practicable, and it strikes me it is, is that at least for one year after the death of the intestate or testator that the executor be exempted from taxation for local purposes, and that may be penalized, have the State deduct from its tax that lit collects from the county the same amount which the State collects direct from the executor or trustee as a direct tax; in that way the county" would not lose anything; I have found a number of estates since this collateral and direct inheritance tax laws came into existence that we caught in that way; I would just say here, [because the question has been asked once or twice during the evening, what proportion the assessed valuation of personal [property in the city of New York bears to the valuation of the >roperty in the city of New York; I can say that for the year 1892, i*sonal property bore the relation of one-sixth to the entire aggre- gate value of our property in the city of New York, real and per- mal, and it paid a tax about in the same proportion; that is, >nal property paid about one-sixth of the tax. Q. Have you found any difficulty under the present law from tecutors where there are more than one to an estate, changing ieir residence from one place to another going outside of the ite? A. I find that they do not go out of the State; they go ito Eichmond county or Westchester or Brooklyn and carry the curities and everything with them; we can only tax theresi- snt who swears that his co-executor has the securities in the ther place. Q. Do you think that the property of an estate should be taxed rhere it is located? A. Where the letters testamentary were led. Without regard to the residence of the executor? A. Yes, ; in that way New York city would benefit largely. Q. What do you say about taxing the personal property of ites? A. I believe that they should be taxed. 526 ne yt 3ID. Q. Assuming that the estate is money, and as you have heard here loans are made in New York from four to four and a half per cent, and the tax rate is anywhere from one and eighty-five one himdredths to two, is not that very severe upon the propert A. Yes, sir; it is. Q. That is the reason I asked you what you say as to the wisdom, of taxing personal property of estates? A. I do believe in taxing, but it is one thing to tax and another to overtax. Q. Have you any idea, to suggest to the committee as to taxing estates and yet relieve them to some extent from what I have suggested? A. I do not know that I am prepared intelli- gently to give an opinion upon that. Q. Would the levy of a uniform specific tax avoid that hardship, if it is a hardship? A. Perhaps it would; to some extent it would; you are not referring now to the imprisonment? Q. No; I am referring now to the personal property of estates where the earning capacity is largely destroyed by taxation not the earning capacity, but the earnings are depleted by reason of taxation, so that the net income is loss. A. If the estate had its money out at four per cent and it had to pay two of a tax; it would be a great hardship to tax it two per cent. Q. What would you say about this; making the tax on the collateral or direct sufficiently heavy to justify the exemption of the personal property of the estate from taxation for the usual period allowed by law for an accounting eighteen months? A. Without having had that before, I should say that might meet the difficulty and might be a remedy and relieve the estates; I should be in favor of abolishing the personal tax matter entirely in the city of New York, if it were not for this one thought that enters into it in my opinion, and that is that the tenant rent-paying people of the cities would be the ones that would suffer if the entire personal tax was abolished; I believe it would result in an increase of rents; it is a well-known fact that a very large pro- portion of the residents of the cities, especially of the city of New York, are not owners of real estate, and those who do own real estate are not going to bear the entire burden of paying the running expenses of the city or State government; if obliged 527 to pay an increased tax, as they will be if this personal tax is entirely abolished, they will look somewhere else to have somebody par it, and very naturally would look to their tenants, and it would result, in my opinion, in an increase of rent, and you would hear an outcry from the tenantry of New York and Brooklyn against the abolition of personal taxes; if the other who owned the real estate would be willing to bear the one-sixth per cent additional and pay the taxes, then we might do that. Q. You say that one-sixth of the total taxation comes from taxation on personal property? A. About one-sixth; we can not get it exactly; it is in the neighborhood of one-sixth; it was last year about one-sixth of the tax. Q. Yon say you are in favor of abolishing imprisonment alto- gether? A. Yes, sir; I am; we have abolished imprisonment for debt in New York, and that is the only remnant left, and it Us time we abolished that. Q. The theory is that if a man is liable to taxation he can be reached by civil proeess? A. He can be reached if he has got property; if -you follow him with supplementary proceeding* it will be reached, and if the examination shows he hasn't it to pay, it is not policy to oblige him to pay what he has not got. 1 U Mr. Malby. Q. Have you any suggestions to make as to the manner in which the collection of personal taxes can be increased? A. Yes, sir; if the officers in every county would follow those people up who move from one county to another, and do it for the purpose of get- ting rid of the tax, then they would be obliged to pay it some- where, and they would not run from the city of New York or .Rochester or Brooklyn; I know of one case where a man lived in* the Navarro Flats lives in West Chester, worth millions; he has fcone there to escape the payment of taxes. By Mr. Coggeshall. Q. A great deal of the difficulty is caused by the lax way of administering the law? A. Yes, sir. The committee then went into executive session, and on motion adjourned to meet in New York, February 10 and 11, 1893, at 1.1 a. in. 528 Joint Committee on Taxation, New York, February 10, 1893. The committee met pursuant to adjournment. William J. Kogers, called as a witness, being duly sworn, testified as follows: Bv Mr. Hamilton. Q. Where do you live? A. In East Orange, New Jersey. Q. And you were subpenaed here as an officer of the Condensed Milk Company? A. Yes, sir. Q. Which has its office where? A. The main office at 71 Hudson street, New York city. Q. .And its corporate title is? A. The New York Condensed Milk Company. Q. And its capital stock is? A. Three million dollars. Q. Organized under the laws of New Jersey? A. Of the State of New Jersey. Q. How long has it been incorporated? A. Since December, 1891. Q. Prior to December, 1891, was it incorporated under the laws of any other State? A. The laws of the State of New York. Q. And under what name? A. The same name. Q. With the same capital stock? A. No, sir; a smaller amount Q. At the time of the change from incorporation under the laws of the State of New York to the present incorporation under the laws of the State of New Jersey were there other corporations included in it; that is, was there a trust formed? A. No, sir. Q. Can you explain to the committee what causes led to the change of incorporation from the State of New York to the State of New Jersey? A. We were about reorganizing, with the inten- tion of increasing our capital stock, and about that time there were very objectionable laws of the State of New York; and the laws of the State of New Jersey, as I understand, were much more favorable to corporations, so we were advised. Q. Can you specify in what respects the laws of the State of New York presented the objections you refer to? A. One of the reasons, I believe, was that you could organize more readily in the 529 State of New Jersey, with less delay; that was one, and there was another one that the laws of the State of New York at that time, a recent law, a law passed and went into effect May, 1891, where the reports necessary to be made were very objectionable to a corporation; in other words it simply made public the whole business and put into the hands of our competitors information that was not desirable to let them have; that was one of the most objectionable clauses I think in that law. Q. Was the subject of taxation also considered objectionable .as imposed by the laws of this State? A. No, sir; I don't think 'there is any objection, so far as I know; allow me to correct that; I understand that there was a little advantage in the franchise, as I understand, but the difference I don't know on a capital stock of 13,000,000; perhaps f 3,000 or |4,000 which, of course, is an item. Q. Prior to 1891 your offices were in the city .of New York? A. Yes, sir. Q. Was there any change made to your incorporation under the .laws of New Jersey? A. In the offices or in the officers? Q. Officers? A. Yes; there was an increased number of direc- tors in order to comply with the New Jersey laws. Q. Practically, then, in the transaction of your business it was conducted in the same way and in the same place as it had been while you were incorporated under the laws of this State? A. Yes, sir. Q. What tax, if any, does your company pay to the State of New York? A. We pay the regular real estate tax; we havfj manufactories throughout the State, several in number and we also pay a personal tax. Q. What personal tax do you pay? A. I presume that is a local tax; I am not certain about that. Q. You do not pay any direct tax to the State of New York, do you? A. I do not think we have as yet; we filed the neces- sary papers, and I do not know exactly what the result is. Q. Have you applied for, and Jjave you obtained a certificate for leave to do business in this State? A. Yes; we have responded to all the requirements of the laws of the State of New York. 67 530 icor sir, Q. The fact is then that practically doing business under iru poration by the laws of New Jersey which is the same business only increased in capital which, was carried on under the laws of the State of New York, yet you are not paying the tax which is paid by the domestic corporations of the State of New York? A. Yes; we are paying the same tax as we always paid. Q. I say you are not paying the tax which is assessed u] domestic corporations in the State of New York? A. Yes, sir, Q. The tax upon your capital stock, your dividends? A. We are a manufacturing corporation. Q. You are purely a manufacturing corporation? A. Purely a manufacturing corporation; I would state as to the laws of the State to-day, they have been changed, as I understand it, though I have not paid much attention to it since we reorganized, bui in looking over a copy of the amended law, there is no objectio that I can see to-day that existed at the time we reorganized i 1891; it seems that practically the laws of the State of N York to-day are practically the same as the New Jersey laws. Q. What part of your business is transacted in the State o New Jersey? A. We have a branch, office there, both in Jerse City, and also in Newark. Q. To what extent is your business transacted there? A. Ver little. By the Chairman. Q. Purely local? A. Not purely local; no, sir; if you mea. our goods, our goods are sold all over the United States; in th State of New Jersey w r e have two offices and stables for th delivery of our goods, the same as we have to Brooklyn. Q. Do you know the valuation on which you paid taxes in thi city? A. I could not tell exactly; no, sir. Q. Have you an idea? A. I would not like to guess at it; th assessment was made and paid at the time; I simply passed i the papers and the treasurer sent his check. Q. Where are your factories? A. There are several throughoi the State of New York. 531 Q. Are they all in the State of New York? A. Not all; no, sir; we have two factories in the State of Illinois; I say " we," that is our corporation. By Mr. Malby. Q. You say you are a manufacturing corporation; do you pay any tax at the present time in the State of New York on your capital stock? A. We have filed according to the requirements of the State, the necessary report; I do not think we have heard yet from the State authorities. Q. Isn't that simply a certificate which the law requires shall be filed in order to do business? A. No, sir; not at all; it is a complete statement; I do not know in what form it is. Q. When you filed the papers that you have filed under the existing laws will you have to pay a tax on your capital stock? A. I am not prepared to answer that; understand me when I say that; I have only done business under this corporation for a little over a year. Q. Have you paid any tax in the State of New York on your capital stock up to the present time? A. No, sir. Q. Or on your dividends? A. No, sir/ Q. When you say you are not prepared to state whether you will, under the present filing of your papers, pay a tax you don't know what law is applicable to that subject? A. I do not; we filed our papers under advice of our counsel. Q. Do you have to pay any tax on your capital stock or divi- dends in the State of New Jersey? A. No, sir; I presume not. Q. Were there several corporations doing the same kind of business you were previous to 1891 in the States of New York land New Jersey when you reorganized your company? A. I jthink likely. Q. Were they consolidated in this new company? A. Not at all; no, sir. Q. No consolidation whatever? A. None, whatever. By the Chairman. Q. Do you manufacture wh&t is known as Borden's condensed milk? A. Yes. sir; that is our brand. 532 By Mr. Malby. Q. Do you remember what your capital stock was in New Y( A. Forty thousand dollars. Q. And now it is $3,000,000? A. Yes, sir. By Mr. Hamilton. Q. Upon what amount of personal property do your companj pay a tax in the city of New York? A. I have already answered that. Q, What was your answer? A. That I do not remember the exact amount; I remember we did pay; that it passed through 1113 hands to the treasurer. Q. What is your best recollection as to the amount? A. I woulc hardly like to say that; I have no reason for keeping it back, bui it would only be a guess. By Mr. Malby. Q. You say you pay a personal tax; what does that consist A. That is. stock on hand; what we are assessed. Q. It does not have any reference to capital stock? A. No, By the Chairman. Q. Is it merchandise and personal effects of the corporatio] hf-re? A. Yes, sir. By Mr. Hamilton. Q. And that is all you referred to as a tax on personal property a tax on merchandise and stock on hand? A. Yes, sir; that what I had reference to. By Mr. Malby. Q. Can you give us approximately the assessed valuation of you real Estate in New York? A. I should say f 1,000,000 a year more; I can give you the exact figures if you desire to have thei later on; that is a rough calculation; we have about seve factories in the State of New York. Q. If you can give us approximately the amount on the sonal property? A. I can do that if you would like to have 533 By the Chairman. Q. You will furnish it to the committee; send it to nie, and T \\ill see that the committee get is? A. Yes; I will. Charles C. Burns, called as a witness, being duly sworn, testi- Ified as follows: By Mr. Hamilton. Q. Where do you live? A. My home is in Rochester, New York; |bnt I am here now. Q. You mean you reside in New York city now? A. No; my te is in Rochester. Q. You also have a residence in the city of New York? A. iporarily; I remain here. Q. You are treasurer of the National Starch Company? A. Yes. Q. That is a corporation organized under the laws of the State Kentucky? A. Kentucky. Q. With what amount of capital stock? A. Ten million five Lucdred thousand dollars. Q. How long has it been organized as a corporation under the iws of Kentucky? A. Since the 1st of May, 1890. Q. Prior to May 1, 1890, under the laws of what State was it Trying on business or was it incorporated? A. It was not in Existence. Q. At the time it was organized was it made up of different )rporations which had lief ore existed? A. No, sir; it was a pur- for cash; an out and out purchase of different properties. .Q. Bought differ out properties or bought stocks in different xrations? A. No, sir; it was properties; it was corporations some cases and in other cases it was simply a private lership. Q. What properties in the State of New York were included that corporation? A. The Glen Cove Manufacturing Company the Niagara Starch Works at Buffalo. Q. Any others? A. In New York State? Q. Yes? A. No, sir. Q. What other States were the corporations in? A. Indiana, iois, Iowa, Kansas. 