B. H, PIERCE,, 
 OLD BOOK SHOP, 
 
 2 130 Oxford St., 
 r el y, - Calif. 
 

 
 
 
 

 , 
 
PREFACE. 
 
 For the average man, government and taxation are merely abstract 
 names, and of little interest except in their personal application to him 
 through what he desires or fears from them. These, however, are times 
 of unrest and apprehension, states of mind veneered, it is true, in the 
 United States by the present activity in business, yet but thinly veneered 
 and at that only for a portion of the people ; and as a consequence of 
 such unrest and apprehension, eyes and minds are now turned to govern- 
 ment, and to a solvent government's strongest arm, taxation, with a ner- 
 vousness and fervor but little abated from the high-pitch climax reached 
 in the last and worst of our great panics. There are derisive voices 
 which cite this looking to government as lamentable evidence of "long 
 slide toward both paternalism and maternalism" by a nation "once inde- 
 pendent as well as free." But the rustic who, in ancient fable, sat down by 
 river's side waiting to cross until all the water should run by, was not 
 more foolish than he who in these days expects by jeering to dry up, or 
 turn into other channels, currents flowing from deep-seated feeling in the 
 people. An almost inappreciable side or line movement of a great gun, 
 once it is approximately aimed at object within range, determines whether 
 the shell it bears shall explode in the right place or hurtle harmlessly by. 
 Only he or they in close touch with the machinery can give to the huge 
 cannon its correct side or line movement: so also only he and they who 
 bring to the people's cause the right knowledge and the right sympathetic 
 touch may fairly hope to impress on popular movements directions slight 
 in themselves, yet decisive of whether the goal shall be squarely reached 
 or just missed; decisive, too, of whether the -goal shall be quickly and 
 economically reached, or only after tedious delay and tremendous ex- 
 penditure sometimes not of treasure alone, but of treasure and blood. 
 
 There is an inner correspondence between government, any govern- 
 ment as we understand the word, and its system of taxation. Or to put it 
 in another way, taxation is the book-keeper of government, and its ledger 
 truly mirrors the wisdom or folly, the mingled folly and wisdom, of gov- 
 ernment. Economists and others have multitudinously and variously de- 
 fined taxes; judges have based important conclusions on nice distinctions 
 as to what is and what is not a "tax." These definitions and distinctions 
 curiously reflect, in so far as they attempt precision, the ultimate politi- 
 cal tenets of their makers. I set forth and analyze some of these defir"' 
 
IV PREFACE. 
 
 tions in the introductory chapter of this book. Occasionally a definition 
 racily reflects the maker's pet aversion. Thus Dr. Johnson in his dic- 
 tionary defines the "excise," which with us goes by the name of internal- 
 revenue tax, as a "hateful tax levied upon commodities, and adjudged not 
 by common judges of property, but by wretches hired by those to whom 
 excise is paid." Readers of Rousseau will remember the striking pass- 
 age in his Confessions (Part I, Book IV), wherein he tells of losing his 
 way, and asking for dinner at a French peasant's cottage. This was in 
 1732, and in that year of grace and of the Old Regime, the peasant offered 
 his unbidden guest skim milk and coarse barley bread, saying it was all 
 he had. It would seem from an expression used by Rousseau that 
 straw, ground, chopped or otherwise, was mingled with the barley meal 
 in making such bread. At any rate he fell to with the appetite of a tired 
 and hungry foot-traveler (for so he was), and ate of the barley bread, 
 "straw and all." The peasant judged from this that the stranger was not 
 shamming hunger, nor visiting his hut for any sinister purpose. So, open- 
 ing a little trap-door beside the kitchen, he made a dive, and brought 
 forth a pure wheaten loaf, an appetizing ham and a bottle of wine. To 
 this spread he contrived soon to join a "tolerably thick omelette." And 
 young Rousseau made a dinner "such as only a pedestrian ever knew." 
 When Rousseau offered pay, the peasant refused his money in great 
 perturbation. Just out of Switzerland where things were different, Rous- 
 seau could not imagine the ground of his host's fear. At last the peas- 
 ant, shuddering, uttered the terrible words "clerks, cellar-rats," meaning 
 the tax-farmer's minions who went nosing about to collect an "aid" on 
 each bottle of wine and a faille (literally chop or cut) on each loaf of 
 bread. Aides and tattle were two of the twenty-odd taxes that used to 
 be collected in France under the Old Regime. The peasant explaining 
 why he hid his bread and wine, said he would be a lost man, if anybody 
 suspected "he was not dying of hunger." "I had not the least idea of all 
 this," adds Rousseau; "and what he said made an impression that will 
 never be effaced. It was the germ of that inextinguishable hatred which 
 afterwards grew in my heart for the vexations which beset the unhappy 
 people, and for the oppressers who inflict them." A still more curious 
 instance of taxation, as affecting life and morals, even literature and re- 
 ligion, is given by St. Augustine in his commentary on the Sermon on 
 the Mount. A Roman prefect had taxed a certain man, believing him to 
 be a tax dodger, to pay a poundweight of gold by a set day, or suffer 
 death for default. "Swearing-off," as they call it in New York, had not 
 yet been invented, or at least was not then and there (Antioch, about A. 
 D. 350) in vogue. "The dread day began to impend" (Schaff's transla- 
 tion), and the unhappy man languishing in prison, was unable "to rid 
 himself of that debt." His only tangible asset was a fair and loving wife. 
 A certain rich man, smitten with her exceeding beauty, offered a pound 
 of gold for one night's conversation with her. "Then she, knowing that 
 she herself had not power over her body, but her husband," went to the 
 
PREFACE. V 
 
 prison, told him the offer, and her willingness to accept, if he, "to 
 whom all that chastity was due, should wish it to be done." It does not 
 appear from Augustine's account that there was any struggle in the hus- 
 band's mind between natural jealousy and equally natural love of life; 
 for "he thanked her, and commanded that it should be done," Augustine 
 adding, doubtless from his own sophistication, "in no wise judging that 
 it was an adulterous embrace, because it was no lust, but great love for 
 her husband, that demanded it, at his own bidding and will." While the 
 woman slept, or was otherwise unmindful at the rich man's villa of the 
 gold he had given her, he devising a novel way of evading his tax, substi- 
 tuted base earth for the gold. The woman, when finally aware of the 
 fraud, made great outcry, went to the prefect, told him what she had done 
 and why, and how the rich man had cheated her out of her husband's 
 ransom. Acyndinus (such was the prefect's name) did rare justice: he 
 fined himself a pound of gold for the public purse, and compelled the rich 
 skulker to make over to the woman "that piece of land" whence the sub- 
 stituted earth had been taken. I believe I am the first Shakespeare com- 
 mentator to point out that this story (the original and analogue of the 
 stories underlying Measure for Measure 1 ) was doubtless in the .poet's 
 mind when that play was writing.* 
 
 It is enough in a practical book, like this, to merely indicate by a few 
 examples, as above, the more remote bearings and wider reaches of taxa- 
 tion. In the body of the work, there is little departure from the main 
 current of taxation from the modern instances which alone have con- 
 trolling influence with those for whom I write. The Anglo-Saxon brain 
 has a most praiseworthy respect for fact; it cares little for principle di- 
 vorced from fact. I have accordingly taken and considered in detail all 
 the important questions of taxation which were before the Minnesota 
 legislature last winter, substantially in the order in which they were acted 
 upon, or failed of action. These questions arose in the main upon an 
 elaborate report and a proposed tax code prepared by a tax commission of 
 three members appointed pursuant to legislation had fn the session of 1901. 
 They were, in the main, argued before committees of one or the other 
 legislative branch, at public hearings often largely attended. I pass, then, 
 in review the tax commission's work, the arguments before committees, 
 and what was done, undone, or left undone, by the legislature. Every 
 question so passed in review has been, is, or will be, of importance in 
 each of the states of the Union; the commentary which I interweave, in 
 passing, is as pertinent to the general principles of taxation, as if it wjsre 
 nicely framed and fitted to questions of my own choosing and given in my 
 own order almost as pertinent as if it were framed with particular refer- 
 ence to questions arising in any other state. In this way the facts and 
 the philosophy go. together ; and a copious index enables the reader to find 
 
 *THE HERTIG SHAKESPEARE (in preparation) ; Critical Study of 
 Measure for Measure 
 
VI PREFACE. 
 
 again whatever may specially interest him. What may be called the orig- 
 inal chapters and they are very important come in an order largely de- 
 termined, and with matter somewhat affected, by the foregoing plan. 
 
 No doubt this is an uncommon way to make a book on taxation. Cer- 
 tainly it is not the way to follow, if the writer aims at the maximum of 
 intellectual pleasure for himself, and the minimum of routine labor. For 
 an -orderly mind, what the Germans call a "closed system" is very enticing. 
 Except as led by motives quite apart from personal pleasure, I should 
 have preferred, in lieu of this work, to prepare a short but rigidly syste- 
 matic treatise on taxation followed by a draft of the revenue sections of 
 a model constitution for an American state, and that in turn by a de- 
 tailed tax code under and pursuant to such constitution. But there are 
 the people as one finds them, with wants and needs as they apprehend 
 them, bound more or less by constitution, code, and custom as one finds 
 th$m : I should be a fool to begin a campaign of education and I am 
 beginning one with anything that would even indirectly suggest in form 
 or substance that while, as scientists say, "nature makes no leap," the 
 people are to make long and sudden leap in a direction hardly even 
 thought about heretofore. It is one thing to use constructive thought 
 for mental pleasure ; it is a very different thing to be the medium for 
 crystallizing into the very body and shape of manifest destiny those ten- 
 dencies which float about to the wonder, or perplexity, or anger of those 
 who hail, or puzzle over, or hate them in a trinity of troubled under- 
 standings. 
 
 This is not a history; but certain facts, without which no good history 
 can be written, are here grouped and preserved. They are all the better 
 for mirroring, as far as they go, certain typical features of American life 
 and legislation ; at the same time, giving the structural facts of taxation, 
 they reflect the atmosphere and the channel through which tax-laws must 
 come or fail to come. Local in form, they are sufficiently universal in 
 substance to mislead no one who begins with them to study the problems 
 of American taxation, or to supplement with them studies made at and 
 from other sources. 
 
 The chapter on the growth and financing of the Great Northern Rail- 
 way Company, profoundly interesting in itself, affords abundant matter 
 for whoever would moralize on the proper relation of wealth to taxation ; 
 and in another chapter my somewhat lengthy comparison of glittering 
 new brigands with brigands who in splendor or tarnish live only in 
 history's "pictured page," signals the kind and quality of those who will 
 most certainly not fail in effort to shift the ta.x back on us, however 
 successful we may be in nominally imposing it on them. Judicious se- 
 lection from a great wealth of material, and from the considerations 
 which spontaneously arise in presenting fact and judgment is the chief 
 difficulty for whoever, having something to write about taxation, would 
 make a book of moderate compass. The chapter on Henry George's sin- 
 gle tax, while perhaps as difficult as any in such respect, was certainly 
 
PREFACE. VII 
 
 not more so than some of the other chapters, and I found it much freer 
 than they from inherent general difficulty of arrangement and detail. 
 Regretting that so much idealism, very valuable if elsewhere and other- 
 wise engaged, should be now, as it were, wasted on the single-tax the- 
 ory, I still trust that the single-taxers will not find me lacking in appre- 
 ciation of, and courtesy toward, what they have done, and what (much 
 more) they vainly hope to do. Some good comes of earnest attempt, if 
 not the good expected. In like manner, my occasional reference to some 
 particular bankruptcy of political economy must be construed as con- 
 sistent with holding that it has still some estate to administer; but per- 
 haps it would be found more appropriate to call it, in certain of its forms, 
 the permanent apologist and receiver of a bankrupt, but still-going, 
 civil society. For the rest, many economists themselves now find Ricar- 
 do's table set with humble pie instead of the proud ambrosia which De 
 Quincey and others gleefully proclaimed bespread it; and of the later 
 economists, the Nation, of New York, regrets that many are singing 
 "songs of freedom and filling the bellies of the poor with the East wind." 
 For whoever will search out, and cling tenaciously to, a wide range of 
 emotional and objective facts, never fail to find room for further facts, 
 never fall into the absolutism of adopting a last-ditch social formula 
 and of committing to it his own common sense and the world's experience, 
 insist, before giving any practical value to any mathematical formula 
 of any economist, that it be usable after the analogy of Kutter's formula 
 for determining the "mean velocity of water flowing in open channels 
 of uniform cross section and slope,"* such a person may read any econ- 
 omist with profit, and generally with considerable militant pleasure, sure, 
 in any event, if he reads many economists, to find means of casting out 
 the Devil with Beelzebub. They profess in these days a hearty allegi- 
 ance to facts ; and their treatises present in convenient form a great 
 many valuable ones. The path from anywhere leads over the world. 
 When economists lay out a path on paper, call that path a law of eco- 
 nomics, and declare it to have a physically corresponding path in the 
 real world, in the course and sequence of certain highly important phe- 
 nomena of civil society, then, in general, neither the professors nor their 
 disciples can keep within the strict limits of the economic path; but with 
 more or less stealth, with more or less openness, they follow it over 
 the world, pronouncing critical, or it may be constructive, judgment 
 on a multitude of things formally excluded from their province. It is 
 as Auguste Comte has said, "a miserable metaphysic" that pretends to 
 elucidate a group of social phenomena by isolating the same in thought 
 from the influence of other social phenomena ; and professors and dis- 
 ciples are rather to be commended for their inconsistency in not keep- 
 
 *"A11 such formulae, liable to error arising from the difficulty of 
 ascertaining the exact condition of the stream as regards roughness of 
 bed, surface slope, etc." TRAUTWINE. 
 
VIII PREFACE. 
 
 ing within the formal limits of political economy, but poaching every- 
 where in other departments of sociology. Professors like Cairnes have 
 shown a curious ignorance of human nature and human need in enter- 
 taining and defending the notion that "the laws of economics are as 
 distinct as possible from rules of action, that political economy is 'neutral !' 
 They forget that the laws of political economy are converted into rules 
 by sheer force of necessity, and that the maintenance of this neutrality 
 is practically impossible" a truth amply proved in their own ranks; for, 
 "as a matter of fact, while affecting the reserved and serious air of stu- 
 dents, political economists have all the time been found brawling in the 
 market-place." ARNOLD TOYNBEE, in "Ricardo and the Old Political Econ- 
 omy." Certainly the economist writer is not hard to find who, with a 
 few formulas and no tincture of jurisprudence, essays to cut wide swath 
 through every department of government. 
 
 The field of taxation proper is hardly to be approached without right 
 of way through the general domain of public revenue, nor to be trodden 
 discreetly without the guiding hand of jurisprudence. How effort herein 
 has kept pace with such requirement; how in a book of moderate com- 
 pass, pre-eminently illustrative to its author of the fact that it is harder 
 to write a small book than a large one ; in a book planned to treat 
 critically the immediate problem of its subject, yet to fail not in many 
 a constructive suggestion; in a book planned to give that subject a pre- 
 liminary clearing of common errors and a large setting of appropriate and 
 often neglected fact ; in a book whose immediate problems, of vast 
 weight as they are, ever revolve in the author's mind into nearly related 
 and collateral ones of equal and of greater weight; in a book meant to 
 show a keen consciousness of fetter and wing, yet to carry each with 
 apparent ease, how in such book I have had such audacity of attempt, 
 and the greater audacity of acknowledgment, are matters of personal 
 quality, itself good for " a hundred thousand in an age where nominal 
 freedom is too often the mask of intellectual cowardice. 
 
 Free choice, without the compelling limitation of space, would have 
 impelled me to avoid the prolix classifications and sub-classifications of 
 which the Germans are so fond, and which are unspeakably wearisome 
 to most American readers, and of no calculable importance to influence 
 American events. Governments get revenue by gift, by contract, and by 
 compulsion. This is the classification adopted by Prof. Seligman, who 
 prefers to call "contractual income" that which the Germans term "pri- 
 vate, economic income," meaning thereby the income derived by gov- 
 ernment from its own "lands or other revenue-yielding property," and 
 from its "mercantile, financial or industrial pursuits," when government 
 chooses to engage in them. To the sources mentioned by Seligman may 
 be added another, that is to say, escheat, whereby government takes 
 decedents' estates when heirship fails through lack of kindred and lack 
 of testamentary disposition. Most contractual income of government 
 will be found, if we carry analysis back a step, to rest on compulsion: 
 
PREFACE. IX 
 
 compulsion is the seed; contract the fruit. Thus the public domain of 
 the United States, when acquired by cession for an agreed price, or ces- 
 sion as a result of war, began in compulsion, since when paid for, the 
 price grew out of compulsory taxation, and when taken, as from Mexico, 
 the compulsion is still more apparent. Even where the United States has 
 conceded that the American Indians had a good title to their lands, it 
 has insisted that it alone had the right to acquire such title from the 
 Indians, and by virtue of its sovereign claim has ousted individuals of 
 title acquired by them from the Indian owners in good faith. 
 
 The foregoing, or primary, classification of public revenues is not that 
 on which writers have spent doughty effort and full measure of con- 
 troversial zeal. They save their forces for the tug of war that comes in 
 the wrangle over classification of the revenues which government forcibly 
 takes from the natural and artificial persons within its jurisdiction, in 
 this disputatious domain of tax classification, "all possible combinations," 
 as Seligman says, "have been made, especially by recent German writ- 
 ers." Essays in Taxation, 267. Fees, for instance, to which Seligman 
 devotes a few lucid pages, and which are the name given to those sums 
 charged or assessed by government for a special service or a special priv- 
 ilege occupy a hundred and sixty-six very sizable and very crowded 
 pages in Adolph Wagner's Fww,Hzwusenschaft, and are treated by some 
 other German writers with a copiousness of detail which I shall neither 
 particularize nor imitate. But I will not with quite the Spartan brevity 
 of Seligman pass over government's right to take the property of individ- 
 uals by exercising the power of eminent domain and the penal power. 
 
 "The power of eminent domain confers on the government the right 
 of taking at its discretion, and to an indefinite extent, private property. 
 With the constitutional and moral limitations upon this power we have 
 not here to deal, chiefly because the power is for the most part not a 
 source of net revenue." So saying, (pp. 267-8), Seligman dismisses emi- 
 nent domain with the further remark that taking under this power is 
 limited to taking for public use and with "just compensation," without 
 contemplation of net income from the property to be so acquired, but 
 with some prospect of such income in view of property conceivably 
 worth more than damages awarded for the taking. The New Jurispru- 
 dence will be much exercised over, and will much exercise this power. 
 Its first need will be to fix a constitutional limit to the ''just compensa- 
 tion" to be awarded individual owners. Everybody knows that the 
 greedy Me, lying more or less dormant in the individual, becomes clamor- 
 ously wide awake the moment it is known that a piece of his property is 
 wanted under the power of eminent domain. The dead set made by 
 Parisian owners and occupants against the public purse when the regime 
 of Napoleon 111. wanted to widen and otherwise change the streets of 
 Paris affords a typical case. Where the law provides that property shall 
 be appraised for taxation at its "full and true value," the hog in the 
 Philistine owner would be almost estopped from squealing against a con- 
 
X PREFACE. 
 
 stitutional provision which should fix as the maximum of damages be- 
 tween him and the state a sum, say twice the average assessed value of 
 the property during the five years preceding 1903.- To fix such a rule 
 with proper local exceptions and equitable qualifications is a difficult 
 but by no means an unsolvable problem. I mention it here merely as 
 showing the wide vistas which the bare mention of the subject opens 
 up for an expert. 
 
 So also the penal power, or "the power to adjudge fines and penalties," 
 is treated by Seligman with like brevity, a reference to "the vague pro- 
 vision" in the Constitution against excessive fines, and the remark, fol- 
 lowing his definition of the power, that it "belongs rather to penology 
 and administration than to the science of finance; for that the private 
 property is here taken, not in accordance with the needs of the state or 
 with any principles of equality or uniformity or benefits or compensa- 
 tion, but solely as a punishment inflicted on the individual." But it must 
 be remembered that forfeitures of charters and franchises is a branch 
 of the penal power ; that large corporations habitually and even wantonly 
 violate the express or implied terms on which they enjoy their charters 
 and franchises; that if, for concrete instance, the proceedings now pend- 
 ing in various courts against the Northern Securities Company should 
 prove to be in result, as is sometimes predicted, little more than horse- 
 play, or even if they should be technically effective, the states whose 
 laws the offending corporations have violated, may still take a short, 
 an effective and even a retrospective cut to forfeit the respective fran- 
 chises ; and fix at the same time the measure of compensation to them 
 for what will be technically "scrap," the only property, besides realty 
 and rolling stock, that they will have remaining. Whatever may be the 
 inner disposition of the federal judiciary, I conceive, that it will find itself 
 estopped from interfering with or impairing the right procedure of the 
 states in this behalf. 
 
 The taxing power proper, often confounded in part with the so-called 
 "police power," of which more in due order, is in modern states even 
 more important than either the power of eminent domain or the penal 
 power, as furnishing the indispensable basis for their exercise. The 
 three together become irresistible in the hands of the right statesman- 
 ship as means for carrying into effect its plan of individual rights. Sub- 
 ject to the foregoing qualification and reminders, Seligman, summing up 
 (p. 302), is to be commended for helpful brevity: * * * "We find 
 that under actual conditions all public revenues are either gratuitous, 
 contractual or compulsory contributions; that the compulsory contribu- 
 tions are levied in virtue of the power of eminent domain, of the penal 
 power (either as a separate power or as the fiscally important part of 
 the police power), or of the taxing power; and, finally, that the taxing 
 power manifests itself in the three forms of fees, special assessments and 
 taxes."' ibid. Special assessments, "a comparatively modern and a 
 
PREFACE. XI 
 
 specifically American development," have written a very large and in 
 places a very confused chapter in American law. 
 
 All taxation is intimately related to law, but this is not a law book, any 
 more than it is a history. In American jurisprudence there is an immense 
 number of adjudicated cases upon tax questions. Some of these declare 
 principles, correct or otherwise, but citable and applicable to taxation 
 in general, or to taxation in its relation to our dual government of 
 nation and state. By far the greater number, however, involve points 
 that go only to minor infringement or alleged infringement of individual 
 right, and go neither to the validity or invalidity of a whole tax levy. 
 I have freely cited and discussed some of the more important cases 
 those that buoy, or it may be, block the way to ultimate Civil Code. An 
 c .therwise good taxer is as naught unless he is himself, or is piloted by, 
 a competent jurist. I have therefore endeavored to give in luminous 
 outline the federal constitutional landmarks which should be present to 
 the mind of every legislator or other person who studies state taxation; 
 and I have been careful to point out the wide vistas in possible taxation, 
 which the courts have not, as yet, attempted to close against the people. 
 It will be seen that I have not abused my familiarity with jurisprudence, 
 to overload the book with technical law. The meaning of such novelties 
 as the New Jurisprudence and the Civil Nation is sufficiently apparent 
 from the context of the passages where they occur. For the rest, these 
 matters will be more fully elucidated in my forthcoming work on the 
 Constitution of the United States, to which this book may serve, in some 
 measure, as an introduction. 
 
 My work in the making of this book has been considerably increased 
 from the fact that I have had to be not only the final, but to some extent 
 the intermediate, proof-reader. The linotype machine has its advantages ; 
 but they conduce neither to the proof-reader's satisfaction, nor to the high- 
 est finish of the printed page. The resetting of a line to change a point 
 or a capital, or a "wrong font" letter, not infrequently gives rise to a worse 
 flaw in the reset line. Accordingly, to save labor, I have occasionally 
 passed lines not quite conforming to my standard in the respects men- 
 tioned, but reproducing "copy" with substantial accuracy and without am- 
 biguity. Such slight seeming of caprice as is herein apparent, as well as 
 in the omission of accent marks from foreign words, may be considered 
 the caprice of convenience, but not of carelessness. C. M. H. 
 
CHAPTER I. 
 
 Taxation in general purpose and result with sundry particular instances, 
 and a glance at the political atmosphere whence other instances are 
 to come. 
 
 I compress taxation into the alliterative formula, taxa- 
 tion for robbery, taxation for revenue, taxation for reform. 
 This formula measures exhaustively all kinds of taxation 
 from the standpoint of their results, and nearly so from the 
 standpoint of conscious purpose in the power that levies taxes. 
 A tribute imposed by strength upon weakness in return for the 
 privilege conceded that the tribe or other social aggregate pay- 
 ing such tribute, shall not otherwise be mulcted in person or prop- 
 erty by the tribe or people receiving it, differs in no essential re- 
 spect from the more or less accidental tribute levied by robber on 
 passing wayfarer; in both cases, immunity as to person and other 
 property for the time being is the only return which the receivers 
 of the tribute make for it. In both cases, too, the result is the 
 finish of a robbery ; only in the case of the stronger tribe or people 
 exacting tribute from weaker tribe or people, the former would 
 hardly have a conscious purpose to rob; they would at least de- 
 scribe their purpose as different from that in the mind of any one 
 who should set out to plunder in his individual capacity another 
 individual entitled to the rights and immunities of the plunderer's 
 own tribe or people; and they would not call their tribal or ag- 
 gregate purpose by any name of reproach. So also in levying 
 tributes which are more properly dignified with the name of taxes, 
 than the simpler tributes just mentioned, those who levy have 
 seldom indeed the distinct consciousness of purpose to rob, and 
 seldomer still the cynical frankness that would be equal to ad- 
 mitting such purpose, though their particular brand of taxation 
 might in practical effect be well likened to downright robberv. 
 Taxation, in anything like the sense now attached to the word, 
 begins only where robbery pure and simple ends, and where trib- 
 ute makes a first step toward taxation, that is, where there is at 
 least some promise of return for the tribute levied, other than of 
 
14 5 , HERTIG ON TAXATION. 
 
 mere immunity from the attack of him who exacts. This prom- 
 ise may be in the nature of an agreement to protect generally ; or 
 the tribute and the return therefor may be in a form (if we go 
 back to rude and remote beginning of civil polity), that we catch 
 so imperfectly as to get no basis for clear understanding or prof- 
 itable comparison. There are differences in individual man, and 
 in his social-unit groups, too wide, in measure of time, stage and 
 race, to be of much comparative value to any one unless to him 
 who values for its own sake a conjecture plausibly made, a story 
 well told, or a contrast strikingly set forth.* 
 
 My formula, then, is not meant to lead anyone into a specious 
 absolutism, or meant to foreclose anyone of the historical and 
 evolutionary domain that may seem to him to invite scrutiny of 
 its older highways and byways leading to and from taxation.! 
 
 For us at least, "all beginning is in the middle" ; what we shall 
 tax and how we shall tax, depends more on a sheer one way or the 
 other with exact reference to the current in which we move, than 
 on any attempted navigation with raft or life boat purposely fash- 
 
 *Wagner, without having in mind any thought resembling the prop- 
 osition put forth in the text, enumerates elaborately three distinct kinds 
 of difficulties that stand in the way of comparing the tax systems of dif- 
 ferent places and countries, even for historical times in ample reach, 
 even for the present time with text and official directory as to the dif- 
 ferent laws on one's desk, difficulties that face him, German professor, 
 as he acknowledges, even in confining himself to his native tongue and 
 solving the contradictions and variations between its bureaucratic jargon 
 (amtliche 1 Te^minologie) and its use in the moujhs of the people, in 
 comparing tax measures and tax results for different German places and 
 periods. "Thus one and the same name of a particular tax does not 
 mean in the same language, German, for instance, always the same thing 
 in the different countries where such language is in use ; it may even 
 change its meaning in the same country, subject to the same tax legis- 
 lation, for example, the expression "income tax" in Prussia, Bavaria, 
 Austria. And he gives literally a bead-roll of other German names for 
 different taxes subject to the contingency of meaning one thing here and 
 something less or something more there. He urges special caution "in 
 the judging, in praise and blame, in the recommendation of foreign ex- 
 emplars, and particularly in setting up a sweeping judgment on historical 
 developments" (namentlich aber auch im Gesammturtheil iiber geschicht- 
 liche Entwicklungen.) Finanzivissenschaft, Erganzungsheft, 3-7. 
 
 *Prof. Seligman constructs for the development of taxation a "hi- 
 torical process" scale consisting of seven steps or stages, which he illustrates 
 and tactily assumes to prove sufficiently, by instancing seven corresponding 
 etymological stages, or groups of tax names expressing each the notion 
 which mediaeval and modern Europe affixed and affixes to each tax stage 
 in due succession. The professorial inclination to absolutism seems to 
 have hindered Seligman from divorcing the particular development which 
 he finds in the narrow area of Europe and in the short stretch of mediaeval 
 and modern time, from the possible and actual developments of taxation 
 in other countries and other times. Perhaps he believes his seven stages 
 
HERTI.G ON TAXATION. 15 
 
 ioned of historical or evolutionary material. Such raft or al- 
 leged life boat will not have even the efficacy of driftwood ; that, 
 at least, is sometimes seriously in the way, while craft launched 
 from professorial ways amount, in general, to no more than cock- 
 boats just sufficient to carry the professors and their salaries to 
 toss in the wake of the ship of state, or, it may be, to be run down 
 by her with scarcely a tremor along her keel. Nothing is more 
 important than fact ; nothing more inevitable than theory ; and 
 nothing more misleading than formula implying fact-register 
 closed and theory perfect in application. The path of Political 
 
 to be necessary and inevitable wherever taxation has been or shall be 
 developed! The mind willingly erects its own order, sometimes its dis- 
 order, into a rigid limitation of nature. 
 
 Here are Seligman's seven stages: "The original idea was that of 
 gift. The individual made a present to the government. [Mediaeval Latin 
 donum, English benevolence.} * * * The second stage was reached 
 when the government humbly implored or prayed the people for support. 
 [Latin precarium, German Bede.} * * With the third stage we come 
 to the idea of assistance to the state. [Government, if not getting gift, 
 was at least getting a favor, evidenced by Latin adjutorium, English aid, 
 French aide; also by English subsidy and contribution, German steur, 
 connoting help, and by Scandinavian hjelp.] * * * The fourth stage 
 of development brings out the idea of sacrifice by the individual in the 
 interest of the state.- He now surrenders something- for the public good. 
 [Old French gabelle, German abgabe, Italian dazio.} * * * With the 
 fifth stage the feeling of obligation develops in the taxpayer. [Evidenced 
 by duty, used in a much wider sense formerly, and in Eneland, even now 
 in a somewhat wider sense than that of a custom-house toll.] It is not 
 until the sixth stage is reached that we meet the idea of compulsion on 
 the part of the state. [English impost or imposition, French impot. 
 Italian imposta, German auflage and aufschlag. * * * * With the 
 seventh and final stage we reach the idea of a rate or assessment, fixed 
 or estimated by the government without any reference to the volition of 
 the taxpayer. * * * * [Our tax, French taxe, Italian tassa, English 
 rate.] It is worthy of note that in the middle ages '"tax" [the word 
 itself or its etymological analogue] meant a direct tax, for which a reg- 
 ular assessment list or schedule was made." 
 
 So far Seligman's seven stages. To the extent that they are of 
 substance and not merely of form, it will be found, I think, that wher- 
 ever the idea of a contribution which we moderns call "tax" was not 
 associated with compulsory payment, either the central government had 
 but feeble authority, as in France before the kings got firm administrative 
 grip on the independent and quasi-independent feudal barons ; or the 
 jurisdiction of the taxing power was otherwise on a disputed basis. It 
 is likely enough that whoever gave or paid relished the payment or 
 gift little better for the name it had. I recall in this connection, and 
 translate, a vigorous passage from J. B. Say : "Whatever name be given 
 it, whether, contribution, tax, obligation, subsidy, or even free gift, it 
 is a charge imposed on private persons, or associations of such, by the 
 sovereign, people or prince, to provide for the outlay which he thinks 
 proper to make at their expense. Traite-d' -Economic Politique (5th ed., 
 3 vols., Paris, 1826), in, 144. 
 
16 HERTIG ON TAXATION. 
 
 Economy is as thickly littered with cock-sure theories gone bank- 
 rupt, as if Sir James Steuart, an economist before Adam Smith, 
 had not written (Inquiry into the Principles of Political Economy, 
 London, 1768, p. 369), "Theory is not sufficient to lay open politi- 
 cal consequences, even to the greatest genius ; all our information 
 as to those matters arises from experience." On the other hand, 
 there are works of approved German pattern distinguished for 
 facts heaped up with painful conscientiousness and disfigured with 
 awkward helplessness in using them where indeed lucid state- 
 ment of important facts is the thing most frequently lacking. 
 The man embarrassed by the wealth of his material is prone to 
 make poor use of what he has. Attraction, in some cases at least, 
 is certainly "proportional to destiny" : and poor judgment, trained 
 in pedant's way, instinctively seeks shelter behind bulky volumes. 
 
 Taxation for robbery, taxation 'for revenue, taxation for re- 
 form, in the order mentioned, set forth in rough approximation 
 the successive stages which we may assign to taxation from the 
 standpoint of its historical evolution. Here again I caution 
 against falling into, or attributing to me, a specious absolutism. 
 These kinds are never quite distinct in point of time, never quite 
 distinct in co-existence, perhaps never quite distinct in purpose. 
 The subtle man will not, and the simpler man should not, fail to 
 remember that robbery for plunder, robbery for revenue to laud- 
 able uses, and robbery to effect a real or supposed reform may all 
 be resultantly, if not purposely, merged in one and the same tax 
 levy. 
 
 If we PT> back a few hundred years and call taxes those trib- 
 utes levied by the princeling's of Romaena, who, as Machiavelli 
 savs. "plundered rather than governed their subjects to correct 
 ends." there undoubtedly was taxation for robbery in a type 
 nearly pure ; and, just like robbery, it recked little if it killed the 
 goose that laid golden eggs. For modern instance, certain por- 
 tions of taxes or tribute levied in some cities, and occasionally 
 throughout states, in amounts fixed bv corrupt ring rule, ap- 
 proach perhaps as closelv to the pure type of taxation for robbery 
 PS any instance belonging to our own times. Thus taxation in 
 the state of New York, dictated and imposed by canal and other 
 corrupt rings for years prior to 1875, had made, as' Samuel J- 
 Tilden said, the burdens even of rural taxpayers "nearlv unen- 
 durable." It was while governor of New York, that Tilden in 
 1875 made a speech at Syracuse, and in direct reference to mem- 
 bers of the canal ring that had plundered within the forms of law, 
 told of the applications for pardon that had been made to him 
 by the friends and relatives of ordinary criminals whom the law 
 had put in prison, and how in consequence of these applications 
 
HERTIG ON TAXATION. 17 
 
 for pardons, he had looked into the particular circumstances of 
 those so imprisoned. "When," said he, "I have compared their 
 offense, in their nature, temptations and circumstances, with the 
 crimes of great public delinquents who claim to stand among 
 your best society and are confessedly prominent among their fel- 
 low citizens, crimes repeated and continued year after year, I 
 am appalled at the inequality of human justice." Tilden's Works 
 (N. Y. 1885) II, pp. 220-1. 
 
 Though an extended enumeration of instances where taxation 
 was a cover for robbery is not within the scope of this work, 1 
 will mention a class of cases peculiar to other times and a differ- 
 ent civilization, where perhaps the consciousness of wrong 
 intended, and wrong inflicted, may have been hardly 
 present at all cases furnished by India, not so ancient as 
 some of the things we know about India, but as far back as we 
 can go in that country for facts relating to taxation, in a sense 
 at all approximate to the sense which we attach to the word. 
 
 "The Indian monarchs," says Sir Henry Sumner Maine, "of 
 whose practices we have any real knowledge took so much of the 
 produce in the shape of land revenue as to leave to the cultivating 
 groups little more than the means of bare subsistence." Village 
 Communities (New York, 1876) p. 179. In considering the sub- 
 ject of taxation in what are, to us at least, its historical begin- 
 nings, due allowance must be made for the different shades and 
 claims of title to levy the tax, impose the tribute, or get in any 
 name, whatever was exacted which from this distance looks like 
 a tax. The proposition which Maine cautiously puts forth may 
 here be cited : "In the beginning of the history of ownership 
 there was no such, broad distinction as we now commonly draw 
 between political and proprietary power, between the power 
 which gives the right to tax and the power which confers the 
 right to exact rent." Id. r 228-9. Perhaps, too, a caution will be 
 in place here, to take "robbery" in its most popular sense. The 
 good judge of the story who set aside a bad verdict with the re- 
 mark that, in his court, it took thirteen men to "rob" a man of 
 his farm gives a sufficient clue to that sense. Moreover, the less 
 poetic judges whose wit and wisdom are chronicled in dry law re- 
 ports, not infrequently describe some particular phase of taxation 
 as robbery, or plunder. Thus Jeremiah S. Black, as Chief Justice 
 of Pennsylvania, said, in 1853, When taxation "is prostituted to 
 objects in no way connected with the public interests or welfare, 
 it ceases to be taxation, and becomes plunder." Sharpless v. 
 Mayor of Phila., 21 Pa. St. 169. Compare Bagehot's piquant 
 characterization of "the primitive notion of taxation," which, 
 however, to be intelligently applicable to particular time and 
 
18 HERTIG ON TAXATION. 
 
 place, must be taken as a notion relatively recent in historical 
 time: "The primitive notion of taxation is that when a govern- 
 ment sees much money, it should take some of it, and that if it 
 sees more money it should take more of it." Works, Morgan's 
 ed. (Hartford, 1891), V. 307. 
 
 A passage often quoted from Lcs Cafacteres de la Bruyerc, 
 first published in 1687, an d to which the incident from Rousseau, 
 given in my preface, affords life-like detail, gives a striking pic- 
 ture of the "Man with the Hoe," as he was under the Old Regime 
 in France, or, for that matter, is anywhere under robbing taxation 
 and a government where he has no voice. A despotic is always 
 a plundering government; and despotism has many forms. La 
 Bruyere says in the famous passage: 
 
 "You shall see certain wild-looking animals, male and female, 
 scattered over the country swarthy, livid and sunburnt, bound 
 to the earth which they dig and turn over with invincible tenac- 
 ity. They have a sort of articulate voice ; and when they straight- 
 en up on their feet, they show a human face. They are in fact 
 men. They withdraw at night into dens where they live on black 
 bread, water and roots ; they spare other men the trouble of plow- 
 ing, sowing and reaping, and deserve therefore not to be scanted 
 in the bread from their fields." But the extortioners in ancient 
 France knew what they were doing, and in self-justification were 
 wont to say : "The peasant must be poor, else he won't work !" 
 II faut que le paysan soit pauvre, pour qu il ne soit pas paresseux. 
 J. B. SAY, Cours d? Economie Politique. 
 
 An up-to-date pendant of La Bruyere's picture is furnished by 
 the Italian peasant, little less wretched now than was his French 
 brother three hundred years ago. Professor Lombroso and 
 others testify that he has special diseases resulting from insuffi- 
 cient food. The Indian monarchs, of whom Maine speaks, 
 robbed in the traditionary Oriental way which had crystallized 
 into fixed habit and unquestioned right ; modern and united Italy, 
 in the span of one generation, professing allegiance to liberty, 
 progress, constitutionality and other catchwords of these times, 
 has certainly used modern financial ways and means to pile up a 
 debt which leaves to her fiscal system no alternative but robbery 
 or repudiation. And present robbery means ultimate repudiation. 
 From the over-abundant testimony upon the robbing taxation in 
 Italy, I select at random the following: "Taxes have reached 
 such an excessive limit, and are exacted in such a vexatious way, 
 that they almost assume the character of theft. Justice is a 
 myth. Magistrates can be bought and sold with the greatest 
 facility and for a low price. Public security is null and the most 
 treacherous crimes can be committed in the very center of the 
 
HERTIG ON TAXATION. 19 
 
 largest cities." Open Court, Vol. XIII, 485. There is an inti- 
 mate connection between Italian taxation and Italian anarchists, 
 as there is between Russian despotism and Russian revolutionists. 
 Reading and international communication being now universal, 
 no nation or country escapes wholly from the problems and 
 plague spots which centre in other nations and countries matter 
 treated at some length in my forthcoming work on Anarchism 
 and Counter- Anarchism. Governmental incompetence, it cannot 
 be too often repeated, is always reflected in the resulting taxa- 
 tion. 
 
 Taxation for revenue, and nothing more, has not been rare in 
 American commonwealths, and particularly in their minor sub- 
 divisions. Where wealth, or it would perhaps be more appropri- 
 ate to say, where poverty is so evenly distributed that neither 
 tax-dodger nor clamor of "privilege" is much in evidence, taxes 
 are in fact so nearly "equal and uniform" that the well-meaning 
 framers of constitutions which decree such equality and uniform- 
 ity need not go further in search of their ideal realized. The 
 taxes imposed by the first congress of the United States, in 1789', 
 under the then newly ratified Constitution, were, in practical 
 effect, and some have thought in intent, purely taxes for revenue. 
 Revenue was the first and most crying of needs, and such a thing 
 as a surplus to squander, or even to spend legitimately, was 
 farthest from the mind of a congress which fixed the salary of 
 its own members at the modest figure of six dollars per day 
 during session, and allowance of one day for each 20 miles of 
 travel. But congress imposed no taxes except by way of duties 
 on imports, which, as calculated by Worthington C. Ford, ^were 
 on an average "equivalent to an ad valorem rate of 8^/2 per cent." 
 It is curious that this first tariff of the United States, which 
 was not in fact a protective tariff, purported to be one, its pre- 
 amble running : "Whereas, it is necessary for the support of the 
 government, for the discharge of the debts of the United States, 
 and the encouragement and protection of manufactures, that 
 duties be laid," etc. "In the whole history of tariff legislation 
 in this country it is the only law which was thus openly passed 
 for protection to American industry." Ford, in Cyclopedia of Po- 
 litical Science, title "Tariffs of the United States." But protec- 
 tion had its advocates in the first congress. Thomas Hartley, a 
 member from Pennsylvania, contrived to say something that 
 sounds as little outworn as if uttered yesterday: "I think it 
 both politic and just that the fostering hand of the General Gov- 
 ernment should extend to all those manufactures which will tend 
 to national utility." Bentoris Abridgement of the Debates of 
 Congress, I, 25. Hartley's colleague, George Clymer, "was satis- 
 
20 HERTIG ON TAXATION. 
 
 fied that a political necessity existed," both for "encouraging 
 manufacturers and obtaining revenue" by duties. Id. 27. And 
 as, moreover, there was no lack of sentiment to the effect that the 
 volume of those duties would be of tremendous magnitude, 
 Bland, of Virginia, thinking there was not money enough in the 
 country to pay the proposed duties (Id. 61), and finding echo 
 for his opinion in the well-known Elbriclge Gerry, of Massachu- 
 setts (Id. 64), it would seem that the first congress, in enacting 
 a tariff "for revenue only," did not know it any more than the 
 excellent M. Jourdain, of iVloliere's humor, knew that he spoke 
 prose. 
 
 Local taxation, as practiced in the minor subdivisions of the 
 American states, is generally free from all intent to rob, and so 
 furnishes many instances ot taxation for revenue in its purest 
 form, as well as in its purest intent. It must not be forgotten, 
 however, that there are individualists, who, believing it to be the 
 whole right, duty and function of government to furnish judge 
 and policeman, see thinly disguised robbery in all school taxes, 
 park taxes and the like, just as the same or other individualists 
 see thinly disguised tyranny in compulsory vaccination, in quar- 
 antine laws, and in many other measures enforced by govern- 
 ment. The small duty on sugar lately levied by the British gov- 
 ernment, as one of the revenue necessities growing out of the 
 Boer war, is in purpose and effect a tax for revenue only ; but, 
 like all taxes on consumption, from its very nature it is levied on 
 consumers without regard to their relative ability to pay, and so 
 is shut out from the equitable aim of levying taxes in proportion 
 to each tax-payer's purse. 
 
 A tax measure may wear the appearance of taxation for reve- 
 nue only,, and yet easily cover other motives, or be incomplete for 
 revenue purposes unless supplemented by other legislation. The 
 British duties on tobacco are fully illustrative of all these phases. 
 They do yield considerable revenue, 9,277,000 pounds sterling 
 in the year 1884-5, I2 838,578 pounds for 1900-1901. But it is 
 not generally known that Great Britain prohibits under penalty 
 the growing of tobacco in the United Kingdom ; and it seems not 
 to be generally observed that while Great Britain levies duties 
 equivalent to about 93 cents per pound on snuff, $1.21 per pound 
 on cigars, $1.10 on cavendish and $1.00 on other manufactured 
 tobacco, she* makes the duties on raw tobacco about 33 cents 
 per pound less on an average, and thus gives to the British man- 
 ufacturing tobacconist an enormous protection much as differ- 
 ential duties between raw and refined sugar "protect" sugar 
 refiners in the United States. This difference is prohibitory of 
 the importation of manufactured tobacco. "Our custom returns 
 
HERTIG ON TAXATION. 21 
 
 for 1882 show an export from the United States to England of 
 290,000 cigars, worth $10,251, no snuff, and all other manufac- 
 tures of tobacco only $604,141." VAN BUREN DKNSLOW, Prin- 
 ciples of Economic Philosophy (New York, 1888), p. 481. 
 
 "About one-half of England's importation of tobacco, to-wit, 
 30,000,000 pounds, comes from the United States." Id. 480. 
 
 Historically speaking, taxation for reform comes late in what- 
 ever civilization it manifests itself, after allegiance to govern- 
 ment and to the permanence of taxation of some sort have become 
 unquestioned necessities in the- average consciousness of civilized 
 man ; perhaps not until after some of his poets have sung like 
 Goethe : 
 
 Law's rights and wrongs outlast the dead and gone 
 Eternal sickness handed down and on.* 
 
 Instances of taxation for reform pure and simple, that is to 
 say, divorced from expectation of revenue, are not very numerous ; 
 but taxes for more money and collaterally for morality, or other 
 aim of reform, are not uncommon. 
 
 In 1790, before the United States had any excise or internal 
 revenue tax. Alexander Hamilton then secretary of the treas- 
 ury, ur^ed "additions" to duties on imported wines nnd spirits 
 and the laying of a tax on spirits "distilled within the United 
 States." "The consumption of ardent spirits," he siid in his re- 
 port to the House of Representatives, * * * "no doubt very 
 much on account of their cheapness, is carried to an extreme 
 which is truly to be regretted, as well in regard to the health and 
 morals as to the economy of the community. Should the increase 
 of duties tend to a decrease of the consumption of those articles, 
 the effect .would be in every respect desirable. * * * It is 
 not, however, probable that this decrease would be in a decree 
 vliHi would frustrate the expected benefit to the revenue from 
 raisin " the duties." Works, Lodge's ed. (New York, 1886), 
 TI, p. 91. 
 
 Most governments are too hard pressed for morev to tax 
 of set purpose anythin^ out of existence, unless with the expec- 
 tation of substitutinT for it somethine else which they prefer. 
 If a. lio-hter tax will let it live and yield revenue, they will not 
 ordinarily carry the weight of the tax to the crushing and de- 
 
 *Es erben sich Gesetz und Rechte, 
 Wie eine ew'ge Krankheit fort. Faust. 
 
 T his couplet has, of course, only such authority as belongs to Mephis- 
 tonhclrs, who speaks it. Perhaps, however, some will think it strikingly 
 annroprinte that the devil himself should attest the devilishness of the 
 burden which has been entailed by dead generations on succeeding ones, 
 by laws and the obligations incurred under them. 
 
22 HERTIG ON TAXATION. 
 
 stroying point/ But the government of the United States is 
 unique in its relations to the government of the several states, 
 and unique in financial resources. The government at Washing- 
 ton can illustrate on various objects, and without financial in- 
 convenience, the saying of Chief Justice Marshall, "The power 
 to tax involves the power to destroy." It has used this radical 
 power of taxation in more than one instance, and to reforming 
 ends. Any state in the American union, except as hindered tem- 
 porarily by its own constitution and courts, both of which it 
 can change at pleasure, can tax to death any industry whose home 
 is in such state ; but it cannot tax the means nor the goods of 
 commerce between the states, except under such limitations as 
 render it impossible for the state to keep objectionable goods that 
 are made in other states out of its markets. The federal govern- 
 ment is absolutely without direct power to prohibit the making 
 and sale of any article in any of the states, unless the same is 
 contraband of war and for use in violation of some treaty, or 
 against the government itself. But what the United States can- 
 not do directly it can do indirectly ; it has the right to select ob- 
 jects for internal revenue taxes, and to lay such tax thereon as 
 congress in its discretion may impose. Thus congress reformed 
 one feature of banks organized and operating under state laws 
 by providing (Act of March 3, 1865), "That every national bank- 
 ing association, state bank or bankin^ association, srmll pay a 
 tax of ten per centum on the amount of notes of any state bank 
 or state banking association, paid out by them after the first day 
 of July, 1866." Any bank, therefore, can receive state bank notes 
 without incurring any tax or penalty ; they can be used as money, 
 also without tax or penalty, between private individuals or non- 
 banking concerns ; any bank or other owner of them can present 
 them for redemption to the bank of issue and demand payment, 
 still without tax or penalty ; but no bank may pay them out ns 
 money without incurring- said tax. It of course yields no reve- 
 nue, but it has caused state bank bills to disappear from circula- 
 tion, and has wholly prevented their further issue, furnishing 
 thus a striking instance of the power of taxation to effect reform, 
 where in the mind of the taxin^ power reform and destruction 
 mean the same thing. But it is important to note here that the 
 work of destructive taxation is most complete and thorough when 
 it is directed against an artificial commoclitv of a particular kind 
 (state bank notes), and leaves substantially untouched another 
 artificial commodity (greenbacks and national bank notes), which 
 will do the work of the taxed-out commodity as well as it did 
 or better. If the artificial commodity so taxed is a staple article 
 of manufacture, for which there is no acceptable substitute, then 
 
HERTIG ON TAXATION. . 23 
 
 an excessively high tax will neither be successful from the stand- 
 point of revenue nor of reform ; the manufacture and consump- 
 tion will go on, as it did when whisky was taxed two dollars per 
 gallon in the period 1865-1868, and the payment of the tax will 
 be largely evaded, as was the tax on whisky during that period. 
 In taxation for reform, as for any other purpose, the foolish tax, 
 the injudicious tax, the tax which overreaches its object, is sure 
 and direct breeder of fraud and perjury. 
 
 The oleomargarine law, just passed by congress and going 
 into effect July I, 1902, is destined perhaps to afford striking il- 
 lustration of the doctrine advanced in the preceding paragraph. 
 This law imposes a tax of ten cents per pound on oleomargarine 
 colored in imitation of butter, a tax which, like that on state 
 bank notes, is meant to be practically prohibitory. The hardy 
 axmen and teamsters in Minnesota logging camps ate last winter, 
 in lieu of butter, and ate without complaint, oleomargarine which 
 cost the employer about fourteen cents per pound, while butter 
 itself, of satisfactory quality, could not have been supplied at less 
 than twenty-five cents per pound. A quarter of a century and 
 longer ago the joke of "strong" butter was as staple in the comic- 
 paragraph laboratory as is yet the mother-in-law joke and others 
 of like currency. Wide extension of processes for makinsr good 
 butter, and the successful competition of oleomargarine (practi- 
 cally unobjectionable as regards looks and flavor) with the cheap- 
 er and ranker grades of "butter, have practically killed the butter 
 joke by removing its every-day basis from most tables. Inferior 
 butter goes largely to the renovator to be made over, or goes into 
 uses where its individual character is otherwise disguised, or 
 where at least it has no echo sufficient to reach the paragrapher's 
 ears. 
 
 Now the new law just mentioned plainly and in set terms 
 discriminates between oleomargarine and butter by taxing the 
 former ten cents per pound, as aforesaid, and taxing renovated 
 butter one-quarter of a cent per pound. It is known that in con- 
 templation of the law's taking effect, "laree firms throughout the 
 countrv have been purchasing low grades of butter" (daily press), 
 with the result of a.dvancine inferior butter or "packing- stock" 
 to a price relatively higher than it was as compared with good 
 butter. Stress is laid on the fact that oleomargarine plants are 
 ready, with little or no change, to renovate or otherwise handle 
 inferior butter on a colossal scale. It is surmised that the buyers 
 of low-grade butter will work it over in their oleomargarine 
 plants, mix it with oleomargarine, and sell the compound so 
 produced as "imitation butter," and under that name. If such 
 surmise is correct, then no doubt the manufacturers expect that 
 
24 HERTIG ON TAXATION. 
 
 the color of the butter used in the mixture will sufficiently color 
 the resulting compound to make its appearance pleasing to con- 
 sumers; and no doubt also they will claim that the oleomargarine 
 contained in the compound is not "colored in imitation of butter" 
 within the meaning and intent of the law, and so not subject to 
 the tax of ten cents per pound. If, as is claimed, the new "imita- 
 tion butter" shall be so plainly stamped or labeled that the pur- 
 chaser will know exactly what it is, then the compound will not 
 be impeachable as a fraud on the buyer. Should these contentions 
 successfully run the gauntlet of the federal courts, oleomargarine 
 as heretofore known will disappear from the markets, and low- 
 grade butters be confined to the market made for them by special 
 dealers for factory use ; while the general public, in lieu of them 
 both, will buy "simply a mixture of renovated butter and oleo"- 
 perhaps not quite so desirable a food-product as the staple oleo- 
 margarine theretofore in current use. Palm oil, too, is mentioned 
 as a possible ingredient in the new oleomargarine. It has a high 
 color, and if courts will kindly hold that its new use is proper 
 food use, and not merely for the coloring of oleomargarine in 
 imitation of butter, the new oleomargarine will not be subject 
 to the new revenue law. 
 
 Should the new law lead to such result, it will of course fail in 
 its two- fold intent of reform by prohibition, and in such failure 
 prove itself a revenue-yielder of considerable importance, if the 
 new "imitation butter" shall be held technically subject to the 
 tax of a quarter of a cent the pound. The tax on state bank notes 
 was entirely successful, as measured bv its intent, because in clos- 
 ing one channel it consciously left another straight and broad one 
 wide open ; the two-dollar tax on whisky failed because in over- 
 hampering legal channel, it perforce shunted commercial forces 
 into opening and following the channel of fraud ; the new oleo- 
 margarine tax is likely to fail, if measured in its intent, by seek- 
 ing to close an established, and, as some think, hiorhlv beneficial 
 commercial demand, without favoring or opening another channel 
 for those forces to flow in which made the one so sought to be 
 closed. Vast commercial interests controlling proportionate and 
 aggressive capital are thus put upon their ingenuity to open a 
 substitute channel. Naturally they will prefer that such substi- 
 tute channel be technically legal. It costs a pood deal of money 
 to violate with success a formal revenue law of the United States ; 
 but that cost can be nicely ascertained, and where, taking all re- 
 sults into consideration, fraud on the revenue laws is very prof- 
 itable, that kind of fraud will be practiced propositions abun- 
 dantly proved bv experience during: the period of two-dollar 
 tax on whisky. In general, then, reform taxation to be successful 
 
HERTIG ON TAXATION. 25 
 
 must not load with prohibitory tolls any broad channel of trade 
 unless, at the same time, it opens or leaves open a sufficiently 
 capacious other channel whose use shall conduce more to the wel- 
 fare of the people than the one sought to be closed. Moreover, 
 reforms effected or intended by taxation are never accomplished 
 but in the face of an opposition proportionate to the magnitude 
 of the interests adversely affected ; and the commercial opposition 
 is often reinforced by those who have no financial interest. Thus 
 David A. Wells, writing more than a dozen years ago, and while 
 attempted prohibitive legislation against oleomargarine had been 
 confined to the state legislatures, said : "The attempt to crush 
 out of use by legislation one of the most brilliant discoveries of the 
 age, namely, the manufacture of butter from the fat of the ox, 
 equally as wholesome as that made from the fat (cream) of the 
 cow, is a libel on civilization ; and, as depriving the masses of a 
 better article of desirable food at cheaper rates, than very many of 
 them have been accustomed to have or can now procure, would 
 be fiercely resented by them, if once properly and popularly under- 
 stood." Recent Economic Changes, 449.* 
 
 While, then reform by means of taxation has an open field oF 
 great importance, the discreet use of it requires the nicest and 
 most delicate quality of practical statesmanship. 
 
 Equally pertinent to remember in this connection is the fact 
 that it is only in the guise of a revenue measure that congress can 
 lawfully enact a pure-food law. It is not claimed by any school 
 or individual, amon<r interpreters of the federal Constitution, thnt 
 the -government at Washington has any right whatever to regulate 
 
 *In saying above that "attempted prohibitory legislation against oleo- 
 margarine had been confined to the states," I perhaps overstated the case. 
 State laws manifestly intended to be prohibitory had been passed, as the 
 New Hampshire statute prohibiting the sale of oleomargarine unless col- 
 ored pink ; but congress, too, had acted, and imposed a tax which some 
 claimed would prove prohibitory, that is to say, a tax of two cents per 
 pound, and a license tax in varying amounts on manufacturer, whole- 
 saler and retailer. The act imposing such tax was passed in August, 
 1886. There was no claim and no reason to claim that the United States 
 needed to cast about for new sources of revenue. The tax was mani- 
 festly a tax on food ; and was undeniably passed for the sole reason that 
 dairy and farming interests called for something of the kind. Grover 
 Cleveland, then president, signed the 'bill. Having put himself forward 
 as an anti-protection doctrinaire, as an individualist so far as one may 
 be in American nolitics, he had in acting on this bill a good opportunity 
 to show his consistency, and he knew it sufficiently well to think it 
 worth while to deny that he had. Noticing in his message of signa- 
 ture that it had been urged against the measure that under guise of 
 revenue legislation its real purpose was "to destroy, by the use of the 
 taxing power, one industry of our people for the protection and benefit 
 of another," he made a pretense of consistency by professing to believe 
 
26 HERTIG ON TAXATION. 
 
 directly the manufacture or sale of any commercial article in any 
 one of the several states ; and that the constitutional power to tax 
 would be used by congress to do indirectly along these lines what 
 it may not do directly seems not to have entered the imagination 
 of the Fathers. True, the right to regulate commerce between the 
 states has in its extension and exercise become of immense impor- 
 tance ; but that has nothing to do with the manufacture of an 
 article, nothing to do with its quality, and nothing to do with its 
 sale except to guard against its exclusion from markets in states 
 where it is not manufactured. Power to tax, however, practi- 
 cally includes all other powers over the subjects of taxation ; and 
 wherever the payment of a tax can be made a condition precedent 
 to the sale of any article, then the taxing power may, within the 
 limits of feasibility and of its own territory, drive such article 
 from the markets. 
 
 What is the check on destructive taxation, imposed for reform 
 or otherwise ? In the United States there is the check of positive, 
 or written law as set forth in the federal Constitution and in the 
 constitutions of most of the states. But the people, or that por- 
 tion of the people which governs, can abolish or change the fed- 
 eral, or any, constitution. Besides, as shown later in this book, 
 the present limitations on the taxing power of the federal govern- 
 ment imposed by the federal Constitution are not limitations of 
 quantity. On final analysis, it is apparent that the only check 
 on the power of nation or state to take property within its limits, 
 in the name of taxation or otherwise, to any amount, is the na- 
 tional or state conscience; perhaps we should say, in the United 
 States, national and state conscience. And the collective con- 
 science of the effective majority in nation or state gives the meas- 
 ure of the national or state conscience. The distinction made by 
 some writers between effective majority and numerical, or nomi- 
 nal, majority is a very happy one. Effective coincides with num 
 erical majority only when what is enacted by legislatures, done 
 
 that it was in fact meant for a revenue law, and put himself on the 
 plane of practical politics in these words: "If entitled to indulge in 
 such a suspicion as a basis of official action in this case, and if entirely 
 satisfied that the consequences indicated would ensue, I should doubt- 
 less feel constrained to interpose executive dissent." The tax of two 
 cents per pound so imposed, and meant to protect butter, was not, in fact, 
 heavy enough to effect the desired end. The amount of oleomargarine 
 manufactured and sold in the United States has continually increased, 
 "from 34.; ^25,000 pounds in 1888 to 48.364.000 in 1802, and 60,632.000 in 
 1804." Oleomargarine exported and sold abroad was not reached bv the 
 two-cent tax ; and the export trade reached figures ereater than those for 
 the home markets, 127,103.000 pounds 'being exported in 1894. Those 
 figures I take from Wells's Theory and Practice of Taxation, p. 257. 
 
HERTIG ON TAXATION. 27 
 
 by executives, and adjudged in courts, happens to coincide with 
 the wish of a majority of the people. A brilliant case of such 
 coincidence was furnished by congress in appropriating, immedi- 
 ately after the fateful destruction of the Maine, $50,000,000 to be 
 expended in the discretion of the President. Other examples of 
 truly representative legislation, state and federal, are not indeed 
 rare ; but they wear scars got in partisan resistance ; their working 
 effect has often been modified by concessions made to secure their 
 passage ; and in general they have lacked the seal of spontaneous 
 and universal rush to desired end so characteristic of the dra- 
 matic act of 1898. Yet the great bulk of legislation, however im- 
 portant and far-reaching its effect, expresses prosaic matters in a 
 form and to an end that do not arouse emotions, nor shock morals ; 
 it is like the day's events plaintively described by the newsboy 
 as being "lots of news but nothin' to holler;" it may carry un- 
 noticed a sly rider intended for strangling its professed intent. 
 Bar rider, the same is even more widely true of the bulk of 
 decisions made and judgments rendered by the courts. In most 
 matters, then, of legislation and litigation, the relation of numeri- 
 cal majority to effective majority is one of passive acquiescence. 
 To arouse this acquiescence into an occasional cheer, and especial- 
 ly to prevent it from lapsing into utter indifference or rousing 
 itself to rebellion is the routine game of practical politics and of 
 the effective majority as such game is ordinarily played. 
 
 Great issues are embarrassing issues to bankrupt statesman- 
 ship ; and if it can give to the very fringe and outskirt of an issue 
 the seeming of central importance, substitute, as it were, the fringe 
 for the body, and have the good luck to hold its opposition to 
 grasping after the same fringe, the conscience and enersry of the 
 numerical majority will ordinarily stir but fitfully, reputations of a 
 certain kind, effective in the ^ame of politics, will be won on 
 fringe-twisting, or "tail-twisting," and the game itself go merrily 
 on. Modern history furnishes no more complete case of bank- 
 rupt statesmanship than that practiced habitually by Naooleon 
 III. throughout his reign of a dozen and a half years. Whether 
 that unfortunate nephew of his alleeed uncle was the author or 
 not of the saying attributed to him. "The wav to govern France 
 is to s"ive her a p-ood war every three years," he contrived to 
 follow substantially that plan in successive staees, marked with 
 the 'Crimean War, the war with Austria, the ill-starred expedition 
 to Mexico, and finally the war with Germany which cost him his 
 throne, France her military prestige, two provinces, much blood, 
 and a staggering increase of her national debt, in which figures 
 the star item of, in round numbers, one thousand million 
 dollars, as a cash indemnity to Germany. Never was the blare 
 
28 HERTIG ON TAXATION. 
 
 of trumpets worked harder to distract attention from the admin- 
 istrative features of a government which was at once feeble and 
 despotic. Never for a while in fact, through the Crimea and 
 through Solferino was blare of trumpets worked more success- 
 fully to such an end. Never did any pretentious o-overmnent 
 make plainer confession of innate weakness than did that ot Na- 
 poleon III., in pandering to property interests, to vested and non- 
 vested rights, thereby squandering large sums of the people's 
 money in covert bids for popularity or otherwise, as when, in 
 acquiring right of way for new and changed streets in Paris, 
 owners, occupants and even expecting-to-be occupants of wanted 
 grounds, were appeased and removed with a liberality that would 
 open new vistas to defendants in American condemnation pro- 
 ceedings, and with a fanciful application of legal principle that 
 would open new realms for the imagination of their lawyers.* 
 
 In 1869, Napoleon III., inspired by the hundredth anniversary 
 of the First Napoleon's birth, said at Chalons to tht troops there 
 encamped: "Soldiers, I rejoice to see that you have not forgotten 
 
 *Lecky, in his Democracy and Liberty, holding that governments are 
 bad in the proportion that they are democratic, looks on "the regime of 
 the present French republic as much worse than that ot Napoleon III. 
 No doubt, during the first half of his reign, Louis Napoleon's govern- 
 ment .caught the multitude; it even caught such shrewd observers as 
 Walter Bagehot. There was prarasitic paternalism for the masses, and 
 low taxes for the classes. "It was," says Lecky, "the policy of the 
 Emperor through his whole reign to secure the popularity of his gov- 
 ernment by keeping the taxes low and unaltered, and meeting the grow- 
 ing expenditure by constant loans. Almost the whole cost of the Cri- 
 mean War, the Italian War, and the Mexican expedition, and also an 
 immense part of the habitual expenditure of the Government in times 
 of peace, were raised in this way. The extravagance of this svstem was 
 in part concealed by the complexity of French financial administration. 
 * * * * I, 51. What Lecky calls "a policy of judicious free trade" 
 naturally inclined and still inclines those who write from the British 
 standpoint to judge the Second Empire with lenience. Lecky praises it 
 for fostering the railway system and for the "singular intelligence" with 
 which vast sums were usually expended on public works. But he con- 
 cedes that "it was a government with no real constitutional freedom, 
 no liberty of the press, no liberty of public meeting. It sheltered or pro- 
 duced great corruption, and repressed with arbitrary and tvrannical vio- 
 lence political opponents. It was detested by the educated classes, by the 
 minority of the population who seriously cared for political freedom, and, 
 in spite of the enormous sums that were expended in public works in 
 Paris, it never succeeded in winning the affections of the Parisian work- 
 men. On the other hand, the theory of paternal government exercised in 
 a thoroughly democratic spirit had probably never before been carried out 
 with equal energy and intelligence." I, 52. It is precisely because the 
 government of the Second Empire affords so true a type of parasitic pa- 
 ternalism that the enlightened paternalist must needs condemn it with se- 
 verest judgment. 
 
HERTIG ON TAXATION. 29 
 
 the great cause for which we fought ten years ago (at Solferino.) 
 Keep always fresh in your hearts the remembrance of your fath- 
 ers' combats and of those combats in which you yourselves have 
 taken part ; for the history of our wars is the history of the pro- 
 gress of civilization. Thus you will keep up the military spirit 
 necessary to a great people. That spirit is the triumph of noble 
 passions over vulgar passions ; it is fidelity to the flag, devotion to 
 your country. Continue as in the past, and you will always be 
 worthy sons of the grand nation." Ap. Littre, sur L'Etablisse- 
 ment de la Troisicme Republique (Paris, 1880), pp. 6-7. 
 
 Discourse like that at Chalons has the very stamp and hall- 
 mark of statesmanship about to make open bankruptcy. Compare 
 to the great advantage of him who overthrew the tottering Sec- 
 ond Empire, Bismarck's speeches in 1884 in support of the Acci- 
 dent Insurance Bill. Here at least is the consciousness of facing 
 a great and permanent question. Bismarck "admitted at the out- 
 set" that the German parliament "was asked to join the govern- 
 ment in exploring an unknown land, and that the difficulties to 
 be encountered would increase the more the progress made." He 
 made bold to favor compulsory insurance of working people 
 against old age, accident, etc., and to draw the conclusion that the 
 state should take insurance into its own hands, and not leave it to 
 private enterprise which really meant private speculation on the 
 misfortunes of the laboring population." WILLIAM HARBUTT 
 DAWSON, in Bismarck and State 1 Socialism (London, 1891), p. 
 118. 
 
 "The whole matter," said Bismarck, "centers in the question, 
 Is it the duty of the state, or is it not, to provide for its helpless 
 citizens? I maintain that it is its duty, that it is the duty not 
 only of the 'Christian State,' * * * but of every state." 
 Again : "I care not that this doctrine savors of Socialism. If an 
 establishment employing twenty thousand or more work people 
 were to be ruined * * * we could not allow these men to 
 hunger. We should have to resort to real State Socialism and 
 find work for them, and this is what we do in every case of 
 distress." Id. 119. 
 
 Does it seem a digression from the main highway to follow 
 great issues as embarrassing bankrupt statesmanship? to fetch in 
 Napoleon III. and Bismarck for varying illustration of that prop- 
 osition? I but lead to the further proposition, which I want to 
 make as emphatic as possible, that the kind and quality of states- 
 manship is put on final proof in the kind and quality of taxation 
 it puts in practice, and in the kind and quality of taxation it en- 
 tails on generations to come. I want also to make emphatic the 
 collateral but still closely related proposition that noisy agitation 
 
30 HERTIG ON TAXATION. 
 
 of questions, in form, strictly tax questions, may well cover a 
 great barrenness of statesman-like ideas. And in that connection 
 I may as well make confession here, for personal differentiation, 
 that my particular views on taxation make lock step with my par- 
 ticular and carefully considered views on the theory and practice 
 of government a confession which shall serve as warrant for a 
 further paragraph or two on the relation of statesmanship to 
 issues. 
 
 A distinction should be made at the outset between issues 
 great in themselves and issues great only in quantitative results. 
 Whoever shall say, "Let us now free the people from industrial 
 slavery," brings into the open an issue great in itself, though he 
 may light it up with no more than the rushlight of an ill-equipped- 
 personal understanding. The issues underlying the wars of Na- 
 poleon III. were of almost petty simplicity, though fraught with 
 results quantitatively vast. Of almost petty simplicity also was 
 the slavery side of the issue between North and South in the Civil 
 War of 1861-5. You shall not hold chattel slaves We will hold 
 chattel slaves, states an issue so simple that half a dozen lines of 
 positive law are enough to settle it, after a four years' war brings 
 one of the belligerents to compulsory acknowledgment of a tri- 
 bunal competent to write the half a dozen lines. The issue so 
 stated is not in fact barbarous, and yet is not many degrees re- 
 moved from barbarous, primitive question between, let us suppose, 
 disputants in the same tribe, arguing as to whether a certain plun- 
 dering expedition should be undertaken then, or postponed to a 
 more favorable time. The moral idealism of New England could 
 shout itself hoarse over a question compressible into a slogan, and 
 disposed of in a few words of constitutional amendment, after a 
 war computed to have cost nine thousand million dollars ; now, 
 however, the moral idealism of New England pipes wonderfully 
 thin on the question of industrial slavery, which may not be de- 
 creed away in half a dozen lines, but must needs be hunted down, 
 if down-huntable, with a code seemingly beyond -Puritanic Yan- 
 keedom to give, with a comprehensive knowledge of human na- 
 ture clearly beyond unaided Puritanic Yankeedom to attain. 
 Again : A distinction should be made between issues simple in 
 themselves, and issues simple as stated, yet leading to no way out, 
 issues clouded on both sides with foggy vision, with wrath and 
 fear, with guileless and beguiling expectation; but for all that, 
 issues struggling for civil greatness, issues struggling to get 
 away from the old, simple, barbarous atmosphere, and still re- 
 taining it as their breath of life. Thus the spurious issue of 1896, 
 drawn in such heat and acrimony, fought in such monumental 
 hysteria, such expanse of fear and such collapsible balloon-like 
 
HERTIG ON TAXATION. 31 
 
 hope, was indeed remarkable, but, to my notion, most remarkable 
 as evidencing, in its cloudier connotations, a real growth away 
 from the old, simple, semi-barbaric issues ; the new life fired the 
 old tongue, but could not rid it of the slogan-compelling habil ; 
 and so the cry was Silver! The election of Bryan in 1896, had 
 he been elected, would have made it plain beyond peradventure 
 that silver had been already sandbagged into incurable cripple- 
 dom.* 
 
 But now when it is said that by the Republican victory of that 
 year, "the American people * * * were saved from one 
 of the greatest perils that had confronted the country since the 
 days of the great rebellion," (Senator KNUTE NELSON'S Speech, 
 July i, 1902), those of us who accept such estimate as just may 
 well ask ourselves, What, if anything, is current statesmanship 
 
 *A revolution may well grow out of the result of a presidential elec- 
 tion, but is not to be voted in, to emerge full-fledged in the counting of the 
 ballots. Speculation on what else would have resulted if a particular event 
 in history had been its own opposite, is of course useless except as an evi- 
 dence of how one, in no wise excited, surveyed things in a time of gen- 
 eral excitement and apprehension. While 1 thought it unlikely that Bryan 
 would be elected, I could not look on his election as a very remote, possi- 
 bility; and 1 believed that his election, should it happen, would have been 
 coupled with so small a Bryan majority, if any, in congress that a free-sil- 
 ver measure would have found in the end enough "weakness" to defeat it. 
 Most bankers thought gold would command an immediate premium in case 
 of Bryan's election. In this 1 agreed with them, but rather dazed the few 
 with whom I talked on the subject by suggesting that such premium on 
 gold would afford a ready means of controlling any panic as between banks 
 and their depositors ; that if, as I doubted not would prove to be the case, 
 bankers and others should hold the premium reasonably low and steady 
 by liberally selling gold futures, depositors would not withdraw their funds 
 to speculate in gold any more than they did during the Civil War ; that to 
 avoid paying out gold or its equivalent to depositors for three days or so 
 would be the only gulf at all difficult to bridge ; that, though the bull head 
 and barren brain of Grover Cleveland, then president, might prove to be 
 an awkward factor by standing for the barren ideal of gold for greenbacks, 
 when silver dollars for greenbacks would just fit the situation and still the 
 clamorous demands of depositors who otherwise might be feverish to rush 
 with greenbacks to the sub-treasuries, yet perhaps he might follow a hint 
 from the camp of sound money, and let his secretary of the treasury do 
 what it had been rumored that secretary would have willingly done pay 
 out silver dollars for greenbacks, and show thereby that Cleveland Democ- 
 racy was no longer open to the charge of discriminating against the white 
 metal in making payments and redemptions over the government counters ! 
 Resumption of gold payments and cessation of scare would be held out to 
 congressman as an inducement to "be good ;" and two years of disappoint- 
 ed Democratic expectation, two years of Republican anger would combine 
 to produce a congressional landslide in 1898 twin to that which had befallen 
 the Cleveland administration in 1894. The greatest immediate danger 
 which I thought might impend in 1896, was from an election so close as 
 to be determined by contested electoral votes. 
 
32 HERTIG ON TAXATION. 
 
 doing to avert, as the .aftermath of the next great panic, another 
 contest of greater gravity on issues more clearly stated and appre- 
 hended than the contest and the issues of 1896? And a candid 
 answer must be nothing. It was often said in 1896 that silver 
 was but a stalking-horse for "anarchy" and other forms of social 
 disorder. "Free Silver," said to me a federal judge, "is but 
 another name for Free Riot ;" Henry George said, "The contest is 
 now on between the Haves and the Have-nots." It would be easy 
 to multiply citations showing a vivid, if not always a clear, con- 
 sciousness that there was much, very much, more than silver 
 at issue in 1896. Now, to the extent that silver was a stalking- 
 horse for other and deeper issues, it is plain that its burial in a 
 coffin of gold or otherwise, affords not the slightest guaranty that 
 those issues will not spring up as unsettled as ever; the right 
 spark ever lurks for the right combustible ; and there are always 
 stalking-horses for those who have no better cavalry. 
 
 As aforesaid, the candid answer to the last question must be 
 nothing. We are indeed making hay in this sunshine of prosperity, 
 but are baling only a very limited percentage of it against the next 
 panic. For now a round half century the Republican has been 
 'the sole party of accomplishment, or, to put it in a -slightly dif- 
 ferent form, the only party to accomplish anything in the United 
 States. It is one thing to say this, and another to award due 
 measure of praise and blame for what has been done. With such 
 award I have at present nothing to do. Without being "in pol- 
 itics," as the phrase goes, I have ordinarily been content to vote 
 the Republican ticket, because looking upon government by that 
 party much as if it were the predestinated and exclusive instru- 
 ment for making a large, an inevitable, and in many respects, a 
 very luminous chapter in the history and evolution of this coun- 
 try, and incidentally of the world. What I think of the federal Con- 
 stitution as rewritten, or rather reinterpreted, by the Republican 
 party will be told in my work on that instrument. But how I 
 grasp one phase of the difficulty, the delicacy and the inevitable- 
 ness of our "colonial" problems, may be briefly outlined here. I 
 will not enlarge on my horror of cruelty in any shape, from any 
 quarter, in any form; I have no stomach to dwell on the real and 
 alleged cruelties attendant upon our war in the Philippines;! will 
 not for a side-light, comment on Japan's folly in transforming her 
 former happy people into a wretched and wretch-making collec- 
 tive apery of Western civilization ; yet I do not hesitate to say, 
 not being the mouth-piece for partisan utterance nor fettered by 
 party limitations, that the supremacy of the United States in the 
 Philippines must be established and maintained, though to do 
 so it should cost the life of every native (man, woman, and child), 
 
HERTIG ON TAXATION. 33 
 
 in all the islands. I say -and write must be in the philosophically 
 necessary sense attendant upon prevision of what will be, such 
 "will-be" going not to the extreme limit of- cost, but to the simple 
 fact that supremacy will be established and maintained, with cost 
 a somewhat uncertain incident. The Filippinos must drain this 
 cup of manifest destiny ; and it is much to be regretted that their 
 sentimental American friends did not have sufficient of the op- 
 portune quality of brain to tell them so. Not that this particular 
 destiny comes in personal or super-personal shape; for it comes 
 only as attendant upon and shaped by the collective qualities of 
 the average American. For the rest, he, like Panurge, is "the 
 best fellow in the world" ; but he Goes not in his heart care a straw 
 for the lives of black men or brown men who die out of his im- 
 mediate sight and neighborhood. If he should dream that the 
 Filippinos collectively hung by a single strand over the abyss of 
 Tophet, and that he, standing near, cut that strand, he would prob- 
 ably regret in the morning that it was only a dream. One of him, 
 on the strength of private letters, assured me with a cheerful 
 smile, this was before alleged cruelties over there had become 
 generally agitated, that our soldiers were now "ripping the 
 Filippinos up the back in great shape," exterminating them a vil- 
 lage-full at a lick. As the instrument of manifest destiny he is 
 near to, and cheerful over, that destiny's ends. State Senator S. 
 A. Stockwell, of Minneapolis, can tell how cheerfully the collec- 
 tive American, of considerably more than average ability, turned 
 down his sentimental resolution in March last.* 
 
 Neither opportune statesmen nor wise philosophers bewail 
 the atmosphere or the constituents which they cannot change; no 
 
 *From the official Journal of the Minnesota Senate for March 10, 
 1902: The following resolution was introduced by Senator Stockwell: 
 
 "WHEREAS, There appeared in the Minneapolis Sunday Tribune^ of 
 March 9, 1902, a Republican newspaper, an interview with a Republican 
 congressman, in which he says, among other things, the following: 
 
 " 'But the Filipino is at heart in a state of rebellion against the United 
 States' authority, and he always will be. You never hear of any disturb- 
 ances .in northern Luzon, and the secret of its ^pacification is, in my opin- 
 ion, the secret of the pacification of the archipelago. They never rebel 
 in northern Luzon because there isn't anybody there .to rebel. That 
 country was marched over and cleaned out in a most resolute manner. 
 The good Lord in Heaven only knows the number of Filipinos that were 
 put under the ground, for our soldiers took no prisoners; they kept no 
 records; they simply swept fh p country, and wherever or however they 
 came upon a Filipino they killed him. The women and children were 
 spared, and may now be noticed in disproportionate numbers in that 
 part of the island. The Spaniards, differently constituted, would go out 
 after a band of insurgents for a day's journey, and then get back to 
 barracks, while our soldiers have pursued them persistently, and ^for that 
 reason our conquest of the 'archipelago is very much more effective than 
 
34 HERTIG ON TAXATION. 
 
 statesman is opportune nor philosopher wise who does not con- 
 trive to find, and ally himself with, the more durable features of 
 his environment. 
 
 We shall keep the Philippines and pacify them. To make 
 literally a desert, and call it peace, will not be done, because we 
 shall make peace a long way this side the extreme limit of cost. 
 No ranker failure, from the standpoint of practical politics, was 
 ever made than the crusade in the first session of the 57th congress 
 against the practice and policy of the administration in the Philip- 
 pines. If the Democrats had chosen to profit by readily accessible 
 knowledge of the average American, and by the Emersonian dic- 
 tum, "The ways of Providence are not the ways of a white-chok- 
 ered student of divinity," perhaps the secretary of their congres- 
 sional campaign committee, hearing from the chairman of country 
 committees, would not labor under the disappointment of finding 
 that there are "but few calls for Philippine speeches" (Minne- 
 
 that of Spain ever was. I look for no real peace short of such measures 
 as those pursued in northern Luzon. 
 
 " 'But will_ the moral sense of the American people stand a policy 
 of extermination?' 
 
 " 'I dare say. The American people have stood it with the Indian, 
 although today we are treating him pretty well ; he is a star-hoarder, and 
 we are supplying him with schools and all sorts of things he has no use 
 for. We are planting him as far as possible on the lands that we do 
 not wish for ourselves. If American investors find property thev want 
 in the Philippines, I do not think they would be embarrassed by any 
 sentiment at home agains f sweening off the Filipinos. Our vigorous 
 policy of maintaining law and order would never be designated extermi- 
 nation ; party platforms and party organs would choose some gentler 
 term; but as I gauge the American sentiment, there was no real opposi- 
 tion to the course pursued bv Funston and others in northern Luzon. 
 and there would not be to a similar course in the rest of the archinelago.' 
 "AND, WHEREAS, The above statement is corroborated by undoubted 
 evidence and is a true statement of the facts, and 
 
 "WHEREAS, This damnable war of conquest and extermination 
 is costing this government hundreds of lives and more than $00.000000 
 annually (enough to almost build a trans-continental railroad), which 
 is taken almost wholly from the toiling masses of this country, and 
 
 "Whereas. But one result can follow the continuance of this war, 
 namely, the destruction of liberty at home and abroad : 
 
 "Therefore, Be it Resolved, That we call upon the President of this 
 Republic, as Commander-in-Chief of the Army and Navy to end this 
 cruel war, assuring the Filipino patriots that it is our purpose to grant 
 them independence." 
 
 "Mr. Ryder [Rep. of Polk County], gave notice of debate, so the 
 resolution went over [one day], under the rules." 
 
 The next day, March nth, was the last of the session, brief nnd 
 pro forma only. However, Senator Stockwell called tin his resolution 
 saying, among other things, "Too well I know that it will fail to nnss." 
 Only thirty-three senators were present and voted, 12 for, and 22 against, 
 the resolution. 
 
HERTIG ON TAXATION. 35 
 
 apolis Times, July 5, 190?), and of being "rather emphatically in- 
 formed that the people are earnest in standing by the army." 
 Democrats and Republicars will alike be pleased with President 
 Roosevelt's 4th of July speech at Pittsburg. Most of them will 
 accept as final his statement therein that, "speaking broadly and 
 generally, peace has come." And it would seem as if the Philip- 
 pine question, as a campaign issue, might stay down for the full 
 count after such knock-out blow as this : "Today the proclama- 
 tion of peace and amnesty has been promulgated, and at the same 
 time our generals have been notified that the- civil government is 
 supreme in the islands. Does that not speak well for our army, 
 for our troops, that the troops of the people should war, hoping 
 for a triumph which is to put power into the hands of the civil 
 authorities?" 
 
 But, for the third time, I say nothing is being done against the 
 next great panic ; and very important, and collateral thereto is the 
 fact that the Republican party has run clear out of issue stock. 
 Incidentally something is heard at Republican conventions, as at 
 St. Paul the other day from Dar Reese in gracefull) accepting his 
 defeat as candidate for the supreme court clerkship that we are 
 nearing tremendous questions; and the president of the United 
 States in the same 4th of July speech expressly admits in relation 
 to trusts and the department of justice, that we here face "infinite- 
 ly difficult problems" for whose practical solution "we need the 
 highest qualities of the intellect," and in thousand-fold greater 
 ratio "character." It must be reckoned a piece of great good 
 fortune for those gentlemen whose political fortunes are insep- 
 arably bound up with the national success or failure of the Re- 
 publican party, and whose practical conception of eternity takes 
 the shape of an endless succession of four-year periods, that they 
 have in the person of Theodore Roosevelt a sufficient substitute 
 for other live issues. He, at least, has the sufficient fiVure and 
 prestige of knight Ivanhoe to unhorse Front de Boeuf (Ox-head) 
 Cleveland or such other Ox-head as the Cleveland Democracy may 
 select as their champion even if Bryan should not be found to 
 have permanently alienated the Democratic masses from any such 
 Ox-head leadership. Bar the happening of the unexpected in na- 
 ture, in finance, and in issues, the Republicans have in Roosevelt, 
 if they choose to use him, a reasonably sure winner for 1904. But 
 after Roosevelt the delude ! There is, of course, amongst other 
 contingencies the not very remote one that the magnates amongst 
 the Republican bosses will prefer to take uncertain chances with a 
 candidate after their own heart, rather than accept reasonably sure 
 victory under the leadership of Roosevelt for whom they have no 
 love. The temptation is certainly great; they have fond remem- 
 
36 HERTIG ON TAXATION. 
 
 brance of McKinley as a "bank of roses," and besides the trusts 
 will consent to have fried out of them an enormous campaign 
 fund for a Republican candidate of their own choice, or at least of 
 their own liking ; and where else is a sufficient sufficient as meas- 
 ured by "recent standards campaign fund for 1904 to be picked 
 up ? Roosevelt, from the trust stand-point, or that of other very 
 large moneyed interests, will be acceptable only as a hard choice 
 as the lesser of two evils. As between Roosevelt and Ox-head 
 Cleveland, or any man after Cleveland's heart, the trusts will not 
 hestitate ; they do not need to be told that Cleveland is compara- 
 tively "safe" ; the dullest ox has some recognition of the source 
 of his stall-fed privileges. 
 
 The dilemma of the Republican magnates as between their own 
 choice and the choice of the Republican masses is most interest- 
 ing. Certain advantages in heeding the latter choice are very 
 palpable. The arrows of negative criticism may be made very 
 keen ; Republican statesmanship presents in spots more than one 
 soft mark ; but with the stout counter-fire of Roosevelt, and the 
 protecting mail of recent and positive achievement over its vitals, 
 the party is sufficiently protected, for the present, against the 
 shafts of guerilla bolomen. And then Roosevelt, manifestly a 
 better campaigner on the trust question than any Cleveland Derno- 
 cratt, will certainly hold his own on that question with anyone 
 from the Bryan wing, and is as likely as any one to score oc- 
 casionally with that extremely low trump tariff-reform. But 
 on the other hand, that one-time "bank of roses" in the White 
 House, our campaign fund, our personal ambition ! 
 
 I return to the main proposition of nothing doing, and the is- 
 sue table swept clean of the old, simple semi-barbaric questions. 
 Nothing, for the rest, shows more plainly the lowness of the issue 
 exchequer than the fact that good Republicans, able Republicans, 
 are now picking crumbs from that barren table of tariff-reform, 
 which so truly corresponds with the hide-bound barrenness of the 
 Clevelandesque brain. That the immediate barrenness of tariff- 
 reform was caught from Cleveland, and is not inherent in the 
 question itself is a proposition which I leive to Colonel Henry 
 Waterson for piquant argument. It is for Republicans to ask and 
 answer: Is 1894, its Wilson tariff, its reat fall landslide fro^rn 
 Cleveland is all. that such ancient historv ? Is the Ding"ley tariff 
 of 1897, crowning, in specially-called session of congress, the vic- 
 tory of 1896 is that tariff already decrepit? Is the main artillery 
 cast and fired for McKinley and prosperity, to go so soon, and in 
 all the freshness of its five years,to the scrap-heap or the melting 
 pot? Because Jew Isaac charges a little high for use. of the gal- 
 lant steed Protection, shall now Ivanhoe Roosevelt change his 
 
HERTIG ON TAXATION. 37 
 
 mount for a cheap Cleveland hack ? Or is there not rather some 
 murmur from cave of Demogorgon soon to be translated into 
 articulate cry of "A plague on both your houses, on both your 
 horses!" This last is as it may be, and a story for other place 
 and time; but it is certain that meanwhile some political econo- 
 mists and some others are threshing from their particular fields 
 a rather light straw of taxation, and with most serious mien are 
 puffing the chaff of it for next years' seed ; and it is certain also 
 that meanwhile Republicans, Bryan Democrats and Populists, in 
 proportion to their respective numbers, are recruiting grounds of 
 like promise for the right man and the right issues when he with 
 them shall appear. Meanwhile, too, it will be a pity, unless a 
 surprisingly rapid march of events shall put the matter in another 
 light, if Roosevelt is not allowed to demonstrate that the limita- 
 tions which now any man carries to the presidency of the United 
 States, and especially the limitations which beset him throughout 
 his four or eight-year period, are sufficient in number and strength 
 to nullify practically whatever of Ivanhoe glory and Ivanhoe good 
 an admiring people expect to result from his knightly qualities 
 however those qualities might shine on hoof-resounding prairie or 
 fire-swept hill. 
 
CHAPTER II. 
 
 Taxation as Caviare to most economists What strict individualists might 
 allow to be taxation The danger in definitions Dr. Johnson's "Taxa- 
 tion No Tyranny" Author praises, 'but rewrites Johnson's statement 
 of the right to tax, and his definition of tax No tax law or any law 
 legally unjust, though it may be mischievous in effect Illustrative tax 
 definitions. 
 
 And now from the bankruptcies of statesmen and statesman- 
 ship to a line of bankruptcies by those who delight to hector 
 statesmen the political economists a line through and about 
 taxation and the immediate field of my subject. One need not be 
 a disciple of David A. Wells an economist himself, though the 
 name is of very scattering significance, to agree with Wells iu 
 the following certificate of bankruptcy issued by him to "most 
 economists," and covering their insolvency in tax matters : "In 
 no department of economic science is there * * * so much 
 obscurity and conflicting opinion [as in the department of taxa- 
 tion.] Most economists teach that there is 'no science of taxation 
 as there is a science of exchanges' ; and 'that there are no great 
 natural laws running through and controlling taxation and its 
 effects. ' ' Theory and Practice of Taxation (New York, 1900), 
 p. 197. Most economists it may be added, would now take higher 
 rank with the critical reader, if each in his field had been as diffi- 
 dent regarding his particular "science of exchanges," as he was 
 confident that there is "no science of taxation" at all. Taxation 
 lies very near to experience and emotion, to human need and 
 human greed ; lies very near, therefore, to the most persistent and 
 stubborn things in the world, things which put up a stout and 
 visible resistance to the gentlemen who would juggle with formu- 
 las, and call their handiwork science; things which have bowled 
 over many an economist and which so far have shut out my other 
 friends, the single-taxers, from even an opportunity to get bowled 
 over, by denying them any innings at all. But taxation, speaking 
 from the platform of common sense and discreet opportunity, 
 based on extended and heeded experience, speaks with as clear and 
 articulate voice as may be attained by any department of govern- 
 
HERTIG ON TAXATION. 39 
 
 ment or economics. Whether such voice be named the voice of 
 "science" or not is a matter of taste ; better heed it than too curi- 
 ously consider names for it. 
 
 My formula, taxation for robbery, taxation for revenue, taxa- 
 tion for reform, descriptive within certain limitations of the pur- 
 pose and result of taxation was not framed to be a definition of 
 taxation, but to aid tax-imposer and tax-student in attaining a 
 clearer consciousness of what they mean and want when they 
 would retain, amend, or supplant with new, the current systems 
 of taxation. Strict individualists, if there are any now, will 
 doubtless allow that taxation is the collective husk of measures 
 and men surrounding a certain variable percentage of private 
 money, and ripening that percentage into public money, where- 
 upon taxation is done with the particular kernels so surrounded 
 and ripened, and statesmanship steps in to devour them. And the 
 strict individualists will allow that the moneys so surrounded and 
 ripened, or if not moneys, the things in kind (as tithe-pigs, and 
 the like) so surrounded, and ripened in kind into public or quasi- 
 public till or barn are taxes. I do not say that strict individual- 
 ists, in so allowing, would quite adopt the foregoing as their own 
 definition of taxation and taxes ; but merely that, in so allowing, 
 they would hesitate to allow that anything further could properly 
 be called taxation or a tax. Some of them no doubt would not 
 allow as much as I have said they would. An individualist who 
 agrees with the supreme court of the United States and many 
 other courts that taxes must be levied for a public purpose, would 
 not concede that levies made and moneys collected in the name 
 of taxation and passing through the public treasury only to be 
 paid out for a purpose, not in the view of such individualist a pub- 
 lic purpose are in fact tax levies and taxes ; he would probably 
 define them in terms of robbery and swag. These illustrations 
 are sufficient to show that the path of the strict constructionist 
 and strict definer is beset with many a practical, and I may add, 
 metaphysical pitfall. The doctors of the civil law had in mind 
 certain of the difficulties attendant on definition when they put 
 forth the maxim, "All definition is dangerous." Where the real 
 thingness of a thing begins and ends has puzzled, as well as in- 
 spired, many a philosopher often less happy in indicating and 
 overcoming the difficulty than the unpretentious rhymester who 
 warbled : 
 
 You'll miss a precious sight not to see our Janet's bonnet : 
 
 Tis not sp much itself as the ribbons that are on it ! 
 
 The definitions of a tax by different writers are practically as 
 numerous as the writers themselves. Their definitions for the 
 most part, apply to and imply a settled state of things, an ac- 
 
40 HERTIG ON TAXATION. 
 
 knowledged government and its unquestioned right to tax. The 
 right to tax is of course co-extensive with the duty of allegiance, 
 and may be extended to aliens and sojourners who owe no alle- 
 giance; but in practice the right of the state or sovereign to tax 
 is subject to many curious limitations and to a resistance which 
 protests its allegiance while resisting, as in the time preceding the 
 Revolutionary War and the separation of the American Colonies 
 from Great Britain. The right to tax as co-extensive with the 
 duty of allegiance is interestingly treated by Dr. Johnson, in a 
 tract published in 1775 opposing the declaration of rights ancj 
 claims by the 'Continental Congress at its session held in Phila- 
 delphia, September 5th to October 26th, 1774. 
 
 According to -Dr. Johnson the general right of government to 
 tax is one of those "fundamental principles, or common axioms 
 which being generally received are little doubted, and being lit- 
 tle doubted have been rarely proved." And the learned doctor 
 ponderously opines that "of these gratuitous and acknowledged 
 truths it is often the fate to become less evident by endeavors 
 to explain them, however necessary such endeavors may be made 
 by the misapprehensions of absurdity, or the sophistries of in- 
 terest." In support of this contention he makes the points: 
 
 1. "It is difficult to prove the principles of science, because 
 notions cannot always be found more intelligible than those 
 which are questioned. 
 
 2. "It is difficult to prove the principles of practice, because 
 they have for the most part not been discovered by investigation, 
 but obtruded by experience." 
 
 And he concludes that he who seeks to demonstrate the truth 
 of these "fundamental principles, or common axioms," will find 
 after hard effort (which the doctor describes as "an operose de- 
 duction"), "that he has been trying to make that seen which can 
 be only felt." Taxation no Tyranny; an Answer to the Resolu- 
 tions mid Address of the American Congress (1775). 
 
 The very best of the old definitions of taxes is infolded in 
 Johnson's dictum that government's general right to tax "was 
 considered by all mankind as comprising the primary and essential 
 condition of all political society, till it became disputed by those 
 zealots of anarchy, who have denied to the parliament of Britain 
 the right of taxing the American Colonies." In his own words 
 infolding said definition, the right which he says was so "con- 
 sidered by all mankind" is thus stated : "The supreme power of 
 every community has the right of requiring from all its subjects, 
 such contributions as are necessary to the public safety or public 
 prosperity.'-' Later, in the same pamphlet, the doctor makes a 
 formal definition of "tax," not quite so good as that infolded in 
 
HERTIG ON TAXATION. 41 
 
 his claim of governments' general right to tax. "A tax," he says, 
 "is a payment exacted by authority from part of the community 
 for the benefit of the whole." And to this definition he adds a 
 declaration which is in full technical vigor in the domain of cur- 
 rent jurisprudence, except as modified by custom, concession, 01 
 constitution : "From whom, -and in what proportion such pay- 
 ment [or tax] shall be required, and to what uses it shall be ap- 
 plied, those only are to judge to whom government is intrusted." 
 
 Time was in this country when the tract of Dr. Johnson, Taxa- 
 tion no Tyranny, was regarded as the very quintessence of talent 
 ignobly serving official tyranny. It is very curious that the learned 
 doctor calls "zealots of anarchy" and again "impudent congress 
 of anarchy" that Philadelphia body whose successors in Washing- 
 ton 127 years later, virtuously wrestled with various proposed 
 bills to "stamp out" anarchy, and, the fervor of official mourning 
 for McKinley having passed away, adjourned without passing any 
 anarchist bill at all ! It is perhaps still more curious that any 
 proposition from any group or collection of persons "within the 
 United States and subject to the jurisdiction thereof" to modify or 
 limit the taxing power of the United States on any such basis as 
 that set forth by the Congress of the United Provinces at Phila- 
 delphia, or on like basis proposed by others of the fathers before 
 and after said session at Philadelphia would in official circles be 
 held to be sufficiently answered and refuted by an argument sub- 
 stantially along Dr. Johnson's lines. 
 
 To return to Dr. Johnson's definitions of a tax, or taxes, it 
 might seem at first blush as if they must" be such (enforced)" 
 "contributions as are necessary to the public safety or public pros- 
 perity" ; and that if not so necessary they are taxes only in name, 
 from which conclusion some would draw the further one that 
 when they are taxes only in name the people have the right to op- 
 pose by force their collection. But the doctor means no more 
 than that they ought to be so necessary, but that whether they are 
 or not, "those * * * to whom government is intrusted" de- 
 cide in advance and by so deciding forever settle the question in 
 the affirmative. In claiming the right of the supreme power to 
 "tax all its subjects," and yet defining a tax as "a payment ex- 
 acted by authority from part of the community for the benefit of 
 the whole," the doctor makes a legitimate distinction between the 
 general right to tax (which owns to no exceptions or exemp- 
 tions), and a particular tax as levied, or imposed, which in actual 
 practice is rarely, if ever, universal as to any class of property and 
 certainly never universal as to persons. The doctor, then, defines 
 in effect and correctly an actual tax as a burden imposed by public 
 authority, and in practice falling in its immediate payment upon 
 
42 HERTIG ON TAXATION. 
 
 a part only of the community. His adding "for benefit of the 
 whole" is a conclusion of moral obligation which governments 
 willingly admit on the lip and disregard in the ledger. He could 
 not admit that some taxes, or some parts of some taxes, are laid 
 for robbery, for that would encourage, if not justify, seditious 
 thought ; but in describing the purpose of a tax as being for the 
 "benefit of the whole," Johnson is broad enough to cover nicely 
 the old taxation for reform laid by the Romans on bachelors to 
 encourage marriage, and broad enough to cover also the modern 
 instances of taxation for reform. His definition is broad enough, 
 too, for the inclusion of confiscation by taxation ; it is plain that 
 if authority exacts "from part of the community for the benefit 
 of the whole" the entire property of such part, consisting, let us 
 suppose, of railroads, waterworks, mines and the like, such ex- 
 action does not go beyond taxation in the Johnsonian sense of the 
 word. To say that a tax is a payment "exacted by authority" is 
 strictly proper, since such payment is not voluntary in any fair 
 sense of the word, but is made under expectation that the full 
 power of government will, in case of default, be used to enforce 
 it. Strictly speaking, the Johnsonian notion of taxation is not 
 broad enough to cover those cases where, in the name of a tax, 
 an impost or excise of such magnitude is imposed, that no collec- 
 tions from it are expected, but rather prohibition of the importa- 
 tion or home manufacture and sale of the article or articles so 
 "taxed. But since for special reason or by special fluke, govern- 
 ment seldom indeed fails to get at least a little money from the 
 operation of a prohibitory tax law, that little, by stress and strain, 
 just contrives to bend its law and itself into literal conformity 
 with Johnson's notion of taxation and tax. There are some eco- 
 nomists and some other tariff-reformers, who would like to add 
 to Johnson's definition of tax the proviso, "But protective tariff 
 taxes are payments exacted by authority from the whole of the 
 community for the benefit of a part." Subject to such limita- 
 tions as those above stated or hinted, Johnson's statement of 
 the right of taxation with the infolded definition of tax, and his 
 express definition of tax, are very good and complete much 
 more so in fact than most of the statements and definitions in 
 such kind by other writers. I would restate the right and define 
 the tax, as follows : "The supreme power of "every community 
 [consisting of the effective majority therein] has the right of 
 requiring from all of its subjects [indeed from all of its inhabi- 
 tants], such contributions [commonly called taxes] as are [in 
 the judgment of such effective majority] necessary to public 
 safely or public prosperity. [Said right, and the amount, 
 apportionment, and use of such contributions, or taxes, are 
 
HERTIG ON TAXATION. 43 
 
 limited only by the amount of property in the community 
 and by such customary or written law as may be held bind- 
 ing on itself by such effective majority, right, amount, ap- 
 portionment, and use being subject only to such violent or other 
 changes as may occur in shifting the centre of such effective ma- 
 jority, or in the shifting of its views without marked change of 
 centre."] 
 
 The spirit of the Johnsonian definition, both as given by him 
 and amplified by me is that no tax-law can be unjust. This is 
 quite true, but only in the sense in which it is affirmed by Hobbes 
 in his masterly treatises on government, that "no law can be un- 
 just," a proposition which, as Austin says, "has been deemed 
 by many an unusual or pernicious paradox." Austin, speaking 
 further of Hobbes's proposition, adds : "If we look at the scope 
 of the treatises in which it occurs, or even at the passages by 
 which it is immediately followed, we shall find that the proposi- 
 tion is neither pernicious nor paradoxical, but is merely a truism 
 put in unguarded terms. His meaning is obviously this : that 'no 
 positive law is legally unjust.' And the decried proposition, 
 as thus understood, is indisputably true. For positive law is the 
 measure or test of legal justice and injustice; and, consequently, 
 if positive law might be legally unjust positive law might 
 be unjust as^ measured or tried by itself" [which would be 
 in effect the suicide of the law.] Lectures on Jurisprudence 
 (London, 1885), I, 268. A law may be inopportune, or un- 
 wise, mischievous in its direct effect, and collaterally in- 
 jurious to morals; but it cannot in the case above explained be 
 "unjust." Laws may be so inefficient or positively mischievous 
 as to invite to revolution and the overthrow of the government 
 that makes them; still they are not technically unjust. If they 
 cause rebellion and successful revolution, a new order of rights 
 and technical justice will be established by the new (or shifted) 
 effective majority, and such new order in turn will embody itself 
 in laws which cannot be "unjust." Success in rebellion and rev- 
 olution makes the patriot ; want of success, the traitor. In a con- 
 tented and law-abiding nation the enacting of new laws and the 
 repealing or amending of the old suppress those abuses which 
 might otherwise be lopped off by the sword of rebellion. 
 
 I now cite and examine a cluster of French definitions. The 
 dictionary of the French Academy defines tax as a "public charge, 
 a right (dr'oit) imposed on certain things." This, like most dic- 
 tionary definitions is very vague and non-committal. Littre, the 
 great lexicographer, in his monumental dictionary of the French 
 fanguage, defines tax first in the meaning of the word according 
 to its first stage in modern evolution : "A name given formerly 
 
44 HERTIG ON TAXATION. 
 
 only to the transitory and occasional levies of rates which the 
 government imposed for the needs of the state." Taxes in the be- 
 ginnings from which modern Europe has been evolved were at 
 first only occasional, not, as now, annual and perpetual ; revenues 
 from crown lands, the public domain, so to speak, of king or 
 other potentate, were thought sufficient for ordinary public ex- 
 penditures. Littre adopts in second place the above definition of 
 the Academy; and quotes from Raynal this further definition of 
 tax : "A contribution for the public expense, which is necessary 
 to the preservation of private property." Mirabeau's definition : 
 "Taxes are but advances (made by taxpayers), to obtain the pro- 
 tection of the courts and police." Voltaire describes paying taxes 
 "as employing a portion, of one's property to keeping up the re- 
 mainder." The Marquis d' Audiffret: "A sacrifice asked of so- 
 ciety for the protection of its existence, as well as for the develop- 
 ment of its power." M. du Puynode : "The portion which each 
 one restores to the common treasury to assure the peaceable en- 
 joyment of his goods (remainder of his property) and respect for 
 his person." Proudhon: "Tax is really an exchange in which 
 the state gives its services and the taxpayer gives hard cash." 
 Proudhon, however, makes the acute observation that taxes are 
 the price exacted by the state for continuing to monopolists their 
 privileges; that where taxation begins, monopoly is already in full 
 flower by its ownership of land, mines, forests and waters; that 
 equality of taxation is an idea in advance of social conditions, but 
 would work to just results only if all fortunes were equal. He 
 argues most interestingly that under any plan of taxation poverty 
 gets the worst of it, still holds, so to speak, the beggar's wallet, 
 while the rich man is ever the object of governmental solicitude. 
 System of Economic Contradictions, Ch. VII. 
 
 Emile de Girardin following Thiers, held pointedly but super- 
 ficially with him that "a tax is and should be nothing more than 
 an insurance premium." Montesquieu, whose Spirit of the Laws 
 was a book much admired by and influential with certain framers 
 of the Constitution of the United States gives therein a definition 
 of public revenues which has largely found favor with his coun- 
 trymen, and with many others. Indeed the foregoing French def- 
 initions are little more than a paraphrase of his definition of state 
 revenues: "The revenues of the state are a portion which each 
 citizen gives of his property, to have the remainder in safety, or 
 to enjoy it more agreeably." Esprit des Lois, Livre Treizieme 
 (Paris, 1867). 
 
 J. B. Say, a French economist, who was much moved by the 
 abuses of the taxing power defined a tax as "a calamity." Paul 
 Leroy-Beaulieu has made perhaps the best of the French defini- 
 
HERTIG ON TAXATION. 45 
 
 tions, best for precise formality, but rigidly excluding all refer- 
 ence to collateral purpose as well as paramount end of govern- 
 ment. "A tax," he says, "is the contribution exacted of each citi- 
 zen for his share of the government expenditures." If the words 
 "exacted of each citizen" seem, at first thought, too broad, the ob- 
 jection may be answered in. a second thought that whoever con- 
 sumes, though he be a beggar, pays at least a consumption tax 
 out of his begging's whenever and wherever he buys with them. 
 So also, as the words "exacted of each citizen" are none too broad, 
 the word "contribution" as representative of what is exacted, is 
 none to narrow, it being fairly applicable to money, to payments 
 in kind, and to payments in work or service. Contribution as a 
 name for tax came into common use with the French revolution, 
 as being free from the old harsh associations connected with the 
 old name, and implying that the citizen in a free state should re- 
 gard his payments as in large measure voluntary. But this, of 
 course, is merely sentimental and decorative, and not even as ef- 
 fective as turning the cracked side of a vase toward the wall, 
 which turning may at least deceive the spectator ; while contribu- 
 tion coupled with the words "exacted" or "enforced" neither de- 
 ceives nor can deceive as to the compelling hand behind it. For 
 the rest, contribution as a name for tax, dates even in English use 
 from a time much before the French Revolution, and is very cur- 
 rent. Daniel Webster and Justice Story (as Justice Samuel F. 
 Miller states in his lectures on the Constitution) defined tax as "a 
 contribution imposed by government on individuals for the ser- 
 vice of the state." 
 
CHAPTER III. 
 
 To serve God and Mammon through tax laws an easy matter for Prof. 
 Perry Purchase, benefit and other exchange theories of taxation super- 
 annuated Simple and permanent basis for condemning such theories 
 False individualist assumption underlying them exploded. 
 
 Nothing in tax literature is more touchingly naive and sloppy 
 than the brief chapter on Taxation in Prof. Arthur L. Perry's 
 Elements of Political Economy, first ed. (New York, 1866). As 
 the book went through nineteen editions and various changes, in 
 one or more of which Perry utters the despairing cry, There is 
 "no science of taxation as there is a science of exchanges" (quoted 
 by Wells, p. 38, above, and credited only to "most eco- 
 nomists"), some specimen of the flower of Perry's genius before 
 it was yet unduly remote from the bud, seems due to my readers, 
 especially as Perry, too, sees an exchange transaction in paying 
 taxes. Perry, moreover, takes a first halting step away from indi- 
 vidualism, yet not far enough to look with approval on any tax 
 measure" that would take from the rich man any greater percent- 
 age of the fruit of his "abstinence" and "thrift" than that taken 
 from the king's poor cousins. Like trustees of other colleges, 
 those of Williams are doubtless thrifty and pious. With their 
 professor of Political Economy sound on "thrift," what writer 
 could take exception to this halting step from individualism, with 
 truly pious knee-crook, toward latent paternalism. "Government 
 exists as well for the improvement as for the protection of society 
 and many of its high functions are moral, to be performed under 
 a lofty sense of responsibility to God and to future ages." Thus 
 delivered and so squared with his trustees, Perry can, and does, 
 proceed to vindicate the ways of government to man in "the 
 matter of taxation." This, he says, "by which government is out- 
 wardly supported and by which it takes to itself a part of the 
 gains of every man's industry, seems to me to find a ready and 
 solid justification in the common principles of exchange. A tax 
 paid is a reward for a service rendered ; and because the service 
 may have respected another generation as well as the present, it 
 is sometimes proper that the tax shall be passed over in part to 
 
HERTIG ON TAXATION. 47 
 
 another generation to pay. The services which government ren- 
 ders to production by its laws, courts, and officers, * * * are 
 rendered on the whole economically and satisfactorily. Taxes, 
 therefore, demanded of citizens by a lawful government which 
 tolerably performs its functions, are legitimate and just on 
 principles of exchange alone.*" 
 
 Now, however, the professors are making a square turn from 
 the purchase theory of a tax (notion that it is a payment to the 
 -government for service rendered in amount equal to the cost of 
 the service); also from the benefit theory of a tax (notion that "a 
 tax is a payment by .citizens to the state on account of and in pro- 
 portion to the benefit received.") Indeed Prof. Seligman with 
 ruthless readiness to jar the feelings of Prof. Perry and others 
 impaled on their own rusty standpoints, does not scruple to write : 
 "Until within a few years it was deemed necessary to base the 
 theoretical justification of taxation on fanciful doctrines of con- 
 tract, of protection and the like." Essays in Taxation, 5. The 
 advance from the individualist, "or restrictive theory of govern- 
 ment which prevailed in the early portion of the igth century," 
 toward the paternalist theory may be measured in part by the fact 
 that grave professors condemn the "benefit theory of a tax," be- 
 cause, "like the purchase theory of taxation, it rests upon the in- 
 dividualistic conception of society." H. C. ADAMS, The Science 
 of Finance, 299. 
 
 The simpler and the permanent reason for condemning the in- 
 surance theory, purchase theory, benefit theory, or any other ex- 
 change theory of taxation (except in those cases where govern- 
 ments take fees for a specific service rendered, or privilege ac- 
 corded), is that governments, as we now conceive them, impose 
 taxes because they must, or cease to exist ; while the taxpayer 
 pays because he must, or suffer consequences which he can in 
 general not choose to endure. In other words, there is in tax- 
 paying and tax-taking the plain fact of contact without contract, 
 though the amount taken is sometimes fixed by contract between 
 the state and the taxpayer ; and it is always useless, often mis- 
 chievous, to blink plain facts. For the rest, the underlying as- 
 sumption and falsehood of all individualists is that "the end of 
 every government is to institute and protect property" a propo- 
 sition that has received due logical pulverization at the hands of 
 John Austin. He, in a note to his sixth lecture, "The Province 
 of Jurisprudence Determined," serves the "propounders of this 
 absurdity" with summary but luminous process^ He first puts 
 the proposition for them into a very general and dignified form, 
 "To confer on its subjects legal rights, and to preserve those 
 rights from infringement, is the end of every government." Then 
 
43 HERTIG ON TAXATION. 
 
 proceeding to demolish : "If the creation and protection of legal 
 rights were its [government's] proper paramount purpose, its 
 proper paramount purpose might be the advancement of misery, 
 rather than the advancement of happiness ; since many of the legal 
 rights which governments have created and protected (as the 
 rights of masters, for example, to and against slaves), are gener- 
 ally pernicious, rather than generally useful. . To advance as far 
 as is possible the common happiness or weal" [is the "proper 
 paramount purpose" of government; and to that end] "a govern- 
 ment must confer on its subjects * * * beneficent legal 
 rights, or such legal rights as general utility commends, an4 
 * * preserve those rights from infringement, by enforcing 
 the corresponding sanctions. But the institution and protection 
 of beneficent legal rights, or of the kinds of property that are 
 commended by general utility, is merely a subordinate and in- 
 strumental end through which the government must accom- 
 pish its paramount or absolute purpose. * * * The propo- 
 sition in question," putting for government's paramount end 
 a merely subordinate and instrumental end, "is, therefore, 
 false; and considered as a definition of the means to such 
 paramount or absolute end, it is defective. For there are 
 absolute legal duties, or legal duties without correspond- 
 ing rights, that are not a whit less requisite to the advancement 
 of the general good than legal rights themselves with the relative 
 duties which they imply." Lectures on Jurisprudence, I, 292-3. 
 "The sum of the subordinate ends which may subserve" govern- 
 ment's paramount end, "is scarcely comprised by a good legisla- 
 tion and a good administration of justice," by furnishing judge, 
 sheriff and policeman. "The prevalent mistake," continues Austin 
 (ibid.) "which I now have stated and exemplified, is committed by 
 certain of the writers on * * * political economy, whenever 
 they meddle incidentally with the connected science of legislation. 
 Whenever they step from their own into the adjoining province, 
 they make expressly, or they make tacitly and unconsciously, the 
 following assumption: that the proper absolute end of a sovereign 
 political government is to further as far as possible the growth 
 of the national wealth. If they think that a political institution 
 fosters production and accumulation, or that a political institu- 
 tion damps production and accumulation, they pronounce, without 
 more, that the institution is good or bad. They forget that the 
 wealth of the community is not the weal of the community, though 
 wealth is one of the means requisite to the attainment of happi- 
 ness." 
 
CHAPTER IV. 
 
 Tax definitions an open pitfall for Judge Cooley Habit makes it easy for 
 the Century Dictionary to fall with him Wells goes further and fares 
 worse Specimens of intellectual anarchy that call for stamping out 
 Entire wealth of country exposed to taxing power Naive remarks of 
 W. E. H. Lecky. 
 
 The late Justice Cooley began his work on the Law of Taxa- 
 tion by defining taxes "as being the enforced proportional con- 
 tribution of persons and property, levied by the authority of the 
 state for the support of the government, and for all public needs." 
 Cooley's definition is at once labored, slovenly and incorrect. In 
 the phrase "contribution of persons and property" does "contribu- 
 tion of persons" mean "contribution (consisting) of persons," as 
 if a slave-owner were made to deliver of his slaves in payment 
 of such contribution ? When the supervisor of a highway district 
 gathers the adult male inhabitants thereof to "work out" their 
 road tax, has he in hand a "contribution of persons" in Cooley's 
 sense of the phrase? In using the phrase and joining with it 
 "property" in the same connection, did he anticipate that extreme- 
 ly infallible economist Edward Atkinson, who says, "Taxation 
 means work, of the head, of the hands or of the machine, or all 
 combined?" If he meant to distinguish between contribution of 
 persons and contribution of property, it would seem that he ought 
 to have been precise. If he meant to say that taxes are propor- 
 tional contributions in personal service, in money, and in kind, 
 levied and enforced by the authority of the state, perhaps he 
 thought that he did so express himself an illustration of how 
 wide a conscientious judge may shoot from the mark of his in- 
 tent. Perhaps some recollection* of classical studies made him 
 deliver an ambiguity common enough in the Latin language, 
 where, for instance, fuga hominum- may be either 'the escape 
 from men,' or, 'the flight' or 'escape of men.' ZUMPT'S Latin 
 Grammar, tit. genitive case, art. 423, n. I. Besides what is gained 
 by the use of the word "proportional," in defining tax ? Propor- 
 tional to what ? Everybody knows that tax contributions vary in 
 
50 HERTIG ON TAXATION. 
 
 general, and particularly in theory, with the purse of the tax con- 
 tributor; but nobody knows the theoretical proportion of such 
 variations without a tolerably comprehensive study of tax statutes 
 and tax decisions, and nobody knows the true proportion of such 
 variations unless he has omniscient judgment of values and in- 
 fallible eye to- see the tax contributor's assets. "Proportional," 
 therefore, adds no value to the definition, is practically meaning- 
 less, and is, moreover, false in its intended meaning. For special 
 instance of such falsity take poll-taxes. These, as generally 
 levied, mean contributions equal each to each exacted by govern- 
 ment from each poll declared taxable under the edict or statute 
 authorizing such tax; and they are not "proportional" to any- 
 thing, even in theory, unless to the judgment or lack of judgment 
 authorizing them to be levied which would give a meaning seem- 
 ingly out of all proportion to that intended by the learned judge. 
 If most constitutions of the American States afford any criterion 
 by their silence as to, or their qualified approval of, poll-taxes, 
 the constitution of Ohio displays on that subject an emotion not 
 at all "proportional" to its gravity, by declaring (const, of 1802, 
 and by repetition in const, of 1851), 'That the levying (of) taxes 
 by the poll is grievous and oppressive." Again; when Cooley 
 cites, without dissent (ist ed. p. 128), McCurdy, J., in Co-it e v. 
 Society for Savings, 32 Conn. 173, he seems to approve Mc- 
 Curdy's approval of doctrine quoted by the latter from previous 
 Connecticut cases : "Taxes are at best arbitrary and unequal. 
 Studied discriminations are made in all tax laws in favor of or 
 against particular persons or subjects, or trades, or business, or 
 institutions." If this is so, why preliminary beguilement of the 
 unsophisticated tax student with a deceitful "proportional ?" 
 
 Though the use of proportion in a tax connection must have 
 become known to Cooley very early in his juristic studies, it is 
 apparently from the opinion of Bigelow, 'Ch. J. in Commonwealth 
 v. Savings Bank, 5 Allen (Mass.) 436, which Cooley cites and 
 commends among others as not going "beyond the demands of 
 strict accuracy," that he got the notion of inserting "proportional" 
 into his definition of taxes, though in form he follows almost 
 literally the definition in 58 Maine, 591. Bigelow said among 
 other things : "Under every system of taxation, however wisely 
 and carefully framed, a disproportionate share of the public bur- 
 den will be thrown on certain kinds of property, because they are 
 visible and tangible, while others are of a nature to elude vigi- 
 lance. It is only where statutes are passed which impose taxes 
 on false and unjust principles, or operate to produce gross in- 
 equality, so that they can not be deemed in any just sense propor- 
 tional in their effect on those who are to bear the public charges, 
 
HERTIG ON TAXATION. 51 
 
 that courts can interpose and arrest the course of legislation by 
 declaring such enactments void." 
 
 Bigelow, of course, was not the originator of "proportional," 
 as applied to taxes. His own state of Massachusetts had before 
 him, and has yet, a provision in her constitution to the effect that 
 the legislature "shall only impose proportional and reasonable 
 taxes." The Alabama constitution of 1819, her first, provided 
 that " all lands liable to taxation" within her boundaries should 
 "be taxed in proportion to their value" ; the nice sense of justice of 
 her carpetbaggers prompted them to insert in her constitution of 
 1867, "All taxes levied in this state, shall be assessed in exact pro- 
 portion to the value of such property," with a proviso author- 
 izing a poll-tax for school purposes not to exceed $1.50 on each 
 poll, showing that the framers of this plank knew that there is 
 neither exact nor inexact proportionality in a poll-tax. Califor- 
 nia's constitution of 1849, ner fi rst > provides that all property in 
 the state "shall be taxed in proportion to its value," and this plank 
 is repeated in her (present) constitution of 1879. Illinois in her 
 first constitution, that of 1818, was silent on taxation, but spoke 
 in her second one, 1848, and imposed on the legislature the duty 
 of providing "for levying a tax by valuation, so that every person 
 and corporation shall pay a tax in proportion to the value of his or 
 her property." This is repeated in the present Illinois constitu- 
 tion, that of 1870; 'but this, as well as the constitution of 1848 
 gives the legislature discretionary "power to tax peddlers, auc- 
 tioneers, brokers, hawkers, merchants, * * * showmen, 
 jugglers, inn-keepers, grocery-keepers, toll-bridges and ferries, 
 and persons using and exercising franchises and privileges,"- 
 that is to say, power to tax said persons and things in such 
 manner as the legislature should from time to time de- 
 termine. This, too, shows that the notion of proportion- 
 ality in American tax law has reference only to taxes 
 based on a valuation of property. So also the constitu- 
 tion of Missouri (const, of 1865, art. I, sec. 30; const, of 1875, 
 art. x. sec. 4), has a plank to the effect that "all property subject 
 to taxation ought to be taxed in proportion to its value." And 
 this plank was expounded by the supreme court of that state, 
 in Glascow v. Rouse, 43 Mo. 489, in a way entitling it, in Coo- 
 ley's opinion, to be "copied at length": "That taxes should be 
 uniform, and levied in proportion to the value of the property 
 to be taxed, is so manifestly just that it commends itself to 
 universal assent. But, notwithstanding the constitutional pro- 
 vision, there are some kinds of taxes that are not usually 
 assessed according to the value of property, and some which 
 could not be thus assessed; and there is perhaps not a state 
 
52 HERTIG ON TAXATION. 
 
 in the Union, though many of them have in substance the same 
 constitutional provision, which does not levy other taxes than 
 those imposed on property, [other taxes, in no fair sense of 
 the word, proportional.] Eveiy burden which the state im- 
 poses upon its citizens with a view to revenue, to carry on the 
 operations of the state government, or for the support of munic- 
 ipal corporations, is a branch of the power of taxation, whether 
 imposed under the name of a tax or some other designation. 
 The license fees which are sometimes required of those who 
 pursue particular employments are, when imposed for revenue, 
 taxes. Lawyers and physicians may be compelled to pay a 
 license for practicing their professions, for the purpose of rev- 
 enue; and although not levied on the property, it is still a tax. 
 Stamp duties are taxes. It is customary to require that cor- 
 porations shall pay a certain sum annually, in proportion to 
 their capital stock paid in, or by some other standard, which is 
 generally fixed for mere convenience. It therefore seems plain 
 that the constitutional requirement that taxation upon property 
 shall be in proportion to its value, does not include every species 
 of taxation." And certainly it seems equally plain that to say 
 of taxes generally, they are "enforced proportional contribu- 
 tions" is a downright untruth as to one very important branch 
 of taxation and an extremely barren and unattainable ideal as 
 regards the other, or property, branch of taxation. In taxation, 
 as elsewhere, the proper function of ideals is to get themselves 
 realized if they can. When, as in Cooley's definition of taxes, 
 they go masquerading as bones-and-body reality, it may afford 
 precious encouragement to idealists generally that even a man 
 so of the dry-as-dust type as Cooley found ideals to such degree 
 indispensable that he deliberately, or rather unavoidably blinked 
 the facts for their dear sake. His so "enforced propor- 
 tional contribution" to the ideal may indeed be precious in their 
 sight: its alleged proportionality is worse than useless in a 
 definition of taxes. 
 
 The learned judge was almost equally unhappy in defining 
 the purpose of taxes as being "for the support of the govern- 
 ment, and for all public needs." Is not the support of the gov- 
 ernment a public need? It would seem that if Cooley had been 
 quite sure of the affirmative he would have finished the 
 clause and the definition with the words "and for all other 
 public needs," instead of leaving to his readers to determine 
 each for himself, by capricious individual choice, in accenting 
 all or public, whether "the support of the government" shall 
 be taken to be itself a private need or a public one. But assum- 
 ing that Cooley meant "and for all other public needs," and that 
 
HERTIG ON TAXATION. 53 
 
 he is generally so understood, would he not have done better 
 had he condensed all mention of the purpose of levying taxes 
 into the simple formula "for public needs"? Is there even the 
 slightest shade of a presumption that any one reading such 
 definition would not know that "the support of the govern- 
 ment" is a primary public need? If not, why so much sur-' 
 plusage? Again: if the learned judge had adopted a simple 
 formula of purpose, he would have done still better in not com- 
 mitting himself so far as to vouch for taxes as being levied for 
 public needs. That foolish sort of optimism which shuts its 
 eyes, or makes believe to shut them and its definitions against 
 the plainest facts is the painted idol of timid and servile 
 minds. Therefore because taxes ought to be for public needs, 
 let us assert and stand to it that they are such, nor dare to 
 define them as being levied for public needs, as well as (fre- 
 quently) for private needs masquerading as public ones! Let 
 us in our definition carefully suppress, to tuck out of general 
 sight in diffuse commentary, that "public needs" as o f ten put 
 forth are such by tne fiat of an oligarchy, which neither the 
 real public nor their timid, or corrupt or by-legal-impediment 
 -restrained judiciary can effectively and according to the real 
 facts declare to be not "public," or effectively declare to be 
 mixed needs, partly public and partly private, upholding the 
 former and defeating the latter. Moreover to define taxes as 
 being for "public needs," and there end, is not to define, bound 
 and limit, but to open wide the door to the much-mixed ques- 
 tion, What, even in the measure of honest and discreet intent, 
 are public needs?* 
 
 The large, but none the less (or shall we say rather all the 
 more?) on that account loose-jointed Century Dictionary has 
 
 *For further illustration of the saying, "All definition is dangerous," 
 I add this note. In criticising Cooley's definition, I had only his first 
 edition before me. His second came out in 1886, ten years after the 
 first. Curious to see whether the learned judge had found his defini- 
 tion satisfactory enough for him to reaffirm it, I have gone to the defini- 
 tion given in his second edition, and find that it varies from the first. 
 "Taxes," says the second edition, "are the enforced proportional con- 
 tributions from persons and property, levied by the state by virtue of its 
 sovereignty for the support of government, and for all public needs." 
 It will thus be seen that it has all the vital defects of Cooley's first defi- 
 ^ition, and another of its own. Why lug in "by virtue of its sovereign- 
 ty?" The people are sovereign and in their "collegiate and sovereign 
 capacity" constitute the state. Or we may put it otherwise ; for there 
 is a considerable assortment of metaphysical formulas that may be used 
 and disputed in this connection. Cooley, with the fatality that so often 
 steers our judges into bad metaphysics, if it steers them into any, makes 
 one abstraction, the state, levy taxes by virtue of another abstraction, its 
 sovereignty ! Whereas, as we all know, it is our officials that levy taxes. 
 
54 HERTIG ON TAXATION. 
 
 ''conveyed," in Ancient Pistol's sense, and renovated in its own, 
 Judge Cooley's definition, and with this result: [A tax is] "An 
 enforced proportional contribution levied on persons, property, 
 or income, either (a) by the authority of the state for the sup- 
 port of the government, and for all its public or governmental 
 needs, or (b) by local authority for general municipal purposes." 
 Bar "contribution of persons and property," and the Century 
 definition has all the Cooley defects underlying its own. The 
 interesting gentleman who thought that among the ten books 
 he should be allowed to take with him on banishment to some 
 Robinson Crusoe island, he would choose him the Century Dic- 
 tionary, might on its definition of "road" (maritime) settle com- 
 fortably down to the conviction that the sea beating about his 
 desert home was all "road" in very truth; might, in casting his 
 eye over the definition of "rouble" or "ruble," wonder vainly 
 what might be the weight and fineness of 'that Russian silver 
 piece; could certainly raise him no question over unmentioned 
 gold roubles, in pieces of ten or .otherwise; would perhaps be 
 satisfied with the statement that "the paper ruble is discounted 
 at about 50 cents" ;* and might, if he should have taken little 
 memory and less analysis to his island, rest upon the foregoing 
 proud definition of tax and the finer-print commentary of about 
 
 Now, if Cooley meant to put the abstract for the concrete, he meant 
 also, if he was consistent, to affirm of the abstract officialdom so mas- 
 querading as the state, that said officialdom levies by virtue of its sov- 
 ereignty. Hence officialdom is sovereign! a conclusion which Cooley, 
 on cross-examination, would have doubtless denied. The formula of his 
 first definition in this behalf, "levied by the authority of the state," is 
 unobjectionable, because it is true. As authority for both definitions he 
 cites Opinions of Judges, 58 Maine, 591, where the justices of the Su- 
 preme Court of that state give to its house of representatives their opin- 
 ions, that it is -contrary to the Maine constitution for towns to assist 
 manufactures, or to carry on manufactures themselves. Among the 
 opinions is one by Chief Justice Appleton, giving the prototype of Cooley's 
 definition, and which he would have done better to follow literally : 
 "Taxes are the enforced proportional contribution of each citizen and 
 of his estate, levied by the authority of the state for the support of the 
 government and for all public needs." 
 
 *Not if he should go to the Century definition of "at," which would 
 tell him under the 3d numbered paragraph of this little word's defini- 
 tidn, that at "of relative position" implies "a point in an actual or pos- 
 sible series, and hence used of degree, price, time" [et al.] ; as, : 
 at seventy degrees in the shade, at four dollars a yard, at ten cents a 
 pound, * * * at midnight, at first, : * * etc. No more if he 
 should consult its definition of "discount," verb transitive, paragraph 3: 
 "In finance, to purchase, or pay the amount of in cash, less a certain rate 
 per cent. * * * * ; as, to discount a bill or a claim at 7 per cent." 
 No more, if he should try definition of discount in paragraph 4: To 
 make a deduction from, put a reduced estimate or valuation upon; make 
 
HERTIG ON TAXATION. 55 
 
 thirty lines following it, rest upon definition and commentary 
 as an all-sufficient basis for a system of taxation which he 
 would now frame him for beguilement of his solitude and for 
 the coming "economic man" who should some time, in multi- 
 plied editions, people his road-girt home. But, if somewhat of 
 an analytic questioner, he might bethink him that the tax so 
 defined is only a paid tax, and wonder what he should call those 
 amounts which, it might occur to him, could be levied, and yet 
 possibly remain forever uncollected and unenforced a matter 
 on which the big dictionary would shed no light, but which 
 would come out affirmatively and indicatively strong, could he 
 only by some wireless telegraphy get and understand signals 
 from State Auditor Dunn, of Minnesota. He might learn from 
 the dictionary that a corporation is an "artificial person"; he 
 could not learn from it whether or not a corporation in the eye 
 of the taxing power is a "person," or "property" or "income," 
 or sometimes one or more of these things and sometimes none 
 of them. He might admire the spirit of precision displayed in 
 the use of its, before "public or governmental needs," should 
 he think the word meant to mark off the needs of the govern- 
 ment as distinguished from needs of another government; and 
 his admiration might take another direction, if he should con- 
 
 an allowance for exaggeration or excess in : as, to discount a braggart's 
 story; to discount an improbable piece of news." 
 
 As I write this note, July I4th, 1902, in the library of the University 
 of Minnesota, comes up a young woman seeking information about 
 place of registry for the summer school. Not being quite sure on this 
 point, I suggest to her to wait until some one in touch with the genii 
 of the place shall appear ; and then with the preamble, "One question 
 deserves another," I ask her, "Will you tell me what you understand by 
 this statement, 'The paper ruble is discounted at about 50 cents?'" 
 She: "Please repeat the statement." I repeat. She: "I suppose it 
 means 50 per cent is taken off." I: "Off the nominal value?" She: 
 "Yes." Further question elicits fact that she has taught 39 months in 
 grammar grades. A demure and mature girl, who had shown me where 
 they keep the Century Dictionary, now appears, and my enlightener of 
 39 months' experience is enlightened in turn, and duly goes to. register. 
 I ask and receive permission of the demure and mature girl to ask her 
 a question. "What do you understand this to mean ?" repeating the 
 paper-ruble statement. She, too, asks that statement be repeated. I re- 
 peat. She then discriminates between 50 per cent and "50 cents," and 
 concludes that "at about 50 cents" means that 50 cents is taken off 
 each ruble by him who discounts. I neglect to inquire about her experi- 
 ence. I next ask a young man who has taught five years, and is now 
 about to take a summer school course in bookkeeping and history, what 
 he understands by the statement. I repeat it for him, once and again. After 
 much hesitation he thinks it means "a. paper ruble is worth about 50 
 cents in American money." These pieces justificatives may not be quite 
 in the Gilder-gangish tone of lexicography; but they are not even a little 
 "scratched," and they will certainly "serve." 
 
56 - HERTIG ON TAXATION. 
 
 strtte its to be merely in aid of "public" and "governmental" as 
 plainly implying the possession by government of private and 
 non-governmental needs. He might wonder whether taxes, to 
 be such, must be coextensive with all "public or governmental 
 needs," and whether, if not sufficient to go round, or if some 
 public need has been forgotten entirely, they are none the less 
 taxes. He might even think that by using the word all, the 
 framer of the definition had in mind a magnificent paternalism, 
 and so would frame accordingly his system for the coming 
 economic man. Not being told by the definition that "local 
 authority" is a derived authority whose source is the state, he 
 might go too far in giving his towns and counties autonomy. 
 If to such criticism it is replied that he would know without 
 the express telling of it that "local authority" is derived from 
 the state, is amended, altered or suspended at the state's pleas- 
 ure, the counter-reply is that he would be much less likely to 
 know this, in its many shades, very nice legal proposition than 
 to know the very coarse fact, which could hardly have escaped 
 his notice, that counties, towns, cities, districts and the like do 
 levy local taxes. Taxes to be such must be levied by sufficient 
 authority : either rest upon such words when you define, or if 
 you essay to list the different kinds of authority for levying 
 them, do not model yourself upon the Century Dictionary. 
 Among the things which the man on the island might be de- 
 luded into believing is the following gem from the Century's 
 fine-print commentary on its tax definition : "In the United 
 States all state and municipal taxes are direct and are levied 
 upon the assessed values of real and personal property, while 
 the revenue required for general governmental purposes [mean- 
 ing required by the federal government] is derived from indirect 
 taxes upon certain imports, and upon whisky, tobacco, etc." 
 Perhaps this statement is sufficient for slipshod purposes, and 
 averages well up to the standards of slipshod correctness. The 
 government at Washington has often taxed occupations, and 
 still does so to some extent. Are those cases covered by "etc." 
 in connection with whisky and tobacco? Could the man on the 
 island ferret out the federal tax on national bank notes under 
 such description? Could he remotely guess under it at the num- 
 ber and variety of the federal taxes imposed in, for, and after 
 the Civil War? Or by the Spanish- War revenue act of 1898? 
 "All state and municipal taxes * * * direct, and * 
 levied upon the assessed values of real and personal property"? 
 It would be difficult to find a more grossly inaccurate state- 
 ment even in the Century Dictionary. It excludes taxes on 
 gross earnings, taxes on net earnings, taxes on insurance pre- 
 
HERTIG ON TAXATION. 57 
 
 miums, taxes on the nominal or authorized capital of new cor- 
 porations for the privilege of incorporating, fixed annual taxes 
 on the apparent or nominal capital of corporations (such as 
 yielded the state of New Jersey taxes on railroad and canal 
 companies not reckoned the sum of $1,633,074.19 for the year 
 ending October 31, 1901), license and other occupation taxes so 
 prominent in the finances of Southern states and their subdivi- 
 sions, license and other like taxes yielding considerable revenue 
 in most of the states and enormous sums in Pennsylvania, as 
 will be shown in the table of itemized receipts for that state in 
 a subsequent chapter. The Century limitation of state and 
 municipal taxes excludes in fact all but the general property 
 taxes. 
 
 I cheerfully give to the Cooley and to the Century definition 
 the benefit of the unintentional brief which David A. Wells holds 
 for them regarding the meaning of "proportional." This "term," 
 says he, "* * * which is largely used in constitutional pro- 
 visions and in statutes relating to taxation, has, however, a 
 meaning so much broader and of such greater significance than 
 generally attributed to it by law-makers and even law inter- 
 preters, that it is worth while to institute an inquiry and en- 
 deavor to understand clearly what it does mean. Scientifically 
 considered, it means the making of the burden of taxation equal 
 upon all subjects of immediate competition. This principle is 
 one of the prime essentials of taxation, and when it is violated, 
 the act of taking or the enforced contribution, is not entitled to 
 be considered taxation, but becomes at once an arbitrary spolia- 
 tion or confiscation." Theory and Practice of Taxation, 320-1. 
 * * * * 
 
 "It would seem to be clear, therefore, that a tax that is 
 not levied proportionally, or, what is the same thing, equally 
 and uniformly upon all subjects in the same field of competi- 
 tion as, for example, upon all persons engaged in the same 
 business or profession, or upon all property of the same kind 
 and all profit or income (less exemptions in the nature of chari- 
 ties) in the same ratio is a discriminating exaction, without 
 claim tc either justice or equality, inasmuch as to the same- 
 extent that some are favored by the discrimination, others are 
 inevitably plundered or crushed. " 7rf. 322. 
 
 The above passages from Wells may be taken as typical of 
 the absurd lengths to which an otherwise reasonable man may 
 go in defense of economic or other slogan to which he has com- 
 mitted his ultimate principles or his partisan hopes. Wells 
 was a doctrinaire of individualism, a partisan of the view that 
 the state and the nation should keep hands off, let things alone. 
 
58 HERTIG ON TAXATION. 
 
 That is to say, he was as much an individualist as one may be, 
 and be an American, in these days of paternalistic tendencies. 
 He waged war on our protective tariffs, and held them. largely 
 responsible for the growth of the paternalistic tendencies which 
 he viewed with disgust if not with alarm. Myself I confess 
 frankly to looking with favor on paternal government, because 
 the people want it, and, they wanting it, some form of it is inevit- 
 able. I am chiefly concerned with elaborating and championing 
 a paternalism of the right sort with making it compatible with 
 private thrift, public economy, improved liberty, with ideals of 
 justice at once noble and practical, to serve it with a New Juris- 
 prudence and a new Civil Nation. The choice for individualists 
 of the Wells or any type lies, I take it, only between the pater- 
 nalism I favor and some other which I am quite sure they would 
 like less. See how the doctrinaire in Wells boggles and shuf- 
 fles to inject into "proportional" a meaning that for it "never 
 was on sea or land." It has, forsooth, because Wells for his 
 doctrinaire needs must find it so, "a meaning so much broader 
 and of such greater significance than generally attributed to it 
 by law-makers and even law-interpreters"! How vainly and 
 with what untrue aim law-interpreter Cooley, how servilely 
 and with what weak fiat the Century Dictionary by "convey- 
 ance" from him seek to attach some jack-leg meaning of "pro- 
 portional" to their definitions of taxes we have already seen. 
 We have seen, too, from the Connecticut case, the Massachu- 
 setts case, the Missouri case above cited (all cited by Cooley. 
 too), certain typical limitations and negations affixed to the 
 proportionality of taxes by American jurisprudence. It would 
 be easy to point out a long line of other decisions by American 
 courts, many of them cited by Cooley, in which the dispropor- 
 tionate levy of actual taxes x is conceded, but individual taxes 
 or tax levies sought on that ground to be impeached are sus- 
 tained, for the practical, but not often confessed, reason that, if 
 not so sustained, the state would be financially embarrassed 
 and judges' salaries might stop. He would be a rash man, 
 knowing the limitations of judges, who should say that no 
 American judge ever held a uniform tax "upon all persons 
 engaged in the same business or profession" to mean and afford 
 pat illustration of a "proportional" tax; he would have slight 
 knowledge indeed of American jurisprudence who should be 
 unaware" of the fact that practically every American judge has 
 been obliged to invent his own, or meekly adopt some other 
 judge's, most transparent sophism, in order to uphoM taxes as 
 "proportional," or what is still more important, and, despite the 
 dictum of Wells, what is by no means the same thing, to up- 
 
HERTIG ON TAXATION. 59 
 
 hold them as "equal" or "uniform" within the meaning of that 
 equality and uniformity prescribed in constitutions. The final 
 trump which some judges play when the tax sought to be 
 impeached obstinately refuses to hold, or answer to, the sophis- 
 ticated label of "equal" or "uniform," is to call it by some other 
 name than tax, and then decide that, as it is not jn fact a tax. it 
 therefore does not need to be "uniform."* How lightly and 
 loosely the Fourteenth Amendment to the Constitution with its 
 "no state shall * * * deny to any person within its juris- 
 diction the equal protection of the laws" sets upon the taxing 
 powers of American states will abundantly appear in a subse- 
 quent chapter. Many a tax, it is true, has been held to be in 
 whole or in part unconstitutional as violating either the federal 
 or some state constitution; but the stubborn and enduring fact 
 remains that, except within relatively insignificant limits, Amer- 
 ican jurisprudence has abandoned equality and uniformity as 
 the working basis of taxation, therein and thereby demonstrat- 
 ing to whoever makes earnest study of the records that Amer- 
 ican statesmanship has never borne serious allegiance to equal- 
 ity and uniformity of taxation, in anything nearly covering the 
 whole field, in any sense approximating the popular meaning of 
 taxation. 
 
 Concede, as federal jurisprudence does, that any American 
 
 *Thus, under the elastic cover of the "police power," states are held 
 to possess an inherent right to regulate those matters which pertain in 
 undefined respects to the health, comfort and general well-being of 
 society; and, as incident to police regulations, the state or municipality 
 may impose fees and taxes which are not taxes within the judge-given 
 meaning of the revenue sections in their constitutions, and which therefore 
 need not be, since they are not, equal and uniform. And there are cases 
 going much further in holding that a tax is not a tax than is indicated 
 in the proposition just stated. As Prof. Seligman says, "It may be con- 
 fidently stated that from the standpoint of the science of finance, the 
 distinction drawn between the police power and the taxing power is 
 to a great extent a fiction referable to certain difficulties in American 
 constitutional law, and to a lack of economic analysis on the part of 
 the judges. Essays in Taxation (New York, 1895), 269. Compare p. 
 83, below) sarcastic description of the police power by Judge McGee 
 and Justice Brewer. The contradictions between the courts of differ- 
 ent states as to what tax and no-tax are to be referred respectively to 
 the taxing and to the police powers are almost amusing. In virtuous 
 Michigan, they once had a constitution that roundly forbade the licens- 
 ing of dram shops, but Was entirely silent as to taxing them. The con- 
 stitution had deliberately shut off a part of the sovereign police power, 
 and blind pigs flourished scot free. Should virtue continue abased and 
 logic exalted? Not unless Puritan descent counts for naught. A vir- 
 tuous legislature taxed and called it taxing; a virtuous supreme court 
 held that it could validly do so under the taxing power; that the legis- 
 lature could lawfully make the dramshops put up, and the police power 
 still lawfully make them shut up. Youngblood v. Sexton, 32 Mich. 406. 
 
60 HERTIG ON TAXATION. 
 
 state, in so far as not prohibited by that state's constitution, 
 may create practically as many classes of persons and proper- 
 ties for taxing purposes as to the state legislature shall seem 
 fit; concede, as federal jurisprudence does, that such state 
 through its legislature may impose upon such persons and prop- 
 erties such different and vary in <? taxes as to the legislature 
 shall seem fit, provided only that the taxes imposed be 'uni- 
 form" on the particular class of persons, on the particular kind 
 of property, they seek to reach*; concede, as federal jurispru- 
 dence does, that the foregoing concessions in no wise contra- 
 vene the Constitution of the United States; concede, as all 
 American jurisprudence does, that unformity nowhere means 
 more than geographical uniformity, and (except locally and 
 yieldingly) class uniformity; concede, as all American jurispru- 
 dence does, that Chief Justice Marshall uttered sound doctrine 
 when he said (McCnllo-ch v. Maryland, 4 Wheat. 316), "If the 
 right to impose a tax exists, it is a right which, in its nature, 
 acknowledges no limits"; concede further that no substantial 
 limitation of Marshall's doctrine is attempted by the supreme 
 jcourt of the United States in the later case of Loan Associa- 
 tion v. Topeka, 20 Wall. 663, where Justice Miller said, "Given 
 a purpose or object for which taxation may be lawfully used, 
 and the extent of its exercise is in its very nature unlimited"; 
 concede also, as a matter of logical necessity, that no practical 
 limitation of the taxing power can be made effective by courts, 
 so long as they hold with the United States Supreme Court 
 "that the judicial power cannot inquire into the intentions of 
 congress in imposing a tax, and that, if injustice is done, the 
 only remedy is an appeal to the legislative power that has in- 
 flicted it"; concede, too, that where present constitutions are 
 silent, as most of them are in fact, on the subject of inheritance 
 and succession taxes, estates are in no wise protected by consti- 
 tutional or other provisions relating to the exercise of the tax- 
 ing power, but may be cut as deep as the legislature will, even 
 though estates consist of bonds or legal tender notes not other- 
 wise taxable; concede, I repeat, as above set forth, and the 
 further concession must be made that, often as courts are men- 
 tioned as the bulwark of privilege, true as it often, and indeed 
 generally, is that they are so, it is none the less true that so 
 
 *This concession is much strengthened by the further one, repeatedly 
 made by the supreme court of the United States, "that the inhibition 
 against taking private property for public purposes, without compensation, 
 contained in the Constitution of the United States, does not extend to 
 state legislation, but is restricted to the legislation of congress." Opinions 
 of Justices, 58 Maine, 604-5. 
 
HERTIG ON TAXATION. 61 
 
 far as any legal obstacle, or doctrinal protection of American 
 jurisprudence is concerned, the glittering bait of the entire 
 wealth of the United States and of the several states, is sus- 
 pended in easy reach of the people through their taxing powers, 
 suspended, that is, with one tolerably important exception, 
 namely, such property as may be protected in whole or in part 
 against taxation by the doctrine of the United States Supreme 
 Court put forth in the ancient and celebrated case of Dart- 
 mouth College v. Woodward (4 Wheat. 518), wherein the in- 
 hibition of the federal Constitution on the states against im- 
 pairing 'the obligation of contracts" was given a construction 
 which enabled the late tax commission of Minnesota to saj 
 truthfully (Report, p. 53) that the court "has never rendered a 
 more unpopular decision than when it held that a state legis- 
 lature may, unless restricted by a constitution, contract away 
 the sovereign power of taxation." But many a limitation has 
 already been engrafted on the Dartmouth-College case, and 
 though, speaking from the standpoint of routine law and the 
 custom of the supreme court, it is not probable that that case 
 will be formally overruled, there is an abundance of positive 
 artillery in the legal arsenal to overcome its negative resistance, 
 whenever the people shall see fit to make a serious matter of the 
 same. 
 
 I doubt not the foregoing paragraph will seem to many 
 American readers as novel in its conclusions of law and fact, 
 as it undoubtedly will, should he read it, to W. E. H. Lecky, 
 widely known in this country as the author of Rationalism in 
 Europe, and to a less extent by other works. In his pessimistic 
 book, Democracy and Liberty, (two vols., New York, 1896), 
 Lecky sees that "serious clouds seem to hang on their [our] 
 horizon" as on democratic horizons everywhere. He is alarmed 
 over corruption in our politics and that acquiescence therein 
 ''which is worse than corruption." In his opinion, we should 
 hot have so acquiesced, under penalty of long ago shooting 
 Niagara, "if it were not that our admirable written Constitution 
 [the federal], enforced by a powerful and vigilant Supreme 
 Court, had restricted to small limits the possibilities of mis- 
 government. All the rights that men value the most are placed 
 beyond the reach of a tyrannical majority. * * * No per- 
 son can be deprived of life, liberty, or property without due 
 process of law. All the main articles of what British statesmen 
 would regard as necessary liberties are guaranteed, and prop- 
 erty is so fenced round by constitutional provisions that con- 
 fiscatory legislation becomes almost impossible. No private 
 property can be taken for public use without just compensation, 
 
62 HERTIG ON TAXATION. 
 
 and the federal Constitution contains an invaluable provision 
 forbidding any State to pass any law impairing the obligation of 
 contracts. The danger of partial or highly graduated taxation 
 voted by the many and falling on the few has been, in a great 
 measure, guarded against." **'*!, 116-17. And the 
 above quotation shows why Lecky will find my conclusions 
 novel. 
 
 There is no doubt that any sudden and radical departure 
 from present practice in taxation and looking toward quick 
 realization of its foregoing mentioned possibilities, would call 
 out tremendous resistance on the part of interests adversely 
 affected; no doubt such resistance would take on novel and 
 surprising forms; no doubt, too, that many courts would sound 
 a piteous note of surprise, and hedge against results with nimble 
 inconsistency, if the people should quickly and seriously take 
 their present word on taxation to the full extent of its letter 
 and of its manifest implications. That, however, is 'not my 
 concern: I take taxation as I find it in official practice, in judi- 
 cial sanction, in the "promise and potentiality" of what it may 
 bring forth, in what, taking its facts and possibilities as so found, 
 I conceive it ought to, and must, bring forth, or to put it philo- 
 sophically, what it will bring forth. It is for others to hedge 
 and palter, if I have made visible the hitherto "unseen liga- 
 ment" which was pressing them to consequences they -could 
 not foresee, and which consequences I make bold to assert they 
 cannot now avoid. I do not like a parasitic paternalism we 
 already have it: I do like, as submissive to, and interpreter of, 
 the spirit of my time, an individualized and enlightened pater- 
 nalism we need for it the New Jurisprudence and the Civil 
 Nation, which are to each other as authoritative voice and ful- 
 filling organism. 
 
CHAPTER V. 
 
 Conception of legal liberty constantly changing Genuine individualism 
 holds it wrong to tax A for educating B's children Auberon Herbert 
 on state-given education quoted to show how far we are from real 
 individualism Strict individualism, as a dream, less subject to jar- 
 ring collision with fact than the spurious individualism of Wells and 
 others Huxley justly concludes that individualism logically ends in 
 theoretical anarchism Neither the genuine nor the spurious individual- 
 ism has any standing in the field of taxation Legislatures and judges 
 alike drifting toward extension of state control Madison's veto and 
 our building an isthmian canal as polar opposites Break-down of in- 
 dividualism in tax propositions of its choice Judge Cooley's lamentable 
 fall from the Wells standpoint. 
 
 Now, the conception of legal liberty, of that liberty which 
 the public should permit the individual to enjoy with respect 
 to his person and his property, is constantly changing, is now, 
 taking the modern world by and large, so discordant, so varied 
 and contradictory that, described in a general sense, such con- 
 ception may be said to reflect mental and emotional anarchy 
 prevalent enough in the modern world not only as to this, but 
 also as to some other important conceptions. Strict individ- 
 ualism is limited to a handful of doctrinaires here and in Europe ; 
 in neither country has it in average sentiment or in the statute 
 book any effective support. How far average American senti- 
 ment is from strict individualism, may be easily and strikingly 
 shown by giving echo to the voice of one crying in the wilder- 
 ness, and letting it mark its own contrast with the average 
 voice and the average present condition. Mr. Auberon Herbert 
 is a very intelligent and well-meaning Englishman, a clever 
 writer, and, except when his voice is grossly out of tune with 
 the times, a man to be heard with earnest attention. I have 
 seen no other article on the Boer war from English or other 
 sources quite so impartial and judicial as one from his pen. 
 Herbert is^ moreover, an extreme individualist, and does not 
 believe in enforced contributions, "proportional" or otherwise. 
 
04 HERTIG ON TAXATION. 
 
 but in so far as he believes in a state, believes in one supported 
 by voluntary contributions. Now it is his voice that I have 
 chosen to accent the contrast between the real thing in individ- 
 ualism and the make-believe individualism of poor old dry-as- 
 dust Cooley, of Wells, of preacher, professor, politician, and 
 average citizen. Listen to Herbert on and against state-given 
 education: 
 
 "The greatest of all reasons [against it is that] you must 
 not take money from A to pay for B, [which reason] is the 
 foundation of all just dealing between man and man." We are 
 so accustomed to the fact that the bachelor, the spinster and 
 other childless persons pay school taxes without discrimination 
 or abatement, that their doing so seems almost as natural and 
 as little in need of justification as their payments to butcher 
 and baker on individual account. The effective majority, re- 
 joicing in its power to exact and believing in the utility of the 
 exaction, has no ears to listen to any question of abstract right 
 that may underlie such enforced contribution. "If," as J. B. 
 Proudhon pointed out, "property is of natural right, as the 
 Declaration of 1793 says, all I have by virtue of that right is 
 as sacred as my person; it is my blood, my life, my own self: 
 whoever touches it offends the apple of my eye. My 100,000 
 francs of income are as inviolable as the grisette's daily wage 
 of three-quarters of a franc; my luxurious apartments as much 
 so as her stuffy room in the garret." Modern necessities, real 
 or fancied, of taxation make short work of natural and other 
 individual rights, as Wells plaintively admits in telling that 
 taxation in Massachusetts "administered by phenomenally hon- 
 est and competent men" has educed the grave assertion by 
 "the acknowledged representative" of her system, as worked in 
 Boston, that "the individual person has no inalienable rights 
 except that to his own righteousness!" Listen now further to 
 Herbert on state-given education: 
 
 "Real intelligence will come to a nation by the process of 
 educating itself, not by being educated by an external machin- 
 ery set up by an enterprising * * * [government]. It is 
 the process of carrying out education by every sort 'of volun- 
 tary association, under every kind of difficulty, and at the cost 
 of many sacrifices that really teaches and influences the people 
 of a country. Your state pot of educational whitewash with 
 which all the children of the country are daubed, whilst you 
 contract to pay so much per thousand for the daubing, will 
 never do more than touch the outside of the nation, morally or 
 even intellectually. A state system of education must be, by 
 the necesity of things, showy, superficial, and vulgar, without 
 
HERTIG ON TAXATION. 65 
 
 soul or truth in it. The American people, like * * * [the 
 English], will never rise to their true proportions as long as 
 they are cursed by it. It is in reality a gigantic enforced char- 
 ity that is without any of the healing virtues of charity, and is 
 always pretentiously denying the vices of its origin. The real 
 living and quickening effects of education can only exist as the 
 parents in every village undertake the thing with their own 
 hands and with their own resources. Then education, however 
 deficient in the outside grandeur of a political system, will be- 
 come a real thing, a flame touching the hearts of the children 
 just because it touches the hearts of the parents. There is" a 
 great sympathy in these matters. But as things are, how can 
 it be a real thing now that the politicians have got hold of it; 
 that the rich pay for it; that the Dissenters have made it tneir 
 established church; that a conceited central office undertakes 
 to think for a whole nation? * * * The whole thing is a 
 standing disgrace to our intelligence as a nation; the biggest 
 example perhaps of that hocus-pocus which our people allow 
 themselves to accept because it comes to them with an unworthy 
 bribe of money." A Politician in Trouble About his Soul 
 (London, 1884), pp. 206-7. 
 
 Said I not the voice of one crying in the wilderness? Yet 
 Herbert has admirers who believe him to be a statesman, but 
 handicapped by living some centuries in advance of the world. 
 I quote him merely for a case of individualism in such extreme 
 opposition to current practice and sentiment as to need no argu- 
 ment to show that it has no leg to stand upon in our times, if 
 ever; quote him to show the honest feeling of real individual- 
 ism when brought face to face with that piece of genuine pater- 
 nalism, the public-school system, dear to our hearts; quote him 
 to emphasize my conviction and proof that the mixed and 
 make-believe individualism of Cooley, Wells and others, while 
 nearer to us as reflecting our transition and anarchic stage, is 
 no more possible as our permanent port and anchorage tha-n 
 Herbert's sturdy and thorough-paced individualism. Indeed 
 Herbert, clinging to an almost indefinitely remote, if riot wholly 
 impractical civil polity, has firmer anchorage than Wells or any 
 of the quasi-individualists of to-day: the fixed and far-off 
 dream-ship of extreme individualism rides safe from the shock 
 of jarring fact; the leaky craft that carries the hopes and for- 
 tunes of current individualism is not without sound timbers, 
 but is daily subject to further stress and to a leakage not to be 
 caulked against with dreams and lying definitions, a leakage 
 which shall not stop short of complete water-logging, and the 
 bringing aboard of a new crew to make partial salvage worse, 
 
66 HERTIG ON TAXATION. 
 
 perhaps, in the eyes of owners and present crew, than going 
 clean to the bottom. 
 
 It was well observed by Huxley, in his Essay on Govern- 
 ment, that "individualism, pushed to its logical extreme, must 
 end in philosophical anarchy," the theoretical anarchism, which, 
 with keen eyes for the imperfections of government and no eyes 
 for the permanent limitations of human nature, makes its re- 
 ligion out of an assumed perfectibility of human nature, and 
 sets up an ideal of earthly human society without government, 
 an ideal gravely asserted, in the Qth edition of the Encyclo- 
 pedia Britanica, to be one "to which the highest religion and 
 philosophy looks forward as the goal of man!" Very sober 
 and very authoritative thinkers have had at least to sigh over 
 the necessity of government. James Wilson, one of the fathers 
 of the Constitution, and who became a justice of the Supreme 
 Court of the United States, said, '"Government is, indeed, highh 
 necessary; but it is highly necessary to a fallen state." And 
 that justly celebrated collection of essays by Hamilton, Mad- 
 ison and Jay, called The- Federalist, written arid published, we 
 may say, as campaign documents to aid in ttie ratification of the 
 Constitution, asks, "But what is government itself but the great- 
 est of all reflections on human nature ?" :;: 
 
 Now extreme individualism, consistent, perhaps, in logic, 
 impossible of realization, dovetails, as it were, with half-way, 
 or quasi, individualism, which may be described as inconsistent 
 in logic, possible in realization: the latter exists in opinion and 
 has corresponding embodiment in civil society. We have 
 seen the untenable case it makes for itself in the field of tax 
 definitions; it is entirely pertinent to our immediate subject to see 
 if it has any strongly-entrenched position in the field of taxa- 
 tion. We shall find that it has none. 
 
 It would be easy to show that the general current of Ameri- 
 can jurisprudence is directed away from strict individualism, 
 and flows with ever-growing increments toward the more com- 
 plete merger of individual person and individual right into state 
 control. Legislature-made law and judge-made law have kept al- 
 most even speed with each other in drift toward that goal a 
 statement subject only to the trifling correction that the judiciary 
 has not unfrequently, in the name of paramount law, made the 
 legislature turn back from short cut and unconstitutional chute. 
 Willing or unwilling witness, they all tell the same story. Thus 
 Wells: "The idea of using the power of taxation for other pur- 
 
 *See on this and kindred subjects. my forthcoming book on Anarchism 
 and Counter-Anarchism. 
 
HERTIG ON TAXATION. 67 
 
 poses than that of obtaining revenue for defraying the necessary 
 expenditures of the government, was one hostile at the outset to 
 all the beliefs and habits of thought of the American people; 
 was totally incongruous with the social and political system which 
 they instituted and expected." This, it is true, is somewhat 
 overdrawn. James A. Garfield said in substance that the 
 fathers made arguments in favor of protective tariffs to which 
 the protectionists ot his own day had added nothing new; and 
 the reader, to find some warrant for Garfieid's statement, need 
 not go beyond my own brief reference ('pp. 19 and 20, above) 
 to the debates in the first congress under the Constitution. In 
 1817, James Madison, often called ''the Father of the Constitu-- 
 tion," vetoed a bill for internal improvement, which as president 
 he could not approve, because he thought it unconstitutional, 
 though he looked with favor on the improvement itself and 
 would gladly have approved the bill if it could have been pre- 
 sented to him after proper amendment to the Constitution. No 
 such amendment has been adopted, and such has been the change 
 in practice and theory that for a long time no amendment on 
 the point has been thought necessary. What a long stride from 
 the strict theory of the use of public moneys, as held by Madi- 
 son, Monroe and others, to the present theory and practice, under 
 which the actual expenditure by the United States of vast sums 
 for improvement of home rivers and harbors, and the proposed 
 expenditure of two hundred million dollars abroad for building, 
 owning and operating an isthmian canal, are favored or opposed 
 with hardly so much as a bare reference to the Constitution! 
 When the supreme court of the United States began to hold that 
 the state, notwithstanding the individual ownership of grain ele- 
 vators, could regulate their charges, the ruling was based on the 
 ground that in the case in hand the elevator men sat at the re- 
 ceipts of tolls, "in the very gateway of commerce," in a great 
 commercial mart, and by such fact of location, had such unfair 
 advantage of the public that the public ought to have the right 
 to regulate. Munn v. Illinois, 94 U. S. 113. The same emi- 
 nent tribunal has since gone to the further length of holding that 
 a statute of North Dakota does not contravene the Federal 
 Constitution, though that statute operates under local physical 
 conditions, making it entirely practicable for every grain owner 
 to be his own warehouseman, though it prescribe a maximum 
 storage rate which may not be remunerative, though it make 
 what elevator it will a public warehouse imperatively bound to 
 receive and store grain, even where the warehouseman may 
 have built and intended to operate, only for handling his own 
 grain, necessary for use in his individual business. Brass v. 
 
68 HERTIG ON TAXATION. 
 
 North Dakota, 153 U. S. 391. Another case this where it is 
 appropriate to quote the dictum of the Boston representative 
 of Massachusetts taxation, "the individual person has no in- 
 alienable rights except that to his own righteousness." Yet, the 
 Munn case, which served as starting-post for the Brass case, 
 was itself, when first decided, considered a wide, a very wide, 
 departure from individualism; how wide was concisely stated by 
 my friend, V. B.Denslow, in the American Law Register (N. S.), 
 x yi- 539 : "The warehouseman enjoys no franchise, as does a 
 railroad company; has no legal monopoly, as had the London 
 Dock Company, in Aldnutt v. Inglis, 12 East, 527; is liable to 
 competition from whomsoever chooses to invest his capital in 
 storing grain; it must be remembered that no navigable waters 
 are appropriated to his private use; as in the case of wharf own- 
 ers; that no exercise of the right of eminent domain is pint forth 
 in his behalf by the state to enable him to build his warehouse, 
 as in the case of canals and railroad companies ; that no improved 
 track is furnished at public cost for his use, as in the case of cab- 
 men; that no right arises by presumption or otherwise, as in the 
 case of ferrymen at common law to restrain a rival from enter- 
 ing into the same business; * * * that he is not even in- 
 corporated;" (and that in short, there is no plain and palpable 
 link between his business and state interference with the same.) 
 
 The individualist propositions which Wells endeavors to for- 
 tify most strongly are two, (i) his personal doctrinaire and 
 lonesome proposition that, as Seligman puts it for him, ''a so- 
 called tax which looks to anything besides the securing of 
 revenue is not a tax, but. an unconstitutional exercise of the tax- 
 ing power;" (2) the more widely held proposition, which is. as 
 phrased by himself, "All taxes or enforced contributions levied 
 by a state in virtue of its sovereignty should be solely (singly) 
 and exclusive?*/ for public purposes." SELIGMAN, Essays in 
 Taxation (New York, 1895), P- 2 ^9 \ WELLS, Theory and' Prac- 
 tice of Taxation, 287. 
 
 Now, in the first proposition, Wells abandons the world of 
 reality for the world of fiat and of doctrinaire dreams. "Taxa- 
 tion for reform," like all powers, as well of nature as of govern- 
 ment, is potent for mischief in unskilled or otherwise inappro- 
 priate hands; but from the very abuse of a particular power we 
 may argue to its beneficent use, and certainly its existence is 
 equally presupposed in use and abuse. Besides, the human will, 
 organ of human sentiment, has a logic of its own, which consists 
 in taking or making a path to> its ends, and in leaving to word- 
 mongers the subsequent burden of naming or nicknaming 
 such path. Every individualist, in virtue of being so, or, as the 
 
HERTIG ON TAXATION. 69 
 
 classicists love to say, ex m termini, concedes grudgingly to 
 government whatever power he does concede. His concessions 
 are grudging in proportion to the intensity of his individualism, 
 until, arrived at the extreme summit and peak of individualism, 
 which extreme is theoretical anarchism, he bluntly refuses to 
 concede to government any powers, holding all its powers to be 
 spurious in title and abominable usurpation in practice. Half- 
 way or quasi-individualists, like Wells, are in perpetual self-con- 
 tradiction. They would be governed, and yet not governed; they 
 refuse to accept sovereign governments as they are in the 
 word of reality, and yet are so far attracted toward them as to 
 lack somewhat in wing-and-will power for soaring to the dreamy 
 heights of theoretical anarchism with its no government and its 
 sweet paralysis of human nature. Cooley as a judge, helping 
 with others to exercise the sovereignty of government, must 
 from that very fact compromise with his quasi individualism 
 much oftener and more deeply than Wells. A jurist is consti- 
 tutionally incapable of disregarding continuously the facts about, 
 and especially the facts behind him. Chief Justice Taney, suc- 
 ceeding Chief Justice Marshall, may occasionally run, or try 
 to, a chute into which Marshall would not have entered; but 
 Taney can no more quit long the main channel which Marshall 
 dredged, filled and buoyed than river pilot can disregard his 
 "marks" when there is no inundation. Cooley, therefore, must 
 fail Wells when the latter needs him most. In earlier days, 
 when saloon-keepers first asked. "How can this be a free country, 
 when you make us take out a license and not other merchants? 
 How does the state constitution protect us with its requirement 
 of equal and uniform taxation, or taxation in proportion to the 
 valuation of property, when you tax us on property and make us 
 pay also a license?" the seeming awkwardness of these ques- 
 tions, very awkward, indeed, if declaration of independence and 
 constitutional catch-words had anything like the meaning attached 
 to them in the mind and heart of the people was promptly and 
 judicially overcome with answer and corresponding judgment: 
 "Oh, your licenses are not imposed by way of tax, nor by the 
 taxing power; they are imposed by, and in the exercise of 'the 
 police power/ which is one of those little incidents of sovereignty 
 rot generally mentioned in Declarations of Independence and 
 Bills of Rights. States may die, but the police power never 
 surrenders. Foreign yokes may be thrown off, but the police 
 power, never!" 
 
 Such grounds for sustaining liquor licenses passed muster 
 reasonably well; but to stretch the police power into covering 
 all manner of licenses, or to compress all special taxes into a 
 
TO HERTIG ON TAXATION. 
 
 category which the police power would cover without stretching 
 was too much for the logic, and incidentally for the stomach, 
 of the American judiciary; hence eventually most courts took the 
 broad ground that where license fees or like special taxes are 
 plainly imposed for purposes of revenue [and where the notion of 
 police regulation is too remote for common sense to accept], they 
 are taxes imposed by and in the exercise of the taxing power [and 
 if there is a constitutional mandate to tax in proportion to value, 
 or by uniform rate on valuation, then such taxes must either 
 be declared unconstitutional, or some other way than appeal to 
 the police power must be found for declaring them constitu- 
 tional.] As the court said in Glascow v. Rouse (p. 52, above), 
 "Every burden which the state imposes upon its citizens with 
 a view to revenue, to carry on the operations of the state gov- 
 ernment, or for the support of municipal corporations, is a 
 branch of the power of taxation, whether imposed under the 
 name of a tax or some other designation." 
 
 As above said, Cooley fails Wells when the latter needs him 
 most; and as above intimated, the reason is that Cooley as a 
 jurist is bound, or under philosophical necessity, to recognize too 
 many established facts contributing to the meaning of tax and 
 taxation to admit that a tax, for other than revenue is not a 
 tax, "but an unconstitutional exercise of the taxing power." The 
 highest art of the definition-framer is to remember, when fram- 
 ing, what he really knows about the subject matter of his defini- 
 tion, and what on cross-examination he would cheerfully 
 admit. Cooley could lamentably fail in this respect; but he 
 cannot fail to affirm or deny what comes to him in the form of a 
 legal proposition, stripped of latent disguise. He admits the 
 police power, has pondered over and perhaps helped to make the 
 vagueness of its limitations. He cannot help knowing and de- 
 claring that there may be a police power within the taxing 
 power proper, as well as a certain taxing power within the forms 
 of the police power. He knows and quotes the vigorous claim 
 which Justice Story makes in Sec. 965 of his Commentaries on 
 the Constitution that the taxing power includes other powers :* 
 knows, too, that later practice sanctions wide claim. He ad- 
 
 *Justice Story says in section mentioned : "The absolute power to 
 levy taxes includes the power in every form in which it may be used, 
 and for every purpose to which the legislature may choose to apply it. 
 This results from the very nature of such an unrestricted power. A 
 fortiori, it might be applied by congress to purposes for which nations 
 have been accustomed to apply it. Now, nothing is more clear from the 
 history of commercial nations, than the fact that the taxing power is 
 often, very often applied for other purposes than revenue. It is often ap- 
 plied as a regulation of commerce. It is often applied as a virtual pro- 
 
HERTIG ON TAXATION. 71 
 
 mits, therefore, "that other considerations than those which re- 
 gard the production of revenue are admissible, and that regu- 
 lation may be kept in view when revenue is the main and primary 
 purpose" ; that ''the right of sovereignty to look beyond the im- 
 mediate purpose to the general effect, neither is nor can be dis- 
 puted." Taxation (2nd ed.) p. 587. Nay, Cooley will do more 
 than admit; he will even advocate. His later writings (essays 
 and occasional pieces) betray a curious note of apprehension, 
 as it were a dawning consciousness that there are forces in 
 society that will by no means keep within the bounds contem- 
 plated for them by humdrum, quasi- individualistic, judge-made 
 optimism. The pride and pomp of the Louisiana lottery stir his 
 soul in its ethical depths. If ever before he inclined to divorce 
 the taxing from the police power, he will now make penitent 
 amends; he will even gladly see the United States government, 
 under guise of a revenue law, regulate the domestic affairs of 
 Louisiana by taxing her lottery to death! Atlantic Monthly, 
 April, 1892. Wells can only deplore this lapse of "high judicial 
 authority" that would "employ federal taxation for the crushing 
 out of state lotteries with the absurd accompaniment of no 
 revenue (taxes); for if the desired object is attained, the payment 
 of taxes and the procurement of revenue will be prevented. "- 
 Theory' and 1 Practice, 262. He shudders in detailing the over- 
 shadowing height to which such power might shoot, if once its 
 swaddling bands were cut by the precedent which Cooley's "high 
 judicial authority" stood ready to sanction, if congress would 
 but do its part. It could destroy "nearly every faculty or power 
 now belonging to and exercised by the several states"; could 
 regulate or suppress not lotteries alone, but "houses of prostitu- 
 tion, gambling and liquor saloons, opium 'joints', and other 
 haunts of vice now under the control and supervision of the po- 
 lice powers of the states." So it could, and so it can, if it but 
 dares to do, and finds acquiescence. We are so concerned over 
 wire-drawn and wide-mesh definitions and limitations, loose 
 
 hibition upon the importation of particular articles, for the encouragement 
 and protection of domestic products and industry ; for the support of 
 agriculture, commerce and manufactures (Hamilton's Reports on Man- 
 ufactures, in 1791) ; for retaliation upon foreign monopolies and injuri- 
 ous restrictions ( * * Jefferson's Report on Commercial Restrictions, 
 in 1793 ; [vol.] 5, Marshall's Life of Washington, ch. 7, : * ; 
 
 [vol.] i, Wait's State Papers, 422, 434) ; for mere purposes of state 
 policy and domestic economy; sometimes to banish a noxious article of 
 consumption; sometimes as a bounty upon an infant manufacture or 
 agricultural product ; sometimes as a suppression of particular employ- 
 ments ; sometimes as a prerogative power to destroy competition and 
 secure a monopoly to the government. * * Smith's Wealth of Nations, 
 p. 5, ch. 2, art. 4." 
 
HERTIG ON TAXATION. 
 
 generalizations and trite maxims that we seldom have room or 
 time for the very simple truth that to do and get your doing 
 acquiesced in is the sum and substance of all government. 
 
 The second fortified proposition of the Wells individualism, 
 taxes must be for public purposes only, is, it may be conceded, 
 well taken, in so far as it is not an identical proposition, in so 
 far as Caesar's tax and Caesar's purpose are not alike branded 
 public by the very imprint of Caesar's stamp. But in so far as 
 it is not an identical proposition, in so far as public pur- 
 pose does not necessarily and inseparably inhere in the' 
 word tax, it does not make for the Wells individualism, 
 but for the Hertig paternalism. Here Wells and I pur- 
 sue the same ideal; only he does not know what to do with 
 the object of his choice, while I but that is a different story. 
 Here he is not under the cruel necessity of parting company 
 with his friend Cooley, but leans on him heavily and on his 
 opinion, as the organ of the supreme court of Michigan, in Peo- 
 ple v. Township, 20 Mich. 452. Said Cooley in that case : "In 
 respect to certain things of absolute necessity to civilized 
 society, the state is precluded either by express constitutional 
 provision or by necessary implication, from providing for at all, 
 and which are thus left wholly to the fostering care of private en- 
 terprise and private liberality. [Express constitutional provisions 
 last only until they are changed; and neither 'necessary' nor un- 
 necessary 'implications' preclude the people from attempting in 
 their associated capacity as a state whatever they shall choose to 
 attempt. The only limitations on attempt and accomplishment 
 are human nature and human environment another simple 
 truth which timidity would cover with the drapery of bad meta- 
 physics.] * * * Certain professions and occupations in 
 life are * * essential, but we have no authority to employ 
 the public money to induce persons to enter them. [True in a 
 sense, but not vitally nor necessarily true. We have the 
 authority to confer whenever it shall seem to us sufficiently 
 essential to do so. We employ the public money and promise 
 commissions as officials to young men to induce them to enter 
 upon the profession of arms at West Point and Annapolis. There 
 is many an abuse, direct or indirect, in this kind, fruit of parasi- 
 tic paternalism, which the right paternalism will correct.] The 
 public necessity for an educated, skillful physician in some par- 
 ticular locality may be great and pressing, yet, if the people 
 should be taxed to hire one to locate there the common voice 
 would exclaim that the public moneys were being devoted to a 
 private purpose. [It is conceded that penitentiaries occupy 'par- 
 ticular' localities, yet the common voice does not exclaim that 
 
HERTIG ON TAXATION. 73 
 
 the public moneys paid to penitentiary, physicians are being de- 
 voted to a private purpose. The educational authorities in Chi- 
 cago supervise their schools, all in particular localities, and 
 have at times been paternal enough to employ physicians to go 
 there at stated times and medically inspect the pupils. I accept 
 as perfectly valid the opinion of grade teachers there that 
 the expenditures in that behalf were foolish, yet they were un- 
 doubtedly for a public purpose. I am not captious; I am aware 
 that Cooley, though he does not say so, means, by the phrase "in 
 some particular locality," in some particular community enjoy- 
 ing the usual American privilege of local self-government; but 
 by "necessary implication," he tacitly assumes two kinds of pub- 
 lic necessity, the kind that does and the kind that does not war- 
 rant the expenditure of public funds ; his thought stalks in very 
 loose-jointed armor; and that fact affords an opportunity to ac- 
 cent the further fact that he misses throughout this discussion 
 what ought to be its fundamental underlying proposition, un- 
 consciously suggested in the very mention of his "express con- 
 stitutional provisions" and "necessary implications," to the 
 extent that the public is its own master, it is its own judge as 
 to what is and what is not such public necessity as to justify 
 and demand the expenditure of public moneys. For the rest, 
 Cooley's illustration from the need of a physician is hardly a 
 happy one ; it sometimes does happen in a new community that a 
 good young physician is attracted or held for the time being by 
 some salaried office, such as town physician or the like, to which 
 the local authorities affix greater compensation than they would 
 otherwise. Thus even where the public is not entirely its own 
 master it may covertly make a public purpose of what superior 
 authority would regard as a private one.] The opening of a new 
 street in a city or village may be of trifling importance as com- 
 pared with the location within it of some new business or manu- 
 facture, but while the right to pay out the public funds for the 
 one would be unquestionable, the other by common consent is 
 classified as a private interest which the public f can aid as indi- 
 viduals, if they see fit, while they are not permitted to employ 
 the machinery of government to that end. [Another unlucky 
 illustration! The good people of St. Cloud, Minnesota, not to 
 mention many another town, can point to the ashes of a saw- 
 mill and to the marks of some other private enterprises which, 
 in their corporate capacity, they were permitted to, and did, aid 
 largely out of a so-called "bonus fund." It is one thing to say 
 what in the technical law of a particular state at a particular 
 time was a "public purpose;" herein Cooley is right; it is en- 
 tirely a different thing to affix "common consent" to such doc-' 
 
74 HERTIG ON TAXATION. 
 
 trine of technical law and imply that it is universal and perma- 
 nent; herein Cooley is wrong, and indeed from the view-point of 
 any comprehensive judgment, a weak blunderer. Like many 
 another judge, he confounds what is, and especially what may 
 be, with what he thinks ought to be. To say what is a public 
 purpose is a judicial function only to the extent that the public 
 has not otherwise authoritatively declared what is such a pur- 
 pose. Where the legislature has power and uses it, judges have 
 decided over and over again that they cannot question the legis- 
 lative discretion nor the legislature's motives. The same princi- 
 ple of decision must of necessjty be applied to public purpose 
 whenever the public shall choose to limit judicial discretion in 
 that behalf.] * * * 
 
 "By common consent, also, a large portion of the most urg- 
 ent needs of society are relegated exclusively to the law of de- 
 mand and supply. It is this in its natural operation and without 
 interference of the government that gives us the proper propor- 
 tion of tillers of the soil, artisans, manufacturers, merchants, and 
 professional men, and that determines when and where they 
 shall give to society the benefit of their particular services. How- 
 ever great the need in the direction of any particular calling, the 
 interference of government is not tolerated, because, though it 
 might be supplying a public want, it is considered as invading 
 the domain that belongs exclusively to private inclination and 
 enterprise. We perceive, therefore, that tbe term public pur- 
 pose, as employed to denote the objects for which taxes may be 
 levied, has no relation to the urgency of the public need or to the 
 extent of the public benefit which is to follow. It is. on the other 
 hand, merely a term of classification to distinguish the objects 
 for which, according to settled usage, the government is to pro- 
 vide, from those which, by the like usage, are left to private in- 
 clination, interest, or liberality." 
 
 On the foregoing, which is the last paragraph quoted by 
 Wells from Cooley's opinion in People v. Township, my ob- 
 servations shall, be confined to two points. If Cooley had said 
 that the law of demand and supply gives us the best obtainable 
 proportion of farmers, tradesmen and the like, such declaration 
 would have been less objectionable than his chosen one, that 
 said law gives us "the proper proportion," etc. Besides he ig- 
 nores those trades union measures which in some cases restrict 
 the number of apprentices, and consequently of workmen, in a 
 given calling with almost the efficiency of a positive and well- 
 executed law emanating from state authority. The over-crowd- 
 ing of professions, admitted to be a fact, is but one of the nu- 
 merous instances wherein the law of supply and demand does 
 
HERTIG ON TAXATION. 75 
 
 not give a proper proportion. The shallow optimism which in- 
 spired Cooley to write "proper proportion" precluded of course 
 any consideration by him of remedy for what he thought to be 
 the soundest health. A discreet paternalism will not squander 
 public funds for the creation of parasitic opportunities; these in- 
 deed it will cut off; but,, it will create opportunities for social 
 units of convenient size to sustain themselves in self-respect and 
 decent comfort; with these, gradually create a public opinion 
 which shall draw to the abundant measure of the new oppor- 
 tunities the very best of young brain and young blood to demon- 
 strate by sturdy and continuous individual development, 
 through social development, that the new paternalism will have 
 come to stay, and to demolish many an idol of den, tribe, mar- 
 ket-place and theatre, to their votaries seeming greater perhaps 
 than Diana of Ephesus did to hers. Good people, don't begin to 
 bawl socialist at me: I know too well the tenacity with which 
 average human nature clings to and chases, a hundred dollars, 
 clings to this, that and the other tangible thing with a yearning 
 that feels in the possession of such thing as its very own the 
 sweetest, fondest ideal realized know these and a thousand 
 other things that enter into a reasonably full inventory of human 
 nature know them too well to entertain for one moment the 
 idle dream of an enforced, an universal collectivism. It takes all 
 kinds of people to make a world, takes all manner of holdings to 
 exhaust the meaning and the fact of property, takes the old and 
 the new sorts and conditions of men to make the civil nation. 
 Since nobody else claims it, I put my hall-mark and a new mean- 
 ing on paternalism, and will show in other time and place its 
 fuller port and significance as rebuilt and launched by me. 
 
 It is sufficiently apparent from what I have already said that 
 Cooley's classification of "public purpose" as determined "ac- 
 cording to settled usage" is valid only as a matter of local tech- 
 nical law and of local usage, which is subject at any time to be- 
 coming unsettled or resettled by authoritative declaration of the 
 people. In fact Cooley himself felt the vagueness of his own, 
 and the difficulty of making any, line of distinction, having said 
 as Wells quotes him (Theofy and Practice, 289), that "there is no 
 such thing as drawing a clear line of distinction between pur- 
 poses of a public and those of a private nature." It is apparent 
 that a public, like any other purpose, may be inopportune or in- 
 discreet. The test then, does not lie in discretion or indiscre- 
 tion. In a despotism, the declaration of Caesar that a proposed 
 exaction shall be called a tax makes it so and makes its purpose 
 technically public, or in Austin's sense "legally just." It is 
 in no wise different where the people speak with full author- 
 
76 HERTIG ON TAXATION. 
 
 ity. I have said that in so far as the proposition, taxes must be 
 for public purposes, has any real meaning, it makes for my pa- 
 ternalism. Now, in the cases where our courts have held taxes 
 to be so only in name because not for a purpose which the judges 
 would consent to call "public/ the point on which they all turn 
 is that some individual is, or expects to be, unduly or dispro- 
 portionately benefited by them claims them for building a road 
 which he will own and operate or for building a factory for his 
 individual business. And the principle established by these cases 
 may be thus worded : Individualism, under "cover of tax-laws, 
 must not be permitted to prey on the public. This, as far as 
 it goes, is just my position; and certainly, whether it be regarded 
 as a self-imposed limitation of individualism or a limitation im- 
 posed by collective social consciousness, it is none the less .a 
 limitation and a proper one, entirely acceptable to any discreet 
 paternalism. 
 
CHAPTER VI. 
 
 The dictum of Justice Miller on the theory of our governments Austin 
 on the sanctions of constitutional law Where constitution unwritten, 
 sanctions "moral" only Moral sanctions explained by the collective 
 temper or conscience of the effective majority No unconstitutional act 
 is illegal when all the departments of government sustain it, and this 
 whether constitution is written or unwritten A true sovereign, whether 
 prince or people, is incapable of legal limitation People by amending 
 constitution could create fegal antinomy Effective limitation of written 
 constitutions lie outside them Legal profession as proximately deter- 
 mining our constitutions Police power from different standpoints. 
 
 All shades of individualism have this in common that they 
 are suspicious of government powers, look with alarm on their 
 possibilities even where conceding that those powers exist, and 
 that they should in some degree, be exercised. Hence the ap- 
 prehension with which Wells and individualists generally look 
 on the tremendous and as yet comparatively unused powers of 
 taxation which may be developed by federal and state govern- 
 ments in the United States ; hence the approval and anxious zeal 
 with which they quote the words of Justice Miller as organ of 
 the .supreme court of the United States in Loan Association v. 
 Topeka, 20 Wall. 655, "The theory of our government, state 
 and national, is opposed to the deposit of unlimited power any- 
 where." This sentence sounds well, and in a sense states a truth, 
 much of the same order as that stated in the proposition, all 
 plane surfaces are flat. All powers exercised under written 
 constitutions, by the very force of the term, written constitution, 
 bear the hall-mark "limited." Every grant connotes a limita- 
 tion; and every constitution is a grant, true when we say that 
 the Constitution of the United States confers only such powers 
 as it expressly or impliedly grants; equally true, when we say 
 technically that our American state governments have in full 
 measure every governmental power not forbidden them in the 
 federal Constitution nor limited by their respective state consti- 
 tutions. So also a limitation was expressed in the saying, "Rus- 
 
78 
 
 HERTIG ON TAXATION. 
 
 sia is a despotism tempered by assassination." The ultimates of 
 government and of jurisprudence are not very often nor very 
 well discussed by American judges; they have seldom needed to 
 discuss them for one thing; and, perhaps it should be added, a 
 latent cowardice in the greater number of them has not contribu- 
 ted to their competency in that behalf. 
 