534 my? Q. What proportion of the capital stock was the Glen C< Starch Company made up of; you say your capital stock v 110,000,000; what proportion was made up on the G-len company? A. I don't know that I am entitled to answer su< question as that; that is a private matter. Q. At what amount was it valued or placed in this agj gation? A. I can not say that. Q. About what amount? A. I can not say that at all. Q. At what amount had the Glen Cove company been capital- ized while it was conducted as a separate corporation? A. I don't know. Q. Haven't you any idea? A. No, sir. Q. Had you been connected with the Glen Cove company' A. No, sir. Q. At what amount had tin 1 Niagara company been capital- ized? A. I don't know. Q. Had you been connected with that company? A. No, sir Q. Do you know anything about the previous business o your company whatever? A. What previous business? Q. As to what amount of capital stock or property was ownec by these various corporations? A. No, sir; I am in the employ of the new company, and I do not know anything about the ol< companies. Q. Were you employed by any of the old companies? A No, sir. Q. Have you received any information as to what the value of those properties were? A. I don't remember. Q. Did the Glen Cove company go out of existence when you company was formed? A. It did. Q. Did the Niagara company also go out of existence then? A Yes, sir. Q. They ceased to be corporations of the State of New York A. Yes, sir. Q. Where is the principal office for the transaction of the busi ness of your company? A. Covington, Kentucky. Q. What office do you maintain in the city of New York? A At No. 20 Broadway. 535 Q. For what purpose is that office used? A. For the transfer of stock and securities of the company principally. Q. It is also used for the transaction of the general business of your company? A. Yes, sir; the general business of the com- pany, of course, is in Covington; we Lad an office there. Q. Is the office in New York used for the general transaction the business of your company? A. Yes, sir. Q. Purchase and sales? A. Yes, sir. Q. How many officers of your company reside in the State of New York? A. I am the only one. Q. Do you know the reasons which led to its incorporation under the laws of Kentucky? A. No, sir; I was not one of the incorporators. Q. Does your company own any real estate in the State of New York? A. Yes, sir. Q. Where is it located? A. Glen Cove and Buffalo. Q. Does your company pay any taxes upon personal property in the State of New York? A. Yes, sir. Q. What amount? A. I can not remember that. Q. Upon what personal property does it pay a tax? A Ir pays a tax upon the bank account, the merchandise in store and the personal property that we have in New York. Q. Do you remember the gross amount upon which you are taxed for personal property? A. No, sir; I paid it simply as it was presented to me each time. Q. About what proportion does it bear to the total capital stock of your company; your capital stock, you say, is $10,000.000? A. Yes, sir; that we pay taxes on that in all States in the Union. Q. I ask you as to the personal property you are assessed upon in the State of New York, what proportion does that bear to your entire capital stock of $10,000,000? A. I can not say as to that. Q. Can you give us any idea? A. No; I can not give you any idea at all. Q. Do you pay any tax whatever on your capital stock through the State of New York directly? A. No, sir. Q. Or upon any dividends declared by you? A. No, sir. 536 Q. What is the amount of the annual sales conducted throu< the office in the city of New York of your company? A. I do know ; I do not have much to do with that part of the business. Q. Haven't you any idea of the business of your company? I have an idea of the business of my company in a general wai but as to that I do not know. Q. In round numbers what is the amount of business tran sacted through the office in New York? A. I don't know. Q. Haven't you any idea? A. No, sir; I have not. Q. Do you do any business? A. I do not do any business of tl company whatever; as I told you I am the secretary and 1< after that part of it. Q. What are your duties as secretary? A. The duties are laid down in the by-laws to attend the annual meetings, the meetings of the board of directors, and keep a faithful record of the book? xind accounts; that is near as I can remember the duties as laid down. Q. Do you also act as treasurer? A. Yes, sir. Q. You are the chief disbursing officer of the company? Yes, sir. Q. And yet you can not give us any idea of the amount receipts of your business or the business done through the office in New York? A. I can not give you anything as to the | factories, wherever they may be. Q. I am not asking through the factories; I am asking the annual amount of sales through the New York office? A. I do not know. l>y the Chairman. Q. Could you furnish the committee with a statement to that effect, if you had time, as to the amount of sales done through the New York office? A. Yes; I can do that. Q. How long would it take you? A. To go down to 20 Broad- way and come back again. The Chairman. I was just going to suggest to counsel that we should excuse Mr. Burns until to-morrow morning, and then he could furnish us with that information. 537 By Mr. Hamilton. Q. I would like to have a statement of the sales and purchases made through your office in New York during the current year, or say 1892? A. I don't think any purchases were made in New York; yes; Queens county is in New York State; that is so. By Mr. Ainsworth. Q. You say you pay taxes for personal property in this State? A. Yes, sir. Q. What part of the State? A. Here in the city of New York. Q. Any in Buffalo? A. The manager attends to that there. Q. You don't know? A. I don't know. By Mr. Ahearn. Q. Does your company own any works on South street? A. Yes, sir. Q. They own that property? A. Yes, sir. Q. Didn't I understand you to say that you didn't own any real estate in New York city? A. I made a mistake; they do own it. Q. That is quite a good lot? A. Yes,; there is quite a piece in it; I don't know what taxes they pay on it. Q. You do the bulk of your business there in the city of New T York? A. In the city of New York; yes, sir. Q. And employ quite a number of men? A. Yes; we employ a great number of laborers. Q. That was formerly the old Duryee Starch Company? A. Yes, sir. By the Chairman. Q. Did any of the existing corporations for the manufacture of starch go out of business at the time of the incorporation of the new company? A. They all did. Q. Those you took in went out of existence? A. Yes, sir. Q. Did the same manufacturing establishments continue under the new name in the same locations? A. Yes; the same locations, but they were revamped and we spent a lot of money in making over and putting our men in. 03 538 Q. I understand, but the same establishments that were manu- facturing starch before continued in the same localities in manufacture of starch under the new name? A. Yes, sir. Q. Do you manufacture the several brands of starch manufc tured before and under the same name, or is it all under 01 name? A. Where we bought the trade-marks, of course, we use the trade-marks with our name on it, the National Starch Manu- facturing Company, successor to the Glen Cove Starch Works. Q. So that the only change really is that it is a new corporation and under the new management? A. Yes, sir. Q. But you continue to manufacture the same brands of si that were manufactured before your incorporation? A. No, sii because we made some new brands; we have disused some of old ones and closed up a good many of the factories. Q. You say your principal offices are located in Covingtoi Kentucky; what relative proportion of employes have you in office compared with the New York office? A. There are v( few; there is only the secretary there and the clerk. By Mr. Ah earn . Q. The bulk of your business is transacted here in the city New York? A. Yes ; that is to say, the routine work of it. By the Chairman. Q. The bulk of the starch manufactured in the United Sta1 is now manufactured by your corporation? A. No, sir; not at we have very strong competition. By Mr. Byrnes. Q. Did your company take charge of the Oswego works also? A. No, sir. Q. Were you secretary and treasurer of the company at the time of the organization ? A. Yes, sir. By Mr. Ainsworth. Q. When you organized, what existing factories went into the combination? A. Do you mean what we bought; we bought the Glen Cove, the Niagara, A. Erkenbecker & Co, George 539 Fox, Lockland, The Topeka Starch Company, the Ottumwa Starch Company, in Iowa. Q. Did the stockholders of the existing corporations, the Glen Cove and others take stock in the new company,? A. They did; yes, sir; they w r ere offered cash first for it. and then they came and bought the securities of the new company. Q. So that practically the. existing corporations and factories became stockholders in the new corporation? A. Yes, sir; voluntarily. Q. Were there any other stockholders except the stockholders of the existing corporations? A. Yes, sir. Q. Your stock was put upon the market and sold ? A. Yes, sir. Q. These corporations were each appraised at a certain sum? A. Yes, sir. Q. And which were paid over in stock of the new corporation or in money, the values which had been placed upon the various properties? A. Yes, sir. Q. Did the Kingsf ord come in with you ? A. No, sir. Q. The capitalization of your new company was 10,500,000? A. Ten million five hundred thousand dollars. Q. Do you know what the capitalization of the existing cor- porations was at the time of the consolidation? A. No, sir; I do not. Q. Have you any idea? A. No, sir. Q. Have you any idea as to whether the capitalization of the new corporation was increased beyond the aggregation of the corporations then in existence? A. I do not know. Q. You do not know whether it was more or less? A. I do not know anything about it; I am an employe of the new company. Q. But you were familiar with the organization of the new company, weren't you? A. In a. measure; no; not the particulars .of it Q. You were its secretary and treasurer? A. Yes; when it reorganized. Q. From the date of its organization? A. Yes, sir. Q. Were you interested in any existing companies? A. No, sir. 54:0 Q. Who is there that would know that fact as to whether your capitalization was increased or decreased beyond the aggre- gate of the capitalization of existing corporations? A. I do not believe anybody knows that; I do not suppose anybody has given it any attention at all. Q. It must have entered into the talk in organizing the new company? A. That is for the incorporators of the company; I suppose they would have done that. Q. Were you one of them? A. No, sir. Q. You made a remark that you paid a tax upon your 10,000,000 of capitalization in all the States in the Union? A. Yes, sir. Q. What did you pay in New York State on that? A. I tell you I can not remember. Q. Do you pay this tax direct to the State or pay them to any of the various departments? A. I can not ^ay that; I pay them as they are presented. Q. Do you know whether they are presented by the local authorities or by the State authorities? A. I do not. Q. Do you pay a tax of that amount in any State where you have no factories? A. I don't think I do. Q. Then why do you say in all the "States of the Union? A. I mean to say in all the States of the Union where we have oui companies. Q. Wherever your factories are? A. Yes, sir. Q. The only tax you pay to the State of New York upon per- sonal property is the personal property your company is subjed to in New York where your office is? A. I don't know aboul that; the details of it I do not know. Q. What proportion of your $10,500,000 capitalization is rep- resented by real estate? A. Bonds were issued for $4,500,000 represent seventy-five per cent of the appraised value of the property. Q. Of the real estate? A. On the real estate. Q. Then, about $6,000,000 would be the appraised valuation ol the real estate? A. Yes, sir. 541 Q. And an issue of $4,500,000 of bonds represents seventy-five per cent of that? A. Yes, sir. Q. If |4,500,000 represents seventy-five per cent of your real estate valuation, then twenty-five per cent of your capital stock must represent the remainder of your real estate? A. Yes, sir. Q. Then seventy-five per cent of $10,500,000 must represent per- sonal property in some form or other? A. I beg pardon; I did not follow that. (Question repeated.) A. Yes; I suppose so. Q. Now, upon that seventy-five per cent of $10,000,000 where are you assessed upon that personalty? A. I say in all States wherever the property is. Q. Do you have any personal property assessment in the county in which the Glen Cove factory is situated? A. I don't know. Q. You understand the law what a corporation is assessed upon the personal property at the place where its offices for the transaction of its' business is? A. Yes, sir. Q. The Glen Cove factory is no longer in existence? A. No, sir. Q. Then there can be no personal property assessment on that property there? A. No, sir. Q. The Niagara factory no longer exists? A. No, sir. Q. Then there can be no assessment upon any part of the personal property in the county of Erie? A. Upon the old Niagara Starch Company? Q. Yes? A. No. Q. There can be no assessment under the law upon any part of your personal property in Erie county because your principal office is not situated there? A. No sir. Q. Your home office is not in the city of New York? A. No, sir. Q. There can be no assessment upon your personal property in the county of New York? A. That is the way I argued it out, but I am paying it all the same; I paid it last year, and I received a notice a short time ago for the personal property this year. Q. Can you give us any idea of the amount? A. I have an idea it is $50,000 to $60,000. 542 Q. Of personal property? A. Personal property. Q. Then as near as you can estimate it whatever personalit is represented by seventy-five per cent of your capital stock is n( assessed anywhere unless you pay a little of it here in the oil of New York; I am not trying to get into your private business? A. No; I suppose not. By the Chairman. Q. The committee would like to have vou tell them just in what way you think under the operations of the statutes of the State of New York you have been made so uncomfortable as drive you to another State? A. We were not driven to anoth< State; we never organized here. Q. But the natural choice would have been to remain under tl laws of the State of New York if you could have been just comfortable here as elsewhere? A. I think it would, but I don ? know anything about that as I was not one of the incorporate] Q. Why did you select the State of Kentucky to organize ii A. I do not know; I did not organize the company. Q. And you never heard any suggestion as to why the Sta1 of Kentucky was selected? A. I do know about that; it seems t< me I heard an idea, that it was because it was a State allowed two pref erred stocks, and the laws of that State permitted that, and the other States did not Q. Nearly one-half of your capital stock is represented by the bonds, isn't that so? A. No; the capital stock is $10,500,000; the bonds are a first lien on the property. Q. Then you have first and second preferred stock in addition to the bonds? A. Yes; and common stock. Q. Then what amount of common stock do you have? A. Five million dollars. Q. Has your corporation declared any dividends since its organization? A. Yes, sir. Q. How many? A. It paid interest on the bonds, and it paid the. dividends on our first preferred stock of eight per cent, and twelve per cent on the second preferred stock. Q. Any on the common stock? A. One per cent on the common stock. 