 To estimate properly the true nature and extent of limitations 
 on taxing powers, or on any governmental powers in the United 
 States, one may examine with advantage constitutional limita- 
 tions as existing and understood in Great Britain. As they have 
 no constitution there, in our sense no written instrument call- 
 ed constitution whatever the British Parliament enacts in due 
 form of law is a valid and binding statute within British juris- 
 diction, until amended or repealed. It may be called uncon- 
 stitutional; it cannot be called illegal. Now, as Austin says: 'Tn 
 every, or almost every, independent political society, there are 
 principles or maxims which the sovereign [whether - absolute 
 monarch, governing oligarchy, or broad democracy], habitually 
 observes, and which the bulk of the society, or the bulk of its in- 
 fluential members, regard with feelings of approbation. Not 
 unfrequently, such maxims are expressly adopted, as well as 
 habitually observed, by the sovereign or state, but are simply 
 imposed upon it by opinions prevalent in the community. 
 Whether they are expressly adopted by the sovereign or state, 
 or are simply imposed upon it by opinions prevalent in the com- 
 munity, it [the sovereign, or state] is bound or constrained to 
 observe them by merely moral sanctions. Or (changing the 
 phrase) .in case it ventured to deviate from a maxim of the 
 kind in question, it would not and could not incur a legal pain or 
 penalty, but it probably would incur censure, and might chance 
 to meet with resistance, from the generality or bulk of the gov- 
 erned." [That is to say, where there is no written constitution, 
 it is the collective temper, or collective conscience, of the effect- 
 ive majority evidenced by maxims, professions of political faith, 
 judicial decisions and the like, that is the constitution; and practi- 
 cal constitutionality consists in keeping within the limit of what 
 that portion of the people composing or capable of composing an 
 effective majority will stand.] Hence, concludes Austin, "if a 
 law or other act of a monarch or sovereign number conflict with 
 a maxim of the kind to which I have adverted above, the law 
 or other act may be called unconstitutional (in that more gen- 
 eral meaning which is sometimes given to the epithet). For 
 example : The ex post facto statutes which are styled acts of 
 attainder, may be called unconstitutional, though they cannot be 
 called illegal. For they conflict with a principle of legislation 
 
HERTIG ON TAXATION. 79 
 
 which parliament has habitually observed, and which is regarded 
 with approbation by the bulk of the British community. 
 
 "In short, when we style an act of a sovereign an unconstitu- 
 tional act [in the more general import of the epithet], we mean 
 this : That the act is inconsistent with some given prin- 
 ciple or maxim; that the given supreme government has ex- 
 pressly adopted the principle, or, at least, has habitually ob- 
 served it; that the bulk of the given society, or the bulk of its 
 influential members [that is, its effective majority] regard the 
 principle with approbation; and that, since the supreme govern- 
 ment has habitually observed the principle, and since the bulk 
 of the society regard it with approbation, the act in question 
 must thwart the expectations of the latter, and must shock their 
 opinions and sentiments. Unless we mean this, we merely 
 mean that we deem the act in question generally pernicious; or 
 that, without a definite reason for the disapprobation which we 
 feel, we regard the act with dislike." 
 
 After the foregoing-quoted considerations on "unconstitu- 
 tional" in its more general sense, Austin passes to the scrutiny 
 of its "more special and definite" meaning, when the use of the 
 word "imports that the conduct in question conflicts with consti- 
 tutional law." And by the expression constitutional law Austin 
 means "the positive morality or the compound of positive moral- 
 ity and positive law, which fixes the constitution or structure of 
 the given supreme government, * * the positive mor- 
 
 ality, or the compound of positive morality and positive law, 
 which determines the character of the person or the respective 
 characters of the persons, in whom, for the time being, the 
 sovereignty shall reside; and, supposing the government in ques- 
 tion an autocracy or government of a number [the positive mor- 
 ality, or the compound of positive morality and positive law], 
 which determines moreover the mode wherein the sovereign pow- 
 ers shall be shared by the constituent members of the sovereign 
 number or body. 
 
 "Now," continues Austin, "against a monarch properly so- 
 called, or against a sovereign body in its collegiate and sovereign 
 capacity [and the people in their collegiate and sovereign ca- 
 pacity are a sovereign body] constitutional law is positive, mor- 
 ality merely, or is' enforced merely by moral sanctions: though, 
 as I shall show hereafter, it may amount to positive law, or may 
 be enforced by legal sanctions, against the members of the body 
 considered severally. [The positive law that may be enforced 
 by legal sanctions, such as impeachment, removal from office, 
 indictment for malfeasance, and the like, against the members 
 of the sovereign body considered severally, applies only to the 
 
80 HERTIG ON TAXATION. 
 
 occasional officer or other active member of the governing body 
 who may commit a breach of constitutional law. Where the 
 different departments of the government aid, abet and sustain 
 each other in such breach, then, as well under our written, as un- 
 der British unwritten, constitutions, there is legality hand in 
 glove with unconstitutionally. In other words governing bodies 
 ' rnpv with legal impunity transcend written or unwritten consti- 
 tutional limitations. We are entirely familiar with the fact and 
 the principle that no penalty attaches to congress or to state 
 legislatures for passing unconstitutional measures; we need ex- 
 tend the principle, or rather follow it, a little further to see how 
 impregnable is Austin's position, and with what slight changes 
 in wording it applies as well to our governments as to that of 
 Great Britain.] The sovereign for the time being, or the pred- 
 ecessors of the sovereign, may have expressly adopted, and ex- 
 pressly promised to observe it [constitutional law] . But whethef 
 constitutional law has thus been expressly adopted [prescribed 
 in written constitutions], or simply consists of principles current 
 in the political community, it is merely guarded, against the sov- 
 ereign, by sentiments or feelings of the governed. Consequent- 
 ly, although an act of the sovereign which violates constitutional 
 law, may be styled with propriety unconstitutional, it is not an 
 infringement of law simply 'and strictly so-called, and cannot 
 be styled with propriety illegal." JOHN AUSTIN, Lectures on 
 Jurisprudence, I. 266-7. 
 
 The power of a sovereign, then, "is incapable of legal limita- 
 tion," as Austin justly says, meaning "by a 'sovereign.' a mon- 
 arch properly socalled, or a sovereign number in its collegiate 
 and sovereign capacity. Considered collectively, or considered 
 in its corporate character, a sovereign number is sovereign and 
 independent; but, considered severally, the individuals and small- 
 er aggregates composing that sovereign number are subject to 
 the supreme body of which they are component parts." Id. 269. 
 The sovereign people acknowledge no legal limitation on them- 
 selves "in their collegiate and sovereign capacity." As James 
 Wilson said, and in substance the other fathers with him, the 
 people "always retain the right of abolishing, altering, or amend- 
 ing their constitution, at whatever time, and in whatever manner, 
 they shall deem it expedient." Now it is only "positive moral- 
 ity" in Austin's sense meaning, in fact, that aggregate of cus- 
 tomary sentiment which I have above called the collective con- 
 science of the effective majority that limits the power of the 
 people in their sovereign capacity. This is a very real limitation, 
 but in no sense a legal one. It is rigidly unconstitutional 
 throughout the United States to make a crime of and punish, 
 
HERTIG ON TAXATION. 81 
 
 that which was not a crime at the time of doing it. Tf now the 
 Constitution of the United States were to be amended, and slich 
 amendment should expressly empower congress to pass bills of 
 attainder and ex post facto laws that should be retrospective in 
 every essential particular for a period of five years, or other 
 period, prior to the adoption of the amendment, it would be pos- 
 sible and legal under such laws to be so passed to make a crim- 
 inal of a man, and forfeit his estate, for doing what in a legal 
 sense was entirely right and proper at the time of doing it. The 
 Constitution as it would then stand would directly conflict with 
 the Constitution as it now stands; the new would make good its 
 conflicting right to prevail as of a past time when the old actually 
 prevailed unopposed. The hypothesis is extreme, the proba- 
 bility of its representing actual fact wildly remote; but the valid- 
 ity of an extreme case shows the impregnable soundness of the 
 underlying principle; no doubt whatever that convictions after 
 such amendment under laws passed in conformity with it would 
 be strictly legal. To make such convictions actual and leeal 
 facts, it is only necessarv to presuppose a sufficient change in the 
 "positive moralitv" of the people, which, as aforesaid, is the only 
 limitation on their sovereign power. 
 
 Tn so far as written constitutions fix or crvstallize in definite 
 form the "positive morality" of state or nation which favors 
 them, they are a real limitation on the powers of government 
 which they enumerate and on the agents to whom they allot the 
 carrying out of such powers. Tn practical effect, 'however, writ- 
 ten constitutions, even among those peoples whose officials at- 
 tempt in measurably eood faith to keen written constitutional 
 limitations, do not draw hard and fast lines except about com- 
 paratively unimportant matters, or those matters such as the 
 duration of office, the number and titles of hieh officials, and the 
 like, which lend themselves readilv to enumeration with rigid 
 and formal description. That line, for instance, in the Constitu- 
 tion of the United States, Divine to the federal courts iuris- 
 diction " of controversies * * between citizens of the same 
 state claiming lands under grants of different states" has given 
 birth to only a few cases and in these from the nature of the sub- 
 ject, the line quoted has been given its plain literal meaning. 
 a statement to be made sparinp-1v pn^ with great caution of 
 any other line in the Constitution th^t h-s had to run the gaunt- 
 let of "construction." But no constitution can succeed in crvs- 
 tallizing into the definite form of its own letter the "positive 
 morality" of state or nation on and alone those points where the 
 constitution has no responsive or correspondine sentiment 
 among the people; or, should the letter so survive, it will take 
 
82 HERTIG ON TAXATION. 
 
 on a meaning contrary to that intended by the framers. The 
 Constitution of the United States intended that the body of its' 
 presidential^ electors should elect to the office of president the 
 man of their free and previously unpledged and undetermined 
 choice ; the people made the Constitution afterwards intend that 
 the electors should vote only for the man or men predeter- 
 mined by the people before choosing said electors; and this sub- 
 sequently acquired meaning of the Constitution has been carried 
 into effect by "positive morality" in Austin's sense, with a rigor 
 almost unknown in the carrying out of other sections of that 
 justly celebrated instrument. The "positive morality" of con- 
 gress, of executive department and of judiciary, may, and often 
 does, widely depart from book-made ethics; but in it lie the im- 
 mediate and pressing constitutional limitations that determine 
 the scope and character of the government at Washington ; such 
 limitations lie only remotely and mediately in the letter of the 
 Constitution. The "positive morality" of James Buchanan and 
 his cabinet was not adequate to the constitutional coercing of se- 
 ceded states; that of Lincoln and his cabinet entirely so espec- 
 ially as reinforced by the responsive echo from the people of the 
 North of that stirring dictum, "whenever you hear a man prating 
 about the Constitution, spot him; for he's a traitor." Even in 
 our not completely representative government there is a consid- 
 erable correspondence, though formal rather than hearty, be- 
 tween the "positive morality" of the official class and that of 
 their constituents. The "positive morality" of the legal profes- 
 sion, from which all judges, many legislators, and not a few exec- 
 utive officers are chosen, is proximately the determining factor 
 in American constitutional law. As applied to such law, this 
 "morality," when divorced from the transient .heat of the advo- 
 cate, consists of a sincere, though very loosely effective, allegi- 
 ance to technical canons of construction, and of imitative admira- 
 tion for the opinions of the judges most celebrated for constitu- 
 tional interpretation. The number and magnitude, frequently 
 the novelty, of questions in constitutional law that keep aris- 
 ing; the intimate connectipn between these and the issues of 
 partisan politics; their broad and yet close correlation with his- 
 tory, economics and special problems in civil polity cause 
 the lawyer class to hold more varied and flexible opinions on 
 constitutional law than on any other branch of jurisprudence, 
 cause lawyers to be more responsive to non-professional fact 
 and sentiment touching constitutional law than they are in 
 other matters, or perhaps than they are generally aware of. We 
 have only to suppose in 'the political field a commanding person- 
 ality embodying the tendencies of these times, speaking on ques- 
 
HERTIG ON TAXATION. 83 
 
 tions of jurisprudence with the authority that follows accurate 
 knowledge, and thus creating a school responsive to his person- 
 ality and his doctrines have only to make such supposition and 
 follow it with very moderate constructive imagination, to per- 
 ceive that our constitutional law, too, "is positive morality mere- 
 ly, or is enforced merely by moral sanctions;" to perceive, also, 
 that the effective range of power deposited within limits whose 
 conceded elasticity has practically an unnamable potential, is 
 little affected by the fact, if it be a fact, that the theory behind 
 such power "is opposed to the deposit of unlimited power any- 
 where." 
 
 As I have necessarily mentioned the police power (pp. 59, 09, 
 70, 71, above), it will be better to use it, rather than another sub- 
 division of positive morality and positive law, as a convenient 
 illustration of the great flexibility and variety of opinion amongst 
 judges and lawyers in a matter closely bound up with constitu- 
 tional law. It would be easy to multiply "authorities," but I 
 limit myself to four: 
 
 "The police power of the state extends to the protection of 
 the lives, limbs, health, comfort and quiet of all persons and 
 property within the state." Thorpe v. Rutland * * R. R. 
 
 Co., 27 Vt. 150. 
 
 "The reasonable limits of the exercise of such power, it is 
 not easy to define." Butler v. Chambers, 36 Minn. 71. 
 
 "The police power is an unknown quantity, an intangible, 
 undefinable something supposed to reside in sovereignty and to 
 justify legislatures in enacting and courts in sustaining uncon- 
 stitutional laws." J. F. (now Judge) McGee, of Minneapolis, in 
 the freedom of a brief. 
 
 "Police power is the refuge of cowardly judges, in times of 
 great popular excitement." Justice Brewer, of the federal su- 
 preme court, in the freedom of a lecture. 
 
CHAPTER VII. 
 
 Summary of points and hint of other methods What taxes are in then- 
 inmost being Taxation has no formal limit Its substantial limit the 
 quantity of takable wealth at a given time Its moral limit the effective 
 resistance to such taking The case of Wisconsin in that behalf Dash- 
 ing personality of Gov. La Follette Fees and special assessments, with 
 criticism therein of Profs. Adams and Seligman Important questions 
 relating to public revenues from other sources than taxes The Tobacco 
 monopoly of France as an enormous state industry, and particulars as 
 to the same Important difference between revenue standpoint here and 
 in Europe Difference in American tax systems great, but less important 
 than they seem at first glance Exasperation as a working factor in 
 American tax reform movements. 
 
 Vve have now passed in review taxation from the standpoint 
 of result and conscious intent; have studiously refrained, bar 
 occasional illustrative or cautionary reference, from carrying the 
 subject outside its more modern, and especially its American, 
 bearings; have critically shown the nature of taxation and taxes, 
 as displayed by their formal side and by definitions looking to- 
 ward that side; have cited, analyzed, amplified and criticized 
 several such definitions; have pointed out the intimate relation 
 between taxation, as a formally unlimited power of government, 
 and'the formally unlimited purposes of government, with pass- 
 ing illustrative notice, of divers incorrect notions of the para- 
 mount ends and final limitations of government and its powers; 
 have touched upon the close relation of practical taxation to 
 actual jurisprudence, incidentally noticing therein the tendency 
 of our judges to sustain the taxing power in its alleged and its 
 real conflicts with the letter of constitutions; have seen that 
 written, as well as unwritten, constitutional guarantees and limi- 
 tations are practically and proximately mainly a reflex of the 
 "positive morality" of the legal profession, which morality has 
 an enormous coefficient of flexibility, but that, on final analysis, 
 these guarantees and limitations are determined and enforced 
 
HERTIG ON TAXATION. 85 
 
 by the collective conscience of an actual, or of an about-to-be- 
 come effective majority, are determined and enforced from and 
 by moral sanctions only, using "moral" in a much wider sense 
 than its popular one, which coincides very nearly with the nar- 
 rower sense of "moral" in doctrinaire ethics. Desiring to reach 
 a constituency of readers who move in the current of American 
 taxation, for whom the individual features and landmarks of that 
 current are the chief, sometimes the only, tax realities, I have 
 necessarily approached the subject from its critical side, content 
 to sound shoals in the main channel, and to insist that its land- 
 marks and other proximate realities be seen under proper angle, 
 in true light, and in truer relation with some other realities. 
 I could name German pedants who would affirm that I have 
 begun in the wrong place, and gone the wrong way this that 
 the zigzags of Hegelian dialectic ought to have marked the 
 route ; that that I ought to have laid a deep and wide foundation 
 built of the principles of political economy well laid in German 
 mortar, and thereupon have gone ahead, if at all. Despite these 
 authorities, I prefer my own way; perhaps other time and place 
 will prompt me to say what I think of theirs. 
 
 What taxes are in form, the foregoing definitions have tried 
 to tell us; what they are in essence, or substance, remains to be 
 told. Taxes, then, are that portion of wealth which government 
 lakes forcibly, and of which it effects a redistribution through 
 channels of its own. The portion so taken is indeterminate, sub- 
 ject to wide quantitative variation, and incapable of formal limi- 
 tation. It may be a small percentage of the aggregate wealth of 
 a given country ; it must, as its maximum, leave at least some 
 personal belongings and the bare means of subsistence; it may 
 be levied on a plan looking to uniformity in what is left rather 
 than to uniformity in the percentage. Hence in defining taxes 
 according to their essence, "portion of wealth" without word of 
 limitation is properly descriptive of what is taken, since all can- 
 not be taken, and any portion, from a little to nearly the whole, 
 may be taken. "Forcibly" must be allowed; we passed it as 
 descriptive of tax-taking in a formal sense ; and it is equally ap- 
 propriate to tax-taking in a substantial sense. A distribution of 
 wealth is effected outside the direct agency of government. 
 That government has permitted or even connived at such 
 distribution, does not unfit the same for serving as implied 
 antithesis to the "redistribution" effected by government 
 "through channels of its own." There is, then, neither im- 
 propriety nor ambiguity in using "redistribution"; and whether 
 little or much be taken it is alike applicable. The re- 
 distribution may be for use or for ownership in any of the senses 
 
80 
 
 HERTIG ON TAXATION. 
 
 ot those words; hence the word itself sufficiently connotes the 
 end of the redistribution. Is there objection to "channels of its 
 own," because government channels are often imposed, deter- 
 mined and otherwise limited by exterior circumstance or even 
 by duress? As well say that my eyes are not mine because I had 
 no agency in making them blue; or that somebody's wife is not 
 his, because he would willingly divorce her but cannot. 
 
 Taxation in itself, as viewed from its formal side, has no limit; 
 and we have just seen that from its substantial side its only limit 
 is the quantity of takable wealth within a given country at a 
 given time, "takable," in the sense here used, comprising all 
 except the scant residuum of personal belongings and means of 
 subsistence that cannot be taken, as explained in the preceding 
 paragraph. If I have not quite "pinched into pilulous smallness" 
 those formal limitations on the taxing power which have been 
 set up by constitutions and maintained by courts, those who have 
 followed my analysis, or critically the courae of American 
 jurisprudence, will admit that the practical scope and effect of 
 such limitations are generally overrated. The goal to which the 
 ways of taxation lead depends on the statesmanship which sur- 
 veys them. Wide open in substance, these ways will present 
 no unyielding formal obstacles to who shall attempt thereby to 
 reach the right goal. 
 
 As intimated above, p. 62, the real limitation on the 
 taxing power, whenever it would step beyond its routine exer- 
 cise in purpose, and kind, lies in the opposition exerted by those 
 who believe that the taking of such step will adversely affect their 
 interests. Instances that may be cited from the current history 
 of Wisconsin lend warm color to this proposition. In that state 
 there has been for some years a pronounced feeling with many 
 of the people that public service corporations, including the 
 steam railroads, "pay relatively less taxes than other persons, 
 and [by reason of paying on the earnings or mileage basis] less 
 than they would pay on a basis of value" [that is, than they would 
 pay if assessed on other property and taxed at the current rate 
 on such valuation.] The first tax commission of Wisconsin so 
 reported to the legislature in 1898. Later in that year, the Re- 
 publicans put into their state platform this plank: "We de- 
 mand the immediate enactment of such laws as may be neces- 
 sary to compel all persons and corporations engaged in business 
 within the state * * * * * to contribute their part and 
 equal share towards the burden of taxation." In 1899 the legis- 
 lature appointed another tax commission; and in the polemic 
 literature of the state, it is said that the railway companies 
 promised prior to the creation of said commission, that if it 
 
HERTIG ON TAXATION. 87 
 
 should be created, "and all other legislative action postponed ai 
 hat session, and [if] the commission should come to the con- 
 clusion that the taxes of the railway companies should be increased 
 and so recommend to the next legislature, there would be no 
 further opposition on their part." I. L. LENROOT, in Milwaukee 
 The commission went to work and there was a truce 
 until the legislative session of 1901, immediately prior to wb'ch 
 the commission made its report and its recommendations for 
 amending the Wisconsin tax laws. Meanwhile, the Republicans 
 in their state platform for 1900 declared their expectation of 
 clinching the work of the commission with such legislation as 
 should be necessary "to compel each individual and every cor- 
 poration transacting business within the state except fraternal 
 [and other exempted associations] to bear a justly proportion- 
 ate share of the burden of taxation." To this plank its conclud- 
 ing words gave stirring emphasis: "To the immediate accom- 
 plishment of this end the Republican party of Wisconsin stands 
 pledged." 
 
 Primary elections and tax reform were the local battle cries 
 in the Wisconsin campaign of 1900. Robert M. La Follette, a 
 dashing and magnetic leader, was the candidate for governor, 
 and into these state issues infused abundance of vim and zeal 
 or rather found them spontaneously responsive to his own 
 earnestness among the Wisconsin voters. The Republican bosses 
 and their lieutenants, the federal office-holders, had no love for 
 the man who hoped by "direct nominations by the people" to 
 put a period to machine rule in his state; and so they used the 
 machine to "knife" La Follette at the polls. They hoped by a 
 vote which should make him run some thousands behind the 
 other Republican nominees to destroy his rising prestige as a 
 leader. They failed in their expectation for the reason that 
 "thousands of voters of other parties supported La Follette for 
 governor because he stood for principles in which they believed." 
 He was not only triumphantly elected, but with him "a magnifi- 
 cent Republican majority in the legislature," pledged not only 
 by the state platform, "but by their assemblv and senatorial con- 
 ventions as well," to redeem the party promise for reform taxa- 
 tion. 
 
 The tax commission presented its report and two drafts of 
 amendments to the tax laws. To increase the annual taxes on 
 railways by about $600,000, and on street railways and some 
 other public service corporations by about $150,000, was the aim, 
 which, if reached, it was thought would make taxes reasonably 
 uniform as between the public service corporations and the other 
 taxpayers of the state. The legislature was given its choice as 
 
HERTIG ON TAXATION. 
 
 between the two bills whether under the wide-open constitution 
 of Wisconsin it would continue with a higher percentage the 
 gross-earnings tax on public service corporations, or drop the 
 gross-earnings tax and adopt in lieu thereof an ad valorem taxa- 
 tion. The governor was in earnest, but his reform legislature 
 declined to follow his and the people's lead. Again I quote 
 Lenroot: 
 
 "From the first day of the session the railroad lobbyists were 
 on the ground in force, offering courtesies and entertainments 
 of various kinds to the members. Bribery is a hard word, a 
 charge, which never should be made unless it can be substanti- 
 ated. The writer has no personal knowledge of money being 
 actually offered or received for votes against the bill. It was, 
 however, generally understood in the assembly that any member 
 favoring the bill could better his financial condition if he was 
 willing to vote against it. Members were approached by repre- 
 sentatives of the companies and offered lucrative positions. This 
 may not have been done with any idea of influencing votes. The 
 reader will draw his own conclusions. It was a matter of com- 
 mon knowledge that railroad mileage could be procured if a 
 member was 'right.' Railroad lands could be purchased very 
 cheaply by members of the legislature. It was said if a member 
 would get into a poker game with a lobbyist the member was 
 sure to win. Members opposed to Gov. La Follette were urged 
 to Vote against the bill because he wanted it to pass. A promi- 
 nent member stated that he did not dare to vote for the bill, 
 because he was at the mercy of the railroad companies, and he 
 was afraid they would ruin his business by advancing his rates, 
 if he voted for it. Such were a few of the methods employed 
 to defeat the bill." [Defeated in the assembly, or lower house, by 
 39 ayes and 50 nays ; on motion to reconsider, by 40 ayes and 50 
 nays, disaffected and pledge-violating Republicans having been 
 joined "by the nearly solid Democratic minority."] 
 
 The state platform of the Wisconsin Republicans for 1902 
 again declares for "an equal and uniform taxation of all taxable 
 property" and for direct nominations to office by the people. 
 Again Gov. La Follette, after a warm but by no means close con- 
 test, has been nominated for governor, and in an intensely 
 earnest speech of acceptance insists that platform pledges must 
 be kept, "if political parties are to be maintained." The reader, 
 bearing in mind that these illustrations from current Wisconsin 
 history are merely in support of the proposition that the real 
 effective limitation on the taxing power is found in the opposi- 
 tion exerted by those whose interests are adversely affected by 
 the proposed exercise of that power, will find an appropriate 
 
HERTIG ON TAXATION. 89 
 
 close and climax to this illustration of my proposition in the fol- 
 lowing passage from La Follette's same speech of acceptance: 
 
 "The greatest danger menacing Republican institutions to- 
 day is the overbalancing control of city, state and national leg- 
 islatures by the wealth and power of public service corporations. 
 This is not more marked with one political party than another. 
 It deals with public officials. It makes no political distinctions. 
 It cannot be cured by denunciation. It cannot be defended by the 
 cry of 'purist,' or 'populist,' or 'demagogue.' It goes directly to 
 the seat of government. It threatens to sap the life of American 
 citizenship. The voter elects the candidate; the corporation con- 
 trols the official. It leaves the citizen the semblance of power 
 which is actually exercised against him. The problem presented 
 is a momentous one. It calls for no appeal to passion or preju- 
 dice or fear. It calls for courage and patriotism and self-sacrifice. 
 It calls for solution. Shall the American people become servants 
 instead of masters of their boasted national progress and pros- 
 perity victims of the colossal wealth this free country has fos- 
 tered and protected?'' 
 
 When it is added that the concrete side of the Wisconsin 
 tax reform campaign may be stated as consisting substantially 
 in an attempt to make the railroads pay, in lieu of their present 
 gross earnings tax of four per cent, a gross earnings tax of five 
 and one-half per cent, or the equivalent thereof on an ad valorem 
 basis; when we contrast this modicum of successfully resisted 
 claim with the possible maximum of theoretically irresistible 
 claim; when we note as coming from tax reform source the state- 
 ment of Wisconsin conditions that "last winter [1901] the repre- 
 sentatives of the railroads made their boasts in hotel corridors 
 that no legislation could be passed of which they did not approve, 
 and that for a period of sixteen years no legislation opposed to 
 the interests which they represented had been passed," the 
 strength of what I have above called "the real effective limitation 
 on the taxing power" shows forth sinister and formidable, strip- 
 ped of all disguise that might else mislead as to purpose and 
 compass. Thus stripped, it accents the proposition suggested by 
 Gov. La Follette's own words, a proposition which he perhaps 
 has not yet consciously entertained that the present system of 
 legislative discretion, legislative irresponsibility, and legislative 
 finality is inadequate to cope with the present urgencies of gov- 
 ernment. 
 
 The preceding paragraph affords a good example of those 
 nearly related and collateral problems, of equal or greater weight, 
 into which the immediate problems of taxation revolve. Even 
 nearer to taxation proper, and yet beyond the scope of this book 
 
90 HERTIG ON TAXATION. 
 
 is the large field of state revenues mentioned in the preface, 
 and not at all or remotely growing out of taxation. Moreover, 
 the use and routine administration of state revenues, state book- 
 keeping and the like are highly interesting and important and 
 hardly to be divorced in thought from taxation itself. To use 
 is twin to acquire; and when the acquired and the used are 
 taxes, ^ the using presents at least as many occasions as the 
 acquiring for the exercise of discretion, justice and the other 
 qualities of expert statecraft. These references to contiguous 
 questions whose lead I may not further pursue, or whose men- 
 tion I close with a sweeping proposition will tend, it is hoped, 
 to balance the reader's attention, and to prevent the attaching of 
 undue importance to any one phase of state finance. 
 
 Taxes in the American states are so preponderant as the 
 -source of state revenues, that naturally other sources are little 
 mentioned and little heeded. Fees, for instance, which I men- 
 tion and incidentally define in the preface, which in Bavaria 
 rather more than support the administration of justice, which 
 some foreign writers extend to the taking in of license charges 
 and even of stamp duties, are with us so relatively unimportant 
 that 1 dare say not one voter in five hundred and not one legis- 
 lator in fifty even thinks of them in relation to taxes. We have 
 no state railways, as in Germany, Italy and Russia; no large 
 state-managed industry like the tobacco monopoly in France. 
 To return again to "fees," they have been so looked upon in 
 England and here as primarily individual perquisites that that 
 notion of them seems still to be the prevailing one, though in the 
 United States in passing through the stage of extreme individu- 
 alism, we have seen fees of office gradually cease to be the pri- 
 vate gain of the officer, who is now in most cases put on salary 
 and made to pay his fees into the proper treasury. In English 
 and American law the notion of fees is still individualist. A fee 
 is a sum of money paid to a person for a service done him by 
 another. Blow v. Huston, 28 English Law and Equity, 360. 
 Costs allotted by a court to the successful party litigant are not 
 technically fees, but are incident to the judgment in his favor. 
 They are for expenses incurred about his suit usually an ag- 
 gregate of fees proper already paid by him plus a "docket fee" and 
 other items that are not fees in any proper sense of the word. 
 The Alabama court in so distinguishing costs defined fees as 
 "compensations to public officers for services rendered individu- 
 als in the progress of the cause, or (in another aspect) not in 
 the course of litigation." Tillnian v. Wood, 53 Ala. 578. Pro- 
 fessor H. C. Adams, in departing from the simpler notion of 
 fees, in wedding them to professorial ideals, and I may add pro- 
 
HERTIG ON TAXATION. 91 
 
 fessorial jargon contrives to be very edifying a rebours, if I may 
 say so. 
 
 "A fee," says he, "is a payment made to the state on the oc- 
 casion of some specific service rendered by the state to the citi- 
 zen, the service, however, being non-commercial in char- 
 acter. Two or three illustrations will make this clear. The pay- 
 ment demanded for recording a deed or mortgage, or for any 
 legal process, is a fee; so also is the payment required to secure 
 a passport or license (this latter, however, should not be con- 
 founded with a license tax), or for the issue of a teacher's certifi- 
 cate or diploma; so also is the payment for connecting with a 
 public sewer or for the privilege of purchasing light and water 
 from a municipality. All these payments and many others for 
 like services, or permits, are called fees." Fairly good, profes- 
 sor; but though the distinction that fees are "non-commercial in 
 character" is convenient enough to mark broadly the difference 
 between the charges made by a state for tolls on its canals or 
 railroads and the charges ordinarily grouped as "fees," yet in 
 many cases, "non-commercial" is too absolute for the propei 
 description of fees. If I employ a notary to protest a bill of 
 exchange, he renders me commercial service; and though ordi- 
 narily the state is not in any sense a party to such transaction, 
 yet it would be entirely competent for the state to put all notaries 
 on its payroll, and cover their fees into the state treasury. So, if I 
 bring suit on such bill, I may in many states employ a private 
 person to make service of the summons, and any such person 
 renders me a commercial service. If I choose for such service 
 to employ a sheriff and pay him a fee fixed by law, and which 
 he is obliged to cover into the county treasury, is the service ren- 
 dered any the less commercial? Continuing, the professor be- 
 comes still more absolute: "They [fees] are, however, in no sense 
 the price paid for the service rendered or the permit granted. 
 While it is true that they recognize a specialization in the service, 
 they are in no sense a quid pro quo. The amount fixed bears 
 no relation to the importance of the service, and only in a few 
 cases to the quantity or the quality of the service. For the most 
 part, services which are made the occasion of a fee do not per- 
 mit of quantitative assessment; nor is the purpose of the govern- 
 ment in demanding a fee that the aggregate of moneys thus 
 secured shall equal the expenditure incident to the service. 
 * * * * A fee is more properly classed under the head 
 of derivative than of direct revenue; that is to say, it is allied to 
 a tax and not to a price. Although paid on the occasion of a 
 special service, it is not paid because of that service, (!) but 
 rather because the government selects a certain occasion in the 
 
92 HERTIG ON TAXATION. 
 
 performance of its general functions for the levy of a special 
 tax, and levies that tax to the individual with whom at the time 
 it comes in contact." HENRY CARTER ADAMS, Ph. D., LL. D., 
 in The Science of Finance, (New York, 1898). It would be diffi- 
 cult, even in competition and of set purpose, to pack more false 
 fact, so to speak, and more false theory, still wearing an appear- 
 ance of good faith, into the same compass than Prof. Adams 
 has contrived to put into the lines last quoted. Fees -'in no 
 sense the price paid for the service rendered!" O monstrous 
 perversion of plainest fact, and made merely to be able to say 
 without the qualification of "often" or "generally" that a fee "is 
 allied to a tax and not to a price!" Professor G. T. Ladd of 
 Yale laments "the degradation of the professorial office;" sees 
 professorial decadence in the decadence of the times; professors 
 honeycombed with materialism losing their spirituality and with 
 it their force, as with his hair Sampson his. And yet I fail to see 
 why the loss by Prof. Adams of his spirituality, if he has lost it, 
 should have made him so grossly negligent in the matter of fees: 
 marshalls, clerks, sheriffs, justices of the peace and constables 
 are proverbially keen in that behalf; and I much doubt if the sad 
 and serious editor of the Atlantic Monthly would think an article 
 on their spirituality at all suited to his readers. However, I leave 
 these collateral questions open, and, returning to the nature of 
 fees, point to the fee system in courts of justices of the peace 
 as evidence that there at least fees are in every sense the price 
 paid for services rendered. Moreover, in many places justice 
 courts are a very active branch of the police power. In some 
 places, they have criminal jurisdiction with no allowance what- 
 ever from the state or municipality. They keep the fees and 
 costs, and pay over fines collected into the proper treasury. 
 There this system is entirely self-sustaining for both justice and 
 constable; and manifestly ft is the purpose of the government 
 "that the aggregate of moneys thus secured" shall make the 
 system self-sustaining, and sufficiently remunerative to incum- 
 bents to keep the offices filled. A curious chapter could be writ- 
 ten on the quantitative and other relations between the quantum 
 of fees and the service rendered. Often the relation is purely 
 quantitative as in fees fixed by law for making .records and issu- 
 ing copies of the same. Here there can be of course no grada- 
 tion of price according to the real importance of the transaction. 
 Often the relation is dubiously quantitative, or quantitative in 
 theory, as in the taxation of costs, leading to downright robbery 
 by the taxing officers. This abuse, for special instance, attained 
 such mammoth proportions in Illinois, that court costs were 
 put upon a fixed and equal basis of so much for the plaintiff in 
 
HERTIG ON TAXATION. 98 
 
 each case, so much for each defendant separately appearing. The 
 "purpose" of government does not lend itself to rigid doctrinaire 
 expression: it is capable of great flexibility as well in its attitude 
 toward fees as toward anything else within its scope. There is 
 nothing in the nature of the subject to hinder government from 
 being impudently exacting, grasping and revenue-seeking in de- 
 manding fees; and, as a matter of fact, government has often 
 been fully level with the measure of its opportunities. The fees 
 formerly exacted in England, so roundly and soundly denounced 
 by Bentham, afford sufficient proof in this behalf, and will be 
 mentioned more at length in a subsequent chapter. The sent- 
 ence last quoted from Adams (pp. 91-2, above), "although paid 
 on the occasion," etc., should be marked and remembered by 
 every student and every thoughtful reader as setting forth a typi- 
 cally awkward sophism, perennial example for one's self to 
 avoid, but good to quote in the heat of debate under the intro- 
 ductory formula, "that reminds me." 
 
 Special assessments, as for opening streets, paving, curbing, 
 building sewers and the like are intermediate between fees and 
 taxes in the stricter sense of the latter word. There is a special 
 benefit to the payor, as in the case of him who pays fees, and a 
 general benefit, as from taxes proper, to the community which 
 uses the street or other improvement on which the special as- 
 sessments are expended. Fees, in many cases, cannot be con- 
 sidered as other than strictly voluntary payments; special as- 
 sessments, in most cases, cannot be considered, when collected, 
 as other than compulsory payments like taxes. Even where the 
 foundation of a special assessment is the petition of a part of the 
 abutting owners, the payments themselves are for some owners 
 compulsory. Special assessments, too, like taxes, are often con- 
 fiscatory, as where a street, with a "job" in it, is unnecesarily 
 opened along surburban lots. Many an owner has "dropped" 
 many a lot because of special assessments, directly by choosing 
 not to pay them at all, indirectly by paying them, only to go 
 broke, get discouraged and let go a little later. Important in 
 municipal finance, and in their technical legal side, special assess- 
 ments in detailed treatment do not fall within the scope of this 
 book. The excellent monograph of Dr. Victor Rosewater, edi- 
 tor of the Omaha Bee, may be consulted with advantage. It is 
 entitled Special Assessments: a- Study in Municipal Finance, and 
 came out as Vol. II., No. 3 of the Columbia College Studies in 
 History, Ecwiomics and Public Lair. Seligman in the few pages 
 he gives to the subject in his Essays in Taxation, is as always, in- 
 teresting and enlightening. I cannot, however, exempt him 
 from the usual professorial lapse a sliding into absolutism. He 
 
94 HERTIG ON TAXATION. 
 
 says (p. 291), "there is no truth in the statement that a fee is 
 voluntary and a special assessment compulsory." I might be 
 with him if he were to plant himself on the ancient .dictum, 
 "Whatever happens necessarily happens," but cannot suffer him 
 to knock out firm modern "voluntary" with loose modern in- 
 stance. I see no use for the word voluntary either in common 
 speech or philosophical disquisition except to describe an act 
 in the doing of which there is conscious choice in relation to 
 proximate object of choice, and, sometimes, in relation also to 
 more remotely expected results of choice. We may cheerfully go 
 half-way, sometimes the whole way, to meet a fee and pay it; 
 special assessments are apt to steal on us like a marauder with a 
 club. Fees are often clearly circumscribed and visible in our 
 field of choice; * special assessments are often neither forseen 
 nor foreseeable. It is merely wrenching "voluntary" out of its or- 
 dinary and practical meaning to deny it in all cases to the act of 
 paying fees. Indeed, Seligman's argument, strictly taken, and 
 allowing to "voluntary" a wrenched but not quite dislocated 
 meaning, goes to proving that the payment both of fees and of 
 special assessments is rather voluntary than compulsory. It may 
 be a hard choice between toothache and the extraction of the 
 tooth; but when there is no other alternative, and the patient is 
 not under compelling guardianship, the act of choosing is his, 
 and is surely voluntary. Birth is not a voluntary act on the part 
 of the born; but it may be a bright and shining mark in the field 
 of choice of the parents who pay the birth fees. Who chooses 
 the office chooses also its burdens; and in this sense, whoever 
 owns a piece of land, may be held to have assumed voluntarily 
 its taxes and special assessments to be thereafter levied, in so far 
 as he pays them at all.t 
 
 The direct revenues of states, revenues which they do or may 
 receive from rentals, or sales of state properties, from the earn- 
 ings of state conducted enterprises, such as mines, railroads, mo- 
 
 *Titles and their successive degrees may be had of some governments 
 by paying high fees. What one of the many payments which human 
 vanity consummates with a glad rush, is, or can be, more voluntary than 
 paying for a title? 
 
 fTo do full justice to Seligman and acquit myself of the possible 
 charge of needless logic-chopping, his paragraph is given at large in this 
 note: "It might be maintained that special assessments are like direct 
 taxes, and fees like indirect taxes, in the sense of taxes on consumption or 
 on acts and communication, because the former are compulsory and the 
 latter voluntary. But this distinction is badly expressed, and really un- 
 tenable ; for, notwithstanding the contrary statement, which has fre- 
 quently been made, indirect taxes are not a whit more voluntary than 
 direct taxes. It is true that if a man chooses to go without tobacco he 
 
HERTIG ON TAXATION. 95 
 
 nopolies, etc., are most interesting for comparison with tax 
 revenues, and as a text from which to expound one's views on 
 the theory and practice of government. The historical origin 
 and legal theory of the public domain of the United States ; the 
 large independent domain of Texas which remained the property 
 of that state after her incorporation into the Union; the policy 
 of the United States in ceding certain lands to the states and to 
 corporations, in giving others to soldiers, and making still others 
 of easy acquirement under the homestead, pre-emption and tim- 
 ber-culture acts ; the policies of the several states with regard to 
 their lands, these different matters and policies constitute the 
 heads for exhaustive study of the principal sources of, and facts 
 pertaining to direct state revenues in this country. But the Erie 
 canal in New York, the early attempts and expenditures oi 
 Pennsylvania to provide her citizens with transportation facili- 
 ties, the enterprise of the city of Cincinnati in building the Cin- 
 cinnati & Southern railroad, open up for study, with other in- 
 stances easy to mention in the field of state and municipal en- 
 terprise, a closely related department of public finance one per- 
 haps even more interesting than that embracing the public land 
 policy of the United States and of the several states. All these 
 I pass over as not within the direct scope of this book; but I 
 would have readers think of them, and especially have them re- 
 member that the propositions and conclusions set forth in this 
 book have not been made without due consideration of impor- 
 tant cognate questions. 
 
 Because of its imposing returns, the ease with which it lends 
 itself to concise statement, and of its standing apart in public 
 finance, I cannot forbear to mention the tobacco monopoly in 
 France. Established by Napoleon's decree of Dec. 29th, 1810,* 
 
 may escape the tobacco tax; but it is equally true that if a man chooses 
 to go without certain kinds of property or income, he may escape to 
 that extent the property tax or the income tax. Indirect as well as 
 direct taxes are compulsory, not voluntary, contributions. In the same 
 way, there is no truth in the statement that a fee is voluntary and a 
 special assessment compulsory. It is true that we do not need to pay 
 a pedler's license fee if we do not care to peddle ; but, on the other hand, 
 we do not need to pay a special assessment if we do not care to own 
 the land. Further, when the payment of a fee is connected with neces- 
 sary, every-day transactions, as are mortgage registration fees or mar- 
 riage fees, there can be no question of the compulsory nature of the 
 transaction. Birth and death cannot well be termed voluntary actions ; 
 .yet a registration fee for a birth or death certificate does not differ in 
 character from any other fee. Fees and special assessments, indirect and 
 direct taxes, are all compulsory contributions. Essays in Taxation 290-91. 
 *Re-established rather. There was a monopoly of tobacco sales under 
 the Old Regime, dating from 1674, and lasting with an interruption of 
 
96 
 
 HERTIG ON TAXATION. 
 
 it has lasted through all the vicissitudes of French government, 
 surviving the first empire, the returned Bourbons, the 
 Orleans regime, Louis Napoleon's so-called republic, his empire 
 and the commune. The present republic approves and contin- 
 ues it. The act establishing it, like any other long in force act, 
 lias undergone revisions and amendments, but these have all left 
 its ground features the same. It survived even a government 
 promise to abolish it: by the law of 1852, the tobacco monopoly 
 was to expire the first of January, 1863. LA ROUSSK, Grand Dic- 
 tionnaire Unhcrscl. It is a state conducted, state-regulated indus- 
 try. There are no private manufacturers of tobacco in France, 
 and every retail dealer is virtually an officer of the state. "The 
 retail dealers are named by the prefect of the commune where 
 the sales amount to ten thousand francs or less, and by the min- 
 ister of finance if the proceeds exceed ten thousand francs. 
 These permits to sell are accorded by preference to persons to 
 whom the state is in some way indebted, as wounded soldiers or 
 the widows and daughters of soldiers. In this manner it gives to 
 those persons suitable occupation and partially relieves the pen- 
 sion rolls." ADAMS, The Science of Finance, 270. It en- 
 courages home industry in a novel way. The law provides that 
 not less than one-fifteenth (Adams) of the raw tobacco used shall 
 be home-grown; but it has been found expedient in practice to 
 greatly increase this figure, and nearly one-third (Adams) of the 
 whole amount used is home-grown. An estimate is made 
 of how much of the home-grown product can be conveniently 
 used in a year's business ; and this is parcelled out to the differ- 
 ent tobacco-growing districts to furnish, not as obligatory, but 
 as permissive. * * "Any one who desires to cultivate this 
 crop must give notice of his intention to the maire of the com- 
 mune before the ist of March, and a permit will be granted for 
 such cultivation ; but the aggregate of these permits must not ex- 
 ceed the amount apportioned to the province. The growing crop 
 is placed under careful supervision in order to make sure that 
 no tobacco is taken for private use or disposed of at private sale. 
 The price to be paid for the crop is determined at the time the 
 assignment for cultivation is made, so that the grower knows be- 
 fore he plants the crop the price he is to receive. For the col- 
 lection of the crop the government has established a sufficient 
 
 almost two years (1719-1720) to the time of the Revolution. Napoleon 
 had sometimes a "sweet" way of dealing with plutocrats. Seeing at a ball 
 a woman covered with diamonds, he asked about the husband of the 
 woman who could afford such profusion. They told him that her husband 
 was a tobacco manufacturer. Some months afterwards, he issued the 
 decree of December 29th, 1810. 
 
HERTIG ON TAXATION. 97 
 
 number of warehouses, so that the grower need not transport 
 
 his product more than twenty-five kilometers" [15% miles]. 
 
 ADAMS, 269-70. 
 
 The manufacture proper is conducted in "nineteen factories," 
 and it gives employment to sixteen or seventeen hundred work- 
 men." So says Adams; but I, distrusting instinctively profes- 
 sorial reasoning, have not much more confidence in professorial 
 facts. ( After scoring on the professor in his generalizations 
 about "fees," I would willingl} have given him praise for lucid 
 statement of facts by quoting him without comment, on the to- 
 bacco monopoly. The first edition of the Grand Dictionnaire 
 Universel of Pierre La Rousse does not bring its economic and 
 other facts of current history down to a date much later than 
 1874. It says that the number of workers of both sexes employ- 
 ed "today" [no date] in the French tobacco factories is above 
 eighteen thousand. As of the specific date of December 31, 
 1874, it says : "In a total of 17,669 registered workers of both sex- 
 es, there were 16,325 women, while the number of men did not 
 reach a tenth of that figure. A "second supplement" to this 
 work brings, it would seem, the figures down to 1889. This sup- 
 plement gives the number of tobacco employes, "exclusive of the 
 engineers of the national factories," as being 22,613, embracing 
 apparently the employes of the government who supervise the 
 culture, as well as all employed in the manufacture of tobacco. 
 Of this number, there were, in round numbers, 2,500 men, of 
 whom 758 were above the grade of ordinary workmen, and as 
 preposes had some measure of supervision and authority, while 
 the remainder of the men, 1,802, were merely ouvriers. The 
 female employes numbered 18,311, that is to say in preposees 
 and 18,200 ouvrieres. A correct statement of facts is much hard- 
 er to find than an honest man. 
 
 The French tobacco monopoly is in fact a government trust, 
 and as such is immensely profitable. The government caters to 
 the taste of those who want fancy tobaccoes; and its experts 
 buy foreign-grown stock to be worked into the different brands 
 desired. It has ceased to be afraid of competition in quality from 
 foreign manufacturers, and permits their sale from its store- 
 houses and from the retail shops. Naturally it regulates the 
 price of both the home and the foreign brands ; each retail dealer 
 is furnished with a scale of prices. The retailer who sells at a 
 higher rate is prosecuted. The profits to the government have 
 increased enormously over the figures attained in the earlier 
 years of the igth century. In 1820, the profits were not quite 39,- 
 coo,oco francs; in 1850, they were 95,625,067 francs; in 1870, 
 194,630,328 francs: in 1889, 314,237,316 francs or about sixty 
 
98 HERTIG ON TAXATION. 
 
 million dollars. These figures of profits are from the Nouveau 
 Dictionnaire d' Economic Politique, Vol. II., Paris, 1892. Adams, 
 whose book came out in 1898, says, but without giving his au- 
 thority: "At the present time the net proceeds range between 
 320,000,000 and 400,000,000 francs a year. The general expens- 
 es of manufacture and sale amount to about 20 per cent of the 
 gross proceeds, thus giving to the state a profit of 80 per cent 
 upon sales." p. 270. 
 
 The public finance of most European countries is handicap- 
 ped with the necessity, which itself grows out of the present 
 political and economic regime, of seeking revenue substantially 
 wherever it may be found from every available source. The 
 tobacco monopoly now yields to the French government nbout 
 as much per head of population as were per capita the national 
 expenditures of the United States government in 1860. With 
 31,443,000 population the federal government spent $63,000,000 
 just a trifle over $2.00 per head; but in late years the French 
 government expends nearly 90 francs, or more than $17.00 per 
 head, and just at present is wrestling with a deficit. Tax reform 
 movements show more or less life in many of the American 
 states; but these movements are from abundance rather than 
 from deficits. In Europe there is comparatively little complaint 
 that the individual escapes his proportionate share of taxation; 
 the question is, What source of revenue is escaping? Here the 
 complaint is that individuals, and especially corporations, are 
 by tax-dodging breaking down or seriously impairing what 
 would otherwise be a satisfactory source of state revenues. the 
 general property tax. The casting about for other taxes seems 
 to be proportionate to the feeling that under the general prop- 
 ty tax too many escape paying their just share. With near- 
 ly 50 states empowered to set up several systems of taxation, it 
 is small wonder that there are many differences of detail; but it 
 is even more wonderful that there is so nearly a substantial har- 
 mony in the general features of American state taxation. Prof. 
 Seligman's enumeration of (in the American states) "no less than 
 thirteen important methods of taxing corporations" is very strik- 
 ing; some of these methods differ very materially in form and in 
 resulting revenue; but there are more approximations to like re- 
 sult in many of these methods than would at first be suspected. 
 It may be added that very good practical results may be had 
 without following one and the same method. Pennsylvania pur- 
 sues various methods; New Jersey has one method for railroad 
 and canal corporations, and a different method for other corpora- 
 tions. No doubt the very diversity of some of the methods pur- 
 sued helps to keep alive certain forms of tax agitation, it being 
 
PIERTIG ON TAXATION. 99 
 
 very natural with human nature in losing its conservatism to 
 conclude that "they do these things better elsewhere," a prop- 
 osition, for the rest, that is often true. 
 
 But on the whole, individual and class exasperation over real 
 and fancied individual and class escape from just taxation, is the 
 most important feature of tax reform movements in the Ameri- 
 can states. This exasperation is a feeling big with results, 
 though not with the results which those most active for tax re- 
 form most desire. Moreover, it is a feeling whose effectiveness 
 for practical results is not to be measured by the more or less of 
 abstract justice underlying. What men earnestly believe is the 
 potent factor in government; what they ought to believe is theo- 
 logical and academic. 
 
 As for me individually tax questions are never quite disen- 
 tangled from contiguous domain, and they present or inseparably 
 call up 
 
 1. How to get state revenues. 
 
 2. How to expend them. 
 
 And reforms in the one are just as important as in the other, 
 and in good practice, perhaps I should say in advanced civil 
 practice, are inseparably associated. However, though the con- 
 structive side of both kinds of reforms is not unrepresented in 
 the remainder of these pages, they are devoted mainly to a crit- 
 ical exposition of how to get state revenues, and how not to get 
 them. With the state of Minnesota, and tax measures and en- 
 deavors therein for main text, I now proceed to give the neces- 
 sary facts and develop my commentary thereon according to its 
 first design, to which, however, these introductory chapters form 
 a necessary supplement. 
 
CHAPTER VIII. 
 
 Salient facts and figures about Minnesota Kaleidoscopic changes Rail- 
 way misery in 1890, railway splendor in 1902 Lest we forget that 
 size may be the greater matter for sighs. 
 
 When, in 1858, Minnesota was admitted to the Union, mak- 
 ing the thirty-second star on the flag of the United States, she 
 had already leaped from a mere territorial spot on the census 
 of 1850, with her tiny roll there of 6,077 inhabitants, to a dignity 
 that entitled her in the mind of congress to two representatives 
 in the popular branch of that body immediately upon her ad- 
 mission. The census of 1860 gave her 172,023 inhabitants; when 
 the first census of the United States was taken, in 1790, but four 
 of the thirteen original states fell below those figures in point 
 of population, New Hampshire, Rhode Island, Delaware, and 
 Georgia. The population of Rhode Island and Delaware taken 
 together, or of either of those states, and Georgia, did not, in 
 1790, equal that of Minnesota in 1860. Roundly speaking, tht 
 population of the thirteen original states in 1790 was twenty- 
 nine times that of Minnesota in 1860. But with the lapse of the 
 next decade a mighty change is wrought in the basis for com- 
 parison; in 1870 Minnesota with her 439,706 inhabitants, figures 
 thus grown despite civil war and Indian troubles and terrors, had 
 surpassed the population figures of each of the thirteen original 
 states as given by the first census, except Virginia's. Her 1790 
 number headed that of Minnesota for 1870 by 250,000, roundly 
 speaking. Minnesota's population in 1880, 780,773, was equal 
 in number to one-fifth the aggregate population of the original 
 thirteen as shown by the first census; and her urban population 
 had barely made the beginning of its present growth. In 1880, 
 good hotels in the state served their guests almost as freely with 
 buffalo hump as with beef from the shambles, and coat of buffalo 
 skin was still the ordinary overcoat of the people, the "wild 
 ox," as Father Hennepin calls the buffalo, being yet in easy reach, 
 not indeed within the state, but further West toward the then 
 terminus of the unfinished Northern Pacific railway. In 1890, 
 
HERTIG ON TAXATION. . - '', : tOl 
 
 with 1,301,826 inhabitants in the state, the urban element had 
 become so important that from a point midway between St. Paul 
 and Minneapolis, a radius of ten miles was sufficient to circum- 
 scribe a population double that of London in Shakespeare's time 
 which central point was then still so rural that within a mile 
 thereof, I saw that summer a brace of prairie chickens seemingly 
 as much at home in coy wildness as their fellows in the hills of 
 the Pembina. 
 
 In 1890, Minnesota's splendid brigand, James J. Hill, had 
 been forced, for lack of money, to pause in his Napoleonic dash 
 for the Pacific coast, and to hang up his unfinished road at an 
 obscure point in Montana,, which threatened for a while to prove 
 his Moscow. The unfinished road, projecting cantilever fashion 
 over the wilderness from buttress of solid fertility in Minnesota 
 and the Red River Valley, had raised the mileage of the Hill 
 system from 1,400 in 1884 and 1885 to 3,000 in 1890, but had 
 lowered its brilliant net earnings of over $3,000.00 per mile in 
 those two fat years to the pitiful figure of $1,627.00 per mile in 
 1890, a lean chop out of which to cut bonded interest and divi- 
 dends, to say nothing of surplus! However, the traffic of Minne- 
 sota and of eastern North Dakota still stood by; a surplus saved 
 from that traffic in former years was still available ; and between 
 them Hill was able to keep unbroken his record with financial 
 friends. There was no default in interest payments, and divi- 
 dends were still forthcoming. The Great Northern Railway 
 Company had just been born, (or rather had just taken that 
 name after prior corporate existence as the Minneapolis and St. 
 Cloud Railway Company), to concentrate into one system, by 
 lease or otherwise, the St. Paul, Minneapolis and Manitoba sys- 
 tem and other Hill railroad properties, so as, it would seem, to 
 make the whole conveniently available to pledge for money with / 
 which to reach the coast. But it was not until 1892, the year 
 which campaign speakers in 1896 were wont to mention as the 
 last of a golden age of prosperity not until 1892 that Hill con- 
 trived to float with the stockholders of the Great Northern Com- 
 pany a $15,000,000 issue of 4 per cent ten-year bonds, retirable at 
 pleasure, and with the funds so obtained finished the road to 
 Puget Sound. But these bonds were offered to the stockholders 
 at 72^/2 per cent of their par value, a beggarly operation com- 
 pared with the Pactolian magnificence with- which a few 
 years afterwards the Great Northern and its one-time rival, the 
 gigantic, but three-times bankrupt, Northern Pacific jointly 
 gave their four per cent paper, two dollars per par dollar of Burl- 
 ington stock, for practically all the shares of the Burlington rail- 
 way system, and with little more noise than that of the "tickers" 
 
102 HF.RTIG ON TAXATION. 
 
 which they helped to keep busy, completed a two hundred mill- 
 ion dollar operation! Had the panic of 1893 come on before 
 $ successful flotation of that $15,000,000 issue of four per 
 
 : bonds, it is more than likely that certain chapters of current 
 railroad history would have a different reading. 
 
 In 1900, only the recognized giants amongst the states were 
 ound to have had during the decade just closed a greater abso- 
 lute increase in population than Minnesota had. Her increase 
 was 440,160. Six states led Minnesota in this respect, Massa- 
 chusetts, New York, Pennsylvania, Ohio, Illinois and Texas. 
 Jhio led Minnesota by only 45,000. No state of the six leaders 
 in ^ absolute increase showed as high a percentage therein as 
 Minnesota except Texas, whose percentage is 36.4 against Min- 
 nesota's 33.8. The "Star of the North" and the "Lone Star" 
 giant of the South were neck and neck in rate of increase, and led 
 all others where those others had a sizable basis of population in 
 1890. Where, in 1890, a state was in extreme infancy, her rate of 
 increase to 1900 would naturally be larger than 'Minnesota's. 
 Thus Montana's rate of increase was 75.2 per cent, and North 
 Dakota's 70.9 per cent; but Minnesota's absolute increase was 
 almost twice that of those two states put together, while Minne- 
 sota's percentage of increase between 1860 and 1870, trie decade 
 corresponding in development -age with the one just finished for 
 those two states was 155.6 percent. 
 
 In 1900 Minnesota's total population of 1,751,394, was headed 
 in number by eighteen other states; she had leaped from 3oth in 
 1860 to i o.th in 1900. Of the 18 that led her, Alabama, New Jer- 
 sey, Virginia, and North Carolina, are in easy hailing distance, 
 the three latter leading with a little more than a hundred thou- 
 sand each, while Alabama leads by only 77,000. No one of these 
 four states had as many inhabitants in 1890 as Minnesota had 
 in 1900; and of those that now lead her in population by greater 
 numbers than they, Tennessee in 1890 led Minnesota's figure of 
 1900 by only 16,000; Georgia by 86,000; Iowa by 160,000, while 
 Wisconsin showing the handsome increase of 22.3 per cent in 
 the last decade, and now the I3th state in point of population 
 had, in 1890, 65,000 fewer inhabitants than Minnesota in 1900. 
 In 1880 only seven of the states, Massachusetts, New York, 
 Pennsylvania, Ohio, Indiana, Illinois and Missouri, had a greater 
 number of inhabitants than Minnesota in 1900. Going back to 
 1870, Massachusetts, Indiana and Missouri drop below the 
 comparative level, Massachusetts by nearly 300,000; Indiana 
 and Missouri by less than 100,000 each. In 1860, Illinois, the 
 then 4th state in population, had fewer inhabitants by 40,000 
 than Minnesota in 1900; but Ohio, in 1860, had nearly 600,000 
 
HERTIG ON TAXATION. 108 
 
 more, and as far back as 1850, 229,000 more, first passing Minne- 
 sota's 1900 figure between 1840 and 1850; while New York and 
 Pennsylvania, then as now giants in population, do not sink to 
 Minnesota's 1900 figures until respectively 1830 and 1840. I 
 put 1830 for New York when she had increased to 1,918,000, 
 (which is almost exactly Iowa's figure for 1890) instead of 1820, 
 when New York had only 1,372,812 inhabitants. Pennsylvania 
 in 1840 had 1,724,033. These two great states had in 1900 re- 
 spectively 7,268,894 and 6,302,115 inhabitants. It is therefore 
 not putting forth a violent presumption to state that many per- 
 sons now born will live to see Minnesota have a population of 
 seven millions, or more, especially as her area exceeds New 
 York's by more than 30,000 square miles, roundly speaking, and 
 Pennsylvania's by nearly 40,000 square miles, while her arable 
 area, owing to the comparative absence of untillable soil leads 
 that of these two Eastern states by a still greater percentage. 
 
 In 1900, then, this "Star of the North" showed herself un- 
 mistakably endowed with the promise and potency of first-mag- 
 nitude splendor, soon to be outshone by no one of her sisters. 
 Her 84,000 square miles of area, begemmed with lakes which 
 occupy 5,000 of those miles, is, indeed, not first in the physical 
 magnitudes of the states. The vast expanse of Texas, measured 
 in 266,000 square miles, stands here at the head. But, as Sir 
 William Crookes, president of the British Association, lately 
 pointed out in seeking to show that the bread-eating population 
 of the world is fast overtaking the capacity of the world's wheat 
 fields, the productive heart, or dependable agricultural area of 
 Texas* is included between the Red River of the South, on the 
 North, and 30 30' latitude on the South and the 96th meridian 
 on the East and the looth meridian on the West, an area of 
 about 43,000 square miles; while the banner agricultural states, 
 Ohio, Indiana, Illinois, Iowa, and Missouri, are each consider- 
 ably less in area than Minnesota. Roundly speaking, Minnesota 
 is as large as Indiana and Illinois takeri together, is one and a 
 half times the size of Iowa, almost twice the size of Ohio, and 
 
 *An area in Texas, 50 per cent, larger than all Minnesota, and too 
 dry to cultivate without irrigation, lies west of the lOOth meridian. An 
 area 80 per cent, as large as Minnesota lies in Texas south^ of the 3Oth 
 parallel of latitude ; and an area about half the size of Minnesota lies 
 east of the p6th meridian. It is particularly with reference to the suc- 
 cessful culture of wheat that Crookes marked off one-sixth of Texas 
 as its dependable agricultural area. He has computed from the census 
 figures of i8co that the sixty counties in that area produced 96 per cent, 
 of the wheat'grown in the state; no less than 57 per cent, of the cotton; 
 51 per cent, of cereals of every description, and a large proportion of both 
 horses and cattle. 
 
104 HERTIG ON TAXATION. 
 
 twenty per cent larger than Missouri. Idaho, Kansas, and Utah 
 states approximately equal to Minnesota in area, have an im- 
 mensely greater percentage of waste lands. Were the western 
 half of Kansas of dependable agricultural value, as good let us 
 suppose as her eastern half, Kansas would now doubtless exceed 
 Minnesota in population. She made a giant stride ahead of Min- 
 nesota in the decade following 1870, kept ahead, though with 
 much diminished lead, in the decade ending with 1890, but came 
 to almost a stand-still in the last census decade, so that Minne- 
 sota now leads her in population by almost 300,000. It is not so 
 widely known as it should be outside of Minnesota, that Indian 
 corn has heretofore proved to be a more reliable crop in this 
 state than it has even in the great states famous for corn. In a 
 good year, an Illinois corn field yields more per acre than a Min- 
 nesota field, but the percentage of variation in Minnesota, year in 
 and year out, is much less than in Illinois. Of states, other than 
 Texas, larger than Minnesota, Michigan is the only one likely to 
 keep in the running with Minnesota for all round development. 
 California, Oregon, Colorado, Nevada, Montana, Wyoming, and 
 the Territories of Arizona, New Mexico and Alaska, the remain- 
 ing states and territories of greater area, have too much moun- 
 tain or other waste land, to acquire and maintain parity of de- 
 velopment with Minnesota, comparing average square mile with 
 average square mile. Accustomed in the United States to vast 
 areas and magnificent distances, to fifty political divisions that 
 are states or likely to become such, we fall too often into the habit 
 of lightly handling these political names, without pausing to 
 think of what each does or may represent, without having in 
 mind here in Minnesota that the magnificent area of our state 
 is within ten per cent of equaling the aggregate area of Maine, 
 New Hampshire, Vermont, Massachusetts, Rhode Island, Con- 
 necticut, New Jersey, Delaware and Maryland, states whose 
 aggregate population, in 1900, was within one hundred and fifty- 
 thousand of reaching nine millions! 
 
 The above figures and considerations are eminently proper to 
 create a fitting atmosphere for viewing the tax-problems of Min- 
 nesota. But this work and these views are more than local ; Min- 
 nesota for herself will settle nothing right unless she heeds the 
 like problems and the attempts at their solution in sister states 
 and in other countries; and her own splendid material setting 
 with its dazzling promise of future material development, differs 
 only in degree and but slightly in kind from the setting in which 
 her sister states do or may shine. Describing her physical un- 
 folding and promise as the environment in which her tax prob- 
 lems grow and await solution, I but describe an environment 
 
HERTIG ON TAXATION. 105 
 
 that is common, in its main features, to all the states of the 
 Union with, however, this essential difference: Minnesota and 
 her sisters of like age or of still later development have the flex- 
 ibility and initiative of youth, the ability to do and dare with 
 more courage and less routine. In this sense, the "Star of the 
 North" is the Star of Hope as well. The ancient ridge which 
 crosses the state, and which was once probably a narrow streak 
 of solid rock projecting from universal ocean is now well cov- 
 ered nearly everywhere with fertile drift; but from that covered 
 ridge within the state, waters flow northward, southward and 
 eastward to Lake Winnipeg, to the Gulf of Mexico, to the St. 
 Lawrence; and it is a pleasant thought that the ancient physical 
 backbone of this continent has much in these days of ours to 
 commend it as moral and physical backbone of the American 
 Union. 
 
 At the same time, let us not forget that exultation in present 
 and sure future growth is not the only feeling with which we 
 should face that growth. Let the spectre of massive poverty and 
 of sullen or furious discontent elsewhere warn us against es- 
 pousing or perpetuating conditions that will give or tend to give 
 to that spectre a flesh-and-blood reality among our children and 
 children's children. Who would not choose rather to see the 
 conditions of increase blighted than to foresee increase under 
 conditions wherein a future poet among us may sing as the sad 
 Leopardi, in Italy, sang at his sister's wedding: "Your children 
 will be starvelings or cowards !" Wealth makes not the man, 
 nor size the state. Wordsworth Donisthorpe, an English bar- 
 rister, in his sturdy book, Individualism, scores many a good 
 point, and many a one good enough in itself but from which he 
 draws wrong conclusions. But on mere increase of population, 
 his biting satire, inspired no doubt by the spectacle of the swarm- 
 ing masses in England, should give us pause, when we are about 
 to be carried away by the American tendency to acclaim with 
 delight unmixed each successive growth in members of our city 
 or state, "Somebody says that the land of England would, if 
 properly cultivated support a hundred and forty millions of peo- 
 ple. What of it? [To what good?] One would suppose that 
 the end and aim of the race was to consist of as many units as 
 possible, irrespective of their quality. * * * What would be 
 thought of an individual man who set before himself as the goal 
 of his ambition, the aim of his life, to attain the greatest possible 
 weight or size? Possibly the land would support a thousand 
 times that number of flies if we all agreed to cut our throats; 
 and what a gain that would be. And again I ask, Why Man? 
 He is an ugly beast at best, taking the majority for a pattern (as 
 
106 HERTIG ON TAXATION. 
 
 in democratic duty bound), something, thought Carlyle, like a 
 split carrot. And if he does happen to be distinguished from his 
 fellow animals by his ability to lie and get drunk, what then? 
 * * * In the days to come when the land shall fall into the 
 hands of the Daniel Lambert school, whose views of the * * * 
 [common weal] is ever increasing numbers, we may yet see a 
 hundred and forty millions of human beings swarming over the 
 surface of the country; a veritable Age Saturnian or shall we 
 say Saturnine? What a field for the district visitor and the 
 missionary! What happy hunting grounds for the quack with 
 his patent pills ! Fortunately this golden age lies in the dim and 
 distant future." Individualism,, pp. 254-5. 
 
 Reflections like these may well sober too jubilant exultation 
 over prospective growth, but should not discourage the present 
 generation, even as they cannot hinder the birth of future ones. 
 Be it our care to solve present problems well, confident that. in 
 so doing we lay the only possible foundation for the welfare oi 
 them who shall follow us. 
 
CHAPTER IX. 
 
 Taxation of railroads in Minnesota on a "contract" basis Origin and 
 Meaning of such basis Legal questions as between railroads and the 
 state Jacobson gross earnings tax of four per cent. Minnesota and 
 Wisconsin tax ideals as varied by geography Basis of street railway 
 taxation Listing under oath Assessed values from 1860 to 1901, 
 with state levy and receipts for latter year Valuations and rates in 
 various Minnesota counties Greene county, Pa., as typical county for 
 showing true values of realty and personalty in long-settled rural 
 districts Early county and school district finances Prairie illustra- 
 tions City counties compared with rural counties. 
 
 The question of railroad taxation is not the burning question 
 here that it is in some of the other states, notably in Wisconsin, 
 Iowa and Nebraska, because in Minnesota the railroads are 
 taxed on a basis fixed for some of them in the days when she 
 was yet a territory, and that basis is thought by many lawyeis 
 to be permanent as constituting a contract between the territory 
 and the railroads, .which contract the state, as the territory's sue-, 
 cessor, may not abrogate or impair under that clause in the Con- 
 stitution of the United State forbidding a state to "impair the 
 obligation of a contract." Congress, in 1857, granted certain 
 lands "to aid in the construction of certain railroads in the then 
 territory, now state, of Minnesota." 
 
 When soon afterwards "the question arose, what rule of tax- 
 ation would prove most beneficial and equitable, as applied to 
 the several companies to be entrusted with these enterprises, and 
 to become the recipient of the lands granted for that purpose?" 
 it was answered by the insertion of a special provision "in 
 each of their charters," that is, the charters of "the original land- 
 grant railroad companies" a provision "in the nature of a con- 
 tract obligating the then territory, now state, to receive and the 
 company to pay annually a certain percentage 'of their earnings 
 in lieu of all [other] taxes." This plan of railroad taxation was 
 adopted in lieu of subjecting the property of the railroads to 
 local assessment and general taxation as other property is as- 
 
108 HERTIG ON TAXATION. 
 
 sessed and taxed -for these reasons, amongst others: That their 
 franchises belonged to the whole people, and so "the taxes 
 which they should pay ought to be contributed to the general 
 fund [the state treasury] for the benefit of all" ; that further and 
 specially the use of those franchises in railroad construction 
 and operation "must necessarily prove of greater advantage to 
 localities along which they should be built, than the parts of the 
 country distant therefrom;" that to subject the lands to general 
 taxation as fast as received by the respective companies, "strug- 
 gling in their infancy" for means to complete the roads, 
 "would tend to delay if not to defeat the very object of the grant," 
 which object was "to secure an earlv completion of the roads,"- 
 and a consequent rapid settlement and development of the coun- 
 try. Opinion of Minesota's Attorney General, February 25. 
 1868. Such contract for an earnings tax having been made, "the 
 people by the adoption of a state constitution containing repug- 
 nant clauses could not impair it." Opinion of Minnesota's At- 
 torney General, March I, 1865, citing Gordon v. Appeal Tax 
 Court, 3 Howard, 433. 
 
 The charter rights of the original land-grant companies have 
 generally, if not in every instance, been kept alive and many rail- 
 roads in Minnesota, though not operating under the names of 
 the original companies, either exercise the original franchises 
 under an amended corporate name, or have otherwise succeeded 
 to them. The Great Northern Railway Company, for instance, 
 is in fact the Minneapolis and St. Cloud Railway Company, or- 
 ganized in 1856, its charter since then having been variously 
 amended, besides the amendment changing the corporate name. 
 In 1873 the Minnesota legislature, copying, in great measure, 
 a prior act (Spl. laws of 1865, sees, one and two, ch. 6), passed 
 an act imposing a tax on the St. Paul, Still water and Taylor's 
 Falls Railroad Company of one per cent on its gross earnings 
 during the period of three years after a certain named date, two 
 per cent for the period of seven years next following said three 
 years, and three per cent on each year's gross earnings after the 
 expiration of the ten years embraced in said two periods such 
 payments to make the company "forever exempt from all [oth- 
 er] taxation and from all assessments." Included in such exemp- 
 tion were also "the lands granted to said company to aid in tfu 
 construction of said railroad as also the stock and capital of sai'l 
 company." Special Laws, 1873, ch. III., sec. I. It was provid- 
 ed in section two of the same chapter that "Any railroad com- 
 pany owning or operating, or which may hereafter own or oper- 
 ate, any line or lines of railroad in this State, may, by resolution 
 of its board of directors, attested by its secretary and filed with 
 
HERTIG ON TAXATION. 109 
 
 the secretary of state, accept and become subject to the pro- 
 visions of this act; and in such case the payment of such per- 
 centage in lieu of taxes, in accordance therewith, shall com- 
 mence from and after the completion of thirty miles of such line 
 hereafter built, or of the entire line, if the same shall be less than 
 thirty miles in length." 
 
 Sections one and two of said act of 1873, modeled on and 
 largely copying sections one and two of said act of 1865, and 
 which related specially to the St. Paul & Pacific Railroad, are 
 still in force; and by section i of Chapter n of the laws of 1887, 
 it was enacted that any railroad company then or thereafter 
 owning or operating any line or lines of railroad in this state, 
 and not having accepted and become subject to said sections of 
 the act of 1873, "shall become liable to pay, and shall pay, a per- 
 centage of its gross earnings in lieu of all other taxes, in accord- 
 ance with the provisions of the" said act of 1873. Accordingly 
 all the railroads in Minnesota pay a gross earnings tax in lieu ot 
 all other taxes new roads one and two per cent for the first 
 three and the next seven years respectively, and three per cent 
 thereafter. All roads ten years old or more are on the three per 
 cent basis. This tax is quietly and easily collected. 
 
 The only questions of particular importance that arise under 
 the law are questions of accounting. "Fine" points, so to speak, 
 have been generally decided by the courts against the com- 
 panies. Thus while the land grants proper of the railroads have 
 been held exempt as per provision in their charters in the nature 
 of a contract (see p. 108, above) ; yet where a railroad company 
 had made a purchase of timber lands from which to cut ties, it 
 was held that these lands are taxable in the hands of the com- 
 pany, just like lands in general in the hands of private owners. 
 County of Tod'tt v. St. Paul, M. & M. Ry. Co., 38 Minn. 163, 
 and the Supreme Court of the United States refused to reverse 
 this decision. St. Paul & C. Ry. v. Todd County, 142 U. S. 282. 
 The land grant is exempt by ''contract;" and the statute, as well 
 that of 1865, as that of 1873, exempts in consideration of the 
 gross earnings tax, all railroad property "held or used for, in or 
 about the construction, equipment, renewal, repair, maintaining 
 or operating" the road. These words of exemption are construed 
 strictly, as in the tie land case. Every reader of legal education 
 knows that contracts or statutes exempting property from taxa- 
 tion are construed strictly, and that doubtful cases are, and ol 
 right ought to be, resolved in favor of the taxing power. The 
 same railroad company owned and maintained a large summer 
 hotel at Lake Minnetonka adjacent to its tracks and for the pur- 
 pose of Increasing its suburban summer traffic. This hotel was held 
 
110 HERTIG ON TAXATION. 
 
 not exempt from ordinary taxation. County of Hennepin v. St. 
 Paul, M. & M. Ry. Co., 42 Minn. ,238. So, also, property 
 bought for a future railroad use that will exempt it from taxation 
 when so used, is meanwhile subject to ordinary taxation. City 
 of St. Paul v. St. Paul M. & M. Co., 39 Minn. 112. A railroad 
 company, by leasing a wharf to a coal company, takes it out of 
 railroad use, and subjects it to ordinary taxation. County of 
 St. Louis v. St. Paul & D. R. Co., 45 Minn. 510. The St. Paul 
 Union Depot Co. is, as it were, a corporate wheel within other 
 corporate wheels. Its stock is all owned by railroad companies ; 
 they having all paid to the state taxes on their own gross earn- 
 ings, made the point that the Depot Company is not liable to 
 pay a tax on its gross earnings; and the point so made was de- 
 cided in their favor. State v. St. Paul Union Depot Company, 
 42 Minn. 142. So it had been previously held that where a rail- 
 way company had leased a portion of its line for a stated annual 
 rent, such rent was not a portion of its gross earnings as not be- 
 ing within the letter of the gross earnings law which taxes only 
 the gross receipts from operation. The court properly observed 
 that the lessee company would have to pay on the gross receipts 
 derived from its operating of the line held under lease, and that 
 to tax the lessor's rent would be double taxation. State v. St. 
 Paul M. & M. Co., 30 Minn. 311. 
 
 . The principal ground of dissatisfaction with the gross earn- 
 ings tax in Minnesota is that its operation does exempt the rail- 
 road land grants from taxation as ordinary lands in the hands of 
 private owners are taxed. This exemption is felt severely in 
 those counties where there is a considerable acreage of land 
 grants yet unsold; but as these lands are passing into private 
 ownership, where they bear their pro rata burden of taxation, 
 their present non-taxation is a diminishing cause of discontent 
 eventually to pass away, but leaving the rankling memory that 
 the railroads had too good a thing. Naturally enough the dis- 
 content with land-grant exemption from taxation inspired both 
 desire and attempt to remedy the evil by appropriate legislation 
 an attempt which constitutional restrictions reduced to mere 
 futile "tail-twisting" of the railway companies interested. In 
 1895 the Minnesota legislature passed an act (Laws 1895, ch. 
 1 68), providing for the taxation of these lands as other lands are 
 taxed, but without in any way affecting the gross earnings tax. 
 An amendment to the state constitution, which amendment was 
 adopted Nov. 8, 1871, had already provided that any law repeal- 
 ing or amending the gross-earnings tax law, should not take ef- 
 fect unless submitted to a vote of the people of the state, and 
 adopted and ratified by a majority of the electors of the state 
 
HERTIG ON TAXATION. Ill 
 
 voting at the election at which the same should be submitted. 
 Constitution, Art. IV, sec. 32a. So the law of 1895 providing 
 for such taxation of railroad lands was submitted to the people, 
 and adopted at the election held in November, 1896. As was ex- 
 pected, the railway companies resisted payment of the taxes 
 on their lands. In due time a test case was brought, and reached 
 the Minnesota supreme court. State v. Marr and Stearns, 72 
 Minn. 200. The court held that the law of 1895 had been passed, 
 submitted and ratified with technical sufficiency. It held also, 
 on the merits of the case, that the law of 1895 was not in viola- 
 tion of the Constitution of the United States as impairing the 
 obligation of a contract; for the court decided that the gross 
 earnings tax laws themselves when passed were m violation of 
 the Constitution of Minnesota, namely, that part of section I, 
 of article IX, which provides: "All taxes to be raised in this 
 state shall be as nearly equal as ma;y be, and all property on 
 which taxes are to be levied shall have a cash valuation and be 
 equalized and uniform throughout the state." 
 
 And of that part of section 3 of article IX, which provides: 
 "Laws shall be passed taxing all moneys, credits, investments 
 in bonds, stocks, joint stock companies, or otherwise, and also 
 all real and personal property according to its true value in 
 money." 
 
 Naturally, if the gross earnings tax laws were themselves un- 
 constitutional they could not create a valid contract whose im- 
 pairment is forbidden by the Constitution of the United States. 
 The court held, however, that section 32a, of article IV, above 
 referred to, does, by its reference to "any law or laws" providing 
 for a tax on the gross earnings of railroads in lieu of all other 
 taxation, and by prescribing conditions "for the repeal or amend- 
 ment" of such law or laws does in effect validate and make them 
 constitutional. The court held further that this validation did not 
 make the gross earnings tax laws take on the nature of a contract 
 which the state could not change. As the court put it, "this rati- 
 fication or validation of the statutes was a qualified one and the 
 right to repeal or amend them was reserved by necessary implica- 
 tion, provided such appeal was adopted and ratified by a majority 
 of the electors." 
 
 This decision would have been a knock-out blow for the 
 contract theory of the railroads, haa it been final. But the Su- 
 preme Court of the United States had jurisdiction to review the 
 case, because it presented the case of a right claimed under the 
 Constitution of the United States, and denied in the state court. 
 The railroads, therefore, carried the case up to this "eminent 
 tribunal," which reversed the Supreme Court "of Minnesota, and 
 
112 HERTIG ON TAXATION. 
 
 held that the gross earnings tax laws do constitute a contract 
 with the land grant companies which the state may not "impair." 
 It held also that, as to the state court's construction of the state 
 constitution, while the federal courts usually adopt such con- 
 struction as binding on them, yet the federal court will use its 
 own independent judgment, "when the question of contract is 
 presented." Stearns v. Minnesota, 179 U. S. 223. That, in any 
 event, statutes, such as the gross earnings tax laws, acquiesced 
 in by the administrative department of the state and by the state 
 courts for a long period of years were not at this late date to be 
 declared unconstitutional in their inception. While there was no 
 dissenting opinion, four of the justices, White, Harlan, Gray and 
 McKenna, intimated that if the question had really turned on a 
 true repeal or a true amendment of the gross earnings tax law, 
 under sec. 32a of article IV of the state constitution, their con- 
 clusion might have been different; that, in effect, a law which 
 leaves the gross earnings tax stand without impairment or dim- 
 inution, but singles out of the property covered by the grass 
 earnings tax, some of it for ordinary taxation, a mode of taxation 
 having no natural connection with the gross earnings tax 
 neither repeals, nor, properly speaking, amends the gross earn- 
 ings tax law; hence, conceding that section 32a of article IV, 
 of the Minnesota constitution affords sufficient warrant for re- 
 peal or amendment of the gross earnings tax law, it does not ap- 
 ply to the case before the court, which presents neither true re- 
 peal nor true amendment. I have gone into this with some mi- 
 nuteness, because such intimation of the federal judges 'seems 
 to afford the only ground of hope that, if what is known as "the 
 Jacobson gross earnings tax law" (Laws of 1901, ch. 150), which 
 is to be submitted to the people at the election in November, 
 1902, shall be ratified by the people, it may be held valid by 
 the Supreme Court of the United States. This law prescribes a 
 four per cent gross earnings tax in lieu of the present percent- 
 ages. It is somewhat boldly drawn, and does not save to new 
 railroads the one per cent tax for their first three years and the 
 two per cent tax for the following seven. See chapter xvii, below, 
 for fuller notice. "Gross earnings," by uniform practice of the 
 railroad companies reporting them and by definition of subse- 
 quent statute, mean "all earnings on business beginning and end- 
 ing within the state and a proportion based upon the proportion 
 of mileage within the state to the entire mileage over which such 
 business is done, of earnings on all inter-state business passing 
 through, into or out of the state, and shall include gross earnings 
 of all express companies, fast freight lines, sleeping and parlor 
 car companies, and other common carriers, corporations, or 
 
HERTIG ON TAXATION. 113 
 
 persons, doing business or transporting persons or property on 
 and over the lines or right of way of any railroad company with- 
 in the state by virtue of an agreement, contract or arrangement 
 of any nature with such railroad company." Statutes of 1894, 
 sec. 2753. 
 
 The constitutionality of the proposed Jacobson law, if ratified 
 by the people, will not be seriously drawn in question, except in 
 its application to those roads which are protected by the early 
 "contract" franchises above mentioned. Its adoption will make 
 the question of railroad taxation a burning one until the question 
 of constitutionality is settled, and still longer, should it be settled 
 in favor of the railroads. 
 
 The revenue which the state receives from the gross earnings 
 tax on railroads is a handsome sum; and in ten years, taking 
 the revenue for 1891 and 1901 for the basis of comparison, it has 
 more than doubled. The gross earnings tax on receipts for 1891 
 amounted to $750,742.10; for 1901, it amounted to $1,658,779.- 
 84. The gross earnings tax in Minnesota and in Wisconsin af- 
 fords a striking illustration of how a slight difference in geog- 
 raphy, is sufficient to make a wide difference in the tax reform 
 ideals of people speaking the same language, pursuing like ends, 
 and professing like federal allegiance. Wisconsin, by judicial 
 construction, has a "wide-open" constitution, and has chosen, 
 under the liberty so afforded to put her railroads under a gross 
 earnings tax. This with her is not by technical "contract" but 
 by plain statute, subject at any time and in ordinary course to 
 amendment or repeal. Minnesota, contract-tied, has now a three 
 per cent tax; Wisconsin, free from contract, has already a four 
 per cent tax. Minnesota's ideal is to raise the gross earnings 
 tax to four per cent by means of the Jacobson bill to be voted on 
 by the people in November, 1902; Wisconsin's ideal, as cham- 
 pioned by Gov. La Follette and by his . friends, is to raise her 
 gross earnings tax to $y 2 . per cent. (See ch. VII.) As Em- 
 erson says, "Want is a growing giant which the coat of Have 
 is never broad enough to cover." 
 
 In Minnesota, as generally in the states, a street railway 
 is not technicaly a railroad. Street railways in Minnesota are 
 taxed on the value of their real and personal property, and on 
 the balance of the market value of their shares of stock, if they 
 have a market value, or on the balance of their actual value, if 
 they have no market value that is to say, on the balance struck 
 by deducting from such market or actual value an aggregate 
 composed of the company's indebtedness, the value of its real 
 property, if any, and of the value of its personal property. The 
 statute provides that the track of a street railroad company 
 
114 HERTIG ON TAXATION. 
 
 "shall be held to be personal property." Statutes of 1894, sec. 
 
 . 
 
 It is sufficient for the purpose of this work and of this chap- 
 ter to add that Minnesota, as the reader has already seen from 
 parts of sections one and three of Art. IX of her constitution, 
 aims at taxing all real and personal property on the basis of its 
 cash value and at a uniform rate on such value. There are the 
 usual exemptions of church property, public property, etc., and a 
 constitutional authorization to the legislature to exempt person- 
 al property from taxation "to an amount not exceeding in value 
 two hundred dollars for each individual." But so far the legisla- 
 ture has not gone beyond making such individual exemption 
 one hundlred dollars. 
 
 Minnesota has not as yet enacted any stringent laws to aid her 
 tax officials in ferreting out personal property that escapes tax- 
 ation. Listing under oath is prescribed (sec. 1523, statutes of 
 1894), but no penalty is prescribed for refusing to so list. If the 
 assessor thinks that the person required to list "has not made 
 a full, fair and complete list of such property, he may examine 
 such person under oath;" but the only penalty- for refusal to an- 
 swer under oath is that "the assessor may list the property 
 * * * according to his best judgment and information.'' Id. 
 sec. 1525. The assessor, if not always a "gentleman" in Mrs. 
 Astor's sense of the word, has usually a gentlemanly regard for 
 the feelings of his patients, and a gentlemanly modesty that 
 keeps him from over-bold guessing. Seldom indeed does he 
 make a guess that costs him thereafter a vote. 
 
 The total assessed values of real and personal property in the 
 state for the earliest year whose figures for both realty and per- 
 sonalty are before me, 1860, were $36,753,408; for 1870, assessed 
 values aggregated $87,179,257; for 1880, $258,055,543; for 1890, 
 $558,820,215; for 1900, $588,016,688. As the railroads 
 pay only a gross earnings tax, their value is in no 
 wise represented in the above figures. Persons who delight to 
 map out the course of things in lines and curves platted on paper 
 will find it a very easy graphic problem to construct a curve 
 showing the relation of the assessed values of personal property 
 in Minnesota to the aggregate values of realty and personal- 
 ty. Settlers in mass are always poor in personal property. What 
 they have, however, is mostly visible and tangible, and as it con- 
 sists largely of the domestic animals, it increases as rapidly as 
 they do. Land at first is the new country's main taxable asset. 
 The curve of the percentage of assessed personal property be- 
 gins a little above a horizontal line representing zero and rises 
 rapidly to a height graphically representative of 25 per cent. 
 
HERTIG ON TAXATION. 115 
 
 when the curve gradually begins to sink in a slightly scalloped 
 line. Thus in 1860, the aggregate assessed value of Minnesota 
 personalty, $4,731,495, was in round numbers 13 per cent of the 
 aggregate valuation of the state. By 1865, it had shot up to a 
 trifle over 25 per cent; in 1870, had already dropped to 23 per 
 cent; in 1880, had fallen to 21 per cent; in 1890, to a little less 
 than 16 per cent; and by 1895 had returned almost to the orig- 
 inal level by further dropping to 13 3-10 per cent. This extreme 
 depression, however, was due to hard times and not quite nor- 
 mal as the percentage rose again to a little less than 17 per cent, 
 in 1900 and to a little less than 18 per cent, in 1901. In 1901, 
 assessed values of personal property reach high-water mark in 
 the history of the state with an increase of $9,000,000 over 1900, 
 and a total of $107,840,044. The years 1900 and 1901 covered 
 one biennial assessment period for realty ; hence assessed values 
 of realty for 1901 were increased only as new acreage (convey- 
 ances to individuals by railroads out of their grants and by the 
 United States out of the public domain) was entered for taxation, 
 and new or improved buildings on lands and lots were marked, 
 by local assessors and boards, and the owners' realty assessments 
 increased over the preceding year according to law. These items 
 increased assessed realty values nearly $4,000,000 for 1901 as 
 compared with 1900. Minnesota's grand total, then, of assessed 
 values for 1901, the first year of the 2Oth century, is $600,980,- 
 614, of which grand total assessed values of personal property 
 constitute, as already stated, 18 per cent. very nearly. 
 
 The "new prosperity" first began to be reflected in the per- 
 sonal property assessed values for 1898. While the totals under 
 this head for 1897, $85,624,134, were only half a million more 
 than for 1895, the leanest in personal property assessments of the 
 lean Grover-Cleveland years, the totals for personal property in 
 1898 leaped to $89,448,796; in 1899 leaped to $92,808,154, and in 
 1900 to $98,803,235, when they first passed the previous high-wa- 
 ter mark set by 1892 at $96,043,649. Note, however, that real 
 estate assessments for the years 1892, 1894 and 1895 reached 
 higher figures per acre ($7.88, 7.96 and 7.71 respectively) than 
 ever before or since ; and that the aggregate assessed values of 
 realty and personalty for said three years were respectively $637,- 
 459,928, $638,916,326, and $641,250,280 greater aggregates than 
 the state showed before, or has shown since. The year 1895 
 holds the banner for low percentage of personal-property values 
 included in her aggregate just a trifle less than 13 3-10 per cent. 
 
 In 1870, the total of all taxes levied within the state for all 
 purposes was $2,619,764.17, making the average rate on the as- 
 sessed valuation 3 per cent. In 1880, the like total was $4,191,- 
 
116 HERTIG ON TAXATION. 
 
 811.41 ; the average rate only 16.2 mills on the dollar. The next 
 five years saw marvels in the development of the state, and the 
 total of all taxes levied in 1885 leaped up to $8,383,696.67 ; the 
 rate to 20.9 mills on the dollar. In 1890, the total of all tax levies 
 within the state was $12,707.563.94, the rate 21.6 mills on the 
 dollar. From 1892 to 1900 inclusive the aggregate of all taxes 
 for any of said years was nearly the same, less than a million 
 more, less than half a million less, than $14,000,000, the year 
 1900 leading in aggregate and in rate, $14,963,901.76, and 25.4 
 mills thereon. 
 
 The first year of the new century leads off with a substantial 
 increase in the aggregate of all taxes, and some increase in rate, 
 over any one of the ten preceding years, aggregate and rate 
 for 1901 being respectively $16,269,671.55, and 27.1 mills on the 
 dollar. In said aggregate the total, levy for the state treasury 
 was $2,045,447.92. But to the budget of the state proper must 
 be added $1,658,779.84 paid into the state treasury in 1901 by the 
 railroads in settlement of their gross earnings tax. Nor must the 
 "private economic" assets of the state be forgotten. On August 
 i, 1901, she owned of her own funding bonds, and of the bonds 
 of six other states, an aggregate of $8,560,718.32. She owned 
 in interest-bearing contracts for lands sold, $5,024,691.27. She 
 owned in unsold lands acreage enough to bring this total of her 
 revenue-producing property to $20,000,000. That the income 
 from these sources must be used for permanent school and uni- 
 versity purposes makes it none the less a state revenue. 
 