543 Q. Can you tell the committee what proportion of the stock is what is recognized as treasury stock? A. Yes; as I say I con- sider this thing confidential, and I do not think it is right to make public in the newspapers all these things; we have in the treasury 14,500,000 we should issue, we have issued f 3,837,000 and we have in the treasury $603,000; on the first preferred stock the capital would be 3,000,000; we have issued $2,219,000 and have in the treasury $780,000; second preferred stock $2,500,000, we have issued $1,340,800, and have in the treasury $653,200; on the com- mon stock out of $5,000,000 we have issued $4,450,700, and have in the treasury $349,300. By Mr. Ahearn. Q. Isn't all of your manufacturing done in Glen Cove? A. No, sir. Q. The bulk of it is? A. No, sir. Q. That is the principal factory, isn't it? A. No, sir; it is one of the largest. Q. It is shipped from there to your warehouses in South street? A. Part of it is and part of it is not. Q. Most of the manufacturing done at Glen Cove is sent to that warehouse? A. Yes, sir. Q. To supply the city of New York and the State of New York? A. Yes; it goes all through the State; that is the natural outlet for it. By Mr. Malby. Q. Where are your other factories located? A. In Topeka, in Ottawa - Q. I mean in New York State? A. In Buffalo. Q. Is the product of that factory shipped here? A. I don't know where that is shipped; I am not familiar with. that. Q. Can you tell me whether any of it is sold from the factory; have you any business office there? A. Yes, sir. Q. That is other than the business office that controls the management of the firm;? A. Any other business offices? 544 Q. Yes; than controls the simple manufacturing? A. manager runs the factory. Q. Have you any salehouses there; do you sell any starch fi Buffalo? A. Yes, sir. By the Chairman. Q. Where are your orders first placed; in the New York offi< A. No, sir ; they are first placed with the manager of the company. Q. Can an order for starch be placed at the Buffalo manufactoi direct? A. Yes, sir; a man would naturally send to that offi( to buy it. By Mr. Malby. Q. Would the communication be addressed to *the National Starch Company? A. To the National Starch Company. Q. And not to the name of the old company? A. No, sir. Q. Has the price of starch gone up any since the organization of your company? A. No, sir; the price of starch is lower now than it ever was before. Q. Can you tell whether under the laws of the State of Kentucky you pay any tax on your capital stock or dividends? A. We do not. Q. Have you filed any certificate in the State of New York? A Yes, sir; in the secretary's office. Q. And your principal business is done in the State of New York? A. No; our principal business the New York business is done in New York. Q. Is that your principal business; that is the larger proportion? A. The larger proportion is done in the State of New York; yes, sir. By the Chairman. Q. And orders from all parts of the country are placed and filled in the State of New York? A. No, sir. Q. Is all the product of your manufacturing establishments in the State sold within the State? A. No, sir; it extends all over the country. 54:5 Q. That is what I mean; that you receive orders in New York from all over the country? A. Yes, sir; for the New York for instance, the New York branch of it. William W. Childs, called as a witness, being duly sworn, tes- tified as follows : By Mr. Hamilton. Q. Where do you live? A. Brooklyn. Q. And you are treasurer of the American Manufacturing Company? A. No, sir; I am acting secretary.. Q. What is the business of. the American Manufacturing Com- pany? A. The manufacturing of jute-bagging for baling cotton. Q. Under the laws of what State are they incorporated? A. The laws of West Virginia. Q. How long have they been so incorporated? A. On that point I will have to state my opinion that it is about five years; I have only been with them a little while, and I am not sure. Q. Do you know whether prior to that they or any constituent part of that corporation was incorporated under the laws of the State of New York? A. No, sir; they never were. Q. Where is their business carried on? A. In the south; that is, their sales are made in the south. Q. Where is their bagging manufactured? A. At Charleston, South Carolina, St. Louis and Brooklyn. Q. Where is the principal office of the corporation for the transaction of business? A. The selling agents are at St. Louis, and they control and sell the entire product of the manufactory, although we have an office in New York. Q. Where is your office in New York? A. Sixteen to eighteen Exchange place. Q. Where are your purchases nfade for the transaction of your business? A. Principally here. Q. Principally in the <-ity of New York? A. Yes, sir. Q. What is the capital stock of your company? A. The paid up (capital), I think is $2,300,000. Q. What, if any, taxes are paid by your company in the State New York or to any of the counties in the State? A. We pay 69 546 only a personal property tax in the city of New York for our office furniture. Q. To what amount? A. Five hundred dollars; a nominal Q. That is upon the value of $500? A. Yes, sir. Q. Then I believe you also pay the tax upon your property Brooklyn? A. We do not own the property; the taxes assessed upon the property we lease. Q. Is that a part of the rental? A. Yes, sir. Q. Other than that you pay no taxes whatever? A. No, sir. By Mr. Malby. Q. Did I understand you to say that your principal office w at St. Louis? A. I say principal in this respect, that the largest mills are there and the selling agents who control the entire product of the three mills are there. Q. Why was the company organized under the laws of the State of West Virginia? A. 1 can not give you an intelligent answer to that; 1 have heard the matter talked over, but thct was before my connection with the company. Q. Do you understand that the laws are much more favorable there than here? A. I have heard so, but I do not know about that. Q. Do you- control nearly the entire manufacture of jute bag- ging? A. Our opponent would hardly admit that fact. Q. What do you say about it? A. I should say that probably we manufacture forty per cent; I have heard that, and I believe it to be true. Q. How many such corporations are there doing business? A. I can not say positively; I think I have heard there were thirty. Q. Is there any mutual understanding between you as to the amount to be manufactured by the separate establishments or the prices to be received? A. Do you mean with other companies? Q, Yes? A. None whatever. Q. Have you ever had? A. I think there was at one time, but I only say so from what I have heard ; it was before my connection with the company. Q. How long have you been connected with the company? A. Since February, 1891. 547 Q. How do prices range now, compared with what they did at that time? A. They are much lower. Q. Is the raw material itself cheaper? A. It is this year; it varies; last year it was higher. ry the Chairman. Q. The raw material is a product of the south? A. No, sir; it is from Jndia, and we buy it here. By Mr. Malby. Q. Have you any objection to stating the amount of dividends declared by your ^comjpanv? A. None whatever, as we have never declared a dividend. Q. Do you mean by that to be understood that your company has never been able to declare a dividend; that isi, never made anything in excess of your expenses? A. No, sir; we do not mean to say that; we probably have made something in excess, but we have not made sufficient to declare a dividend since my connection with the company; in fact it has been a cut-throat business for the last three years, and while at one time it was Supposed that the prospect was we might make large profits, we :havo made very little. Q. Owing to competition? A. Mostly. Q. You say your paid-up capital is $2,800,000? A. Yes, sir. Q. What is the entire capital of your company? A. We are ; authorized to have a capital of $5,000,000, but our paid-up capital represents stock in the business. By the Chairman. Q. Do you call the balance treasury stock? A. No, sir. Q. It has never been issued? A. Never been issued. Q. Did the creation of your corporation result in the consolidation )f several other corporations? A. It did in the consolidation of two corporations; perhaps I might say of three; two companies in Louis and one in Charleston. Q. Where is the great bulk of your business transacted? A. over the south; probably the State of Texas does more than IT other. 548 .. Q. But through what office or business house is it done? A, More through our selling agents in St. Louis than anywhere Q. To what office do they account? A. Our treasurer lives St. Louis, and has entire control and charge of the finances, but under him, as the acting secretary and cashier, I transact part of the business here in New York. Q. Do the selling agents, for instance, in St. Louis, accoi to the St. Louis office or to the New York office direct? A. account to the New York office, but they retain the funds th( principally. Q. But the business is really done here? A. It is done h( on paper. Q. What officers of your corporations reside within the State of New York, if any? A. One of the directors and myself are the only ones. By Mr. Malby. Q. Is the business conducted at St. Louis for the purpose avoiding taxation in New York? A. No, sir; not at all; the busi- ness was originally carried on in St. Louis, and the office was in New York because this is the point where we are brought into immediate contact with the importers. By the Chairman. Q. This is the great commercial center? A. For the purchase of supplies; there is no advantage to us in coming here for the purpose of selling, but for the purchase of supplies there is an] advantage. Q. What proportion of your product is manufactured in the city of Brooklyn? A. A very little proportion as yet, inasmuch as we have been constructing the mill which is not yet completed. Q. It is a new venture? A. Yes, sir. Elisha M. Fulton, Jr., called as a witness, being duly sworn,: testified as follows: By Mr. Hamilton. Q. Where do you live? A. In New York. Q. Are you connected with the National Cordage Company? Yes, sir. 549 Q. In what capacity? A. As director now. Q. How long have you been acting as director of that company? A. About two years. Q. That company is organized under the laws of the State of New Jersey? A. Yes, sir. Q. How long has it been so incorporated? A. Since 1885. Q And its capital stock Is? A. Twenty-five millions. Q. Was it at any time or any of the preceding corporations merged into it incorporated under the laws of the State of New York? A. I think so; I think there was one. Q. What one was that? A. I think it was Tucker, Carter & Co. Q. Your company has an office for the transaction of business In tho State of New York? A. Yes, sir. Q. Whereabouts? A. One hundred and thirty-five Front street, New York city. Q. How long has it maintained that office? A. Since the [organization of the company. Q. And what business is transacted with that office? A. The j transfer of stock and part of the general business of the company. Q. Is that the principal business office of your company? A. sir. Q. And has been since its organization? A. Yes, sir. Q. How many of the officers of your company are residents of the lie of New York? A. That I could not tell you. Q. Can you give an estimate? A. Officers or directors)? Q. Officers and directors, calling the directors officers? A. I ink out of nine directors five are residents of New York. By the Chairman. Q. Where does the president live? A. New York. Q. Vice-president? A. New York. Q. Secretary? A. I don't know who is secretary. Q. Treasurer? A. Cincinnati. Q. Are there any other officers of the company? A. I think lere is an assistant treasurer. 550 Q. Have you a managing director? A. I think there was at one tune; he was never fixed in the office; that is he has ne attended in the office. Q. Where does he reside? A. In New York; I think tha Mr. Wallace now. T.y Mr. Hamilton. Q. What is the business carried on by your company? Cordage. Q. And where are its factories located? A. In the west, 11 New York, in New Jersey, Pennsylvania, Ohio, Massachusetts, Illinois, and several more of the western States I don't know. Q. Where is it carried on in the State of New York? A. Brooklyn. Q. What is the total output of your company? A. In neighborhood of 125,000 tons a year. Q. What proportion of that is from the factories also Brooklyn? A. I think about 15,000 tons. Q. You say you have factories also in New Jersey? A. We only have one now. a Q. toiat is the only connection then, in fact, which your cor- porations has with the State of New Jersey; that is it has no factory doing business incorporated under the laws of that State? A. Our largest mill burned down there since our incor poration about a year and a half ago. Q. That has not been rebuilt? A. Not as yet been rebuilt and 1 think I will have to correct myself, the other factory I was thinking of is in Beading. Q. Then at the present time there is no factory in New Jersey? A. No, sir; not at the present time. Q. And has not been for a year and a half past? A. About that Q. What business then does your company transact in the State of New Jersey, what proportion? A. We sell our output there. Q. You do that in every State in the nation, don't you; sell your output? A. Almost. 551 Q. What further business other than the sale of your output is carried on in the State of New Jersey by your corporation? A. I don't know of any. Q. What real estate do you own in the State of New York? A. We own those factories in Brooklyn. Q. Any other? A. Not to my knowledge; there may be. Q. What taxes do you pay upon your personal property or upon your corporate business in New York? A. I have no* the slightest idea. Q. You act simply as a director of the company? A. Yes, sir; and I do not even go down there at all. Q. Have you anything to do with the books of the company? A. Nothing at all. Q. Did you act in any clerical capacity at all? A. No, sir; I do not go to the office once in three months. Q. What officer of your company has charge of that department A. Mr. Loper, I suppose, in the department of books. Q. No; I mean the department which superintends the pay- ment of taxes? A. I think Mr. Loper. Q. What is Mr. Loper's full name? A. G. W. Loper. Q. And Mr. Loper's office is where? A. One hundred and thirty-five Front street. Q. Mr. Loper resides where? A. Cincinnati. Q. Is he in New York now? A. Yes, sir. Q. You are not able to give us any information whatever as to the taxes of the company? A. I haven't the slightest idea of it. Q. Is your father an officer of the company? A. No, sir. Q. He was an officer? A. Yes, sir. Q. What office did he hold in connection with it? A. He was ii treasurer for a number of years, and then for a very short time he was financial director; I think that is the office he had. Q. He has ceased to act in either of these capacities at the present time? A. Yes, sir; and has for some time. By Mr. Ainsworth. Q. Have you any bonded indebtedness A. I don't know. 552 By 1ho Chairman. Q. Can you tell the committee why the National Cordage Coi pany elected to incorporate under the laws of the State of N< Jersey? A. i can not; that was before my connection with it. Q. I think you have already testified that the bulk of your business is done here in the city of New York or done from city of New York? A. The books and that sort of thing mi the general office business may be done here, and yet I don't kn that that is the ease now; I believe a great deal is done Illinois. Q. That is, your output goes there? A. No; I mean offi< where the books are kept. Q. The head offices are in the city of New York? A. Yes, si Q. And this is really the home of the company except for fact that they are incorporated under the laws of the State New Jersey? A. Yes; I should think so. Q. What is the capital of the company? A. Twetaty-fr millions. Q. Has it been recently increased? A.Yes, sir. Q. What was it originally? A. Fifteen millions; when it wj first incorporated I think it was only five; it had been for soi two years fifteen. By Mr. Byrnes. ,Q. How many factories have you in Brooklyn? A. I beli< there are four. Q. And they were consolidated? A. Yes, sir. By Mr. Malby. Q. Are there any other companies doing the same business in the "United States? A.Yes, sir. Q. What proportion of the entire busines's does your com- pany do? A, I think they do a larger proportion of the business now than when I was here; when I was in the office and knew, I think w T e did about two-thirds. Q. And you think they do a larger amount now? A* I thinlc possibly they may do