 A scrutiny of aggregate assessed values by counties and of 
 county rates for the year 1901, shows interesting facts. Cook 
 county has the record for small value of personal property, ab- 
 solute and relative. Her total valuation is $1,290,723, of which 
 only $22,549 (less than the fiftieth part) represents the assessed 
 value of personal property. But this is an undeveloped county, 
 having in "town and citv lots including structures thereon" only 
 $16,559. At the same time, while the average assessed value of 
 lands for the whole state in 1901 was $7.25 per acre, and in Cook 
 county $4.46 per acre, no less than seventeen counties had average 
 assessed land values of less than $4.46 per acre, while two of the 
 seventeen, Roseau and Aitkin, had land values respectively only 
 of $1.44 and $1.47 per acre. Roseau has not only the record for 
 the lowest value per acre, but also for the lowest taxable acreage, 
 135,712 acres; for, though Ramsey returns but 56,131 taxed 
 acres, that is because her area is mostly taxed in St. Paul 
 lots. Roseau, too, holds the record for the ratio of personal 
 property values to real estate values, $145,503 out of an aggre- 
 gate for both values of $364,797 40 per cent! She holds the 
 
HERTIG ON TAXATION. 117 
 
 record for the smallest total levy, $18,661.27, and, with her rate 
 of 51.2 mills on the dollar, would hold the record for highest rate 
 but for Red Lake county topping that rate and record with 53.8 
 mills. 
 
 Minnesota having counties in all stages of development af- 
 fords an ample domain in which to verify the conclusions which 
 a tolerable observer could hardly fail to make, without special 
 study of those figures, which show the development of taxable 
 personal property in relation to taxable realty. First . a large 
 country, or county, "out of doors," as the saying runs, that is, 
 land wild and cheap, population scant in number with little money-, 
 and little personal property of any kind, but with opportunity to 
 every one's hand for getting a farm, or a "claim" that shall be- 
 come one. If in such country Or county the soil is good, and the 
 tide of settlement flows that way in sizable volume, there is a rap- 
 id increase in population and in assessed values of personal prop- 
 erty. Each settler has abundance of food and shelter for domes- 
 tic animals; he needs them, and they multiply rapidly. If he is 
 first caught by the easy tillage of a prairie farm and the invita- 
 tion it holds out to grow large fields of grain, and to neglect 
 stock-raising, still he will soon have neighbors to point him out 
 a better path ; and meanwhile he will go in for horses, machinery 
 and the like, all tangible personal property. Land will of 
 course rise in price and value, but not at first so fast as to keep 
 proportionate pace with the expansion of personal property val- 
 ues. Then, too, a psychological factor comes in to modify the 
 first assessments of lands in a new country ; men carry there their 
 standards of value from other counties ; and while they make a 
 very considerable, often a nearly or quite sufficient, allowance for 
 the abundance and cheapness of the lands in their new home, yet 
 very often an assessment figure for land is reached and adhered 
 to because it seems ridiculous to put the value any lower, and 
 such stand is often voiced and summarized with the remark, "It's 
 worth that if its worth anything!" Add to this the urgent need, 
 re-inforced often by an over-urgent clamor, for revenue in a new 
 country, while there is yet almost no personal property to tax; 
 and it becomes apparent why and how the land tax is burdensome 
 from the outset, and why and how, if the new country develops 
 rapidly, the assessed values of personal property show for awhile 
 a greater percentage of increase than the assessed values of the 
 land. Itasca, for instance, is one of the large and new counties 
 in Minnesota, and has, speaking roundly, 900,000 taxed acres. 
 St. Louis, with 1,887,877 acres; Otter Tail, with 1,214,919, and 
 Polk, with 1,138,658 are the only counties that lead Itasca in 
 taxed area. Now Itasca has a total assessed valuation of $5,353,- 
 
118 HERTIG ON TAXATION. 
 
 774, of which aggregate only $212,121 (not quite 4 per cent.), 
 represents the assessed value of personal property. Yet the as- 
 sessed value of Itasca lands averages $5.47 per acre (only $1.78 
 below the average for the whole state), and she levies the' aggre- 
 gate sum of $144,175.25 for local and state purposes, at an aver- 
 age rate of 26.9 mills on the dollar, the average rate for all 
 Minnesota being 27.1 mills, or just 2-10 of a mill higher. Red 
 Lake county, already mentioned as having the highest rate of 
 taxation in the state, 53.8 mills on the dollar, is a Red River 
 valley county, though i'olk county is between her and the river. 
 .Red Lake has a fertile soil and many other natural advantages. 
 She has been settled long enough to show that 20 per cent, of 
 her aggregate assessed value is in "town and city lots including 
 structures thereon." She is remarkable for the length and 
 vehemence of a contest within the limits of her county seat town 
 as to where the business center thereof should finally be friends 
 of this or that spot backing up their friendship by building ac- 
 cordingly. Good as her acre lands are, she has contrived to keep 
 their valuation down to $2.28 per acre, aided no doubt by satis- 
 factory growth in her taxable personalty and in her "town and 
 city lots," perhaps by sturdy effort on the part of her farmers to 
 saddle taxes on }he other fellow. She leads all the counties but 
 Roseau in the ratio of taxable personal property to aggregate of 
 realty and personalty; both kinds aggregate $1,527,867, of which 
 $382,479, or a little more than 25 per cent, represents the assessed 
 value of personal property. 
 
 In this connection it may be observed that if a given county 
 has so far got its age and growth that changes in the number of 
 its inhabitants and in the selling price of its lands are slight and 
 gradual ; and if such county remains so far rural and agricultural 
 that no more than about one-eighth to one-tenth of its inhabi- 
 tants live in towns and villages, it may be assumed with toler- 
 able safety that the "true value in money" of all the personal 
 property owned in such county will not aggregate very much 
 more, and but little less, than 25 per cent of the "true value in 
 money" of the aggregate real estate therein ; and this upon the 
 basis of measuring values by the cash price that can be obtained 
 at private sale for both kinds of property, as evidenced by actual 
 sales. Legislators and students of taxation, by bearing in mind 
 facts of this description, would be less "rattled" by loose-jointed 
 talk of the vast amounts of personal property that escape taxa- 
 tion. The personal property of certain individuals and of cor- 
 porations in some places undoubtedly does escape, largely escape, 
 the efforts to tax it. Even in rural counties, after a certain time, 
 a good deal of personal property escapes ; but in seeking to correct 
 
HERTIG ON TAXATION. 119 
 
 this or any evil, the first thing is to get an approximately clear 
 conception of its extent. 
 
 The attempt of the "Committee appointed hy the Tax Con- 
 ference of Pennsylvania Interests/' to value accurately all of the 
 property in that state is very interesting. (See farther mention 
 of said Committee in ch. XVIL, below.) From the mass of facts 
 and figures reported by the committee, I select those bearing on a 
 Pennsylvania county which, from personal knowledge of the same 
 I have taken as a typical agricultural county, fairly prosperous 
 and nearly stationary. This is Greene county. Population in 
 1890, 28,935; in 1900, 28,281. Borough and village population 
 in 1890, 3,300; in 1900, 4,055. The actual increase in borough 
 and village population in ten years was only a little more than 
 400 instead of the apparent increase of 755 ; for Mount Morris, 
 an ancient and straggling country village became incorporated 
 within the decade, and shows in the census of 1900 with 345 in- 
 habitants, changed in form but little changed in substance. 
 Greene county, then, with a farm and pasturage area of 396,800 
 acres, and with about i-io of her real estate values in borough 
 and village property, had in 1892, according to the Pennsylvania 
 Committee the following aggregate actual values : 
 
 Total real estate $17,103,804 
 
 Total personal property 4,235,400 
 
 Moneyed capital (not included in last 
 
 item) 1,000,000 
 
 Total actual values $22,339,204 
 
 Percentage of personal property 23^ 
 
 The item of moneyed capital, $1,000,000, is an independent 
 estimate, Greene being one of the counties whose "moneyed cap- 
 ital" the committee had not satisfactory data for estimating. 
 
 I return to Minnesota tax statistics for 1901. Dodge is the 
 banner county for low rate of taxation, 16.8 mills on the dollar, 
 as against her nearest competitors, Carver with 18.2 mills, Sib- 
 ley with 18.7 mills, Houston with 19.1 mills, McLeod with 19.5 
 mills, Olmstead with 19.6 mills. No other counties have a rate 
 below 20 mills on the dollar. Thirty-five counties have a rate of 
 over 20 and less than 25 mills on the dollar. Nineteen counties 
 have a rate of over 25 and less than 30 mills on the dollar. Nine 
 counties have a rate of over 30 and less than 35 mills on the 
 dollar. Eight counties run under 40 and above 35 mills on the 
 dollar; and the five remaining counties run from 43.1 mills to 
 53.8 mills on the dollar. 
 
 Dodge county, the leader in low rate, has an aggregate as- 
 sessed valuation of $5,186,644, of which but a trifle more than 
 
120 HERTIG ON TAXATION. 
 
 the tenth part $534,679, to speak exactly represents the as- 
 sessed valuation of her "town and city lots including structures 
 thereon." Her acres have an average valuation of $13.55, 
 which is nearly as high as the acre valuation anywhere in the 
 state outside of the large city counties of Hennepin and Ramsey. 
 Outside of those two counties, only Blue Earth, Dakota and 
 Washington counties, $14.45, $H-66 and $14.11 respectively, 
 have a higher average valuation on their acres than Dodge county 
 has. Olmsted, $13.52, and 'Carver $13.29, are next below 
 Dodge in valuations per acre. In the agricultural counties that 
 run above Dodge in acre valuations and in those mentioned as 
 running just below her in that respect, the rates of taxation are 
 almost correspondingly moderate, 20.8 mills for Blue Earth, 
 1 8.2 mills for Carver, 22.4 mills for Dakota, 19.6 mills for Olm- 
 sted, 23.9 mills for Washington. It may be safely assumed 
 that the gradations in these rates depend very largely on the rel- 
 ative amounts and numbers of urban property and urban popula- 
 tion in the counties just mentioned. Washington, with the high- 
 est rate in the five, contains the important city of Stillwater, and 
 in her aggregate valuation of $8,716,325, the sum of $3,609,833 
 represents the assessed value of 'town and city lots, including 
 structures thereon." Dakota, with the next highest rate in the 
 five has in "town and city lots," etc., $1,782,170 out of a total 
 valuation of $7,860,973, while Blue Earth, with a rate 1.6 mills 
 lower than Dakota has a somewhat higher percentage of urban 
 property in her total valuation, $2,796,194 out of $11,494,543. 
 But special variations in administration and in financial need in 
 both city and county subdivisions easily account for departures 
 from theoretical proportion. In Carver, however, and in Olmsted, 
 both with low rates ('Carver's only 1.4 mills above that of 
 Dodge) the relation of urban property to rate of taxation is very 
 evident. Carver's urban property amounts to only $372,923 in a 
 total valuation of $3,945,319; Olmsted's to $1,398,836, or not 
 quite one-fifth, in a total valuation of $8,651,156. In Sibley, 
 Houston and McLeod, above mentioned as respectively third, 
 fourth and fifth in point of low rates of taxation, assessed val- 
 ues of lands are well above the average for the whole state of 
 $7.25 per acre ; in the case of Sibley and McLeod, respectively, 
 $10.58 and $12.08 per acre, while Houston, dipping closer to the 
 general average, has $7.50 per acre. Sibley's urban property is 
 only $391,049, out of a total of $5,062,653; Houston's $396,015 
 out of $4,001,541 ; McLeod's $648,857 out of $5,204,421 ; that is 
 to say about one-thirtieth, one-tenth and one-eighth respectively. 
 In all these counties of low rates, prosperous agricultural 
 counties, among the oldest in the state, and hence no longer in 
 
HERTIG ON TAXATION. 121 
 
 the fitful fevers of early infancy, we see that good lands and the 
 relative insignificance of city property and city population are 
 the chief determining factors in the rates of taxation. Good lands 
 in advanced development bring up the average valuation of acres 
 in their county; absence or relative insignificance of urban de- 
 velopment means practically no taxes 'for police, fire. department, 
 streets, sewers, expensive graded and high schools, and the like. 
 Schools of course are everywhere, and their maintenance counts 
 up for a heavy item in all American local taxation. Perhaps 
 the burden of taxes for schools is nowhere felt quite so severely 
 as in the newly settled counties of the Northwest, a stage of de- 
 velopment through which all the counties must pass or have 
 passed. About the first school house in a new district, sometimes 
 clusters a greed as eager and as reckless as that which on a more 
 ambitious scale manifests itself on 'change in metropolitan cities. 
 When settlements are in easy reach of railroad trains, the thirst 
 for public plunder is stimulated to earlier manifestation by the 
 quicker advent of "fences" for the swag. Thus, the broad prai- 
 ries of the Dakotas were settled in downright earnest, only when, 
 so to speak, there was but a step from the palace car to the 
 "shack." Towns, counties and school districts generally paid 
 their obligations in "orders," which were hawked about and sold 
 at a roaring discount. Such "orders," be it remembered, are 
 warrants duly signed and countersigned by the proper officers 
 of town, city, county or school district, and drawn upon the 
 treasurer of such municipal subdivision in favor of the respective 
 payees. No Dakota order in the early days drew less than 7 
 per cent interest, and 10 per cent was not uncommon. Orders 
 when presented to the treasurer for payment, were by him stamped 
 "Not paid for want of funds," or with like legend, and thence 
 forward bore interest until paid. School orders generally sold 
 at a greater discount than county or city orders, as being more 
 local and subject to more contingencies in point of revenue to 
 pay them with. County orders, as good in fact as bonds of the 
 United States, were often sold at 85 cents on the dollar of their 
 face, or even less, while 90 cents on the dollar of face value was 
 considered a fair price to get for the orders of counties of un- 
 questioned solvency orders sure to be paid in eighteen months 
 or thereabouts, with 7 per cent interest from the date of their 
 presentation for payment. 
 
 Professors and others desiring light on "the incidence of 
 taxation" seldom consider cases such as are afforded by orders 
 like those mentioned; but I will add, for their benefit, that in 
 such, as in many other cases, the "incidence," or where the tax 
 represented by the discount on such orders, finally alights, is 
 
122 HERTIG ON TAXATION. 
 
 not to be settled off-hand by the application of any ready-made 
 or even of any re-made theory. Most of those orders were is- 
 sued in payment of fees and services according to a scale or 
 schedule fixed by law, and in the expectation of payment for 
 the same in cash. The county therefore, or other subdivision, 
 found in these cases a par market for orders, and lost directly 
 only such part of the interest on the same as might have been 
 saved by a better way of getting and using credit. No juror 
 failed to serve, or witness in criminal cases to attend, or officer 
 to officiate, because of payment in orders. Counties paid in the 
 aggregate considerable sums as a bounty for killing gophers ; 
 and the tails of these animals were taken as sufficient voucher for 
 their death, and when presented to, and counted by, the county 
 auditor, were the basis of bounty warrants, or orders, at so 
 much per tail, as fixed by law. No complaint was ever made 
 that gopher mortality was in any way lowered by the discount 
 on county orders. There was always some bank or banker will- 
 ing to buy, or if no bank or banker, somebody with a little money 
 of his own, or somebody with a moneyed connection "below" 
 would step in to save the situation. You shall find more than 
 one old banker, more than one old other citizen, to tell you that 
 the money out of which he got the most good was borrowed 
 long ago at 2 per cent a month, or even at a higher rate. So 
 in the times of these orders there was an all-round distribution 
 of profits that delighted everybody, and a scattered incidence of 
 taxation which nobody curiously considered. 
 
 It was different with certain other orders. Contracts for pub- 
 lic work, and especially for school-houses, showed in prices asked 
 and obtained the full amount of the anticipated discount, and 
 something more. That there was some sort of a cash market 
 for school orders was the cause that not infrequently a school 
 district was organized out of territory where there were prac- 
 tically no school children organized for the sole present pur- 
 pose of getting a roaring builders' profit and for taking a roar- 
 ing discount. He who would buy the orders of the new district 
 encouraged him who would build the new school-house, soon to 
 ornament the raw prairie, and with the half dozen shacks of the 
 school-house promoters, to constitute the entire architectural 
 display in all the district. The chief of the promoters got the 
 building contract from the zealous allies whom he had induced 
 to become school officers, and in due time had his and their profits 
 in cash, while the buyer of orders had them, and his prospective 
 profits on paper. For, as is well known, the holder of a mere 
 warrant, or order, does not hold something protected in any 
 way by purchase "in good faith and without notice," as does 
 
HERT1G ON TAXATION. 123 
 
 the holder of commercial paper or negotiable bonds ; but as hold- 
 er of warrant or order, he is subject to any and every defense 
 that the municipality could make against him to whom the war- 
 rant was originally issued. The school districts thus perma- 
 nently and corruptly organized, survived after their first boards 
 of officers and directors had built and retired from office. Set- 
 tlers came in and found a school-house waiting for them ; they 
 needed a school-house, but perhaps did not want the kind of one 
 they found certainly not at any sucn magnificent price as that 
 represented by unpaid orders outstanding. Sometimes they 
 grumbled, burdened themseKes with heavy taxes, and paid for 
 tne school-house; often they grumbled, employed attorneys and 
 put up a stout defense against the holder of orders, with a suc- 
 cess of course in proportion to their tenacity and the complete- 
 ness with which they contrived to bring out the facts. 
 
 in general, it may be said that new counties are poorly 
 financed. They need so many things to be built from the ground 
 up, roads, bridges and public buildings, that, credit on any 
 terms co-operating, it is not surprising to find new counties, 
 controlled often by inexperienced and enthusiastic men, taking 
 a faster pace than is good for them, creating some things that 
 they could get on without, and particularly putting more money 
 into certain kinds of improvements than they should in their 
 first decade or first twenty years of county organization. Hence, 
 generalization, as to the significance of particular features in the 
 rate and amount of taxation in any new county, should be qual- 
 ified by careful attention to its situs, its physical geography, the 
 general character of its population, the date of its organization, the 
 half dozen men who probably control its politics and expendi- 
 tures, the county debt they have created, etc. With a prosperous 
 agricultural and relatively insignificant city development, as in 
 the case of the old and low-taxed group of counties above anal- 
 yzed, the special influence and facts to be weighed in consider- 
 ing the financial side of new counties are pretty well canceled 
 out in the lapse of twenty years or so from the date of county 
 organization : debts will have been paid, and the public extrav- 
 agance that often waits on booming will have disappeared. Here 
 and there the trail of a new court house will be well marked, 
 if such building is rapidly paid for; unusual floods may impart 
 their own swelling to the road and bridge account, but the main 
 current of county expenses will flow on with much smoothness 
 and uniformity. 
 
 In comparing county wilh cour.ty as regards revenue and ex- 
 penditure in a state so diversified as Minnesota, and where the 
 assessed values of farm lands vary by so considerable a margin, 
 
124 HERTIG ON TAXATION. 
 
 it does not necessarily follow that the lowest rate of taxation con- 
 clusively determines that there is better financial management 
 where it prevails than in certain other counties where the rate is 
 even considerably higher. Thus Dodge county with her ban- 
 ner low rate of 16.8 mills has a slightly greater taxed area than 
 Anoka county, 277,050 acres as against Anoka's 267,313. But 
 Dodge lands are valued at $13.55 P er acre > an d Anoka's at only 
 $5.56 per acre. Besides Anoka county as a whole has a greater 
 city burden than Dodge, city valuation $758,164, as against 
 Dodge's city valuation of $534,679. - But Anoka county, with 
 a rate of 33.4 mills does not levy taxes in as great an aggregate 
 as Dodge county with 16.8 mills, or about halt of Anoka's rate : 
 Anoka county levies $86,315.11 ; Dodge, $87,268.70. 
 
 Again, taking the most typical of the counties which have age, 
 high-priced lands, low rates of taxation, and preponderating 
 agricultural interests, we find that in their aggregate valuations 
 the percentage of personal property is somewhat lower than the 
 average percentage for the state, and in some instances consid- 
 erably lower. Thus Carver's percentage is 16, Dakota's 11.4, 
 Dodge's 17.3, McLeod's 16.5, Olmsted's 18.6, Sibley's 15. Blue 
 Earth, with high-priced lands and low taxes can make some claim 
 of being an urban county, since only five other counties lead her 
 in their assessed values of town lots and city property, and her 
 city property valuation is nearly one-fourth of her aggregate, 
 while her percentage of personal property, 16.4, is close to the 
 average for counties otherwise in her class. Houston, with low 
 taxes, decided agricultural preponderance, and lands valued at 
 only 25 cents per acre above the average for the state, shows 
 a higher percentage of personal property than any other of the 
 low taxed counties 23 per cent. But she has almost the same 
 taxed area as Dakota; and if her lands, like the latter county's, 
 were assessed at $14.66 per acre, instead of at $7.50, her per- 
 centage of personal property would be only 14. Tangible per- 
 sonal property is valued uniformly throughout the state, accord- 
 ing to the scale adopted in the state board of equalization, while 
 lands, as already shown, differ in assessed value from each other 
 in the different counties by all sorts of percentages. Dakota and 
 Houston, just compared, are of about the same size, and list near- 
 ly the same amounts of personal property, $901,442 and $919,467 
 respectively; yet Dakota's percentage is 11.4, Houston's 23. 
 
 The three distinctively city counties of the state, Hennepin, 
 Ramsey and St. Louis, have an aggregate valuation of $250,- 
 631,370, which is five-twelfths of the valuation of the entire state. 
 These three counties, then, pay five-twelfths of the taxes that are 
 yielded to the state treasury by direct levy. Including their local 
 
HERTIG ON TAXATION. 125 
 
 taxes they pay 45 i-io per cent of all the taxes levied within the 
 state, that is to say: 
 
 Aggregate levy for all purposes within the state. . . .$16,269,671 
 Aggregate levy in Hennepin, Ramsey and St. Louis. 7,341,271 
 The assessed personal property in Hennepin amounts to 21 
 per cent of the whole assessment in that county ; in Ramsey, to 
 17.7 per cent; in St. Louis, to 16 per cent; and the average in 
 the three counties is i8^4 P er cent, as against an average ot 
 173-10 per cent, for the other counties in the state. When the 
 high valuations of certain lands in the cities are considered (see 
 ch, XIII, below), it would seem that in Minnesota, at least, 
 most kinds of personal property in. her larger cities fare rather 
 worse at the hands of the assessor than does personal property 
 in the rural counties. 
 
CHAPTER X. 
 
 Foundation of Great Northern Railway A romance in opportunity From 
 1879 to 1902 From scant hundreds to long- thousands From a golden 
 gratuitous nest-egg to a brood yielding more than $200,000,000 of 
 profits Successive steps in this production of wealth. 
 
 Thrift that waxes fat and kicks must not, as Prof. Perry at- 
 tests, be taxed at any more on his dollars, however he came by 
 them, than haggard near-the-rocks on the suppositions dollars 
 which the assessor has set down to him, and which this year shall 
 yield no tax payment, but rather the beginning of a tax-title. The 
 professors, in general, are good to wealth; but wealth is often 
 so ungrateful as to anger and perplex their souls by stealing 
 or begging franchises, and by leaving then a disportionately 
 light tribute with the tax-gatherer. I contribute herewith for 
 their benefit and for those of them who study problems of tax- 
 ation and government, a study in sudden and colossal growth of 
 profits of universal interest but peculiarly pertinent to the peo- 
 ple of Minnesota and of North Dakota, who have largely been 
 the power behind the scenes in the creation of those profits. 1 
 refer to the fortunes made or increased by the operation and 
 manipulation of the Great Northern Railway Company, and of 
 its predecessor and lessor, the St. Paul, Minneapolis and Mani- 
 toba Railway Company. None of this is ancient history. Go- 
 ing back only a little more than twenty years from the present 
 date, back to 1879, we come to the '"Manitoba" company, as 
 the Great Northern's predecessor was generally called, just en- 
 tering upon an inheritance of a little less than 600 miles of rail- 
 road, built with more or less of pain, tribulation and financial 
 disappointment by its predecessors, with which I have now noth- 
 ing to do. The boom of the Red River Valley of the North was 
 about to begin ; and the Manitoba company was destined to profit 
 by that boom out of sight more largely than any other person 
 or corporation. The Manitoba began with a bonded debt of some- 
 thing more than sixteen millions of dollars and a capital stock 
 of fifteen millions. We need not inquire to what extent this 
 
HERTIG ON TAXATION. 127 
 
 original capital was "sugar," "velvet," or "water," as the zero 
 capital from which value is expected to grow is variously called: 
 the profits realized are sc stupendous, that the figures are affected 
 but a little in percentage by assuming, for the sake of argument, 
 that the original capital was paid in, dollar for dollar in cash. 
 Let it be so assumed. 
 
 Probably no more valuable nucleus of what was to develop 
 into a great railroad system was ever acquired by any individual 
 or syndicate than that which came into the hands of 'James J. 
 Hill and his friends in 1879, and was launched in that year, as 
 already stated, under the corporate name of the St. Paul, Min- 
 neapolis and Manitoba Railway Company. Waiving inquiry into, 
 the actual consideration given by Hill and his friends for the 
 control of these properties, we follow the system from its initial 
 560 miles, reaching, in essential summary, from St. Paul and 
 Minneapolis to St. Vincent follow it to 656 miles 'in 1880, 
 702 miles in 1881, 926 miles in 1882, and 1,203 miles in 1883, 
 the figures for the years 1880 to 1883, inclusive, beins: the aver- 
 age mileage in those respective years operated. Poor's Man- 
 ual for 1884, p. 749. The boom which began for practically 
 all the United States in 1879 continued for the Red River Val- 
 ley well into 1882, for St. Paul and Minneapolis several years 
 longer, and for transportation purposes continued practically, 
 though not uniformly nor without abatement, until after 1892. 
 The Manitoba system reached the high level mark of boom pros- 
 perity in 1883, i ts gross earnings for that and the preceding- 
 year, due as well to high rates as to the boom, having reached 
 a little more than. $7,000 per mile! What this means may be 
 realized when it is stated that the 1,500 miles of road, speak- 
 ing roundly, comprising the Chicago, St. Paul, Minneapolis and 
 Omaha system, owned by the Northwestern and operated through 
 a populous and prosperous country into like cities, earned <rross, 
 per mile, in the tremendous traffic year of 1901 just $7,111.67. 
 
 In 1882, the Manitoba paid its first dividend 6>4 per cent 
 en $15,000,000 of capital stock. In 1883, after the stock had 
 been swelled to $20,000,000 by a gift issue of $5,000,000 to the 
 stockholders in stock certificates, it paid a dividend of 9^ per 
 cent on the whole $20,000,000 of capital. Besides paying these 
 dividends it carried in cash balances or to the credit of its sink- 
 ing fund several millions more. But we are not concerned with 
 its internal operations, except in so far as they took the form of 
 distribution to its stockholders. Meanwhile, market quotations 
 of the stock, while it remained at $15,000,000, had risen from a 
 fiVure considerably below par to the high water mark of 166. 
 Whether anybody on the "inside" profited by the intended new 
 
128 HERTIG ON TAXATION. 
 
 issue of -$5,000,000 to make a large fortune by selling short, I am 
 not informed. This, too, is beside the main question, which is 
 the amount of profits confessed by public distribution. As was 
 inevitable, the market price of Manitoba stock, under the influ- 
 ence of the new issue thereof and of the bond issue mentioned 
 below, sagged way down. For the markets had not then taken 
 the measure of Minnesota's and East North Dakota's sustain- 
 ing power for railways ; nor had they got entirely accustomed to 
 Mr. Hill -as an economical, though daring, manager. Therefore 
 the bear features of the situation brought about by the new 
 issue, etc., were worked too hard, and the stock went at times 
 below par. In the year 1884 its highest figure was 99, and 
 under the pressure of bad money markets it went that year as 
 low as 76%. In 1885, its high mark was 110^/2, its low 79%. 
 It should be added that the additional $5,000,000 of stock (based 
 on excellent value, but all water or "velvet" from the stockhold- 
 ers' standpoint), was not the only "bear" feature from the stock 
 exchange point of view, but that $10,000,000 of 6 per cent. 50- 
 year bonds, dated May I, 1883, "were issued to stockholders 
 in the nature of a scrip dividend at the rate of 10 per cent, of 
 their par value!" POOR'S MANUAL for 1884, p. 750. These bonds, 
 still outstanding and guaranteed, principal and interest, by the 
 Great Northern, are now worth at least 140. 
 
 The* dividends of 1882 and 1883 aggregating 16 per cent, 
 brought the average up to 4 per cent, per annum for the four 
 years that the road had been practically in operation. After 
 1883, Manitoba stock was put on a regular 6 per cent, dividend 
 basis, and so continued as well before as after the 999-year 
 lease of the system to the Great Northern Railway Company, 
 made in 1890, continued till the $20,000,000 of Manitoba stock 
 on which the Great Northern, as one of the conditions of the 
 lease, guaranteed 6 per cent, dividends was bought up by the 
 Great Northern through an issue of its own stock, as explained 
 below. These dividends, then, may be considered as a fairly sat- 
 isfactory regular profit, and I shall take no account of them when 
 I come to estimate the extra profits taken by Mr. Hill and his 
 friends as the result of their operations. 
 
 Mention has been made of the condition of the Great North- 
 ern Railway Company in 1890. In 1900, at the close of its fiscal 
 year, June 30, the $15,000,000 of bonds which, as we have seen, 
 it negotiated in 1892 at 72^2 cents on the dollar, and which 
 were sold subject to the privilege of retiring them at par after 
 a certain date had been paid off and cancelled. They were in 
 fact called for payment prior to September i, 1898, and ceased 
 to bear interest after that date. The operation of retiring them 
 
HERTIG ON TAXATION. 129 
 
 was financed through an issue of Great Northern preferred stock 
 to the amount of $25,000,000, for which stockholders were given 
 the privilege of subscribing at par. Payment for the stock could 
 be made in cash, or in said bonds at par, or, to the extent of 
 40 per cent, of the subscription, in stock of the Seattle and 
 Montana Railroad Company, whose stock the Great Northern 
 bought up with a part of the proceeds of said issue of preferred 
 stock. The Seattle and Montana had been quietly promoted by 
 the Great Northern, and advances to it had been made by the 
 latter "during a series of years" (Poor's Manual for 1898, p. 
 460), to an amount aggregating, with interest, March I, 1898, 
 "about $11,300,000," moneys "which would otherwise have been 
 subject to distribution in the form of dividends among Great 
 Northern stockholders." But all the stock of the Seattle and 
 Montana, $12,500,000, in consideration of said advances, or in 
 discharge of the indebtedness growing out of them, was turned 
 over to a trust company for the benefit of the Great Northern 
 stockholders, for ratable distribution among them, and figured 
 as worth 80 cents on the dollar, at the time of the issue of said 
 Great Northern preferred stock. That issue aggregated, as 
 aforesaid, $25,000,000, or just enough to retire the $15,000,000 
 of 4 per cent, bonds at par, and the $12,500,000 of Seattle and 
 Montana stock at 80 cents on the dollar. But there had already 
 been issued $25,000,000 of preferred stock, hence each holder of 
 the prior issue of Great Northern preferred had the right to 
 double his holdings by taking as much of the new as he already 
 had of the old. And he held, or the Manhattan Trust Company- 
 held for him, 50 cents in the capital stock of the Seattle and 
 Montana for every dollar he owned of the old Great Northern 
 preferred^ and this fifty cents paid forty cents on each dollar of 
 the new preferred stock for which he subscribed. If, too, he 
 had subscribed in proportion to his holdings of old preferred 
 stock for said $15,000,000 of bonds at 72.^/2 cents of their par 
 value and still held his pro rata amount thereof, he got his new 
 preferred stock by simply exchanging therefor his bonds at par 
 and his Seattle and Montana at 80 cents on the dollar, without 
 paying any cash in the transaction. Meanwhile the old issue of 
 $25,000,000 preferred Great Northern had not been idle. Origin- 
 ally $20,000,000, and subsequently increased $5,000,000 more for 
 making additions and betterments, it began to draw dividends 
 on November I, 1890, quarterly, at the rate <f 4 per cent, per 
 pnnum, and after the I per cent, dividend of February I, 1891, 
 at the rate of 5 per cent, per annum until August, 1897, when 
 quarterly dividends of 1^/2 per cent, or 6 per cent, per annum 
 began, and continued until Nov. I, 1898, when the quarterly in- 
 
130 HERTIG ON TAXATION. 
 
 stallment (now on $50,000,000 instead of a lower rate on $25,- 
 000,000) was raised to 1^4 per cent, or 7 per cent per annum. 
 The retiring of the $15,000,000 of bonds and the $12,500,000 
 of the Seattle and Montana stock was completed as of the date 
 August I, 1898, since the first quarterly dividend on the new 
 stock was paid, as aforesaid, on Nov. i, 1898. But prior to the 
 issuing of the $25,000,000 of new preferred stock, the old pre- 
 ferred had commanded a handsome premium in the markets of 
 the world. Even as a 5 per cent, stock, it was at a premium. In 
 the flush times of 1892, December 29th of that year, for in- 
 stance. Great Northern preferred sold in New York at 133. In 
 the evil times even of 1893 and 1894. it sagged less relatively than 
 most of the other stocks. August 30, 1894, it was worth 101 ; 
 but the Great Northern's gross earnings for the fiscal year end- 
 ing June 30, 1894, $3,013.14 per mile, were 25 per cent, less than 
 for the previous year, and 31 per cent, less than for the year 
 ending June 30, 1892. However, it gradually recovered, sell- 
 ing, Nov. 2, 1895, at 123^, and in the scary days just preced- 
 ing the November elections in 1896, at 115. February 2, 1897, 
 it was worth 121. As it was a stock "closely" held, sales of it 
 were small and infrequent, as compared with the so-called active 
 stocks. A novice might conclude that the announcement of issu- 
 ing $25,000,000 on top of the like original amount would depress 
 the price of Great Northern shares. Just the contrary took place. 
 The right of the old stockholders to subscribe for the new be- 
 came at once commercially valuable. Old shares carrying what 
 the street calls "rights" began to climb in value, as soon as the 
 intended new issue was announced, in fact, on "inside" knowl- 
 edge of such issue before it was announced. From 135 at about 
 the end of January, 1898, the stock in less than a week, seemingly 
 on such secret tip, jumped to 16?, and with some relapses, on 
 profit-taking and the beginning of trouble with Spain, climbed 
 gradually to 180 on July I, 1898, the last day, when it was sold 
 with "rights." On July 2, 1898, the stock dropped to 122, the 
 first market price on the basis of a total issue, of $50,000,000. 
 including old and new. Thus old stockholders who subscribed 
 for bonds at 72^ cents had been receiving their 4 per cent, inter- 
 est on the face value of the bonds,' or about 6 per cent, on the 
 money actually invested, and on July I, 1898, say six years 
 after the investment, assuming them then to hold their stock on 
 which they had J)een receiving dividends as above mentioned, 
 could get a premium of $80.00, on each $100.00 share of stock, 
 and the bonds being then worth par could get a cash bonus of 
 $27.50 on each $72.50 that they had invested in the bonds, which 
 bonus is almost 40 per cent, of the capital originally invested in 
 
HERTIG ON TAXATION. 131 
 
 chc bonds. If, however, the stockholder stood pat with his old 
 stock, and took his allotment of the new, then, assuming him to 
 sell on July 2, he would have put on the market with, say each 
 $1,000 of his old stock, a like amount of new stock for which 
 latter he would have surrendered bonds of the face value of 
 $600.00 and Seattle and Montana stock of the face value of 
 $500.00. But the $600.00 of bonds cost him only $435.00, and 
 his Seattle and Montana was in fact a dividend on his Great 
 Northern stock. Moreover, selling his $1,000 of old stock and 
 the like amount of new for 122, he would have received $2,440.00 
 for the lot. Assuming (but not warranting) that his old stock 
 cost him par, he then, on an original investment of $1,000 in 
 .stock and $435.00 in bonds, on which he had had good dividends 
 and good interest, would have made a premium of $1,005.00 
 over and above dividends and interest. Assume, however, that 
 he did not sell, but retained all his stock, old and new, he would 
 thus have made a still higher premium by staying for a later 
 market. Within sixty days from July 2, 1898, when his stock 
 was 122, it rose to 136. In 1899, it was never below 142, and 
 was generally above that figure. In 1900 it ranged between 144 
 and 190. In the meantime, practically as soon as the second 
 $25,000,000 of preferred stock had been issued, a third $25,- 
 000,000 was authorized. This was for the purpose of purchasing 
 the outstanding capital stock of the St. Paul, Minneapolis and 
 Manitoba Railway Company, at whose head Hill first grew to 
 reputation, and which was leased on February I, 1890, to the 
 Great Northern Company for a period of 999 years from that 
 date. One of the conditions of the lease is that the lessee guar- 
 antees the payment of 6 per cent, dividends per annum on the 
 $20,000,000 of stock of the Manitoba Company. In retiring, there- 
 fore the Manitoba stock at the rate of $125.00 of Great Northern 
 stock for each $100.00 of the former, Hill did a good thing 
 in a twofold sense : Firs!, the Great Northern converted an an- 
 nual fixed charge of $1,200,000 (6 per cent on $20,000,000) into 
 a matter optional with the Great Northern. It may pass or re- 
 duce a dividend on its own stock, practically at the directors' 
 pleasure, whereas it must pay a guaranteed dividend on the Man- 
 itoba stock so long as the latter was outstanding ; second, ex- 
 changing $25,000,000 of stock for $20,000,000 of a different obli- 
 gation is one of the ways of "loading," as they call it. This is ex- 
 tremely convenient for a prosperous and growing company ; it 
 helps to consume an awkward surplus which, when too large, al- 
 ways inspires envy and invites attack. Thus, when one pays out 
 in dividends $1,750,000 per annum (7 per cent on $25,000,000) 
 as against $1,200,000 (6 per cent, on $20,000,000) his company 
 
132 HERTIG ON TAXATION. 
 
 is to all appearance, and to some extent in fact, $550,000 poorer 
 at the end of a year than it would have otherwise been. The ex- 
 change of Great Northern preferred stock for Manitoba stock was 
 substantially completed in 1899, and during the same year an ad- 
 ditional amount of Great Northern stock, $15,000,000, was offered 
 to its stockholders at par and issued to enable the company to ac- 
 quire $7,500 ooo additional stock of the Eastern Railway Co. of 
 Minn., and to buy a railway system centering in Spokane, Wash., 
 , consisting of 217 miles of track and presumably the ordinary 
 rolling stock for the same. These lines, the principal one of 
 which was known as the Spokane Falls and Northern Railway, 
 had been promoted and largely built by - - Corbin, who is 
 
 said to have cleared a large fortune by selling to the Great 
 Northern. The securities of the Spokane system so bought ag- 
 gregated, according to Poor's Manual for 1899, p. 630, $9,776,- 
 200.00, but whether this sum was the face or the actual purchase 
 price is not stated. We have thus followed the Great Northern 
 from its enforced pause in what used to be called "The Great 
 American Desert" in its successful resumed march to Puget 
 Sound, and from its $20,000,000, and then $5,000,000 more of 
 preferred stock to further increases raising its aggregate stock to 
 $90,000,000 at an early date in 1899, an d this without breaking 
 the market therefor but rather the contrary. It should be added 
 here that a 'reserved right of the company to issue $20,000,000 
 of common stock was never used, and has been permanently 
 abandoned, so that there is in fact but one class of Great Northern 
 stock ; also that the original $20,000,000 of this stock was issued 
 to stockholders of the St. Paul, Minneapolis & Manitoba Com- 
 pany for fifty cents on the dollar, they, however, surrendering as 
 additional consideration for the stock, odds and ends of securities 
 belonging to the Manitoba system, and having an aggregate face 
 vahie of over $22,000,000. These securities, whatever their real 
 value in cost, were a part of the earnings of the Manitoba Com- 
 pany, and had their origin largely or entirely in branch roads or 
 other properties built and capitalized by the Manitoba. 
 
 The Manitoba and its successor, the Great Northern, have 
 been, for railroad companies, very close corporations. Hill and 
 his friends may be said to be "it" and "they." We may now fig- 
 ure approximately some of their open and palpable extra profits : 
 
 In the year 1883, extra Manitoba stock $ 5,000,000 
 
 In the year 1883, 9^2 per cent dividend on same. . . . 475,000 
 In the year 1883, $10,000,000 6 per cent bonds at 10 
 
 cents 9,000,000 
 
 In the year 1890, 50 per cent, rebate on 20 millions 
 
 G. N. stock. , 10,000,000 
 
HERTIG ON TAXATION. 133 
 
 [This $10,000,000 was for the $22,000,000 of se- 
 curity which the Manitoba system had earned 
 extra. See p. 132, above.] 
 
 In the year 1898, 27^ cents on the dollar, account of 
 bonds redeemed at par which they got for 72*^ 
 cents 27*^ per cent of $15,000,000 4,125,000 
 
 In the year 1898, credit on new issue of Great North- 
 ern stock account of Seattle and Montana secur- 
 ities 10,000,000 
 
 In 1899 stock bonus in exchanging $25,000,000 Great 
 
 Northern stock for $20,000,000 Manitoba do.... 5,000,000 
 
 In 1900, the stockholders were given the privilege of 
 subscribing at par for $9,000,000 more of stock 
 (i-io of a new share for each share of their prior 
 holdings), and as the highest market price which 
 Great Northern stock reached in 1900, was 190, 
 this subscription privilege was worth 90 cents on 
 each dollar of the new issue, or a total of 8,900,000 
 
 An additional $1,000,000 of stock was authorized in 
 1900 and reserved for employes to purchase, lim- 
 ited to those drawing salaries of less than $3,000, 
 and need not here be further noticed. In 1901, 
 Mr. Hill cut another very large "melon," in the 
 shape of a further issue of stock to the face value 
 of $25,000,000, and for which stockholders had the 
 privilege of subscribing in proportion to their prior 
 holdings. But in offering this new stock Mr. 
 Hill told them that the Great Northern had made 
 permanent additions to the leased Manitoba sys- 
 tem to the amount of $5,000,000 which under the 
 lease the Great Northern was entitled to have re- 
 imbursed, and which sum, had it not been so used, 
 could have been paid to them in dividends. That 
 therefore, as provided in the lease, the Manitoba 
 had issued for said additions $5,000,000 in bonds 
 to the Great Northern, which now held them in 
 its treasury for the benefit of its stockholders, and 
 who would now get a benefit to the extent of that 
 sum by a credit to that amount pro rata on their 
 new stock subscriptions. As the sum so rebated 
 was 1-5 or 20 per cent of the entire new issue, the 
 cost of the new stock to the prior stockholders 
 was therefore 80 cents on the face value of the same 
 or $80.00 per share. The prior stock capital hav- 
 ing been brought up to a round hundred millions 
 
134 HERTIG ON TAXATION. 
 
 by the successive issues already mentioned, each 
 holder was entitled for every four shares that he 
 already held to take one new share at $80.00. 
 Now on the mere rumor of some such melon to 
 be cut, Great Northern stock sold for 200 a week 
 before the official announcement was made ; and the 
 day of the announcement, March 18, 1901, the 
 price of Great Northern stock rose to 208. Now 
 as each new share, costing- the old stockholders 
 only $80.00 per share was in fact worth from 
 $200 to $208, there was virtually a bonus of at 
 least $120, in each new share ; that is to say, in the 
 whole new issue of $25,000,000, the virtual bonus 
 
 was 30,000,000 
 
 The above figures represent only the more open and 
 palpable extra profits drawn or drawable from 
 the Manitoba and Great Northern systems. The 
 original stock capital of $15,000,000, assuming it 
 to represent that much money actually paid in, 
 has been drawing both in its old and in its new 
 form satisfactory dividends, six per cent as Mani- 
 toba stock after 1883, and seven per cent since its 
 conversion into Great Northern stock in 1899. 
 The original capital having thus been taken care 
 of in a highly satisfactory way as to returns 
 actually received, the premium on it in March, 
 1901, taking Great Northern stock at 200, was 
 worth, and may fairly be considered an extra 
 
 profit of the value of 15,000,000 
 
 We may now recapitulate these extra profits drawn or draw- 
 able as follows, carrying them to March 31, 1901, a 2i-year 
 period of profit: 
 
 In 1883, new Manitoba stock, face $ 5,000,000 
 
 Six per cent.' annual dividends on same, (computed 
 for convenience, as having been paid in block on 
 March 31 of each year, instead of quarterly) for 
 the years 1884 to 1898 inclusive, compounded at 
 
 4 per cent, to March 31, 1901 6,419,894 
 
 Seven per cent, dividends on said stock after its con- 
 version into Great Northern for the years 1899 
 
 and 1900 no interest 700,000 
 
 Nine and one-half per cent, dividend on said stock for 
 
 the year 1883 475> 
 
 Compound interest for 17^ years on 1883 dividend 
 
 at 4 per cent 468,730 
 
HERTIG ON TAXATION. 135 
 
 The 1883 bonus in bonds 9,000,000 
 
 Six per cent interest paid on same compounded 
 
 annually at 4 per cent 13,840,856 
 
 Premium of 40 per cent on the entire $10,000,000 
 
 of said bond issue, per market price, March, 1901 4,000,000 
 
 The 1890 rebate on Great Northern stock 10,000,000 
 
 (This item being represented by so much 
 stock, the dividends and interest on dividends 
 must figure as profits.) 
 Dividend of I per cent, paid November i, 1890, and 
 
 February i, 1891 200,000 
 
 Compound interest on last item for 10 years 96,040 
 
 Regular quarterly ij4 per cent, dividends on said ten 
 
 millions from May, 1891, to May, 1897, inclusive 3,125,000 
 Compound interest on said dividends lumped as an- 
 nual for 1892-96 inclusive and reckoned from Sep- 
 tember 30 in each year 926,835 
 
 Quarterly dividends of i l / 2 per cent, paid August 
 
 and November, 1897. 300,000 
 
 Simple interest 3^ years on dividends paid August 
 
 and November, 1897 42,000 
 
 Simple interest 2 l / 2 years on aggregate dividends 
 
 paid in 1898 62,500 
 
 Dividends paid in 1898 625,000 
 
 Dividends paid in 1899 700,000 
 
 Simple interest i l / 2 years on dividends of 1899 42,000 
 
 Dividends paid in 1900 700,000 
 
 Six months interest on same 14,000 
 
 Dividend of February i, 1901 175,000 
 
 Bonus by retiring in 1898 $15,000,000 bonds. ....... 4,125,000 
 
 Simple interest at 7 per cent, on same for 2 l / 2 years. . 721,875 
 
 The 1898 credit by Seattle & Montana security 10,000,000 
 
 Dividends on same, 1898, i^4 P er cent I75>ooo 
 
 Interest on same, 2.y 2 years 17,500 
 
 Dividends for 1899, 7 per cent 700,000 
 
 Interest on same i l / 2 years 42,000 
 
 Dividends for 1900, 7 per cent - 700,000 
 
 Interest for six months 14,000 
 
 Dividends, February i, 1901 175,000 
 
 The face value of bonus for exchanging Manitoba 
 
 stock in 1899 5,000,000 
 
 Dividends on said five millions in 1899 350,000 
 
 Dividends on said five millions in 1900 350,000 
 
 Dividends on said five millions in February, 1901 .... 87,500 
 (A small fraction* of. Manitoba stock not having 
 
136 HERTIG ON TAXATION. 
 
 been exchanged, the items pertaining to this 
 last $5,000,000, should be diminished about 2 
 per cent. Omission of interest hereupon and 
 of compound interest from various items above 
 will more than correct this inaccuracy.) 
 
 Bonus in premiums, or market value, in $9,000,000 
 
 stock issue of 1900 8,900,000 
 
 Bonus of like kind in the issue of 1901 30,000,000 
 
 Premium bonus by 1901, in original issue of Manitoba 
 stock, leased on its dollar for dollar equivalent in 
 Great Northern stock 15,000,000 
 
 But we have not included in the above the premium 
 or rise in market value in the $5,000,000 issue of 
 Manitoba in 1883, nor i n tne $20,000,000 Great 
 Northern issue of 1890 (one half of which issue 
 was by way of a credit as aforesaid), nor in the 
 $25,000,000 issue of 1898 covering the bond retir- 
 ing and the Seattle and M. deal, nor in the $5,000,- 
 ooo of Great Northern stock given as an outright 
 bonus in the exchange of Montana stock ; and 
 as, in March 1901, the market value of all these 
 items was double their face, we must therefore 
 add to the above schedule of extra profits 55,000,000 
 
 We have neglected also the first increase of Great 
 Northern stock ($5,000,000 for additions, etc.), p. 
 129, and the $15,000,000 increase in 1899 for ac- 
 quiring the Spokane system, etc., p. 132; hence an 
 additional item of extra profit by virtue of the 
 market value in March, 1901, of 20,000,000 
 
 Total $208,270,730 
 
 Should it be objected that the value of Great Northern stock 
 at 200 as per sales in March, 1901, is too high, it must, of course 
 be conceded that very heavy offerings at that figure would not 
 have been absorbed by the market; yet, under the depres'sion of 
 the May panic in 1901, 167^ was the lowest figure reached by 
 Great Northern, and frequently afterwards during the year it 
 went above 190. We may be sure also that even 200 would not 
 buy a controlling interest. It may be mentioned here that the 
 "common" stock of the Northern Pacific on its reorganization in 
 1896 was fixed at $80,000,000, and that half of this was offered 
 to the Great Northern if it would guarantee the payment of in- 
 terest on the new bond issues of its former rival. This offer was 
 accepted and the stock would have been .delivered if the supreme 
 
HERTIG ON TAXATION. 137 
 
 court of the United States had not decided in the Pear sail case 
 that such transaction would have virtually made a consolidation 
 of the two roads, was in violation of the statutes and policy of 
 Minnesota, and hence could not be legally consummated. Here 
 would have been at least $40,000,000 more to add to the already 
 extra profits of Mr. Hill and his friends. In estimating the ex- 
 tra profits as above no notice is taken of townsite opportunities 
 and other avenues of profit which the absolute control of a rail- 
 way system gives to its chief and his intimates. Knowledge in 
 advance of the time and amount of issue of the different blocks 
 of capital stock above mentioned could have been turned to im- 
 mense advantage by quiet buying and selling at the right times. 
 
 The present enormous financial power of the Great Northern 
 can perhaps be best appreciated from the physical side by noting 
 a few of the things which it does with scarcely a ripple in its 
 financial current. It spends in 1901, $5,000,000 in permanent 
 improvements ; opens a 20 mile cut-off in Montana, and builds 
 thirty miles of new road in Washington between Fair Haven and 
 Blanchard, on which are four tunnels, one of them 1,200 feet long 
 builds this merely to avoid the sharp curves on the old line 
 between those points. Troubled with washouts between Seattle 
 and Edmonds, it sets the road on piles driven in the water beyond 
 reach of future landslides. It quietly adds new feeders to the 
 main line and lengthens the feeders already built .or bought. 
 
CHAPTER XL 
 
 Masterful men the ultimate problem of taxation Herein of modern 
 plutocrats and Roman emperors Side light from Napoleon and his 
 career The art of R. W. Gilder gives him place with kings "Surely 
 power obliterates moral sense" Modern despots in general tame and 
 petty creatures beside the Roman Caesars Nero as an over-radical tax- 
 reformer! The modern plutocrat derided in literature and spurned by 
 his fellow anarchists Sad case of the too virtuous plutocrat Quay 
 accuses him of corrupting politics The virtue of Mr. Bliss Perry, 
 editor of the Atlantic Monthly, intolerant of franchise-stealing Prof. 
 Hadley, of Yale, over-illustrates his own view of the chief use of edu- 
 cation Praise for the plutocrat from Hubert, Sumner of Yale 
 Orthodox political economy as a substitute for religion The plutocrat 
 not individually responsible for his more atrocious crime Case where 
 he was worse than a red anarchist Not generally in it with the real 
 thing in vice or ambition Plutocracy and Nerocracy Antinomy of 
 the plutocratic mind In re James J. Hill, J. Pierpont Morgan and 
 Jesus The kernel ,of this and the preceding chapter. 
 
 It is almost needless to say that in describing James J. Hill 
 as a "splendid brigand," I use the words to mark him as the ideal 
 embodiment of the present industrial spirit, and not as derogatory 
 to his personal character. He is beyond compare the greatest 
 man yet developed by railway traffic either here or elsewhere. 
 He has been often compared to Napoleon, and is certainly like 
 the Great Emperor in his attention to primary basis in operating 
 and in marvelous attention to and memory of details. He may 
 have lapses of memory before committees and commissioners 
 was it not Napoleon who said "every sovereign must lie?" As 
 Napoleon would have done in Hill's place and with his schemes, 
 he had explored per buckboard or otherwise, and planned accord- 
 ingly, the location of much of his "Manitoba" system long be- 
 fore it was built, and long before it astonished experts in gen- 
 eral, and probably to some -extent Hill himself, by earning a little 
 more than $7,000 gross per mile on its 1,300 miles of raw 
 country road in 1882 and 1883. Unlike Napoleon's or Jay 
 Gould's, Hill's natural endowment of moral character is of the 
 
HERTIG ON TAXATION. 139 
 
 very best. He is not more degenerate than any man tends to be- 
 come, who to great activity joins ideals not quite the highest. 
 He is not more cynical than the necessity of having an occasional 
 cheap patriot on his secret pay roll tends to make a man, or the 
 necessity to carry out large plans by overcoming many kinds of 
 opposition, or the danger of losing control of "Nipper"* by the 
 greed of business friends in seeking a nimble profit by selling 
 short ; certainly not more cynical than one is apt to become by 
 long exposure to the dead set which human cupidity and baseness 
 make at a man in Hill's position. 
 
 To say, as I have said, that Hill's natural endowment of 
 moral character is of the very best does not imply statement or 
 belief in the continuance of such character. Historian and ro- 
 mancer are they not often the same? alike ten us that Nero 
 began well, and that in the first year of Domitian's reign, it was 
 as if the lamented Titus were still at the helm. It was 
 young Nero, who "would listen to no denunciation; [who] when 
 a decree of death was brought to him to sign, regretted that he 
 knew how to write." To mention in the same connection a 
 virtuous magnate of modern democracy and the wicked emperors 
 of old Rome, suggests a comparison from which I do not shrink. 
 Though the differences are more marked and perhaps more prom- 
 inent than the points of likeness, these latter are sufficiently evi- 
 dent and persistent, certainly unmistakable. Human nature 
 has its individual differences; and the medium in and through 
 which each individual develops would give a somewhat varying 
 result, were that medium in each case not just what it is and has 
 been ; as the belle-flower apple, for instance, varies when grown in 
 different soils, and especially in different climates. The rationale 
 of development and of explanation remains still the same ; only in 
 the case of human nature as seen in high office or other position of 
 rreat power, the analyst of character is apt to fail through his 
 own limitations, which may reflect his subject in the mirror of 
 narrow prejudice, of common ready-made ideals, or of distorting, 
 wonder-struck bedazzlement. I do not by any means intend this 
 three-fold failure of the mirror which the analyst strives to hold 
 up to his subject, to be exhaustive of the modes of such failure. 
 Nathaniel Hawthorne, for instance, would not have failed in a 
 presentation of the development of Nero's character would not 
 have failed, that is, through narrow prejudice, or through cheap 
 Hawthorneish ideals, or through wonder-struck bedazzlement; 
 
 * Northern Pacific Railway (N. P. R.) stock became familiarly known 
 in the exchanges as "Nipper" long before it proved its title to the name in 
 the panic of May 9, 1901. 
 
140 HERTIG ON TAXATION. 
 
 but he would have failed none the less, as is sufficiently apparent 
 from a scrutiny of what Hawthorne could and did do, and was 
 sufficiently apparent to Hawthorne himself. The problem of 
 Nero tempted him, but he had too much self-knowledge to at- 
 tempt its solution. Very interesting, however, is Hawthorne's 
 apprehension of the fact of such problem. "I wish," he says, 
 "some competent person would undertake to analyze and develop 
 his [Nero's] character, and how and by what necessity with all 
 his elegant tastes, his love of the beautiful, his artist nature he 
 grew to be such a monster. Nero has never yet had justice done 
 him, nor have any of the wicked emperors ; not that I suppose 
 them to have been any less monstrous than history represents 
 them ; but there must have been something in their position and 
 circumstances to render the terrible moral diseise which seized 
 upon them so generally almost inevitable. A wise and profound 
 man, tender and reverent of the human soul, and capable of ap- 
 preciating it in its height and depth, has a great field here for the 
 exercise of his powers. * * * The subject of Nero and his 
 brethren has often perplexed me with vain desires to come at the 
 truth." French and Italian Note-Books, Vol. II, pp. 3-4. To 
 paint a Nero from within, to make apparent with, artistic nicety 
 each fitting and inevitable step in his downfall, is, I concede, 
 sufficiently difficult, perhaps impossible. But that is not my af- 
 fair, either here or elsewhere. It is enough to know and to note 
 the few main facts which inevitably accompany and condition 
 development of character as well in ancient Nero as in modern 
 plutocrat. These facts are much the same whether their subject 
 be born to the purple, or achieve, by his own efforts, the right to 
 wear it. On him who is to the purple born, and on him who 
 achieves it, the like facts of position are, however, apt to produce 
 different effects. The former takes to their influence an imma- 
 ture, perhaps in no respect a formed character ; the latter, a char- 
 acter and judgment tried and seasoned in one or more important 
 respects, but having many a blind side. In the general imma- 
 turity and crudity of the one and in the blind or ignorant sides of 
 the other, lurk the like dangers. Imperial position does not 
 sweep Marcus Aurelius from his moorings, because he brings to 
 it a character of native strength that has already attained to its 
 full growth. He may be expected to always retain the funda- 
 mental weakness of the doctrinaire, that is, ignorance of indi- 
 vidual human nature, unhappily conspicuous in his allowing his 
 real or putative son, Commodus, to succeed him : the meta- 
 physical side of his philosophy may not be quite exact to his own 
 mind, but his love for philosophy is genuine and he bears the im- 
 perial purple "as he bore everything else, in that self-abnegatory 
 
HERTIG ON TAXATION. 141 
 
 spirit which the higher reaclfes of philosophy bring." Other 
 rulers may see further, but nothing shall take from Marcus the 
 title of "good emperor." 
 
 The moral doctrine that is learned by heart from another's 
 teachings, or is espoused because it is "sound," may or may not 
 be honored with the lips alone; we know how often it fails in 
 practice to control conduct. But when, as in the case of Marcus 
 Aurelius, consistent action had shown the internal stamp of 
 genuine moral character, the world was not surprised to find that, 
 as loosely paraphased by the piquant Saltus, he had written too : 
 
 "Revenge yourself on your enemy in not resembling him. 
 Forgive ; forgive always ; die forgiving. Be indulgent to the 
 wrong-doer ; be compassionate to him ; tell him how he should 
 act ; speak to him without anger, without sarcasm ; speak to him 
 affectionately. Besides, what do you know of his wrong doing r 
 Are all his thoughts familiar to you ? May there not be some- 
 thing that justifies him? And you, are you entirely free from 
 reproach? Have you never done wrong? And if not, was it 
 fear that restrained you ? Was it pride, or what ?" 
 
 If Marcus Aurelius may be taken as of the best type among 
 those born to the purple, and as most fitting to illustrate how 
 character already formed turns on its own centre despite dazzling 
 position, Napoleon may be taken as the type most fitting to il- 
 lustrate completely formed character achieving the purple, and re- 
 maining consistent thereafter affording no new or surprising 
 development, but showing merely the effect of practice and habit 
 on what was already fully formed. Marcus Aurelius would never 
 have picked up a crown with the point of his sword ; Napoleon 
 would have doubtless espied some crown to so pick up, even had 
 that of France not lain in the mire awaiting him. Napoleon car- 
 ried with him to his very first command a profound contempt for 
 human nature in the lump, as needing and ready to obey a firm 
 master who would govern men through their fears and passions. 
 He said to Miot de Melito in November, 1797, when his star 
 had not yet lit him to greater glory than that he had gained as 
 commander of the army in Italy: "The [French] nation wants 
 a head, a head illustrious in glory, and does not want theory of 
 government, fine phrases, ideologue cant, which for the French 
 is meaningless." If, remarks in substance Taine, he needed any 
 object lesson to confirm the low views he had of human nature 
 Egypt soon furnished him with it, Egypt where he was free 
 from all control, where he governed like a sultan, and got used 
 to acting in a sultan's way. He declared himseli specially dis- 
 gusted with Rousseau's idyllic conception of uncivilized man, 
 after he had seen man in that state in Egypt. "The savage is a 
 
142 HERTIG ON TAXATION. 
 
 clog," was Napoleon's conclusion* from his Oriental experience^ 
 and he looked upon civilized man as having" the savage lurking 
 within him just below the skin. Savage and civilized man alike 
 need a master, a magician to subdue their imagination, to disci- 
 pline them, to muzzle them against vicious use of their teeth, 
 to hold them in leash, to look after them and lead them in the 
 chase : Man's lot is to obey ; he deserves no better and has no 
 other right. TAINE, Lc Regime Modcrnc, 1,72. As first con- 
 sul, later as emperor, he applied on a large scale his theory that 
 man is held captive or subject by his personal passions by fear, 
 cupidity, sensuality, self-love, emulation ; that moreover man's 
 head is easily turned; he is imaginative, credulous, subject to 
 mad rushes. "Exalt his pride and his vanity," continues the 
 theory ; "get him up an extreme and false opinion of himself and 
 others, and you can spur him on to go, head down, wherever you 
 choose to have him." Id. 75. "All his means of governing men 
 were chosen from those which tend to degrade man. * * * 
 He pardoned virtue, only when he had succeeded in making it 
 ridiculous." MME. DE REMUSAT, I, 106, II, 247, 336. "He be- 
 lieved neither in virtue nor in honesty ; he often called -these two 
 words abstractions; and this skepticism was, what made him so 
 distrustful and so immoral. * * *, He looked upon men as 
 base money or as instruments." Count CHAPTAL, Notes (unpub- 
 lished.) This conception of human nature and of the motives 
 that lead ic remained with Napoleon unchanged if anything 
 strengthened by his own success, though failure to estimate cor- 
 rectly the springs of human conduct was finally the chief factor 
 in his downfall. An inevitable and disastrous result of such 
 conception was the gradual eliminatiion from those about him 
 of all persons possessing in marked degree either intellectual 
 or moral capacity. "Toward the end, he tolerates about him only 
 vanquished and captive souls ; his leading henchmen are machines 
 or fanatics, a worshipping adorer like Maret, a policeman shrink- 
 ing from no task like Savary. From the beginning he has re- 
 duced his ministers to the rank of clerks ; for he himself is ad- 
 ministrator as much as governor, and in each branch of service, 
 he looks after details as attentively as he looks after the whole ; 
 hence for heads of departments, he wants only active scribes, 
 mute carriers out of orders, docile and special workmen, no free 
 and sincere counselors." TAINE, Lc Regime Moderne, I. 70-80. 
 Chaptal, in his Notes (unpublished) gives a graphic picture of 
 the rapidity with which Napoleon's temper and conception made 
 him feel at ease in the despot's chair, and there only. During the 
 consulate, "his judgment," says Chaptal, "being yet unformed on 
 most subjects, he permitted discussion, and it was then possible 
 
HERTIG ON TAXATION. 143 
 
 to inform him, and often to get adopted an opinion put forth in 
 his presence. From the moment that he got ideas, true or false, 
 on the various matters within the field of government, he con- 
 sulted no one further; ** * * he had keen mockery for all 
 those who put forth an opinion differing from his own ; he sought 
 to make them ridiculous, and said often, tapping his head, that 
 that good instrument was more useful to him than the counsels 
 of men who were reputed to have instruction and experience. 
 * * * For four years, he sought to surround himself with the 
 strongest men of each party. Afterwards the choice of his agents 
 began to seem to him a matter of indifference. Believing' him- 
 self strong enough to govern and administer by himself, he even 
 took pains to put away all those whose talent or character an- 
 noyed him. He wanted lackeys, not counselors. * * * The 
 ministers became simply upper clerks of bureaux ; the council of 
 state had no other function 'than to give formal approval to his 
 decrees ; he administered down to the pettiest details. All about 
 him were timid and passive ; they heard the will of the oracle, 
 and without reflection, carried that will into effect. * 
 Convinced that others' knowledge and experience could no longer 
 be useful to him, he thought that henceforth he needed only ready 
 hands." 
 
 A distinguished American, who had the best of opportunities 
 for arriving at an enlightened conclusion, confirms the above 
 French testimony at every point, and independently. As the min- 
 ister of the United States appointed by Thomas Jefferson, and 
 charged with the negotiations which resulted in the purchase of 
 Louisiana, Robert R. Livingston was at Paris before Bonaparte 
 formally became Napoleon, while yet the consular ^overnmetit 
 was in full vigor, and while the one-man policy of the first consul 
 had not yet taken fixed lines, or at least was not yet apparent in 
 the large measure which it was about to fill before the eyes of an 
 amazed world. Livingston wrote in September, 1801 : 
 
 "There never was a government where less could be done by 
 negotiation than here. There is no people, no legislature, no 
 counselors. One man is everything. He seldom asks advice 
 and never hears it unasked. His ministers are mere clerks, and 
 his legislature and counselors parade officers." Letter to Madi- 
 son, as quoted by Dr. James K. Hosmer in History of the Louis- 
 iana Purchase, (N. Y. 1902), 119. 
 
 Dr. Hosmer's work gives an extremely interesting account of 
 how Napoleon arbitrarily carried out his personal will in selling 
 Louisiana to the United States. I cannot refrain from quoting 
 here four most beautiful lines of Victor Hugo, coupling 
 1802, the year of his own birth, with an advanced stage in Bona- 
 
144 HERTIG ON TAXATION. 
 
 parte's becoming Napoleon, when the [iQth] century was two 
 years old, Rome [the about-to-be empire with Paris as capital], 
 was replacing Sparta" [Paris and France simply and sternly rev- 
 olutionary], when "already Napoleon was peering from the Bona- 
 parte shell, and brow of emperor was breaking mask of first con- 
 sul too fretted with law's restraint :" 
 
 Ce siecle avait deux ans, Rome remplacait Sparte, 
 Deja Napoleon percait sous Bonaparte, 
 Et du Premier Consul trop gene par le droit 
 Le front de F Empereur brisait le masque etroit.* 
 It was but a consistent manifestation of his character, as 
 above described, that Napoleon felt and freely expressed his 
 sovereign contempt for all the social conventions. It is con- 
 ceded that he had little time and less enjoyment for intrigues 
 with women a fact which did not hinder him from now and 
 again entertaining and following up a master's caprice in that 
 line. After such an affair he did not scruple to impart to Jose- 
 phine the "intimate details" of his chase and capture. She nat- 
 urally protested, but in just what words I believe biography fails 
 to tell; doubtless some part of her protest in spirit at least, was 
 equivalent to the modern woman's "You're no gentleman." 
 Mme. de Remusat, however, kindly preserves Napoleon's an- 
 swer to Josephine's reproaches: "I have the right to answer 
 all your complaints by an eternal 'Me!'' To explain which the 
 Emperor added: "I am apart from everybody; I accept no- 
 
 *I regret exceedingly that when, or just about when, Mr. Richard Wat- 
 son Gilder's lyre was attuned to the warbling of that exquisite lay, begin- 
 ning with 
 
 "I love the smell of her garments," 
 
 he did not pass from his fellow feeling with Henry of Navarre to some 
 sympathetic glow over Napoleon, and give to the world a translation 
 of the lines here quoted from Hugo. After all, from the great Bour- 
 bon to the great Napoleon is but a step ; and when I think if, metaphys- 
 ically speaking, one can think of what one assumes never was of the 
 translation that Mr. Gilder might have made, and I have given, in this 
 behalf, I know not whether it were better to mourn absolutely, or just 
 relatively to patient search in the files of the Century Magazine, if per- 
 chance there be not there Gilder's or Gilderian's gem in such kind : 
 The century two years old, no Century yet, 
 
 The Prankish Rome her Sparta's place was taking; 
 Napoleon out of Bonaparte's worn shell 'gan get, 
 
 And Caesar's front First Consul's mask was breaking! 
 To find in a Century line an elision and an ellipsis converging into the 
 untamed alliterative vigor of "gan get," is like the story of Henry Martin 
 making merry over walnuts and wine almost "too wildly dear" for ex- 
 pectation. Perhaps a more reasonable probability for the third line would 
 
 Napoleon now in Bonaparte's shell did fret! 
 
HERTIG ON TAXATION. 145 
 
 body's conditions." And Taine further interprets and expounds 
 tne Napoleonic thought: "I accept obligations of no kind, of no 
 code, not even of that common code of exterior civility which 
 diminishing or masking primitive brutality, permits men to meet 
 without shocking each other." Le Regime Moderne, I. 93. 
 .Joubtless Napoleon did not perceive the immense advantage 
 from a democratic standpoint, the necessity, in fact, if life and so- 
 ciety are to reach a tolerable plane that the conceptions underly- 
 ing such words as "lady" and "gentleman" should permeate all so- 
 cial strata, and hold out for pursuit social ideals which shall 
 not be beyond the humblest position and the most moderate 
 capacity. It is only the idea of such advantage and such neces- 
 sity, or v f kindred advantage and kindred necessity, that can 
 humanize the infusion of truth, truth none the less though cyn- 
 ical and unpalatable, that mingles with the following words of 
 Napoleon, reported by Mme. de Remusat, I. 277: "I have small 
 liking for the vague and leveling word 'conventions,' which the 
 herd of you throw out on every occasion; it is an invention of 
 the fools to get closer to the people of good sense, a sort of so- 
 cial gag against the strong, helping mediocrity to play its own 
 game. * * * Ah! good taste! Another of those classic 
 phrases that I don't admit." 
 
 None more strikingly than Napoleon possessed the strong 
 hand; a better conception of human nature would have enabled 
 him to found a really strong government. Seeing behind human 
 nature no motive worthy of great respect, and seeing in the crea- 
 tures which body that nature forth only the raw material of abso- 
 lute government, "the heap of clay awaiting the potter's hand to 
 give it form," and abiding by this conception as final despite its 
 contradiction by palpable facts the stubborn opposition of Eng- 
 land, the mild but unbending resolution of the Pope, the violent 
 insurrection of Spain, the fermenting discontent of Germany, the 
 resistance of Catholic conscience, the gradual defection of 
 France, he must needs so abide because such conception was 
 innate in his own character, because he must see in man just 
 what his ambitious needs bade him see ; and from this blind side 
 of his character, aided by the exuberance of his constructive 
 imagination, came most of the false calculations that led him 
 to ruin and St. Helena. TAINE, ID. I. 75, 76. They who are fond 
 of tracing Napoleon's downfall to a colic or other indisposition at 
 Borodino, forget that there is always an abundance of little 
 things to furnish forth the proximate cause or causes for a top- 
 pling structure to tumble down; whereas the true cause of its 
 fall lies in its being essentially and fundamentally a toppler. 
 
 Napoleon, however, vigorously as his own personal will re- 
 
146 HERTIG ON TAXATION. 
 
 pudiated modern ideals and limitations, could not escape be- 
 ing the child of his time in which even another Augustus was 
 impossible, to say nothing of Caligula, Nero, Domitian, or Heli- 
 ogabalus. Thus Augustus, whose character has been so well 
 varnished by some historians had a Rome that perfectly tolerat- 
 ed him as an unscrupulous debauchee as well in youth as in ripe 
 age.* 
 
 vvlien he sent the imperial conveyance, or "litter," as it is 
 generally called, to a Roman matron, however high her rank, it 
 was always an effective invitation "to come to the Palatine, and 
 to yield herself like the lowest slave." M. BEULE, Augustus, 
 159. The husband had too lively a recollection of the bloody 
 Triumvir Octavianus to dispute the possession of his wife with 
 the imperial Augustus, who had developed from that triumvir. 
 The sending of the imperial litter was no infrequent occurrence; 
 it happened, indeed, so often that Augustus put forth reasons of 
 state to justify himself the need to thus find out the secrets of 
 eminent families, to find out, in the interest of Roman order, 
 what was going on amongst his enemies. Napoleon was too 
 much the child of his time to take this Augustan way of finding 
 a new mistress, when an occasional whim impelled him to such 
 aim. His Paris was perhaps little less immoral at heart than the 
 Rome of Augustus; but in vice, as in despotism, there are fash- 
 ions as dangerous- in a large way to disregard as the fashions 
 in clothes and every-day conventions in a small way. Disregard 
 in the one case may bring about assassination or revolution witii 
 the same readiness as disregard in the other may bring about 
 social ostracism. Besides, Napoleon did not need Machiavelli 
 to prompt him that it is dangerous for a prince to take the wives 
 of his subjects; it was of fundamental doctrine with Napoleon, 
 and from his standpoint of the most discreet statesmanship, that, 
 to exploit the individual advantageously for the state, the Na- 
 poleonic despotic state, he the individual, must have and feel 
 himself in secure possession of, his private domain, his personal 
 fenced corner, which the government shall severely let alone. 
 Otherwise his condition will seem to him intolerable; he will 
 have no heart to toil and moil for the master. Beware of breaking 
 or drawing the temper from, this powerful and precious spring 
 of action ; let him go ahead in working, producing, laying up 
 
 * If Gibbon has been thought to praise too highly the government of 
 Augustus, that eminent historian must be acquitted of anywise flattering 
 the private character of Augustus, of whom he says: "A cool head, an 
 unfeeling heart and a cowardly disposition, prompted him at the age of 
 nineteen to assume the mask of hypocrisy which he never afterwards laid 
 aside." Decline and Fall of the Roman Empire, Chapt III 
 
HERTIG ON TAXATION. 147 
 
 savings, though it be only to have him get wherewith to satisfy 
 the tax-gatherer; let him go ahead, get married, rear a family, 
 though it be only to furnish sons for drafting into the army." - 
 TAINE, I, 171. 
 
 There were, besides the limitations of his time which Napo- 
 leon instinctively recognized and heeded, thereby attaining his daz- 
 zling success, other limitations on which he trampled defiantly or 
 heedlessly, and which in the end caused his overthrow; but at 
 heart he despised all limitation, as well that by which he profit- 
 ed as that which his cannon could not sweep away. An excel- 
 lent judge of human nature except in its higher reaches, an ad- 
 ministrator without a peer, intolerant of peculation except 
 where he winked at it to bind the thief more strongly to his serv- 
 ice, Napoleon brought to empire with him his masterful mind 
 and marvelous faculties, practically uninstructed and unhamper- 
 ed by governmental practice or governmental tradition. His 
 unique native ability sufficed for the deeds of brilliant oppor- 
 tunism with which he amazed and terrified the world. A Na- 
 poleon, called to govern in any age or time, could not escape that 
 turning of the head which came to the emperor from the colossal 
 plans which his stupendous constructive imagination kept ever 
 building up, and which, like dreams of Alexander stirring 
 Caesar, would never let him rest. But between that imagination 
 ever firing its owner to wider conquest, to reach India through 
 subdued Russia, and the mad imagination of Caligula, the mob- 
 crazed and art-dizzy imagination of Nero, Domitian striving to 
 outdo Nero, that of 'Commodus outdoing both, the imagination of 
 Heliogabalus making "depravity a pursuit," and so successfully 
 that he carried depravity "not only beyond the limits of the im- 
 aginable, but beyond the limits of the real," between, I repeat, 
 the imagination of Napoleon and that of any of the wicked em- 
 perors of old Rome, the difference, vast as it is, is not a differ- 
 ence in degree but a difference in kind the difference between 
 the dreams of the strong head turned by its very strength and 
 the dreams of the weak head carried by circumstance to the diz- 
 ziest of heights, and held there in seeming security by strength 
 not its own. "There is," says Edgar Saltus, "no term in English to 
 convey that dominion over sea and sky which a Caesar pos- 
 sessed, and which Caligula was the earliest to understand. Au- 
 gustus was the first magistrate of Rome, Tiberius the first citizen, 
 Caligula was the first emperor, but an emperor hallucinated by 
 the enigma of his own grandeur, a prince for whose sovereignty 
 the world was too small. "-^-Imperial Purple, 69.* 
 
 Saltus. here quoted, is always piquant, though his piquancy is not 
 
148 HERTIG ON TAXATION. 
 
 There is in fact neither boundless nor irresponsible power ; 
 but the book-keeping of God and of the people Oi f ten permits it 
 to seem so, as it did to the wicked emperors, turning their heads, 
 and causing such thoughts as that expressed by Caligula to his 
 mistress Pryallis : "And to think that I have but a sign to make 
 and that beautiful head of yours is off." Id. 75. As kings and 
 other hereditary, or capriciously chosen rulers, have been per- 
 haps oftener than otherwise below the average man in mental 
 and moral strength, it is not surprising that such generalizations 
 as the following by Count d'Herisson have been often made, 
 and never without some verifying instance in mind. "Surely 
 power obliterates moral sense, and the most liberal resolutions 
 of a new monarch fade away as he mounts the steps of the 
 throne." Autour d'Une Revolution, 315. 
 
 The problem of the Neroes which attracted and perplexed 
 Hawthorne, which in Napoleon's case (most important for the 
 indirect light it sheds on the Neroes) does not exist and which 
 to the sober thinker presents little of the difficulty with which it 
 tries the skillful and conscientious artist reduces, then, in its 
 simplest terms, to weak and unformed character, or. in some 
 cases, to character formed and seasoned in depravity, developing 
 into manifestations which startle and appall in the possession 
 and exercise of practically boundless and irresponsible power, 
 though the fear which is never inseparable from great cruelty, 
 and even a straining after popularity of a certain kind are impor- 
 tant factors in the problem. Modern despots, bar Napoleon and 
 some of the Orientals, are tame and petty creatures beside the 
 imperial Caesars. The hulking and incompetent Alexander III. 
 had those same domestic virtues which made Jay Gould's pas- 
 tor forget the colossal thefts of the little demon of Wall street, 
 and which made some foreign critics disposed to condone the 
 administrative brutalities of the late Czar. It was a thorn in 
 Napoleon's side that he could not muzzle the English press ; and 
 even in censored and otherwise muzzled Russia the official 
 barbarians responsible for her "most cruel" most despotic, and 
 most retrogade" government, as Tolstoi terms it, are painfully 
 aware that a great outside public condemns their atrocities, and 
 have raised the making of lying apologies to a* fine art, to befog 
 and appease that public. The restraints which public opinion 
 and the ideals of common decency, to say nothing of constitu- 
 
 always coupled with what theologians call "inerrancy." Soberer authority, 
 however, confirms substantially what he says of Caligula. "In the reigns 
 of Caligula, Cladius and Nero the politic disguise under which Augustus 
 and Tiberius had endeavored to conceal the extent of their power was 
 n contemptuously aside." H. F. PELHAM, in Encyclopedia Britannica. 
 
HERTIG ON TAXATION. 149 
 
 tional limitations, impose upon modern princes, had practically 
 no existence in ancient Rome. Where the stoic philosophy, as 
 in the case of the Antonines, or other influences had confirmed 
 the native strength of an emperor's character, he governed well, 
 and was in the main free from anything thought to be personal 
 vice in that day; shining examples of domestic and civic virtues 
 have never been quite absent in the worst of times ; but in the 
 Rome of the Caesars, whoever had either open or latent ten- 
 dency to what we now call degeneration, found little external 
 prop or support against headlong fall. "There have certainly 
 been many periods in history when virtue was more rare than 
 under the Caesars; but there has probably never been a period 
 when vice was more extravagant or uncontrolled. Young em- 
 perors especially, who were surrounded by swarms of sycophants 
 and panders, and who often lived in continual dread of assassina- 
 tion, plunged with the most reckless and feverish excitement 
 into every variety of abnormal lust. The reticence which has 
 always more or less characterized modern society was unknown, 
 and the unblushing, undisguised obscenity of the epigrams of 
 Martial, of the Romances of Apulius and Petronius, and of some 
 of the dialogues of Lucian, reflected but too faithfully the spirit 
 of their time." LECKY, History of European Morals, II., 321. 
 
 It is peculiarly appropriate to this work and pertinent as 
 showing a flaw already apparent in the character of young Nero, 
 that early in his reign he was an over-radical tax reformer! Who 
 knows but some enthusiastic "single-taxer" of our day might 
 develop into a Nero, had he but Nero's chance? Nero would 
 have gone a step further than the single-taxer would have 
 abolished and not merely shifted the burden. But I will let Gib- 
 bon speak for him : "In the first and golden years of the reisrn of 
 Nero, that prince, from a desire of popularity, and perhaps from 
 a blind impulse of benevolence, conceived a wish of abolishing 
 the oppression of the customs and excise. The wisest senators 
 applauded his magnanimity ; but they diverted him from the exe- 
 cution of a design which would have dissolved the strength and 
 resources of the republic. Had it indeed been possible to realize 
 this dream of fancy, such princes as Trajan and the Antonines 
 would surely have embraced with ardor the glorious opportunity 
 of conferring so signal an obligation on mankind. Satisfied, how- 
 ever, with alleviating the public burden, they attempted not to 
 remove it." Decline and Fall, ch. VI. 
 
 Now the modern plutocrat, whether named Hill or other- 
 wise I limit myself to the kind living and operating on Amer- 
 ican soil frankly accepts the limiting conditions of his time and 
 country, at least in the outset of his career. He is, in the begin- 
 
150 HERTIG ON TAXATION. 
 
 ning, seldom without some of the amiability that characterized 
 young Nero, and which, for the rest, most young Americans pos- 
 sess a fact which does not necessarily imply that they a 
 potentially Neroes. He cuts rather a sorry figure in American 
 light literature, if either sweet or light be applicable to the novels 
 that dribble along in American magazines. In novels that fall 
 below the standard of magazine literature, he sometimes buys a 
 conscience or a concubine, and gets the worst of the bargain. 
 When only "tolerably virtuous," to borrow a phrase which the 
 late Robert Ingersoll launched with gleeful contempt, he has 
 been known to reflect that, while an atmosphere thick with 
 conventions is an excellent thing, and does not fetter materially 
 operations financial or otherwise, it greatly aids the black-mailer 
 to levy and collect an exorbitant tax. When intolerably virtu- 
 ous, only modestly plutocratic, and with no high ideals to fill the 
 place taken in others by the pleasures of sin, the case, though 
 rare, does happen, he has been known to "retire early, get 
 melancholy, and die before his time. He has been known to 
 read in sympathetic youth John Stuart Mill on the Subjection 
 of Women, and to wince in ripe age at getting his leg heavily 
 pulled for alimony. Though in rare cases, one may need most 
 of the finders in reckoning his consecutive polygamies per 
 successive mistresses, his voice will never fail to lend resonant 
 support to those who demand a more stringent regulation of 
 divorce. Though, like Panurfre, he is, in general, for his inti- 
 mates the best fellow in the world, he gets scant justice, unless 
 he pays high for it, and not always then. Though circumstances 
 force him to be art anarchist, and to nullify in detail such laws as 
 run counter to his will and his interest, as Jay Gould did the 
 national banking law, when about Black Friday time, he had the 
 Tenth National Bank of New York certify checks without limit 
 and several kinds of law when he deliberately printed and sold ail 
 the "Erie" certificates of stock that Vanderbilt would buy, yet 
 the professional anarchist refuses to hail him as comrade, and 
 v ould rather give him the warm bomb than the glad hand. 
 Statesmen of Senator M. S. Quay's purity impeach his piety and 
 his principle, fry him for campaign contributions, and even re- 
 proach him for not being a cheerful giver: 'There must be less 
 business and more principle in our politics, else the Republican 
 party and the country will go to wreck. The business issues are 
 making our politics sordid and corrupt. The tremenduous sums 
 of money furnished by business men, reluctantly in most in 
 s'a^ces. are polluting the well-springs of our national being."- 
 QUAY in 1896, ap. Lit. Digest, XIV., 227. Statesmen of Ex- 
 President Harrison's capacity reckon that his tax-dodging, if not 
 
HERTIG ON TAXATION. 151 
 
 stopped, will disrupt the nation. Sad and strenuous-looking edit- 
 ors, like Mr. Bliss Perry of the Atlantic Monthly, who would 
 rather die than print anything that would impair the vested right 
 of Houghton, Mifflin & Co., to the prospective profits in books 
 published by that respectable firm, lash him to the main brace, 
 and flay him alive for franchise-stealing. The President of the 
 University of Minnesota has warned our young men that if they 
 do not stop their ears against the siren gambling spirit of the 
 plutocrats, the country will go to the dogs or like disastrous 
 goal within twenty-five years, of which, if I mistake not, some 
 six or seven are already run. Arthur Hadley, President of Yale 
 University, seems to have wrestled down, like a magazine hero, 
 his former wicked impulse to visit the plutocrat with social os- 
 tracism, and to have found philosophic rest in the conclusion 
 chat "there will, of course, always be a conflict between those 
 who have more money than votes, * * * an<3 those who 
 have. more votes than money," a proposition which, perhaps, 
 goes a step beyond that other one of Mr. Hadley, The chief use 
 of education is to broaden the mind, and may possibly be held to 
 show that in Mr. Hadley's case, at least, the chief use of educa- 
 tion is to flatten the mind. But in another Yale professor, an 
 economist like and unlike Mr. Hadley, the poor, despised pluto- 
 crat has a friend who pipes no uncertain note Prof. W. G. Sum- 
 ner. He, by the way, having cast eyes, the very opposite of 
 sheeps', at American homes, and finding unhappy ninety per 
 cent, of the marriages there in evidence, must needs be hard 
 pushed, to find somewhere some salt of the earth. What skeptic 
 so heartless as to rob poor Sumner of faith in the Captain of In- 
 dustry and the plutocrat employer? 
 
 In these days of liberalized Christianity, they who might in 
 other days have been religious fanatics, have found, like Sum- 
 ner, a make-shift substitute in orthodox political economy. I 
 use "orthodox" in this connection only for courtesy; there is 
 now no othordox political economy ; and of all the pseud-sciences 
 not even speculative metaphysics has made worse bankruptcy 
 than political economy. There is more harmony between the 
 different wings of theoretical anarchism than between almost 
 any individual economist and his next neighbor in the same pro- 
 fessional line. The economist can't go a step without mounting 
 on the stilts of technical ''value" and technical "capital;" and 
 generally does not try to go a step without devoting a dull and 
 lengthy chapter to telling his reader how badly other economists 
 have limped in non-advancing zio-zags because they did not 
 know either what "value" means or what "capital" means; and 
 his reader may lay good odds that the next professor to write a 
 
152 HERTIG ON TAXATION. 
 
 book will not fail to add another name to the list of limping 
 stilt-users. There is not a settled county in all Minnesota, or for 
 that matter in the United States that has not once or repeatedly 
 given ocular refutation to Ricardo's theory of rent. But I said 
 "orthodox" economy, and there is a yellow thread of unity, or 
 tie that binds, and which may be used to sustain the description, 
 "orthodox." That yellow thread is worshipping awe before the 
 golden calf, which orthodox economists write Wealth, and, as 
 orthodox, love best when its material is mined, and fashioned 
 into shape, along old-time lines. In their camp, then, the often 
 elsewhere and otherwise despised plutocrat finds words of 
 cheer and encouragement, a claim of moral and scientific sanc- 
 tion for that practical philosophy of life embodied in the words 
 of a frank millionaire to me in 1895, just after the federal su- 
 preme court had finally held the income tax law to be uncon- 
 stitutional, "The rich man generally comes out on top." Thus 
 indorsed, basking in the obsequious smiles of the family pur- 
 veyor, the family physician, the family pastor, sometimes even 
 of the family archbishop, he need never lack the caressing flat- 
 tery of other intimates, nor, in general, flattery on the part of 
 the "capitalist" press. Unless, like Astor, he is sicklied o'er 
 with the wealth of his ancestors, he has no aching void that only 
 "good society" can fill. He has been known to brand as an "ig- 
 noble aspiration" the desire to be rich, which saying did not 
 diminish either his desire or his skill as a tax-dodger; nor does 
 such contradiction necessarily show him a bad man or a hypo- 
 crite. In his beginnings, at least, he is generally as good as, 
 and often better than, his neighbors. When he is self-made, 
 there was a time in his life when for twenty-five thousand dol- 
 lars or so he would have sworn allegiance to the spirit of the law 
 and of all the prophets, and perhaps, for such sum, have kept it. 
 So far from making "depravity a pursuit" he has so fully and 
 freely accepted modern civil conditions that, in general, his chief 
 individual crime is that he stole a part of his fortune under the 
 forms of law. The more atrocious crime of his class, the fas- 
 tening of industrial slavery upon the masses and his stubborn re- 
 sistance to effort that would abolish such slavery is indeed 
 atrocious in result, but due to conditions so complex as to dull 
 somewhat the edge of individual responsibility. The class de- 
 fiance, "What are you going to do about it?" is not unmixed 
 with many a sincere individual utterance from the class of ."What 
 can you do about it?" Where there is a skepticism that would 
 be converted, if it could be shown how, the friends of the faith 
 must seriously consider, if the fault of failure to convert lie not 
 in the doctrine or in its missionaries. The economists are fond 
 
HERTIG ON TAXATION. 153 
 
 of saying, though not quite so clearly as I say it for them, that 
 the cost of the product of the poorest mine that is kept worked 
 measures the price that all miners of like products get for the 
 same, the profits of the paying mines being, as it were, a sur- 
 plus product much like Ricardo's economic rent; that the cost of 
 raising wheat on the poorest lands that are handy to market and 
 on which people keep raising wheat, or of raising on, and mar- 
 keting from, the better but less favorably situated lands which 
 just continue to attract continuous, or nearly continuous wheat- 
 raising measures with substantial accuracy the price of that 
 grain, for that the tillers of such lands cling to or let go of wheat- 
 raising just about when price is a shade above, or a shade below 
 that cost. This theory and the propositions which it implies 
 practically ignore the resisting medium which air abstract social 
 theory must face when it is launched from the professorial desk 
 for a trial in real life; ignore the role of hope and ignorance in 
 human affairs; ignore that capital, working mines, often keeps 
 a ledger showing for years at a stretch a huge balance on the 
 wrong side, that stubbornness often keeps no books, and as 
 often as not capitalizes its labor into what is truly and literally 
 a sinking-fund, and thereby is never without the hope of a 
 bumper harvest "like that in King Charles' time," and the hope 
 of a bumper price like that in some other time. With the con- 
 viction that "the seasons have changed so as wheat don't do well 
 here any more," the American farmer quits growing it in his 
 particular locality. Light yield, or none at all, palpably disas- 
 trous, moves him to quit, consideration of price hardly at all. 
 My friends, then, the economists, will hardly -blame me after 
 such example of their worst or least desirable, as gauging the 
 standard of price, for carrying that "worst or least desirable" into 
 a different field, there to do better work; the worst or least de- 
 sirable conduct of the individual plutocrat may set the pace for 
 plutocrat conduct in general, and certainly does furnish the 
 standard by which the public judges plutocratic motive and in- 
 tent, does furnish brilliant proof in support of Hamlet's happy 
 saying, "There is nothing either good or bad but thinking makes 
 it so." Such crimes as abuse of legal process, deliberate slander- 
 ing of a city's credit, wholesale attempt to debauch public opin- 
 ion, persistent libeling of the motives and character of every 
 prominent opponent, deliberate breach of contract, praying hy- 
 pocrisy using Sunday as the safest day for- nefarious operations, 
 malicious mischief little different in kind from, and with worse 
 motives than, anarchistic bomb-throwing all these and the de- 
 tails of their working are set forth in Henry D. Lloyd's Wealth 
 against Coimnomcealth, chapters XXII., XXIII., and XXIV. 
 