a, little larger now. 553 Q. Is the capital of 25,000,000 paid up? A. Yes, sir. Q. Can yon tell us what the amount of your dividends have been within the past two or three years? A. The gross amount? Q. Each year? A. They have been paying eight per cent on their preferred and ten per cent on the common; that is on 15,000,000. By the Chairman. Q. They have not declared a dividend on the recent increase? A. That was only done within two or three weeks. By Mr. Malby. Q. Can you tell us what the stock is worth in the market? A. Seventy-four and one-half; that is the new stock after the common was doubled. William M. Htiagland, called as a witness, being duly sworn, testified' as follows: By Mr. Hamilton. Q. Wherf do you reside? A. In Brooklyn. Q. You are the treasurer of the Royal Baking Powder Com- pany? A. I am. Q. A corporation organized under the laws of the State of New York? A. Yes, sir. Q. With a capital stock of how much? A. One hundred and sixty thousand dollars. Q. How long has it been so incorporated? A. Since 1873. Q. Was it at any time incorporated under the laws of any other State? A. 1 don't know. Q. How long have you been connected with it? A. Eight years. Q. Then it was not during your period of service in the com- pany? A. No, sir; I think it neA'er was. By the Chairman. Q. The committee know that the Royal Baking Powder Com- pany is acting under the laws of the State, and we suppose that you are satisfied with the conditions? A. There is one thing I 554 would like to say in reference to corporations organized under the laws of other States; such experience as I have had in th case when taxes have been levied upon those corporations it always been with a > sentiment of retaliation in other States; great many corporations who have formed under the laws New York would therefore suffer in other States in case taxation should be made too heavy upon corporations doi business in other States; my sentiment has been made up of the fact that taxation should be very lenient over corporations that are not organized in the State of New York, for whatever reason they may have removed or have fomied und'er other laws. By the Chairman. Q. What would you say to so amending the laws as to ti foreign corporation in this State just as we treat our domesl corporations, to put- them exactly on the same footing? A. believe that the great prosperity of this country is due in one cans to the fact that we 'have so-called free trade among the different, States of this union, and corporations organized in the different States should, in my opinion, pay there tax there and if those States did not see fit to insist upon levying the tax that is not our lookout. Q. Don't you look upon it as a shifting of the burden, that large corporations doing business in this State can reincorporate under the laws of other States and thereby escaped their contribution to- the support of the other States? A. Doesn't that show that we are levying a tax in this State that is burdensome, which should not be put upon the corporation? By the Chairman. Q. Isn't it a burden to your corporation as well? A. Yes, sir. Q. How is it then you can live under it and they can not? A. We could live better under it if they did not exist. By the Chairman. Q. Do you find it oppressive with your company to pay the tax in I this State? A. I think the taxation upon the corporations are j oppressive, and I am perfectly free to say to you that it has been - 555 talked over among our directors whether or not we should p out from under the form of corporation, whether we slwmld not i>o back to a partnership. By Mr. Guenther. Q. Do you pay the taxes on the entire personal estate owned by your corporation? A. Personal estate owned by the corporation would be capital stock, wouldn't it? By the Chairman. Q. No; your plant outside of your real estate, and all of your personal effects of the corporation outside of the stock would be personal property? A. We pay taxes on all the personal. Q. On the total value? A. Yes, sir. By Mr. Malby. Q. Do you think that a corporation organized' under the laws of the State of New York and paying taxes here can compete with a company organized under the laws of the State of West Virginia where they do not pay any taxes anywhere? A. It depends entirely upon the coloration and what they are formed for. By the Chairman, Q. Doing a like business? A. I have not experience enough to say. By Mr. Guenther. Q. There are several corporations engaged in the same line of business in this State as well as in several other States adjoining New York, and they combine; several of the corporations in this State refuse to go into it; does that concern, incorporated in the State where there are no taxes, remembering that those in this State are incorporated under our laws and pay taxes do you think it is fair to those that remain in this State to pay taxes here and allow a corporation that is incorporated in another State to come here and compete with those paying taxes? A. I think it is not fair to tax the corporation in New York while corporations 556 in other States do not have to pay taxes ; and for that reason I ai in favor of a tax upon Q. Do you understand my question; suppose there are sevei coriK>rations in this State and the same kind of corporation in other States adjoining New York, and engaged in the same line of business; several of those in this State combine with those in adjoining States and become incorporated in one State, say, f( instance, New Jersey or West Virginia; one or two of ihose engaged in the same business in the State of New York refuse to go in it; they continue incorporated in this State and pay taxes iu this State; it is fair to those remaining in this State to allow those incorporated in other States and paying no tax to come i] hero and compete with them in the same line of business? A. consider it fair because other people have the same privileges they want to go out of New York and incorporate. By the Chairman. Q. What would you do; would you relieve the domestic coi rations from taxation or would you impose taxation upon th( foreign corporations doing business in this State? A, I shoulc relieve the local corporation of its tax. By Mr. Guenther. Q. Where would you get your money from to meet the expenses of the government? A. Do not want to know my opinion? Q. Yes? A. From real estate. Q. On the single tax idea? A. I do not know whether that is the term applied to such a belief. Q. You believe in taxing the real estate? AL. Yes; we are large holders of real estate and would be willing to pay our share. Q. And you think personal property receiving a certain pro- tection from the law as much if not more than real estate should not pay any tax and that real estate should bear the whole burden of taxation? A. Yes, sir. Q. Why should there be this discrimination in favor of per- sonal property as against real estate? A. I believe that the 557 centers of trade are more prosperous by an aggregation of per- sonal property; I do not believe in driving away personal property from New York by putting a tax upon it; we can give employment to labor and have improvements of all kinds by having personal property to spend; and if we are going to tax it and drive away we make people conceal it so we can not get at it. By Mr. Ainsworth. Q. Enlarge your views and take in the whole State, and how does your argument apply to the rest of the State, except its great cities; would you make these people pay the entire expense of the State government; enlarge your view beyond the little island of Manhattan, and what you think about it? A. I believe it would be fair on the agricultural interests; I do. Q. To let them pay the majority of the taxation in the State of New York; you say you do not believe in the taxation of a corporation; what do you say about a corporation which occupies a public street railroad; shouldn't they pay a tax for their fran- chise? A. Would that be considered a State tax? Q. They are taxed now? A. I think my views cover the whole subject; if a street railroad company will go to work and run the risk to get enough five-cent fares to make it convenient for me to go to Central park I bid them God speed and do what I can for them. Q. You understand that a corporation with individual stock- holders, that their private estate not invested is not liable for its debts? A. Yes, sir. Q. And a partnership would be? A. Yes, sir. Q. You believe that no tax should be imposed upon a corpo- ration for the exemption from liability which a State gives them? A. I do not think the advantage is worth what it is charged. Q. It is so much that many men before this committee have testified that they came to New York to organize so as to have that? A. It may be among other corporations. Q. I am taking the enlarged view? A. Then you can judge what the others have to say. : 558 Q. Good business men in the city of New York have testified that they have come to New York to organize a corporation for the purpose of exempting their private estate from liability tha they would incur as partners in doing the same business; now, ought not that corporation to pay something for its privileges or its advantages? A. There are many large corporations in New York, and there are a few that probably that would be an advan- tage; I think, if a majority of the corporations in New York are formed in such a way, that they could very readily return to their old style of partnership, and the release from liability you speak of is not worth what is now being charged us in the way of taxation. By the Chairman. Q. Do I gather from your view that whatever tax is im] upon a local railroad company that it ought to be local in 11 nature; for instance, a railroad corporation with a franchise New York, that if it is to be taxed at all the tax ought to local in its character and the city ought to get the benefit of H is that the idea? A. That is it. By Mr. Ainsworth. Q. You think it should be taxed upon something beside it real estate? A. If it is taxed it should be. By Mr. Guenther. Q. You say you do not favor the idea of taxing personal property; do you recollect the trouble we had in Buffalo during the year whereby the troops were called out to protect the personal property of the railroads at an expense to the county of Erie of nearly |3 00,000; that was for the purpose of protecting personal property; we real estate owners in Erie county must pay the tax for protecting that personal property; why should not the owners of that personal property pay for their proportion to meet the expenses of the State, the county and the city incurred in its protection? 559 By Mr. Ainsworth. Q. Why should the Orange county farmers pay for that entirely? A. As I have said before, I have not studied the question thoroughly. Q. What is your idea as to taxing personal property in view of what I said occurred in Buffalo last year? A. I understand that is the only case of the kind that ever occurred in New York; it is an exceptional thing. Q. But you see the law is that the county is responsible for the destruction of personal property during a riot; you see the personal property has the protection but the county is responsible for it? A, It is a question whether it does not all work around right in the real estate. Q. How would it work around in your opinion? A. This is not an inquisition, is it? Q. No; but we are trying to get your ideas;? A. If you will allow me it is a question to me whether Erie county has not been made what it is by that personal property that is there, and whether it is not worth while to protect that propery for the sake of making Erie county what it is. By the Chairman. Q. What Mr. Guenther has just said as to the conditions that prevail in Erie* county, about the State having to step in and protect railroad property in the county of Erie, and the county of Erie having to make that good, isn't that an argument in favor of what I suggested about the taxation of railroads being local? A. Yes; I think it is, Q. It ought to be local; if the county in which the railroad is located must bear the expense of protecting the property even by the State militia, why then should not the return from that property come to the county -instead of to the State? A. As you state the question, it seems to me it should. F. O. Hanlon, called as -a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. You are the secretary of the National Lasting Company? A. The Universal Lasting Company. 560 Q. Is it a domestic corporation? A. Yes, sir. Q. With a capital stock of? A. One million dollars. Q. With the principal office for the transaction of busii where? A. New York city. Q. Have you any suggestion to make to the committee as to the propriety of modifying the present laws relating to taxatioi so far as they affect the commercial or corporate interests the State? A. I would like to state that my experience has in connection with the company which I represent, in. addition to this lasting company, and we paid the tax (city); it does n< amount to a great deal, $500 a year, but if you take our positio] to-day, we have been four years in existence, and spent probabl f 150,000 in experimenting with a view to perfecting our machinei and we have not had one cent of revenue from any directioi whatever; 'in that case I think there ought to be some modifieati< and my idea upon the subject of taxation I have given it soi little thought is that it should be on the earning capacity of company; I believe in the taxation of personal property. By Mr. Ainsworth. Q. You believe that there should be a system of taxati< graduated accordingly to the rate of dividend which you ai able to pay? A. In that respect taking a corporation, if are in position to earn a certain amount of money, they mai perhaps pay enormous salaries and thus reduce the amount ol dividends declared. By Mr. Guenther. Q. In view of taxing the earning, don't you think the resi would be the same as it is to-day in taxing personal property, that those companies or concerns would have to hire exj bookkeepers, etc.? A. Of course, that is a subject that WOT have to be considered; but my idea is that the tax should and that it would be far preferable to make it a nominal tax 01 the gross earnings; if you propose a tax upon the net earning of a company, of course they can pay their officers enormoi salaries, and thus reduce the dividends. 561 By the Chairman. Q, Suppose the State should determine to tax tlie gross earn- ings of the company; what size of an army of experts do you sup- pose it would need to keep them in hand? A. Of course, but you take our case in the same condition we are in it seems to me a little bit unjust; we have not declared a dividend or received any revenue from any invention whatever, and we pay the State taxes one of them $876. By Mr. Guenther. Q. How long have you been incorporated? A. I think Feb- ruary, 1888. Q. Did a number of people engaged in the same line of busi- ness organize together? A. No, sir; simply to develop a patent lasting inaehine. Q. Were you connected with the company when they were organized? A. Yes; I am connected with the company, the Universal Lasting Machine Company, which is the outcome of another company. Q. You saw no reason why you should not incorporate in this State under existing laws? A. No, sir. By Mr. Malby. Q. You say you are connected with other corporations? A. Yes; with the John Paten Manufacturing Company; also with the Positive Screw Pump and Meter Company, but that is a company w r hich never been in business, and never paid any tax. Q. Do you believe in. taxing personal property? A. Yes, sir. Q. Is there any good reason to suggest itself to your mind w r hy a corporation organized without the State should pay the same | tax with a company that is opganized within the State? A. No, sir; have you put on record that I said I paid from $800 State tax; that is for the John Paten Manufacturing Company; although both of them are domestic corporations. Adjourned. 