154 HERTIG ON TAXATION. 
 
 (New York, 1894). The people of Toledo, Ohio, a city having 
 in 1888 about 90,000 inhabitants undertook then to free them- 
 selves from the monopoly of two pipe line companies then and 
 there having and using separate franchises to supply the people 
 with natural gas. "They obtained their franchises as competi- 
 tors, but were soon found to be one in ownership, prices, and all 
 details of management." Id. 305. These companies "in the 
 midst of the work of laying pipes" had suspended operations 
 until the city council at their dictation had fixed the prices the 
 people should pay for gas. "These rates were enough to pay 
 not only a fair dividend, but to return in a few years every dollar 
 of capital invested in lands, pipes, etc." Later they demanded 
 another increase which, according to the sworn statement by 
 their superintendent of the amount of gas supplied daily would 
 have amounted to $351,362.50 a year. Toledo's own first esti- 
 mate of the amount necessary to buy gas land and to build pipe 
 lines did not exceed $750,000 an amount somewhat exceeded 
 when the city came to the work of carrying out its plans, though 
 the excess of cost over estimate was largely caused by the ham- 
 pering efforts of the two private companies. "They made the 
 charges [presumably those contemplated in the farther 'in- 
 crease' for which they asked, but did not obtain, authority] 
 regardless of the ordinance, and used delay in furnishing gas 
 as a means to make people willing to pay these illegal rates. 
 Consumers seeking to renew their contracts were informed that 
 the price would be doubled." Toledo had further grievances. 
 "The companies refused to supply fuel to an oil refinery which 
 had been built in Toledo in opposition to the trust refineries. 
 The companies discriminated against some customers and in 
 favor of others. The power to say which manufacturer should 
 have cheaper fuel than his competitor was a power to enact 
 prosperity or ruin." Id., 305-306. It is the story of Toledo's 
 struggle against, and its final hard won victory over this gas 
 combination that is told by Lloyd in the above mentioned chap- 
 ters of his book a struggle by "a vigorous community of 90,000 
 people" against "a little group of men," a group, however, con- 
 trolling "in one aggregation not less than $160,000,000, besides 
 large affairs outside of this" a struggle in which the sand-bag- 
 ging attempts above mentioned were ever at a pitch of dramatic 
 intensity a struggle in which the nefarious possibilities of a 
 huge aggregation of private capital were seen at their worst, and, 
 so seen, serving to keep awake in the minds of the people a deep 
 fear of ^such aggregations, even when seen at their best; making 
 them as regards the treatment which they should receive, the 
 evil which they are thought to be. Thus the "worst or least cle- 
 
HERTIG ON TAXATION. 155 
 
 sirable" of such aggregations shall fix the standard of apprehen- 
 sion and regulation for all of them. 
 
 If one personally knowing here and there an individual mem- 
 ber of the American plutocracy, judge him merely according to 
 first impression and the dull and prosy appearance of the man, 
 it will seem, in comparing such plutocrat to Nero, and using 
 Napoleon to light up the whole with the brilliancy of vast and 
 genuine ambition it will seem, at first blush, plain, very plain, 
 almost frivolously plain, that the American plutocrat, partly 
 from temperament, partly from the unescapable limitations of 
 his local surroundings, is, to borrow a horsey illustration from 
 flash circles, merely as a tame plug to a thoroughbred, along- 
 side the real thing in vice or the real thing in ambition. If, 
 however, disregarding first impressions, one puts off comparison 
 until one has followed in detail certain colossal operations bear- 
 ing the plutocrat stamp, and has marked the worst and truly 
 hideous features there apparent, then it will seem equally plain 
 that Neronocracy and American plutocracy differ chiefly, in that 
 the latter, with a cunning never developed in, because the need 
 of it was little felt by, the former, recognizes certain fettering 
 conditions which it cannot openly transcend, and to get around 
 which by secret breaking or marvelous stretching, it does not 
 scruple to use every power and resource at its command doe^ 
 not scruple to use such power and resource with as shameless 
 defiance of public and private right and as flagrant breach of the 
 moral law as any such defiance or breach practiced by Nero in 
 the exercise of that unbounded "dominion over sea and sky 
 which a Caesar possessed," and which "there is no term in Eng- 
 lish to convey." The details of a Nero's vice grossly shock the 
 Puritan ear, but should a Puritan conscience be really more 
 shocked by them than by some of the crimes of plutocracy? No 
 member of the Baptist church, "in s^ood standing," will imitate 
 Commodus outdoing Nero, and, like Commodus, promenade 
 "in the attributes of a priest of Anubis through a seraglio of six 
 hundred girls and mignons" who exemplify their purpose in life 
 as he passes. It may be freely conceded that no member of that 
 church, in good standing or otherwise, will think of setting up 
 such seraglio either for himself or for any legislature that he 
 may desire to buy. It would be both too scandalous and too un- 
 necessarily dear. But when Henry C. Payne, in 1884, bought 
 his way to the senate of the United States through the then 
 Democratic legislature of Ohio, it is no strain on the imagina- 
 tion to conceive him, in view of the nefarious practices of his 
 associates, some of whom are and some of whom are not mem- 
 bers of said church no strain to conceive him or them as 
 
156 HERTIG ON TAXATION. 
 
 shrinking from no kind, quality, or scale of debauchery that 
 would help wicked purpose to success. When cold cash affords 
 the cheapest and safest means, there is, of course, no question of 
 anything else. "Entities," said Occam with his Razor, "must 
 not be multiplied beyond necessity;" moral or legal codes, thinks 
 Rockefeller with his Standard Oil, must not be shocked beyond 
 necessity. 
 
 Modern brigandage achieving the colossal, would sometimes 
 atone, or forget, or deceive, by splendid giving. But Nero was 
 "splendidly lavish," and for awhile achieved with the Roman 
 masses an adoring popularity. "For days and days in the 
 Forum there was an incessant shower of tickets that were ex- 
 changeable, not for bread or trivial sums, but for gems, pictures, 
 slaves, fortunes, ships, villas and estates." Imperial Purple, 103. 
 Caracalla, who "bounded like a panther on to the throne," and 
 who "had not a taste, not a vice even, which was not washed and 
 rewashed in blood," was a prodigal giver to his soldiers, and by 
 them adored, despite the universal execration in which others 
 held him. "No pne had abandoned to the army such booty as 
 he." Id. 224. But in these days, though a gift doth still "blrul 
 the eyes and pervert the judgment of the righteous," it is not 
 necessarily effective unto total blindness and complete perver- 
 sion. Gifts to universities and colleges easily recoil. A profes- 
 sor may be meek, and duly grateful to the hand that endows, 
 but he may also prove a flaming firebrand plucked from the 
 quenched; and his students, like standard oil at times, are always 
 likely to blaze out under low initial heat. 
 
 Does it follow that a plutocrat of the most objectionable type 
 is necessarily a canting hypocrite, because he robs and prays? 
 A question not to be answered lightly, nor to everybody's satis- 
 faction. In the non-logic of many a mind, and in the non-con- 
 sistency of many a character, two contradictory propositions are 
 each true, and two conflicting actions are each genuine. That 
 contradiction which Hawthorne, and Shelley before him, noted 
 in the Italian character, deeply religious yet damnably vicious, 
 is by no means rare outside of Italy. Perhaps we may safely 
 say that when the American business man develops into a pluto- 
 crat, he does not necessarily lose entirely his conscience, but 
 that he treats it much as any account is treated in bookkeeping. 
 Thus, during the Civil War a New England patriot made larcre 
 gains as secret Dartner in vessels and cargoes "running the 
 blockade." It was not quite right to supply the rebels with 
 necessaries even at a bumper price ; a balance therefore was due 
 to Conscience on open account. So this same Yankee mikes 
 amends by arming and equipping at his expense a regiment of 
 
HERTIG ON TAXATION. 157 
 
 New England volunteers, and presents them to the government 
 at Washington to go against the rebels to whom his blockade- 
 runners were carrying aid and comfort! At any rate, whatever 
 the motives that inspired to a partial balancing of the Conscience 
 account, let us be thankful that the rogues of today are not in- 
 sensible to those motives. And at the same time, let us remem- 
 ber for practical guidance that the right opportunity to rob sel- 
 dom fails to develop the right robber, and is not likely to fail 
 because such person has a particular creed or none at a 1 !. Or, as 
 the old German saying runs, "Make a sheep of yourself, and 
 wolf's teeth are sure to find you." 
 
 From the standpoint of the public, none of the great brigands 
 have a cleaner record than James J. Hill. As Napoleon finding 
 the crown of France lying in the mire, picked it up with his 
 sword, so Hill finding a railroad crown unclaimed and vacant 
 picked it up, and got a better title to it than Napoleon to the 
 crown of France ; there was no pretender, Bourbon or otherwise, 
 to Hill's crown. The public was silent; it 'had neither voice nor 
 organ; it was not conscious of its latent claim. In so far as it 
 had done anything, it had given, by implication, a general invita- 
 tion to anyone who would to come, pick up and appropriate to 
 his individual use. Hill came, picked up, and appropriated. As 
 titles go in such kind, than his none could be better. But the 
 New Jurisprudence will teach that the public is not estopped by 
 any informal action, nor bound beyond a reasonable time by any 
 compact, however solemn ; and the public will find, if necessary 
 to resort to hanging, a constitutional way to hang a few old 
 judges, a few other old officials, and even a few old lawyers, who 
 may prove officiously obstructive of the New Jurisprudence. 
 
 Certain truisms are so seldom said such is human cowardice 
 in shrinking from exact inventory of what it dare not deny that 
 they sound in the saying revolutionary and murderous ; as, 
 for instance, the truism implied in the words, "resort to hanging," 
 in the preceding paragraph. It is not denied that the people have 
 the right to change to any namable extent their political consti- 
 tutions and their civil and criminal laws. The right to hang is 
 necessarily coextensive with the right to make laws concerning 
 hanging. The conditions, therefore, which give individual im- 
 munity from the halter, lie only in power to persuade the effective 
 majority that the individual ought not to be hanged. A hypo- 
 thetical necessity for hanging becomes an actual necessity only if 
 and when the effective majority so conceive it. I do not predict 
 the necessity, but mention merely one of the legal results that 
 could readily flow from it, should it occur. Nor would such neces- 
 sity be any the less a necessity, shouM its results be deplorable. 
 
158 HERTIG ON TAXATION. 
 
 For the rest, I speak here only of hanging within the form of law, 
 and of what the people can and may do in their sovereign capacity, 
 whenever they take that view of it. 
 
 As for Hill individually, no doubt he holds himself to be in a 
 certain sense a trustee for the public. To transform volunteer, 
 irresponsible trustees into those solemnly appointed and who 
 will account to the public along the right lines and administer 
 from right motives is a step which the public will yet take. 
 Hill has, or at least had, all the virtues of the best brigands, or 
 chiefs, of the old school, virtues whose code is very concise, 
 Be good to the family, be good to the class, and levy all the trib- 
 ute you can on the rest. He has also the modern administrative 
 virtues of a Napoleon no sly peculation allowed, no detail 
 skamped, unquestioning obedience to the head a head never at 
 a loss to give orders, and a headsman's hand for any officer or 
 other employe that fails to obey them. Taken when not too 
 hardened in brigandage to be open to the right civil ideals, any 
 man, potentially a Hill, can be made of inestimable value to the 
 public. 
 
 Finally, as for Hill individually, Hill the worker, given to 
 neither wine nor women, yet not fired by the highest ideals, Hill, 
 the practical man finding relief from heavier burdens in walks 
 about, and attention to, his farm at Hazelhurst, this Hill has 
 a weakness that particularly exemplifies honest Sancho's pro- 
 verb "the belly must be filled with hay or with straw." This 
 weakness, the straw on which he feeds, lacking the nourishment 
 afforded by higher ideals, is the love of diamonds ! Not diamonds 
 to wear, but diamonds as a strictly private weakness glittering 
 unmounted stones to look at, stones by the handful and basket- 
 ful. It is said that he requests certain large dealers in these 
 baubles to sell none of unusual size or other peculiarity without 
 giving him a chance to* buy, if the diamond in question should 
 tickle his fancy. I cannot think that he philosophizes over his 
 heap of brilliants as Balzac makes Gobseck philosophize over 
 his gold; nor yet that he has a scientific interest in them that 
 would survive, if by new mines, or by art, diamonds should be- 
 come almost as cheap as glass; nor yet that he contemplates 
 them as wealth in highly portable shape against the necessity 
 of flight in revolutionary or other contingency. I therefore put 
 down his love of diamonds merely as a vulgar weakness, like 
 that further one now that he is more exposed to Wall-street 
 contagion, and has become a garrulous old man lately evi- 
 denced in his remark, on hearing that Gates, the jovial Chicago 
 iron-and-steel pirate, is about to build a magnificent yacht : "I'll 
 build one that will make that moonlighter's look like a foundered 
 
HERTIG ON TAXATION. 159 
 
 canal-boat with a lantern in it!" It would be interesting, in this 
 connection, to know in just what words, spoken or thought, J. 
 Pierpont Morgan marked the superlative excellence of the gor- 
 goeus Christian special train, fraught with himself and clergy- 
 men, which made triumphal entry last fall into San Francisco 
 as compared with the lowly ass on which Jesus entered Jerusa- 
 lem. A pity, too, that history has not preserved the piquant 
 comparison made by Commodus, when, scheming to outdo Nero, 
 he planned to strut, priest of Anubis, through that "seraglio of six 
 hundred girls and minions." Truly this would be a sad world 
 without competition. 
 
 That the power to tax is the power to destroy is an axiom 
 of the old jurisprudence; that the power to tax is co-extensive 
 with legislative discretion, is also admitted; that, as applicable 
 to this country, the legislatures have full discretionary power, as 
 regards taxation, except in so far as the people have chosen to 
 restrict that power by written constitutional limitations, which 
 the people can amend or abrogate at will, is not denied, unless 
 in an occasional suggestion that, in any event, some heed must 
 be given to natural justice; that, on final analysis, the citizen face 
 to face with the full power of the state, has no right but the 
 right to his own righteousness, has been boldly affirmed by 
 tax officials in Boston; that the powers of darkness under cover 
 thereof, have stolen and hidden, without deigning even to pay 
 tax on their plunder, has so smitten the reform professors that 
 they have risen in their might a might that proudly fancies it- 
 self equal to the task of "reaming out" a little the dribbling 
 spigot of corporate taxation, but quakes in the knees at the very 
 thought of using the above sledge hammer of doctrine to do a 
 little tapping at the bung-hole! 
 
 I make frank confession of looking at the problem, or 
 problems, in a different light. In this and the last pre- 
 ceding chapter, I have placed together certain facts and compar- 
 isons pertinent to be borne in mind by whoever would govern 
 wisely in the taxing as in other departments wisely in the 
 Northwest or elsewhere. At least a partial inventory of the 
 "powers of darkness" in their realities and possibilities is highly 
 necessary to whoever would be successful "children of light." 
 At the same time I have made it apparent and would make it 
 emphatic, that the particular powers of darkness in these chap- 
 ters examined are not entirely black either in intent or in prac- 
 tical effect. Rule and probable ruin by a few overgrown pluto- 
 cratic swine are at least a shade better than rule and sure ruin 
 -by an army of pauperocratic pigs. Be it mine to refute as 
 frankly and earnestly the theory that we are limited to such al- 
 
160 HERTIG ON TAXATION. 
 
 ternative as it is mine to confess that one branch thereof holds 
 us in confident grasp. Be it mine to admit that a sudden and 
 permanent increase in tax revenue from sources that have here- 
 tofore been comparatively dry, may not prove an unmixed good, 
 and certainly will not, unless it runs safely the guantlet of danger 
 that new revenues will lead to new and indiscreet expenditures 
 without lightening materially present burdens. Reform, then, 
 in tax expenditure is even more vital than reform in tax collect- 
 ing. The plutocratic hoard that grows by all the plutocratic 
 methods, including non-payment of taxes, will be for the very 
 reason that it consists mostly of visible properties, always reach- 
 able by the state whenever the state shall really want it ; whereas 
 the funds and labor squandered on indiscreet public expenditure 
 are so much wasted wealth, and breed to boot a swarm of par- 
 asites who increase the complexity of problems of government. 
 Corporate bonds and shares may be hidden, it is true; but the 
 properties on which they are based are always in plain sight. 
 The new jurisprudence will see to it that violation of express or 
 implied conditions in corporate charters, works forfeiture of cor- 
 porate franchises not in theory alone, but in fact and in practi- 
 cal effect forfeiture as to which no statute of limitations shall 
 run against the people forfeiture from whose date the further 
 exercise of the forfeited franchises by the delinquent corpora- 
 tions or their assigns shall be construed to be a mere license 
 revocable at the people's will, unless extended by solemn com- 
 pact for a reasonable term under rigid conditions of control 
 forfeiture to be retrospective in effect and to date from the time 
 of the first violation of such express or implied conditions, a 
 point of great importance in determining the value of such cor- 
 porations as between them and the people, when and if the people 
 want to take them over. For instance, a corporation which has 
 long used and enjoyed, by the neglect of the public authorities, 
 valuable franchises which the new jurisprudence will declare 
 ought, of good legal right, to have been adjudged forfeited for 
 breach of conditions years lief ore the judgment of forfeiture shall 
 have been actually pronounced will have its properties appraised, 
 when the people want them less of course, all present value of 
 their franchises, and less the fair annual value of the franchises 
 from the retrospective date of their forfeiture, compounded at 
 current interest to the date of such appraisement and taking 
 over. 
 
 Neither the gentlemen who cultivate the practical side of 
 jurisprudence for the fees it brings them, nor the gentlemen 
 elected or appointed from among them to judgeships have had 
 much occasion to ponder upon and elaborate that implied bur 
 
HERTIG ON TAXATION. 161 
 
 mighty principle, lurking in every system of jurisprudence, the 
 ultimate protection of each and every property right rests wholly 
 upon the state conscience; and any property may be taken, nay, 
 will be taken, on just such terms as the state (or national) con- 
 science shall choose to impose. This conscience, as at present 
 working, permits property to be taken (unless owner and taker 
 make private agreement as to terms) only at its fair appraised 
 value, to be determined in condemnation proceedings either di- 
 rectly on the part of the state, or by those wham it authorizes 
 to so acquire property for some purpose of public utility. The 
 whole doctrine of "vested rights" is merely a permissive decree 
 of the state (or national) conscience, revocable at will, and of no 
 standing before the people's inalienable and superior right. The 
 new jurisprudence will ever bear this doctrine in mind and de- 
 velop it, but develop it equitably. 
 
 "We cannot exterminate the race of briars without slaying 
 the rose of Damascus/' (DONISTHORPE, Law in a Free State} ; 
 and the New Jurisprudence and the new civil polity will forget 
 neither this nor any reasonable limitation. 
 
CHAPTER XII 
 
 Minnesota to the tax front Unpledged legislative discretion Mandate and 
 membership of 'the Minnesota tax commission Gov. Van Sant calls 
 special session American tax reform movements make leaps and 
 bounds in the dark Versatile individuality of Minnesota legislature 
 How handicapped L The right autocrat (or the right organized idea) 
 lacking. 
 
 With the foregoing facts and considerations to pave the way, 
 and with a caution against any hasty conclusion on the reader's 
 part which he may draw from the last preceding chapter, let us 
 see how the vigorous commonwealth of Minnesota grasped its 
 problems of taxation through its constituted authorities, in Feb- 
 ruary and March, 1902, when an extra session of the legislature 
 was held for the special purpose of grappling with the tax prob- 
 lems. It had been neither chosen for such purpose, nor "in- 
 structed" thereon by its constituents. Probably no individual 
 member voted on any measure or could have voted, save in 
 strictly local matters in such a way as to subject him to very 
 sharp censure on the part of the great body of his constituents. 
 The House of Representatives had been elected in 1900, when 
 also half the Senate was .chosen the other half having been 
 elected in 1898. By the state constitution, senators have terms 
 of four years those in the odd numbered and in the even num- 
 bered districts, holding alternately for two years longer than the 
 House with which they were elected. Minnesota from the stand- 
 point of practical politics is a "doubtful" state in "off years," 
 but has never failed to go Republican at presidential elections. 
 Her present legislature is largely Republican, and her state ot- 
 ficers, as well as her congressional delegation, entirely so. 
 
 This legislature, at its regular session in 1901, authorized the 
 governor to appoint a tax commission to consist of three mem- 
 bers and to report not later than the first of February, 1902. 
 The act so authorizing prescribed the duties of the commission, 
 as follows: "The duties of said commission shall be to make 
 a tax code for the State of Minnesota. Such code shall include 
 
HERTIG ON TAXATION. 163 
 
 a complete system for the just and equitable taxation of all forms 
 of property both tangible and intangible, and shall be properly 
 indexed and proposed in the form of a bill or bills for presenta- 
 tion to the legislature. Said code shall include provision for a 
 permanent tax commission and shall define its duties, powers 
 and compensation. The commission shall also prepare and re- 
 port a bill or bills providing for any constitutional amendments 
 which may be necessary for properly carying out the system of 
 taxation recommended by the commission." 
 
 On January 10, 1902, the Tax Commission duly reported to 
 the Governor its preliminary work and recommendations in 59 
 pages, its proposed tax code in 308 sections, filling 119 pages, 
 and its proposed constitutional amendments in two pages. W. 
 J. Hahn, H. W. Childs and G. S. Ives, prominent citizens of the 
 state, were the three members of the commission. Mr. Hahn 
 had been attorney general of the state for the six years ending 
 January 5, 1887; Mr. Childs had held the same office for the six 
 years ending January 2, 1899; Mr. Ives had been lieutenant 
 governor of the state for the two years ending January 3, 1893, 
 and, like his colleagues on the commission, is a lawyer of ability 
 and experience. 
 
 Upon the filing of the commission's report Hon. S. R. Van 
 Sant, governor of the state, issued his proclamation calling the 
 legislature to convene in extra session on the 4th of February. 
 In his message, at the opening of the extra session the governor 
 called attention amongst other things to the fact that the legis- 
 lature in its session of 1901, "was practically unanimous in ap- 
 proving the bill providing for a commission, there being only 
 eight votes recorded against it, four in the house and four in 
 the senate;" that, in order to consider the commission's report 
 and enact its measures into laws as soon as possible, the regular 
 session of 1901 had been adjourned before the expiration of the 
 90 legislative days to which the state constitution limits any ses- 
 sion, the object of such earlier adjournment in 1901 being "that 
 the subject matter of the report of the commission and the 
 measures proposed might be taken up in extra session without 
 additional expense to the state;" that, owing to the need of mort 
 effective tax legislation, "it was tacitly understood that if your 
 general session was shortened, you would be called together in 
 extraordinary session immediately after the report of the com- 
 mission for the purpose of affording an early opportunity to con- 
 sider the measures proposed, and to enact such laws as you 
 might deem just and wise." It is always a serious step, as things 
 go in American politics, to convene an extra session of a state 
 legislature. The people at large, seeing the bulk of the statutes, 
 
164 HERTIG ON TAXATION. 
 
 a balk increasing with each successive session, dimly apprehend 
 that the need is not of more but of more discreetly and more 
 sparingly framed laws. Sins of omission and commission, likely 
 to occur at any session, are apt to recoil on the party in power 
 for the time being, more particularly, in the case of an extra ses- 
 sion, on the governor who called it. Governor Van Sant, there- 
 fore, prudently made it apparent that he had not lightly used 
 his authority in calling the extra session. In any event, he de- 
 serves the thanks of the state for having so called. 
 
 On the urgency of tax legislation in -Minnesota, and the get- 
 ting of it through a commission, the governor said in his mes- 
 sage : "It is a matter of common knowledge that for many years 
 there has been a universal demand in our state for a commission 
 clothed with the duty of preparing more efficient tax laws. The 
 creation of such a commission has long been urged by the pub 1 
 lie press, has been recommended by many of my predecessors. 
 and earnestly advocated by our state auditor whose duties in 
 tax matters make him especially familiar with the defects of our 
 present tax system." What Governor Van Sant says in this 
 passage may be truthfully said, with some modifications, of near- 
 ly all the states of the Union ; but the principal modification to 
 be made as well for Minnesota as for most of the other states is 
 to substitute for the words "a universal demand," etc., the words 
 "a growing interest in and demand for reforms in levying and 
 collecting taxes under the laws of the several states of our 
 Union." As a matter of fact, such interest and demand are neith- 
 er universal nor well considered, neither well organized in means 
 nor well fixed in aims. The tax reform movement is permeated 
 with the anarchy that now prevails with reference to the proper 
 sphere and functions of government in general not the theo- 
 retical anarchism that hopes by force or otherwise that all gov- 
 ernment will in time come to an end, but the good old fashioned 
 anarchy of confusion and conflict, with neither leader nor con- 
 quering principle in evidence, unless I but that is another 
 story. 
 
 On February 4th, then, 1902, what may be known to history 
 as ''the First Tax Legislature of Minnesota," began to sit in ex- 
 tra session a legislature composed of sixty-three senators, and 
 one hundred and nineteen representatives. The lieutenant gov- 
 ernor of the state, being bv virtue of his office, president of the 
 senate, virtually makes the number of senators sixty-four. In 
 the present senate, lawyers are much in evidence, and prepon- 
 derate in influence. This is not surprising, when the president 
 of that body and twenty-six senators proper are members of the 
 legal profession, or a total of 42 per cent of the whole. Other 
 
HERTIG ON TAXATION. 165 
 
 professions and occupations are numerously but scatteringly rep- 
 resented. There are seven merchants, five editors, three lum- 
 bermen, two manufacturers, and two farmers. There is one 
 pharmacist, one physician, one banker, one dealer in farm ma- 
 chinery, one produce commission merchant, one compositor, one 
 contractor, one general life insurance agent. Not classified with 
 any of the foregoing, are those leading double or triple, lives 
 from the standpoint of occupation, one druggist-banker, one 
 who is farmer, banker and dealer in agricultural implements, one 
 who runs a saw mill, a flouring mill, a general store and a large 
 farm, one who is railroad contractor, miller, hardware merchant 
 and lumber dealer, one who sells real estate, negotiates loans 
 and writes insurance, one who does the same, bar loans, one who 
 runs a bank and a law office, one who is a con- 
 tractor and civil engineer. Two senators still unclassi- 
 fied, but endowed with the usual American versatility, may, from 
 the leading fruitage of their strenuous lives, be put down as of- 
 fice-holders. Though, in general, office-holding on the part of 
 the senators appears to be only a side line, so to speak, in their 
 lives, it seems that only six members out of the entire body 
 "never before held office." Numerically speaking, the offices 
 that lead to membership in the senate of Minnesota are, county 
 attorney ships, and, if I may launch a quasi bull, getting elected 
 to one branch or the other of prior legislatures. No less than 
 twenty-one of the senators have "been to the legislature before," 
 and fifteen of them have held the office of county attorney. Two 
 senators have been, respectively, governor and attorney general 
 of the state. About a dozen have been aldermen or members of 
 some city or village council. Ex-county officers, other than 
 county attorneys, make a scattering show, but a considerable 
 aggregate, county auditor, register of deeds, judge of probate, 
 clerks of district court, treasurers, commissioners, etc. Ex- 
 mayors, about half a dozen. Esthetics and finance are jointly 
 represented by an ex-member of a board ol park commissioners. 
 To lead in a "campaign of education," and shed light upon their 
 colleagues, are ex-county superintendents of schools, ex-presi- 
 dents of boards of education, and ex-holders of "numerous vil- 
 lage and school offices." The mild effulgence of American high, 
 normal, collegiate and university schools lit up the earlier path 
 of many a senator. Of the few who have had "only a common 
 school education," none flaunt signal of distress or self-distrust 
 on that account. The Civil War volunteers were all mustered 
 out of service thirty-seven years ago; but three veterans of that 
 war still answer roll call in the Minnesota senate. Of all the 
 senators, only 15 were born in Minnesota. Forty-one were born 
 
166 HERTIG ON TAXATION. 
 
 in the United States outside of Minnesota, of which number, 
 fifteen Were born east of Ohio. Seven were born in foreign coun- 
 tries. Hon. Lyndon A. Smith, lieutenant governor and presi- 
 dent of the senate, was also born outside the state and is a native 
 of New Hampshire. As against the forty-three Republican sen- 
 ators, there are sixteen Democrats, two Populists, one Demo- 
 cratic Populist, and one Independent-Republican. 
 
 The House of Representatives does not belie its name and 
 is less professional and more popular than the Senate. The 
 legal profession, though well represented with twenty-two mem- 
 bers, is not overwhelming in influence, and the leader of the 
 House, Hon. Jacob F. Jacobson, "the gentleman from Lac Qui 
 Parle County," and chairman of the committee on appropria- 
 tions, is not a lawyer, but a dealer in farm machinery. Of him 
 more anon. Thirty-three members are listed as farmers a 
 number considerably greater than that which catalogues any 
 other occupation of theirs. After the lawyers, who are second 
 in number, come the merchants, numbering eleven, to whom, 
 however, should be added about as many more who are mer- 
 chants in a specialized way two dealers in 'hardware and [agri- 
 cultural] implements," one grain and produce commission mer- 
 chant, one wholesale produce dealer, three dealers in farm ma- 
 chinery, one dealer in "machinery and hardware," one lumber- 
 man, one "hardware merchant." There are five bankers, one 
 of whom is also a practicing physician. At least ten of the 
 members as listed in the Legislative Manual for 1901, appear to 
 have no fixed profession or occupation. Half of this ten may 
 be put down as office holders, and the other five are doubtless 
 general utility men in th'eir respective localities. Mechanical oc- 
 cupations are scatteringly represented. There is one shingle- 
 sawyer, one printer (who is also an editor and publisher), one 
 barber, one union labor champion, and one harness-maker, who 
 does something also in the "live-stock" way. There are two 
 physicians, besides the banker-doctor; and there are two drug- 
 gists, two hotel-keepers, two real estate dealers, and twice that 
 number who to dealing in real estate add insurance, loans and 
 the like. There is one commercial traveler, one life-insurance 
 agent, one contractor and builder, one civil engineer, one who is 
 a printer, railroader and lawyer, one who is a real estate man 
 and railroad contractor, one teacher by profession and farmer 
 by occupation, and one editor. The editor, too, is a handy man, 
 having formerly been "engaged in railroading," and having 
 served as recorder and sheriff, also as mayor separate offices and 
 distinct terms. There is one ex-policeman, and the youngest 
 member of the house served as a private soldier in the i3th 
 
HERTIG ON TAXATION. 167 
 
 Minnesota, in the war with Spain. Seven of the older members 
 were federal soldiers in the Civil War, one of them rising to the 
 rank of captain and two of them to that of first lieutenant. Three 
 others have seen military service, one "from March 1864 to 
 May, 1866, in Brackett's Battalion," another for over three 
 years as a "private in the regular army" (2oth U. S. infantry), 
 the third as lieutenant in the Fifteenth Minnesota, raised for the 
 Spanish war. Many members have had an amazingly varied ex- 
 perience amazing, if judged by the standards of countries where 
 routine holds full sway. Thus one member "has held numerous 
 public offices," been county superintendent of schools, published 
 the "first Democratic paper" in his county, was appointed post- 
 master by Grover Cleveland, was "U. S. pension examiner for 
 four years," and surgeon in the fourteenth Minnesota (Spanish 
 war regiment), with rank of lieutenant. A little more than two- 
 thirds of the members had held office of some kind before their 
 election to this legislature. One-fourth of them, speaking round- 
 ly, were born outside the United States ; only one-fifth, still 
 speaking roundly, were born in Minnesota ; the others, sixty-four, 
 were born in the United States, but outside of Minnesota, twen- 
 ty-four having been born in states east of Ohio. The House 
 is even more overwhelmingly Republican than the Senate, 
 nearly a hundred of the 119 members or, to speak by the card 
 and the blue-book, ninety-five being of that party. There are 
 fourteen lonesome Democrats, and a scattering remainder of 
 Populists, or with an eye toward that ilk. Lively enough these 
 latter, and hopeful with a reasoning that has point, if not true 
 prophecy : "The future ought not to "be to the Republicans, can- 
 not be to the Democrats, and who shall inherit, if we do not?" 
 
 We may now speak of this legislature entirely in the past 
 tense. While its term does not technically expire until the fall 
 election of 1902 shall have given life and a commission to its 
 successor, it is practically as certain as any contingent event 
 can be that it will not again be called to meet in extra session. 
 Such then was the legislature which met to consider the subject 
 of taxation a body of well-meaning- and intelligent men, not a 
 legislature to set the seal of its approval on anything manifestly 
 scandalous or contrary to the public welfare. It was handi- 
 capped as all American legislatures are, by the fact that some- 
 thing was sure to be done, with neither pre-arranged public will, 
 nor any safeguard against the consequences of prolix -debate 
 malforming compromise and final hasty action. It was further 
 handicapped by the difficulties inhering in the subject of taxation, 
 and by the worse difficulties begotten of previous legislation 
 and the constraint of constitutional limitations still binding. 
 
168 HERTIG ON TAXATION. 
 
 Difficulties born of previous legislation prevail in substantially 
 all of the American states. 1 am informed on good authority, 
 that a gentleman of high place and competency, said privately 
 not long ago, in speaking of the tax laws of his state: "I doubt 
 not that the laws of other states are in as hopeless confusion as 
 ours, but I am accustomed to think that ours are the most il- 
 logical and imperfect with which I have any acquaintance. The 
 subject of taxation is one which can only be dealt with success- 
 fully by an intelligent autocrat. We have plenty of intelligence, 
 but too much diffusion of power to reach a satisfactory deter- 
 mination." To vest the right authority in the right voice goes 
 indeed to the heart of the question. The New Jurisprudence 
 and the Civil Nation will attempt its solution. 
 
CHAPTER XIII. 
 
 The professorial tendencies and regrets of the Minnesota tax commission 
 A study in the assessed as compared with the true values of real 
 estate Minnesota, Iowa, Wisconsin, Indiana, Pennsylvania Urban 
 assessed relatively higher than rural property, Six general propositions 
 on values and principles. 
 
 The several members of the Tax Commision, mentioned in 
 the preceding chapter, received their commission on the elev- 
 enth day of April, 1901; and they completed their report in nine 
 months. The commissioners in the 59 pages of said report which 
 are taken up with an account of their preliminary work and an 
 apologetic commentary on their proposed code, make frank con- 
 fession of the difficulties of their task difficult ''under the most 
 favorable circumstances," and vastly more so by reason of the 
 provisions of the state constitution to whose mandates "they 
 had to yield." Report, p. 4. The commissioners showed them- 
 selves to be sicklied o'er with the pale cast of that type of pro- 
 fessorial thought which feels that great ^things are to be done 
 some of these days in the domain of government and the social 
 field after more data shall have been collected and more books 
 written thereupon. 
 
 "The commission deeply regrets that it was not afforded am- 
 ple time and means for the accumulation of valuable data relat- 
 ing to taxation in this state. This report would have performed 
 a far more instructive and useful function if the commission had 
 been able to present therein a comprehensive tabulation of the 
 wealth of the state under appropriate classification. Legislation 
 is most wise which emanates from a fine knowledge of the sub- 
 ject to which it is addressed. [Say rather from a practical, work- 
 ing knowledge of the temper and wants of the people on whom 
 legislation is to operate. That 'fineness of knowledge' which 
 enables a man to satisfy a board of professors of his competency 
 is by no means a sufficient guaranty of that man's fitness to leg- 
 islate.] 
 
 "Statistics should be marshalled showing the actual valuation 
 of real property in the several counties of the state; the valua- 
 
170 HERTIG ON TAXATION. 
 
 tion of personal property in cities and villages and in the rural 
 districts; in tangible and intangible forms; in productive and 
 non-productive uses; in investments in stocks, secured and non- 
 secured loans and bank deposits, engaged in manufacturing, job- 
 bing, mercantile, transportation and other public service enter- 
 prises. 
 
 "There should be a showing of incorporated companies class- 
 ified with respect to the purposes of organization disclosing the 
 amount of capital authorized and paid in, volume of earnings 
 and taxes paid. 
 
 "Such a showing would have been rich in suggestions and an 
 instructive guide both as to present and future tax legislation." 
 Report, p. 4. 
 
 No one puts a higher value on facts than I do. Views on 
 taxation, or on any subject, that do not rest on the buttress of 
 solid fact are as defective as a bridge built on basswood piers, 
 if such a bridge could be found. But facts undigested and un- 
 assimilated, facts supernumerary and over-minute, are apt to 
 have the same effect on the mind as the shot with which the 
 jumping frog of Talaveras was filled had on his legs: they cre- 
 ate inability and indisposition to budge. A journalist must havt 
 a "nose for news;" and a fact-user must have a nose for facts, 
 must have a judgment that singles out the right sort from the 
 mass, and that knows when it has enough. While, therefore, the 
 tax commission is to be commended for its loyalty to fact, I can- 
 not subscribe to its regrets nor to the list of its needs as above 
 set forth ; it underestimated the accessibility and simplicity of the 
 right facts, and it vastly over-estimated the need of the detailed 
 local statistics which it wished it had. 
 
 Thus, as regards the true value of lands in comparison with 
 their assessed value, it had ready at hand the official figures of 
 the assessed value for all the years that Minnesota has levied 
 taxes; and I doubt if any deliberate, cumbrous and expensive 
 official investigation of real values, scraped and faked together 
 for special purpose would give even as good an approximate 
 result as that within the reach of one competent private investi- 
 gator who should devote a few days to that matter. True, the 
 facilities for such work at St. Paul, while good in spots, and sup- 
 plemented by the cheerful willingness of state officers and em- 
 ployes to give what aid they can, are by no means ideally per- 
 fect. Despite the general excellence of the state library in the 
 legal field which it aims to cover, despite the valuable collection 
 of books and documents in the Historical library, there is many 
 a gap in the blue-books and official documents issued by other 
 states in the Union. As these, when issued, cost nothing but 
 
HERTIG ON TAXATION. 171 
 
 the asking and storing, it is hoped that when the new capitol is 
 occupied, both the will and the increased room will co-operate 
 in making and keeping the official series complete. 
 
 Now the neighboring state of Iowa has taken official pains 
 to find the value of acres, as determined by private sales, and to 
 tabulate that value side by side with the assessed value. Iowa's 
 state board of review requires each county auditor in that state 
 to report every ten years the area of the lands conveyed on a 
 certain day, the price received therefor, and "the assessed value 
 placed on the same property." The day covered by these reports 
 is March I, in, thus far, the years 1871, 1881, 1891, and 1901. 
 The figures thus obtained are extremely interesting and instruc- 
 tive : 
 
 March i, 1871 
 
 Acres sold 24,302 
 
 Price per acre $ 14.0 ) 
 
 Assessed value per acre 6.00 
 
 Percentage .43 
 
 March i, 1881 
 
 Acres sold 3 1 ,5 1 7 
 
 Price per acre $16.00 
 
 Assessed value 7 . oo 
 
 Percentage 44 
 
 March i, 1891 
 
 Acres sold 4 2 ,453 
 
 Price per acre $27 . oo 
 
 Assessed value 1 1 . oo 
 
 1 'crcentage .41 
 
 March i, 1901 
 
 Acres sold 1 12,660 
 
 Price per acre $44 . oo 
 
 Assessed value 9 . oo 
 
 Percentage .20 
 
 It will be seen that the percentages of assessed value on real 
 value are remarkably uniform for 1871, 1881, and 1891, a trifle 
 more than forty per cent for each year. The uniformity of these 
 results would indicate that the aggregate consideration received 
 or bargained for lands conveyed in one day of the year, when 
 compared with the aggregate assessed value of the same lands at 
 the same time, gives a very fair average of these respective values 
 for the whole state. Is this inference weakened by the seemingly 
 anomalous result obtained in 1901, a cut of a little more than 
 half in the former percentage? Must we adopt as correct the 
 slang grammar of lies "lies, damned lies, and statistics?" Not 
 in this case, at least. I "euess." in the Yankee's sense of the 
 
172 HERTIG ON TAXATION. 
 
 word, that there is a simple explanation. The good people of 
 Iowa having some years ago bowled over the demon "Rum" 
 with prohibitive statutes, sighed for new moral ideas to instal? 
 in triumph, and thought to remove from their statute book that 
 old chronic lie and breeder of lies, property shall be assessed for 
 purposes of taxation at its "true cash value." So they provided 
 for ascertaining such value, and decreed by statute that 25 per 
 cent of such ascertained true value should be set down as the as- 
 sessed value thus making law and practice for once a pull-to- 
 gether team. The 25 per cent basis went into effect in 1897, and, 
 such is the tendency of human nature to hammer down assessed 
 values a tendency fostered and developed by the prevailing 
 statutes into unwearying activity, that in 1901 our Iowa neigh- 
 bors had already succeeded in getting the assessed value of lands 
 two dollars per acre below the new 25 per cent mark ! The true 
 value being then $44.00 per acre, the average assessed value 
 should have been $n.oo, instead of only $9.00 per acre. In 1898, 
 Illinois adopted 20 per cent of the true value of all kinds of prop- 
 erty as the amount to be set down as the taxable or assessed 
 value thereof. 
 
 The Iowa figures, taking them by separate counties, for 1871, 
 1 88 1, and 1891, are specially interesting as showing the influence 
 in individual cases of what economists call "the higgling of the 
 market," the influence of assessors' favoritism, and the like. Thus 
 in 1891, in three counties, the assessed va-iue equaled or exceeded 
 the selling price, being in one of the three in per cent of the 
 same, and in another 108 per cent. In the three counties where 
 the percentage of assessed value was lowest, the figures are, re- 
 spectively, 15, 23, and 24 per cent. In 1881, the three highest 
 percentages were 175, 175, and 166; and the three next highest 
 were 133, 133, and 120. Two others were still above par 113 
 and 1 02 while in no les than four counties the assessed just 
 equaled the selling or true value standing at even 100 per cent. 
 The low mark was 19 per cent, reached by only one county. The 
 two counties next lowest stood each at 20 per cent. The three 
 counties next lowest stood at 25, 28, and 30 per cent, respectively. 
 In 1871, the high water mark, both for the year and the whole 
 record was reached in Winnebago county, where an 80 acre tract 
 of land assessed at $3.00 per acre was sold at $1.00 per acre 
 making the assessed value 300 per cent of the real value! In 
 five other counties the percentages stand above par 135, 133, 133, 
 125, 114. In four counties the assessed just equaled the selling 
 value. That year made the low as well as the high percentage 
 mark, a 90 acre tract in Dubuque county selling for $67.00 per 
 acre,, and assessed at $6.00 per acre, or 9 per cent of the real value. 
 
HERTIG ON TAXATION. 173 
 
 The low percentages run thence, 19, 20, 22, 28, 28, 28, 30, 31, 32, 
 32, etc. Those steady influences, "the higgling of the market," the 
 favoritism or neglect of assessors, are supplemented by circum- 
 stances easy to imagine a tract of land selling on some real or 
 supposed speculative merit, or a tract selling because some neigh- 
 bor pays more than it is worth, either to round out his own former 
 holdings or for other effective personal reasons ; while, to deter- 
 mine the lowest selling prices, there come in sales in a dull mar- 
 ket, or a poor piece of land sold out of a larger and better tract, 
 all assessed to one owner at a uniform rate, or a deal made on a 
 called bluff, or an opportunity offered by an angry non-resident. 
 But when an average is made on returns from nearly 100 counties, 
 and that average for three decennial years is almost the same, it 
 may be assumed that the special factors that make respectively 
 for high and low very nearly cancel each other sufficiently, at 
 least, for practical purposes. The Minnesota, then, or any tax 
 commission, could have safely assumed, from readily accessible 
 data, that in states like Iowa and Minnesota, where no improved 
 "jacking-up" machinery has lately been installed, and where, for 
 the purpose of levying a state tax, lands are attempted to be 
 "equalized" in value throughout the state, the assessed value, as 
 regards acre property, will not much exceed forty per cent of 
 the fair market value as ascertained by private sales. 
 
 I had finished the above study of true as compared with 
 assessed values before receiving the "First Biennial Report of the 
 Wisconsin State Tax Commission," (Madison, 1901), second 
 edition, which I owe to the courtesy of Gov. La Follette. From 
 this report it appears that in 1873 tne Wisconsin legislature "en- 
 acted a law (Chapter 210) providing that an abstract of the 
 record of sales of real estate in each county be transmitted annu- 
 ally by the registers of deeds to the secretary of state, giving 
 in connection with the consideration named in each deed, the 
 amount for which the property was assessed as shown by the 
 last assessment roll. * * * Wisconsin is believed to have 
 been the first state to enact such a law." The commission discov- 
 ered that in the 25 vears during which the law had been in force 
 prior to their examination of the statistics thereby afforded, "sales 
 of upwards of 36,000,000 of acres of land as acre property had 
 been recorded; or that about 12 per cent more than the total 
 acreage of the state had been transferred." Total acreage of the 
 state, including government land, about 34,600,000 acres ; as- 
 sessed for taxation in 1898, as per report of secretary of state, 
 32,017,368 acres. The commission found a "total absence of 
 anything like uniformity of assessment." Even "in the same 
 county adjoining towns or assessment districts differed widely." 
 
174 HERTIG ON TAXATION. 
 
 When in one town the average assessed value averaged, "say, 
 30 per cent of the actual selling value * * * in the adjoin- 
 ing town the assessment might be on the basis of 50 or even 75 
 per cent of the selling value." There was, however, "some meas- 
 ure of uniformity * * * in individual towns or districts 
 through a period of years." That is, a rate once made was gen- 
 erally pretty closely maintained. The higgling between assessor 
 and land-owner fixes the assessments ; and when once fixed, the 
 line of least resistance runs closely along the old figures, unless 
 there has been a considerable physical' change in the property, 
 such as urban developments, mines opened, etc. "Even where 
 assessors were frequently changed, each succeeding assessor, as 
 a rule, seemed to follow closely in the footsteps of his predecessor 
 in the matter of fixing the valuation." 
 
 To escape errors arising from deeds stating only a nominal 
 consideration, deeds conveying only a fractional part of a lot or 
 tract where the assessed value of the whole might have been "re- 
 corded opposite," deeds conveying an undivided interest "while 
 the assessments covered all interests," and lastly, deeds "drawn 
 with a higher or lower stated consideration than the actual one for 
 which the sale was made," the commission "instituted a scrupu- 
 lous examination in every assessment district of each year's re- 
 ported sales and assessments of the same property." All tax deeds 
 were of course eliminated, all others stating only a nominal con- 
 sideration, and all others "where the striking disproportion be- 
 tween the sale figures and those of the assessment showed that an 
 error of some kind had been made." It was believed that the 
 wide scope of the data used would largely eliminate the effect of 
 undiscovered errors. The commission, however, owing to the 
 vast extent of the statistics, limited their examination and their 
 calculations to "the five years from 1895 to 1899, inclusive," dur- 
 ing which time there were sold 7,710,356 acres, excluding, of 
 course, the sales of village and city lots. Now, in those five years 
 the commission found 82,519 bona fide sales of acre property and 
 40,607 bona fide sales of city and village lots. 
 
 Passing over other particulars of computation as detailed by 
 the commission, it is enough to note here that "the 1,300 and odd 
 assessment districts" of the state were taken separately, the ratio 
 of assessed to selling value year by year determined, and then 
 with the total assessed value in each such district for each year 
 before the commission, it "secured an average ratio of .assessed to 
 selling value for each district" over said period of five years. 
 If, for instance, "an average ratio of assessment to selling price" 
 for any eiven year or period is 40 per cent, it is easy by applying 
 such ratio to the total assessed value to arrive at the true values, 
 
HERTIG ON TAXATION. 175 
 
 in so far as the determined ratio may be correct. With this pro- 
 cess applied to each district according to the ratio so ascertained 
 therein, "the true values of all towns, villages and cities thus 
 ascertained are added together, and the aggregates thus obtained 
 constitute the grand total of taxable real property in the state."- 
 Report, pp. 45-5 1. 
 
 "The total actual value of the taxable real estate in the state, 
 based upon a five years' average," was thus found to 
 be $1,192,867,499. "The total average assessed value of real estate 
 in Wisconsin for the corresponding five years, compiled from re- 
 ports of the secretary of state, is $518,824,553, and from these 
 two sums we find the average of assessed values to be 43.4 per 
 cent of the aggregate actual value." Id. 51 The commission 
 note, however, that "nearly 300 million dollars of value," in Mil- 
 waukee, "is assessed at between 50 and 60 per cent of actual 
 value." This would reduce the average assessed value of the 
 other real property in the state to about 40 per cent of the true 
 value. The average ratio of the assessed to the true value of 
 lands, confined to acre or farm property only, as "shown by the 
 computation based upon 82,519 sales of farm land, during a period 
 of five years," was 39.5 per cent. The commission, as a further 
 means of finding the assessed as compared with the actual value 
 of farm property, sent out inquiries to a large numbe- of "selected 
 farmers," who, among other information, were thus asked to give 
 "the value of their real estate and the amount for which it was 
 assessed in 1899." Usable replies were received from 1,124 farm- 
 ers, who therein returned their land as worth sums aggregating 
 $5,507,036, "and the assessment of the same property in 1899 as 
 $2,109,927, the average ratio of assessment to actual value ac- 
 cording to those statements being about 38 per cent." Id. 57. 
 
 Wisconsin conditions do not vary materially from those ex- 
 isting in Iowa, and the elaborate attempt of the Wisconsin com- 
 mission strikingly confirms the conclusions to be drawn from the 
 far scantier Iowa figures ; and we may conclude that in both 
 states, and for the times in both when the assessed was by law 
 required to be the true value, it was in fact just about 40 per cent 
 of the same as determined by actual sales. 
 
 The Minnesota commission was not in fact seriously perplexed 
 by any lack of data on the relation of assessed to acfual values. 
 It is safe to say, that if the commission had had twice the time 
 and twice the money to spend, it could hardly have stated differ- 
 ently or more judiciously the conclusion found on page 16 of the 
 Report : "One of the potent causes for the concealment from the 
 assessor of money and other classes of highly valuable personal 
 property is the fact that whenever listed it is commonly valued 
 
176 HERTIG ON TAXATION. 
 
 by a higher standard than that applied to other classes of prop- 
 erty." And the commissioners' own facts and figures on the as- 
 sessment of real estate (Report, pp. 11-12) are strikingly inter- 
 esting. I transcribe: 
 
 "Real property, always visible and its valuation readily ascer- 
 tainable, is a startling example of the disregard of law by those 
 to whom its administration is entrusted. The assessed valuation 
 of such property throughout the state for the past twenty years 
 is instructive. Selecting for illustration every tenth county as 
 they appear on page 190 of the report of the auditor of state for 
 the year 1899-1900, lands were assessed per acre in the years 
 1880, 1892 and 1900, respectively, as follows: 
 
 COUNTY 1880. 1892. 1900. 
 
 Aitkin $2.58 $2.10 $1.45 
 
 Carver 11.06 14.10 12.89 
 
 Dodge !O-79 10.92 13.12 
 
 Houston 8.61 6.57 7.18 
 
 Lake 4.96 3.93 5.03 
 
 Morrison 4.32 4.40 3.34 
 
 Pipestone 3.90 4.93 5.04 
 
 Rock 5.08 7.41 7.82 
 
 Traverse 3.76 4.65 4.95 
 
 Yellow Medicine 4.65 7.41 6.55 
 
 "Results still more surprising are seen when we select from the 
 lists certain of our oldest and most prosperous counties. We 
 present the following instructive tabulation : 
 
 COUNTY 1880. 1892. 1900. 
 
 Brown $6 . 87 $7 . 64 $8 . 07 
 
 Faribault 7.54 9.51 14.25 
 
 Goodhue I 3-9 I I 3- I 11.67 
 
 Nicollet 9.15 10.61 10.80 
 
 Olmsted l Z-7& 12.81 13-45 
 
 Winona IO -75 11.41 12.01 
 
 "It is obvious that valuations for purposes of assessment have 
 been but slightly influenced by actual valuations. Comparing as- 
 sessments generally made in the year 1900 with those made in 
 1880, 1890 and other years, it is manifest that little, if any, attempt 
 has been made to advance the assessed valuation in accordance 
 with the advance in actual values, which have in many instances 
 been very great. 
 
 "The injustice is still more apparent when the assessments of 
 real property in one county are compared with those in another 
 county. The same report of the auditor of state shows (p. 194) 
 
HERTIG ON TAXATION. 177 
 
 that in 1880 the average valuation of acre property in the state 
 was $7.80, while in 1899 it was only $7.02. 
 
 "These figures leave no room for doubt that the constitutional 
 mandate requiring property to be assessed at its 'true value in 
 money' has been more honored in the breach than in the observ- 
 ance in the assessment of real property." 
 
 The figures given by the Commission, striking and interesting 
 as they are, do not sustain quite the full conclusion drawn from 
 and implied in them. Moreover, the Commission, beginning with 
 the average assessed value in 1880, failed to note 'the handsome 
 advance in assessed values that had been made through the decade 
 beginning with 1870, in which they averaged $4.39 per acre up 
 to 1880, when they averaged $7.80 per acre. It must be remem- 
 bered, too, that 1880 was a year of hope and activity in Minne- 
 sota realty; that the year 1892, though afterwards emphasized 
 by public speakers as the culmination of a golden age of pros- 
 perity, was, as regards Minnesota, like the six years preceding it, 
 a time of stagnant or falling real estate prices, and that in 1900 
 an era of higher prices for lands had practically just begun, and 
 that for acres the rule is that assessed values do not respond 
 quickly either to rising or to falling prices. I do not think that 
 lands in Aitkin county, for instance, could have been sold gen- 
 erally, or on any large scale, for a price equal to their assessed 
 value either in 1880 or in 1892. It may be noted, in this connec- 
 tion, that Judge H. R. Wells, of Preston, Minn., in addressing 
 the tax committee of the House, on February n, and making a 
 drastic attack on the code proposed by the Tax Commission, 
 asserted with great positiveness that many lands, even rural lands, 
 in Minnesota were not in fact undervalued in the assessors' books 
 either for the years mentioned by the Tax Commission or for 
 other years ; and that there are whole counties in which the aver T 
 age selling price would not ordinarily and on an average reach 
 the assessed values of the lands so sold. It may be added, too, 
 that many of the more undesirable and non-productive city prop- 
 erties, say in St. Paul, Minneapolis and Duluth, can still be 
 bought at a price not exceeding, or even less than, their assessed 
 values.* 
 
 Many a mortgagee, in the decade ending in 1897, nas winced 
 under the burden of taxation on lands acquired at foreclosure 
 
 The St. Paul Pioneer Press, in its issue of February 5, 1902, made 
 editorial comment on what it calls "the gross inequalities in the assessed 
 valuations of real estate in the several counties as the result of the efforts 
 of local assessors and boards aided by the representatives of the different 
 local .districts in the state board of equalization, to reduce their several 
 quotas of state taxation to the lowest figures possible. "The consequence," 
 
178 HERTIG ON TAXATION. 
 
 sale lands mortgaged to him in the less developed portions of 
 the state for two dollars or less per acre, up to three, four or five 
 dollars per acre, and on which in many cases he made a loss, 
 sometimes of a portion of his principal, oftener of a portion only 
 of the interest due and of taxes necessarily paid by him. This is 
 
 says the Pioneer Press further, "is that in all the rural counties of this 
 state, and in fact in all the counties of the state outside of Hennepin, Ram- 
 sey and St. Louis, containing the three leading cities, the assessed valua- 
 tions of real estate are notoriously much less than one-third, and in many 
 instances less than one-quarter, of the selling value of the property. It is 
 equally nototrious that in the cities of Minneapolis, St. Paul and Duluth, 
 where the assessed valuations were based on the extravagantly inflated 
 prices of the boom times of 1887, the assessed valuations of real estate are 
 in general far in excess of what the property would sell for. There have 
 been some reductions in the real estate valuations of St. Paul and Min- 
 neapolis on this account, but in St. Paul at least, if the real estate were 
 reassessed at its actual selling value it would result in a large reduction 
 of the present assessed valuations. There are tens ot thousands of city lots 
 in St. Paul whose owners would be glad to sell them for one-half or one- 
 third their assessed valuation. This is more or less the case with Min- 
 neapolis and Duluth." 
 
 Undoubtedly some properties are over-assessed in the cities named ; 
 and the wholesale statement of the Pioneer Press, while somewhat over- 
 drawn as regards present conditions, is very nearly the literal truth if 
 applied to conditions prevailing in 1893-1897 and even somewhat earlier. 
 Facts in partial support of the statement at present may, however, be 
 readily given. Thus, in April, 1902, an , auction sale 'of the undisposed 
 portion of the "Dawson estate" was held in St. Paul. The- properties 
 consisted of city lots, mostly unimproved or nearly so, and of acres all 
 lying in St. Paul and Ramsey county. Here are the figures : 
 
 Aggregate assessed values were a little more than $400,000 
 
 Aggregate auction sale price 162,653 
 
 Purchasers got lands subject to back taxes of about 30,000 
 
 The sale had been well advertised and attracted much local attention. 
 Taxes are levied in a wholesale way, and if the true wholesale value of lands 
 cannot be determined by a fair and well advertised auction sale, piece by 
 piece of the lots and acres making up such aggregate, then there is no 
 way of determining the true wholesale market value of lands. Yet, here 
 is a fair sale at prices somewhat less than half the assessed valuations. 
 
 I inquired a few days after said sale was made, of a conservative holder 
 of considerable St. Paul realty, if he had any lots or pieces that he would 
 sell for less than the assessed values. He answered : "I have some lots 
 in St. Paul that I would sell now, and would have sold any time these last 
 five or six years, for the assessed values. I have half a dozen pieces I 
 would sell for less than the assessed values, say for 90 per cent of their 
 average assessed value. This is approximately true of every St. Paul 
 real estate owner who has considerable holdings. . I have one improved 
 piece that I would sell for 90 per cent of its assessed value. Have kicked 
 on assessments, but can't get them lower." 
 
 No doubt over-assessments of city property are, and particularly have 
 been, more numerous and oppressive than over-assessments in the rural 
 counties, though as I have shown, cases of over-assessment, or at least 
 full assessment, are not wanting in the latter. 
 
HERTIG ON TAXATION. 179 
 
 particularly true, to my own knowledge, of Crow Wing county, 
 which adjoins Aitkin, and which assesses lands, on an average, 
 at $2.33 per acre. It levies, or did in 1901, an average tax for all 
 purposes aggregating nearly 4 per cent of such valuation. It is 
 an undeveloped county ; the farms are new ; the farmers mostly 
 without capital. A farmer owning 160 acres of land, mortgaged, 
 bought on purchase-money contract, or held somehow in the hope 
 of ultimate clear title, soon makes improvements that bring his 
 taxes to $20.00 per year and upwards on his quarter section. If, 
 as sometimes happens, he buys cattle and horses on mortgage, 
 or whether he gets them by slower and surer means, his personal 
 property tax comes at once into play; and he is lucky indeed if 
 he gets clear of his various taxes for 1-12 of his gross earnings. 
 
 It may, in fine, be truly said that in Minnesota there were, 
 in 1892, many farms, more particularly undeveloped and little- 
 improved farms, which, if then bought for a price not equal to 
 their assessed value, and held by the purchaser for speculation 
 until 1900, and then sold for the best obtainable price, would have 
 returned a loss instead of a profit on the investment. It may just 
 as truly be said that the like lands bought for the like price in 
 1892, and held until this year, 1902, and sold now for the best ob- 
 tainable price, would return a fair profit on the investment. Both 
 by general custom, and in many states by statute solemnly con- 
 firming such custom, the fair cash value or "true value in money" 
 of such land or other property is simply the ideal price it would 
 bring if discreetly sold at private sale on a market supplied only 
 with occasional or average offerings of the kind of property so 
 valued. Everybody know-s that, ordinarily speaking, no such 
 price could be obtained for all the lands in a county if all were 
 offered and sold in, a few days', or even a few weeks', time ; 
 still less, if all the lands in half a dozen adjoining counties were 
 at the same time put on the market and sold. Taking one year 
 with another, it is oftener that the ideal price mentioned cannot 
 be obtained for an occasional tract of land than that it can. Yet, 
 with all the foregoing facts and considerations adverse to the 
 true value of lands, as compared with their assessed value, it re- 
 mains undoubtedly true that, taking the average of settled con- 
 ditions, and applying them to the assessed value of lands in slates 
 where, a uniform tax on such valuation is levied throughout the 
 state for state purposes, and where the law aims to assess at full 
 value, the average actual selling price of lands not sold under 
 the hammer or for taxes is, as in Iowa prior to 1897, about two- 
 and one-half times their assessed value. Assessors, as in St. 
 Cloud, Minn., not infrequently adopt for their own guidance the 
 rule that 40 per cent of what they think is the fair selling price 
 
180 HERTIG ON TAXATION. 
 
 should be put dov/n as the assessed value. It follows, therefore, 
 that, where this rule applies, if the state or the Civil 
 Nation, should need to obtain by condemnation proceedings large 
 tracts of land, while the state should not fail to do equity where 
 special facts would seem to require it. yet it should have, as a 
 shield against the stubborn or obstructive proprietor, the option 
 to take the land at ~y 2 times the amount of its assessed value on 
 an average taken on assessments made for several years prior to 
 such proceedings. But this is another matter, of which I "shall 
 elsewhere say more. When there is no state tax levied on the as- 
 sessed value of lands, but only local taxes, then, so long as the 
 valuation is uniform within the taxing district, the assessed value 
 matters comparatively little to the tax-payer, and there is a wide 
 range in the percentages of assessed compared with true values. 
 In Pennsylvania, the state levies no tax on lands ; and there, as 
 ascertained by careful investigation in 1892, "the ratio of assessed 
 to actual valuation differs greatly in the several counties, varying 
 from 17 per cent in Luzerne to 100 per cent in Berks, 'Chester and 
 Perry." Report of the Committee Appointed by the Tax Con- 
 ference of Pennsylvania Interests. The ratio of assessed to actual 
 valuation of real estate, averaged for the entire state of Pennsyl- 
 vania, as ascertained in the same investigation for the year 1892, 
 was 64^ per cent. 
 
 The state of Indiana claims to hold an exceptional place in the 
 matter of taxation. A few years ago it installed machinery to 
 "jack up" assessed values. In 1891 that state greatly increased 
 the powers of the state board of tax commissioners. Since then 
 Indiana has been struggling, with more or less success more in 
 the case of real estate, less in the case of personal property to 
 attain for assessed value the ideal of "true cash value." The state 
 board of tax commissioners has succeeded in making it obligatory 
 on the respective counties to pay out of county funds- the ex- 
 penses of county assessors in attending annually at the state cap- 
 ital a general convention of the state tax commissioners and the 
 assessors. The governor, who is by virtue of his office the presi- 
 dent of the state board of tax commissioners, usually presides at 
 these conventions. The state auditor, secretary of state and two 
 special commissioners, constituting the other members of the 
 board, "are also present and often read papers and take part in 
 the discussions. The attorney general is always present to answer 
 the thousand and one questions ninety-two assessors can put in 
 a question box." Indianapolis Correspondence of Minneapolis 
 Journal, Feb. 12, 1902. Such convention has no legal authority 
 to fix valuations. The purpose is to secure uniformity of valu- 
 ation of the same kinds of property in all parts of the state, to 
 
HERTIG ON TAXATION. 181 
 
 create enthusiasm for the true cash value ideal, to brace up the 
 assessors, to inform them of their powers and of new tax laws. 
 The conference convention has proved to be an immense help in 
 the direction of enforcing the law. * * * W. H. Hart, audi- 
 tor of state, * * * ' is of the opinion that Indiana real estate 
 is assessed at from 60 to 70 per cent of its true cash value. A 
 comparison of real estate transfers and tax duplicates proves that 
 Mr. Hart's estimate is high enough. Often land is sold for twice 
 its assessed value." The Same. It is apparent, then, that the 
 ideal of true cash value even as regards real estate is still far 
 ahead of attainment ; and it is certain, as I shall show later and 
 on other evidence, that the ideal of true cash value for personal 
 property in Indiana is immensely and irretrievably beyond at- 
 tainment. 
 
 Based on the above and foregoing facts, and on other facts 
 which I have observed and studied, are the following general 
 propositions, which, I submit, would not be substantially changed 
 or modified by any fair-minded investigator, however minute or 
 extended his research : 
 
 1. The tendency to depress assessed values below the sum 
 for which owners of real estate would be willing to sell their re- 
 spective tracts, is universal, and, except in comparatively rarp 
 cases, results in assessed values being fixed at less than half the 
 average private selling price as determined by actual sales. 
 Where there is a special effort made through special tax machin- 
 ery, as in Indiana, to bring assessed values and selling prices to- 
 gether ; or where, as in Pennsylvania, real-estate values through- 
 out the state are not "equalized," and no state, but only local, 
 tax is levied, the average ratio of assessed value to private sell- 
 ing prices (assumed to be "true cash value"), is from 15 to 25 
 per cent higher than the average level. 
 
 2. Another cause that makes assessed values in certain locali- 
 ties greater than they would otherwise be is the real or fancied 
 local needs in new and undeveloped countries ; when the rate of 
 the tax levy on lower valuations would be too high to look well, 
 local boards naturally assess values higher than they otherwise 
 would. A like cause of higher assessed values exists where the 
 rate of taxation is limited by the state constitution, and the needed 
 or desired revenues cannot be had without marking up values. 
 These two causes may be safely neglected in a work like that 
 undertaken by the Minnesota Tax Commission. 
 
 3. The many individual and local cases where on the one 
 hand the owner beats the public by getting his land assessed at 
 n extremely low value, and where, on the other hand, the public 
 beats the owner (as in St. Paul, Minneapolis, Duluth and else- 
 
182 HERTIG ON TAXATION. 
 
 where), by assessing- his lands and lots too high as compared with 
 down-town blocks and buildings, and as high, or even higher 
 than they can be sold,: these many individual and local cases 
 prove that the justice meted out by the "rule of thumb," as 
 worked by assessors and equalizing boards, only roughly approxi- 
 mates ideal justice ; prove also that the like inequalities are not to 
 be overcome entirely under any system of taxation ; accent collater- 
 ally the important fact that it seldom or never pays to own poor 
 property. In this latter connection it may be observed that the 
 owner of a poor farm, of an undesirable lot, of a buildmg ill- 
 adapted to its purpose, is generally assessed relatively higher 
 than his richer, or luckier, neighbor. The average assessor, or 
 average other man, is always timid in dealing with what sur- 
 passes the ordinary in his line. Administrative features that will 
 obviate, as far as practicable, the inequalities mentioned in this 
 paragraph, are not difficult to devise for any tax code. Such 
 features in broad outline would always consist in provision for a 
 board of review having the time and the capacity to do effective 
 work in correcting assessments. 
 
 4. It is true, and especially important to bear in mind, that 
 the difficulties and perplexities which may occur to the legislator 
 in giving practical effect to the three preceding numbered para- 
 graphs-, stand upon their own bottom, so to speak, and that his 
 right or utfoiig solution of them need not affect substantially the 
 kind and quality of the legislation which he should favor in tax- 
 ing railroad and other large corporations and\ public service com- 
 panies. 
 
 5. The complex and often ridiculous features in codes de- 
 signed to work out the assessment, levy and collection of a gen- 
 eral property tax, as shown up in my next chapter with the Min- 
 nesota commission's proposed code taken for monumental and 
 warning example, do not make for the single taxer's theory, and 
 do not bar a sound system of taxation which shall reasonably levy 
 and collect taxes on nearly all kinds and sub-kinds of "property." 
 
CHAPTER XIV. 
 
 Prevalence of personal property tax in the United States Constitutions 
 prescribe, practice demurs General property tax basis of public finance 
 in the several states Minnesota's tax commission, under the yoke of 
 her constitution, declined to pad the yoke; but would gladly see it 
 made more flexible Doctors doubting their drastic prescription Per- 
 sonal property features of their proposed code examined and criticised. 
 
 The facts pertaining to personal property taxes in the United 
 States are notorious and, in broad outline, extremely simple. Sec- 
 tion two of article XII of Ohio's constitution, adopted in 1851, 
 and still in force there, is fairly representative of the spirit of 
 A.merican constitutions and statutes, whose makers have aimed 
 aim excellent in its intent, extremely defective in its marksman- 
 ship ! to apportion justly the burdens of taxation on all property 
 according- to its value in money. The first and most important 
 clause in said section of the Ohio constitution is as follows: 
 "Laws shall be passed taxing by a uniform rule all moneys, cred- 
 its, investments in bonds, stocks, joint stock companies, or other- 
 wise, and also all real and personal property, according to its true 
 value in money." The framers of Minnesota's constitution copied 
 word for word (Sec. 3, Art. IX) the Ohio clause just quoted, 
 with the exception of omitting after "taxing," the words "by a 
 uniform rule." But as the Minnesota framers had used the word 
 "uniform" in the first section of article IX, they doubtless thought 
 that whatever force and effect the words "by a uniform rule" 
 might have, they had sufficiently embodied in said section i, the 
 first clause of which runs as follows : "All taxes to be raised in 
 this state shall be as nearly equal as may be, and all property on 
 which taxes are to be levied shall have a cash valuation and be 
 equalized and uniform throughout the state." 
 
 In Minnesota, then, as in nearly all of the American states, 
 the taxing power is committed to the legislature under the rigid 
 constitutional restriction that there must be no discrimination be- 
 tween the taxing of realty and the taxing of personal property ; 
 that each must be assessed at its "true value in money" ; and that 
 the rate, or percentage, of taxes levied on the valuation of real 
 
184 HERTIG ON TAXATION. 
 
 estate in any year must be uniform with the rate on personal prop- 
 erty as valued for the same year; or, in simple language, when 
 a lot assessed at $100.00 costs its owner, in any year, a tax of 
 $3.00, a horse of his assessed at $100.00 must also cost him a tax 
 of $3.00 in the same year; or, if lot and horse have different own- 
 ers, each owner pays the same tax on each, the law meaning and 
 intending that the assessed value of the lot and of the horse shall 
 truly declare the "true value in money" of each. But the con- 
 stitution makes it obligatory on the legislature to pass laws tax- 
 ing all moneys and all credits. Now if the owner 
 of the lot or of the horse sells that particular prop- 
 erty on time, on credit, on "tick" or in any form of 
 words meaning that the purchaser does not pay spot 
 cash for his purchase, but that he creates a debt by the deal which 
 he is bound to pay later, then, in every such case, whether the 
 sale is on open account, or the amount to be paid is evidenced by 
 a promissory note signed by the purchaser, the seller owns a 
 "credit" on which the law requires him to pay taxes, and the pur- 
 chaser owns a lot or a horse on which the law equally requires 
 him to pay taxes. The same lot, or horse, or any other piece of 
 realty or of personal property may be sold an indefinite number of 
 times and create the like number of outstanding or technical 
 "credits" from one assessment day to the other.' The owner of 
 the horse on asssessement day must pay the current rate of taxa- 
 tion on its "true value in money," while a dozen or any other num- 
 ber of men who may hold "credits" as the result of the successive 
 sales of that same horse must each pay the like rate of taxation 
 on his credit assessed at its "true value in money." But if it is 
 a board-of -equalization horse, meaning thereby a horse, as horses 
 are tagged in value by the state board of equalization in Minne- 
 sota, then the owner of the horse on assessment day will have to 
 pay the current rate of taxation only on "$26.00 to $30.00," for 
 that is the range of taxable value of the horse as fixed by said 
 state board ; whereas if a horse has been sold a dozen or any other 
 number of times, let us suppose, for $100.00 or more each time, 
 each "solvent credit" thereby created will, if listed for taxation 
 at all, be assessed at or near its face value. Thus the assessment- 
 day horse-owner is hit lightly, while the faith in prior owners 
 "faith," says St. Paul, "is the substance of things hoped for"- 
 which gave rise to these successive credits, and remains always 
 the ground of whatever estimated value they are reckoned to pos- 
 sess, is marked for the assessor's heaviest blows, unless indeed 
 the conclusion of Paul's definition, "the evidence of things not 
 seen," suggests to each credit-owner that in his own case, at least, 
 "the evidence of things not seen" can readily become, for the as 
 
HERTIG ON TAXATION. 185 
 
 sessor, the unseen evidence of things unknown and unlisted. The 
 assessment-day horse-owner joins the universal trust to keep the 
 assessed value of visible tangible property as low as possible ; 
 and the credit-owner joins the more special and limited trust to 
 keep moneys and credits as much out of sight as possible. Each 
 apprehends more or less clearly the contradictions and absurdities 
 in the taxing system. One feels he is justified in a low valuation 
 of tangible property because his neighbor, or perhaps the nearest 
 Village Hog, is covering certain notes and mortgages clean up : 
 the neighbor or the Hog covers up partly because he can, and 
 partly because if he does not, he will be hit harder, much harder 
 than the tax-payer whose holdings are mostly in visible tangible 
 properties. It is hardly necessary to add that the uniformity of 
 rate in this paragraph meant holds good only for limited areas. 
 Each taxing district may, and generally does, have a different 
 rate. 
 
 Now the Minnesota Tax Commission confronted by the s'ate 
 constitution and what it imposes the general property tax,* 
 which "is the keystone of the financial arch of the states" could 
 hardly do otherwise in submitting a new tax code than attempt 
 to make its features such as give wider and more literal effect to 
 the constitution. "The mandate of the constitution,'' says the com- 
 mission, "is clear and explicit in requiring the application of that 
 rule [requiring all property to be taxed according to its "true 
 value in money"} and no other. Inded, any statute enacted by 
 the legislature which. prescribed a different rule would be clearly 
 invalid, and the action of any officer in departing from that rule 
 in the assessment of property would be a gross violation of the 
 constitution." Report, p. 17. I said the commission "could 
 hardly do otherwise" ; but it would be better to put it, could 
 hardly be expected to do otherwise. It would, however, have 
 shown a more subtle and more practical grasp of the situation, if 
 the commission had taken the ground that the constitution has be- 
 come what the people in carrying it into effect have made it, as 
 well in the relation of assessed to true values as in other things. 
 The letter of the law is one thing ; the practical construction given 
 to it may be an entirely different thing; and when that practical 
 construction is one which the people have placed on a written con- 
 stitution whose letter still abides unchanged, we may be sure that 
 such construction will continue. The constitution of the United 
 States, for instance, contemplates according to its letter and the 
 intention of its framers the election of a president by an un- 
 
 *The general property tax is so called from the idea underlying it, 
 that everything which is called "property" should be taxed. 
 
186 HERTIG ON TAXATION. 
 
 pledged body of electors chosen for their discretion and prudence 
 to elect a president in the free exercise of that discretion and pru- 
 dence ; the people have construed that instrument in such a way 
 that the president is practically, though not literally, 
 elected by the people, or rather by the popular will as 
 expressed through the several states in the technical number of 
 electoral votes allotted to each. A presidential elector who would 
 venture to vote against the candidate he was chosen to vote for 
 would commit politically the unpardonable sin, be execrated and 
 perhaps killed by his enraged constituents. Had the commission 
 taken the more subtle and practical view, it could have codified 
 the laws pertaining to the taxation of personal property strictly 
 along the old lines, adding such features as would seem to make 
 the tax laws more effective to reach large corporations and the 
 like, its code for taxing personal property might have run suc- 
 cessfully the gauntlet of the legislature, and become a law. It is, 
 however, no matter either for regret or censure that the com- 
 mission took the more open and palpable course, went to Indiana 
 law to compile a drastic code, and thereby gave to the people a 
 foundation on which to base a more stirring and strenuous cam- 
 paign of education. 
 
 The commission did not blink the evils nor the general ineffi- 
 ciency of the personal property tax, and made pertinent observa- 
 tions thereupon : "So universally is the evasion of the law in the 
 assessment of personal property practiced, and so notorious is the 
 fact that much the greater volume of it is unassessed, that its 
 evasion is often regarded a virtue rather than a vice. In few, 
 if any, states is more than twenty-five per centum of the personal 
 propertv liable to taxation listed for assessment. * * * 
 
 "It has unquestionably given rise to widespread immorality. 
 Men of unquestioned business integrity not only find little diffi- 
 culty in listing their property far below its real value, but also 
 in making oath to lists which they know to be false. * * * 
 
 "It has long been the policy of this state, as well as of many 
 other states to tax mortgages and other forms of credit. Lon<^ 
 experience has demonstrated that such a law can. at best be but 
 imperfectly enforced. Students of taxation, with scarcelv an 
 exception denounce it as fallacious in principle and a fruitful 
 source of immorality. The taxation of a mortgage, when the 
 subject is itself tax^d, is a species of double taxation. * * * 
 
 "Low rates of interest on mort^a^e loans can never exist 
 where the loan itself is taxed. The state which seeks to tax the 
 mortgage must expect one of two results to follow : (T) increased 
 rates of interest or (2) evasion. Moreover, the enforcement of 
 such a law results in discrimination against the citizens of the 
 
HERTIG ON TAXATION. 187 
 
 state in which it is enforced. The commission visited cities in 
 this state where the aggregate rate of taxation was five per cent. 
 It would be clearly impossible for a borrower to secure a loan 
 on property in such a town at six per cent if the lender was re- 
 quired to pay upon the loan a tax of five per cent. The fact that 
 mortgage loans are being made on property so situated is a dem- 
 onstration that the law is as to them inoperative. 
 
 "When a state begins to tax credits there is no logical halt- 
 ing place until all forms of credit are reached. If the loan se- 
 cured by mortgage is taxed so must be the one which is not se- 
 cured. If the loan evidenced by a written promise is to be, so 
 must be the one resting only on a verbal promise. As no system 
 of taxation could ever become efficient enough to reach the greater 
 volume of credits, it is clear that its attempted enforcement must 
 always be attended -with great injustice. 
 
 "The commission is, after careful consideration, firmly of the 
 opinion that the early abandonment of the -present policy of tax- 
 ing credits would be wise, as the revenue derived therefrom is, 
 and will remain, too inconsiderable to counter-balance the in- 
 justice and immorality incident to such measures. If it be found 
 that public sentiment will not at present sustain so radical a change 
 in the revenue policy of this state, then some method for the taxa- 
 tion of credits, less unjust than the one now existing, should be 
 adopted. * * * 
 
 "While of the opinion that it is unwise for this state to con- 
 tinue the policy of taxing mortgages and similar species of prop- 
 erty, the commission was, in viciv of our constitution, unable to 
 provide for their exemption, either in whole or in part. [Italics 
 mine.] 
 
 "No marked reform in the taxation of personal property can 
 be effected until the legislature is afforded greater freedom of 
 action in the matter of legislating upon the subject. 
 
 "To the objection that by the exemption of credits many of 
 our wealthiest citizens and money lenders would escape taxation, 
 we reply that such a result would not necessarily follow. Every 
 system of taxation is deficient which does not provide for a rea- 
 sonable income tax. Minnesota would take a proud step for- 
 ward by wholly abrogating a tax on credits, and adopting a pro- 
 gressive income tax." Report, pp. 6, 7, 8, 9. 
 
 The commission devotes chapter XII of the preliminary por- 
 tion of its report (pp. 46, 47, 48, 49) to the favorable considera- 
 tion of a tax on incomes, a subject to which I shall return in 
 subsequent chapters of this work. 
 
 Between the mandates of the state constitution and its own 
 views that no satisfactory system of taxation can be put into 
 
188 HERTTG ON TAXATION. 
 
 operation until that constitution shall have been materially 
 amended, the commission might have likened itself to a man with 
 a wooden leg entering himself for a foot race so glaring is tne 
 contradiction between the commission's task and the conditions 
 thereof. Sections I to 175 inclusive of its proposed tax code were 
 unconditionally rejected by the legislature. Embraced in these 
 rejected sections are numerous drastic provisions for jacking up 
 the assessed values of property, and for reaching with new and 
 improved assessor's dragnet the alleged huge volume of perspnal 
 property which has hitherto escaped its toils a new and im- 
 proved dragnet in whose efficiency the commission could have 
 had only the most lukewarm faith, since it says on page 6 of its 
 report: "In few, if any, states is more than twenty-five per 
 centum of the personal property liable to taxation listed for as- 
 sessment." Now as this seems to be true of the state of Indiana 
 from whose code the commission got most of its proposed drastic 
 provisions at least the assessed value of Indiana's personal prop- 
 erty has about the same ratio to the assessed value of her realty 
 as is found in some states making no special pretense or effort 
 in that line, the conclusion that the commission must have had 
 but luke-warm faith in its own drasticity is irresistible. 
 
 These drastic provisions, rejected, as aforesaid, by the Minne- 
 sota legislature, are interesting to students of taxation and to 
 tax-payers in all states and in all countries, because they consti- 
 tute an admission by the friends of a general property tax that, 
 if such tax is to be played henceforth effectively by Minnesota 
 or any state on the basis of reaching and assessing at the "true 
 value in money," these same drastic provisions are to be its 
 trumps and its only trumps. Now what in brief, and in a length 
 which their great number imposes, are they? 
 
 They consist first and foremost in a searching "dictionary" 
 section, describing and defining in thirty-six lines the kinds and 
 qualities of personal property to be so assessed and taxed. Such 
 dictionary section, however, is common to the drastic as well as 
 to the non-drastic codes, beinq" the indispensable basis from which 
 both start. Friends of the .eeneral personal property tax may, 
 and doubtless do, look upon the slightly varying dictionary fea- 
 tures of different codes much as the made-to-order Kentuckian is 
 said to look on whiskey finding none bad, only some kinds a little 
 better than other kinds ! There are every where so many volumes 
 of statutes in which the reader can see for himself a sample of 
 such dictionary work, that I need not set out here any specimen 
 in full. One pleasant feature of the commission's dictionary, 
 brought into salient relief by Senator George P. Wilson's ques- 
 tions before committee to one of the tax commissioners is its 
 
HERTIG ON TAXATION. 189 
 
 defining as taxable "all shares in corporations organized under 
 the laws of this state, when the property of such corporation is 
 not exempt, or is not taxable to the corporation" and its defining 
 as taxable, on a far more wide-open plan, "all shades in foreign 
 corporations, except national banks owned by citizens of this 
 state" ; whereby if a group of citizens in Minnesota wishing, say, 
 to own an interest in lands by means of corporation shares were 
 to organize a corporation and invest the capital thereof in Min- 
 nesota lands, their stock, as such, would not be taxed because the 
 property of the corporation (lands) is "taxable to the corpora- 
 tion," whereas if the same group should invest the corporate 
 capital in Wisconsin lands, and own in Minnesota their certifi- 
 cates of stock, they would be taxed on these shares assessed at 
 their "true value in money !" Other double taxation was pro- 
 vided for by making taxable in Minnesota "all goods, chattels 
 and effects, belonging to inhabitants of this state, situate without 
 this state." We know that if an "inhabitant of this state" owns 
 cows on a Wisconsin farm, the local assessor there will not miss 
 them; the keen sense of justice of the tax commission was not 
 keener than its confidence that it could empower a Minnesota as- 
 sessor to hit the same cows at long range. But in such sense of 
 justice and such confidence the tax commissioners were not the 
 first : wise and virtuous Massachusetts, to mention no others, had 
 set the pace for them. The constitution thrust into the commis- 
 sioners' unwilling hand an uplifted sword against commerce in 
 the shape of clause numbered five of their property dictionary, 
 taxing "All ships, boats and vessels, and their appurtenances, be- 
 longing to inhabitants of this state, whether at home or abroad' 
 and all capital invested therein." Clause numbered twelve of the 
 same section exemplifies also the inherent defects of the gen- 
 eral property tax, when it would reach "All produce, seeds and 
 grain on hand within this state whether in granary, mill, ware- 
 house, or otherwise, or in transit." As I shall show in another 
 chapter, any tax that is not a confiscation tax adjusts itself so 
 that it finally takes only a fair percentage of income. Real es- 
 tate taxes, in so far as they do not confiscate, take only such fair 
 percentage. Therefore to tax separately and indiscriminately 
 "produce, seeds and grain," the income of land which has already 
 paid in the name of real estate taxes its fair income tax, is really a 
 kind of double taxation and should be omitted entirely, or very 
 much restricted. How unscientific the general property tax can 
 become is well illustrated in clause numbered thirteen of the dic- 
 tionary, defining as property "for the purposes of taxation," "all 
 mains, pipes, conduits or subways laid in any road, street or al- 
 ley ; all tracks, roads and bridges of every street railway company, 
 
190 HERTIG ON TAXATION. 
 
 together with all its poles erected and wires laid or suspended in, 
 upon or over the same ; all poles and wires laid or suspended in. 
 upon, or on any road, street or alley by any other company or 
 person." These things taken by themselves and valued as "prop- 
 erty" are nothing but "scrap," either worthless or having a "true 
 cash value" equal to a very small fraction of their first cost ; or, 
 not taken by themselves and valued as "property," but valued 
 in relation to their actual commercial uses, they have a value 
 little differing from that of "scrap" in the case of a still going but 
 very unprofitable company, a moderately increased value 
 over "scrap" in the case of a struggling but doubtlul 
 company, and finally a value much above their original cost 
 if owned by a going and profitable concern which would lose 
 immensely by even a temporary deprivation of their use, and 
 which may have installed them at a time when labor and material 
 were much cheaper than on some given assessment day. 
 
 In law the expression of a number of things, mentioning each 
 by its name, is often held to mean that the law purposely excludes 
 from its operation those things which it fails to name, notwith- 
 standing its use of general language which might have been 
 broad enough to cover everything, if it had called nothing by its 
 particular name. As concisely put, this rule is that "The ex- 
 pression of one thing is the exclusion of any other [unnamed] 
 thing." The commission, like others before them, bore this rule 
 in mind and fenced against it in the I4th and final clause of 
 their dictionary of personal property, by bringing under the tax- 
 yoke "all personal property not herein enumerated and not ex- 
 pressly exempt by law." 
 
 The commission, recognizing the supreme importance of mon- 
 ey, devoted to its definition the whole of section 5 of their pro- 
 posed code: "The term 'money,' or 'moneys,' whenever used in 
 this act, shall be held to mean gold and silver coin, treasury notes, 
 bank notes, and every deposit which any person owning the 
 same or holding in trust, and residing in this state, is entitled to 
 withdraw in money on demand." 
 
 The quoted definition of "money" includes under the name 
 of "deposit" a very important class of what are in fact "credits ;" 
 hence in defining the latter, to which it devotes the whole of sec- 
 tion 6, the commission was careful to attempt to exclude bank 
 deposits, though, as a matter of fact and of practice, "time cer- 
 tificates of deposit" have that doubtful cast which makes it un- 
 certain whether under the commission's definition such certificates 
 are "moneys" or "credits." Section 6, defining the latter, is as 
 follows : "The term 'credits,' whenever used in this act, shall be 
 held to mean and include every claim and demand for monev or 
 
HERTIG ON TAXATION. 191 
 
 other valuable thing, and every annuity or sum of money receiv- 
 able at stated periods due or to become due, and all claims and 
 demands secured by deed, contract, or mortgage due, or to be- 
 come due." 
 
 In section n the commission gives to the terms "value," "cash 
 value," "valuation," "true and full value," etc., the same meaning 
 "wherever used in this act," and defines that meaning to be "the 
 usual selling price at the place where the property to which the 
 term is applied shall be at the time of assessment, being the price 
 which could be obtained therefor at private sale, and not at forced 
 or auction sale." And in section 17, the commission gives its 
 construction of the mandate in Sec. 3 of Art. IX. of the Consti- 
 tution, "Laws shall be passed taxing * * all real and per- 
 sonal property, according to its true value in money," by the per- 
 emptory prescription, "All property shall be assessed at its true 
 and full value in money." 
 
 The commission followed the usual, and indeed, if the taxation 
 of personal property is to continue, the necessary course, in pro- 
 viding (Sec. 29) for the annual listing and assessing of the same. 
 As is well known, the laws of the states vary considerably as to 
 the frequency of assessing real estate a two-year interval be- 
 tween real-estate assessments being the shortest. 
 
 The startling awkwardness, to use no stronger term, which 
 lurks in every code providing for laying a general property tax 
 appears full-bodied in paragraph numbered 17 of the commis- 
 sion's section 31 : "All grain in any elevator belonging to the 
 person owning such elevator, or to a person not residing in this 
 state, shall be assessed against the owner in* the assessment dis- 
 trict where such elevator is situated." This implies, of course, 
 that grain in elevators, which grain is owned by residents of the 
 state other than the owners of such elevators, shall be assessed 
 to said resident grain-owners in the assessment district where 
 they reside. But, ordinarily speaking, the owners of such grain, 
 the title to which is always evidenced by warehouse receipts, al- 
 most as transferable and as current as money, will not list the 
 same for assessment, and the elevator-owner cannot, except on 
 the theory that they to whom he has issued his outstanding ware- 
 house receipts continue up to assessment day to own the grain 
 therein described. Not even on such theory can the elevator- 
 owner ordinarily list as belonging to any particular person the 
 pram he happens to have on hand at assessment day, and which 
 he took in upon warehouse receipts ; for, in ordinary course, he 
 maintains only grades of grain, and not individual ownership 
 of any portion thereof. He may, and often does, treat it all as his 
 own property, subject to his liability to deliver grain of the grade 
 
192 HERTIG ON TAXATION. 
 
 and quantity called for in his warehouse receipts. The like start- 
 ling awkwardness appears in lustier limb and limp in Chapter V. 
 of the Laws of North Dakota for 1899, providing that grain in any 
 warehouse or elevator shall be taxable to the warehouse man or ele- 
 vator man, irrespective of actual .ownership, but giving him a lien 
 on the gfain fof the amount of such tax! This saving clause, 
 of course, is pure nonsense : no elevator-owner will consent to 
 hamper his business by inserting in a warehouse receipt issued 
 by him that unless the grain therein described shall have been 
 called for and delivered before assessment day, he will retain 
 two, or four, or five per cent of it, as the case may be, to recoup 
 himself for the taxes that may be. levied on it ; and no elevator- 
 owner with a care for the permanence of his business will sur- 
 prise the holder of his grain-receipt, who presents it for the grain 
 or the value thereof, by saying, "Oh, here, this grain has been 
 assessed since it was put in, and I guess the tax on it will be about 
 3 cents a bushel, but I'll let you off for 2 l / 2 !" As the North Da- 
 kota law stands, it has proved to be a sufficient nuisance to induce 
 grain warehousemen to go into the courts and claim that it is un- 
 constitutional. The supreme court of that state, however, upheld 
 the law mMinncapolis & Northern Elevator Co. v. Trail! County, 
 9 N. D. 213. A characteristic passage of the opinion is the fol- 
 lowing: "It is entirely clear that the assessment required to be 
 made [by section i of said statute], * * * is against the 
 person, firm, company or corporation having the actual physical 
 possession and control of the grain assessed, and without any 
 reference to ownership than that furnished by possession. The 
 tax is assessed against the possessor and against no one else. It 
 is well settled that the power of the state as to the mode, form 
 and extent of taxation is unlimited when the subjects to which 
 it applies are within the jurisdiction, unless restricted by consti- 
 tutional provisions." State Tax on Foreign-held Bonds, 15 Wall. 
 
 In the Foreign-held Bond case, just cited, the federal supreme 
 court holds broadly that, "unless restrained by provisions of the 
 federal Constitution, the power of the state as to the mode, form, 
 and extent of taxation is unlimited, w~here the subjects [meaning 
 the property] to which it applies are within her jurisdiction." The 
 reader must be cautioned that "the power of the state" in the pas- 
 sage just quoted means in practical effect "the power of the state 
 legislature," except in so far as limited by the state constitution. 
 The state, having full power to amend and alter her own" con- 
 stitution, is not in fact limited thereby in the technical sense of 
 the word, though her legislature may be, and usually is, very 
 much limited in the exercise of power by such constitution. 
 