7i 562 Joint Committee of Taxation, New York, February 11, 1893. The committee met pursuant to adjournment. Charles Davison, called as a witness, being duly sworn, testifi* as follows: By Mr. Hamilton. Q. Where do you live? A. In New York. Q. You are the secretary of the National Lead Company? A. Yes, sir. Q. Which is a corporation organized under the laws of the State of New Jersey? A. Yes, sir. Q. And has been in existence as such since December, 189] A. Yes, sir. Q. That company was constituted of various previously exis ing corporations, including several which were organized und< the laws of the State of New York? A. Yes, sir. Q. The New York corporations which entered into this coi binatiou have since been dissolved, or some of them? A. think so. Q. What is the business of the National Lead Company? They manufacture white lead, oxides, linseed oil, pipe and sheet lead, and in fact all manufactures of lead. Q. What is the capital stock of the present corporation? A. Thirty millions. Q. Where are its factories carried on or operated? A. In a number of different States. Q. Some of them in the State of New York? A. Yes, sir. Q. How many? A. I think there are six. Q. Where are they located in the State of New York? A. At Staten island, Brooklyn, and Ulster county, Saugerties, or what- ever the name of it is. Q. Where is your chief office for the transaction of the busi- ness of this company? A. The executive offices are at No. 1 Broadway, New York, and the chief office of the company is No. 1 Exchange place, Jersey City. Q. By that you mean the office for the corporation purposes is in Jersey City? A. Yes, sir. 563 Q. But the business uniformly is transacted in the New York office? A. Yes, sir. Q. Can you tell us what is the output of this company annually, the product, the annual sales? A. No; I could not. Q. Can you give us an estimate or approximation of what it may be? A. I could not without the figures, as we own stocks of other companies, and I could not separate them in my mind without seeing the figures. Q. What real estate does this company own in the State of New York? A. It owns real estate in Brooklyn, Saugerties, Staten island and Buffalo. Q. What taxes does this company pay other than the taxes upon the real estate which it owns in the State of New York? A. I do not think I could tell that without referring to the records; I think the State taxes the company; I do not know the amount or on exactly what. Q. Your company has applied for a certificate for leave to do business in this State? A. Yes; and received one. Q. And you clam it pays its tax upon what they allege is the capital employed in the State? A. I presume that is it. Q. Do you remember what that amount is fixed at? A. I do not ; we made a long statement to the Comptroller of this State. Q. Has that been adjusted yet? A. I do not think it has. Q. Do you remember what figures were claimed by your com- pany as the basis of the capital employed in this State by it? A. No, sir; I could not tell. Q. Do you know what causes, if any, led to the organization of this company under the laws of New Jersey when its business is uniformly transacted in the State of New York? A. Its busi- ness is not uniformly transacted in the State of New York; its executive offices are here in New York. Q. Its principal offices are manned here and its principal busi- ness is conducted from here, isn't it? A. No; not as far us sales and manufacturing; what do you mean, the business Q. The management and control is exercised here; the super- vision? A. Yes; the supervision. 564: Q. The home really of its capital is in the State of New York apart from its real estate possessions; now, what causes, if ai led to the organization of that company under the laws of N< Jersey and not under the laws of New York? A. I was n< instrumental in forming the company; I was elected secretai after the formation of the company; but I presume, if I can gr a presumption, that the reason of its being practicable to obtai a more liberal charter to preserve the autonomy of the business better in New Jersey and also from the expense being less, the taxation being less there. Q. Under the laws of New Jersey your company found it sible to organize what would be a trust, a combination of varioi corporations? A. A company that could own a number works in different States and also the stocks of different coi panies. Q. Your combination is generally known as the lead tmt isn't it? A. It was formerly a trust; it is now known as company. Q. And you found that under the laws of New Jersey you coi organize and as you say preserve the autonomy of the trus whereas under the laws of the State of New York you were not permitted to do that; is that the fact? A. I do not know; as I say, I was not instrumental in organizing the company; I came in afterwards, but I presume that is it. Q. That is your understanding of the affair? A. Yes, sir. By Mr. Malby. Q. I understand yon to say that this company was formed ly the consolidation of various other lead companies; will you please tell us which ones they were, and give the locations of them? A. The Atlantic, with works located in Brooklyn; the Brooklyn, located in Brooklyn; the Bradle}', located in Brooklyn; the Jewett, located on Staten island; the Cornell, located at Buffalo; the Ulster, located at Sangerties. Q. Any others? A. I think that is all. Q. Were all these companies yon have mentioned organized before that time within the State of New York? A. Yes, sir. 565 Q. All State organizations; that is. incorporated under the laws of the State of New York? A. I think all those I men- tioned? except the Atlantic and tin- Cornell bad become organized under one company here called the National Lead and Oil Company. Q. A State institution? A. A State institution. Q. Now, \vliat companies did yon take in in this consolidation outside the State of New York? A. The Southern, Collyer and Bed Seal, St. Louis; the Shipman and Southern of Chicago; the Kentucky of Louisville; the Eckstein and Anchor of Cincinnati; I think that is all. Q. Now, ifn what manner did you secure control of these various companies? A. They were secured by purchase. Q. The purchase of their stock? A. Yes, sir. Q. Did you reissue new stock from the consolidated company in place of the old? A. Yes, sir. Q. If 1 understand you, there was no real money purchase of any of these previously incorporated institutions; the manner in which 3011 secured control under the new consolidated com- pany was by the issue of the stock of the new company? A. I think so. Q. What proportion of the business does your company at the present time do in the rnited States? A. I could hardly answer that. By the Chairman. Q. In other words, how many lead companies do you know of outside of your present organization doing a similar business? A. There are a great many different branches. By Mr. Malby. Q. Is there any company doing business outside of your own with anything near the capital you have invested? A. No; I think not. '^ ' Q. Give us your best estimate of the proportion of the whole business which your consolidated company does within the I'nited Stales? A. I do not think I could do that, because it may 566 do a larger proportion of one and a smaller proportion of anoth< branch, and so on. Q. Can yon give us some estimate of it? A. Nothing thj would be reliable. Q. Would it exceed fifty per cent? A. I should not think so. Q. How about your linseed oil; what proportion of that bui ness do you do in the United States? A. I should think possibl seven or eight per cent. Q. Can you tell me whether the price of the products in whicl you are engaged in manufacturing and selling have inci any since the various companies were consolidated into one? Since the organization of this company? Q. Yes? A. No; there has been a decrease. Q. How about the price of linseed oil, was that increased c decreased? A. That is increased. Q. How is it with white lead? A. Decreased. Q. I understand you to say that you owned the stock of o1 companies; what did you mean to be understood by that? The stock of other companies in States where foreign corpoi tiona ran not own property. Q. There are some States in the Union, then, in which yoi company, by virtue of the fact that it is organized under the of the Stare of New Jersey, can not do business there? A. It can not own. real estate, I believe. Q. In addition to having consolidated these various com- panies to which you have called our attention, do you also own in those States stock of other companies doing general business of the same order? A. Yes, sir. Q. Is it true that your consolidated company either owns or controls the majority of the companies doing this kind of business in the United States? A. Which kind of business? Q. The business in which you are engaged? A. We are engaged in different businesses. Q. I mean by that the different branches of business in which you are engaged; take them separately; do you do a majority of the business and own or control a majority of the companies which 567 are engaged in the manufacture and sale of white lead? A. Yes; I think white lead we do. Q. And the linseed oil? A. No; that is very small. Q. What is your other chief manufacturing industry besides white lead? A. The oxides. Q. How is it with the oxides; do you manufacture and sell and control a majority of that article? A. I am not clear on that; I do not know the statistics of the business well enough. Q. Do you manufacture and sell mixed paints? A. No. Q. What other article do you engage in manufacturing and selling chiefly? A. We manufacture considerable lead pipe and lead sheet. Q. What proportion of the total output in the United States do you manufacture? A. I could not say; it is comparatively a small proportion I should think. Q. Has the capital stock been increased lately? A. No; it has not been increased at all. Q. Do you knoAv what the stock is worth? A. I think the paper could tell you better than I could. The Chairman. The common stock closed at forty-eight; the preferred is ninety-three and one-fourth. Q. That is about as you understand it? A. Yes, sir. Q. Have you paid any dividends since the organization of the company? A. Yes, sir; Ave paid four quarterly dividends of one and three-quarters per cent on the preferred. By the Chairman. Q. 1 do not know whether the question has been already asked, but if it was I did not hear it; can you tell the committee what proportion of your business is done through your New York office, or about? A. We do no business at all through our New York offices. Q. No orders are jrtaced there? A. No; simply the executive business of the concern. Q. The principal office is located where? A. The selling office? Q. The principal office of the company; what do you call the 568 principal office? A. The executive offices are here in New Yorl at No. 1 Broadway. Q. That is the principal office as you understand it? A. I thii likely the principal office is in New Jersey. Q. What business is transacted through the office in New Jersey' A. The transfer of stock and its corporate business. Q. And where are the offices located through which the genera business of the company is done? A. It is done through tl various branches, the selling and all that sort of thing. Q The original factories that were taken in on the oonsolich tion have lost their identity but don't they continue just the same' A. Yes, sir. Q. You say your company has an interest in several corporatioi in other States that were not taken in at the time of consolidation' A. Yes, sir. Q. The reason they were not taken in was that the laws of tl States in which they were located respectively did not admit foreign corporation to own property there? A. Yes; I think was the principal reason. Q. Can you say whether your company has a controlling intero in these various corporations in other States? A. Yes; we hav< a controlling interest. Q. So -that, they are practically a part of the National company' A. Yes. Q. Taking the National company and these various compani which you control outside of your own company, what proporti* of the business of the company is controlled by them takci altogether? A. As I say we have a variety of branches, in some o which we do a largo proportion of the business, and in others w< do a comparatively small proportion. Q. "What proportion of the manufacture of Avhite lead is coi trolled by the combination? A. I never have -seen the books oi the other outside companies so I could not tell you that. Q. Have, you any idea about what it would be? A. No; it a large proportion, but 1 do not know as to the exact peiveutaj of it. 569 Q. Isn't it suluVieiitly large to enable you to control the market as to ^hite lead?. A. No. Q. TTo\v would that apply as to lead pipe? A. It would not apply at all. Q. How would it apply as to linseed oil? A. That is a very small factor; you can manufacture, but unless you have some patent it will not control any market ; if you should attempt to control the market by putting 1 up the prices you would simply increase competition which would in the end be disastrous; that is not our policy at all; our idea is and it ha been to lessen our cost and sell as cheaply as possible and prevent competition in that Avay. Q. What State of the Union does your corporation do the greatest amount of business, as you understand it? A. Sell the most goods in? Q. Yes. A. I should presume in New York State, though I am not positive as to the exact figures. Q. I think T understood you to say that the orders for the H various commodities are placed at the different factories, is that ? A. Yes; the offices of the different factories. Q. Now, these various factories or offices of the factories y account to some fountain head, don't they? A. Yes, sir. Q. Where is that fountain head? A. The executive offices No. 1 Broadway. Q. In the city of New York? A. Yes, sir. Q. Then boiling it down, as* a matter of fact, all the business of the company is transacted in the city of New York? A. No; not all. Q. These various outside branches are simply a part of the cen- 1 office in the city of New York, jsn't that so; they all account to it? A. Yes, sir: they all Account to the New York office, the same as a railroad going through a number of States has one ;head office that they have to account to. Q. No other business is done, I think I understood you to say, in the New .Jersey office except to keep a record of tl;e stock and transfers of the stock? A. Yes, sir. 570 Q. And that all the receipts are received in the New Yor] office and are accounted for to the NCAV York office and <1 burseinents are made through that? A. Through the New Yor) office. By Mr. Guenther. Q. Have you in mind any alteration of the corporation laws this State that would be an inducement for corporations such as your to incorporate in this State and still provide a means of tax for the purpose of meeting the expenses of this State? A. I never studied that question particularly, but I should say- that if the thing was simplified so that corporations would know exactly what they would have to pay it would be a great in advance. Q. You believe in some specific tax? A. So that they woul know exactly, so that it would be specific; I think we are vei indefinite as to what may be collected or may not be collected. Q. You have no proposed amendment in mind as to the mannt of simplifying the laws? A. No, sir; I have not given it enouj attention. Q. You stated that you did not know the particular re* they went to the State of New Jersey to incorporate? A. Sii ply that I did not know positively as I came in afterwards; expenses, as I understood it, were light there the expenses incorporation and the charter was more liberal. By Mr. Malby. Q. I think it already appears that on the capital stock of the companies organized in the State of New Jersey they pay no tax to the State there; how is that? A. We pay a tax on the organization; I think there is a slight tax each year. By the Chairman. Q. You understand that under the laws of the State of N< w Jersey corporations are not required to make the same kind of reports to the State that they are in the State of New York, isn'ij that so? A. Yes; not such detailed reports. Q. As you understand it not so inquistorial? A. Yes, sir. 571 Q. Is that one of the objectionable features under our laws? A. Yes, sir; I think it is a very objectionable feature. Q. Why? A. Because it throws open your business to your competitors. Hy Mr. Guenther. Q. Don't that apply to all corporations then? A. In the manu- facturing business that that would be entirely different, fire insurance, life insurance or a bank or anything of that kind. Q. Controlling the market as you do in the National Lead Com- pany would it make any difference if they knew your business or not? A. I have already said we do not control the market; the great American people control the market. G. Weaver Loper, called as a witness, being duly sworn, testi- fied as follows : By Mr. Hamilton. Q.. Where do you live? A. I live in New York at present. Q. You are connected with the National Cordage Company? A. Yes, sir. Q. In what capacity? A. Treasurer. Q. You have also been connected in what other capacity? A. Secretary and director. Q. As such, are you familiar with what the total output of your company is? A. Yes, sir. Q. And the proportion which the output of the New York State companies bear to the total? A. Yes, sir. Q. What is the total output? A. Under full running capacity about 85,000 tons out of the State and 20,000 to 25,000 tons in the State. Q. Is this 20,000 to 25,000 tons in New York State all sold and distributed from the New York office or through it? A. No, sir. Q. What portion of it ifij? A. That would be a very difficult question to answer; I would have to explain still further that in the absorption of the New York mills each concern still held their individuality and sell considerable quantities in their own name, such as Waterbury & Co., William Walls Sons, Tucker, Carter & Co., the Elizabeth Cordage Company, the Lawson Eope Works. 572 Q. They sell in their own names? A. Yes, sir. Q. And furnish the west through the western outlets? Yes, sir. By Mr. Guenther. Q. Can you tell the committee what is the amount of perso] tax you pay in the State of New York? A. I have not the slightesl idea, Q. Have you ever paid aify? A. I think we have. Q. Where? A. In the State of New Jersey. Q. Don't you think it would be fair since your output is aboul one to three in the State of New York and two-thirds in th< whole Union you should pay some personal tax in the State oi New York? A. I do not think the National Cordage Compai would object to doing anything that was fair and equitable connection with other corporations; they would like to work und< the State of New York. Q. Can you tell us what amendment you have in mind to general corporation laws of the State of New York that w< induce you to come back in the State and still contribute a portion of your tax to the State? A. I would pull down ev< bar I could. Q. What are they? A. I would not compel the company make out elaborate statements. Q. We amended the law as to the statement last year, and il is niucli more liberal than it was before; is there any other si gesiion you can make in relation to the amendments? A. Oi this, that the concerns that I have mentioned who are operai these mills pay a tax to the State of New York. Q. They do? A. Yes, sir; Waterbury, Wall, Tucker, Carter Co., the Elizabeth Company and the Lawrence mills, am we own the properties. Q. They pay on real estate? A. Yes. sir. Q. Do they pay any personal tax? A. They pay a tax on theij sale*, each of these concerns. Q. Have you in mind the amount of tax they pay? A. have not. 573 By the Chairman. Q. On the consolidation, did not these several domestic cor- porations lose their identity, or did they still continue to exist as corporations? A. It is in this way; we absorbed the concerns I have mentioned; purchased the plants outright; we have them leased to each of these concerns for a series of years, the mills; at, the beginning of each year they are compelled to put in a com- petitive bid to manufacture goods for the National Cordage Company; they have their capital in the business but we own the plants; the National have their working capital and each indi- vidual mill has theirs; the concern that w r ill not meet a bid must shut down and does not run. Q. If they do not meet a bid do they derive any benefit from the combination? A. Not a cent. Q. It has been alleged as to one combination that whether they operated or not they received their share of the earnings of the combination just the same,? A. The National Cordage Com- pany act in that matter in a cold-blooded way; they have leased the mills, and they must put in a competitive bid; all bids are then opened ; we find then that we have a certain price for manu- f act L> ring sufficient to run us for that year; another concern per- haps would not meet that bid, and we shut them down. By Mr. Guenther. Q. Are not those that lease these concerns stockholders in the National Cordage Company? A. Stockholders some days, E sup- pose, and not stockholders the next; I think all of them are to a certain extent stockholders of record. By Mr. Ainsworth. Q. When you organized your combination, did the stockholders in existing corporations become stockholders in your corporation? A. Only regarding the New York Concern ; all that we have I bought out Q. Did you issue any of your stock to them as a corporation in payment of their plant? A. There was a certain amount of stock issued to the New York concerns. Q. Was that stock issued to them in consideration of their plant? A. Part in stock and part in cash. By the Chairman. Q. Was it in consideration of their plant? A. Yes, sir. Q. Did they then cease to be a corporation; in other words, what became of the stock each individual held in these corpora- tions; did they in place of the stock they held in these organiza- tions take your stock? A. No, sir. Q. They retained their holdings in the old corporations? A. Yes, sir; and do to-day. Q. And to them was divided the stock which that organization received from yours; to the stockholders of the existing plant was devoted thte stock which that corporation took in yours' A. That I don't know. Q. Or did the corporation, as a corporation, hold that as ai asset? A. I don't know. Q. Have you any way of finding out? A. I think I could. By Mr. Ainsworth. * Q. If they still hold stock in your corporation as an asset ol that corporation then it is personal property owned by thei isn't it? A. I don't know. Q. Wouldn't it be? A. I should say it is. * Q. Then they should be taxed upon that, should they not, upoi the theory of taxing personal property? A. I should yes to thai Q. But, as matter of fact, you do not know whether they have paid a tax on it or not? A. No; I do not. Q. Your combination or corporation is organized upon the theoi of controlling the product of all these factories through one sal< agent, isn't it? A. Not through one; we have a series of sale agents. Q. But they are subordinate to the corporation? A. Yes; w< are the owners of the plants; but we are not the owners of theii capital stock. Q. Are you able to tell how much stock you issued to any these corporations then existing? A. No, sir. Q. What is the capitalization of your company? A. Twenty- five millions. By the Chairman. Q. Do you know the amount of capital stock of any one of the corporations that was taken in? A. Yes; I know my own. Q. Do you object to saying how much that was? A. With the best of feeling, I would object to stating the amount at which it was taken in; but if I can answer your question in this way, it was very little above the valuation of the real estate and machinery. By Mr. Ainsworth. Q. What was your corporation? A. The Victoria Cordage Company. Q. Take the Victoria Cordage Company; what was done with that corporation, with the stock which was issued to you by the new corporation? A. It was locked up in a box. Q. Was it distributed to the stockholders? A. No, air. Q. Then your corporation still owns the new stock as an asset? A. Yes, sir. Q. Do you object to telling us how much it was? A. Yes, sir. Q. Do you know whether your corporation ever paid a tax upon that stock or not 9 A. Yes, sir. Q. Has it? A. Yes, sir. Q. Where? A. Ohio. Q. This was under the listing law that you were caught? A. Yes; we were not caught; we declared it. By the Oh airman. Q. What becomes of the dividends that are declared 011 the stock that you received from the National company? A. They are divided among the stockholders. Q. Arj they divided among the stockholders of the new stock I or the holders of the old? A. To what do you refer? Q. I refer to the stock? A. Take the Victoria Cordage Com- ly; we received a certain amount of dividends from the National Cordage stock that we hold; that is declared as a divi- dend to the holders of the Victoria Cordage Company stock. Q. Then does that carry out the idea I suggested, that whether rou run or whether you don't, you get your . dividends just the 576 same? A. No; I have got to keep that plant up; I have got support that, plant; if yoa do not run Q. Well, suppose your plant does not run; you have receive stock at least equal to the value of your real estate and your plant? A. Yes, sir. Q. And on that stock you receive a dividend from the National Cordage Company; do you say that the dividend thus received is divided among the stockholders of the original concern? A. That is right. Q. Don't they receive their earnings then whether they operal or not? A. No more than if you went into the market ai bought stock; suppose I sell that stock? Q. But. I have understood you to say that you have received amount at lease equal to the value of the real estate and planl A. Yes, sir. Q. So that you have practically sold out? A. Yes, sir: I ha 1 got the stock and sold oat the mill. Q. And you get your earnings whether you operate or nc don't you? A. That is right, but not in the light you place it suppose I sell out; I have a plant worth $500,000, and I ti |500,000 worth of stock for it; you must remember that I hai only converted one asset into another; if I sell that stock, y( can not say that I got any remuneration. By Mr. Malby. Q. You have no right to shut down if you take that sitocl because you are released by your ownership in the corporation' A. No, sir; not at all; that mill is leased; you are compelled support that mill; you must keep it up; if you are not willing manufacture at the bid sent to the company you shut down, during that year you operate you control the mill at your o^ expense. By the ( hairman. Q. But the National Cordage Company are the owners in of the entire plant? A. Absolutely. Q. Therefore no loss can come to the original holders becai they have received some new stock at least equal to the value 577 of what they held in the old? A. Very well; suppose they sell it; w r here does the corporation stand? Q. This corporation is merged into the new one? A. Suppose they divide up the assets, and then run under their manufacturing contra cr? By Mr. Malby. Q. We understood you to say you did not divide? A. I said I did not. By the Chairman. Q. I understand that the entire amount of stock your company received is locked up in a box? A. That is right. Q. And has not been distributed? A. No; and will not be until it gets to par. Q. But the earnings are distributed? A. That is right, and the dividends are distributed;.! see the point you are arriving at, buc the National Cordage Company are there for the company alone, and not lor the old owners of the mills; that is why I hold my stock. By Mr. Malby. Q. You simply sell the products of these various manufacturing wporations which you have consolidated into yours? A. Yes, sir. Q. Did you force a sale of these various corporations to the National Cordage Company by the purchase of a majority of the stock and by an election of the directors? A. No, sir. Q. How did you get control of it? A. When they wanted to | sell out we bought them. By the Chairman. Q. Barkis was willing all around? **A. That is right. By Mr. Malby. Q. Was that willingness brought about by the fact that your >mpany had purchased a majority of their stock and held a eon- )lling interest in it? A. No, sir. 73 Q. You say that unless they accept your bids they do not manufacture for you? A. That is right. Q. Do they manufacture for anybody? A. No, sir; it is 01 property. Q. You simply say to them if they can not manufacture for you and at your prices they must shut down? A. That is right; can not make the prices; it is a competitive bid. Q. You owning a majority of the stock and controlling directors simply shut down? A. Not a majority of the stock but owning the mills. Q. But you lease them; are there any regulations or law; which authorizes you to shut them down? A. Certainly there is if they can not meet the competitive bids. Q. Is that a part of the laws? A. Yes, sir. Q. If they do not meet competitive bids they shall not manu- facture? A. Y r es, sir. Q. That is a part of Hie laws aifd not part of the power y< exercise by virtue of owning the stock or controlling the din tors? A. No. Q. It does not depend at all upon the fact that you own th stock? A. We do not own the stock; we own the plants; there no concern to-day in which we own as you may say a majoril of the stock; we never operate that way. Q. Doesn't it depend upon the fact that the directors ai favorable to your company? A. Which directors? Q. The directors of the old companies, as I understand you to say? A. No; it is a matter of indifference to us whether the directors of the old companies are favorable or not. By the Chairman. Q. Don't your owning it or controlling it interpolate in your contract with these various concerns A. We have no con- tracts except a manufacturing contract. Q. But you have a contract which provides that if they can not manufacture at your prices they shall not manufacture at all? A. No, sir; we have a contract that if they can not manufacture at she competitive bid price we accept they can not manufacture. Q/Isn't that the same thing? A. No, sir. 579 By Mr. Ainsworth. Q. These competitive bids come from your own stockholders? A. No, sir; from the different mills. Q. The different mills are your stockholders, aren't they? A. Some of them are and some are not; some have sold the stock. Q. Your competitive bids is confined to your own stockholders practically, isn't it? A. No, sir; not necessarily, because some rof them have sold the stock and some hold the stock. Q. Do you mean stockholders of the Cordage company? A. Yes, sir; certainly. Q. The stockholders of the Cordage company are stockholders of the old existing corporations, aren't they? A. I say that iparties to whom stock was given at the tune of purchase, some them have sold their stock and some hold it. Q. You kept yours? A. Yes, sir. Q. And you know of some of the existing corporations at the to of your corporation that have sold their stock? A. Yes, sir. Q. And do those corporations who have sold their stock still st and maintain their plants? A. Y^es, sir. Q. And in those cases the stock has been divided among the ;kholders of the old company? A. Yes, sir. By Mr. Guenther. Q. The fact is that some of these corporations that existed fore the consolidation can run their works unless the National >rdage Company give their consent to them to run? A. No, sir; can run if we accept if they make the same price at Lch we accept the competitive bids. \. What is the object of this competitive bid? A. The reduc- of the cost of manufacturing. And you control it upon the market afterwards, the National Company? A. Yes, sir. By the Chairman. Q. You are in absolute control of the market? A. Not always; e would like to get it. 580 By Mr. Ahearu. Q. Isn't twenty-five per cent of your goods sold by Waterbi and Wall in the city of New York? A. No, sir; Waterbury three houses over the country. By Mr. Guenther. Q. If you were to get entire control you would be willing pay a fair percentage of tax to the State upon your persoi property? A. We would be willing to pay it now just as mu< as then. By Mr. Ahearn. Q. You don't know whether Waterbury and Wall pay any A. I do not. Q. You people do not pay any personal tax? A. E do think so. By the Chairman. Q. Waterbury & Co. and Wall are only agents? A. No, they are a regularly authorized concern, with capital I sup] the two companies together, of three or three and a half millioi operating their own business. Q. Waterbury and Wall are stockholders in your company A. Yes, sir. Louis D. Clark, called as a witness, being duly sworn, testifl< as follows By Mr. Hamilton. Q. Where do you live? A. In East Orange, New Jersey. Q. You are connected with the Standard Oil Company? Yes, sir. Q. In what capacity? A. I am secretary of the Stan< Oil Company in New York. Q. And in what capacity are you related to the parent plan! A. There is no parent plant. Q. To the central organization or the central combinatioi A. I know of no such central combination. Q. Where is the office? A. Twenty-six Broadway. 