HERTIG ON TAXATION. 193 
 
 Hence, in the large sense of the word, power applied to the 
 organic capacity of the state, the federal courts are quite right in 
 not mentioning state constitutions as limiting the power of their 
 respective states. 
 
 The North Dakota court, further considering said elevator 
 case, held said act of 1899 not to be in violation of section 176 of 
 the state constitution, which runs there as it does in Ohio and 
 Minnesota, "laws shall be passed taxing by uniform rule all 
 property according to its true value in money," etc. The elevator 
 man thought it was not a "uniform rule" which imposed on him 
 the burden of paying another's tax, even though the law tried to 
 give him a way to get such tax back again. The court answered 
 by saving, "The only assessment of this grain is that made to 
 plaintiff, and the only tax imposed is that which plaintiff is re- 
 quired to pay." Hence, strictly speaking, it is not another's tax. 
 And the court, so concluding, was consistent in further holding it 
 to be immaterial whether the lien provided was an adequate in- 
 demnity or not : "Having reached the conclusion that it is within 
 the taxing power of the state to assess and tax grain to a party in 
 possession, the question as to whether a sufficient or any provis- 
 ion has been made to indemnifv the tax-payer against possible 
 loss does not affect the validity of the assessment or tax." 
 
 It is one thing to find out that a particular tax-law is consti- 
 tutional ; it is a very different thing to find the same law a reve- 
 nue-producer. That this one is not, North Dakota officials can 
 now testify. 
 
 To chase grain in elevators with a tax is almost as elusive and 
 delusive as to chase money for the like purpose. We may be 
 sure that among- the several American states, all competing with 
 each other for the advantages of commerce and internal improve- 
 ment, some will not be blind to the easy chances afforded by the 
 blunders of neighboring- states, and will even connive at violation 
 or unauthorized suspension of their own laws to build up com- 
 merce and internal improvements. We may also be- sure that 
 a law driving- prain out of elevators at a fixed and arbitrary time 
 or times will diminish to some extent the normal profit in oper- 
 ating- the same, and that such diminished profit will tend to disap- 
 pear in lower prices to the farmer for his grain. It is proper to 
 assess an elevator as other tangible and unconcealable property is 
 assessed ; it would be proper to impose an additional tax in the 
 nature of a privilege, or franchise, tax upon grain elevators, 
 which mi^ht be justly computed bv enacting- that such franchise 
 tax should be enual to the sum produced bv the current rate of 
 taxation, if levied on bushels of No. 2 wheat qsses^ed to full 
 market value to the number expressed by one-tenth of the capacity 
 
194 HERTIG ON TAXATION. 
 
 of each elevator. Thus an elevator having a capacity of one mil- 
 lion bushels, with No. 2 wheat worth seventy cents on assessment 
 day at place of assessment, would pay a special franchise, or 
 privilege, tax equal to the sum at current rates levied on property 
 assessed at $70,000.00 ; or, as taxes run in the city of Minneapo- 
 lis, about $2,100.00. I do not wish to make an issue on these 
 particular figures. Whether $2,100 is too high or too low a special 
 tax for such elevators to pay, I leave in abeyance insisting mere- 
 ly that some such basis is the proper one for specially taxing ele- 
 vators ; that such tax would encourage the operation of elevators 
 at all times to their full capacity, would not tend to press wheat 
 to market, and would not disturb storage conditions. The tax, 
 of course, should be low enough not to drive out any elevators, 
 nor hinder the erection of any otherwise proposed new ones. As 
 a tax on the instruments of commerce it should be discreetly 
 weighed and cautiously imposed ; in any event, its yield should 
 not be dependent on mere luck or caprice like that which the 
 late Charles A. Pillsbury induced the Minneapolis elevator men 
 to pay some years ago. He got them to seal their hard consent 
 on an assessment of seven cents per bushel for the wheat in their 
 elevators, which the assessor gladly consented to make, and on 
 which they paid tax at current rates, say, one dollar on every 
 five hundred bushels of wheat. Where the law is plain and cer- 
 tain, and the tax reasonable in amount, tax-payers will pay more 
 or less cheerfully, but they will pay. When the law is foolish, 
 unjust, impractical, attempting the impossible and so failing in 
 execution, tax-payers, with eyes open to the law's weakness, 
 will look upon it as rather meritorious than otherwise to evade 
 the law, or do like the elevator men did under that seven-cents-a- 
 bushel arrangement, make a voluntary payment as they might 
 have done for the benefit of a church or Sunday-school. The tax 
 commissioners of West Virginia, in 1884, made complaint, it may 
 be observed "that the payment of the tax on personalty is al- 
 most as voluntary and is considered pretty much in the same light 
 as donations to the neighborhood church or Sunday-school." 
 
 Section 32 of the Minnesota tax commission's proposed code 
 contains elaborate directions in n numbered paragraphs as to 
 who shall list taxable personal property owner, agent, trustee, 
 guardian, conservator, executor, husband, receiver, corporation's 
 officer, partner, pawnbroker. Paragraph 5 shows a curious sur- 
 vival of the letter of old laws in opposition to the modern spirit 
 of the laws. Tt provides for listing "the property of a wife by 
 her husband if of sound mind ; if not, by herself {"Senator Wilson 
 ironically asked one of the commissioners if this was not an over- 
 sight ; if the commission had not failed to consider the splendid 
 
HERTIG ON TAXATION. 195 
 
 revenues that might be derived from the rivalry of rich wives in 
 their diamonds, if it were made obligatory on them to 
 do their own listing ! 
 
 Sections 33 and 34 impose on the consignee of property held 
 by him on the first day of April, ''consigned or delivered to him 
 from any place within this state," the duty of making a sworn 
 statement of such property and of its respective owners and their 
 places of residence ; whereupon the local assessor shall assess 
 to the owners within his district their respective shares of the 
 same, if they have not already made honest returns thereof and 
 been assessed on the same ; and then the local assessor must send 
 the consignee's statement to the county supervisor of assessments, 
 who is to see that no man on the list within his county and out- 
 side the local assessor's bailiwick shall escape. That duty done, 
 the county supervisor is to notify his colleagues in other counties 
 what said consignee's statement shows as to the property of resi- 
 dents in said other counties ; and the colleagues in turn shall see 
 to it that no guilty consignor resident in their counties escape. 
 Now, as it is made the consignor's own duty to list his property, 
 including any that he may have so consigned, and as section 41 
 prescribes an iron-clad oath which every lister "shall annually 
 make out and deliver to the assessor between the first day of 
 April and the first day of July," to the effect that he, said lister, 
 solemnly swears (or affirms) that to the best of his "knowledge, 
 information and belief, the foregoing statement [of the property 
 to which this oath is appended] contains a true, full and complete 
 list of all property held, controlled, or belonging: to me [him] 
 on the first day of April, 19 , including all personal property 
 pertaining to merchandising, manufacturing, or otherwise, and 
 that where I [he] have been unable to exhibit any class of per- 
 sonal property to the assessor, such property has been fully and 
 fairly described and its true condition and value represented ; that 
 I [he] have in no case sought to mislead the assessor as to either 
 quantity, quality or value of property, and that the deductions 
 claimed from credits are bona fide debts for a consideration re- 
 ceived, and do not consist in any part in bonds, notes or obliga- 
 tions of any kind, given to any insurance company on account of 
 premiums or policies, nor on account of any unpaid subscriptions 
 to any corporation, institution or society, nor on account of any 
 subscription to or indebtedness payable on capital stock of any 
 company, whether incorporated or unincorporated ; that since the 
 first day of April of last year I [he] have not, directly or indi- 
 rectly, converted or exchanged any of my [his] property tem- 
 porarily for the purpose of evading the assessment thereof for 
 taxes, into non-taxable property or securities of any kind ; and 
 
196 HERTIG ON TAXATION. 
 
 that I [he] have, to the best of my [his] knowledge and judg- 
 ment, valued said property at its true cash value, by which I [he] 
 mean the usual selling price, being the price which could be ob- 
 tained for such property at private sale, and not at forced or 
 auction sale ;" now, I repeat, as it is made the consignor's own 
 imperative duty to make such oath, why, if oaths are effective, 
 seek the "double cinch" of checking the individual lister by ex- 
 acting also an iron-clad sworn- statement from consignees? Are 
 consignors unduly forgetful or perjury-full? Is the fair name of 
 him who consigns produce to be sold for his account to be thus 
 invidiously attacked ? It is well known that the Village Hog has 
 money "at usury," and that his more tangible but less well-fixed 
 neighbor, wincing at the injustice of the fact, leads him far and 
 away in amount of taxes paid. When tax-code makers cast 
 about for oaths to affix, why not provide for taking the oath of 
 each man to whom the Hog is reputed to have lent money, and 
 thus uncover the Hog's hidden "credits !" 
 
 It is true that in section 42, hard following the oath-presenting 
 one, the assessor is given cross-examining powers, but these are 
 negligently left discretionary : "Whenever the assessor shall be 
 of the opinion that any person, company or corporation has not 
 made a full, fair and complete list of personal property which he 
 is required to list for the purposes of taxation, he shall examine 
 such person under oath in regard to the classes and -amount of 
 the property he is required to list." Is a poor assessor dependent 
 on the good-will of his constituents for his present, and a future 
 better, office, perhaps expected, is a poor assessor to take the in- 
 itiative and tell neighbor Thompson that he, the assessor, is of the 
 opinion that neighbor Thompson has perjured himself, and so 
 must give him a chance under sworn cross-examination to repeat 
 or correct the perjury? The law for these hundred years in 
 American states has kept lamentine. through exponents of more 
 or less authority, that vast quantities of personal property are 
 hidden against taxation ; let the law. if it believes in itself and 
 in its exponents, frankly presume th?.t everv lister is a liar, and 
 require the assessor to cross-examine accordingly. He can then 
 point to its mandate and say to neighbor Thompson, "You see. I 
 have no choice." Section 42 further requires him, in case he 
 thinks neighbor Thompson has rot made that "full, fair and com- 
 plete list" which is the law's ideal, to examine not only Thomp- 
 son, but also "to examine on oath any other person whom he be- 
 lieves to have knowledge of the amount or value of any property 
 owned, held or controlled by such person, company or corpora- 
 tion." But here, too, the original sin of leaving the initiation 
 to his discretion acts as a damper on his calling in and examining 
 
HERTIG ON TAXATION. 197 
 
 those persons who might help him to uncover ^-the "credits" of 
 the Village Hog. These laxities, common, I believe, to the tax 
 codes of all American states, seem to show that the law has a 
 semi-consciousness of its own absurdity, and feels it better to be 
 quietly evaded by a tacit, undeclared sort of loop-hole (the as- 
 sessor's discretion), than by a visible riying-leap over the hedge 
 sure to result if the assessor and his constituents were cornered 
 by the revoking of his discretionary powers. So also the penal- 
 ties provided in section 43 for refusal "to swear," or refusal "to 
 testify," together with the machinery for applying the same, 
 would have proved vain and inoperative had the commission's 
 code been enacted. Practically nobody, when required by the 
 assessor, would have refused to swear or to testify after a 
 fashion ; hence the assessor, like the good fellow that he almost 
 always is, would very seldom indeed have felt it necessary "to 
 apply to any clerk of the district court, or any justice of the 
 peace in his county, for a subpoena requiring such" recusant 
 "person, or an officer or agent of any such company or corpora- 
 tion, to appear," etc. ; and hence also the penalty for failure "to 
 appear and answer under oath," in obedience to such subpoena, 
 would have been very seldom invoked, the penalty, namely, 
 which section 43 says, "shall be a contempt of court, and may be 
 punished by a fine of not more than one hundred dollars, or by 
 imprisonment not exceeding thirty days." 
 
 Those sections which follow up the should-have-been lister 
 who was sick or absent at listing time (sees. 44 and 45) ; those 
 prescribing the adding of fees and costs of said subpoena to the 
 other taxes of him who would not otherwise swear or testify, en- 
 abling the sick or absent lister to purge himself of the evil conse- 
 quences of his sickness or absence (sees. 46 and 4^), still pur- 
 suing invalid or absentee (sec. 48), visiting any false or fraudu- 
 lent lister with the thunder of a misdemeanor carrying a fine of 
 not less than fifty nor more than five thousand dollars, yet kindly 
 giving the poor or stubborn man a chance to snap his fingers 
 at the fine by lingering in "the county jail * * * not ex- 
 ceeding a period of six months" v sec. 49), rock-bottoming listing 
 and values, where other means fail, on the assessor's best judg- 
 ment and information, pieced out with such oath-given scraps as 
 he may pick up over the country at large (sec. 50), reminding 
 the assessor that he, too, is mortal and fallible, and "liable to a 
 penalty of twenty-five dollars" if he takes anybody's unsworn 
 statement or unsworn word where the law says oath, and so liable 
 "for every such acceptance" (sec. 51), following up the assessor, 
 deputy assessor, or county supervisor of assessment who may be 
 guilty of "any such acceptance of an unsworn list," with what for 
 
198 HERTIG ON TAXATION. 
 
 a free-born American is "the most unkindest cut of all" that 
 such acceptance "shall be sufficient cause for his removal from 
 office" (Id), even those sections may escape further mention 
 with no more serious damage to the reader than they would have 
 worked damage, had they been enacted, to the Minnesota tax- 
 payer's pocket. 
 
 In section 52, the would-be code indicates that its work, like 
 woman's, is never done ; and its oaths though as numerous and 
 vehement as Uncle Toby said those were which were sworn by 
 "our army in Flanders," are never searching enough. It there- 
 fore makes it "the duty of every assessor to report to the county 
 auditor" any property taxable but unlisted, discovered by him 
 or brought to his attention after June 3Qth, the day set for the 
 formal closing of his books. Section 53 would do equity to school 
 districts by prescribing the keeping of exact "tab" on the assess- 
 ments assessable in each by setting the proper baptismal number 
 of such district "opposite each assessment in a column provided 
 for that purpose in the assessment book." 
 
 Sections 54 and 55 doubtless seemed to the tax commissioners 
 "daisies," "peaches" or "crackerjacks," if we may conceive three 
 such grave gentlemen as stooping to trivial English in praise 
 of their handiwork "made in Indiana" and elsewhere. By sec- 
 tion 54 each assessor, "immediately upon completing the assess- 
 ment of personal property in any year," [that is, when he is sup- 
 posed to get it done, June 30, not counting later discoveries], is 
 required to make out and mail to the county auditor a statement 
 showing the names and post-office addresses "of all persons own- 
 ing personal property subject to taxation in his township or as- 
 sessment district, and the amount for which each of said tax- 
 payers has been assessed by him." By section 55. the county 
 auditor shall concentrate his energies on the stately "mail" which 
 the several statements of the several assessors shall heap up for 
 him ; and he shall immediately on receipt of said mail gladden 
 the heart of some printer fat the county's expense] by causing 
 "the list of each township, ward or other assessment district to be 
 separately printed;" [and shall thereupon, at his county's expense, 
 make contribution to the postal deficit of the United States by 
 mailing] "to each person named in each of such lists, at his place 
 of residence, if known, [otherwise, perhaps "at" any old place, 
 though the section is silent on this point], a copy of the list of his 
 township, ward or other assessment district." Both sections are 
 of the law's luxury and not of its necessity, as section 55 express- 
 ly says in substance that, if neighbor Thompson and neighbor 
 Jones, through failure either of the assessor to make out and mail, 
 or of the auditor to get printed and to mail do not get a chance 
 
HERTIG ON TAXATION. 199 
 
 to compare and spy on each other's assessments, neither shall have 
 any authorized "kick coming," nor shall such failure of assessor 
 or auditor "have the effect of impairing or affecting the assess- 
 ment of the personal property of any such person." 
 
 Section 56 takes a bold and patriotic stand against any "an- 
 archy" that may lurk among assessors. Its clearness and sim- 
 plicity should be a model to all code-makers, and I therefore 
 quote it in full : "The assessors in the execution 'of their duties 
 shall use the forms and follow the instructions which shall from 
 time to time be presented and furnished them in pursuance of 
 law." 
 
 Section 57 provides that "on or before the first day of July, 
 annually," the assessor shall turn over to the county auditor his 
 assessment books duly filled out and showing the result of his 
 work ; also the separate "lists and statements of all persons as- 
 sessed," [duly ballasted, of course, with the tremendous oath on 
 each prescribed in section 41]. Said lists and statements, official 
 ammunition to refute or verify, as^ the case may be, alleged false 
 and fraudulent lists are to be carefully kept in pickle, "and 
 preserved in the office of the county auditor for the period of three 
 years from and after the first day of July of the year in which 
 they are so delivered ; and the county auditor is hereby author- 
 ized to destroy the said lists at the expiration of said period." 
 [This seems wanton destruction. Should not makers of such 
 codes provide for the permanent preservation of choice specimens 
 in the archives of the state historical society ? Besides, if a county 
 auditor at the end of each three year period were to wet down 
 these lists and statements into illegible pulp, and sell the same to a 
 paper-mill and pocket the price, would he be guilty of malfeasance 
 in office ?] Section 57 further provides that there shall be attached 
 to the assessors' books so returned an oath to be made by the 
 assessor or his deputy. The form of this oath is duly given and 
 fills twenty-one lines. The assessor, or 'his deputy, must swear to 
 full value, full diligence, and full avoidance by him of conniving 
 "at any violation or evasion of any of the requirements of law in 
 relation to listing or valuing the personal property, moneys, cred- 
 its, stocks, or other property for taxation." The oath, however, 
 is merciful to him in that it does not require him to give a sworn 
 estimate of the value of the moneys, credits and other personal 
 property in his district that, despite his efforts, have escaped list- 
 ing. But such mercy is not surprising ; for actual laws, as well as 
 mere would-be laws, must put on some appearance of self-respect, 
 and assume some belief in their own efficiency. Tax codes of the 
 drastic kind, providing for a general property tax, come the near- 
 est of any body of law to confessing on their face that they are 
 
200 HERTIG ON TAXATION. 
 
 unjust and inefficient as well by the easy and manifold evasion 
 which they foresee and the numerous clumsy provisions which 
 they make against such evasion. The legislature of Wisconsin 
 has engrafted a delicious bit of fiat self-respect on to the tax code 
 of that state not a particularly drastic code at that by declar- 
 ing, evidently but not confessedly on the theory of necessity for 
 tax-laws to keep up an appearance of self-respect, that an as- 
 sessor may not afterwards in court open his mouth and swear that 
 he previously swore officially to a return which was wrong. 
 There is a puzzling line in the Shakespeare sonnet 
 
 "When my love swears that she is made of truth, 
 I do believe her, though I know she lies." 
 
 The Wisconsin legislature has improved on this sentiment by 
 enacting in effect: When my love (the assessor) swears he's 
 true, you must believe him, and he must believe himself, though 
 we all know he lies. The sentence in which Wisconsin so decrees 
 (Code Sec. 1063) merits full quotation: "No assessor shall be 
 allowed in any court or place, by his oath or testimony, to contra- 
 dict or impeach any affidavit or certificate made or signed by him 
 as such assessor." We express no opinion, says, in substance, the 
 supreme court of Wisconsin, on whether or not this is a discreet 
 provision; but it is within the legislative discretion to so enact, 
 and the provision is valid. Marshall v. Benson, 48 Wis. 558, 
 affirming prior decision of like effect. 
 
 Section 58 requires ''every person elected or appointed to the 
 office of assessor" to file "within ten days after he is notified of 
 his election or appointment" a bond with at least one surety, 
 bond to run to the state of Minnesota, amount $500.00, surety to 
 be approved by county auditor, and bond to be filed in the latter's 
 office. If thereafter the assessor does not "diligently, faithfully 
 and impartially" assess, there is no virtue in bonds ; for such as- 
 sessing is expressly nominated as the condition of the bond, which, 
 if unfulfilled, shall pinch the assessor and his surety five hundred 
 dollars' worth. Here again comes in the inevitable oath : "he 
 shall, moreover, take and subscribe on said bond an oath that he 
 will, according to the best of his judgment, skill and ability, dili- 
 gently, faithfully and impartially perform all the duties of his 
 office." It must not be forgotten that multiplication of oaths, ex- 
 uberantly practiced in American jurisprudence, and particularly 
 in the administrative policies of American codes has leveled flat 
 all solemnity which might otherwise have kept up in oaths; that 
 the ensuing multiplicity of perjury has taken, so to speak, all the 
 edge oif that crime, and made it as safe and abundant as common 
 
HERTIG ON TAXATION. 201 
 
 lying. If anything is proved by American tax experience it is 
 that the assessor's oath before and after, flanked by the intermedi- 
 ate oaths of his subjects or victims, does not materially raise the 
 percentage which the assessed value of personal property is of 
 the total assessed value of all the property in a given state. 
 
 Section 59 provides for the appointment of a bonded and 
 sworn deputy assessor, when the assessor deems such deputy nec- 
 essary for the completion of the work in his district by the date 
 set therefor. 
 
 Section 60 imposes upon the county auditor the duty of acting 
 as first revisor and corrector of the assessors' returns to the ex- 
 tent of any belief or information he may have "that the assessor 
 has not returned the full amount of all property required to be 
 listed in his township or district," or "that any person has given 
 to the assessor a false statement of his personal property." The 
 auditor's belief must be based on "reason," not on mere caprice. 
 Though the commission does not say so, reasons must be as plen- 
 tiful as blackberries in August, perhaps more so, to move him to 
 believe, or rather to intimate, that any voting constituent of his 
 has perjured himself before the assessor. County auditors have 
 been known to be triumphantly re-elected term after term. Even 
 after the county board of review has taken its turn at correcting 
 the assessments, the duty and jurisdiction of the auditor continue, 
 so that any new fact which comes to him in belief or information, 
 and showing the new law to have been blind to some or all of 
 neighbor Thompson's or neighbor Jones' personal property must 
 be given straightway hospitality on the returns : "he shall imme- 
 diately proceed to correct the return of the assessor and to charge 
 the owners of such property on the tax lists with the proper 
 amount of taxes ; and in the performance of the duties aforesaid 
 he is hereby authorized and empowered to issue compulsory pro- 
 cess [that is, is made prosecuting attorney and court in one], 
 and to require the attendance of any person whom he may believe 
 to have knowledge of the existence, location, or value of such 
 property, and to examine such person on oath in relation to such 
 statement or return ; and the auditor in all such cases shall notify 
 every such person before making the entry on the tax list, that 
 he may have an opportunity of showing that his statement or the 
 return of the assessor is correct ; and the county auditor shall, ih 
 all cases, file in his office a statement of the facts or evidence upon 
 which he made such corrections." Observe now the fear that this 
 would-be laws displays lest k be evaded ; how it distrusts aver- 
 age human nature even as exemplified in county auditors ! The 
 auditor is made simply a "jacking-up" tribunal; "he shall in no 
 case reduce the amount returned by the assessor, without the 
 
202 HERTIG ON TAXATION. 
 
 written consent of the tax commission, on a statement of the case 
 submitted by the county auditor or the party aggrieved." 
 
 Section 61 virtually admits that notwithstanding all the new 
 code's manifold precautions, officers and oaths, the dodging tax- 
 payer will still be able to dodge. It says in substance : "You may 
 dodge me this year, as you did last year; you may dodge me 
 next year and the next, but if you do, I enact that 'if any personal 
 property subject to taxation be omitted in the assessment of any 
 year or years,' it shall go on to the tax lists for the current year, 
 and be hit for the taxes it should have paid for any year with 
 seven per cent interest on the proper amount so, as aforesaid, suc- 
 cessfully dodged, from the time of such dodging, until I finally 
 enforce payment. Familiar doctrine, my good man, that the 
 statute of limitations never outlaws a prosecution for murder ; I 
 put you in the same class as murderers no statute of limitations 
 for tax-dodgers ! And this, whether the dodging results from 
 .your fault or 'any erroneous proceedings' of mine, or from any 
 'other cause !' ' 
 
 The next section to take up the burden of making the law 
 more binding is section 119, providing for the appointment in 
 each county of a "county supervisor of assessment" by the board 
 of county commissioners of such county. At the general elections 
 in 1902, the new office to become elective, and the new officers 
 then elected as county supervisors of assessment shall succeed 
 such appointees. Appointed or elected, each such, officer shall 
 give a bond in the sum of five thousand dollars and take and sub- 
 scribe the usual routine oath of office. Provision is made for his 
 removal from office for "malfeasance or nonfeasance" (sec. 120), 
 and for his suspension pending the investigation of charges 
 against him (Id.) ; "he shall, subject to the advice and instruction 
 of the Tax Commission, have full and complete supervision and 
 direction of the work of assessors in his county, and is required 
 to advise and instruct them as to their duties" (sec. 121) ; he shall 
 at least once a year, and as many other times "as may be neces- 
 sary," "personally visit each town, city and village in his county," 
 shall "have access to all public records, books and papers of offi- 
 cers throughout the county," and shall use his powers and oppor- 
 tunities "to the end that he may secure accurate knowledge, and" 
 lest there be a misunderstanding as to the meaning of "accurate 
 knowledge," "full information of the assessment of property," 
 and of tax matters generally "in the several assessment districts of 
 his county" (sec. 122) ; he "shall examine and test the work of as- 
 sessors during the progress of assessments, and shall have the 
 power to personally value and assess different kinds and classes of 
 property previously assessed by the assessor, so that he may ascer- 
 
HERTIG ON TAXATION. 203 
 
 tain whether such assessor is assessing property at full value or is 
 omitting property subject to taxation from the roll" (sec. 123.) 
 | Note again the charming skepticism of the proposed law as to 
 whether the bond-bound and two-oath-bound local assessor 
 aided by oath-bound listers and power to swear the whole neigh- 
 borhood will be of any real efficiency, since it requires the 
 county supervisor to keep the local assessor and the lister 
 "guessing" in both the slang and the technical sense of that 
 word.] Sec. 123 further gives him "all the rights and powers of 
 an assessor for the examination of persons and property, and for 
 the discovery and assessment of property subject to taxation," 
 and, lest he tall into the easy ways of King Log, sharply reminds 
 him that he, too, is subject to superior mandate: "he shall make 
 such assessments or re-assessments of property as shall be required 
 of him by the Tax Commission or the County Board of Review." 
 He is to further load the county auditor with written ammuni- 
 tion to better open before the County Board 01 Review such cof- 
 fers as shall have proved impervious to oaths and to his and the 
 local assessors prior charges provided he gets wind of such 
 coffers "betwixt and between," that is to say, after the first hurly- 
 burly "and before the meeting of the County Board of Review." 
 Even after such meeting, he may not lay aside his spurs, take 
 slippered ease, and draw his salary in peace, but shall continu- 
 ally bear in mind that the most elaborate tax laws are made to be 
 evaded, and shall continue to keep his eyes open, and "report to 
 the county auditor at any time during the year any omitted prop- 
 erty that he may discover subject to taxation, together with the 
 value thereof, and the auditor shall thereupon assess the same for 
 the proper year or years." 
 
 If the county supervisor shall prove to l:e a smooth man and 
 a person pleasing to the county commissioners, he may go junk- 
 eting at his county's expense; for section 124 empowers him still 
 to pursue the villainous tax-dodger into "another county or 
 state," if the supervisor believes that evidence of such tax-dodg- 
 ing exists in "such other county or state," and can convince the 
 county commissioners that he may safely absent himself awhile 
 from his oath-bound but squirming local assessors and tax-dodg- 
 ing subjects and convince them also that the expense of the pro- 
 posed trip "is warranted." Thereupon the board may let him 
 go, and, if it does, "shall allow him such reasonable sum, payable 
 out of the general revenues of the county, to defray his necessary 
 expenses of travel and examination, as it shall deem proper." 
 
 Section 125 affords the county supervisor every facility for 
 becoming a county boss by giving him an additional whip over 
 his lieutenants, the local assessors. He shall complain of any as- 
 
204 HERTIG ON TAXATION. 
 
 sessor to the governor "whenever he ascertains or has good rea- 
 son to believe that any assessor is guilty of a violation of any 
 of the provisions of this act." The section is silent as to the 
 many opportunities "this act" affords for honoring it more in the 
 breach than in the observance ; is silent also as to the many op- 
 portunities it gives to the county supervisor to be excusably 
 blind or maliciously sharp-sighted, at his pleasure. 
 
 Section 126 requires him to "make out a report in duplicate 
 showing in detail the work of assessors in each of the several 
 districts in his county, the failure, if any, of assessors or property 
 owners to comply with the law, the relative assessed and true 
 value of property in each assessment district, and all such other 
 information and statistics which he may have obtained that will 
 be of assistance in determining the relative value of all taxable 
 property in each town, city and village in the county." The 
 county auditor gets one copy of this report, "the Tax Commis- 
 sion at the capital of the state" gets the other. The above 
 clause which I have put in italics is truly delicious ; it implies 
 beyond question that, despite all the new and cumbersome tax 
 machinery, the proposed law knows that it will be generally 
 evaded, and that therefore the assessed value will not be the same 
 as the true value ; but it has solemnly decreed that these values 
 must and will be the same, has "blown itself," as the street says, 
 to the utmost to make them the same ; yet solemnly requires its 
 brand-new county supervisor of assessment to write down him- 
 self and itself as example of self-stultifying asininity. Such 
 report as to "the relative assessed and true value of property" 
 would run, if reduced to the simplest and truest possible form of 
 expression, about as follows : "Between us all, we have hoisted 
 assessed values somewhat above the figure attained under the old 
 law ; but I have confidential information that in such and such 
 counties, the rise is nothing to speak of, and scores of persons 
 predict we shall not be able to maintain the rise here. We have 
 raised somewhat the percentage of the assessed value of personal 
 property on total assessed values ; but we shall never be able to 
 get it above 20 or 2$ per cent of the whole. Our constituents 
 mock the law and make fools of us in their valuations some 
 30, or 50 or 80 per cent, more or less." 
 
 Sections 127 and 128 fix the compensation of the county su- 
 pervisor. In counties of less than 75,000 inhabitants he is to 
 get $4.00 per day "for the time actually employed by him in the 
 discharge of the duties of his office." Out of this it would seem 
 that he is to pay "all of his expenses," except as above provided 
 in section 124, the junketing section. In counties "having a pop- 
 ulation of more than seventy-five thousand," he "shall devote his 
 
HERTIG ON TAXATION. 205 
 
 entire time to the duties of his office, and shall receive an annual 
 salary of not less than eighteen hundred dollars, nor more than 
 three thousand dollars," to be paid by his county, and to be fixed 
 within the county named by the board of county commissioners. 
 Sections 129-142 inclusive provide for the creation, salaries 
 and duties of a tax commission to consist of "three qualified elec- 
 tors of this state." They each take the usual perfunctory oath 
 of office, and each gives a bond in the penal sum of ten thousand 
 dollars. They are to be appointed by the governor, the first 
 set for two, four and six years individually, that the term of one 
 of them may expire every two years ; thenceforward the term for 
 each of them shall be six years, except as vacated by death, resig- 
 nation or removal. "Each tax commissioner shall receive an 
 annual salary of three thousand dollars." He shall also be allowed 
 his "necessary expenses in the performance of the duties imposed 
 by this act, the same to be approved by the state board of review." 
 Provision is made for "a competent stenographer as secretary," 
 at not exceeding twelve hundred dollars a year, and for "addi- 
 tional clerical or other assistants." if reasonably required. The 
 commissioners are to sit in a state-provided office at the capital, 
 and hold obligatory sessions on the first Tuesday of April. July, 
 August, continuously during the month of September until the 
 third Tuesday thereof in each year, and may hold such ad- 
 journed sessions as thev may deem necessary. The chairman may 
 call special sessions to be held at any place in the state, at his dis- 
 cretion, and must call them when and where in the state the other 
 members of the commission shall in writing request. It is grant- 
 ed full access to such state-filed or locally-filed documents as it 
 may want to examine, and all local offices "shall in the form pre- 
 scribed" by it "make returns to it of all information which it may 
 call for." It may issue subpoenas, as out of any court, compel 
 attendance of witnesses, swear and examine them ; may compel 
 "the production of any book, document or paper." It may not 
 itself attach or fine a witness who refuses to appear or produce, 
 but the district court or a justice of the peace is wide open to it 
 in that behalf. The obedient witness gets compensation for at- 
 tendance, to be fixed by the commission, but not to exceed "the 
 amount of travel and attendance fees- allowed by law to a witness 
 in the district court." The subpoena-server gets the usual com- 
 pensation for his work. In section 135 the commission is author- 
 ized and required in fifteen numbered paragraphs to do and per- 
 form a wide range of duties, all proper and important, if a per- 
 manent tax commission shall be created. To exercise or e neral 
 supervision over county and other local tax officials, to investi- 
 gate and report as to inheritances, to reduce or increase the as- 
 
^06 HERTIG ON TAXATION. 
 
 sessme: : t of mineral lands as may be necessary in years when no 
 real-estate assessment is made, to prescribe forms of assessment 
 books and blanks, to confer with assessing officers, to file com- 
 plaints with the governor against assessing officers or other 
 official violators of the tax laws ; to investigate irregular assess- 
 ments, to visit counties, to scrutinize the valuations of public 
 service companies and see that railroad companies make faithful 
 report of gross earnings, to make comparative studies in the reve- 
 nue laws and systems of other states and countries, to keep in 
 hand and properly classify the workings of the home system, and 
 draw up and recommend necessary additional legislation, to make 
 proper abatement of taxes after full investigation, to bring to the 
 attention of county boards of review and the state board of re- 
 view tax matters of special importance to each, to make record of 
 its official acts and expenditures, these of course are duties not 
 only of the highest importance to the working of a code like the 
 proposed one, but, with some modifications, many of them would 
 be advantageously performed by a specially authorized man or 
 board .under any system of taxation. 
 
 Section 136 is a mere value-hoisting device, and empowers the 
 commission when not satisfied with the assessment in any assess- 
 ment district to "direct the county supervisor of assessment to re- 
 assess all or any part of the taxable property in such district," 
 and report his work against a prescribed date. That officer hav- 
 ing already plenty to do, will, if he desires to please the commis- 
 sion, mark up values arbitrarily ; if he desires more to please his 
 local constituents, his reassessment will not differ much from the 
 one which failed to satisfy the commission. 
 
 Appeals from the county boards of review are passed upon by 
 the commission (Sec. 137) ; it reports the reassessments it has or- 
 dered, and the disposition of the appeals it has heard, to the state 
 board of review (Sec. 138) ; it has inquisitorial power to exact 
 reports from every person, firm and corporation relative to his or 
 its property, and has the right to inspect his or its books, ac- 
 counts, papers and property* (Sec. 139) ; it has original jurisdic- 
 tion, if it chooses to exercise the same, to repair and supplement 
 the work, or undone work, of county and other local tax officials, 
 by ferreting out any property that may have escaped taxation in 
 prior years, and compelling the county auditor to increase by the 
 amount of its discoveries the current valuations of the guilty 
 dodgers' property (Sees. 140, 141.) 
 
 Sec. 142 makes it obligatory on the commission to call an an- 
 nual "meeting of the county supervisors of assessment 
 for a conference upon the subject of taxation, the administration 
 of the laws, and for the instruction of such officers in their du- 
 
HERTIG ON TAXATION. 207 
 
 ties." Each attending officer shall be allowed his actual ex- 
 penses incurred in such attendance, to be approved by the Tax 
 Commission and paid by the respective county. The Origin and 
 working of such conference in the state of Indiana have already 
 been mentioned, page 180. 
 
 I have now noticed, and, I think, sufficiently discussed every 
 section of the commissioners' proposed code in so far as the same 
 bears upon the proposed more effective assessment of personal 
 property. It is true, as already observed, that the legislature 
 of Minnesota refused to enact this code, which remains therefore 
 a dead and buried project of law. But tax questions are settled 
 neither in Minnesota, nor, with possibly one or two exceptions, 
 in any state of the American Union. So long as the general 
 property tax in its usual .form shall remain the keystone of the 
 revenue arch, so long will there be complaints of its injustice 
 and its inefficiency, and so long perhaps will there be some voices 
 clamoring for a more drastic code than that on the statute-book 
 of Minnesota, or the statute-books of other states. To study 
 and criticise, and, where proper, to ridicule, the proposed and 
 now dead code of the late tax commission of Minnesota is to 
 study, criticise and ridicule any of the drastic codes now else- 
 where in alleged force or that may be framed and laid before 
 future legislatures by future commissioners or individuals. To 
 graduate, therefore, in knowledge and criticism of this, our pro- 
 posed and dead code of the year 1902, is to graduate in knowledge 
 and criticism of any of the drastic codes. The state of Minne- 
 sota has expended a handsome sum in printing and distributing 
 twelve thousand copies of said commission's report and code ; it 
 would be a pity for it to enter the limbo of waste paper, and 
 there lie unnamed and forgotten, when it can be made to serve as 
 a more solid basis for a campaign of education than any dreamed 
 of by its framers. Should the grateful state of Minnesota buy 
 and distribute twelve thousand copies of this book, no matter ; 
 others may draw the right inference. 
 
 A preacher had finished a sermon to the general satisfaction 
 of his audience, and had eloquently praised the fashioning hand 
 of Providence as shaping all things well. At the church door 
 lingered a hunchback, and . with appropriate p-esture over his 
 shoulder said to the self-satisfied preacher : "And you say Provi- 
 dence shapes all things well !" "Friend," answered the preacher, 
 "it does seem to me that for a hunchback you are very well 
 shaped." I am reminded of the story by the commission's own 
 defence of its code. See report everywhere and particularly such 
 passages as the following : "It may here be properly said that 
 if it shall be proved by experience under the bill that the enforce- 
 
208 HERTIG ON TAXATION. 
 
 ment of its provisions are inadequate to produce results far more 
 satisfactory than any the state has ever yet known, the sooner 
 the taxation of many classes of personal property is abandoned 
 the better." Report, p. 15. Very well said, indeed. If this is 
 not a well-shaped hunchback, then Providence never made one. 
 
CHAPTER XV. 
 
 Proposed code of the tax commission is opposed by various interests 
 Bankers have their hearings and score against it Labor organizations 
 protest likewise vessel-owners, grain-dealers, warehousemen, and live- 
 stock men Farmers lukewarm or divided Bankers charged with 
 underhand work in procuring petitions After two weeks devoted to 
 public hearings in committee, the House takes up the code, much 
 amends it, and kills it by a narrow margin. 
 
 It was apparent at the outset that the commission's 
 code must suffer death, or at least severe mutilation. It had ad- 
 herents but practically no "instructed" friends. Appearing in 
 print only a few days before the legislature met to pass upon it, 
 this formal project of "reform" taxation had little time to make 
 friends, but, as the sequel showed, abundant time to make ene- 
 mies. Various special interests at once took alarm. Bankers, 
 in particular, felt that such a code, if enacted, would or might 
 work untold mischief. Disingenuous attempts, not, of course, 
 quite so open as I put them in my own blunt words 
 were made by friends of the code to have the bankers 
 think that their customers certainly would not, and that they, the 
 bankers, certainly need not, list deposits ; that paragraph num- 
 bered 2 of sec. 32, requiring every lister (that is every person 
 required to make out, swear to, and deliver, a list to the assessor) 
 to "list separately and in the name of his principal all * * * 
 classes of property [expressly including moneys and credits] 
 * * * invested, loaned or otherwise controlled by him as the 
 a^ent or attorney or banker" would not be construed or 
 acted upon in such a way as to bother bankers ; that no assessor, 
 Traveled on neighbor Thompson's list as not being "full, fair 
 and complete," would dream of looking for Thompson's banker, 
 or of examining "such person under oath," as required by section 
 42 ; that certainly no assessor would put to any banker the search- 
 ing interrogatory numbered i in section 37, required by said 
 section to be propounded to every lister, and containing amongst 
 others the words, "Are you, or were you on the first day of April 
 
210 HERTIG ON TAXATION. 
 
 of the present year * * * the agent, attorney or banker, in- 
 vesting, loaning, or otherwise controlling, the money or other 
 property of any other person ;" that in any event, funds deposited 
 with a banker became in law, as soon as so deposited his own, 
 subject only to his obligation to pay the same sum according to 
 the terms of the deposit; that in the law's eye, he controls no 
 money but his own, unless the money is deposited with him in 
 an unbroken package to so remain, and in and as such package 
 to be returned by him; that therefore he may say no to all in- 
 terrogatories without committing perjury ; and that, if he had any 
 fears still .remaining, they could and would be removed .by ap- 
 propriate amendments to the new code before its passage. It was 
 gravely printed in newspapers that as the result of a conference 
 at which the new code was officially expounded to the bankers 
 shortly before the legislature met they felt much more easy in 
 mind than they felt before. Now the banker may not always be 
 a brilliant man ; like the conductor that put Bill Nye off the train, 
 he may not be able to "write a poem to save his measly soul from 
 perdition;" and he is, moreo\er, a modest man; it is tolerably re- 
 cent history that Grover Cleveland's blatherskite comptroller of 
 the currency easily convinced the bankers that he knew more 
 about banking than they did. Still the banker knows a thing or 
 two ; and he knows with unerring accuracy that if depositors be- 
 lieve that their money, on to speak technically, their "credits" are 
 not securely hidden in his hands, from the assessor, they will 
 withdraw said deposits, and hide them elsewhere. All "coons" 
 look alike to the comic songster and all scares look alike to the 
 serious banker. Besides, the banker felt, and was therein un- 
 questionably right, that he pays taxes enough, and that whoever 
 escapes a just share of personal property taxes, he certainly does 
 not. Naturally, therefore, and justly the banker remained an 
 uncompromising enemy of the new code. He was heard before 
 the tax committee of the House before the bill was considered; 
 and the objectionable realities and possibilities of the same were 
 so apparent as well from the banker's as from the depositor's and 
 from every common sense standpoint that the banker scored an 
 important victory even before it was apparent that the new code 
 as a whole would be hopelessly defeated. A correct newspaper 
 chronicle of this victory gained February 20, runs as follows : 
 "Mr. W. P. Roberts, [member of the house from Minneapolis], 
 introduced an important amendment to section 32 of the law by 
 striking out [from that part above quoted] the words 'or bank- 
 ers', which are not in the old law. This is the provision that it 
 was feared would require bankers to list their deposits and thus 
 create an annual panic. The amendment was adopted." Other 
 
HERTIG ON TAXATION. 211 
 
 amendments adopted before the new code was voted upon as a 
 whole and finally killed, struck out entirely its drastic provisions 
 relating" to assessments, and substituted in their place provisions 
 that had already been enacted some years and had become 
 blunted and comparatively harmless in their practical working 
 effect Minnesota statutes that nobody dreams of listing and 
 assessing up to.- 
 
 The bankers, even if they had had no misgivings as to the 
 effect on their deposits of the operation of a law like the pro- 
 posed code, had grounds enough besides to enlist them in warm 
 opposition. The law, as it stands and has long stood in Minne- 
 sota, contemplates, like the proposed code, assessments at the 
 "true cash value" of the property. Bank stock cannot be hidden 
 from the assessor's view, and it is tolerably easy to give it its 
 "true and full value." Bankers, as a rule are reluctant to admit 
 even to an assessor that their stock is not worth at least par. To 
 give that stock, however, its par or "book" value and assess it 
 thereat, would not only work upon banks the hardship of paying 
 an excessive tax, but would set forth in an over-glaring light 
 the injustice of such tax in contrast with the lighter taxes paid 
 on other personal property. Therefore in nearly all the Ameri- 
 can states all in fact where the theory of law is that the assessed 
 and taxable value shall be the "true and full value" incorporated 
 banks, though all pay a high tax, pay nevertheless only a com- 
 promise tax. Thus in Minnesota for some years last past, the 
 state board of equalization has flatly disregarded the state consti- 
 tution and statutes, as well i-n respect to other values as in respect 
 to the values of bank stocks having adopted for the latter the fol- 
 lowing arbitrary rule : "From the sum of the capital stock sur- 
 plus and undivided profits of each bank deduct the amount of 
 the legally authorized investments in real estate, etc., and take 
 fifty per cent of the remainder as the assessable value of the 
 shares of the bank's stock.' 1 State Auditors Report for 1889- 
 1900, p. 333- 
 
 In face therefore of the unusual hoist in assessed values which 
 the new code, as proposed, would elaborately try to bring about, 
 the bankers while. robustly disbelieving that any great all-round 
 hoist would be effected, felt that they would be the easiest target, 
 and feared that the assessed values of bank shares, for awhile 
 at least, might be marked up by assessors, county auditors, super- 
 visors of assessors, county boards of review, and finally, as 
 "great panjandrum," by the tax commission itself marked up 
 out of all proportion as compared with other markings up. This 
 fear of itself was enough to make them intensely hostile to the 
 code drafted by the tax commission. Upham, president of the 
 
1312 HERTIG ON TAXATION. 
 
 First National Bank, of St. Paul, with this fear in mind, said in 
 an address to the tax committees of the House and Senate, that 
 under the proposed code the taxes of banks would he increased. 
 "This condition could be met, however, by reducing the capital- 
 ization, and dividing- [that is, paying to the stockholders in extra 
 dividends] the surplus, which naturally would have a tendency 
 to make money more scarce and would react on every industry 
 that asked for credit." He rose to a higher plane of eloquence 
 when he said of the new code, which had then been launched 
 on its brief legislative career as "House File Number i": "The 
 true title of this Bill would read, 'To discourage enterprise and 
 industry and put a premium on perjury.' ' S. A. Harris, presi- 
 dent of the National Bank of Commerce, of Minneapolis, in ar- 
 guing to the same committees, summed up with judicial discre- 
 tion the effect of the bill, if it should be enacted, as working sim- 
 ply an unnecessary disturbance of conditions: "It is too 
 drastic," he said, "and drastic measures are seldom effective." E. 
 A. Merrill, president of the Minnesota Loan and Trust Company, 
 of Minneapolis, pointed out to the committees the obvious and 
 clinching fact that the bill, if enacted and enforced, would be dis- 
 astrous to such depositors as it might catch, since interest paid on 
 deposits was seldom more and often less than the rate of taxation 
 on assessed values. "Savings banks," he said, "will be injured 
 most. They pay but three per cent interest. Make this bill an 
 effective law, and it will sweep away the income derived from 
 that interest, and take away the chief object in saving. If the 
 doubtful policy of taxing deposits at all be admitted, it should be 
 admitted only on the plan of levying a small and certain tax. 
 New Hampshire, for instance, successfully taxes savings bank 
 deposits by imposing on them an annual tax of one-half of one 
 per cent." Mr. Merrill further argued that the passage of the 
 bill would cause depositors in commercial banks to transfer their 
 accounts to banks outside the state, thus causing the calling in of 
 loans, scarcer money and higher rates of interest. Its passage, 
 moreover, would be disastrous to local trust companies ; deposits 
 now held for estates and others would go to trust companies out- 
 side the state. 
 
 A. D. Stephens, of 'Crookston, in the famous Red River valley, 
 is a bright Scandinavian, a self- made man, as are most Minneso- 
 tans, and a banker in very close touch with the farmers of the 
 valley. He made an argument before the tax committees criti- 
 cising sharply the bill as a whole and certain of its minor ad- 
 ministrative features. While indorsing the arguments of his city 
 colleagues, Mr. Stephens was specially earnest and emphatic in 
 affirming that the code drafted by the tax commission would, if 
 
HERTIG ON TAXATION. 213 
 
 enacted, work hardship upon farmers : "This measure is aimed 
 at tax-dodgers, but in my opinion it won't reach them. It will 
 reach the farmers, however, for their property is visible. They 
 have no bonds or securities to hide. Their assessors know to a 
 dollar what their land is worth. In my district, where lands have 
 been assessed at from $5.00 to $7.00 an acre the assessment will 
 be based on a valuation of five times as much. A blow strik- 
 ing the farmers directly hits the country banks. We cannot pros- 
 per unless the farmers do." It will be seen from the above that 
 Mr. Stephens thinks the average "true and full value" of lands in 
 the Red River valley is from $25.00 to $35.00 per acre, and 
 admits that their present assessed is only about one-fifth 
 of their true value. This may be compared with the adverse state- 
 ment of Judge Wells quoted above, p. 177, that on the whole, 
 Minnesota lands are not under-assessed, and with the note, p. 177, 
 giving some evidence that there is in fact much over-assessment 
 of real estate in the large cities of Minnesota. There has been a 
 great rise in the price of Red River lands in the last three years. 
 The most recent assessment of lands there this is written May 
 2, 1902 was made in 1900. No doubt manv sales have been 
 made recently that fully sustain the figures of Mr. Stephens. 
 WHY THE LABORERS' FURNITURE SHOULD BE EXEMPT. 
 The formal representatives of labor organizations appeared be- 
 fore the tax committees of the House and Senate, and made good 
 points' against certain features of the new code. One provision of 
 the same that seemed wholly without friends is a clause in section 
 2, making the taxable personal property of "each individual * 
 * actual and bona fide owner thereof" exempt from taxation "to 
 an amount not exceeding twenty-five dollars in value." The con- 
 stitution authorizes the legislature to so exempt to an amount not 
 exceeding $?oo.oo in value. The exemption heretofore author- 
 ized by the legislature stands, and has so stood for years, at 
 $100.00. The commission, in cutting it 'to $25.00, would have 
 cut it clean out, but for the doubt whether "in view of the peculiar 
 languaee of the constitution * * * a failure to provide for any 
 exemption would conform to the constitutional requirement." I 
 give the commission's reasons for the cut in their own language : 
 "The consensus of opinion, almost without dissent, expressed to 
 the commission, verbally and by letter, is that the present exemp- 
 tion of one hundred dollars is a fruitful source of evasion. 
 
 "One of the marked evils incident to such exemption is the 
 practice common throughout the state to list personal property 
 as if owned by the several members of the same family. Stock 
 on the farm and household goods, when so distributed for listing 
 purposes among the members of a numerous family, too frequently 
 
214 HERTIG ON TAXATION. 
 
 are successfully kept off the assessor's books. The exemption is 
 undoubtedly fraught with more evil than good. If its purpose 
 was ever a justification for its existence it is no longer so." Re- 
 port, p. 10. 
 
 Later, in defending the commission's work before the tax com- 
 mittee of the House, Commissioner Childs, suave gentleman and 
 excellent lawyer, perpetrated an unconscious pun in saying that 
 before the filing of the commissioners' report "not a single citi- 
 zen was seen but wanted the exemption taken off." No doubt 
 "single citizens," Bachelor Jones, Spinster Smith, Widow Bedott 
 and- other mateless and childless citizens, viewed with alarm an 
 existing provision that enabled neighbor Thompson to give in his 
 stock and household goods as parceled out in ownership among 
 the numerous members of Thompson's family, while they, the 
 singly taxed, or single taxees, had no such way to bilk the as- 
 sessor. It did not, however appear that General Childs meant his 
 defence to receive so strict a construction. "The commission," he 
 continued, "were told everywhere that the exemption was used as 
 a means to fraud." With what seems a glaring inconsistency, 
 when one bears in mind the paragraph I have just quoted from p. 
 10 of the commission's report, the General further said: "If the 
 commission had had power it would have provided for an exemp- 
 tion of $250.00 to the head of a household for household goods." 
 Doubtless General Childs meant if the constitution authorized ex- 
 emptions to heads of families only and not to others, the commis- 
 sion would have favored such exemption to the amount of 
 $250.00. But in view of the searching oaths and multifarious offi- 
 cials provided for in their code, and the commission's proclaimed 
 expected efficiency of the same, it seems very queer that the com- 
 mission in said paragraph of p. 10, if they had really wanted any 
 exemption, did not add that though the exemption had been used 
 freely "as a means to fraud," yet their new code would surely 
 and triumphantly head such fraud off, and that, as the revenue 
 derivable from the taxation o'f personal property would not be 
 seriously diminished by allowing the exemption of $^oo.oo 
 worth of the same, that is, up to full constitutional limit, to every 
 bona fide owner, they would recommend such exemption, which, 
 of course, under the constitution would and must apply not only 
 to heads of families but to all owners of personal property. The 
 pointing out of their inconsistency, though of little importance 
 in itself, points farther the moral that if three such bright men 
 ns I 11 ?: late tax commissioners of Minnesota got so easily "balled 
 up" in o^e of the minor tangles of the subject, there is the greater 
 n-'c-d o^ n. book on taxation like this one of mine. 
 
 Any way the protest of the labor representatives and others 
 
HERTIG ON TAXATION. 215 
 
 against the reduced exemption found ready and practically unani- 
 mous favor. Mr. Gordon O'Neill, representing the Duluth Fed- 
 erated Trade and Labor Assembly, made a little address to the 
 tax committee of the House, fairly typical of what his colleagues 
 generally said and thought of the proposed gode. "The assess- 
 ment of property at full valuation," said he, "will increase the 
 taxes of the working classes all they can stand, and the proposed 
 cut of the exemption to $25.00 worth of personal property will, if 
 adopted, impose an additional burden. Besides the proposed 
 method of taxing vessels and grain will injure the laboring peo- 
 ple, of Duluth, as, under the proposed taxes, vessel-owners and 
 grain men will be forced to leave the state, or do business on a re- 
 duced scale. The provisions for taxing money in banks will mean, 
 the withdrawal of deposits on assessment day, April I, and will 
 make it more difficult to obtain credit from them." The same day, 
 February 7, I urged upon the committee that as regards the ex- 
 emption, the labor representatives were entirely right ; that in- 
 stead of reducing it, the legislature ought to raise it to the full 
 constitutional limit of $200.00 ; that all taxes tend to, and in so 
 far as they do not confiscate, do, become in effect income taxes, or 
 take a certain average percentage of income in the class to which 
 each tax-payer belongs ; that, though tax students vary widely in 
 their conclusions regarding certain details in "the incidence of 
 taxation," in figuring out just how and to what extent certain 
 taxes and parts of taxes are finally paid pro rata out of each in- 
 dividual purse, yet they are agreed that whoever consumes pays 
 some taxes on each garment that he wears and each mouthful that 
 he consumes ; that therefore the laborer who must spend the 
 greater part of his income and often the whole of if as fast as he 
 gets it, pays in the inevitable consumption tax included in every 
 commodity which he buys a tax abundantly heavy for persons of 
 his means without pursuing his household furniture or other per- 
 sonal property ; that as to frauds practiced by listing property as 
 belonging- to different members of the same family, and which the 
 commission in their report, p. io. seem to imply are practised 
 mostly in the rural districts, these should not be invoked to war- 
 want an act of injustice to others ; that these frauds, if not of too 
 light an effect on the revenues to deserve serious notice, could in 
 the main be checked, even though the exemption could not, un- 
 der the present constitution be limited to the heads of families ; 
 that a familiar doctrine of jurisprudence gives to the legislature 
 a wide choice in the means it shall take to uphold a constitutional 
 right, so long as it does not seek absolutely to infringe upon or 
 deny such right ; that this familiar doctrine can be applied to the 
 checking of frauds relating to personal property exemption ; and 
 
216 HERTIG ON TAXATION. 
 
 that the legislature, if it see fit, may constitutionally make the pos- 
 session of personal property by one family in one dwelling 
 or by one family in one farm dwelling and on lands 
 worked or tilled by that family a presumption absolutely 
 conclusive on the assessor and other tax officials, that the head of 
 the family, or whoever appears to be such, is the sole owner of 
 said property ; only, of course, the legislature must give some 
 remedy for cases where the presumption declared conclusive does 
 not conform to the real facts of ownership, that is, let the ag- 
 grieved members of the Thompson family, if their separate in- 
 dividual property shall have been wrongly lumped together and 
 assessed to the paternal Thompson, apply to the district court in 
 due form of law according to such details of procedure and such 
 special remedy as the legislature may authorize and prescribe. 
 Such remedy would naturally be attended with some trouble and 
 some expense. .Should that fact occasionally work an injustice, it 
 would be more in seeming than in reality ; it would only be go- 
 ing back to the ancient way of looking upon the Thompson clan 
 or gens as one, and of dealing with it as a unit. "We may be sure 
 that old man Thompson will never go to court to make the bluff 
 that certain of the Thompson property assessed to him has been 
 for some time parceled out to, and between, Tom, Dick and Harry 
 Thompson and their buxom sisters, Sue, Flora and Kate. If in 
 those rare cases when the Thompson property has been in fact so 
 parceled out, and the Thompsons remain together, a co-operative 
 commonwealth in miniature, have they not still remaining the 
 individual blessings of that cohesive affection and the material ad- 
 vantages of that co-operation, though it will be a losing venture 
 commercially speakine, for them to go to court, and release their 
 individual properties from the assessor's aggregating pinch ?" It 
 may be added here that the House, before killing off the tax com- 
 missions' code amended it so as to raise personal property ex- 
 emption to the full constitutional limit of $200.00. The yeas were 
 70 and the nays 31. The nays were all Republican, except Hill- 
 mond (Democrat) and Mahood (Populist). Three Democrats 
 were absent, or did not vote. The other Democrats and all the 
 Populists, except the two mentioned, voted yea. So of the 70 
 yeas, 54 were Republican, and 16 Democratic or Populist. 
 
 The proposed taxation of vessels according to their "true 
 value in money" met deserved opposition at the very outset. 
 The constitution of Minnesota has for some time been very suc- 
 cessfully evaded as regards such taxation. In 1895 a law was 
 passed called familiarly the vessel-tonnage tax law. Laws, 1895, 
 Ch. 224. It provides for the annual payment of "three (3) cents 
 per net ton of the registered tonnage" of "any steam vessel 
 
HERTIG ON TAXATION. 217 
 
 barge, boat or other water craft owned within this state, or hail- 
 ing from any port thereof." Such payment is made directly into 
 the state treasury and exempts vessels "from all further taxa- 
 tion either state or municipal." The state keeps one-half of such 
 payment and turns over to the county in which the "port of 
 hail" of the respective vessels is situate the other half. This 
 law in fact applies only to St. Louis county because the city of 
 Duluth therein is practically the only port town in Minnesota. 
 Though the law is clearly unconstitutional, it is acquiesced in; 
 and it is acquiescence that gives the final stamp to every valid 
 law. In 1901, the tonnage on vessels, yielded, speaking roundly, 
 $10,000, which is far better than nothing. 
 
 Governor Van Sant, in his message at the opening of the 
 special session, fired the first shot against the commission's pro- 
 posed tax on shipping with excellent aim and prudent states- 
 manship. We may allow that commerce has a very seamy side 
 at times, and yet take no umbrage at the Governor's unstinted 
 praise of commerce. Whatever the goal to which we tend, how- 
 ever grave the problems which the eager spirit of 
 commerce will surely raise, both our arrival at the goal and our 
 confronting the problems are equally necessary and inevitable. 
 So long therefore as w r e are in this particular stage of evolution, 
 moving inevitably on the wheels of commerce, let there be no 
 foolish sprinkling of sand on the axles ; that, at least, is no way 
 to regulate nor to apply brakes. The Governor said in his mes- 
 sage: 
 
 "The proposed code provides for the repeal of the vessel-ton- 
 nage tax. In this respect allow me to make the following sug- 
 gestions : 
 
 "Every good citizen takes pride in the commercial advance- 
 ment of his state. It should be our policy to foster tendencies 
 which promise greater wealth and prosperity to any section of 
 the state. Although remote geographically from the seaboard, 
 it is apparent, that this state, unless prevented by legislation, 
 may soon outstrip many of her rivals in the magnitude of her 
 shipping interests. The registration of vessels navigating in- 
 ternational waters at the port of Duluth indicates that it is a 
 favorite port. When we bear in mind that interstate tonnage is 
 beyond the taxing power of the state, and that the revenues de- 
 rived from a tonnage tax upon vessels must always greatly ex- 
 ceed what would arise from any other method applied to that 
 class of property, it is apparent that the subject is one which 
 calls for your most careful consideration. I trust, therefore that 
 you will be able to enact legislation which, while not in violation 
 of the constitution, will preserve to the state advantages already 
 
218 HERTIG- ON TAXATION. 
 
 gained, and present no impediment to the growth of our in- 
 fluence over navigation upon the Great Lakes." 
 
 A strong delegation from Duluth addressed the tax commit- 
 tees of the House and of the Senate. They pointed out with 
 great vigor and obvious reason the folly .of imposing a tax on 
 ships based on their assessed valuation at their "full and true 
 cash value." Ships could be taxed only at their home port, as 
 had been long ago decided by the supreme court of the United 
 States (Hayes v. Steamship Co., 58 U. S. 596), and vessel-owners 
 engaged in the lake trade could easily make the home port of 
 their vessels some port not in Minnesota. New York made a 
 pretence of taxing vessels registered at Buffalo as their home 
 port and engaged in the lake trade, but this law was habitually 
 and by common consent evaded, and its non-observance officially 
 tolerated and winked at to encourage lake vessels to register at 
 Buffalo. Captain Alexander McDougall, originator of the 
 whaleback type of vessel" said that the proposed code, if enacted, 
 would destroy Duluth's prestige as a shipping center: "Registra- 
 tion at Duluth under the law now in force, [a law, which, though 
 unconstitutional, as aforesaid, is in force by common consent | , 
 costs the state nothing, has grown enormously and advertises 
 Minnesota throughout the world. Taxes on vessels as proposed 
 in the new code will, unless the law prescribing them shall be 
 come a dead letter, drive the registration to other states." 
 
 The speaker might have given a striking illustration of the 
 fact that a foolish tax on the instruments of commerce is easily 
 evaded by quoting from the Report of the United States Com- 
 missioner of Navigation for 1894, a paragraph cited by D. A. 
 Wells in his Theory and Practice of Taxation, p. 414: "It is rel- 
 atively an easy matter for the owner of several vessels to form a 
 partnership with the resident of another state, in which low 
 taxes are imposed on shipping, and by allowing the vessels to 
 stand in the name of such partner to escape the endeavor of the 
 law to tax him more than his competitors in navigation are 
 taxed. Thus, some years since, the authorities in Chicago de- 
 cided to tax the shipping owned at that port on its full insurable 
 value at the rate fixed for municipal taxes. The vessel owners 
 of the city, in self-defence and to enable them to continue in 
 business against competing ports were compelled to make nom- 
 inal transfers of their property, and thousands of tons of ship- 
 ping doubtless owned in Chicago, appeared on the records of 
 the National Bureau of Navigation as owned in other states. 
 Though in the number and tonnage of its entries and clearances 
 Chicago ranks with the greatest ports of the maritime world, 
 yet its apparent rank as a ship-owning port is insignificant." In 
 
HERTIG ON TAXATION. 219 
 
 plain and blunt statement, the technical home port of vessels 
 will be made to appear that within reach whose taxes are lowest; 
 and whatever may be the- letter of their respective laws on tax- 
 ation, we know that in the commercial rivalries of states, tax 
 officials and other citizens, as at Buffalo, will work together in 
 countenancing the evasion of laws taxing shipping to induce the 
 owners thereof to make theirs the home port of vessels. How 
 much more advantageous from every standpoint to impose a 
 moderate and certain tax on the tonnage or on the earnings of 
 ships in lieu of all other taxes. 
 
 The most important, perhaps, of all the special interests that 
 made protest and argument before the tax committees against 
 the tax commission's code was that of the grain men. I am 
 bound to say that they were thoroughly and indisputably right 
 as regards their main position on the tax question ; and that po- 
 sition is summed up in these words: All grain '-in transit" 
 should be exempt from taxation; and all grain stored in eleva- 
 tors, whether billed or about to be billed out in interstate transit, 
 or held for use in the state, should in the eye of the law be con- 
 side'red "in transit." To make this proposition the law of the 
 state, is, they argued, the only way in which Minnesota can main- 
 tain her supremacy as a grain market in competition with neigh- 
 boring states. "The Duluth delegation was specially interested 
 in having grain in interstate transit exempt. The proposed tax 
 meant that the business would go to Superior. Duluth was now 
 the outlet of a funnel that comprised the entire Northwest. A 
 board of trade had been built up which gave the farmer a mar- 
 ket for his grain, and grades had been established recognized 
 the world over. But if this tax bill prevailed, the business would 
 be done in Wisconsin or other neighboring states." Pioneer 
 Press Report, Feb. 8, 1902. It is stated by the Duluth dele- 
 gation that contracts for building new elevators were held in 
 suspense pending legislative action on the new tax bill. Captain 
 McDougall, above quoted on the taxation of shipping, was one 
 of the speakers for the Duluth grain delegation. Other Duluth 
 speakers were Messrs. M. J. Phillips, A. D. Thompson, Ward, 
 Ames, and George C. Spencer. 
 
 The Minneapolis gram men, for whom spoke C. M. Harring- 
 ton, of the Van Dusen-Harrington Company, and Mr. L. Loring, 
 argued that the passage of the tax bill would destroy 
 the supremacy of Minneapolis as the primary wheat market of 
 the world; that the mills there could not operate successfully 
 without there were elevators in constant operation and of great 
 storage capacity; that the existence and use of such storage ca- 
 pacity are absolutely essential, vitally necessary, to make a 
 
220 HERTIG ON TAXATION. 
 
 strong market for wheat; that Minnesota alone cannot furnish 
 the mills with the wheat they need, and that they must have all 
 the facilities for a strong market, and that market itself, to at- 
 tract their wheat from other states in competition with the en- 
 tire world; that without the great storage capacity of the Min- 
 neapolis elevators, wheat needed there would be sent to the East. 
 and would never return; that the proposed code would destroy 
 or cripple the elevators, and the mills would eventually have to 
 shut down, in which case the farmer would get only the shipping 
 price for his grain; that substantially all the capital of the ele- 
 vator companies is in their plants, and is already taxed as real 
 estate; that they buy their wheat with borrowed capital, which is 
 also subject to a tax under the name of "credits." 
 
 Readers will note that while I heartily concur in the main 
 proposition as advanced above prior to giving the substance of 
 the arguments made by the grain men, neither the arguments as 
 such nor the contingent prophecies therewith interwoven are 
 mine. I believe in a moderate special tax on elevators, as set 
 forth above, pp. 193-194. I believe also that if the foolish, drastic 
 provisions of the proposed code regarding grain and other prod- 
 uce, had been enacted, the disastrous consequences predicted by 
 the elevator men would have materialized merely in much annoy- 
 ance and some loss to everybody interested in handling or rais- 
 ing grain, but in the end would have been largely canceled out 
 by systematic evasion and open violation of the law; and I don't 
 believe in the legislative creation of schools for perjury or any 
 form of law-breaking. And finally, I will use to some purpose 
 the words of clause numbered 12 of the commission's dictionary 
 of taxable' personal property: I believe in the non-taxation of 
 "all produce, seeds and grain on hand within this state, whether 
 in granary, mill, warehouse, or otherwise, or in transit." This 
 belief, carried into law, would exempt the farmer's seed grain 
 or any grain or other produce that he may have on hand at as- 
 sessment day. I would, however, couple this exemption with 
 the limitation that grains held over from any harvest except the 
 one last preceding assessment day should be taxable. Thus, as 
 on assessment day last year's grain is generally more than six 
 months old, and would not be assessable under my plan, until 
 the coming of another assessment day, the farmer could hold 
 his grain free from taxation, either for speculation, or other- 
 wise, at least a year and a half after harvesting it. Of course, 
 there is practically no year-and-a-half-old grain in elevators, and 
 not much in farmers' granaries; but it would work no hardship 
 for it to be taxed wherever found. This plan gives practical 
 shape to the common-sense principle that the land itself being 
 
HERTIG ON TAXATION. 221 
 
 taxed, and bearing, as it does, the greater burdens of taxation, 
 the land's income is entitled to a reasonable exemption. Let us 
 suppose that such an exemption, if given by the law, would en- 
 courage the well-to-do farmer of any locality and even well-to-do 
 townsmen to use their moneys, "credits" and their credit to buy 
 and hold wheat harvested in 1902 hold it past assessment day 
 in the spring of 1903, with the intention of taking chances on 
 the harvest of 1903 turning out poorly, or of taking chances on 
 any other contingent event that would raise prices, if such event 
 should take place. It is plain that the first effect of such a move- 
 ment would be a brisker market and better prices. It is a mat- 
 ter of common observation that now in the spring local stocks 
 of wheat in country elevators and to a certain extent in country 
 granaries, are rushed to market before assessment day. The 
 buyer knows the reason of this as well as the seller. Unless the 
 buyer is reasonably sure that he can evade the law as it now 
 stands, and which, if it were enforced, would tax all wheat in 
 Minnesota on assessment day, at a rate that would make the tax 
 amount to about two cents per bushel unless, I repeat, the 
 buyer is reasonably sure that he can evade that tax, he is in- 
 disputably sure to give about two cents a bushel less for the wheat 
 so rushed to market in the spring than he otherwise would. If 
 that tax shall be collected, he who rushes to market before as- 
 sessment day as surely pays it, as if he had to go and procure, 
 before selling, a license to sell, and had to pay for such license 
 two cents per bushel. 
 
 In public hearings before the tax committees of the House 
 and Senate, the first two weeks of the special session were con- 
 sumed. Some routine legislative matters received attention; 
 some bills of a "curative" nature made long strides toward a 
 place in the statute book; but in the main, the special session 
 then and thereafter confined itself to tax matters. Opposition 
 to the proposed code was expressed by nearly all the speakers 
 at these hearings. Two of the tax commissioners, Ex-Attorney- 
 General Childs, as already mentioned, and Ex-Lieutenant Gov- 
 ernor Gideon S. Ives made arguments in favor of the bill. Gov- 
 ernor Ives, perhaps, did not mean to be cynical; but his argu- 
 ment in favor of the drastic personal-property-tax provisions of 
 the code he had helped to frame is in the cynic's vein, or looks 
 that way, if one slightly rearranges his propositions. Minneso- 
 ta's present tax laws, he argued, have yielded in the taxation of 
 personal property a scant harvest of revenue and a bounteous 
 harvest of misrepresentation and lying" ; why this outcry over 
 the compulsory virtue of our new code ? Is lying then so excel- 
 lent and virtue so poor a thing, that Minnesota taxpayers, who 
 
222 HERTIG ON TAXATION. 
 
 alas are tax-dodgers as well, should now complain because we 
 propose that the state shall become in very truth [what some 
 cheerful philosophers have called "organized morality"] what 
 she should always be, effective to prevent fraudulent decep- 
 tion? 
 
 While the present tax-laws of the state, those which have 
 yielded the crop- of misrepresentation of which Governor Ives 
 spoke, provide that every person having taxable property of his 
 own, or required to list as holder of same for another, "shall 
 make out and deliver to the assessor, when required, a state- 
 ment verified by his oath, of all the personal property in his pos- 
 session or under his control" (Code of 1894, sec. 1523), and fur- 
 ther provide that whenever the assessor thinks such lister "has 
 not made a full, fair and complete list of such property, he may 
 examine such person under oath," etc. (Code of 1894, sec. 1525.), 
 yet there is no penalty of any kind for refusal to so swear, un- 
 less it be regarded as a penalty that the assessor "if such person 
 shall refuse to answer under oath, * * * may list the property 
 * * * according to his best judgment and information;" and 
 hence, assessors always being modest in the use of their "best 
 judgment and information," all swearing in tax matters, as the 
 Minnesota laws now stand, is wholly gratuitous and unnecessary. 
 Hence also such deception and misrepresentation as are prac- 
 tised by the lister may be classed in bulk as plain lying and not 
 perjury. Hence I summed up in a subsequent speech before the 
 tax committee of the House, Gov. Ives' argument not according 
 to its wor % ds but according to its pith, as follows: We have now 
 got you trained to be experts in plain lying, and you seem to like 
 it ; is it, then, such a great matter if we lead you a step further 
 and make you experts in complex perjury? 
 
 The general farming interests barely appeared at all before 
 the committees either to protest against or to favor the bill. 
 The live stock men, however, protested vigorously against its 
 passage. Many of them, it was urged, were earnestly striving to 
 improve horses, cattle and sheep by procuring from other states 
 and 'from across the water, at great expense, blooded sires and 
 dams for their particular localities. There was great risk in this, 
 because it was always uncertain how any animal would turn out ; 
 and it was but fair, ran the conclusion, that the assessor should 
 not assess high-priced brood animals at their supposed full cash 
 value. Improved breeds should be encouraged, and the state 
 by non-interference should be the chief encourager. The rev- 
 enue to the taxing power in these special cases would be trifling, 
 but could easily be grievous to the individual. Even under the 
 present law assessors were occasionally unduly anxious to mark 
 
HERTIG ON TAXATION. 223 
 
 up a high-priced stallion or bull, but the local boards of equal- 
 ization would generally do nearly the right thing and keep the 
 assessment from remaining excessively high. 
 
 Petitions purporting to be signed by farmers and opposing 
 the bill were numerously received. The rare petitions purport- 
 ing to be from the same or any class and favoring the bill, made 
 a weak showing in comparison with the numerous opposing 
 ones. "The first petition in favor of the bill which was received 
 from Fillmore county yesterday, aroused much interest, but it 
 looks very lonesome alongside of the increasing pile of protests 
 against the measure." BINGHAM, in Duluth Evening Herald, 
 Feb. 15, 1902. For the rest, petitions at best are rather weak ev- 
 idence of the sentiment which they profess. A pair of sturdy 
 Scandinavians, A. D. Stephens, the Crookston banker already 
 mentioned, and J. F. Jacobson, member from Lac qui Parle 
 county, had a vehement wrangle on this point When Greek 
 meets Greek Stephens insisted that the farmers were opposed 
 to the bill; Jacobson accused the bankers of making it appear 
 that farmers opposed the bill, when in reality they did not. 
 
 "We have seen these petitions from farmers, asking the sanie 
 action which you bankers are asking/' said Jacobson, "and we 
 all know how the farmers were induced to sign them. Anybody 
 can get signers to petitions." 
 
 "It is true," replied the banker, "that people who are luke- 
 warm or neutral do sometimes sign petitions to accommodate 
 the man who asks them. But you must have a mighty poor 
 opinion of the friends of this code, if it has any, if you think that 
 they will write themselves down on the other side the moment 
 they are asked. I know lots of farmers who wouldn't sign a 
 petition in favor of this bill for anybody. Fact is the bill's'so bad 
 that it has aroused lots of people to work against it: Why don't 
 it inspire somebody to pull for it? Here's ten dollars that says 
 no underhanded methods have been used to get petitions signed." 
 
 "That's easy money," rejoined Jacobson. "Don't you know 
 the bankers' association has sent out letters calling for smooth 
 work?" 
 
 "If there are such letters," sur-rejoined Stephens, "they only 
 stand for the honest belief of the bankers that such legislation 
 as the tax commission recommends would be detrimental to the 
 interests of the farmer as well as the banker. The same boat 
 carries us both. Once more this is my indorser," and he 
 smoothed out the new ten-dollar bill. 
 
 This colloquy took place in the senate chamber ; and the dis- 
 putants had become the center of a sizeable group. Jacobson 
 now took advantage of the "psychological moment" to flash 
 
224 HERTIG ON TAXATION. 
 
 forth a letter written or printed on stationery of the Minnesota 
 Bankers' Association, and read it out as follows: 
 
 "I inclose you herewith a petition recommending that action 
 on the proposed tax bill be deferred until the constitution is so 
 amended that a proper law can be passed. The petition is in- 
 tended to be a personal one to your local representatives in the 
 legislature. 
 
 "I wish you would insert the proper names at the head of 
 the petition and obtain as many signatures as you can of the 
 men in your locality who are opposed to the proposed tax law 
 prepared by the commission. Additional plain sheets can be 
 attached for more names. 
 
 "Please do the work as rapidly and as discreetly as possible, 
 avoiding the stirring up of opposition, and endeavor to obtain the 
 names of men who have the most influence with your repre- 
 sentatives. 
 
 "Send the petition, when- signed, to your delegates in St. Paul. 
 "Yours respectfully, 
 
 "Joseph Chapman, Jr., 
 
 "Secretary." 
 
 "Be discreet!" shrieked Jacobson; "avoid the stirring up of 
 opposition. That's how you got your petitions from farmers. 
 But you didn't show them your secretary's letters; you had an- 
 other kind for show;" and Jacobson produced another letter to 
 go with the one he had read, and the blank petition. 
 
 "We have all heard of men," said Stephens, "who express a 
 preference for hell rather than meet certain of their neighbors in 
 heaven. Perhaps the secretary of the Bankers' Association had 
 some such fact in mind, and used accordingly what I believe to 
 have been unnecessary caution for fear some farmers seeing 
 themselves and bankers going the same way would think it best 
 to face about. And I'll allow that such work, .though neither 
 harmful nor in fact misleading, gets into the underhanded class 
 by a close squeeze. There's your money." 
 
 The "gentleman from Lac qui Parle'' waved the bill aside. 
 Said he: "The only bill next my heart is the tax bill. I never bet, 
 and besides, I don't need the money. Keep it to pay taxes 
 with !" 
 
 A farmer from the Red River Valley, named Cart- 
 wright, appeared before the committee in his working 
 clothes, and spoke against the bill, saying that it had been talked 
 over by farmers in his locality who had a debating club, and 
 that they were opposed to the bill. Questioned pointedly by J. 
 A. Peterson of Minneapolis, Mr. Cartwright replied that he was 
 no lawyer, only a plain blunt farmer, and that he could not go 
 
HERTIG ON TAXATION. 225 
 
 over the bill point by point, like a lawyer, and pull it to pieces; 
 but that the farmers where he came from did not like it. When- 
 ever a man does the unexpected, people are apt to cast about 
 curiously to look for hidden motives. That Stephens should have 
 come from the Valley to voice the feeling of country bankers 
 seemed genuine and natural; that Cartwright should have come 
 from the Valley to speak for the farmers seemed to require a 
 different explanation; at least the friends of the bill thought 
 so, and whispered that special inducements had made him come. 
 I do not feel called upon to attempt the solution of every ques- 
 tion mentioned in these pages! 
 
 Toward the close of the public hearings, a natural stump 
 speaker and ready humorist appeared before the tax committee 
 of the House. He spoke in favor of the bill, and brought out the 
 oldest and most typical point which prods the farmer to discon- 
 tent with the workings of tax laws in the American states, the 
 farmer is caught, while the Village Hog, known to have money 
 on hand for a hard bargain or to lend at usury, gets off with 
 nominal taxes on his moneys and credits. I give the piquant re- 
 port of him and his speech made by Stillman H. Bingham in the 
 Dul nth Evening Herald of February I5th. I do not vouch for 
 Bingham's account of how the speaker came to take the floor, 
 but only for the substantial accuracy of Bingham's report of the 
 speech: "Yesterday J. F. Jacobson and J. A. Peterson hunted 
 out a real live farmer and got him to talk on the bill. His name 
 is Warren Wakefield, and he lives in Long Lake, Hennepin 
 county, a short distance outside of Minneapolis. He is really 
 a farmer, and he is also justice of the peace in his village. To 
 prove that he is a farmer he wears whiskers, and came into the 
 legislative halls dressed just as though, like Cincinnatus, he had 
 been called away from the fields to the capitol. He made a 
 speech and he favored the tax bill. He said that in the country 
 nothing escapes the assessor. Everybody knows just what ev- 
 erybody else owns, and there is no chance of getting out of pay- 
 ing taxes on it. 
 
 ' 'But my neighbor in the town,' said Wakefield, farmer and 
 justice of the peace, k owns $30,000 [and will even admit privately 
 that he's got it] which he loans out on mortgages. He does 
 not may I say damn? [here the speaker had the look of one 
 sure of his point] I will say damn he does not pay a damn cent 
 of taxes on his money!' [Laughter and applause.] 
 
 "Air. Wakefield said that the farmers had absolute confidence 
 in the legislature, and he said further that in the past the farmer 
 had been paying more than his share of taxes, and he would be 
 in favor of any bill that would equalize things. The legislature 
 
226 HERTIG ON TAXATION. 
 
 might be sure it had the farmers back of it, and it could go ahead 
 and pass the tax bill, just as it came from the commission, with- 
 out changing it." 
 
 Of the addresses made on the hearings before committees, 
 none attracted quite so much attention as that of Lawson Purdy, 
 on February nth. Purdy is secretary of the New York Tax 
 Reform League, and is a very "bright" young man. The Houst 
 committee on taxation met with the like Senate committee to 
 hear him; and as the session and the speech had been well men- 
 tioned beforehand in the public press, every seat in the House 
 chamber and its gallery was occupied. Purdy's limitations had 
 been studiously kept in the background; probably only a small 
 portion of his audience knew that he is a single-taxer, must 
 therefore be an out-and-out free trader, must look with more 
 or less contempt on every plan of taxing personal property, 
 must, on any occasion calling for an address to such an audi- 
 ence, be "nothing if not critical."* The follies of the general- 
 property taxer are nuts for the single-taxer; and such is the 
 construction of human nature, such its inseparable aversion to 
 anything like a pure form of the single tax, that probably no one 
 will ever have an opportunity to cast at the single-taxer the rot- 
 ten fruits of single tax laws. It is delicious to pose as a political 
 lord of the earth on such terms as guarantee permanent lord- 
 ship of the air ! A single-taxer may be compared to a physician 
 whose particular unshakable article of belief is that he has a 
 sovereign specific remedy sure cure, whatever the diagnosis. 
 He has no possibility of growth in the matter of remedies ; there 
 is his sovereign specific, one and invincible, the same, yesterday, 
 to-day and forever. Human nature rebels instinctively against a 
 course that insures mental paralysis. We may imagine, there- 
 fore, the physician of the sovereign balm saving himself in such 
 case by whetting his faculties on diagnosis, developing every 
 sense to detect obscure and other symptoms that make a patient 
 sick enough to give the sovereign specific a chance to work ! So 
 the single-taxer has developed a marvelous keen scent to find 
 out the woes born of the general property tax. He has em- 
 braced the one chance open to keep his faculties on edge! Thus 
 Thomas G. Shearman's work, Natural Taxation (New York, 
 1895) contains a delightfully keen criticism on the taxation of 
 
 *In justice to Purdy it should be said that the printed version of his 
 speech contains these words, "I wish to be understood as not in favor of 
 taxing personal property, directly or indirectly." Though I followed the 
 speech, as spoken, with interest, and as I thought sufficient attention, I 
 did not mark these words, and unaware, at the time, of his antecedents, 
 heard him through without thinking of single tax. 
 
HERTIG ON TAXATION. 227 
 
 personal property, entirely applicable to such taxation as prac- 
 ticed in nearly all the American states. Admitting the justice ot 
 such criticism within the limitation stated, it does riot follow 
 as a consequence thereof that Shearman's proposition "One Tax 
 Enough," put forth in his chapter X., is established ; nor, if such 
 tax, levied on the ground rent of real estate, should produce suf- 
 ficient revenue without confiscating the land, does it follow that 
 such single tax should be adopted. The single-taxer would 
 be met on the threshold by what Shearman concedes to be "the 
 universal practice of assessors to rate vacant land held for spec- 
 ulative purposes, much lower than occupied land having precise- 
 ly similar market value;" and this "universal practice" would 
 go far toward bowling over the single-taxer in his dearest and 
 fondest expectation that vacant lands at least would be con- 
 fiscated under the operation of the single tax, or speedily pass by 
 leaps and bounds into improved lands. But I return to Purdy's 
 speech. Sparkling with instructive criticism, based on facts fa- 
 miliar to all students of taxation, its counsel to Minnesota- was 
 to adopt the constitutional amendments proposed by the com- 
 mission (of which amendments more anon), and to offer them 
 unweighted with any code or "purpose of making any specific 
 changes" in the general body of the tax laws. "The amend- 
 ments in themselves," he said, "are necessary and so good that 
 their adoption should not be imperiled by being even in thought, 
 bound up with any particular tax system. The amendments 
 should receive the votes of all without regard to their views as 
 to what system the legislature should see fit to adopt when it has 
 the power." The commission's proposed amendments to .the 
 constitution, as we shall see later would give to the legis- 
 lature practically a free hand to deal with taxation. 
 
 Purdy further advised the legislature to continue in office 
 the members of the tax commission, "and add two business men 
 to increase its representative- character. 7 ' He could hardly do 
 less than praise the commission for recommending local option 
 in taxation, since the commission seem to have borrowed from 
 him, or from others like-minded, the local-option sentiment ex- 
 pressed on p. 55 of the commission's report and approvingly 
 quoted by Purdy: "It should be left to a large extent to the 
 political subdivisions of the state to determine for themselves 
 the objects for which revenue is to be raised therein and the 
 subjects from which it is to be exacted." Single-taxers now 
 favor local option in taxation largely for the reason that they 
 have begun to recognize the very stubborn and very patent fact 
 that no state as a whole will adopt the single tax. They hope, 
 therefore, to divide and conquer : If they cannot convince a 
 
228 HERTIG ON TAXATION. 
 
 state of the powerful searching and healing properties of their 
 sovereign specific, perhaps they can contrne to induce some 
 taxing district within a state to show to a skeptical world by 
 conclusive experiment the wonders which they hope if any 
 single-taxer can be found to express his faith with so weak a 
 word as hope ! the single-tax medicine will work upon the sores 
 and blotches of the body politic. 
 
 Perhaps the reason why I listened through Purdy's speech 
 without the thought obtruding, "Aha, a single-taxer," or "now 
 the fixed idea bobs up serenely !" is that Purdy is not so severe- 
 ly rigid a single-taxer as not to admit that there are degrees of 
 viciousness in systems of general property taxation. The good 
 single-taxer, like the good prohibitionist, loves simplicity of 
 classification ; all taxation of personal property is alike damnable, 
 thinks the first; all "rum" is alike damnable, thinks the second. 
 Purdy, with regard to the taxation of personalty, has worked 
 himself into a broader position, not unlike that which Henry 
 Ward Beecher took on the sightliness of the human ear. "There 
 are no pretty ears," said Beecher; "they range from the tolerable 
 to the hideous." So Purdy notes that there is taxation and tax- 
 ation: "Substitutes for the direct taxation of personal property 
 have been adopted 'in many countries and in some of the states, 
 and almost all of them are much to be preferred to your present 
 antiquated policy. * * * I would unhesitatingly urge the 
 adoption of certain substitutes for the tax on personal property 
 if my choice were confined to the tax as it now exists or a sub- 
 stitute for it. By some of these other plans, you can, if you de- 
 sire, raise more revenue and impose the burden more evenly 
 and with much greater justice than it can be imposed by any 
 system of ad valorem taxation upon personal property." All of 
 which is said with excellent judgment and discretion needing 
 only the one saving clause: that such tangible personal property 
 as may be easily reached, and may be as readily assessed on the 
 basis of its value as real estate, need not be taxed in a perfect 
 revenue svstem, but may be taxed on substantially the same basis 
 as real estate without serious injustice or serious blemish to 
 "scientific taxation." All idealists should learn the, to them, very 
 difficult lesson that there are degrees in the beauty and desirable- 
 ness of. the different parts of what thev seek to establish. They 
 should take to heart the words of Chief Justice Marshall in 
 M'Culloch v. Maryland, "A tiling may be necessary, or very 
 necessary, or absolutely and indispensably necessary." 
 
 When Purdy had finished his address, some of the legislators 
 plied him with questions. J. A. Peterson of Minneapolis elicited 
 the "damnation of faint praise" which lurks in the mind of the 
 
HERTIG ON TAXATION. 229 
 
 single-taxer for everything but his fixed idea, by asking Purely 
 what substitute for the present personal property tax he would 
 recommend. 
 
 PURDY : "Almost any other system would be preferable." 
 PETERSON: "Please recommend some special one." 
 PURDY : "The Paris plan of taxing a man in proportion to 
 the value of his home, while a bad one, is much better than your 
 Minnesota plan, or than that plan with amendments in the hope 
 of making it more efficient." 
 
 Senator Wilson of Minneapolis, having in mind that the con- 
 stitution of the state of New York, by its silence regarding taxa- 
 tion, has given to the legislature there unhampered dis- 
 cretion to deal with that subject, might have moralized that it is 
 one thing to have chances and another thing to improve them. 
 Instead, however, he went, as is his custom, straight to the point, 
 and said to Purdy : "You New Yorkers have been free from 
 constitutional limitations for 100 years and yet you do not think 
 your system of taxation much better than Minnesota's. Will it 
 take us 100 years under an amended constitution, to reach New 
 York's present stage?" 
 
 PURDY : "I must strip off seventy of these years that do not 
 count at all. Tax agitation in New York is only 30 years old. 
 Trouble over tax laws is a symptom of health. We are having 
 that trouble. If you don't have trouble, you are dead. You have 
 got to have growing pains all the time." 
 
 Asked by W. D. Washburn, Jr., of Minneapolis, as to the 
 best method of taxing the franchises of public service corpora- 
 tions, Purdy replied that all occupying several tax districts 
 should be assessed by a central body. As between getting in- 
 creased taxes from such corporations and getting reduced street 
 ra'ilway fares or other cheaper service, he preferred reduced 
 rates when conditions were such as to make them possible. He 
 seemed to avoid studiously any mention of the method patented 
 in Illinois and sealed with the approval of the supreme court of 
 the United States, and copied in substance by the commission in 
 Sec. 83 of its proposed code: "In ascertaining the value of any 
 franchise subject to taxation under subdivisions IV. and V. of 
 Title IV. of this act, the assessor or assessing board shall add 
 together the value of the capital stock and funded or bonded 
 debt of any such person or company as determined by him or 
 it, and shall deduct therefrom the value of the real and personal 
 property rendered for taxation by such person or company, and 
 the residue shall be used as the basis for ascertaining the value 
 of the franchise owned by such person or company, and the 
 ii.ount so ascertained shall be deemed the value of the fran- 
 
230 HERTIG ON TAXATION. 
 
 chise, which shall be subject to taxation in that amount as such." 
 He seemed to avoid also with like care any reference to the 
 merits or demerits of a gross earnings tax. He could not in 
 fact very well make mention of any of these modes of taxation 
 without letting the single-tax idea escape and so calling undue 
 attention to its excluding imperialism. 
 
 Bowling, speaker of the House, by appropriate question, 
 drew from Purdy the opinion that it is better to amend the pres- 
 ent constitution than to wait for a constitutional convention to 
 submit a new constitution. 
 
 Riley, of Jackson county, asked if the New York laws provide 
 an efficient way of reaching notes and other "credits !" 
 
 PURDY: 'There is no way that I know of. The ancient Ro- 
 mans had a pretty good one. They used thumb screws; but 
 even that way was not entirely successful.''* 
 
 Purdy made no mention in his speech of the Pennsylvania 
 system of taxation; but, in answer to a private inquiry of mine 
 immediately afterwards, said that the system of taxation in that 
 state is, in many respects, the best of the American systems. 
 
 *"A leading characteristic of the later [Roman] Empire is grinding 
 taxation. The government being overwhelmingly powerful, there was no 
 limit to its power of extortion ; and the army of officials which had now 
 been created plundered for themselves as well as for the government. 
 * * Roman finance had no conception of the impolicy of laying taxation 
 so as to depress enterprise and trade. * * * It is related in many 
 books with what malignant ingenuity the men of property everywhere 
 were, so to speak, chained to the spot where they lived, that the vulture 
 of taxation might prey upon their vitals ; and how the peasantry were in 
 like manner appropriated and enslaved to military service." J. R. SEELEY, 
 Roman Imperialism (Boston, 1889), pp. 62-3. 
 
 "In respect to the assessment and collection of taxes on personal 
 property, the accounts that have come down to us are most interesting, 
 and ought to be full of instruction to legislators and tax commissioners 
 of the present day who believe in patterning tax administration after old 
 and vicious experiences, so far as the changed conditions and ideas of 
 civilization in the nineteenth century will admit. The proprietor of such 
 property was in the first instance questioned under oath; and every ^ at- 
 tempt to prevaricate or elude the intentions of the legislator was punish- 
 able as a capital crime, and was held to include the double guilt of treason 
 and sacrilege. If the results of personal interrogation under oath were 
 not satisfactory to the tax officials, they were empowered to administer 
 torture; and when personal stoicism or absolute incapacity failed to 
 effect the desired results, resort was had to other, most abhorrent, and 
 unnatural methods for procuring the sum at which their property was 
 assessed 'the faithful slave being tortured for evidence against his mas- 
 ter, the wife to depose against her husband and the son against his sire.' 
 * * Zosimus, a historian who wrote in the arly part of the fifth 
 century, says that the approach of the fatal period when the general tax 
 upon industry was to be collected 'was announced by the tears and terrors 
 of the citizens.' " D. A. WELLS, Theory and Practice of Taxation, p. 98. 
 