581 Q. What other business is transacted at that office besides the ! business of the New York Standard Oil Company? A. The National Transit Company has an office there. Q. What other business of any of the Standard Oil Companies I or constituents of the old Standard Oil Trust are transacted there? n A. The Standard Oil Trust or the liquidating trustees have a I transfer office there, I believe. Q. Are you in their employ also? A. No, sir. \ , Q. Are your duties solely confined to the duties of secretary of the New York company? A. I am also secretary of some other companies. Q. Which companies were formerly members of the Standard Oil Trust? A. They were not members of the Standard Oil Trust; their stock was owned by the Standard Oil Company. Q. But they were connected with the Standard Oil Trust 9 A. Only in that way. Q. I do not care in what way; but they were connected with it? A. As companies they had no connection with it; no sir. Q. They are members of it? A. No, sir. Q. They sold their product to it? A. No, sir. Q. In what way were they connected with it? A. I say they were not connected with the Standard Oil Trust. Q. In what way did they deal with the Standard Oil Trust? They had no dealings with them as corporations. Q. When was the Standard Oil Trust dissolved? A. Last rch. Q. What was it composed of? A. It was composed of a board nine trustees. Q. What did these trustees own or hold? A. They held ihe ks of various corporations. Which of the corporations are now transacting businebs ch your board of trustees represented? A. The Standard Oil pany in New York. Q. Which others? A. There are no others transacting business 582 I : Q. What is the stock of the Standard Oil Company of New Yoi A. Seven millions. Q. That is organized under the laws of the State of New Y( Isn't it? A. Yes, sir. Q. With its real estate situated where? A. Some in New Yoi city, some Long Island City, Brooklyn, Buffalo, Olean, Osw< various points throughout the State and in New England. Q. Your companies pay its corporate tax under the act of 1880-1? A. No, sir; as a manufacturing company it pays no corporate tax. Q. What is its annual output? A. I could not say. Q. Can you give it to us for any year of the past ten? A. I could not. Q. What amount of tax is paid "by this company on personal property in the State of New York? A. That I could not answer intelligently for the reason that the company has increased within the last year, and it has not as yet paid the tax; since the dissolu- tion of the trust there has been a consolidation of a number of companies. Q. When was this consolidation entered into? A. Last April. Q. How many companies were embraced in that consolidation? A. Half a dozen. Q. Were they all New York corporations prior to the time they were merged into one? A. All but two of them were; there were two from New England. By Mr. Guenther. Q. At the time of your consolidation in the State of New York, was stock issued to those connected with the Standard Oil Company ; ? A. I do not quite understand you. Q. All the stock at the time of your consolidation was held by whom; by New Yorkers? A. The stock of the Standard Oil pany in New York? Q. Yes; at the time you incorporated or consolidated 7,000,000 capital? A. Previous to that time, do you mean? 583 Q. At that time? A. It was held partly by the trustees of the Standard Oil Company and partly by individuals. Q. At the time of your consolidation and incorporation in this State did you pay an incorporation tax on the 7,000,000? A. Yes; we had paid on 5,000,000, the original capital of the company when it was organized in 1893, and we paid on the increased 2,000,000 at the time of the consolidation. Q. I understood you to testify that you were incorporated in this State? A. Yes, sir. By Mr. Ainsworth. Q. You say ytour consolidation took effect last April? A. Yes, sir. Q. Do you know what assessment was made in July upon the personal property of the Standard Oil Company in New York? A. The assessment on the Standard Oil Company at that time was made on the old company prior to the consolidation, which was on |600,000. Q. That would include the personal property you had at Olean, Buffalo, Oswego, etc.? A. No, sir; it would not. Q. Were they not different properties of the old company? A. No. sir; they were, but they did not come into the tax year; the assessment made in July was on the personal property as it existed on the second Monday of January which was prior to the consolidation. Q. And prior to the consolidation, the Oswego works up there were a part of your A. They were a separate organization, the Oswego Manufacturing Company. Q. And that organization was merged into this and it ceased to exist as a separate corporation? A. Yes, sir. Q. And the Oswego Manufacturing Company became stock- holders in the Standard Oil Company at that time? A. They did. for the time being. Q. And now,? A. No, sir; the stock was distributed among the stockholders; the stock they received from the Standard Oil Company in New York. 584 Q. The amount of stock issued to that corporation represented your estimate of its value? A. Yes, sir. Q. Its personal property will hereafter be assessed here being located here? A. Yes, sir; it is a part of the personal property and will come in New York. By Mr. Guenther. Q. You have no connection with any other company outside of the State? A. Do you mean the Standard Oil Company in New York or myself? Q. 1 mean the Standard Oil Company in New York? A. No, sir. l>y Mr. Ainsworth. Q. You saw fit to organize under the laws of the State of New York; did you take in consideration the advantages to be derived from organizing outside of the State? A. I presume that was considered at the time; I had nothing to do with it. Q. Do you consider the tax which the State of New York now imposes upon corporations organized within the State burden- some? A. That is a matter which I do not feel competent to express an opinion; it does not bear on us as a corporatioi because as a manufacturing corporation we are exempt. Q. But the organization tax you find no fault with? A. It larger than we have to pay in other States. {>y Mr. (luenther. Q. Don't you think a manufacturing corporation ought to pay a tax as well as any other corporation? A. No, sir; I do no1 think it should. Q. You have protection to your property by the State? A. We pay a local tax. Q. Don't other corporations do the same? A. Yes, sir; bui we manufacturing corporations disburse more money in the State and bring more wealth in to tin 1 State than a business corpora- tion does. 1 585 Bv Mr. Ainsworth. Q. You make a distinction between a corporation which obtains a valuable franchise and a manufacturing corporation? A. Yes, sir. Q. Take your corporation; when your tax will be adjusted next year upon the amount of personal property, it is upon the basis of the property you held in January; how is that arrived at by the authorities; do you make a statement? A. We make a state- ment to them of the amount of our assets and liabilities and the --ed valuation of our real estate. Q. That don't apply to the assessed valuation of real estate in other places; that would be subject to local tax there; but you | furnish them with a statement of your assets and liabilities as a corporation? A. Yes, sir. Q. And is that verified by you? A. Yes, sir. Q. And that is the basis of taxation? A. Yes, sir. By Mr. Hamilton. Q. Deducting from that the assessed valuation of the real n estate; in order to arrive at the value of the personal property I they deduct from the entire assets the assessed valuation of the I real estate? A. Yes, sir. By Mr. Guenther. Q. Will you state to the committee in what manner a nianu- icturing corporation is of more benefit to the State than a less corporation, and why they should be exempt from taxa- and others not, receiving the same protection the other cor- >rations receive, they contributing to the expense of the State id you do not? A. Because we employ a great deal of labor; id we also pay a larger real estate tax than a business corpo- ition. Q. Can you give us any other reason? A. No; I think not. By Mr. Ainsworth. Q. You make this distinction that any person can engage in a mfacturing business without the aid of the State while he 586 can not run a railroad without invoking the right of eminei domain? A. Yes, sir. William H. Butler, called as a witness, being duly swoi testified as follows: By Mr. Hamilton. Q. Where do you live? A. In New York. Q. And you are connected with the American Tobacco Com- pany? A. Yes, sir. Q. In what capacity? A. Secretary. Q. WTien was the American Tobacco Company organized? In January, 1890. Q. And under the laws of the State of New Jersey? A. Yes, Q. Its capital stock is? A. Thirty-five millions. Q. It has an office in the city of New York? A. Yes. sir. Q. Its principal business office? A. No, sir; its principal ness office is in Newark, N. J. Q. Where is the New York office located? A. Forty -1 Broadway. Q. What business is earned on at 45 Broadway? A. Ex( tive business. Q. What business is carried on at the New Jersey office? Corjoration business. Q. The transfer of stock and the like is carried on in N Jersey, bur the actual management and control of the business ^ is exercised in the New York office, the executive part of it? A. Yes, sir. Q. Are its officers chiefly residents of the State of New York? A. No; some are residents of the State of New Jersey, some in New York and some in Virginia. Q. What causes led to the organization of this corporation under the laws of the State of New Jersey, if you know? A. When we were organized in 1890, we were informed that the laws of New York were in somewhat of a chaotic stale, and we were advised by counsel to organize under the laws of New I Jersey. 587 Q. What do you say as to the laws at present existing in the State of New York? A. I think they are very much improved; in fact, if we were to organize to-day we would organize under the laws of the State of New York. By Mr. Guenther. Q. Where have you got your office in New Jersey? A. Eight hundred and two Broad street, Newark, N. J. Q. The only object of having that office is for the reason that the law under which you are incorporated stipulates that you shall have an office in New Jersey at which your directors meet annually? A. Yes, sir. Q. And that is about the only purpose of that office? A. It is for general corporation purposes. Q. Do you pay any tax upon personal property in the State of New York? A. Yes, sir. Q. How much? A. That I could not say; we pay it in New York city and Kochester, where we have factories. By Mr. Malby. Q. The real estate tax and personal tax you pay in these vari- ous places where you manufacture? A. Both. Q. Was this company formed by the consolidation of other companies? A. Yes, sir; it was formed by buying out other corporations, firms and individuals. Q. And is your business confined to manufacturing and selling tobacco? A. Yes, sir. Q. You run your various. branch manufacturing establishments yourself? A. Yes, sir. Q. You have no such arrangement as the National Cordage Company appears to have? A. No, sir. By Mr. Ahearn. Q. Where is your factory located? ter and two in New York city. A. We have one at 588 Q. Do you pay a personal tax in the city of New York? A. Yes, sir. Q. How much ? A. I could not say. By Mr. Guenther. Q. How ID any factories have you in New Jersey? A. None at present. By Mr. Malby. Q. Does your company control the manufacture and sale of tobacco in the United States? A. No, sir; not by any means. Q. What, proportion of the business do you do? A. I could not say; it is a small proportion; I can give you an idea; we do between twenty-five and thirty millions of pounds of tobacco; and I can name one factory in St. Louis that does 25,000,000, and there are a number just like that; Lorillard, for instance, does 20,000,000. Q. Have you any business relations with either one of those corporations? A. No, sir. Q. How is it in the State of New York; what proportion of the business do you do here in the State of New York? A. I could not say; a small proportion. Q. What amount of dividends have you been able to declare upon your stock? A. Eight per cent on the preferred and twelve per cent on Hie common. Q. Do you know w r hat your stock is selling at? A. From 107 to 110, I think. Q. Where does your president and vice-president live? A. The president lives in New York; the first vice-president in Rich- mond, Virginia; the second vice-president at Rochester; the third vice-president at Baltimore. Q. Your secretary and treasurer? A. The secretary lives in New York; the treasurer lives in New York. Q. The majority of your directors, are they New Yorkers? A. No, sir; they are from various places. 589 John Rhodes, called as a witness, being duly sworn, testified as follows: By Mr. Hamilton. Q. You are a resident of this city? A. I am. Q. And you are president of the Union Savings Bank of this city? A. The Greenwich Savings Bank. Q. Located where? A. On the corner of Sixth avenue and Sixteenth street. Q. With deposits amounting to? A. Twenty-five millions. Q. How long have you been connected with savings bank systems? A. Since 1 Avas 24 yea-re of age, as a trustee of savings bank. Q. How long have you been president of the Greenwich Bank? A. I think I became president in 1879. Q. You have given attention to the suggestion that has been made in regard to the taxation of savings bank deposits? A. I have. Q. Will you favor the committee with your view in regard to that as to whether the effect would be a favorable one or the con- trary? A. I am perfectly willing to do so; I might say at the beginning that, personally, I am opposed to the question of per- sonal taxation, and of course to put a tax on the deposit^ in savings banks is really personal taxation; 1 think that is a wrong principle, and especially when the people who are taxed come from the poorer and the working classes; then, again, a savings bank, it must be borne in mind, is a benevolent institution; there is no capital; there is no benefit to be derived by any of the stock- holders; it is simply an institution in which these trustees are appointed for the purpose of taking care of these savings as they come in, limiting the deposits of each individual to $3.000; the great mass of these deposits are made up from the savings of the poor people; I will frankly admit that, of course, some little money comes into the banks, perhaps, from a class of people who ought to pay a tax, but even in those cases a majority of them come from wages and savings; again, take a State like New York State, and there are a great many people who go on accumulate a few thou- 590 sand dollars and die leaving perhaps $5,000 or $7,000; these people are entirely incompetent to take care of this money; they don't know who to trust; they don't know what to put it into, and they distribute it through the savings banks and they come regularly every six months to draw their interest; that class of people are entitled to protection as far as a tax is concerned; the idea of taxation is to throw a burden upon those who are least able to bear it; so, I think, the reason that has been advanced in that direction has no good foundation; that is my own judgment; then back of that again is the fact that all of this money in savings bank is already sdbject to taxation in theory; ever}* individual is subject to taxation, a personal tax, and to tax deposits in a savings bank you can not tax the bank because there is no capital, and there is nothing to tax; we are simply the custodians for these people; and, therefore, no tax in this way is practical ; then back of that is the fact that the State very wisely surrounds all the investments in a savings bank; I should say puts a great deal of protection around a savings bank in this State; I have been trying for five years to get the scope extended because I think it is absolutely needed; but the result is that we are obliged to invest our money for these people at low rates of interest; the average rate of interest so far as New York State rather Brooklyn and New York city is concerned in the interior of the State it would be perhaps a little better with the loans on farm property but the average earnings of the savings bank to-day on investments is three and one-half per cent; and that is what we pay to our depositors; the surplus that we gather is provided by law simply as a protection, so that in case of any loss, the declining of