HERTIG ON TAXATION. 231 
 
 "But the trouble with Pennsylvania," he added, "is that she is 
 lulled to sleep by the revenue which the corporations in whose 
 grasp she is grudgingly concede to her. Hence there is no spirit 
 of tax reform in that state, no 'growing pains.' ' : I shall make 
 further reference to the Pennsylvania system in another chapter, 
 merely observing here that the plan which it embodies, far-reach- 
 ing, but moderate, taxation of moneyed interests, has shown it- 
 self to be very successful as a revenue producer. I have lingered 
 perhaps longer than necessary over Purdy's address; but it and 
 the incidents connected with it afford good "copy" for taxation 
 and a good background for my own comment. It is moreover, 
 a pleasure, almost a duty, to dwell upon the cheering fact that a 
 reformer who would fain play but on a single string, can so far 
 modify his strumming upon it as to make its notes practically 
 inaudible ! If the bankers coached him to that end, still the fact 
 is cheering. And I quite agree with the Minneapolis Times 
 that if, as was said, the bankers saw "fit to pay his expenses and 
 an honorarium beside," they are to be commended therefor. 
 "What," justly asks the Times, "what difference does it make 
 whether Mr. Lawson Purdy ****** j s p a jd ^y t h e 
 bankers of the twin cities * * * or not? Mr. Purdy is a 
 prominent man in his own state; * * * he has light to 
 throw on the tax subject; what we want at this juncture is light, 
 lots of it, a flood of it." 
 
 On February i8th, the House by 167 yeas and I nay, voted 
 that the Committee on Taxes and Tax Laws be discharged from 
 further consideration of "House File number One" (the commis- 
 sion's proposed tax code), "and that said bill be reported back 
 from said committee by its chairman immediately." Wallace 
 (Rep.) of Minneapolis, chairman of the committee, as one de- 
 lighted to be relieved of a white elephant, made haste to obey 
 the will of the House, which thereupon voted that the bill 
 be made a special order for the next day. So, on February 19, 
 actually the I3th day of those on which sessions were held, a 
 very unlucky 1 3th, as it proved, for the proposed code, the 
 House in committee of the whole began consideration of "House 
 File Number One." The members had been duly enlightened 
 by generally attending the public hearings held by their own 
 or by the senate committee on taxation, by discussion amongst 
 themselves, by talks with their constituents, and by the extend- 
 ed comment for which the newspapers made room in their col- 
 umns. Bingham, the piquant correspondent of the Duluth Ev- 
 ening Herald, thought at the close of the public hearings that 
 their effect had been rather to bewilder more than to remove 
 prior bewilderment. "If," he wrote, "the discussions could be 
 
232 HERTIG ON TAXATION. 
 
 continued and the mystifying intricacies of tax matters could 
 be twisted about for a few weeks longer, the condition of the leg- 
 islative mind would be simply appalling." 
 
 It is easy to refute this pessimistic statement. The legislature 
 had, in fact, learned a good deal. It had learned, for one thing, 
 that snap judgment in matters of taxation was likely to prove 
 poor policy as well in practical politics as in statesmanship, 
 learned, in a new application, that the clouded title of "Do" 
 makes a clear title for "Don't." The solid shot of official facts 
 and figures giving the experience of other states, and showing 
 how easily tax-dodgers bowl over the sanction of oaths, had 
 been rained upon the members, and staggered in many their 
 faith in the efficiency of drastic codes for taxing personal proper- 
 ty. While members had been for the most part non-committal, 
 the expression of very forcible sentiment against the proposed 
 code by legislators themselves had not been entirely absent. 
 Thus Senator E. K. Roverud (Rep.) of Houston county, made 
 bold to predict in the Caledonia Journal, edited and published 
 by him, that the drastic oaths prescribed would divide personal 
 property owners into three classes, "perjurers, jail-birds and 
 those moving into other states where the tax laws are more 
 reasonable." The same senator in said Jonfnal had given to the 
 commission's "county supervisor of assessments" the following 
 drastic send-off: "If he is disposed to do his duty, that is, to be 
 a ferret and a bull dog at the same time, he can create all kinds 
 of disturbances, and if he is not driven out of the county at the 
 end of a shot gun before his term is out he may count himself 
 lucky!" There were, of course, some members of the legislature 
 who could be counted on in advance to favor only conservative 
 modifications of the tax laws ; and a very few, as the natural rep- 
 resentatives of special interests, were booked to put the brakes 
 tt> the best of their ability on most of the moves contemplated 
 by the tax reformers. City newspapers, rarely even lukewarm 
 toward the proposed code, were mostly aggressively hostile to- 
 ward it; and two score or more of country paners presented 
 serious objections to the bill as a whole or to som? of its features. 
 I say two score as having counted that many, without making 
 any attempt to take a census of journalistic opinion; but there 
 must have been many more country papers in the ranks of the 
 opposition. The Pioneer Press said editorially on February 5th, 
 "The great majority of the country papers in the state seem to 
 be either opposed to the new tax bill or doubtful about it." 
 Minor points of criticism from various sources were directed 
 against the bill, creation of new offices, new salaries new 
 burdens, its increasing the labors and responsibilities of offi- 
 
HERTIG ON TAXATION. 283 
 
 cers already existing. The county auditors in convention count- 
 ed "fourteen new or enlarged duties provided for [them] in the 
 proposed measure." County auditors must have additional cler- 
 ical help, as the new code would fully double office work. Coun- 
 ty treasurers protested loudly against various administrative fea- 
 tures of the bill, and particularly against section 163 imposing 
 upon treasurers the functions of a sheriff in collecting delinquent 
 personal taxes, and sections 166, 167 and 168, charging the 
 treasurer with the full amount of such delinquent taxes and mak- 
 ing the conditions extremely burdensome for him in getting 
 credited back any of such uncollected taxes. 
 
 Shrewd politicians are aware of the fact that the launching 
 of tax programmes at the opposition is rather dangerous work 
 and fraught with all the possibilities of the boomerang ; hence 
 partisan labors as such were little in evidence either for or 
 against the proposed code. Senator C. O. Baldwin of Duluth, 
 mentioned often as a possible Democratic candidate for governor, 
 was thought to have outlined a tax platform for his party in 
 enumerating the planks which he favored personally : 
 
 i. Amend the state constitution so as .to make needed reform 
 possible. 
 
 2.. Amend section 1530 of the code of 1894 so as to provide 
 for the taxation of franchises. 
 
 3. Enact a law for the taxation of foreign corporations so 
 that they will have no advantage over domestic corporations. 
 
 And as embodying the spirit in which all these problems should 
 be approached Senator Baldwin outlined the following discreet 
 prefatory plank : "Under the present prosperous condition of our 
 state, county and municipal governments, there is not present or 
 urgent necessity for hasty tax legislation and the people do not 
 demand drastic or oppressive, tax laws." Strictly speaking, how- 
 ever, no vote on tax matters showed a clean party division, though 
 in some of the skirmishes preceding a final vote, the Democrats 
 and Populists, as will be seen later, voted nearly as a unit. 
 
 When on February ipth, the House proceeded to consider 
 "House File Number One" it became apparent that the gauntlet 
 which it had to run fairly bristled with amendments. These came 
 in so thick and fast that J. A. Peterson, of Minneapolis, moved 
 that any member be privileged to offer amendments the same to 
 be specially printed in convenient form for the use of the House. 
 The motion prevailed, a lucky fact for me, as the special printing 
 so done enables me to be accurate without being burdensome with 
 details. The special list of amendments so printed came out in 
 three long sheets, somewhat in the style of galley proofs. Their 
 aggregate length is a little more than nine feet. 
 
234 HERTIG ON TAXATION. 
 
 When it came to the consideration of amendments, and, by 
 the way, our nine foot list did not shut out other and further of- 
 ferings, what the House had learned from the various sources I 
 have mentioned, or what it knew at the outset, soon became ap- 
 parent. One thing- it knew or had learned, is that no vessel is too 
 slow to show a clean pair of heels to the ad -valorem tax which 
 pursues her. Laybourn (Rep.), of Duluth, was therefore enabled 
 to get his amendments promptly and unopposedly adopted pro- 
 tecting Minnesota shipping interests. Roberts (Rep.), of Minne- 
 apolis, himself a voluminous amender, seconded them. One of 
 Laybourn's amendments relieved owners of "vessels navigating 
 international waters" from the duty of. listing them for assess- 
 ment ; another of his amendments incorporated into the proposed 
 code "as section 83a" a new section re-stating practically verba- 
 tim the law of 1895, the substance of which I have given above, 
 p. 216. This took the bull of constitutional amendment by the 
 horns in the same way that it had been already grasped, a way al- 
 ways open to the people when other ways fail quietly ignoring 
 the constitution and going ahead. The folly of taxing, or rather 
 of attempting to tax, the instruments of commerce is an important 
 lesson to be learned by legislators. That the popular chamber 
 of the legislature of Minnesota unanimously recorded that it had 
 learned at least one branch of this lesson that the assessor must 
 keep his hands off vessels in the carrying trade is alone worth 
 the cost of the special session, if the result shall show that it is in- 
 deed finally learned. Let us hope that another tax commission, 
 should there be one, before the constitution of Minnesota shall be 
 finally amended ri^ht, will not assume that its own superior vir- 
 tue need be evidenced by an attempt to reinstate the constitution in 
 that particular feature, which the vessel tonnage tax law of 1895 
 has snubbed so triumphantly and satisfactorily ! 
 
 Another branch of the same lesson presents greater difficulty 
 especially as regards the putting it in practice under the Minne- 
 sota constitution. That other branch relates to the taxation of 
 grain, on which I have above expressed myself with sufficient 
 fulness. Pp. 220-22 1. The vote of the House hereupon in view 
 of the constitutional difficulties, is not quite conclusive as to the 
 views of the members regarding the taxation of grain. Laybourn 
 offered four amendments relating to such taxation, the result of 
 which, if adopted, "would be," as the sturdy Jacobson of Lac Qui 
 Parle county apprehended them, "to exempt practically all the 
 grain in the state." The question, too, came in such shape as to 
 make it seem to many members that the triumph of these amend- 
 -ments won::'' 1 e merely the triumph of the large grain-holders, 
 "of vital importance to the elevator and grain interests of Duluth," 
 
HERTIG ON TAXATION. 235 
 
 as Laybourn urged. Accordingly Jacobson had with him in op- 
 posing them the strenuous Populist Sageng, of Otter Tail, Sa- 
 geng's like-minded colleague from Polk county, and Hickey 
 (Dem.), of St. Paul. These with Jacobson, the Republican lead- 
 er, made strong speeches against the amendments. Jacobson 
 made the point that grain in transit could not be taxed under the 
 decisions of the United States supreme court, and that no other 
 grain could or should be exempt ; that the talk by the Duluth 
 delegation of grain taxation driving the grain interests of their 
 city out of the state was not made in good faith ; he had heard the 
 same thing before. Wisconsin could not profit by our enacting 
 here the proposed code; for Wisconsin law is just the same. 
 Hence there would be no discrimination in favor of Wisconsin. 
 The amendments were voted down by a large majority a fact 
 which insured the solid opposition of the Duluth delegation to 
 the bill as a whole, though the friends of the bill at no time 
 counted on much help from that quarter. 
 
 I have already chronicled the triumph of amendments favor- 
 able to bankers and their customers. A group of amendments 
 of great importance was offered by Wallace of Hennepin. Nearly 
 all of these were adopted. They struck bodily out of the proposed 
 code sections 12, 37. 38, 45, 46, 48, 49, 50 and 51. They .aimed 
 to strike out of it also section 33 and 34 which cumbrously provide 
 for listing by consignees and for the following up of property so 
 listed, wherever it may be, by spurring the assessor and county su- 
 pervisor of assessment to strenuous efforts in that behalf. But 
 the House had a little indulgence for the commission's work be- 
 fore sweeping it all aside, and concluded to let sections 33 and 34 
 stand awhile. The Wallace amendments also struck out sections 
 35 and 39, and substituted therefor corresponding sections of the 
 present tax laws, or other provisions much milder than those 
 stricken out. A delusive appearance of savage rod in pickle tor 
 the tax-dodger was kept up by an amendment offered by Jacob- 
 son (familiarly called "J a k:e" by his fellow members and the re- 
 porters) of Lac Qui Parle, providing that where a victim refuses 
 to list his property or to swear to his listing, the county auditor, 
 after the assessor shall have hit such victim to the full extent of 
 the assessor's information and belief shall hit him a?ain by tack- 
 ing atop of the assessor's estimate a penalty to the amount of 50 
 per cent thereof. Any victim feeling himself aggrieved by such 
 guess and a half heaped up opposite his name in the assessment 
 book, may appear before the county board of equalization and 
 show cause, if any, why the penalty should be stricken off a clear 
 case on its savage face of "heads I win, tails you lose." For the 
 assessor's guess and a half may fall short of a correct assessment 
 
236 HERTIG ON TAXATION. 
 
 and a half, in which case the victim is amply rewarded for his 
 scruples against perjury; whereas if the guess and a half should 
 come a trifle high, the victim may still appear before the county 
 board, and show that he has experienced a change of heart by 
 swearing in due form of law, or in that form which has been 
 likened to one of the stripes of the rainbow. 
 
 I do not know who first framed the Jacobson amendment, nor 
 have I thought it worth while to trace the evolution of similar 
 provisions in the codes of the American states. Illinois ( ?) may 
 have originated them; has had them, at least since 18 . 'Certainly 
 there is no louder wailing anywhere than in the state of Illinois 
 over the craft and cunning, the omnipresence and ubiquity of the 
 tax-dodger. And I have at last found a case, coming, too, from 
 Illinois in my elaborate speech to the tax committee of the 
 House and a miscellaneous audience, on February 14, I challenged 
 anybody to produce one from anywhere, and paused in vain for a 
 reply of prosecution for perjury in swearing to an assessment 
 list. Guess what sort of a defendant the people of Illinois thus 
 indicted and prosecuted. "I give it to you in a thousand," as the 
 French say. Exhaust your thousand, and then, learn that the 
 defendant is a widow (colored) ! Shades of Charles Summer 
 and his Civil Rights Bill ! shall the negro be mobbed in the 
 Solid South, and not have in the good Republican state of Illinois 
 the white man's and white woman's right to swear with impunity 
 to a false tax schedule? The trial judge, Baker, scored tax-dod- 
 gers, but noted it was passing strange that the defendant before 
 him should be "picked out and made an example of," when 
 "thousands of wealthier persons are filing the same kind of sched- 
 ules and committing the same kind of offense every year." Chi- 
 cago Daily News, May 17, 1902. I shall learn the outcome of 
 this case with much interest. The colored widow made a schedule 
 for assessment in 1900, and afterwards in the probate court ad- 
 mitted that the schedule would not be found quite right, "if 
 Christ came to Chicago." Indicted for perjury on the strength 
 of her schedules conflicting with her admission in the probate 
 court, she rashly thought there was a dead open and shut case 
 against her and pleaded "guilty." When, perhaps too late, she 
 got a lawyer and the permission to change her plea to "not guilty/' 
 her eyes were opened to the fact that under the former revenue 
 law, money in bank was a "credit" and not money from an assess- 
 ing standpoint ; howbeit, unfortunately for her, money m 
 bank, under the new Illinois revenue law, is held by Judge Baker 
 10 be "cash on hand" for schedule purposes. The newspaper re- 
 port from which I glean is delightfully vague and omissionate as 
 to any final disposition of the case. 
 
HERTIG ON TAXATION. 237 
 
 I beg" the reader's pardon for digressing even one moment 
 from so intense a subject as the Jacobson amendment. The di- 
 gression has forced into a new paragraph the further curious fact, 
 which and which alone I at first meant to state in the preceding 
 one, the fact that "Jake's amendment" had found lodgment in 
 the statutes of Minnesota just forty-two years before he offered it 
 as something new ! Had not only got itself declared law in Min- 
 nesota forty-two years ago, but somewhat more recently than 
 forty-two years ago had got itself declared no law in Minnesota, 
 because it is unconstitutional. In the laws of 1860, p. 26, sec. 30, 
 stands almost the very letter of the fateful amendment, and holds 
 itself out as duly enacted by the legislature of Minnesota. The 
 state supreme court bowled it out as unconstitutional in McCcr- 
 mick v. Fitch, 14 Minn. 252. Whether the legislature afterwards 
 took the unnecessary trouble to repeal it, I have not thought it 
 worth while to look up. The court reasoned, in substance, and 
 correctly, that the "true value in money" contemplated by sec. 3 of 
 art. IX. of the constitution is an assessed value ; that the only organ 
 for grinding out assessed values -is the assessor and his reviewing 
 and equalizing superiors ; that when the assessor assesses, whether 
 in the effulgent li^ht of an oath or in the dark mystery of oathless 
 "information and belief," it is neither more nor less an assessment 
 which he makes, conclusively presumed in the unclouded eye of 
 the law to foot up to the "true value in money" of the property 
 so assessed, and of all the property subject to assessment, of the 
 assessee the "true value in money" unless it is made truer by the 
 duly authorized boards of review and equalization, proceeding ac- 
 cording to routine and, perhaps, according to the facts that may 
 be brought before them. An assessment so made is not to be 
 lightly, nor can it constitutionally be, impeached by arbitrarily 
 marking it up for the non-swearing Jones and letting it stand un- 
 marked for the cheerful perjurer Thompson. To allow such a 
 thing, were to play at fast and loose with the constitutional "true 
 value in money" of sec. 3, and the "equalized and uniform" "cash 
 valuation" of sec. I of art. IX. In fine you shall not, under our 
 constitution, say : The assessor barks the tree, and then say in 
 your next breath, the assessor barks at the tree. You might per- 
 haps fine Jones $10.00 or so for "neglect or failure to list, or to 
 swear to the return," but to raise that question you must impose 
 your fine as such, and try to get it as such ; yon can't slide it in as 
 a. cold deck, calling it an assessment, or a 50 per cent, rise in an 
 assessment. The court further held that in the case at bar the 
 assessment of the individual who complained of the 50 per cent, 
 rise was void throughout, and that no tax could be collected from 
 him on such assessment. Hence if the Jacobson amendment had 
 
238 HERTIG ON TAXATION. 
 
 finally become a seeming statute, knowing tax-dodgers might have 
 been seen beseeching county auditors to mark up their assessments 
 by 50 per cent. Perhaps even some disguised "boodler" im- 
 posed on "Jake" and brought to him a Greek gift with "tax re- 
 form" blown in the bottle. 
 
 Jacobson, though sturdy, is to quote a Baconian phrase, 
 "hugely politic." The Wallace amendments came up before he 
 offered his own. Wallace in championing them stated truly that 
 they eliminated the drastic and inquisitorial features of the bill. 
 Stark (Rep.), of 'Chisago county, then said it seemed to him that 
 there had been a combination of the friends and enemies of the 
 bill a combination that he did not understand. Whereat much 
 laughter, amid which Jacobson took the floor. He conceded that 
 the Wallace amendments went a long way toward satisfying com- 
 plaints against the bill, but beyond question they went too far. 
 He thought it unwise to adopt them. "They favor a class of tax- 
 dodgers. To adopt them is truckling to a lot of people that 
 threaten to leave the state, if their demands are not satisfied. 
 For my part I say, let 'em go, .for they are not good citizens. 
 If this bill, as it comes from the tax commission would drive them 
 all out of the state tomorrow, I would vote for it. If other states 
 were enacting stringent laws, and tax-dodgers on that account 
 were emigrating to Minnesota, I would vote for a measure that 
 would keep them out !" He then offered his amendment above 
 described. Wallace laughingly offered support for support he 
 supporting Jacobson's, if Jacobson his. It was now noon, Feb- 
 ruary 2Oth ; all were hungry, and some wanted a little further 
 time for considering the amendments. So an adjournment was 
 taken until two p. m. 
 
 By the time the House convened in the afternoon, J. A. Peter- 
 son, of Minneapolis, a shrewd politician, who stepped from a 
 county attorneyship to the legislature, and who hopes to step 
 from the legislature to congress seemed to have united all who 
 favored the bill in any shape. At any rate he appeared as the 
 spokesman of what bore every mark of a compromise, and skill- 
 fully pressed all the points he invoked in its favor. He favored 
 both the Jacobson amendment and the Wallace amendments. 
 Noting that the Wallace amendments would take out the inquisi- 
 torial and drastic features, he pointed out that the powers of the 
 tax commission and of the county supervisor of assessments 
 would remain unchanged. The tax commission was really the 
 feature of the bill. Left in by the amendments, as it was, it could 
 reach the iron mine corporations now escaping taxation to as 
 -reat an extent as the public service corporations. He dwelt upon 
 the fact that a tax commission in Michigan as part of its first 
 
HERTIG ON TAXATION. 239 
 
 year's work had increased the assessment of mines in that state 
 by $80,000,000. The bill as an unamended whole had in and out 
 of this House able and earnest opponents. Personally he would 
 be glad to vote for it without these amendments. Without them 
 he feared that it could not pass. He would therefore vote for 
 adopting them and hoped all friends of the bill would do likewise. 
 Since they could not get everything, better take what they could 
 get. Jacobson finally took substantially the same ground and 
 withdrew his opposition to the Wallace amendments. 
 
 Before the vote on them was taken, Sageng, the sturdy Popu- 
 list from Otter Tail, made a warm dissenting speech. "You al- 
 leged friends of this new tax code," said he, "are afraid to stand 
 up for it on a fair and square basis. You forsooth are for it as it 
 stands; you accept these amendments only because the. other fel- 
 lows must have them. The fact is you have got up this unKoly 
 compromise on your own account. I don't like it, and I'll have 
 none of it. These drastic and inquisitorial features, as you call 
 them, are vital to the bill ; pass it without them, and the 
 bill will be a dismal failure. Your unholy spirit of com- 
 promise is dangerous ; it favors the tax dodger, or, as I prefer 
 to call him, the tax thief. I think a tax dodger is as bad as a 
 man who breaks into the county treasury and steals public funds. 
 I congratulate myself that I voted against the law creating the 
 tax commission. I certainly am not to blame tor the result of it, 
 any more than for these amendments to which I . am unalterably 
 opposed." 
 
 In the further. course of the debate, Roberts of Hennepin, said 
 in favor of the Wallace amendments that they take away inquisi- 
 torial powers from nobody but the assessor. 
 
 PLOWMAN (Populist) of Otter Tail : "You mean that it takes 
 away from the local authorities all power of seeing that things are 
 assessed properly !" 
 
 ROBERTS : "If you want to see a panic, get this bill passed 
 without amendments !" 
 
 The division on the Wallace amendments, so far as the debate 
 showed, was largely between the cities and the country the 
 country members claiming that by their adoption the cities would 
 escape measures that would uncover their hidden wealth for as- 
 sessment, while the farming communities would be still caught as 
 they have been heretofore. 
 
 The Jacobson amendment was first put to a vote, and was 
 adopted by 81 to 18. It is an instructive commentary on hasty 
 and over-zealous legislation that nobody remembered that this 
 amendment once stood as law in Minnesota until the supreme 
 court held it to be unconstitutional, and that nobody, on its own 
 
240 HERTIG ON TAXATION. 
 
 showing", suggested that it would be so held. As a statute once 
 more, it would have been a boon to tax-dodgers. The Wallace 
 amendments were carried to the extent already stated, but by a 
 smaller majority 60 to 46. 
 
 Of the 18 votes against the Jacobson amendment, 15 were Re- 
 publican and three Democrat. The three Democrats were from 
 city districts, as were also eight of the 15 Republicans. The vote 
 on the Wallace amendments, present mildness against new dras- 
 ticity, is interesting'. Of the 60 yeas, only Butler (Dem.), Fust 
 fDem.), Hemsted (Dem. -Pop.), Hickey (Dem.), and Mahood 
 (Pop.), are non-Republican. The 55 Republicans who voted yea 
 were not, as might be thought, nearly all from cities. In fact 
 only 27 of them (classifying important places, Winona, Still water, 
 Faribault, Brainerd and Rochester with the larger cities for the 
 purposes of this count) were city representatives. Four, however, 
 of the non-Republican yeas were city votes, counting Hemsted of 
 Crow Wing as a city voter. It is a question, then, whether city 
 votes constituted a bare majority of these 60 yeas. Per contra 
 there were some city votes in the nays. The aggregate Populist 
 and Democrat nay vote was 15, including therein three city votes ; 
 but of the 31 Republicans who voted nay, only three were from 
 cities. The 40 country members who voted nay on the Wallace 
 amendments indicate very nearly the real strength of the proposed 
 code in the House. After the vote was taken various ones of the 
 nays declared that they would not vote for the bill as amended. 
 . The Roberts amendments, substantially all of which seemed to 
 aim at making the proposed code more certain and definite fell 
 under suspicion of having been inspired by "corporation influ- 
 ences" ; and so all of them that sounded important went by the 
 board. The particular brick that set the Roberts row a-toppling 
 was inscribed with a proposition to let the street railwav com- 
 panies show, as a part c|f the report prescribed by sec. 70, the cost 
 of renewing their plants, roadbed and equipment, if so renewed 
 at any time from the proceeds of bonds or stock, and the actual 
 value of their real property or their personal property, other than 
 franchises, at the time of assessment as compared with their origi- 
 nal cost, if such property actually cost more than its present values. 
 Jacobson thought this would destroy the intended effect of the 
 new code. Roberts was twitted with his professed friendliness 
 for the bill. Larson (Rep.), of Redwood county, said: "We 
 have heard a good deal about the enemies of this bill ; now we are 
 just finding out who they really are." 
 
 The next day, however, February 2 ist, the undaunted Roberts 
 offered a further block of amendments relating mostly to admin- 
 istrative features and beginning with sec. 75 and flying, with 
 
HERTIG ON TAXATION. . 241 
 
 many a descent on intermediate sections, to sec. 155. Encouraged 
 by his success in getting these adopted, he suddenly flew back to 
 sec. 76, requiring "other public service companies" to make annual 
 reports to the assessor, and setting forth what such reports shall 
 contain. To sec. 76, then, he offered an amendment giving to any 
 such company the right to "present such additional facts or state- 
 ments with regard to its business and the income derived there- 
 from, as may tend to show what proportion of each arises from its 
 enjoyment of any right, privilege or franchise." Here the vigilant 
 house again suspected an attempt to "ball up" the plain letter of 
 the proposed new code in the interest of public service corpora- 
 tions, and voted down the amendment to sec. 76. Roberts, how- 
 ever, remained in the thick of the fight, and still offered amend- 
 ments of a minor character until Monday, February 24th, the last 
 day on which any were offered. 
 
 Populist statesmanship was not unrepresented with amend- 
 ments. Oppegard of Polk offered two which were adopted. One 
 of them cut a printer's fee of 15 cents per description of delin- 
 quent real estate to 12 cents per description. The other cut down 
 to 12 cents a printer's fee of twenty cents for the like description 
 in "notices af expiration of period of redemption of real property 
 sold for taxes." On February 24th, just before the bill was voted 
 upon, Schurman (Rep.) of Ramsey, himself printer, editor and 
 publisher, came to the rescue of the "capitalist press," and asked 
 the unanimous consent of the House to move a reconsideration 
 of the Oppegard amendments, which had been adopted the day 
 before. Laybourn objected, "and the request was denied." 
 
 Plowman (Pop.) of Otter Tail, was not so lucky with his 
 amendment. Opposed to what he called the centralizing features 
 of the "state board of review," or equalization as constituted by 
 <-he proposed codes a board to consist of the governor, state 
 auditor, secretary of state, attorney general, and the three tax 
 commissioners, Plowman moved to amend by making the state 
 board of equalization consist of the governor, auditor of state and 
 attorney general, "together with one member [an elector] from 
 each congressional district, not a member of any county board of 
 equalization to be appointed by the governor with the 
 
 advice and consent of the senate." Such board to have power to 
 raise and lower assessments and to so operate on any district in- 
 dependent of other districts, but subject to the general limitation 
 that "they shall not reduce the aggregate valuation of all property 
 in the state, as returned by the several county auditors more than 
 one per centum on tl^e whole valuation thereof." This, of course, 
 0:1 a division between the country and city members of such board, 
 would enable the preponderant faction to reduce assessments for 
 
242 HERTIG ON TAXATION. 
 
 its own territory, but would force it at the same time to raise cor- 
 respondingly, or nearly so, the assessments in the territory of the 
 other faction. Notwithstanding or, perhaps, because of this 
 objectionable feature, Plowman's amendment came near adoption, 
 being lost on the close vote of 48 yeas and 52 nays. The negative 
 votes were all Republican, with one exception: Fust (Dem.), of 
 Minneapolis, voted nay. All the other Democrats present and 
 all the Populists voted yea making an aggregate of 18 Demo- 
 crat and Populist votes in the 48 yeas. 
 
 Hurd (Rep.), of St. Paul, got one important amendment 
 adopted. Sec. 64 of the proposed code, following the usual prac- 
 tice in assessing bank stocks, provides that the assessor shall de- 
 duct the amount of any bank's "legally authorized investments in 
 real estate" from the aggregate amount of its capital and surplus 
 fund, "and the remainder shall be taken as a basis for the valua- 
 tion" of its shares. Hurd's amendment provided that the assessor 
 should deduct along with the real estate "also all legaf investments 
 in United States bonds." The amendment was adopted February 
 24th. But during the noon recess of the same clay it was discov- 
 ered that this amendment, if it should become law, would exempt 
 entirely many a bank from taxation ; and so in the afternoon it 
 was promptly reconsidered and killed. 
 
 During the pendency of the various amendments, an occasional 
 opposition partisan lead, necessarily from a short suit, made a 
 faint ripple in the proceedings. Thus Pennington (Dem.), of. 
 Dakota county, moved on February 2Oth to amend sec. 23 by 
 striking out the word "commission" and inserting in place thereof 
 the word "commissioner." There had been some talk amongst 
 members and others of substituting a tax commissioner for the 
 commission of three members contemplated by the bill. The ef- 
 fect of Pennington's amendment, if adopted, would have been to 
 commit the House not to the "single tax" but to a single tax 
 commissioner. It was looked upon as a feeler in the direction 
 of setting the Republicans to fighting among themselves on the 
 merits of one tax commissioner as against a board of three, and 
 was promptly killed by an overwhelming vote. 
 
 Pennington was luckier, however, when on February 24th, 
 he appealed to the spirit of fair play in the Flouse by moving an 
 amendment to sec. 129 to the effect that "not more than two of the 
 [tax] commissioners so appointed shall be members of the same 
 political party." The amendment was adopted by 56 yeas to 47 
 nays. Even this amendment did not poll in its favor quite all the 
 non-Republicans: Sikorski (Dem.), of Winona, voted nay! It 
 may be remarked in parenthesis, that the appointment of boards, 
 where the law forbids that all the members thereof be of one poli- 
 
HERTIG ON TAXATION. 243 
 
 tical party, occasionally subjects the appointing power to peculiar 
 embarrassment. In Iowa, for instance, is such a law ; and my 
 friend Cummins, governor of that state, has trouble in finding 
 Democrats for minority appointments ; whoever he selects in that 
 capacity is promptly declared to be "no Democrat" by scores who 
 claim to know ; and if of those scores some one were so appointed, 
 another flying squadron would promptly tag him "no Democrat" 
 as well. Hard lines for a party when a Republican governor 
 opposed to it must decide on the party credentials of its alleged 
 members ! As illustrating the see-saw of sentiment I add that 
 .when three or four days later the like amendment was offered to 
 the Jacobson bill, the same House voted it overwhelmingly down. 
 
 And now, well towards noon of February 25th, "House File 
 Number One," with a large slice of its drastic heart cut out by 
 amendment, was put to vote on the question of its passage. The 
 official record is of Spartan brevity : "And the roll being called, 
 there were yeas 54 and nays 60, as follows : [Yeas and nays 
 given by name.] So the bill did not pass." 
 
 Those who voted yea were : 
 
 Aanenson (Rep.), Alley (Rep.), G. W. Armstrong (Rep.), 
 Babcock (Rep.), Bean (Rep.), Brubaker (Rep.), Burns (Rep.), 
 Bush (Rep.), Cooke (Rep.), Dealey (Dem.), Deming (Rep.), 
 Dorsey (Dem.), Gait (Rep.), Gandrud (Rep.), Grass (Rep.), 
 Harden (Rep.), Haugen (Rep.), Haugland (Rep.), Henricks 
 (Dem.-Peop.), Herbert (Dem.), Hillary (Rep.), Hillmond 
 (Dem.-Peop.), Hinton (Rep.), Hogan (Rep.), Holm (Rep.), 
 Hunt (Rep.), Jackson (Rep.), Jacobson (Rep.), Johnsrud 
 (Rep.), Larson (Rep.), Lee (Rep.), Lommen (Rep.), W. Nelson 
 (Rep.), Neubauer (Rep.), Nichols (Rep.), Nolan (Rep.), Ny- 
 quist (Rep.), O'Neil (Rep.), Ofsthun (Rep.), J. A. Peterson 
 (Rep.), Rapp (Rep.), Roberts (Rep.), Sander (Rep.), Schwarg 
 (Rep.), Stark (Rep.), Stevenson (Rep.), Stites (Rep.), Swan- 
 son (Rep.), Sweet (Rep.), Torson (Rep.), Wallace (Rep.), 
 Ward (Rep.), Wilder (Rep.), the Speaker (Rep.), that is to say 
 49 Republican and five non-Republican yeas. 
 
 Those who voted nay were : 
 
 Alford (Rep.), Allen (Rep.), Anderson (Rep.), J. A. Arm- 
 strong (Rep.), Barte'au (Rep.), Benson (Rep.), Berg (Rep.), 
 Bosworth (Rep.), Bury (Rep.), Butler (Dem.), Gumming 
 (Rep.), Fust (Dem.), Gainey (Dem.), Hemsted (Dem.-Peop.), 
 Hickey (Dem.), Hurd (Rep.), Hymes (Rep.), Johnson (Rep.), 
 Kelly (Rep.), Lane (Rep.), Laybourn (Rep.), Lemke (Rep.), 
 Mahood (Pop.), Mallory (Rep.), Mark (Rep.), Martin (Dem.), 
 Miller (Rep.), Morley '(Rep.), Morris (Rep.), H. K. Nelson 
 
244 HERTIG ON TAXATION. 
 
 (Rep.), Norman (Rep.), Noyes (Rep.), Ocobock (Rep.), Op- 
 pegaard (Pop.), Pennington (Dem.), S. D. Peterson (Rep.), 
 Phillips (Rep.), Plowman (Pop.), Pope (Rep.), Pugh (Rep.), 
 Rich (Rep.), Rider (Pop.), Riley (Rep,), Ryan (Rep.), Sageng 
 (Pop.), Scherf (Rep.), Schurman (Rep.), Schutz (Rep.), Si- 
 korski (Dem.), Smith (Rep.), Umland (Dem.), Von Wald 
 (Rep.), Washburn (Rep.), Wells (Rep.),. Whitford (Rep.), Wil- 
 cox (Rep.), that is to say, 44 Republican and 16 non-Republican 
 nays. 
 
 The above analysis of the vote show s so close a division of the 
 Republicans, that the Democrats and Populists held and used the 
 balance of power, and so defeated the bill. Including the Lake 
 county member in the St. Louis county delegation, Duluth had 
 six representatives ; and, as was expected they voted solidly 
 against the bill. The Hennepin county delegation of sixteen split 
 even on the vole, while of the Ramsey county eleven, eight voted 
 against and three for the bill. Therefore, out of the aggregate of 
 thirty-three representatives from Duluth, Minneapolis and St. 
 Paul, the vote stood n yeas and 2.2. nays, or a majority of two to 
 one in the negative. But of these city nays, five were Democrat, 
 so that of the 44 Republican nays, 27 were from what are usually 
 called country districts. Some Republicans before the vote was 
 taken, charged that the "fusionists," as the opposition were called, 
 had held a caucus and decided to vote solidly against the bill. But 
 as, on the vote, there was a division in the opposition camp of five 
 yeas and sixteen nays, it does not seem that the balance of power 
 which the opposition used so effectively was a concerted balance. 
 The Populists proper evidently followed the sledge-hammer lead 
 of Sageng : all of thena voted nay. 
 
 After the result of the vote was announced the House im- 
 mediately adjourned, and a livelv canvass was made by friends 
 of the bill to get seme member who voted in the negative to move 
 a reconsideration, and enough converts besides to snatch victory 
 from the jaws of defeat.. This was so far successful that next 
 day "Von Wald moved that the vote by which House File One 
 was lost be reconsidered." The motion was lost by the closest 
 possible margin, there being 54 yeas and 55 nays. So the bill was 
 finally killed. It is interesting to note that, while the yeas for re- 
 consideration, 54, were just the same in number as the yea vote 
 when the bill itself was voted on, seven voted for reconsideration 
 who had voted against the bill, Gumming, Feeney, Martin, Oppe- 
 gaard, Pennington, Sageng, and Von Wald, converts from all 
 parties, though only one Republican was in the lot. Of the seven 
 who had dropped out of the original 54, Cooke, Dorsey, Hogan, 
 Holm, Lee, W. Nelson, and Ward, Cooke was not present when 
 
HERTIG ON TAXATION. . 245 
 
 the vote on reconsideration was taken ; but the others were present 
 and voted against it. Benalken (Dern.), who was absent when the 
 vote on the bill was taken voted against reconsideration; while 
 of the 60 that voted against the bill, five were absent, and did not 
 vote at all on the question of reconsideration. These were Dob- 
 bin, Lane, H. R. Nelson, Plowman, and Umland. 
 
 The stock argument of friends of the bill was that the farmers 
 demanded its passage ; but the division amongst the country mem- 
 bers is sufficient evidence to the contrary. With regard to the 
 bill as a whole, many farmers were doubtful ; and there was an 
 occasional strong showing by farmers of vehement sentiment 
 against the bill. Some of these, men of influence at home, "told 
 their representatives that if they voted for a tax code that would 
 raise their farm valuations halt a dozen times and put a tax on 
 grain that the farmer would have to pay, they had better go to 
 some county where they were not known after the legislature 
 should adjourn." Any one "mixing" much with the members 
 could easily verify the words quoted above, which are from the 
 legislative correspondence of the D ninth Evening Herald. 
 
CHAPTER XVI. 
 
 Survivals of the proposed code in parts Its real-estate tax features be- 
 come law Likewise its inheritance tax, though ruined by eleventh 
 hour amendments Inheritance tax in no way limited by government at 
 Washington Merits of Bentham's escheat, or inheritance tax The 
 Jacobson bill, and its rush through the House Argued before S-enate 
 committee The monopoly of iron mines Concerning public service 
 Companies Senate debates about, and finally kills, Jacobson's bill'. 
 
 The proposed code after its death and burial as a whole was 
 resurrected in part. One part of such part known as the Jacob- 
 son bill "House File 56," was rushed through the House, only to 
 be killed in the Senate; another part of the resurrected portion 
 known as the" Anderson bill and embodying most of the really val- 
 uable features of its original, namely those relating to the penalties 
 on, and collection of real estate taxes, started as "House File 
 Number 58," and finally became a law in 88 sections, as chapter 2 
 of the laws of 1902. Still another resurrected part of the bill re- 
 lated to the tax on inheritances (sees. 278-299 inclusive), was 
 launched as "House File Number 57," and became, unfortunately 
 with defacing amendments, a law in 24 sections as chapter 3 of the 
 laws of 1902. The two sections it contains which are not in the 
 original, repeal respectively all prior acts inconsistent therewith, 
 and provide that it shall "be in force from and after its passage." 
 This law, too, is one of the exxxl works of the tax commission, and 
 is fully explained and justified in their Report, pp. 56-59. The 
 few amendments which seriously mar its efficiency are discussed 
 below in this chapter, and may be easily repaired at the next ses- 
 sion. The Anderson bill (House File 58) follows the tax com- 
 mission's code verbatim as to the subjects mentioned, the amend- 
 ments being few and short, and born of a desire to make the 
 administration of the law simpler and easier. It has the high prac- 
 tical indorsement of that efficient officer, State Auditor Robert C. 
 Dunn, who argues with much force and good reason that the An- 
 derson bill is worth to the state a great deal more than the cost of 
 the extra session which made it a law. Under the law before the 
 Anderson bill was passed, many real estate owners in Northern 
 
HERTIG ON TAXATION. 24 7 
 
 Minnesota let their taxes go and remain delinquent of set purpose. 
 These lands when nominally sold for delinquent taxes, fell nomi- 
 nally to the state, there being few or no private bidders who 
 would put up their money in Northern Minnesota for tax sale 
 certificates. From time to time the legislature would pass a clear- 
 ance sale act, whereby the lands so nominally sold to the state at 
 tax sales would be offered and sold again, under the provision that 
 at such clearance sale where the highest bid for any tract or piece 
 should amount to no more than a certain* portion of the taxes 
 against such tract or piece (usually naming as the minimum the 
 state tax for a certain period) the person so bidding should own 
 the land so bid off, discharged of all taxes prior to such a named 
 year. Such sales were always well attended by thrifty owners 
 and hunters of bargains in tax titles. Some pieces were sure to be 
 neglected or- forgotten by careless or amateur owners ; and these 
 were snapped up by the tax-title sharks. Between these and 
 owners attending the sale to "bid in" the tracts on which they had 
 neglected to pay taxes, there was always an amiable comity : shark 
 did not bid against owner who was present to remove the tax 
 cloud from his original title ; owner did not bid against shark 
 when neglected tracts or lots were offered. Shark frequently 
 figured as owner of a prior shaky tax-title, which he, too, as a 
 matter of profitable speculation had not protected by paying sub- 
 sequent taxes ; and now at the clearance sale he figured, as to cer- 
 tain tracts, in the dual role of owner and shark. It should be 
 added that the taxes lost by such clearance sales were local taxes, 
 and not those accruing to the state. 
 
 It is hoped by means of the Anderson bill to discourage own- 
 ers of real estate from letting the taxes thereon go delinquent. 
 The means relied on to that end are a general strengthening of the 
 proceedings to sell real estate for delinquent taxes, hardening of 
 the terms on which courts may hold tax-titles invalid, and particu- 
 larly the giving, to any person holding- a tax sale certificate issued 
 under the act, the right "at any time after the time for redemption 
 from the tax sale on which said certificate was issued has expired," 
 to "commence a suit in the district court of the county where the 
 lands embraced in any such certificate are situate, to quiet his title 
 thereto without taking possession of such lands." If in such suit, 
 the plaintiff's title is held invalid, "for any cause other than one 
 which- renders the taxes embraced in such certificate or deed void, 
 or that such taxes have been paid, or the property was exempt' 
 from taxation, such action shall not be dismissed by the court, 
 but the court shall ascertain the amount due the plaintiff for all 
 taxes, and all subsequent taxes, penalties and costs paid by him or 
 his assignors, if any, with interest thereon at the rate of twelve 
 
248 HERTIG ON TAXATION. 
 
 per centum per annum from and after the date of such certificate, 
 deed or payment, and decree a lien against such lands in favor of 
 the holder of such certificate or deed for the amount so ascer- 
 tained, and [thereupon the court shall] decree a sale of such land, 
 for the purpose of satisfying such lien together with the costs of 
 such judgment and sale." More briefly stated it will cost the 
 owner the original taxes and twelve per cent, interest thereon and 
 subsequent taxes and twelve per cent, interest thereon, even 
 though some technicality should be held sufficient to defeat the tax 
 title as an entirety ; and the same action which demonstrates such 
 technicality against the tax sale certificate holder suffices for the 
 making and foreclosure of a mortgage for said amounts in his 
 favor. So also he who brings suit "to vacate or set aside any tax 
 judgment or tax certificate, or to remove a cloud upon any title 
 created by any tax certificate," etc., must pay into court on be- 
 ginning such suit "the amount for which such land was sold 
 * * * and the amount of all subsequent taxes, penalties and 
 costs paid" by the holder of such certificate or his assignors, with 
 twelve per cent, interest on the whole, but if "the sole claim made 
 in" stating the cause of such action "is that the taxes for which 
 the certificate was issued had been paid before sale or that the 
 land described therein was exempt," the plaintiff is dispensed from 
 making such payment on beginning his suit. Due provision is 
 also made for the like protection of tax certificate holders, who 
 are not original bidders, but came in as assignees of the state, 
 where in lieu of other bidders, the county auditor shall have "bid 
 in" lands for the state. Commission's Code, sees. 239, 240; An- 
 derson bill, sees. 64, 65. In the words of the commission (Report, 
 p. 33), "the bill provides that all tracts of land bid in by the state 
 and not assigned or redeemed within three years shall become the 
 absolute property of the state. It is believed that the bill will 
 thus vest the state with absolute title to such property. The pres- 
 ent law [that is to say now, the old law] has [had] been so far 
 modified by amendments adopted from time to time as to practi- 
 cally negative its provisions relating to absolute sales." 
 
 The former law by letter and construction was liberal in allow- 
 ing abatement of taxes and particularly in allowing the refund- 
 ment of moneys to those who held tax title rights which on one 
 technicality or another were invalid. As the commission puts it 
 (Report, p. 34) the old law in those respects gave rise to "num- 
 erous and grave abuses." The commission hoped by giving to it- 
 self and its successors exclusive jurisdiction to allow abatements 
 (sec. 135), but "only after full investigation by the Tax Commis- 
 sion of all the facts relating thereto, and the favorable recom- 
 mendation of the board of county commissioners and the county 
 
HERTIG ON TAXATION. 249 
 
 auditor" hoped to correct thereby the abuses of the old law in 
 that regard; but neither this feature of their code, nor any sub- 
 stitute therefor became law, and so the old law and the old practice 
 as to abatements are still in force. That portion, however, of 
 their code which relates to refundments is included in the Ander- 
 son bill, and seems well fitted to correct the abuses which had 
 grown out of the former law in that behalf. No refundments 
 now, unless the property is exempt from taxation, or the taxes 
 shall have been paid before the sale, or unless the assessment or 
 levy of the tax sought to be refunded shall be void. And no 
 merely fanciful technicality shall render void such assessment or 
 levy. "The bill makes a wide departure from the policy of the 
 existing law [that is, now, the former law] as to refundments in 
 cases where tax certificates are found to be void by reason of a 
 jurisdictional defect other than a void assessment or levy. No 
 refundment will be allowed under the bill in any such case. In 
 place of refundment, the certificate holder will have a lien upon 
 the tract which may be enforced against it." Report, p. 35. 
 
 The commission on the same page notices "the pernicious prac- 
 tice" which grew up under the former law "of delaying applica- 
 tions for refundments in order to enable the certificate holder to 
 collect a high rate of interest." He got in fact, when "refund- 
 ment" was made the amount or amounts paid by him with 8 per 
 cent, interest from the date of such payment or payments to the 
 date of refundment. This "pernicious practice," it is believed, 
 will be effectually checked by the Anderson bill. To show some 
 of the things that were possible formerly in the name of "refund- 
 ments," I quote again from the commission's report, written while 
 the former law was still in force : "It now happens that a certi- 
 ficate holder will remain inactive for ten or more years, when 
 sometimes by collusion with the owner of the property, he is 
 able to collect the amount paid by him at the tax sale for the en- 
 tire period at the high rate of interest provided by law. * In the 
 meantime the right of the state to reimburse itself out of the 
 property in question has been barred for one or more years by 
 the statute of limitations. As a check upon so glaring an evil, 
 the bill provides that no refundment will be allowed unless the 
 right thereto has been determined or the certificate and appeal 
 obtained and application made within eight years from the date 
 of the tax sale. No interest will be allowed beyond a period of 
 six months after the right of refundment has been determined." 
 
 P- 35- 
 
 The taxation of inheritances provided in "House File Num- 
 ber 57," also an "Anderson bill," may be made with a few easy 
 amendments to cover the subject with fairness and discretion, and 
 
250 HERTIG ON TAXATION. 
 
 to conform to the state constitution. Such taxation in the United 
 States dates from the year 1826, when Pennsylvania passed her 
 first statutes taxing- the estates of decedents. It has now become 
 a popular mode of taxation ; and the decisions of the supreme 
 court of the United States holding' squarely that the taxation so- 
 called of estates of decedents is not technically taxation of prop- 
 erty but a tax on the right of succession, are shining- examples 
 that legal technicalities may be as powerful instruments in favor 
 of the people as they often are against them. United' States v. 
 Perkins, 163 U. S. 628, and kindred cases. In the "case cited, 
 Mr. Justice Brown said, in delivering- the court's opinion : "The 
 [inheritance] tax is not upon the property in the ordinary sense 
 of the term, but upon the right to dispose of it, and it is not until 
 it has yielded its contribution to the state that it becomes the 
 property of the legatee." To the average reader this will doubt- 
 less sound like a distinction without a difference; but by means 
 of it, the states, as regards the taxation of decedents' estates, are 
 freed from the iron grasp of the federal constitution, and from 
 congressional control as well. Congress exempts greenbacks and 
 United States bonds from taxation. A, who was a citizen of 
 New York, and died there, left a fortune in government bonds. 
 The glad ' heirs rejoiced further in the prospect of having 
 no inheritance tax to pay. Now came the New York authorities, 
 and said, under the sanction of the supreme court of the United 
 States : "Good people it may seem a trifle hard on you, but the 
 commonwealth of New York must really add a slice of those 
 bonds to the common wealth. True we have no right to tax them 
 as your property God and the federal statutes forbid that we 
 should exercise such right. But property is one thing, and the 
 right to step into it and a dead man's shoes, as you will soon see, 
 is another thing. The right to step into it is, in New York, or in 
 any American state, the creature of such state ; and the will of the 
 state as to the conditions on which it will permit you or any one to 
 enjoy that right within her boundaries, is supreme. Not only did 
 the fathers in framing the constitution of the United States forget 
 to prescribe the sort of toll gate which a state shall plant before a 
 dead man's shoes, but the supreme court of the United States 
 has elaborately acknowledged that they did so forget. The will 
 of the state in this matter is the supreme law." 
 
 The tremendous importance of this doctrine and the ample 
 powers which it leaves to the states to use a free hand in dealing 
 with estates that pass through probate would justify much fuller 
 discussion than I can here give to it. In it ancl otTier peaceful 
 means that lie ready to the people's use for correcting all man- 
 ner of abuses growing out of ill-gotten and badly used properties, 
 
HERTIG ON TAXATION. 251 
 
 may be found the only antidote to the poison of violent revolu- 
 tions. To enumerate these means, to apprise the people of them in 
 plain and simple language, to see that they are jealously guarded, 
 to look to it that candidates for judgeships shall neither he elected 
 nor appointed without professing allegiance to them, to provide 
 for the summary impeachment of judges when they fail in such 
 allegiance, these things constitute a gigantic but imperative task 
 for the new jurisprudence to attempt and perform. 
 
 I return to the inheritance tax. The commission in their Re- 
 port, p p. 57-59, give an excellent summary of what had been 
 done in that matter prior to the enactment last winter of that part 
 of their proposed code which relates to such tax ; also a good 
 summary of said part which, as "House File 57," is, except as 
 defaced by unfortunate amendments. now a law of the state, as. al- 
 ready mentioned. I transcribe here Irfat portion oT their report : 
 
 "The first attempt at that species of taxation by this state was 
 the act of 1885, which was held invalid because the taxes sought 
 to be imposed by it were not equal within the constitutional man- 
 date. Assuming evidently that it was requisite, in order to prop- 
 erly legislate upon the subject, that the constitution must have 
 given express authority, the legislature submitted the amendment 
 which was adopted in 1896, reading as follows : 
 
 And provided further, that there may be by law levied and 
 collected a tax upon all inheritances, devises, bequests, legacies, 
 and gifts of every kind and description above a fixed and specified 
 sum, of any and all natural persons and corporations. Such a tax 
 above such exempted sum may be uniform, or it may be graded or 
 progressive, but shall not exceed a maximum tax of five per cent. 
 
 The framer of the amendment apparently misconceived the 
 power of the legislature as it then existed, and was most unfor- 
 tunate in the language employed. There can be no doubt that 
 the power to tax the estate or property of decedents then existed, 
 so long as the method adopted conformed to the rule of equality. 
 Strangely enough, the amendment displays on the part of its 
 framer a misconception also of the character of the legislation of 
 other states. With few exceptions the tax is imposed by those 
 states either directly upon the estates of decedents, or upon the 
 transfers of thre property of decedents, while the amendment in 
 question requires it to be imposed upon "all inheritances, devises 
 bequests, legacies and gifts." The constitution had been more 
 wisely framed if it had simply provided that the legislature might 
 impose a graduated or progressive tax upon the estates of de- 
 cedents. Under the present form of the constitution, it is impos- 
 sible to allow an exemption of $5,000, as at present, and realize 
 adequate revenue from the tax, as the exemption must apply to 
 
252 HERTIG ON TAXATION. 
 
 every inheritance, devise, bequest, legacy and gift. To illustrate : 
 A decedent having an estate of $25,000 has only to devise and be- 
 queath it to five of his lineal descendants in equal amounts in or- 
 der to wholly defeat the tax. If on the other hand, the tax were 
 imposed upon the estate, a single exemption would be permissible 
 and $20,000 of the estate could be taxed. 
 
 The legislature of 1897 attempted to frame a law under the 
 present form of the constitution, but made two grave mistakes : 
 It imposed the tax only upon personal property, when it should 
 have been imposed also upon real property. It imposed it upon the 
 entire inheritance, devise, bequest, legacy 1 , and gift of $5,000, 
 when it should have been upon the excess above that amount. 
 For these reasons the statute was held invalid by the supreme 
 court in the case of Dfeiv v. Tift, 79 Minn. 175. 
 
 At the last session of the legislature a further attempt was 
 made to legislate upon the subject; but, as yet, the validity of 
 the act has not been adjudged by the courts. Without express- 
 ing any opinion as to its compliance with the constitution, the 
 commission deemed it advisable to radically change some of its 
 provisions. The provisions of the bill relating to the subject are 
 embraced within Title XVII. It will be found by comparing those 
 provisions with the act of 1901, that they differ from it in the 
 following particulars : 
 
 1. The bill adopts the language of the constitution and im- 
 poses the tax upon the inheritance, devise, bequest, legacy or gift. 
 
 2. It reduces the amount of exemptions to one thousand dol- 
 lars, thus insuring a substantial amount of revenue. 
 
 3. It provides for the payment of expenses and refundments 
 out of the state treasury instead of the county treasury, inasmuch 
 as the state is to receive the whole tax and should therefore defray 
 the expenses of its collection. 
 
 4. It arranges sections in their natural and logical order. 
 
 5. It eliminates many provisions which were wholly unnec- 
 essary and tend only to confusion and uncertainty. 
 
 In reducing the amount of exemptions, the bill is yet more 
 liberal than similar laws of several other states. In Pennyslvania 
 it is $250, in New York and Maryland, $500 ; in Connecticut, 
 $1,000; in 'Colorado $5,000, but the tax is upon the estate as an en- 
 tirety. 
 
 If it be objected that the exemption should be a higher sum 
 than $1,000, we -reply that when the beneficiary is a father, 
 mother, husband, wife, child, brother, sister, wife or widow of a 
 son, or the husband of a daughter, or an adopted child, the rate 
 of the tax is only one per cent. It is therefore obvious that it will 
 not in any such case prove a heavy burden. It will be most re- 
 
HERTIG ON TAXATION. 253 
 
 munerative when applied to other classes of beneficiaries, for 
 then a tax of five per cent will be imposed. No sound reason can 
 be urged for imposing a tax in such cases, below the constitu- 
 tional limit of five per cent. It has been well said that "the ex- 
 tension of intestate succession to collateral relations is, under ex- 
 isting social conditions, defensible only to a very limited extent/ 1 
 Seligman, Essays in Tax, 124. The soundest reasons of public 
 policy justify a much heavier tax when estates descend to col- 
 lateral than when they descend to direct relations. 
 
 After pronounced popular approval of this method of taxation 
 and repeated action by the legislature upon the subject, it is now 
 unnecessary to discuss the wisdom of its adoption." 
 
 Mention has been made above (p. 246) of the fact that, except 
 as defaced by certain unfortunate amendments, the tax commis- 
 sion's code in so far as it relates to the taxing of inheritances 
 has become the law of Minnesota. Laws of 1902, chapter 3, 
 (House File No. 57). If the story of the short-lived Jacobson 
 amendment (pp. 235-238), buried with the code to which it was 
 affixed, affords, by reason of its eventual harmlessness, a purely 
 comic illustration of the folly and danger lurking in our hasty 
 amendments, "House File Number 57" affords a typical ex- 
 ample of the like danger carried to serious consequences, and ac- 
 tually working grave mischief in the statute book. The ex- 
 ample is all the more striking in that it is furnished by the graver 
 and more deliberate senate. "House File Number 57" was 
 reached in that body "on Special Orders" in the afternoon of 
 March loth, the last day but one of the session, and the last day 
 on which any bill could have been lawfully passed. The senate 
 then and there hurriedly adopted five amendments, no one of 
 which was really necessary, and three of which did no harm. 
 Schellbach (Rep.) of Yellow Medicine offered an amendment 
 which improved the phraseology of the bill by substituting the 
 words "legally adopted" for the cumbrous but letter-perfect 
 "adopted as such in conformity with the laws of this state." 
 Snyder (Rep.) of Hennepin offered one which softened the time 
 provisions by changing "six months" into "one year." Brower 
 (Rep.) of Stearns offered one extending the pale of near rela- 
 tions who -pay a diminished tax so as to include "grandchild, 
 nephew or niece." This is creditable to the senator's heart, and 
 invites no criticism from the head. This finishes the senate 
 amendments that bear no serious consequence. The senator from 
 Stearns made what has proved to be the serious mistake of offer- 
 ing the two other amendments. When a legislator of Brewer's 
 ability, caution and zeal in the service of the people, makes such 
 eleventh hour slip, the example ought to inspire all good legisla- 
 
254 HERTIG ON TAXATION. 
 
 tors with double caution against adopting amendments without 
 deliberation, when the gavel is about to fall. The example is fur- 
 ther intensified by an unintended and unforeseeable result, by 
 which, as it seems, "House File 57" is rendered unconstitutional. 
 I will explain : In the laws of 1902, as printed, a tax of 10 per cent 
 of the amount so distributed is put on legacies, or shares in estates 
 going to collateral relatives, whereas the constitution limits the 
 maximum to 5 per cent. As I write (May 23) it is stated in the 
 daily press that "Judge Bazille, of the probate court of Ramsey 
 county" has refused to appoint appraisers for the estate of the 
 late Emerson W. Feet, for that the inheritance tax law is uncon- 
 stitutional because of "an amendment adopted last winter" in 
 "contravention of the constitutional amendment of 1894 which 
 fixes the maximum tax at 5 per cent." And in explanation 
 thereof the press quotes that level-headed representative, W. B. 
 Anderson (Rep.), of Winona, as saying that "the amendment 
 which nullifies the inheritance tax law was slipped into the bill in 
 the senate and in the rush of business on the last day, the uncon- 
 stitutional feature was not noticed." 
 
 At any rate, when the senate amendments were adopted, the 
 bill was sent to the house with the request that it concur therein ; 
 and as the very last thing that the house did except to refer a bill 
 of seventy-five dollars and to adjourn for the fun, horse-play and 
 no business of the next and last day was to vote "on the re-pas- 
 sage of the bill as amended," it was so re-passed and without 
 deliberation, by yeas 83 and nays 2, the latter being Hickey 
 (Dem.) of Ramsey, and Rider (Pop.) of Otter Tail. 
 
 Now the two fatal Brower amendments tend indeed to spoil 
 the bill as a revenue producer; but except as error of the clerks 
 may have that effect, they do not render it unconstitutional. The 
 bill, as first passed by the house did not embody the tax commis- 
 sion's recommendation to tax all inheritances of a value exceeding 
 $1,000.00 upon their excess in value above that sum, but in lieu 
 of $1,000 as the exemption limit, fixed unwisely, as I believe 
 that limit at $5,000.00. The house 'also had further damaged the 
 bill as a revenue-yielder by taxing legacies going to near rela- 
 tions at one-half of i per cent., instead of the I per cent, recom- 
 mended by the commission. Brower s two amendments, as per 
 the official journal of the senate of March loth, by twice substi- 
 tuting "ten" for "five", once in section i, and once in the "last 
 line" of section 2, merely raise the $5,000 exemption, just men- 
 tioned, of the house to the final senatorial exemption of $10,000. 
 The fatal and unconstitutional "10 per centum" appears indeed 
 in section 2, but is not in the "last line" of said section ; hence 
 while it must have got in as a result of the Brower amendment it 
 
HERTIG ON TAXATION. 255 
 
 must also have got in by error of the engrossing clerk or other 
 error; only one "ten" is substituted for one "five," in section 2. by 
 the B rower amendment, and that in the "last line," whereas 
 in the law as printed, two "tens" are substituted in section 2. for 
 the like number of "fives," one of which stood before "thousand" 
 in the "last line," and one before "per centum" in a preceding- 
 line. 
 
 I now discuss the Brower amendments in their natural and 
 foreseeable results. The exemption from inheritance tax,, as is 
 well pointed out by the commission, does not attach to the estate 
 as a whole, but attaches separately to each bequest or legacy that 
 may be carved out of any decedent's estate. It follows, therefore, 
 taking for example an estate of $50,000, to be divided amongst 
 five heirs, that out of such estate so divided, the state of Minne- 
 sota, under "House File Number 57" as finally passed would 
 receive no inheritance tax whatever. Such large exemption loses 
 literally a golden occasion to extend the practical scope of Ben- 
 tham's maxim, "All taxes ought to be taxes upon affluence." If 
 the near relatives of him who leaves an estate aggregating even no 
 more than $20,000 a/e not better, far better, fitted to take a win- 
 ning part in the "struggle for existence" than the average "father, 
 mother, husband, wife, child, brother, sister, grandchild, nephew 
 or niece," etc., for each and every one of whom, and for as many 
 of them as share in any one estate, "House File 57" now exempts 
 $10,000 from inheritance tax, if, I repeat the near relatives of a 
 decedent whose whole estate amounts to no more than $20,000 are 
 not better equipped for life's struggle than the average person 
 who has no present, no immediate, and probably no prospective, 
 interest in an estate in probate or to be probated, then, in the 
 great majority of cases, it is because such near relatives have 
 neglected the good opportunities generally afforded to them in the 
 circle in which their decedent moved. The Local Hog and the 
 Skinflint proper, in villages and small cities, seldom acquire great' 
 wealth. But all things go by comparison, and they are rich for 
 their time and place. When in the course of nature, they pass 
 into the category of decedents, their estates are found to be quite 
 moderate, measured by the standard of wealth in large cities and 
 by the standard of "House File 57." Yet such decedents are cer- 
 tainly of the righteous who in their lifetime are never seen "for- 
 saken, or their seed [at any time] begging bread." Such deced- 
 ents were very often, if not always, the typical tax-dodgers in the 
 respective places where they lived. A business man from one of 
 our smaller cities was talking with me last winter about the dras- 
 tic features of the tax commission's now buried code. "Tom 
 ," said he, mentioning the typical skinflint in his town, 
 
356 HERTIG ON TAXATION. 
 
 would swear a hole through boiler iron, before he'd 'cough up' 
 his money and notes for taxation." When Tom dies, let the state 
 come at least partially into its own ; it will not do so, as House 
 File 57 now stands ! 
 
 Rome, under the Caesars, had an inheritance tax ; but Bentham 
 may be safely put down as the father of it in its modern form. 
 Under the title of Supply Without Burden, or Escheat VICE Tax- 
 ation, Bentham published in 1795, a pamphlet printed in 1793, but 
 withheld for a time from the public. It is of advantage to com- 
 pare the masterly boldness of the original with the timidity of the 
 remote, and often of their source unconscious, copies which do 
 duty in the American states as inheritance tax laws. I restate 
 in my own words, except as indicated by quotation marks, the 
 main propositions of Bentham, neglecting those relating to en- 
 tails, the property of peers, etc. These propositions are : 
 
 1. Appropriate "to the use of the public all vacant succes- 
 sions, property of every denomination included, on the failure of 
 near relations, subject only to the power of bequest, as herein- 
 after limited." [Near relations in Bentham's sense mean those 
 "within the degrees termed prohibited," that is those with whom 
 the decedent could not have lawfully intermarried.] 
 
 2. Near relatives childless, and without prospect of children, 
 for example females aged 48 ; males aged 60, if to such male no 
 child shall have been born in the five years last preceding the 
 distribution of his decedent's estate; and males aged 55, if mar- 
 ried to a wife above 48, all these, in lieu of absolute title to their 
 share of the estate, shall enjoy such share "in the shape of an 
 annuity for life." [Such annuity, if the proposition were to 
 become law in the American states, would be the annual income 
 of the value of such share as measured by the current rate at 
 which the state could borrow money. The state, as residuary own- 
 er of the legacy would, of course, pay to such childless beneficiary 
 such annual income during the remainder of his or her life.] 
 
 3. As an appropriate "farther help" to the state, claimants of 
 estates, though claiming as "near relations" should be required to 
 divide their shares equally, one-half to them and one-half to the 
 state, where such claimants are not likely to have grounded their 
 plans of life "upon the expectation of the succession" as if they 
 stand to the decedent in the relation of uncle or aunt, grand- 
 father or grandmother, or "perhaps" nephew or niece. 
 
 4. Modify the power of bequest or disposition of property 
 by will, so that testators shall 'have the right only to so dispose 
 "of the half of whatever property would be at present subject to 
 that power." Wills under such a law, if they should purport to 
 dispose of all the testator's property, or should by any artifice at- 
 
HERTIG ON TAXATION. 257 
 
 tempt such entire disposition, would be so construed as to give 
 effect to the will pro tanto, that is, make it valid to dispose of half 
 the testator's property, cutting all legacies in two half to the 
 heirs, half to the state. 
 
 Bentham's plan of administration was to convert the whole 
 fund in which the state should become thus interested, into cash. 
 An officer of the crown [here a state officer] should manage from 
 the outset any estate in which the public should be co-heir. 
 
 "Many writers (Blackstone for one)," remarks Bentham's 
 editor, "have treated the right of bequest with very little cere- 
 mony ; many writers, without having in view such public benefit 
 as is here in question, have been for abolishing it altogether." He 
 mentions, as one of these, "the author of the code Frederic, 
 * * * chancellor to the late King of Prussia." 
 
 The Jacobson bill, "House- File 56" mentioned early in this 
 chapter as having been rushed through the House only to be killed 
 in the Senate, deserves further mention. Around it clustered the 
 hopes of those who have a keen consciousness of the injustice that 
 grows out of pre-empted and prestolen opportunities, but who will 
 pardon me, I think if they read this book through for saying 
 that they set about redressing such injustice in a blind and blun- 
 dering way. The Jacobson bill adopted in substance those fea- 
 tures of the commission's rejected code which relate to public 
 service corporations and the creation of a permanent tax com- 
 mission with slight administrative changes to allow for the fact 
 that, as contemplated by it, there would be no state board of re- 
 view and no county supervisor of assessments. An original fea- 
 ture of the bill was a provision for laying a tax of 5 cents "upon 
 each gross ton of iron ore hereafter mined during any year in this 
 state, which tax shall be in lieu of all other taxes upon such ores 
 and the property actually and necessarily employed in the pro- 
 duction thereof," the revenue yielded by such tax to be distri- 
 buted "between the county and the state in the same proportion as 
 the proceeds of taxes upon real estate are distributed." 
 
 In commenting upon Purdy's speech I quoted (p. 229, supra), 
 the basis laid down by the commission in its proposed code, sec. 
 83, for ascertaining the taxable value of franchises. This which 
 is the heavy ordnance of one win^ of radical tax reformers, was 
 also the heavy piece in the Jacobson battery. No large body of 
 voters seemed ready to cry out against taking any sort of a shot 
 at franchises. Indeed, in one sense, to fire and miss is to play a 
 better game than to fire and hit. In practical politics, the firing 
 shows good intent, and the blame for missing: can g^enerallv be 
 laid on some one else. Besides, the enemy so fired at and missed 
 
258 HERTIG ON TAXATION. 
 
 may find it expedient to remain neutral about election day for fear 
 of more effective shot next time. 
 
 One limitation on the effectiveness of the Jacobson battery 
 resulted from giving it a hampering ally in the proposed tonnage 
 tax on ore. This insured the opposition of the Duluth delegation, 
 and in the end of various senators from other districts on the 
 twofold ground that such tonnage tax is of spurious or doubtful 
 constitutionality, and that the residents of the iron district, where 
 alone it would apply, are opposed to it. In its rapid passage 
 through the House, the tonnage tax was signaled as a thrust at the 
 United States Steel Corporation, commonly known as the "steel 
 trust." The, Minneapolis Times of March i, describing its pas- 
 sage by the House, said : "The tonnage tax provision was fought 
 by the iron and steel lobby" but without mentioning the home 
 or personnel of such lobby. Jacobson who jammed his bill 
 through the House between 10:30 a. m. and 4 p. m., February 
 28th, said among other things in the vehement arguments with 
 which he supported it: "I introduced this bill to show where the 
 opposition to tax reform comes from. It comes from the public 
 service corporations, and from the great steel trust, fighting be- 
 hind pretended sympathy for widows and orphans, workingmen 
 and small depositors, and in behalf of 'the poor farmers.' They 
 could fight under that cover a few days ago, when 'House File 
 Number One' was on ; they can't do it under this bill. You were 
 not honest when you fought this way, and your vote now will 
 prove it. My bill will not hurt the farmer or drive the elevators 
 out of Duluth, and you can't hide under cover of that argument. 
 You've got to come out in the open and fight fair. The tonnage 
 tax will remove the mines from local authorities, and justice will 
 never be secured until they are so removed." He took flat issue 
 with his former friend State Auditor Dunn who opposed the pro- 
 posed tonnage tax and favored assessing the mines on an ad- 
 valorem basis ; was confident that, if this his bill should become 
 law, the increased revenues from it and the raise of the gross 
 earnings tax on railroads to four per cent, successfully cham- 
 pioned by him the previous winter would enable the state to take 
 care of its institutions and pay the running expensesof state gov- 
 ernment without levying in the counties a single dollar of taxes 
 for the state treasury. 
 
 Laybourn of Duluth, led the opposition to the bill. His chief 
 proposition was that the tonnage tax would be a heavy and unjust 
 blow against St. Louis county and its leading industry, the min- 
 ing of iron ore. He pointed out the newness of this industry and 
 the recent birth of the immense values that now attach to many 
 of the iron properties. A very handsome increase in assessed 
 
HERTIG ON TAXATION. 259 
 
 values had been made at the last assessment in 1900, and he in- 
 doised the statement and prediction of -State Auditor Dunn that at 
 the next assessment the coming- summer, the value of the iron 
 mines would be fixed at around $30,000,000, a very good valua- 
 tion as compared with other real estate properties. Besides, the 
 tax commissioners in their Report, p. 43, had failed to recommend 
 a tonnage tax because of its doubtful constitutionality, and most 
 lawyers were flatly of the opinion that such tax would be held 
 unconstitutional. Moreover, many towns with flourishing schools 
 have been built up out of the iron industry. Their chief revenue 
 is derived from an cud valorem tax on mines. Impose a tonnage 
 tax, and it immediately becomes discretionary with the mine 
 owners to shut down their mines, and so the product ceasing, local 
 revenues from taxes would cease. As it is now, iron-mine owners 
 must pay a fixed tax according to each biennial assessment, and 
 people living in the iron districts know that this revenue is cer- 
 tain and sure. They know that with it they can maintain their 
 schools and raise other needed local revenues. St. Louis county 
 had done her share in yielding revenue to the state treasury 
 more than her share in fact; and here Laybourn made an ex- 
 haustive statistical showing on that proposition. "Certainly," he 
 urged, "St. Louis comity deserves a full hearing and fair treat- 
 ment at the hands of the state." 
 
 ROBERTS : "Just here is where the gentleman from St. Louis 
 county differs from the rest of this House. We have got to look 
 upon St. Louis county as a rotten pocket borough which is owned, 
 with all of its public officials by the United States Steel trust." 
 (Laughter and applause.) 
 
 LAYBOURN : "The gentleman from Hennepin impugns the 
 standing of every person, who lives in St. Louis county. I de- 
 nounce as untrue and unjust the statement that the LTnited States 
 Steel trust owns St. Louis county." 
 
 JOHNSON of Hennepin : "How much property does the steel 
 trust own in St. Louis county?" 
 
 LAYBOURN : "I do not know." 
 
 JOHNSON: "I know one thing; in my bridge business I've 
 got to pay the trust twice as much for iron and steel as was paid 
 before the trust was organized. This charge is based on whole- 
 sale watering of stock, and now I want to know how much of our 
 state is owned by this enormous trust. I propose now to vote 
 for this bill in order to reach this great trust." 
 
 More than one member associated St. Louis county and the 
 steel trust top-ether, and assumed that what one wanted meant 
 what both wanted. Dobbin of Hennepin, took the reasonable 
 
260 HERTIG ON TAXATION. 
 
 ground that it is right in principle to tax the income and earnings 
 of corporations, and hence supported the bill. He, however, 
 failed to allow for the special facts which militate against a ton- 
 nage tax on Minnesota's iron mines facts brought out with over- 
 whelming force in the arguments before the Senate and its com- 
 mittee. Armstrong of Hennepin, in supporting the bill, men- 
 tioned as a fact needing the special attention of the legislature 
 that the gas company of Minneapolis, pockets dividends on $800,- 
 ooo of stock and interest coupons on .$3,000,000 of bonds. The 
 debate was further enlivened by remarks of Jacobson, growing out 
 of a personal tilt with State Auditor Dunn. That officer's fiscal 
 policy is opposed to the tonnage tax, and had been expressed with 
 great vigor, and with, for some, convincing weight. Jacobson 
 did not attack Dunn's character. "I have," he said, "the utmost 
 respect for State Auditor Dunn, and he is entitled to a great deal 
 of credit for a great many things that he has done." But his at- 
 tack was rather along the line of laurel-clipping than laurel- 
 stripping. ''Many of the reforms," said Jacobson, "for which 
 Dunn now claims credit were enacted not by his help, but in spite 
 of his opposition." Jacobson was in fact paving the way for his 
 own candidacy to the office of state auditor ; and while Dunn had 
 given out that he would not stand as a candidate for re-election, 
 it was known that he would use his strength in favor of one of his 
 deputies. Both of these gentlemen are good men, and have 
 sturdy characters. Neither one of them would fail to carry out 
 the people's mandates, to the extent that the same should be 
 clearly given to either to execute. But in those tangled thickets 
 through which the people's will has not yet cut clear paths, each, 
 on his own account, is likely to do energetic and somewhat gro- 
 tesque, though entirely pardonable, grubbing. Enlightened men- 
 tion of the personal bias, so apt to cloud 'great issues, is always in- 
 structive to the reader, to say nothing of the advantage it may be 
 to the actors and their constituents. 
 
 The ingenious Laybourn nagged Jacobson with a motion for 
 a recess of fifteen minutes and the floor of the House to State 
 Auditor Dunn meantime, to make a counter-argument on the 
 tonnage tax. 
 
 JACOBSON : "In place of a recess to allow Dunn or any other 
 man a chance to take up our time, I shall move the previous ques- 
 tion !" 
 
 LAYBOURN : "That shows the high-handed methods of the 
 author of this bill. He admits the weakness of his case when he 
 refuses to give the state auditor a hearing." 
 
 JACOBSON : "We shall vote this bill up or down here and now, 
 if we have votes enough to do it ; and as to State Auditor Dunn, 
 
HERTIG ON TAXATION. 261 
 
 [fairly shouting] we will settle our hash outside of this house." 
 [Laughter and applause.] 
 
 This wrangle ended in Laybourn dropping his motion for a 
 recess and Jacobson his motion to move the previous question ; 
 and the debate continued to a later hour in the day. 
 
 Jacobson in closing his argument on the bill, warmed, as a 
 Minneapolis Times reporter expressed it, to "a red-hot roast on 
 the iron ore interests of St. Louis county." With voice raised 
 "to the highest pitch, he shouted" : 
 
 "They are robbing the state of our wealth. When they have 
 taken away the iron ore, all we have left is a h^ole in the ground. 
 
 "I admit that the real estate taxes on the farming interests are 
 not what they ought to be, [that farms are assessed too low] ; 
 but I tried my damnedest a few days ago to rectify it by passing 
 the tax code, which this House voted down. [Great laughter.] 
 You vote this bill up or down now, and you make for yourselves 
 a record that can never be rubbed out." 
 
 The bill was then put to vote, the roll was called and "there 
 were yeas 84 and nays 25." The nay votes were given by : 
 
 Alford (Rep.), Barteau (Rep.), Berg (Rep.), Bury (Rep.), 
 Dunn (Rep.), Ferris (Rep.), Fust (Dem.), Gainey (Dem.), 
 Hemsted (Dem-Peop.), Hickey (Dem.), Hillory (Rep.), Holm 
 (Rep.), Hurd (Rep.), Laybourn (Rep.), Miller ("Rep.), Neu- 
 bauer (Rep.), Noyes (Rep.), Ocobock (Rep.), Phillips (Rep.), 
 Plowman (Pop.)/Pugh (Rep.), Rich (Rep.), Sikorski (Dem.), 
 Smith (Rep.), Wilcox (Rep.), 19 Republicans and six non- 
 Republicans. Mallory (Rep.), of the Duluth delegation was un- 
 avoidably absent, but would have voted against the bill. Others 
 absent were Dagget (Dem.), sick, and Lane, Mark, G. Peterson, 
 Potter, Ryan, Schurman and Washburn, ("Republicans). 
 
 It was now (March i) "up to" the Senate to show its colors 
 in the matter of taxation. It had been leisurely and properly 
 awaiting the action of the House, meantime laboring through its 
 own committee on taxation and its judiciary committee to fit it- 
 self with satisfactory views on the whole subject, including 
 amendments to the constitution. It was evident from the outset 
 that the Senate would not imitate the House and jam the. bill 
 through. It was said, that some members of the House who 
 voted for the bill felt that they had been over-hasty in railroading 
 through so important a measure in three and a half hours. True 
 the franchise tax and the creation of a permanent tax commission 
 had been considered before, but the tonnage tax was entirely new. 
 They had, from some quarters, to endure the jibe of having so 
 feared that they would have nothing to show for the session's 
 
362 HERTIG ON TAXATION. 
 
 work that at the crack of JacobsorTs whip "they hurried into line 
 like a herd of frightened cattle." 
 
 When the bill was reported to the Senate, Thompson (Rep.), 
 of Fillmore, moved that the rules be suspended, the bill placed 
 upon general orders, and discussed immediately in committee of 
 the whole. Baldwin (Dem.), of Duluth, promptly and vigor- 
 ously objected, dwelling with special emphasis on the doubtful 
 constitutionality of the bill, the certainty that collection of the ton- 
 nage tax would be contested on that account, and the disaster 
 to St. Louis county for it to have tied up its chief item of taxes 
 for several years pending the decision on constitutionality. 
 Dougherty (Rep.), of Duluth, and McKusick (Rep.), of Pine, 
 took the floor in support of Baldwin's protest. McCarthy 
 (Rep.), of Itasca, avowing that he favored the bill and was ready 
 now to vote on it, took the judicious ground that as regarded the 
 tonnage tax there was a principle of local self-government at 
 stake ; that it was due to the members from St. Louis county in a 
 matter of such far-reaching importance to their locality to give 
 the bill deliberate consideration and not rush it through. Cour- 
 tesy would require this, even were there no deeper principle in- 
 volved. Somerville (Rep.), of Brown, supporting also Bald- 
 win's protest, took the ground that in any event, the bill needed 
 recasting ; that not the tonnage tax alone needed careful consider- 
 ation, but also the tax-commission provisions of the bill ; that the 
 bill as rushed through the House virtually imposed upon its pro- 
 posed tax commissioners no duties except the drawing of their 
 salaries. That earnest, but not fanatic, tax reformer, Snyder 
 (Rep)-, of Hennepin, favored referring the tonnage-tax portion 
 of the bill to the judiciary committee, and urged that the other 
 portions of the bill be considered in committee of the whole. 
 Horton (Rep.), of Ramsey, made a vigorous and spirited attack 
 upon the bill as a whole and upon its details ; upon it as violating 
 the spirit and intent of the real purpose for which the special ses- 
 sion had been called, upon it as a personal bill to launch a personal 
 boom ; upon it as purporting to crack a loving paternal whip 
 over one of the largest of St. Louis county's interests, yet not 
 in fact for love of St. Louis county, but in the hope that the noise 
 of the whip would be greeted with noisier applause ; upon it as in 
 fact a once-killed bill which no parliamentary body ought now to 
 let stalk about in its grave clothes and the added trappings of a 
 faked resurrection ; upon a bill whose many outrageous and unjust 
 provisions could be matched only by the now proposed procedure 
 of rushing it through this Senate with less consideration than that 
 given to a dog-tax bill. Ives (Dem.), of Ramsey, the humorist 
 of the Senate, objected to giving this bill the cruel but not unusual 
 
HERTIG ON TAXATION. 263 
 
 treatment of whip and spur. To' push on the lines, he thought, 
 would just suit the constitution of the bill, and might save it from 
 a part of the jar it would surely experience should it ever get on 
 far enough to stack up against the constitution of the state. Be- 
 sides he believed in fair play. He had noticed that whenever a 
 bill came up from the House bearing a certain hall-mark, it was 
 always pressed to go on special orders, and be jockeyed through 
 with whip and spur. What was the matter with rotation in rough- 
 riding? Sheehan (Rep.), of Ramsey, capped the wit of his Dem- 
 ocratic colleague by stating that he understood the creamery peo- 
 ple felt slighted that their butter- output was not included in the 
 five cent tonnage tax, and that they wanted a hearing. Knatvold 
 (Rep.), of Freeborn, believing that the virtue which hesitates is 
 lost, favored immediate action. "If," said he, "the bill is held up 
 here a week, there won't be a shred of it left." "Why not?" cried 
 a number of senators. 
 
 SCHALLER (Dem.), of Dakota: "Isn't this Senate honest 
 enough to pass the right kind of bill next week ?" 
 
 KNATVOLD : "A few days' delay has killed many a bill." 
 
 BALDWIN : "The gentleman from Freeborn has attacked the 
 honesty of this body. It seems to me that he has nearly tran- 
 scended the limit." 
 
 KNATVOLD: "I have not attacked the honor of the Senate. 
 I only meant that enough votes might be bought to defeat a bill : 
 such things have happened." 
 
 McGovERN (Dem.), of Waseca, thought the tonnage tax sec- 
 tions should go to the judiciary committee for a formal report as 
 to their constitutionality. For himself, they were clearly uncon- 
 stitutional. 
 
 WILSON (Rep.) of Hennepin : "It may be conceded that the 
 tonnage-tax sections are of doubtful constitutionality ; but courts 
 still adhere to the familiar legal principle that where in doubt 
 whether a statute is or is not constitutional, they resolve that doubt 
 in favor of the statute and uphold the same." 
 
 Finally, on the substitute motion of Snyder, the bill was re- 
 ferred to the tax committee, with instructions to report not later 
 than March 5th. This committee held well-attended public hear- 
 ings on March 3d and 4th, when a number of speakers discussed 
 the franchise and tonnage tax features of the bill. 
 
 State Auditor Dunn was the first speaker at these hearings, 
 and naturally opposed the bill his opposing views on the tonnage 
 tax being already well known. "This feature," he said, "is clear- 
 ly unconstitutional. The bill is wrong in principle, and violates 
 the mandates of the constitution that all taxation shall be as near- 
 ly equal as may be." 
 
264 HERTIG ON TAXATION. 
 
 ''When, some two weeks ago," he said further, "I appeared 
 before the tax committee of the House, I did not quite speak my 
 full mind. I should have liked to say, and think now I ought to 
 have said: 'Pass the real estate provisions of the tax commis- 
 sion's bill, drop the rest of it, pass some constitutional amend- 
 ment, and then, for God's, sake go home!' [These real estate 
 provisions are embodied in the Anderson bill ''House File 58," 
 duly passed as said above.] Friends of the tax code, however, 
 dissuaded me from coming out against any particular features of 
 the bill. I felt that if out and out tax reform is to come, it must 
 come through a legislature elected on that isssue. [A very saga- 
 cious remark.] When the tax code of the commission was draft- 
 ed and shown to me, I told my friends that it would not pass ; that 
 it contained too much new and radical matter to be adopted all 
 at once, if at all. I am bound to admit, moreover, that both hu- 
 man nature and the official experience of American states is 
 against the full collection of taxes on personal property. Human 
 ingenuity cannot frame tax laws that will force people to pay 
 taxes on personal property to the extent required by the letter 
 of the present law and of the state constitution. I am a firm be- 
 liever in an income tax. 
 
 "The Anderson bill [House File 58] will be a great thing for 
 this state. Few persons realize the extent of the tax-dodging, 
 real-estate tax-dodging, that is practiced under cover of law, in 
 the northern half of the state. One thiid of these taxes are never 
 paid. You have passed five 'forfeited' tax bills in ten years." 
 [Meaning clearance sale bills of lands "forfeited to the state," as 
 described above, p. 247], 
 
 Returning to the tonnage tax, he described the substantial 
 progress that had been made in taxing the iron mines under laws 
 enacted at previous sessions. Chapter 134 of the laws of 1897, 
 empowering the state board of equalization to increase the assess- 
 ment of corporations, firms or individuals, as well as 'Chapter 
 235, of the laws of 1899 prohibiting the removal of ores until 
 after payment of accrued taxes registered a big advance in iron- 
 mine taxation. The state board had already got the assessed 
 values of the mines up to $13,000,000. This year there would be 
 a new biennial assessment, and he was confident that the state 
 board would bring the valuation way above that figure. The 
 state auditor's office had already done good work in this matter, 
 because he, the speaker, had used horse sense and a part of the 
 small contingent fund allotted to his office to send a special ex- 
 aminer into the iron district to report on values. If the legislature 
 would appropriate v$2,ooo.oo to his office to eniptov the right ex- 
 pert on mining values, he pledged his word and his experience, 
 
HERTIG ON TAXATION. 265 
 
 that the people would not complain henceforth that the iron mines 
 did not pay their full share of taxes ; and they wouldn't be able 
 to hold their taxes up for a term of years while the courts were 
 hammering at the constitutionality of it ! Non-productive mines, 
 or mines held for speculation, would entirely escape taxation 
 under the Jacobson bill ; and in years when, to use Carnegie's 
 figure that "iron is either prince or pauper," the iron and steel 
 trade shall seem like a pauper compared to its present princely 
 business, the mining of ore in Minnesota would bo so curtailed that 
 local revenues in the iron districts would fall far short of local 
 needs. [Well said! Iron mine assessments now $30,000,000.] 
 
 Attorney J. L. Washburn of Duluth, who was the next speak- 
 er, eloquently attacked the tonnage tax at all points : 
 
 Because it is repugnant to the constitution as it was, and re- 
 pugnant to the amendment of 1895, under which it purports to 
 be drawn ; because it is repugnant to the principles, and lays the 
 ax at the root of local self-government ; because, aside from ques- 
 tions of constitutional law, the taxation it proposes is upon an un- 
 equal, unjust and unenduring basis ; because the people of Duluth 
 fear it as a new beginning of the old injustice, whereby the state 
 under a former tonnage tax law, held unconstitutional, had sought 
 to turn all of the tonnage revenue into the state treasury ; because 
 under the proposed tax, local revenues would be uncertain and 
 fluctuating ; because the tonnage method of taxing mines has been 
 tried elsewhere, proved a failure, and been universally abandoned ; 
 because the present method of taxation (assessment of mines as 
 other real estate is assessed) is efficient and capable of producing 
 a certain and sufficient revenue without injustice or inequality; 
 because the proposed tax militates against the independent miners 
 of low grades of ore, against mining on state lands, and against 
 local manufacture of iron from the ores of the state, (and this for 
 the reason that a tax of 5 cents per ton on high and low grade ores 
 alike, would exclude our low grade ores from use) ; because it 
 visits with injustice the taxpayers of the most profitable subdi- 
 vision of the state, and sets the hand of government against large 
 and important interests now profitable to the state and its citizens ; 
 because, in the belief that the proposed legislation is void, it is 
 certain to be resisted in the courts, and delay for a long time the 
 collection of needed taxes that would otherwise be collected at the 
 usual time. 
 
 He further said that the iron ranges run about 125 miles, east 
 and west, and include five little cities and many villages. These 
 were a unit against the proposed tax. It was plain to all the peo- 
 ple there that the proposed tonnage tax, should it go into effect, 
 would substitute fear and depression for their present hope and 
 
266 HERTIG ON TAXATION. 
 
 confidence. These cities and villages each knew that their reve- 
 nues , nay their very existence would be subject to the caprice of 
 the mine owners, if the latter could at any time choose what mines 
 they should please to let lie idle and untaxed. What could be 
 more subversive to local self-government than a combination in 
 the legislature which should successfully fasten upon a limited 
 area of the state a mode of taxation which the citizens of that area 
 to a man repudiated ? He had been told that the steel trust, 
 which owned most of the mining properties and has ore to last it 
 for 100 years to come was doing nothing regarding this bill. 
 He could well believe it ; if it should work to the trust's advantage, 
 it could quietly pay the ore tax and keep still ; if the trust people 
 didn't like its operation, they had in his opinion a sure thing in 
 seeking to have the courts hold it unconstitutional. Meanwhile 
 the people would be the real sufferers from this crude and un- 
 called for experiment in legislation. He believed the action which 
 this Senate would take would prove the wisdom of having two 
 branches of the legislature. 
 
 His apology for the fear expressed that there was danger of 
 an attempt to enrich the state treasury by robbing Duluth of part 
 of what should be justly her local revenues lay in the fact that 
 he was a frank, plain-spoken man ; that the fear existed, and had 
 its ground in past legislation and in the reckless haste with which 
 this bill, as if per pneumatic tube, had been shot through the 
 House into the Senate ; and, he might have added, in the Sivright 
 bill, for a constitutional amendment, mentioned more fully on p. 
 267, below. 
 
 I feel that a book on taxation is imperfect if it fails to notice 
 the antagonisms in tax matters, between the different parts of the 
 same state. Though, in the American states, that part of the 
 taxes which goes into the state treasury is small as compared with 
 the parts that remain for local use in Minnesota about one- 
 eighth of the taxes levied by local boards is for the state treasurv 
 yet this small part is amply sufficient to inspire zealous effort on 
 the part of the different counties to vie with each other before the 
 state board of equalization to cut down their aggregate assessed 
 values and thereby whittle a thin paring off their state tax. Be- 
 cause of the large special interests of Duluth, perhaps in part also 
 by survival of the nagging habit inaugurated long years ago by 
 J. Proctor Knott in his burlesquing panegyric of Duluth, that 
 city and her county of St. Louis still come in for an undue share 
 of half-earnest half-nagging supervision at the hands of the legis- 
 lature I should say attempts at such supervision by some part of 
 the legislature, as lately at least, no successful attempts of this 
 kind have been launched ; and we have alreadv seen that <:he same 
 
HERTIG ON TAXATION. 267 
 
 House which was stampeded on the tonnage tax, showed its good 
 will to Duluth in its entire willingness to continue in her favor 
 the unconstitutional vessel tax, though, as the state treasury gets 
 half of the same, the half now amounting to about $5,000.00 per 
 annum, while in 1894, the last year of the ad valorem tax on ves- 
 sels, the total tax collected on Duluth shipping was $3,038, of 
 which the state only got an eighth or thereabouts, it is plain that 
 it would not be in the best of taste for the rest of the state to 
 twit Duluth as to the enjoyment of unconstitutional favors. The 
 spirit of fair play, as well as of reform taxation, is now abroad, 
 and I think may be counted upon to ward off serious injustice 
 from particular localities. The spirit of fair play was amply suf- 
 ficient at the special session, to kill the unjust bill for a constitu- 
 tional amendment offered in the Senate by Sivright (Rep.), of 
 McLeod, authorizing the legislature, among other grants of pow- 
 er, to make such disposition as it should see fit of the taxes col- 
 lected from iron mines. This bill was promptly killed by the 
 judiciary committee of the Senate. The right of the state at large 
 to control any particular city or locality is, of course, as full and 
 flexible as the people in declaring their organic law, or constitu- 
 tions, choose to make it ; the discreet exercise of this right is quite 
 another matter, and involves the nicest and most delicate functions 
 of statesmanship. 
 