securities, or anything of that kind, these depositors may at all times realize and feel that they oan get back 100 cents on the dollar for every dollar they put on the bank; therefore the moment you tax you immediately reduce the ability of the bank to earn this money; then, what is the result of that; the result of that is to discourage the depositor, and you leave those who are intelligent and are anxious and want to get on and who need their income to secure investments else- vvhere, and they are lured into all sorts of things; for instance, 591 take these building and loan associations, which in ;ome respects are good in principle, yet there has been a great deal of money put into these associations, and there is a great deal of money going to be lost in them; take all these western farm mortgage companies; the tenement-houses are flooded at times with pros- pectuses of all sorts and kinds urging these people to take their money out of the banks were they only get three and one-half per cent and send it out of the State where we give you six per cent; and the difference in the interest is taken by the men who manage your money; and the tendency of course is to get that money out of the bank; our theory is to keep the money, as far as possible, within the State; their theory is to give these poor people in return for their deposits sufficient to induce them all the time to increase them; now, the result has been in this State at the present time that our savings bank system which was reorganized some fifteen or twenty years ago, that is under the general sys- tem and undoubtedly under the wisest laws of any State in the Union, that the savings bank had gone on increasing until to-day there is f 600,000,000 invested in the savings banks in this State; and it seems to me a bad principle to tax these people*; I am thoroughly in favor with taxation, but I think we should tax properly; I think our laws are very crude; I believe this question of personal taxation as applied to savings banks I think your people would get the benefit of it anyway if you take off the per- sonal taxation of the property in the city of New York the bonds and mortgages of which the banks, certainly in these large cities, hold something like half of their assets, the rate of interest on these bonds would go down half a per cent the very moment that incubus was removed, so that people could feel they could take and hold bonds and mortgages and not be liable for personal taxation, the rate of interest would go down at once; it would | benefit the mass of people; there is no question about it at all; lit was said how about the surplus in these savings banks; we lean earn three and a half per cent including the surplus to-day; i that is to say, if we have a surplus, the interest on the surplus jgoes towards the running expenses of the bank, so we can pay our (depositors three and one-half per cent. 592 By Mr. Ainsworth. Q. What is the surplus of your bank? A. Two millions and a half. Q. What is the average amount of your deposits? A. If I remember right, about $430. Q. Do you know the rate of expense of keeping an account in your bank? A. I think the expenses of our bank are some- thing like $60,000 or $70,000 a year as against 25,000,000 deposit, whatever the percentage would be; it is very small; I have seen it but have forgotten. By Mr. Malby. Q. Who owns the surplus? A. I have been often asked that question, and have never been able to answer it satisfactorily; you have got to take a plausible case, which is not plausible; thai is to say, suppose the State of New York should pass a forbidding the continuation of a savings bank; now, comes th< question you have got a surplus of 2,500,000 which does not belonj to the trustees, and it does not belong to the depositors, or th< in the bank, because you must remember that these deposil change every five years; the total volume of our deposits ai drawn out every five years; I do not mean to say every deposil but there are 5,000,000 drawn out of our bank every year an( in five years there are 25,000,000 which is the sum total of oui deposits; it does not belong to the depositors nor the trustees. mi< I have always supposed that the State would lay claim to under such a case. By Mr. Malby. Q. Why wouldn't it be fair to tax the surplus? A. The aiis I make is this: The small return on the investments allowed law to a savings bank we need every dollar we can get out ol our surplus to pay the amount of interest we are paying depositors at the present time. Q. Don't you pay the running expenses by the difference be1 the rate of interest which you pay depositors and that whic you receive; doesn't that pay the running expenses? A. It woi 593 with our bank, but it would not with banks generally through the Slate; it would with a few large banks, but that is lessening as these old securities mature; all of our new investments are made on the low basis; we are investing on bond and mortgage at four and a half and buy city bonds at three per cent. Q. You say you think the rate of interest would probably decrease if the taxes were wholly removed from personal property? A. Yes; on mortgages. Q. Isn't it your opinion also that if the taxes were less on real estate the rentals would go down? A. No, sir; because you must raise your taxation; perhaps I do not understand you. Q. I understood you to say that if you relieved personal property from taxation money would become plenty and the rate of inter- est go down; that would be the natural effect if the tax were removed from real estate, wouldn't it? A. No; I said that if you removed personal taxation the rate of interest on bonds and mortgages would go down, because bonds and mortgages are now subject to taxation. By Mr. Gruenther. Q. Does your bank pay anything on the bonds and mortgages held by it? A. We do not; we are exempt. Q. It would not make any difference to you then whether that was removed? A. Not as far as the bank is concerned, except this, that it would lessen our ability to earn; we are carrying in our bank 12,000,000 of bond and mortgage loans, and the average is four and one-half per cent; if you take off the liability for personal taxes as applying to mortgages, in my judgment, it would not be a year before the rate of interest on these loans would drop four per cent; in other words there would be such a demand for investment on bond and mortgage owing to freedom from taxa- tion that the whole rate would drop half a point, and our bank instead of getting four ."UM)0 and pays four pel cent; that shows (he surplus has nothing to do with it? A. Yes: it does. Uy Mr. Hamilton. Q. Theoretically it has, but practically none? A. The Bowi Savings IJank are paying four per rent, because they think ihev 597 have got surplus enough; they have been paying that four or live years. Q. You said that to tax the surplus, would be to tax the poor people; you said, furthermore, you are opposed to taxing personal property: it would naturally come back then to taxing the real estate? A. You do it now, and you should. Q. I>ut if you take the tax now on personal property off there would be an additional burden on real estate? A. Yes; that should be raised. Q. Isn't it true that it is the poor people who are go,ing to suffer by it by put tins* 1 an additional tax on real estate? A. No, sir: I don't see why; I should not confine it to real estate; the reason I object to a personal tax is this: You can not tax a thing which is movable and which can get away; real estate you can tax; you can tax a city railroad, and they should be taxed because they have got their rails down and they are doing 1 busi- ness in the streets; you can put a license tax upon a business house, because they have got to do business where they are located, and they can not get away from it; but when you come to tax personal property, a man with a knowledge of the business world either invests it in such a way that he is not liable or invests it in some corporate property or some other business where you can not tax him; take the street to-day; there is no tax put upon Wall street; you can not reach them; the personal tax is all right if you could only collect it, but as it is it results in an injustice, and the widow and orphan pays it. Q. What 1 am trying to get at is this: You said that you were opposed to a personal tax because it falls upon the poor people, and on that Theory you are opposed to taxing banks; for that very reason you could not be in favor of putting the tax entirely on personal property, because (he ultimate result of that tax falls really on the poor man; the tax would have to be raised, and it would have to be increased upon the real estate in order to make up what was lost by taking it off the personal? A. No; L should tax corporate property as I have already indicated; 1 should put 598 a license tax upon business; I do not see why there should not be a licence tax upon a partnership business. Q. The trouble is that every time we have one interest here they want to put the tax upon some other interest; they all want to escape? A. They w r anl to escape if they can; but they all agree to this, that the attempt to tax personal property is a failure, and that the burden rests entirely upon the widow and orphan; it is the estate that can not escape; it is the trustee that can not escape; it is the poor woman who can not get away from it. Q. Why not take up the listing system? A. As to the listing system there is simply this to say, that it is so obnoxious that the people themselves would not stand it; they would not submit; what would you think of a listing system by which you were com- pelled to reveal all the secrets of your own means and swear to it? Q. As far as real estate is concerned you are compelled to reveal that? A. No; you are not. Q. If I buy a piece of property with a mortgage on, the mort- gage goes on record? A. Yes; the mortgage does. Q. And that reveals the indebtedness? A. But when it comes to a listing system that is different; you remember how unpop- ular that was in the war, and to-day the listing system would be one of the most unpopular measures. By the Chairman. Q. You do not think that you can make people honest by the operation of law? A. No; you can not do it; if you collect your taxes you have got to collect them by natural processes, and that is collecting them from places that can not get away. Q. The law to be operative must have, as matter of fact, the support of the people? A. I think so; the lying and corruption through a listing system would be awful. By Mr. Guenther. Q. What do you think of the plan in Switzerland that after the death of a person it is discovered he has made false state- ments so far as his property is concerned that all the property 599 then goes to the government; would that be an inducement for men to be honest? A. It might do for Switzerland but not for America. By Mr. Ahearn. Q. Do you know any savings bank in the city of New York that during the past five years has increased the rate of interest? A. No, sir; they are not able to increase the rate of interest; yes, there are several banks here that have gone from three and a half to four per cent. Q. What are they? A. I think the New York Savings Bank; the Bowery: the Bleecker; the Seaman's, and it is our hope to do the same. Q. Inside of five years is that? A. Yes, sir; the Seaman's pay four per cent on sums up to $500, and three and a half per cent on sums less; we should have done it if it had not been that we felt the necessity of accumulating a surplus out of our old securities. By Mr. Guenther. Q. What would you think of taxing a foreign corporation incorporated in another State and doing business in this State equal to that of a corporation that is incorporated in this State? A. I should endeavor, as far as the law would allow me, to make them pay their taxation. Q. You think that would be fair? A. I think so. Q. And you think a manufacturing corporation ought to pay its proportionate share of the tax? A. I think so. By the Chairman. Q. Have you given any thought to the subject of taxing to w r hat is called the collateral or direct inheritance tax? A. Well, only in this way, that I think it is wrong; I think it is an attempt to make posterity pay for what the individual should be made to pay; under wise taxation laws you can reach the mass of the community and they will pay the tax, but after a man 600 is dead to tax those that follow after him for his sins of omission I think is morally wrong. By Mr. Malby.. Q. But they do not do that according to the decisions of court; as I understand it they hold distinctly that a man's poster- ity had no legal right to his estate except under the statute, no common law right. The Chairman. The State could take it all, in other words. Mr. Hamilton. It is not justified by way of retaliation at all under the law ; it is simply unlawful. The v itiiess. Theoretically that is true; still the fact remains that they have to pay it; that is about the amount of it. By Mr. Malby. Q. What is the total bank surplus in this State, do you kn A. About 50,000,000 all through the State. Charles S. Shivler, called as a, witness, being duly sworn, testi- fied as follows: By Mr. Hamilton. Q. Where do you live? A. Brooklyn.- Q. You are connected with the American District Telegraph Company? A. Yes, sir. Q. In what capacity? A. Secretary and treasurer. Q. That company is organized under the laws of the State of New York? A. Yes, sir. Q. What is its capital stock at present? A. Four million dollars. Q. Its principal office for the transaction of business is located where? A. New York city. Q. What taxes upon personal property are paid by the Ameri- can District Telegraph Company to this Shite? A. T could not tell you the amount, exactly; I do not remember; we pay. I think, about $2,000 a year altogether in taxes. Q. That is the total tax, about $2,000 a year? A. That was the amount previous to the increase of capital stock which took place last year. 601 Q. What was the amount of that increase? A. One million dollars. Q. From three to four? A. Yes, sir. Q. Was your total contribution for franchise and for the various privileges you held under this State on your charter the $2,000 upon a capitalization of what was 3,000,000 and is at present 4,000,000? A. Yes; we were paying as near as I remember about $2,000 a year when the capital stock was 3,000,000. Q. In that $2,000, do you include also the taxes paid upon real estate owned by the company? A. The company has no real estate. By Mr. Malby. Q. What is the rate of taxation; can you tell us? A. I don't remember. Q. In paying $2,000 you pay about two per cent on $100? A. Yes, sir. Q. Do you pay any tax on your capital stock? A. Yes, sir; that is included in the amount I stated. Q. Do you pay anything on your dividends; any tax? A. As I understand it the tax we pay is a payment which is based upon the amount, on the estimated value of the capital stock; we make a report yearly of the dividends paid and we make an estimate of the value of the capital stock. Q. What is the value of your stock, that is, what is it selling for? A. I think about fifty-seven. Q. How much are your dividends? A. Last year we paid two and one-half per cent. Q. And was last year more or less than the previous year? A. It was a little more; two years before I think we paid two per cent. Q. Is there any other telegraph company organized under the State of Xew York except your own; how about the W r estern Union; is that a New York State corporation? A. I think not; I 1 am not sure about that. ^' OF UNIVERSITY Q. Of course, you pay a tax on your property in the localities where it is located? A. Yes, sir. Q. Its lines and poles and so forth? A. The company which represent has no connection with companies of the same name in other States outside of New York; there are several American district telegraph companies, but they are separate organizations. Q. But all under one organization? A. No, sir; they are entirely distinct and separate. Q. These taxes, which you pay, the amount, does that include the taxes levied to others by the different localities through which your lines pass.? A. Our lines exist only in the State of New York; while there are American district telegraph companies in other States they are entirely independent of ours. The committee then went into executive session. II UNIVERSITY OF CALIFORNIA LIBRARY