 When Washburn had finished his very effective speech, Alfred 
 Merritt, also of Duluth, and known as having had very large, and 
 as having yet some mining interests not in the steel trust, was 
 called before the committee and made a frank, almost cynically 
 frank, statement 'of the helpless position of the independent mine 
 owner ; he can mine ore as cheaply as any one, but to get it from 
 mine to market there's the rub. "The independent mine owner 
 has ceased to exist," said Merritt ; "he may claim to exist, but the 
 existence and the name of 'independent' are idle mockeries. The. 
 people who are making a profit out of iron mines own, or can 
 'pull' the ore railways, the lines which carry iron ore from the 
 mines to the clocks. Unless an owner is connected with or inter- 
 ested in one of these railways, he cannot ship a single pound of 
 ore to Cleveland at a profit. Take a case in point. A million 
 tons of ore from one mine was sold in Cleveland last season at 
 $2.26 per ton. Thirty-five cents per ton was paid as royalty, 
 eighty cents for railway freights from mine to dock, seventy cents 
 for lake freights, 55 cents for mining expense, and from 10 to 15 
 cents for insurance. Total $2.50 to $2.55 per ton. If these had 
 been honest charges, the loss on that shipment alone would have 
 been $250,000. But instead, a heavy profit was made because of 
 rebates paid by the carriers. Titles in fee to independent mine 
 
'268 HERTIG ON TAXATION. 
 
 property are now not worth a dollar because of the discrimina- 
 tion in ore rates. I have disposed of nearly all I owned, an-d am 
 trying to get rid of the rest before the situation is generally 
 known. Some of .the owners used to think they were independ- 
 ent, but they were compelled to quit. There are none now for this 
 bill to injure." 
 
 The smaller public service companies of the state now found 
 a voice to protest in their interest against the proposed franchise 
 tax. To hit them with an assessment of all their tangible personal 
 property, all of their real estate, then add up the value of their 
 outstanding bonds and stocks, and deducting therefrom the as- 
 sessed value of their personal property and real estate, assess the 
 difference as the value of their franchises, would, argued S. Liver- 
 more, of Winona, and manager of a company there, take in total 
 annual taxes 21 per cent of the gross earnings of his own com- 
 pany. He had figures from a number of other public service 
 companies in the smaller cities of the state showing that, as ap- 
 plied to them, the like taxation would take from 8 to 38 per cent, 
 of their gross earnings. 
 
 At this point I took the floor for five minutes, and proclaiming 
 robust skepticism as to the bill ever being enforced to the extent 
 or in the spirit contemplated by its supporters, predicted that its 
 immediate effect, if enacted would be a scare effect which would 
 check for awhile the carrying out of contemplated public service 
 enterprises in various portions of the state, particularly the build- 
 ing of electric roads, one of which I mentioned as likely to be 
 built in Senator Buckman's district, and on which a halt had been 
 called on account of this very bill ; that after' a time the wind 
 would be tempered to the attempted to be shorn lambs, or, if gen- 
 tlemen preferred, the assessor's ax would be found very dull 
 against the attempted to be mangled wolves, who would find a 
 way to get their full measure, or more, of protection and shelter, 
 whereupon things would go on much as they do now ; that if any 
 dazzling profits had been made in the operation of public service 
 companies in the smaller cities of Minnesota, I was not aware of 
 them, though I spoke from some personal experience and consider- 
 able further knowledge in that line, but without any personal 
 pecuniary interests to be in any wise affected by this bill ; that 
 one gentleman whom I knew had some years ago installed in one 
 of the smaller cities an electric street car line, comprising a little 
 more than three miles of track laid with 30 Ib. steel rails, power- 
 house, engine, dynamo, cars, etc. at a total expense of $53,- 
 ooo.oo ; that he operated the same for two or three years at an 
 average loss of about $10.00 per day, and then scrapped the plant, 
 offering the material and machinery thereof at $10,000 to who- 
 
HERTIG ON TAXATION. 269 
 
 ever would buy ; that, while I did not hold this case forth as 
 typical, it was undoubtedly true that more money in the aggregate 
 had been lost than had been gained by public service companies 
 in the smaller cities ; that the practice in this state with regard 
 to the taxation of such companies in such cities had been to ob- 
 serve the law in form, and completely violate it in substance,, by 
 approving a valuation which would yield a tax that might be 
 compared to a not unreasonable annual license fee ; that all statu- 
 tory, or written, law is no more than its letter modified by custom ; 
 that a gross earnings tax, discreetly and expertly graded, is the 
 only good way to tax public service companies ; that the Jacob- 
 son bill, if construed to half the extent of its letter, would certainly 
 confiscate the smaller public service companies ; that any tax, in 
 so far as it is not a just income tax in effect, if not in letter, is 
 a confiscatory tax ; that, with the present temper of the people 
 and of their tax officials, any tax code let alone long enough to 
 have custom give it a settled construction becomes merely a ma- 
 chine to levy and collect income taxes ; that a shining illustration 
 of this is the tax on incorporated banks, seemingly and con- 
 fessedly a high tax, and in fact partially confiscatory on' a new 
 bank, though the rule in this state is to assess shares at only 50 
 per cent, of their book value ; that the bank tax would in fact 
 drive all incorporated banks out of business, if it were an ad 
 valorem tax at current rates on fifty per cent, of the bank's entire 
 assets, instead ,of being as it is only 50 per cent, of the bank's 
 technical, which is in fact only its nominal, capital; that, for 
 further illustration, a bank having $1,000,000 of share capital, 
 cannot be considered as firmly established and successful until it 
 has from three to five times that amount of deposits ; that by the 
 custom which makes law these deposits as such are unta.red; that 
 thus a well established bank having $1,000,000 of share capital 
 and $4,000,000 more of deposits pays annually, let us suppose, 
 a tax 01 $20,000, or $4,000 for each $1,000,000 of resources, or 
 4-10 of one per cent, on its aggregate actual capital, and equiva- 
 lent to a moderate income tax ; that the same $20,000 paid by the 
 bank, while it is yet new and has only a small line of deposits is a 
 very burdensome tax and partially confiscates ; that, for the rest, 
 the right of confiscation, like the right of revolution, remains one 
 of the reserved and inalienable rights of the people, but that for 
 the present day and date we have no statesmen in place who con- 
 fess the will, or profess the skill, to use these tremendous rights 
 to the people's advantage ; that, as for me, I could always be 
 counted in the opposition when it came to corporation "tail- 
 twisting" when it should come to corporation head-twisting, 
 there would be something different to say. 
 
270 HERTIG ON TAXATION. 
 
 The next day, March 4th, there was a protest before the Senate 
 tax committee against creating a permanent tax commission- R. 
 A. Kirk, of St. Paul, and speaking for the wholesale traders of the 
 Twin Cities and Duluth, argued that such commission is unneces- 
 sary, expensive, non-representative, and against the spirit of home 
 rule.. The board of equalization, as at present constituted, repre- 
 sented all portions of the state, had given satistaction, and should 
 be continued. 
 
 On this day, too, the larger public service corporations ap- 
 peared, and for the first time, during the special session, made 
 public and official protest against the proposed legislation. J. F. 
 Calderwood, comptroller of the Twin City Rapid Transit Com- 
 pany, which owns and controls the street car systems of St. Paul 
 and Minneapolis opposed the Jacobson bill on two grounds : 
 
 First : That it would, if enacted, confiscate the property of 
 his company. 
 
 Second : That "it is in direct violation of sec. I of article IX. 
 of the constitution, beginning thus: 'All taxes to be raised in 
 this state shall be as nearly equal as may be, and all property on 
 which taxes are to be levied shall have a cash valuation and be 
 equalized and uniform throughout the state.' ' 
 
 Calderwood argued his second proposition more as a layman 
 than as one learned in the law ; and showed rather that the steam 
 railroads under their alleged inviolable contract with the state 
 whereby they pay into the state treasury three per cent, of their 
 gross earnings in lieu of all other taxes, have the better end of 
 the bargain, than that other concerns, not enjoying the like con- 
 tract privilege, have any special claim to constitutional considera- 
 tion, or ground to fear technical infringement of their constitu- 
 tional rights. It was, however, easy for him to support with 
 facts the plain statement that taxes are not really uniform in Min- 
 nesota. Thus, as he said, "the 1901 taxes of the Twin City Rapid 
 Transit Company, payable in 1902, are $149,728.28. The gross 
 earnings of the company for the fiscal year ending Dec. 31, 1901. 
 were $3,173,975.85. The tax amounts to 4.7 per cent, of the gross 
 earnings. This is 54 per cent, greater than the 3 per 
 cent, gross earnings tax" on steam railroads, "and 17^ per cent, 
 greater than the proposed 4 per cent, gross earnings tax which is 
 to be submitted to the people by constitutional amendment next 
 November." 
 
 Calderwood's comparison of the taxes paid by his company 
 with those paid by steam railroads in Minnesota of nearly equal 
 and somewhat greater earnino- capacity is interesting to the tax 
 student: "Twin City Rapid Transit 'Company taxes for 1901 are 
 nearly $20,000 larger than the Minnesota taxes of either the Du- 
 
HERTIG ON TAXATION. 271 
 
 luth & Iron Range or the 'Omaha,' although the Minnesota gross 
 earnings of these roads are over $1,000,000 greater than those of 
 the Twin City Rapid Transit Company. Twin City Rapid Tran- 
 sit taxes, again are over 100 per cent, larger, both in rate and 
 volume, than the taxes of the Duluth, Missabe & Northern, whose 
 earnings are several hundred thousand dollars greater, [but which 
 on account of its newness pays a gross earnings tax of only 2. 
 per cent., p. 109, supra ; and likewise are more than double in 
 volume the Minnesota taxes of either the Minneapolis & St. Louis 
 or the Chicago & Northwestern, on the basis of the earnings of 
 these two roads for the year 1900, $2,389,939, and $2,435,110 re- 
 spectively." 
 
 Calderwood made a very interesting showing in comparing 
 the dividends and taxes of his company with those items of the 
 Eastern Railway of Minnesota, which is a part of the Great 
 Northern railway system, substantially its line between the Twin 
 City and Duluth. "In Minnesota mileage," he said, "Minnesota 
 earnings, and amount of common stock outstanding the two roads 
 are approximately alike. In volume of dividends and taxes, they 
 are quite different. Minnesota gross earnings are $3,207,142 for 
 the Eastern railway and $3,173,975 for the Twin City Rapid Tran- 
 sit Company. Minnesota taxes were $96,214 for the Eastern 
 railway and $149,728 for the Twin City Company, or 50 per cent, 
 larger for the latter. 
 
 "The Dividends paid by the Eastern railway (see pages 333-5 
 of the 1901 report of the state railroad and warehouse commis- 
 sion) were 12 per cent, on $16,000,000 of common stock, amount- 
 ing to $1,920,000. The dividends paid by the Twin City Com- 
 pany on $15,010,000 of common stock outstanding were 4 per 
 cent, and amounted to $600,400, being less than one-third those 
 of the Eastern railway. For the year 1900 Eastern railway divi- 
 dends were 10 per cent, on $16,000,000 of common, and Twin 
 City dividends were 3 per cent, on $15,010,000 of common. For 
 1899, which was the first year holders of Twin City common en- 
 joyed a dividend, Eastern railwav dividends were 10 per cent, on 
 $12,500,000 or $1,250,000, and Twin City dividends were 2^2 per 
 cent, amounting to $375,250. 
 
 Taxes on Minnesota gross earnings of the Eastern railway 
 for the last three years reported were, respectively, $96,214, 
 $81,500, and $56,289, a total of $234,003 for the three years, 
 amounting to somewhat less than 6 per cent, of the dividends paid 
 on the common stock. Taxes of the Twin City Rapid Transit for 
 the past three years are, respectively, $149,728, $119, 761 -and $91,- 
 201, the three year total being $360,690, or 25 per cent, of the 
 common stock dividends for the only three years in which that 
 
272 HERTIG ON TAXATION. 
 
 stock has had dividends at all. fit is but fair to remind the 
 reader here that the stock of the Eastern railway of Minnesota is 
 all common stock and is in the treasury of the ureat NortHern 
 railway company, which of course receives the dividends, and 
 that the Twin City Rapid Transit Company has, besides the com- 
 mon stock mentioned, $3,000,000 of preferred stock on which 
 dividends of 7 per cent, have ben regularly paid for some years.] 
 
 * * * 
 
 "But in addition to paying a 50 per cent, larger proportion of 
 its earnings in taxes, than the average Minnesota steam road, the 
 Twin City Rapid Transit Company bears other public charges 
 not expected of steam roads. For example, it pays out about 
 $100,000 per annum in street paving and on the average about 
 $10,000 a year in snow removed from the public streets. These 
 charges in many cities are included in the taxes ; [and hence in 
 such cases enter into the statistics of taxes paid by the street rail- 
 way companies, and to that extent swell those figures unduly, if 
 compared without discrimination with the taxes paid by street 
 railways in Minnesota, where the paving charges are not so in- 
 cluded. Calderwood reckons the average of taxes paid by the 
 street railways of the United States, apparently using these taxes 
 as paid in the more important cities for his basis at 'perhaps 
 about 4 per cent, of the gross earnings.'] 
 
 * * * 
 
 "In Milwaukee, * * * the city bears- the first cost of the 
 paving between and for a foot outside of the tracks and rails, and 
 the company is required to keep up the repairs afterwards only. 
 In the Twin Cities the street railway bears the first cost. Last 
 year it was $185,000; in 1900, $90,000; in 1899, $87,000; in 1898, 
 $75,000; in 1897, $100,000; in 1896, $150,000. This covers sim- 
 ply the cost of paving and does not cover the cost to the com- 
 pany by reason of the reconstruction of its tracks. These addi- 
 tional public charges not borne by the steam roads amount on the 
 average to very nearly the ordinary direct taxes. [Moreover] 
 our company will expend this year [1902] on account of street 
 paving in the two cities $300,000; [and we have] in hand and 
 are letting contracts for $170,000 of improvements, but today, 
 | March 4th], I am in receipt of telegrams stating that if the bill 
 passes as proposed we cannot negotiate the securities to meet this 
 expenditure. * * * 
 
 "Let us now see what the taxes would be under the proposed 
 bill that is before this House. [Calderwood here quoted the de- 
 tails of the bill's assessment provisions.] 
 
 "Let us apply this method to Twin City Rapid finance for 
 
HERTIG ON TAXATION. 273 
 
 1901. Taking the market quotations of capital stock and funded 
 debt, we get the following result : 
 
 $i5,ooo;ooo of common stock at $1.10 $16,500,000 
 
 $3,000,000 of preferred stock at $1.50 4,500,000 
 
 $10,888,000 of mortgage bonds at $1.10 11,976,800 
 
 Total market value of securities $32,976,800 
 
 "As the company is [to be] first assessed on the value of its 
 tangible real estate and personal property, and as the value of 
 the franchise is deemed to be the total amount [or rather value] 
 of the capital stock and bonded debt, less the value of the real 
 estate and personal property thus assessed, it is apparent that the 
 aggregate assessed valuation in any case amounts to the total 
 value of the capital stock and bonded debt, and that the deductions 
 for tangible real and personal property are wholly immaterial. 
 The real and personal property of the company may be assessed 
 at $1,000 or at $10,000,000, the total assessment for, taxation will 
 be just the same, and in this case, if the letter of the [proposed] 
 law is enforced, will be $32,976,800. 
 
 ''How large a tax would this produce? 
 
 "The tax levy in the Twin Cities is approximately 30 mills 
 on the dollar ; the actual average on the company's valuation in 
 Hennepin, Ramsey and Washington counties for 1901 being 29.2 
 mills. A rate of 29.2 mills on a valuation of $32,976,800 produces 
 a tax of $962,922.56. This is over 30 per cent, of the total gross 
 earnings of the company for the calendar year just closed. It is 
 50 per cent, greater than the dividends paid to the holders of the 
 $15,000,000 of common stock. It is 70 per cent, greater than the 
 annual interest charges on the $10,833,000 of bonded debt. It 
 is over three times the amount paid into the treasury of Minne- 
 sota by any Minnesota railroad.. It is two-thirds of the total 
 taxes paid last year by all Minnesota railroads. * * * The 
 avgregate gross earnings railway tax of the 39 railway com- 
 panies doing business in Minnesota and reporting thereon to the 
 state commission is $1,441,548, which is only about one-half more 
 than the bill would levy upon a single street railway. [Report of 
 Railroad and Warehouse Commissioners, p. 76.] The Minne- 
 sota gross earnings of these 39 railroads is $49,767,322, or about 
 15 times that of the single street railway. [Calderwood here 
 asked, in substance, 'Is this the equality of taxation and uni- 
 formity of valuation that the framers of section i of article IX. 
 of the state constitution, had in mind?'] * * * 
 
 "For 1901, the balance [or net earnings], after deducting the 
 cost of operation [from the gross], is $1,758,524 ; from this deduct 
 the interest charges of $772,000, and the tax $962,000, as proposed 
 
274 HERTIG ON TAXATION. 
 
 under this bill, and you have a balance of $24,524. Deduct this 
 from the $281,000 we expended in betterments, from our profit 
 of 1901, and the stockholders would be obliged to go down into 
 their pockets for $256,000 to meet the expenses for 1901. This 
 would effectually wipe out the common stock. 
 
 ''There is always a consolation, it is said, in every calamity. 
 The consolation in this case would be this : The $900,000 tax of 
 the first year would be reduced 50 to 75 per cent for the second 
 year by reason of the fact that the stock would have no value. 
 Only so long ago as 1898, Twin City Rapid Transit common stock 
 was worth only 15 cents on the dollar, because it earned no divi- 
 dends. But a tax proposition which produced assessments in 
 place of dividends would wipe out the 15 cents on a dollar, and 
 the holders would be paying bonuses to get somebody to take the 
 stock as a gift. Meanwhile, the market value of the securities 
 would drop to a figure which would yield the state less revenue 
 than the taxes now secured. 
 
 "We are interested in the Duluth street railway company ; we 
 have never paid any dividends [there], but if this law [bill] 
 passes as proposed, we will not be able to meet our interest 
 charges within $160,000." 
 
 Rome G. Brown, a Minneapolis lawyer, pointed out, in behalf 
 of water power companies, that the endeavor of the bill to in- 
 clude them among the companies that could operate only by virtue 
 of special franchises was merely an attempt at fiat transforma- 
 tion; that the law of this state, as settled by a line of supreme 
 court decisions, declares the right to develop and use or lease wa- 
 ter power to be" a riparian right attaching to lands adjacent to the 
 place of development ; that therefore the right to so develop, use, 
 or lease could not be transformed into a franchise right by legis- 
 lation. 
 
 E. E. Webster, of Minneapolis, general manager of the Twin 
 City Telephone Company, showed that his company was not oper- 
 ating under an exclusive franchise, but under city ordinances fix- 
 ing its rates and regulating the quality of its service and equip-" 
 ment. In the Minneapolis ordinance, a special earnings tax in 
 addition to general taxes had been reserved, 5 per cent, of earn- 
 ings of all telephones that the company should install in excess of 
 the number installed by its competitor. The proposed law would 
 make its taxes amount to 45 per cent, of its gross earnings, for 
 the current year, computed on the showing for February. 
 
 D. F. Morgan, attorney for the Northwestern Telephone Com- 
 pnay, said that if his company were taxed under the proposed 
 law, such tax would take 10 per cent of its gross earnings, which 
 be equivalent to 43.6 per cent of its net earnings. [On 
 
HERTIG ON TAXATION. 275 
 
 this statement, then, it takes to operate Morgan's company and 
 maintain its equipment in condition for service 77 per cent, of the 
 <2TOss earnings, leaving 23 per cent, out of which to pay interest 
 on bonded debt, if any, and dividends to stockholders.] All he 
 asked was equal taxation with other classes of property. He did 
 not like the inquisitorial features attached ^o the tax commission 
 sections of the bill. 
 
 A. B. Jackson, of Minneapolis, attorney for the Minneapolis 
 Gas Light Company, made the point that increased taxation of 
 public service companies would result in one of two things : 
 Either the character of the service would be impaired or its cost 
 would be increased, and in that event the consumer would pay 
 the tax. The taxation contemplated in the Jacobson bill would 
 bring the Gas Light Company's tax up to 21 per cent, of their 
 gross earnings. 
 
 Robinson, general manager of the Minneapolis General Elec- 
 tric Company said they operated under an ordinance prescrib- 
 ing a very expensive installation of their plant as a condition for 
 operating at all and requiring them further to furnish the city 
 with service worth $6,000.00 per annum in addition to their reg- 
 ular taxation. The tax under the proposed law would amount to 
 2i l /4 per cent of their gross earnings, and they could probably pay 
 it the first year, but after that they would be relieved, as their 
 property then would have practically no taxable value. 
 
 And now on March 5, the senate committee on taxes made its 
 report on the bill, recommending indefinite postponement. While, 
 of the committee members, none seemed to favor the bill as it 
 stood, four of the thirteen favored reporting it back to be placed 
 on general orders without recommendation. The committee's vote 
 on indefinite postponement was as follows : 
 
 Yeas: Caller (Dem.), Greer (Rep.), E. E. Smith (Rep.), 
 Daugherty (Rep.), E. J. Jones (Rep.), Roverud (Rep.), Somer- 
 ville (Rep.), Stockwell (Demo-Pop.), Underleak (Rep.). 
 
 Nays: Grindeland (Rep.), McGill (Rep.), Miller (Rep.), 
 Snyder (Rep.). 
 
 Snyder presented a minority report on behalf of himself and 
 his three colleagues, as follows: [We] "are of the opinion that 
 the bill, as it reads, does not provide a fair and equitable method 
 for the taxation of mines and public service corporations, as com- 
 pared with the method of taxing all other property in this state ; 
 but are of the opinion that the bill can be amended so that 
 it will be a desirable bill to pass, and respectfully recommend 
 that 'House File 56' be placed on General Orders without recom- 
 mendation." The adoption of the minority report would doubt- 
 less have resulted in discussion of its features section by section, 
 
276 HERTIG ON TAXATION. 
 
 as soon as it should have been reached "on General Orders," the 
 offering and adoption of numerous amendments, and probably the 
 passage by the senate of the bill as so amended, with somewhat 
 diminished probability that the House \ ould have concurred in 
 such amended bill. As it was, however, the majority report rec- 
 ommending indefinite postponement was adopted, after an in- 
 teresting debate, and the bill killed. 
 
 Snyder in support of his motion to substitute the minority for 
 the majority report, said that the committee v/as a unit against the 
 tonnage tax provision, but differed on some of the other pro- 
 visions. For himself he wanted the tax commission feature pre- 
 served if everything else was eliminated. 
 
 Young (Rep.) supported Snyder s motion in a very earnest 
 speech. All the conditions were favorable to making an effective 
 piece of legislation of the bill, and it would be the height of folly 
 or worse to discard all that has been done, and confess impotence 
 to avail themselves thereof. Enemies and friends of the bill were 
 now practically a unit in agreeing that its tonnage tax provisions 
 should be stricken out. The way so far was clear : strike them 
 out and go ahead. Moreover, nobody wanted to assess franchises 
 on a basis that would confiscate, and the bill would not have that 
 result. Indeed a provision could be added to the bill in set terms 
 for the valuation of franchises in the same proportion as other 
 property. The extra session had been 'called to enact tax legis- 
 lation ; there was a demand for legislation to properly tax corpo- 
 rations ; the people would demand an explanation if such legis- 
 lation were not forthcoming ; and the Republican party in this 
 state would suffer if nothing should be done. He appealed to the 
 Republicans of the senate to save the bill; all objections could 
 be obviated by amendment. 
 
 In speaking a second time on the motion, Senator Young criti- 
 cised the address ot Comptroller Calderwood, of the Twin City 
 Rapid Transit Company, made before the tax committee, and said 
 that Calderwood's figures showed that that corporation was pay- 
 ing in taxes only 4 mills on the dollar of actual valuation, while 
 all other property paid 30 mills. [But this is comparing the per- 
 centage of tax paid on market value with the percentage paid on 
 assessed values without reducing to a common denominator.] 
 A dividend of 7 per cent., he said, coming nearer to just criti- 
 cism, had been paid on Twin City preferred stock, representing 
 actual investment, and 4 per cent on the common stock, represent- 
 ing water. 
 
 McCarthy (Rep.), of Itasca, made an eloquent and elaborate 
 argument in support of Snyder's motion, and urged the passage 
 of some tax reform law. Tax reform had been an issue in this 
 
HERTIG ON TAXATION. 277 
 
 state for some years ; up to January loth everybody wanted tax re- 
 form, and understood what was to .be accomplished by an extra 
 session in carrying out the program begun by the legislature 1'n 
 1901. Suddenly came a change; soon after the tax commis- 
 sion's report appeared, nearly every newspaper in the state re- 
 versed itself, and began to argue that nothing should be done. 
 The big corporate interests had hurled the whole state against the 
 legislature, and had defeated the tax code. When the Wallace 
 amendments were adopted in the House, the seeds of death were 
 sown in the bill. The senate had now the one remaining chance 
 to save some very important raid vital features of the code prepared 
 by the tax commission. . Would his fellow members be equal to the 
 occasion? If they were not, the legislature and the Republican 
 party would be held responsible, and the party would suffer the 
 consequences. 
 
 Johnson (Dem.), of Nicollet, said he fully agreed with the 
 doleful forebodings for the Republican party held by two of its 
 most able members (Senators Young and McCarthy), but he, 
 as a Democrat could not help them out. He would not have voted 
 for the tax code of the commission in its original form and he 
 certainly would not vote now for this choice bouquet culled out of 
 its worst features, to encourap-e political buncombe, and t-ike a fall 
 out of the Twin City Rapid Transit Company, towards which 
 most of the arguments of the friends of the bill had been ad- 
 dressed. He was opposed to the franchise tax proposition, be- 
 cause it would cripple the independent telephone lines and like 
 enterprises throughout the state. 
 
 Jones (Rep.), of Todd, said he was not afraid to meet the is- 
 sue. This was not a Republican measure, nor would a vote on it 
 afford any test of party fealty. Its friends could not cram the bill 
 down his throat, merit or no merit, by labeling it a Republican 
 measure. A special session with negative results was immeasur- 
 ably better than a special session with indefensibly bad results. 
 He would admit that the special session would not shine as a 
 bright particular star in the Republican galaxy ; but he could not 
 for the life of him see that it had or would spread a coat of tar- 
 nish over its other stars, unless by a miracle some such bill as 
 this, should be yet passed. Anyway if there should be any tar- 
 nish on the party, he was entirely willing to be held reponsible for 
 his proportionate share of the dimness. He believed that Repub- 
 li:an voters were too intelligent and too fair-minded to look upon 
 simple justice to corporations as criminal generosity to the v same; 
 and certainly it was a cowardly thing and an unjust thing, after 
 killing the tax code in its drastic assaults on every other class of 
 property to try to enact it as against corporate interests only. As 
 
278 HERTIG ON TAXATION. 
 
 for him, he favored a gross earnings tax, and one or two senators 
 vehemently favoring this bill had formerly stood with him on 
 that proposition. 
 
 Ives (Dem.), of Ramsey, said that, after microscopic re- 
 search, he had failed to find any obligation on the legislature to 
 vote for some bill, any bill that might be passed, merely because it 
 was a tax bill, and because this was supposed to be a tax session. 
 
 The law creating the tax commission had instructed that body 
 to report a complete system of taxation. No such system had 
 been presented to the senate, and it was not his province to discuss 
 what had been done and undone in the other branch of the legis- 
 lature. The bill now under discussion and before the senate 
 would create a tax commission with nothing to do ; and he, there- 
 fore, could not even support that feature of the bill, much as he 
 admired and enjoyed dignified leisure. Where even the friends of 
 the measure admitted the necessity of curing its drastic and un- 
 fair provisions, he thought that before it could be amended with 
 something drastic and fair to the satisfaction of this body, the 
 senate would be reminded of the two-headed ram that had more 
 fights on hand than he could attend to. He was not so partisan as 
 to withhold from his Republican friends a word of good cheer. 
 It might indeed be a melancholy spectacle for the Republicans to 
 see a great party die ; but if this p -eclicted funeral of theirs 
 should be held because of a Republican legislature discreetly turn- 
 .ing down this bill, it was already past praying for, and the hearses 
 might as well be ordered before the vote was taken ! If the 
 thought should occur to the weeping mourners that no party really 
 great could catch cold and die so easily, it was not for him to say 
 that eleventh hour wisdom was of no avail perhaps here, too, 
 the old saw, "better late than never," would apply. 
 
 Sheehan (Rep.), of Ramsey, said that this was certainly not 
 one of those cases where the senate should reverse the report of its 
 committee. The measure as it stood, was, on the subjects to 
 which it applied much more drastic even than the tax commis- 
 sion's code. He did not share in the fears of some of his fellow 
 Republicans. The people expect the legislature to be fair, no 
 matter what effect it may have on any political party. The bill 
 was radically wrong and rotten. Laws now in force are ade- 
 quate for fair and equal taxation. 
 
 Thompson (Rep.), of Fillmore, favored putting the bill on 
 General Orders. He was a citizen of the state first, and then a 
 Republican ; as citizen and Republican he was for fair and equita- 
 ble taxation. The big corporations were not bearing their share 
 of the tax burdens and the people were suffering accordingly. 
 He urged the city members to carefully consider their own in- 
 
HERTIG ON TAXATION. 279 
 
 terests, and support legislation to bring corporations under proper 
 regulation and within reach of the law. He would favor any and 
 all amendments that would improve the bill, and there was no 
 better time than now to go on in the work of tax reform. 
 
 Underleak (Rep.), of Olmsted, said that the code proposed 
 by the tax commission should have been enacted as a whole. With 
 that code defeated, there was really nothing left for the senate to 
 consider. The question ought to be divested of all partisanship, 
 and the present measure considered on its merits if it had any. 
 He should vote to sustain the majority report. 
 
 Horton (Rep.), of Ramsey, said that he, too, would have 
 voted for the commission's proposed code, had it come to the 
 Senate, but it had not come. There was no party obligation in- 
 volved in the present measure. That obligation had ended when 
 the tax code was defeated in the house. There was no obligation 
 to support "a bastard bill emanating from unknown sources." 
 
 Brower (Rep.), of Stearns, made an impassioned speech in 
 favor of the minority report. "This is not," said he in substance, 
 "a mere party question ; it is a question far above party a ques- 
 tion which the good men of all parties will unite in viewing 
 through the higher, purer atmosphere of that citizenship which 
 thinks only of the general welfare. The great issue is tax re- 
 form in all its phases, not merely a franchise tax bill ; and the one 
 phase of that great issue now before us, is not whether we here 
 and now have the opportunity for inaugurating all at once a gen- 
 eral tax reform ; but whether we are brave enough nay, I dare 
 maintain patriotic enough, to use the present opportunity for 
 doing what we can and reforming to the extent that we may. 
 Every platform, and every rostrum about which an audience 
 gathers is made to ring with declamation of the people's rights. 
 I tell you the people are beginning to think it stran.ee that the only 
 lukewarm voices concerning their rights are heard in the legisla- 
 ture. For myself, I have confidence in the integrity, in the good 
 will, in the abilitv of this legislature and this senate. I do not 
 believe that the discussions we have had, the arguments we have 
 heard, the facts that have been presented before us and before our 
 committees have been lost still less do I believe that they should 
 be lost by our failure to grapple with the problems of taxation 
 to the full extent of our present opportunity. It is one thing and 
 I concede, a proper thing, to point out the faults of this measure 
 as it stands ; it is another thing, but a proper thing also and an im- 
 perative thing, to make this bill by amendments what it should be, 
 (even to the making of a substantially new bill), and thereby re- 
 deem to the people the pledges of the legislature." 
 
 Ryder (Rep.), of Polk, said: "This is not the bill the legis- 
 
280 HERTIG ON TAXATION. 
 
 lature was called on to pass, but a bunco measure. I certainly am 
 not afraid of the political consequences if we fail to pass it." 
 
 Fitzpatrick (Dem.), of Winona, said: "As a Democrat, I do 
 not believe in interfering in family quarrels, and, as a general 
 thing, I have no desire to work for the salvation of the Republi- 
 can party. But now if the success of this bill will save that party, 
 I am entirely willing that my Republican friends, or enemies, 
 should have that measure of relief. Besides I want to see on the 
 statute book some small souvenir of the great wave of tax reform 
 that swelled high in 1901, and is dashed mostly to spray in 1902." 
 
 Snyder now moved the previous question, which was there- 
 upon duly put to vote : "Shall the report of the minority be sub- 
 stituted for that of the majority ?" And the roll being called, there 
 were yeas 28 and nays 35, as follows : 
 
 Yeas: Baldwin (Demo- Pop.), Barber (Rep.), Batz (Dem.), 
 Benedict (Rep.), Brower (Rep.), Fitzpatrick (Dem.), Gause- 
 witz (Dem.), Grindeland (Rep.), Halvorson (Rep.), Jepson 
 "Rep.), Knatvold (Rep.), Larson (Rep.), Lord (Rep.), Mc- 
 Carthy (Rep.), McGill (Rep.), McGovern (Dem.), Meilicke 
 (Demo-Pop.), Miller (Rep.), Myron (Rep.), Schaller (Dem.), 
 Schellbach (Rep.), Snyder (Rep.), Somerville (Rep.), Swening- 
 sen (Rep.), Thompson (Rep.), Viesselman (Dem.), Wilson 
 (Rep.), Young (Rep.), 20 Republican and 8 non-Republican 
 votes. 
 
 Nays: Buckman (Rep.), Chilton (Rep.), Caller (Dem.), 
 Daly (Pop.), Dart (Dem.), Daugherty (Rep.), Dickey (Rep.), 
 Du Toit (Dem.), Everett (Dem.), Greer (Rep.), Grue (Pop.), 
 Hawkins (Rep.), Horton (Rep.), Hospes (Rep.), Ives (Dem.), 
 Johnson (Dem.), Jones, E. J. (Rep.), Jones, J. D. (Rep.), Mc- 
 Arthur (Rep.), McGowan (Dem.), McKusick (Rep.), McNamee 
 (Dem.), Nixon (Rep.), Potter (Rep.), Reeves (Rep.), Roverud 
 (Rep.), Ryder (Rep.), Sheehan (Rep.), Shell (Rep,), Sivright 
 (Rep.), Smith, E. E. (Rep.), Smith, J. H. (Rep.), Stockton 
 (Rep.), Stockwell (Demo-Pop.), Underleak (Rep.), 24 Repub- 
 lican and 1 1 non-Republican votes. 
 
 There were no absentees, and every senator voted. 
 
 The motion to substitute the minority report having been thus 
 voted down, the question next taken was on the adoption of the 
 report of the majority of the tax committee recommending in- 
 definite postponement, which report was adopted, yeas 37 and 
 nays 26. Baldwin and McGovern who did not favor the bill, were 
 willing on the first vote to put the bill on General Orders, and let 
 the majority then have a chance to fashion it as they might ; and 
 seeing the substitute motion was lost they recorded their opposi- 
 tion to the bill by joining the majority on the vote to postpone in- 
 
HERTIG ON TAXATION. 281 
 
 definitely. With these exceptions those who voted yea on the mo- 
 tion to substitute, voted nay on the motion to postpone in- 
 definitely and those who voted nay on the former motion voted yea 
 on the latter one. 
 
 Sheehan, to give the bill its final quietus, moved that "the 
 vote by which the report of the committee on taxes and tax laws 
 was adopted, and House File Number 56 indefinitely postponed, 
 be reconsidered." The motion to .reconsider was lost by yeas 26, 
 nays 37 : all those that voted yea on- the motion to indefinitely 
 postpone, voted nay on the motion to reconsider and vice versa. 
 So the bill was killed and buried. 
 
CHAPTER XVII. 
 
 Minnesota constitution now difficult to amend Recent attempts to obviate 
 that difficulty A paragraph on constitutional conventions Minnesota 
 and Ohio courts in conflict over like constitutional plank Rationale 
 of judge-made law Difference between limitations on power of con- 
 gress and those on power of state legislatures The federal Constitu- 
 tion as limiting taxing powers What might result if either federal or 
 state government could tax instrumentalities of the other Bentham 
 on abuse of taxing legal process Nature of limitations on taxing 
 power of congress Proposed constitutional amendments set forth 
 Closed and "wide-open" constitutions, and how they work in Pennsyl- 
 vania and elsewhere Amendments proposed by Atty. General Douglas 
 and others Judiciary committees and the amendments they adopted 
 Analysis of same and mention of Jacobson gross-earnings law. 
 
 In November, 1898, Minnesota adopted to her constitution an 
 amendment, which goes far toward making the constitution hence- 
 forth as unamendable . in practice as is the constitution of the 
 United States. By that amendment, the legislature, consonant 
 with the general practice in all the American states has the initia- 
 tive, and "whenever a majority of both houses of the legislature 
 shall deem it necessary to alter or amend this constitution, they 
 may propose such' alterations or amendments, which shall be pub- 
 lished with the laws which have been passed at the same session, 
 and said amendments shall lie submitted to the people for their ap- 
 proval or rejection at any general election," whereat if it shall 
 appear "that a majoritv of all the electors voting * * * shall 
 have voted for and ratified such alterations and amendments, the 
 same shall be voted to all intents and purposes as a part of this 
 constitution." This does not mean "a majority of all the electors 
 voting" upon the amendments, but a "majority of all the electors 
 voting" at such election upon any matter or for or against anv 
 persons on any "ticket." As now all ballots cast are officially 
 printed and uniform, and contain all questions to be voted on. 
 together with the names of all the candidates that are officiallv 
 recognized for the different offices, there are ro separate bal- 
 lots, and the whole number of ballots deposited in the urns deter- 
 
HERTIG ON TAXATION. 283 
 
 mines the number of persons voting at such election. Official bal- 
 lots are long, and many a voter finds it tedious to mark with a 
 cross his choice of candidates and his choice between questions, 
 to the prolix end of the strip of paper so, as aforesaid, officially 
 furnished. Many a ballot so cast shows that its voter had not 
 sufficient interest to vote for a candidate for every office named, 
 but voted merely on governor and congressman, and may be on 
 two or three county officers. Constitutional amendments, seldom 
 inspiring a burning interest, suffer particularly from voters' neg- 
 lect. The many voters, therefore, who do not vote at all on these 
 amendments, practically vote against them, since the blanks and 
 the negatives, alike count in determining whether "a majority of 
 all the electors voting" voted in the affirmative. Thus the inertia 
 which springs from indifference is found to be the real balance 
 of power, and has defeated every constitutional amendment that 
 has been submitted to the people since the adoption in November, 
 1898, of the rule, No vote on equals a vote against. This should 
 not be. A vote for should be presumed to result from a certain 
 interest in and study of. If, then, a majority of those who vote 
 on the amendments vote for them, such vote should be held suf- 
 ficient to establish the amendments. The indifferent, and conse- 
 quently the inert, should not be permitted to disfranchise the 
 striving and progressive alert. It is not, of course, impossible for 
 an amendment to embody a crafty but disguised purpose ;'nor is it 
 impossible for the promoters of such an amendment and such a 
 purpose to derive aid from a law whereby a bare majority of those 
 voting on amendments would be sufficient to establish the same. 
 Such a case, by its very terms not likely to happen, though not 
 quite impossible under the present jurisprudence and modes of 
 government would work no irreparable wrong, and, even if suc- 
 cessful for a time, would bring about the collateral and wholly un- 
 intended result of making the people more vigilant in the scrutinv 
 of proposed amendments. Besides, the New Jurisprudence will 
 devise ways and means to make it practically impossible for 
 roguery to hunt cover in the forms of law. 
 
 At the special session of Minnesota's legislature in 1902, an 
 unsuccessful effort was made to submit to the people whether they 
 would amend or not the present rule for determining the ratifica- 
 tion and rejection of amendments to the constitution. Senator 
 H. J. Miller (Rep.), of Rock county, offered in the body to which 
 he belongs an amendment providing that of those voting for and 
 against such ratification, the majority so voting shall determine 
 the adoption or rejection of the amendment voted upon disre- 
 garding wholly those electors, who while voting at the same elec- 
 tion shall have neglected to vote on the amendment or amendments 
 
284 HERTIG ON TAXATION. 
 
 then and there proposed. Miller's bill, "Senate File Number 
 Eighty," was passed by the Senate, on March 5th, in a rather list- 
 less session eleven senators being absent. There were 36 yeas 
 and 1 6 nays. Of the nay votes, half were Republican and half 
 Democrat. Of the yea vote, 31 were Republican, 3 Democrat and 
 2 Populist. 
 
 When the bill reached the House, it was referred to the judi- 
 ciary committee which failed to make report on it, and so the 
 measure was killed. It found in the House a zealous champion 
 in Nichols (Rep.), of Pipestone county, who made strenuous ef- 
 forts to get it considered his last but one (on the last active day 
 of the session) taking the form of . a motion "that Senate File 80 
 be recalled from the judiciary committee," which motion was lost 
 on the tie vote of 47 to 47. The yea votes were 35 Republican, 
 and 12 non-Republican. The nay votes were 40 Republican and 
 7 non-Republican. Of these last 6 were Democrat and I Popu- 
 list, all the other Populists having voted yea. Thus, as it hap- 
 pened, Republicans, Democrats and Populists each held the bal- 
 ance of power on this vote. 
 
 Nichols was not yet quite defeated. He had previously intro- 
 duced "House File 87," a bill much like Senator Miller's, had 
 worked it through committee, and now, with Miller's bill smoth- 
 ered, his own in the forenoon of March 10, "was read the third 
 time," arid the "question taken" on its passage. There was time 
 yet to rush it to the Senate, and perhaps to get it passed there, if 
 the House should take favorable action. It was not to be ; the 
 House voted it down by yeas 45 and nays 52. 
 
 It was apparent from the outset that amendment and revision 
 of the constitution would be subjects of much attention last win- 
 ter on the part of the Minnesota legislature. The tax commis- 
 sion, as in duty bound, offered important amendments, and the 
 judiciary committees of the House and Senate respectively 
 wrestled with these and with various other proposed amendments. 
 In the House, Smith (Rep.), of Hennepin, introduced early in 
 the session a bill (House File 12) for a constitutional convention. 
 This was not put to vote until near final adjournment, when 
 (March 7th) it passed the House by 90 yeas and n nays. Among 
 the nays were two Democrats and one Populist. The majority 
 vote, examined in detail, shows that not only the great mass of 
 Republicans in the popular body favored a constitutional conven- 
 tion, but that a majority of the Democrats and Populists also fa- 
 vored it. The Senate smothered the bill, and not unwisely ; there 
 is need of a campaign of education, in any event, before the calling 
 of a constitutional convention, and there is at least a fair show 
 to accomplish by amendments substantially all that such con- 
 
HERTIG ON TAXATION. 285 
 
 vention would, and at a saving of $100,000 to the state or there- 
 abouts. Constitutional conventions easily become two-edged ; and 
 in our present state of emotional and intellectual anarchy I bor- 
 row the word approximately in Comte's sense they are rather 
 more likely to produce results displeasing to the many than to the 
 few. I have not yet analyzed the new constitution of Alabama ; v 
 but pending the late convention there a conservative citizen of that 
 state assured me that special interests would hold the convention 
 well in hand ; and it is matter of notoriety that zealous friends of 
 the people fear to urge the calling of a convention to revise the 
 constitution of Illinois, lest sinister designs control its work. 
 Under the protection of the New Jurisprudence, constitutional 
 conventions will be mi r hty and beneficent organs of the people. 
 The vote on Smith's bill (House File 12) is interesting, however, 
 as reflecting a state of unrest in the popular body of the Minne- 
 sota legislature. 
 
 The amendments which became a subject of struggle in both 
 branches of the legislature, grew out of those suggested and rec- 
 ommended by the tax commission and were confined to the subject 
 of taxation. The commission in their Report (pp. 52-3) set forth 
 their firm conviction of the necessity of amendment, and men- 
 tioned in partial support of such conviction the "great changes 
 and developments" which have taken place in the industrial world, 
 "since the adoption of the original constitution," both the sub- 
 jects and objects of taxation, differing now, in many respects, 
 from what they were then. 
 
 "Following" industriously in the footsteps of other states [that 
 is, of most of the other states in the Union], in the formulation of 
 its organic law [that is, in the make-up of its constitution],' this 
 state adopted the policy of depriving the legislature of powers 
 touching taxation which are essential to the natural growth and 
 development -of a revenue system." Report of the Tax Commis- 
 sion, p. 53. In thus stating that the Minnesota legislature is re- 
 strained by the state constitution from the use of a free hand in 
 tax matters, the commission failed to add that the supreme court 
 of the North Star state has upheld the letter of the constitution, 
 as regards tax matte r s, with rather more than average judicial 
 fidelity, and has declared many a tax law to be unconstitutional. 
 However, in the case of the State v. Moffeft, 64 Minn. 292, the 
 court made bold to sustain a striking departure from the letter 
 of the constitution, ("laws shall be passed taxing all moneys, 
 credits," etc.), and to uphold sec. 1526, of the General Statutes of 
 1894, authorizing the deduction of bona fide debts from the gross 
 amount of taxable "credits," in determining the sum of the latter 
 which should be assessed to any particular victim who fails to 
 
286 HERTIG ON TAXATION. 
 
 make a clean escape. The court put its decision on the ground 
 that this particular infraction of the constitution had been repeat- 
 ing itself in the uniform practice of assessors and equalization 
 boards under the same or a like" statute, ever since assessing and 
 taxing had been going on in this state, though an attorney general 
 had held as early as 1864 (Opinions, ed. 1858-84, pp. 148-150), 
 that such statute is unconstitutional ; and that this practical con- 
 struction long ago given to the constitution, and since then uni- 
 formly acquiesced in, sets the seal of constitutionality to the stat- 
 ute which lends the form of law to such construction and ac- 
 quiescence. The supreme court of Ohio did not hesitate to de- 
 clare void a like statute, under a like constitution. Exchange 
 Bank of Columbus v. Mines j 3 Ohio St. I, (decided in 1853). 
 
 In fact section 3, of article IX. of the Minnesota constitution 
 is practically a literal copy of section 2, of article XII. of the Ohio 
 constitution (still in force there), adopted in 1851. The Minne- 
 sota copyists omitted after the word "taxing," in the first line, the 
 Ohio words "by a uniform rule" but retained the legal effect there- 
 of by their wording of the first clause of section i, of article IX. 
 (See sees. I 2, 3 and 4, of article IX. as set forth below in full, 
 in this ch.) Minnesota has "public burying grounds," where 
 Ohio has simply burying grounds, and has "shall" after "individu- 
 al," where Ohio has "may." There are no other differences. And 
 section 1526 of the Minnesota General Statutes of 1894, held con- 
 stitutional in Moffet v. State, above, is almost a copy of the loth 
 section of the Ohio tax law of April I3th, 1853, which particular 
 section of the Ohio tax law the supreme court of that state held 
 to be unconstitutional and void in Bank of Columbus v. Mines, 
 above. The Ohio court quoting from section 2, of article XII., 
 of that state's constitution, the words "Laws shall be passed tax- 
 ing, by a uniform rule, all moneys, credits," etc., gave to those 
 words their plain, literal and palpable effect, as follows : "The 
 manifest effect of this constitutional provision, is to make prop- 
 erty the basis, and the sole basis of taxation." Therefore, credits 
 being property, and there being no words authorizing their ex- 
 emption in the Ohio constitution, the statute purporting to author- 
 ize the deduction "from the gross amount of money and credits" 
 [otherwise taxable] of "the amount of all bona fide debts owing" 
 by the person listing his property for taxation, is unconstitu- 
 tional and void. Why, then, in Minnesota, under a constitution 
 having almost Ohio's very words, and certainly Ohio's very in- 
 tent, should a like statute, allowing the deduction of debts from 
 credits be held constitutional? 
 
 The question just asked is of tremendous importance. It opens 
 the flood-gates to the great volume of criticism loosened by Ben- 
 
HERTIG ON TAXATION. 287 
 
 tham and swelled by others, after him, against judge-made law, 
 or as Bentham derisively called it "dog law" ; it gives the floor to 
 those who defend judge-made law as of practical necessity, and, 
 for highly important instance, to those who, like John H. Hop- 
 kins, in the Southern Law Review for November, 1901, argue 
 that by judge-made law the Constitution of the United States has 
 been pried off its written base, and set adrift toward goals which 
 give alarm or joy, according to the different views and tempers of 
 those who no.te the fact. Judges and lawyers accept the fact and 
 the necessity of judge-made law in much the same temper and 
 with much, the same serenity that they bring to the ''taxation of 
 costs" ; there may be grave or shrill dissatisfaction over particular 
 case or item, none over cases and items as such. The New 
 Jurisprudence will accept the fact and admit the necessity, with 
 the important qualification that both can, "and of right ought to 
 be," largely and strikingly reduced. Meantime the practical situ- 
 ation remains, that our constitution and laws, invite and even 
 demand a vast supplementary body of judge-made law, from the 
 fact that they are based, as to some important feature or features 
 in them, as a whole, upon the five-fold foundation of : 
 
 1. Compromise sections, planks, clauses, or words, adopted 
 because otherwise the subject in hand must have been passed over 
 in silence, or pointed to precise and, to some minds, displeasing 
 ends. [Such sections, planks, clauses and words always militate 
 against certainty and precision. The Constitution of the United 
 States is conspicuous for planks born of compromise. It is, how- 
 ever; very conspicuous also for the superior style in which it is 
 written, due to the fact that one man, Gouverneur Morris, was 
 chief scrivener of "the Committee on Style" which .gave final 
 shape and finishing touches to the matter which the convention 
 had agreed to. Morris could write, and here and there the polish 
 he put on seems to have gone far below the surface and taken 
 the mould of original fibre.] 
 
 2. A foolish straining after sham originality. Because of this 
 many a clever and many a clumsy scrivener have not been con- 
 tent to copy word for word the particular section or article of a 
 constitution or statute previously adopted or enacted in their own 
 or some other state, and which section or article won the scrive- 
 ner's approval for substance and nearly so for form ; but. instead 
 of an exact copy, such scrivener has made an approximate copy, 
 left out something of his original or added "new matter" of his 
 own sufficient for courts afterwards to "distinguish" the legal ef- 
 fect of the whole, so approximately copied and varied, from the 
 received and accredited legal effect of the particular section or 
 article from which such approximate copy was made. 
 
288 HERTIG ON TAXATION. 
 
 3. Amendments offered and passed with much the same mo- 
 tive, and much the same result, as that set forth in the last pre- 
 ceding paragraph; and amendments offered (slight in appear- 
 ance to all except a profound expert), to give a sinister twist to 
 what otherwise would have been straight. [In the field outlined 
 in this and in paragraph 2, folly plays into the hand of cunning ; 
 and in particular cases it is often difficult to determine which 
 reaps the greater quantitative harvest. To a subdivision of this 
 field easy to add belongs the mischief caused by amendments of- 
 fered hastily, but offered in good faith and accepted* in good faith, 
 in the last hours of a legislative session. The fate of "House File 
 57" is good for illustrative example, as above mentioned.] 
 
 4. Fear of the people in mass and fear of their elective repre- 
 sentatives, which fears have been, and are, characteristic of all the 
 constitutions as well of the United, as of the several, states. [By 
 this fear, and the restrictions of it begotten, amendment of consti- 
 tutions and the adoption of new ones has been rendered difficult 
 and in some cases practically impossible. The good prohibition- 
 ist, for instance, would doubtless prefer to violate his principles 
 and his personal constitution by drinking, martyr-like, a jorum 
 or two of whiskey daily, if he could not otherwise prevent the 
 "resubmission" to the people of a prohibition clause in his state's 
 constitution after the same has been once affirmatively adopted. 
 It must, however, be said in justice to American constitution- 
 makers that they need not, in general, lay to their souls the smart- 
 ing Shakespearian unction, 
 
 "Thus conscience doth make cowards of us all" ; 
 for their fear is lest, with door left open for sudden rush, the peo- 
 ple should rashly undo to their own hurt some piece of constitu- 
 tion-making, itself completed only after much labor and the ex- 
 penditure o<f $100,000 or more by the 'state. Besides it must be 
 conceded that now, very powerful, very cunning, and very selfish 
 interests are on the look-out prior to and in every constitutional 
 convention, to shield themselves as well as may be for offense and 
 defense.] 
 
 5. The inherent difficulty of covering with general words in 
 constitution and other written law all the particular cases which 
 shall arise ; and herein the tremendous sub-difficulty of laying on 
 constitutional restraint which shall be duly operative for padded 
 neck and not unduly operative for galled withers. [When, for 
 instance, constitution fails to fit case which it did not forsee, and 
 could not; or fails to fit cases which it ought to have foreseen, and 
 might have foreseen but for incompetence of its framers, or fore- 
 seeing did not cover by reason of clerical slip, or "by reason of 
 many-voiced, discordant babble, sometimes by reason of clear- 
 
HERTIG ON TAXATION. 289 
 
 voiced, opposing interests, then in these cases or any one of them, 
 the door stands open for "construction" and resulting judge-made 
 law.] 
 
 Meanwhile, and pending the many substantial reductions 
 which the New Jurisprudence will work in the range and effects 
 of the foregoing conditions, and of such other sub-causes and con- 
 ditions Avhich co-operate with them, it must not be forgotten 
 that judge-made law is an instrument, which like any other under 
 discreet and just guidance, may be made to do yeoman service for 
 the people. The right organ for carrying out the people's will, 
 the right conception of political justice, and the right skill in 
 carrying such conception into every walk of civil life these are 
 now the great desiderata, or to adapt a Baconian expression, the 
 great table of deficients. The Civil Nation shall be such organ, 
 and its New Jurisprudence shall furnish and apply the right con- 
 ception of justice. The highest possible ideal of a written code 
 is that it shall be so plain as to preclude all ambiguous interpreta- 
 tions and applications ; so just in intent and so far-seeing in pre- 
 vision that it will' be permanent. In practice, and as enacted, we 
 find codes that are the very opposite of such ideal ; codes again 
 that in some measure, in some parts, approximate it. If the ideal 
 lies beyond our grasp, beyond the limits of complete readability, 
 the field of approximation promises noble and exhaustless har- 
 vests to the right culture. 
 
 Now the written law of the Ohio constitution, as above quoted 
 and construed by the supreme court of that state, in Exchange 
 Bank of Columbus v. Hincs, 3 Ohio St. i is plain in expression, 
 just in intent and dim-sighted in preyision. Lacking, then, in one 
 of the elements of permanence, it invites the legislature and the 
 people to its violation, and invites the courts to wrench awry the 
 plain letter of its meaning. But when the Ohio court was called 
 upon to so wrench, the constitution there, of 1857, was only two' 
 years old, and the statute violating it had just been passed. Most 
 courts are averse to pioneering, to taking the initial steps in a de- 
 parture from marked path ; most courts require a decent pretext for 
 doing the new right thing or the new wrong thing. An ancient 
 legal maxim is, "The wrong step, when everybody maketh it, is a 
 legal step," or as it is usually quoted Communis effor fatit jus. 
 An acquiescence in the meaning 1 and practical effect of any written 
 law or body of law, when the people and their officials alike unite 
 in such acquiescence until it grows the moss of custom, gives the 
 force of law to the meaning and practical effect so acquiesced in ; 
 custom at last erows its mosses and puts its authoritative glosses 
 on every code that is not repealed or substantially chano-ed, before 
 the lapsing of the time necessary to the development of custom's 
 
290 HERTIG ON TAXATION. 
 
 work. The Ohio court simply declined to sanction a plain breach 
 of a new constitution, declined to pioneer ; while the Minnesota 
 court, for which lapse of time and path worn bare by transgres- 
 sors' feet had taken away all question and all opportunity of pio- 
 neering, had, in construing the same question under substantial- 
 ly like constitution, only to register the people's will as evidenced 
 by their customary "construction," or rather violation of the state 
 constitution. And the Minnesota court did so register by giving 
 a decision just the reverse of that rendered by the Ohio court. 
 
 Waiving the standpoint of rigid theoretical exactness, and 
 waiving all speculative consideration as to what our jurisprudence 
 might, could, would or should have been, if American courts had 
 uniformly and precisely followed the plain letter of code and con- 
 stitution a speculative consideration, for the rest, which would 
 be wholly barren in view of the fact that the constitution of the 
 Anglo-Saxon mind is such that as between break in formal prin- 
 ciple and break in practical result, it chooses generally the former. 
 I may say that, in a certain practical sense, each the Ohio and 
 the Minnesota court was right, the Ohio tribunal in declaring 
 the constitution before custom had modified the letter of it. the 
 Minnesota one in giving judicial sanction to an unconstitutional 
 law which unbroken custom for' forty years had converted into a 
 proper interpretation of the constitution. But now if, conform- 
 ing to the practical interpretation given to the constitution and 
 the tax code that has grown up under it, both little changed in 
 essential features these forty years, except as modified by the 
 customary practical effect given to them, the legislature should 
 boldly take the view one, for the rest, easily justified that all tax 
 laws that are permitted to work undisturbed for a few years, tend 
 to, and in so far as effective do, levy income taxes very much less 
 than three per cent of the capital value of the property, affected ; 
 and if thereupon the legislature should proceed to enact laws giv- 
 ing effect to the uniformity and equality clauses of the constitu- 
 tion, only in so far as practice and custom have made them effec- 
 tive, holding for instance, and enacting in accordance with so 
 holding, that" a small, but collectible tax on mortgages and other 
 credits, say *4 of I per cent, and the like tax on grain in elevators, 
 say 1-5 of i cent per bushel, afford a much closer approach to 
 constitutional equality and uniformity, than a 3 per cent rate on 
 a nominal "full and true value" assessment does, the real novelty 
 in .a supreme court decision sustaining such legislation, should 
 one be rendered by the Minnesota or any supreme court, would 
 not be a novelty of principle engrafted on a dearth of precedent, 
 but a novelty of boldness in consistent following of principle. As 
 a frequent thing in jurisprudence, the controlling principles of 
 
HERTIG ON TAXATION. 291 
 
 decisions are put forth -as one puts up a "shack" on a claim 
 good to camp in for a little while, but not for permanent abode. 
 Not for American judges the Emersonian hobgoblin of "a foolish 
 consistency." 
 
 It is important to remember that the legislature of a state 
 in the American Union may do in a legislative way all that the 
 state as a whole can do in that way, and without reserve or re- 
 straint except as imposed by the state constitution. As the tax 
 commission put it, "A state legislature is deemed to have plenary 
 power upon all subjects of legislation, save as it has been de- 
 prived thereof by constitutional restrictions." Report, p. 53.' 
 There is thus a great distinction between the kind of limitation 
 on the powers of the federal congress and the kind of limitation 
 on the powers of a state legislature. Congress had and has no 
 original fount of theoretical sovereignty in its own representative 
 right to draw from ; every state legislature had and has such theo- 
 retical fount as full and exhaustless as the power of the people of 
 its state. Congress has, therefore, just the' powers, and no more, 
 which the Constitution of the United States has given to that 
 body'; and every state legislature has all the powers of legislation 
 which have not been expressly or impliedly withheld from it. 
 Congress must find as warrant for its power the express or im- 
 plied letter of a grant of such power ; state legislatures go lawfully 
 ahead unless impeded by express or implied negation of their 
 powers. But such negation is found as well in the Constitution of 
 the United States as in the constitutions' of the several states. 
 
 The principal negations on the power of the states, which 
 means in practice on the power of the state legislatures, the ne- 
 gations, I mean, imposed by the Constitution of the United States, 
 in so far as said negations give rise directly or indirectly to ques- 
 tions involving the power of the states to levy taxes, are : 
 
 1. "No state shall *"-*..* pass any * * law im- 
 pairing the obligation of contracts." Const, of U. S., Art. I, Sec. 
 10. [A good illustration of how this clause may affect the power 
 of a state to impose taxes is shown above (pp. 107-119) in refer- 
 ence to the gross earnings tax on Minnesota railroads.] 
 
 2. "No state shall, without the consent of Congress, levy any 
 imposts or duties on imports or exports, except what may be ab- 
 solutely necessary for executing its inspection laws." Ibid. 
 [Maryland, in 1821, passed a statute imposing a license of $50.00 
 on "all importers of foreign commodities." This act was held void 
 as in conflict with the clause quoted in this paragraph, and also 
 as in conflict \villi the commercial clause quoted below as No. 3. 
 Bro^-n v. MaryJand, 12 Wheat. 419. A tax on the occupation of 
 
292 HERTIG ON TAXATION. 
 
 ah importer is a tax on importation.- 7W. So also the supremo 
 court of the United States held to be unconstitutional, as in con- 
 flict with the clause in this paragraph quoted, a statute of 'Cali- 
 fornia, imposing a stamp tax upon hills of lading for gold or 
 silver transported from any point or place in that state to any point 
 or place without the state. Almy v. California, 24 Howard, 169. 
 A tax on an export bill of lading is in fact a tax on the commodity 
 exported. Id.] 
 
 3. "Congress shall have power to regulate commerce with 
 foreign nations and among the several states." Id., Art. I. Sec. 
 8. [This clause of the United States Constitution has been up- 
 held and enforced by the federal supreme court more literally and 
 perhaps with farther reaching consequences than any other im- 
 portant clause of that justly celebrated instrument. The innate 
 tendency of human nature to resort to some form of "protection" 
 has been repeatedly and powerfully illustrated in the many stat- 
 utes of many states and the ensuing litigation in the federal courts 
 wherein said statutes have been held void as being in conflict 
 with the all-powerful "commerce clause." The Supreme Court 
 of the United States has thus maintained complete free trade 
 between the states of the Union, which the several states, follow- 
 ing the innate tendency to resort to "protection," have sought to 
 impair by taxes of various kinds and forms, such as license taxes 
 on peddlers of goods, "which are not the growth, product, or man- 
 ufacture" of the state so licensing ; prohibitive fees or regulations 
 under color of food inspection laws ; taxes on goods imported in 
 bulk from other states, and levied before such goods were mingled 
 with the general mass of property in the taxing state. Taxes on 
 gross receipts growing out of interstate commerce, and taxes by 
 a state on the foreign-held bonds and obligations issued by her 
 home corporations, have been held unconstitutional under this 
 clause. See p. 311, below. Many other statutes seeking to im- 
 pose taxes meddling with interstate trade have been held uncon- 
 stitutional. The late Justice Miller of the federal supreme court, 
 says in his Lectures on the Constitution (New York and Albany, 
 1891), pp. 80-8 1 : "Many cases have come before the supreme 
 court of the United States involving this question, when state laws 
 have been held to be invalid because in conflict with the constitu- 
 tional power of Congress to alone reTnlate commerce of that na- 
 ture. Notwithstanding for nearly one hundred years we have 
 had in the federal Constitution the declaration that Congress shall 
 have power to regulate commerce among the several states, there 
 are at this hour upon the statute books of almost every state laws 
 violating that provision ; and there is no doubt that if that clause 
 were removed to-morrov/, this Union would fall to pieces, simply 
 
HERTIG ON TAXATION. 293 
 
 by reason of the struggles of each state to make the property 
 owned in other states pay its expenses."] 
 
 4. "No state shall * * * deny to any person within its 
 jurisdiction the equal protection of the laws." Id., Fourteenth 
 Amendment. [This portion of the much cited amendment is the 
 bulwark imposed by the federal Constitution against "class legis- 
 lation" a very ineffective bulwark, indeed, against class legisla- 
 tion of a certain kind. The practical construction given to the 
 bulwark by the federal supreme court is that so long as classifica- 
 tion is not capricious nor arbitrary, so long as classification shows 
 some semblance of a statesman-like reason for making it, so 
 long and so far may states make as many classes and class laws 
 as they choose, subject only to the limitation that each member of 
 any class so created must be treated substantially as his fellow 
 members in the same class, are treated. Thus the "equal protection 
 of the laws" does not apply to citizen and citizen as such, but to 
 class member and like class member as such. No doubt, to im- 
 agine an extreme case, if some future constitution of Minnesota 
 were to copy from the Ohio constitution of 1802 the poll-tax 
 clause of that instrument, perpetuated also in Ohio's present con- 
 stitution, "the levying of taxes by the poll is grievous and op- 
 pressive ; therefore the legislature shall never levy a poll tax for 
 county or state purposes," but were to add the proviso, "But 
 nothing herein contained shall be construed to prevent the legis- 
 ture from levying a poll tax of $1.00 per annum on each male 
 inhabitant of St. Louis and Fillmore counties, of the age of 21 
 years and upwards, to be levied and collected as other taxes shall 
 1)e, and to be remitted to the state treasurer for state purposes 
 when and as other dues shall be remitted," no doubt such carv- 
 ing out of a class would be void as in contravention of the Four- 
 teenth Amendment, if for no other reason. It is easy to imagine 
 such capricious and arbitrary creation of classes as transcend the 
 limit, but not quite so easy to defend some of the class legislation 
 which has been held not to transcend it. But the general discus- 
 sion of this clause is more pertinent to my work on the Constitu- 
 lion of the United States, where it will be treated in full detail.] 
 
 Pursuing here the further consideration of this clause of the 
 Fourteenth Amendment in its direct bearing on the taxing powers 
 of the states, I add that revenue clauses in state constitutions are 
 sometimes expressly framed to fit the construction given to trie 
 Fourteenth Amendment by the supreme court of the United 
 States. Such, for instance, is a well-known and much discussed 
 clause of the Pennsylvania constitution of 1873, "All taxes shall 
 be uniform upon the same class of subjects within the territorial 
 limits of the authority levying the taxes." This was copied into 
 
294 HERTIG ON TAXATION. 
 
 the constitution of Colorado, adopted in 1876, also into those of 
 some other states, and is found also in the amendments proposed 
 last winter by the Minnesota tax commission. It was held in 
 Williamsport v. Wcnncr, 172 Pa. State Reps. 173, that the city of 
 W., being of the class authorized by the Pa. legislature "to levy 
 and collect for general revenue purposes a license tax not ex- 
 ceeding one hundred dollars each annually on all auctioneers, con- 
 tractors, * * * merchandise venders," and some forty 
 other kinds of persons and said city having pursuant to that 
 authority enumerated "merchants of all kinds," and classified them 
 for the purposes of determining the amount of such tax accord- 
 ing to the gross sum of their annual sales, and having fixed the 
 amount of their respective license taxes, in fact, though not in 
 name, at $1.00 on the thousand of their respective annual sales, 
 had constitutionally exercised the power so delegated, though the 
 city had used such multiples, not with close mathematical accu- 
 racy, but on the maximum sales within each class. Thus the city 
 ordained that those whose- sales did not exceed $1,000 "shall con- 
 stitute the first class and shall pay one dollar;" that those having 
 sales over $1,000 and not exceeding $5,000, "shall constitute the 
 second cla^s and shall pay five dollars," and so on upwards 
 through many classes so created. It is plain, therefore, that the 
 Pennsylvania court thought it sufficiently "uniform" under the 1 
 constitution to make the merchant, having sales of only $1,100 
 per annum, pay $5.00 license tax, while his luckier brother in the 
 same class, with annual sales just reaching $5 ooo.oo, paid no 
 more. "The power of the legislature," said the court in this case, 
 "to delegate to a municipality its power to tax and its power to 
 classify is not disputed by the counsel, but it is contended that no 
 such power is \in technical completeness} delegated by the act of 
 1889." 
 
 So also the same court held, in Commonwealth v. Clark, 195 
 Pa. St. 634, that while exempting a part of a "class doing an an- 
 nual business of less than $i-,ooo, and imposing a tax upon others 
 belonging to the same class" was such "class legislation" that 
 that part of the ordinance before it "must fall," yet that the city 
 of Titusville could constitutionally make valid classes of whole- 
 salers and retailers, and levy, not under its police powers, but as a 
 technical tax proper, an annual tax of $100.00 on class one of 
 retailers, consisting of retail merchants with annual business each 
 of over $60,000, and drop to just $60.00 on class one of whole- 
 salers, consisting of wholesale merchants with annual business of 
 over $100,000; could levy an $80.00 tax on class two of retailers, 
 business $50,000 to- $60,000 per year, while levying only a $50.00 
 
HERTIG ON TAXATION. 295 
 
 tax on class two of wholesalers, business $60,000 to $100,000 per 
 annum, etc. Still another and later Pennsylvania case (Knisely v. 
 Cotter el, 196 Pa. St. 614) approves the spirit of the two cases 
 already cited, and while holding that the. act of May 2, 1889, 
 under which the cities acted, does not in legal effect make the 
 tax which it authorizes "a tax upon property, but upon the busi- 
 ness of vending merchandise" (syllabus), by which saving dis- 
 tinction, it could be upheld, even if thought unconstitutional from 
 the standpoint of its seeking to impose "a tax upon property," 
 further holds that "even as a tax on property it is not unconstitu- 
 tional for want of uniformity." And the Pennsylvania court cites, 
 as fully indorsing its views, Bell's Gap R. R. Co. v. Penn. 134 
 U. S. 232, to the effect that state systems of taxation, "so long as 
 they proceed within reasonable limits and general usage, are with- 
 in the discretion of the state legislature, or the people of the state 
 in framing their constitution ;" and that they are not in violation 
 of the provision in the Fourteenth Amendment that "no state shall 
 deny to any person within its jurisdiction the equal protection of 
 the laws." This provision "was not intended to prevent a state 
 from adjusting its system of taxation in all proper and reasonable 
 ways. It may, if it chooses, exempt certain classes of property 
 from any taxation at all, such as churches, libraries and the prop- 
 erty of charitable institutions. It may impose different specific 
 taxes upon different trades and professions, and may vary the 
 rates of excise upon various products ; it may tax real estate and 
 personal property in a different manner ; it may tax visible prop- 
 erty only, and not tax securities for payment of money ; it may 
 allow deductions for indebtedness, or not allow them." The last 
 preceding quotation, also from the Bell's Gap R. R. case, last 
 above cited, must be understood as affirming the states to have the 
 powers mentioned, if their legislatures are not restrained from 
 their exercise by the state constitutions. S. F. Miller, late one 
 of the justices of the United States supreme court, expresses the 
 same principle in his lectures on the Constitution of the United 
 States, pp. 668-9 : "^ state l aw fo r the valuation of property 
 and the assessment of taxes thereon, which provides for the classi- 
 fication of property, subject to its provisions, into different classes, 
 which makes for one class one set of provisions as to modes and 
 methods of ascertaining the value, and as to right of appeal, and 
 different provisions for another class as to these subjects, but 
 which provides for the impartial application of the same means 
 and methods to all constituents of each class, so that the law shall 
 operate equally and uniformly on all persons in similar circum- 
 stances, denies to no person affected by it 'equal protection of the 
 laws' within the meaning of the Fourteenth Ame"dni< nt Jo the 
 
296 HERTIG ON TAXATION. 
 
 Constitution of the United States." See, under No. 6 below, 
 important inheritance tax case cited. 
 
 5. "The citizens of each state shall be entitled to all privi- 
 leges and immunities of citizens in the several states." Id. Art. 
 IV., Sec. 2. [This clause of the Federal Constitution is not so 
 important in its bearing on the question of taxation rjy the 
 states as most of the others above quoted. Its construction, 
 as made by the federal courts, is favorable to the state taxing 
 powers. Taxation, ordinarily speaking, follows property and not 
 citizenship. Under like property conditions the citizen at home 
 and his neighbor from another state, unless the latter is a mere 
 bird of passage, are treated alike from the taxing standpoint. 
 The tax-dodger is as likely to claim and profit by a sham resi- 
 dence in some particular locality within his own state, as to 
 claim and profit by a sham residence outside his own state. 
 One legal proposition enunciated by the supreme court of the 
 United States with reference to this clause specially favors taxa- 
 tion by the states. A corporation is held to be a citizen of the 
 state where it is incorporated for the purpose of defining whethei 
 the federal courts have jurisdiction where such corporation is 
 one of the parties; but a state may specially tax foreign corpora- 
 tions; they are not "citizens" in the sense which that word has 
 in the first line of the clause under discussion. Paul v. Virginia, 
 8 Wall. 168. In saying that a state may specially tax foreign 
 corporations and discriminate against them in favor of her home 
 corporations," the word "tax" is to be understood in general as 
 having reference to a sum imposed on such foreign corporation 
 as a payment to be made for the privilege of .doing business in 
 such state. Nor does the imposition of such payment infringe 
 upon the commerce clause of the federal constitution (quoted 
 above as No. 3) unless such corporation is strictly engaged in 
 carrying on foreign or interstate commerce, or employed by 
 the government of the United States. Pembina, etc., Milling 
 Co. v. Penna., 125 U. S. 181. Nor in such case is such corpora- 
 tion denied "the equal protection of the laws" under the Four- 
 teenth Amendment, for it has no right to claim such protection 
 except "on condition that it pays the required license tax." Id. 
 The "immunity clause (quoted above as No. 5) does, however, 
 inhibit to some extent the taxing power of the states: they must 
 not impose a discriminating tax upon non-resident traders. 
 Ward v. Maryland, 79 U. S. 418. In this case the Maryland 
 statute required Ward, as a non-resident trader, to take out a 
 license running one year and pay therefor $300.00, while the 
 license for the same time required to be paid by resident traders 
 
HERTIG ON TAXATION. 297 
 
 was in the lowest class only $12.00 and in no case higher than 
 $150.00.] 
 
 6. "No state shall * * * deprive any person of life, 
 liberty or property without due process of law." Fourteenth 
 Amendment, Sec. I. [This clause of the Constitution of the 
 United States stands in close physical connection with No. 4 
 above quoted. The two, then, are naturally cited together and 
 often invoked together as having been violated 'by the constitu- 
 tion or statutes of some state. I have separated No. 4 from No. 
 6, because the latter, in so far as it affects the taxing power of 
 the state, affects the procedure, or machinery- for assessing and 
 collecting taxes, rather than the kind and quality, or the rate and 
 subjects of taxation. If, for instance, a tax is not in contraven- 
 tion of some other provision of the Federal Constitution, and 
 if it is not sought to be assessed and collected in such a way as to 
 reach the tax payers' property without giving to him actual or 
 constructive notice of the proceedings at each successive stage 
 thereof, and without giving him a reasonable opportunity to ap- 
 pear and contest the same, then such tax and the proceedings 
 under it cannot be impeached, under the Federal Constitution, 
 as depriving a person of property "without due process of law." 
 However unfair and foolish a tax may be, always provided it be 
 able to slip past other restraints, it takes the property of tin 
 citizen "with due process of law," if he has but had his notice of, 
 and his chance to contest, the legality of the various proceedings 
 embraced in assessment, levy and collection. Whether in such 
 case with such chance he locally puts his own shoulder to the 
 wheel or not, he shall bawl to the federal Hercules vainly for 
 help. Nor is individual notice of the sitting of a board of equal- 
 ization necessary; it is enough that the time of its sitting is fixed 
 by law, when any aggrieved individual can attend if he sees fit. 
 The United States supreme court said in State Railroad Ta.\- 
 Cases, 92 U. S. 610: "This board has its time of sitting fixed 
 by law. Its sessions are not secret. No obstruction exists to 
 the appearance of any one before it to assert a right, or redress 
 a wrong; and, in the business of assessing taxes, this is all that 
 can be reasonably asked.''] 
 
 One of the most important of recent cases involved the two 
 clauses of the Fourteenth Amendment quoted above by me sep- 
 arately as Nos. 4 and 6, in connection with an inheritance tax. 
 Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283. In 
 this case, a law of Illinois had imposed a legacy and inheritance 
 tax, a tax of i per cent on each inheritance or legacy going to 
 near relations, but only on the excess above $20,000 of such 
 inheritance; a tax of 2 per cent on each legacy or inheritance go- 
 
298 HERTIG ON TAXATION. 
 
 ing to somewhat more remote relatives, on the excess of such 
 legacy above $2,000; and finally on all estates of decedents go- 
 ing to persons more remotely of kin or not of kin at all a tax 
 on the whole estate so distributed without any exemption, on 
 estates of $10,000 or less 3 per cent; on estates of over $10,000 
 and not exceeding $20,000, 4 per cent; on estates over $20,000 
 and not exceeding $50,000, 5 per cent, and on larger estates 6 
 per cent; provided that no estate of less than $500 should be 
 subject to any tax. This progression of rates was assailed in 
 the courts of Illinois as being in violation of the constitution of 
 that state requiring equal and uniform taxation. Illinois hoi cling- 
 that the progressive feature did not violate her constitution, 
 the case went to the supreme court of the United States upon the 
 contention that the establishment of a progressive rate was a 
 denial both of due process of law and of the equal protection of 
 the laws, under the Fourteenth Amendment. The federal court, 
 however, denied the contention, and held the Illinois inheritance 
 tax law to be constitutional. 
 
 7. Congress shall have power to lay and collect taxes, du- 
 ties, imposts, and excises, to pay the debts and provide for the 
 common defense and general welfare of the United States; but 
 all duties, imposts and excises shall be uniform throughout the 
 United States." Art. L, Sec. 8. [This clause which measures 
 the vasf taxing powers of congress does not in itself limit the 
 taxing powers of the states. Except as the states are expressly 
 prohibited in the Federal Constitution or prohibited by 
 construction given to that instrument, from levying and 
 collecting taxes of a certain kind such as "imposts or 
 duties on imports or exports," "duties of tonnage," taxes 
 on inter-state commerce and the like, the states may tax what- 
 ever congress may tax, though congress, on account of the spe- 
 cial limitation of its powers cannot conversely tax whatever the 
 states may tax. A familiar example of the exercise of this con- 
 current and unlimited right of taxation belonging both to the 
 federal and to the state governments, is afforded by the liquor 
 traffic. The liquor seller pays a license tax to both governments, 
 and the nation and the state may make such tax as high as each 
 shall choose. It is, however, a doctrine derived wholly from gen- 
 eral principles, which the federal and most state constitutions 
 pass over in silence that neither the national nor any state gov- 
 ernment has the right to tax the instrumentalities of the other. 
 "The power to tax involves the power to destroy," said Chief 
 Justice Marshall in the celebrated case of McCufloch v. Mary- 
 land, 4 Wheat. 316. Hence if either government could lawfully 
 tax the instrumentalities of the other, such doctrine would be 
 
HERTIG ON TAXATION. 299 
 
 equivalent to proclaiming that the seeds of speedy decay had 
 been planted in the very foundation and structure of our system 
 of government. A particular illustration will suffice. It is no 
 novelty, in taxation for governments to tax writs, pleadings, 
 judgments, all the machinery of legal proceedings, nay even 
 pardons. The tax on pardons in England was formerly four 
 pounds sterlng! Less than a hundred years ago on account of 
 taxes on legal papers, "the expense of carrying through a common 
 action" [at law] could not "be less than about 24 pounds at the 
 lowest rate on the plaintiff's side alone." BENTHAM'S Works 
 (Bowring's ed.) Vol. II., p. 575, in note. In the same volume 
 (p. 593) in an Addition fry a Learned Friend, it is said that the 
 defendant in Roc v. Gudgeon, a chancery case, "submitted that 
 he ought not to be compelled to set out certain accounts which 
 had been required by the bill,' as the expense of taking what is 
 called an office copy of them, a necessary preliminary to any 
 further proceeding on the part of the plaintiff in the case would 
 amount to the sum of 29,000 pounds ; an expense almost wholly 
 arising from the stamps on the paper, on which the office copy 
 of the answer is compulsorily made!" (Held in said case" not 
 necessary to set out said accounts, but the reason for so hold- 
 ing not stated.) It was doubtless owing to Bentham's unan- 
 swerable protests against such taxes that in England, by the 
 statute of 5 George IV., Ch. 41, they were in great measure re- 
 pealed, and have since then become wholly extinct. In France, 
 however, the stamp duties on all manner of legal and quasi-legal 
 documents, certificates, process and the like inaugurated by 
 Mazarin, then for a brief time abolished, but reinstated by Col- 
 bert have survived the vicissitudes of revolutions and govern- 
 ments and still yield a handsome sum to the French revenues.] 
 
 Now the necessary papers in legal process and in the admin- 
 istrative department of nation and state are instrumentalities of 
 government. If nation or state could tax these and other instru- 
 mentalities of each other, the immediate peril in it and the 
 speedy ultimate ruin, if the right to so tax and the fact of so tax- 
 ing were established and continued would be equally apparent. 
 "If the states," said Chief Justice Marshall in McCulloch v. 
 Maryland, above cited, "may tax one instrument employed by 
 the government in the execution of its powers, they may tax 
 any and every other instrument. They may tax the mail ;they 
 may tax the mint ; they may tax pat ent rights ; they may tax the 
 papers of the custom house; they may tax judicial process; 
 they may tax all the means employed by the government to an 
 excess which \vould defeat all the ends of government. This was 
 not intended by the American people." 
 
300 HERTIG ON TAXATION. 
 
 It is an equally well settled principle of American*- juris- 
 prudence that the nation can no more tax the instrumentalities 
 of the state governments than the latter can tax those of the na- 
 tion. 
 
 When all is said, the limitations relating to taxation which 
 the Constitution imposes upon congress are of form rather than 
 of substance. The better construction given to clause Xo. 7 
 above quoted is that congress is authorized "to levy and collect 
 taxes, duties," etc., only for the purpose expressed, "to pay the 
 debts and provide for the common defense and general welfare 
 of the United States." This is a public purpose; but except in 
 so far as the president may kill an appropriation bill with n 
 an appropriation by congress "goes" whether i.s purpose is pub- 
 lic or otherwise. No tribunal other than congress can pass on 
 that question, and there is no way to recover government money 
 paid out on a foolish or corrupt appropriation. The limitation 
 expressed in the words "uniform throughout the United States" 
 is very vital in the sense, that, except as narrowed under the 
 "colonial policy" of the nation (as in the special tariff for Porto 
 Rico, sustained' in Downcs v. Bidr^cll, 18: U. S.) it protects- the 
 people against taxes which discriminate geographically, or be- 
 tween different localities in the United States. If "uniform" 
 were construed in the strict sense of the word, then congress 
 would be confined, both as to duties and internal revenue taxes. 
 to an ad valorem rate, the same at any given time on all the sub- 
 jects of taxation. With this strict meaning of 'uniform," whis- 
 key could not be made to pay a tax equal in amount to four or 
 five times the average cost of producing it, while making tobac- 
 co and other articles pay a tax equal to only a fraction of the 
 cost of their production. Not the strict but the common-sense 
 meaning of "uniform" has been given to the word as used in the 
 Constitution ; a tax, then, is "uniform" when it is so geographically, 
 that is, of the same rate on the same thing throughout the Unit- 
 ed States, though each different thing may be taxed at a different 
 rate, subject to the like geographical uniformity. None of those 
 limitations interfere with the option of congress when to tax and 
 how much to tax. There is a clause in Sec. 9, of Article I. of 
 the constitution that imposes on congress a somewhat ambigu- 
 ous limitation, "No capitation or other direct tax shall be laid, 
 unless in proportion to the census or enumeration hereinbefore 
 directed to be taken." The failure of congress to understand 
 this clause as the federal supreme court afterwards understood 
 it by a divided court, after a reargument which changed the 
 mind of one of the judges caused the federal income tax law of 
 [894 to be held unconstitutional. 
 
HERTIG ON TAXATION. 301 
 
 lUit this, like the other limitations, can hardly be considered 
 as a substantial check on the power of congress to raise revenue 
 by taxation. Congress, it must be remembered, has at its com- 
 mand not only the immense direct powers for taxation granted 
 by the Constitution, but indirectly all powers of the state gov- 
 ernments for the like purpose. The instance in support of this 
 proposition furnished by the financial history of the Civil Wai 
 is worth remembering. In 1861, a "direct tax" aggregating $2:, 
 000,000 was laid upon the states in proportion to their population 
 as evidenced by the census of 1860. The government at Washington 
 having taken the theoretical stand that the seceding states were 
 still in the Union, could not do otherwise than levy upon them 
 their pro rata share of the $20,000,000 tax. This tax was not in 
 form or fact a levy and collection through the federal machinery, 
 but a requisition on the respective states. The northern states paid 
 their pro rata amount of the tax, but raised the money through 
 their own fiscal and taxing machinery sufficient evidence in 
 support of my proposition that the federal government, in ad- 
 dition to its own special tax machinery, indirectly commands 
 for raising further revenue all the taxing machinery of the 
 states. 
 
 The foregoing quoted clauses of the Federal Constitution, 
 numbered from i to 7 inclusive, show in outline with the com- 
 ment appended to them the inter-relation of the federal and 
 state systems of taxation, and particularly those restraining con- 
 siderations which must be constantly borne in mind by whoever 
 would frame or amend a state constitution, or frame or amend 
 a tax code for any state in the Union, and by whoever would 
 give intelligent consideration to work of that kind done or to be. 
 done. The more intricate and detailed varieties of federal and 
 state taxation will be brought under full control and regulation 
 by the new jurisprudence, of which more in other works. 
 
 In the current practice of law as applied to tax matters, and 
 to many other matters as well, the Federal Constitution and its 
 courts always remain as the forlorn or buoyant hope of lawyers 
 whose clients are disappointed in the state courts. An instance 
 lies ready to hand. 
 
 The so called "unit rule" for taxing public service corpora- 
 tions, that is, loosely stated, taxation on the sum of their stocks- 
 and bonds, more accurately stated in Sec. 83 of the tax commis- 
 sion's code in prescribing the mode for valuing franchises (quot- 
 ed above, and applied with approximate accuracy by Calderwood 
 in his argument, p. 272. above) has been sanctioned by the 
 supreme court of the United States (Railroad Tax Cases, 92 U. 
 S. 575), as not in contravention of the Federal Constitution. In- 
 
302 HERTIG ON TAXATION. 
 
 deed the court said: "The validity of the statute is not seriously 
 questioned here on the ground of any conflict with the Consti- 
 tution of the United States." P. 617. 
 
 The far-reaching and radical consequences, however, of a 
 bona fide and continued application of the unit rule, are so appar- 
 ent, that the very contemplation of them has sufficed to paralyze 
 the working of the rule itself. There, for instance, is Illinois, 
 from which state came the group of pioneer cases, in which the 
 rule and the statute embodying it were declared constitutional in 
 92 U. S. 575, just cited. Yet in Illinois the rule and the embody- 
 ing statute remained a dead letter officially, until very recently, 
 when the women of the Teachers' Federation of Chicago, with 
 woman's zeal and her faith in the transfusion of blood into ghosts, 
 brought an action of mandamus against the members of the Illi- 
 nois State Board of Equalization, asking the court to order the 
 board to reassemble and to assess in accordance with such rule 
 and the letter of the law. The court so ordered. Great Flutter. 
 Appeal to the Illinois supreme court. Elaborate opinion by that 
 tribunal affirming on all points the judgment of the lower court. 
 Reluctant Board of Equalization does now reassemble and actu- 
 ally assess. Great rejoicing for that now the ship of Illinois state, 
 and particularly her magnificent tender, Chicago, will float with 
 even keel on deep seas of revenue. Why the Illinois corporations 
 should so deeply mourn and stubbornly contest is not at first 
 glance apparent, when one notes that in Illinois since an extra 
 session of her legislature held in 1898, while they try to list all 
 kinds of property at its "full and true value," they take only 20 
 per cent of such value and put that 20 per cent in an appropriate 
 column of the assessment book as the taxable value of the prop- 
 erty. But low assessments, involving high rates on the assessed 
 value" these and previous immunity from high taxes, moved the 
 Illinois corporations to resist. They had exhausted recourse to 
 the courts of Illinois and found that recourse fruitless. Where 
 now could they go, except to the federal courts, to the sheltering 
 arms of the same "Uncle Sam" who had previously told them in 
 the Q2nd volume of his United States Reports that the validity 
 of the statute was not seriously questioned- on account of any sup- 
 posed conflict with his Constitution, and if it were so questioned, 
 the simple answer would be. no conflict? Here is a newspaper 
 epitome of the first result of fleeing to the good Uncle for shelter : 
 "The United States Court in Chicago took the extraordinary step 
 of setting aside the unit rule assessment of local corporations 
 adopted under the state law, and substituting an assessment 
 made by capitalizing the net earnings. Should this be sustained 
 by the supreme court, probably there would be an end cf fran- 
 
HERTIG ON TAXATION. 
 
 303 
 
 chise taxation on this basis." Minneapolis Tribune, April 13, 
 1902. [This case reviewed, ch. XIX, below.] 
 
 If the foregoing considerations in this chapter, and all of 
 them, were not present to the minds of the legislators and others 
 who passed judgment on the proposed amendments drafted by 
 the Minnesota tax commission, and discussed last winter, such 
 considerations will materially aid any who may choose to recur 
 to the subject in Minnesota, or who may bring fresh minds to 
 amending constitutions in Minnesota or elsewhere in the United 
 States. This, then, is the logical place to set forth those* amend- 
 ments, as well as those different ones which the Minnesota legis- 
 lature did adopt in lieu of them. Article IX of the Minnesota 
 constitution contains, as it stands, 17 sections. By adopting the 
 commission's amendments, this article would have still had 17 
 sections, but the first four would have been substituted out by 
 the like number of the commission's. Here follow in parallel col- 
 umns the four sections of said article and the four sections which 
 the commission sought to substitute for them : 
 
 LIKE NUMBERED SECTIONS OF THE 
 COMMISSION. 
 
 [The reader will note that the 
 words in brackets in the left-hand 
 column mark amendments that 
 have actually been adopted from 
 time to time, and are now a part 
 of the sections wherein they 
 stand ; while the bracketed words 
 in this, the right hand column, 
 are my comment.] 
 
 "Sec. i. The power of taxa- 
 tion shall never be surrendered or 
 suspended." [This proposed sub- 
 stitute for Sec. i of Art. IX. of 
 the actual constitution is short and 
 sweet. The commission judi- 
 ciously observed on p. 53 of their 
 Report, with evident reference to 
 this clause: "Public interests 
 would undoubtedly be best guard- 
 ed under a constitution which 
 divests a legislature of the power 
 of entering into a contract with 
 respect to taxation. The United 
 States supreme court has never 
 rendered a more unpopular deci- 
 sion than when it held that a 
 state legislature mav. unless re- 
 stricted by a constitution, contract 
 away the sovereign power of tax- 
 a f ion. That decision has been ad- 
 
 SECS. I, 2, 3, 4, AS THEY STAND. 
 
 Sec. i. All taxes to be raised 
 in this state shall be as nearly 
 equal as may be, and all property 
 on which taxes are to be levied 
 shall have a cash valuation and 
 be equalized and uniform through- 
 out the state ; [provided, that the 
 legislature may, by general law or 
 special act, authorize municipal 
 corporations to levy assessments 
 for local improvements up- 
 on the property fronting upon 
 such improvements, or upon the 
 property to be benefited by such 
 improvements, or both, without 
 regard to a cash valuation, and in 
 such manner as the legislature 
 may prescribe.] [And, provided, 
 further, that for the purpose of 
 defraying the expenses of laying 
 wntcr pipes and supplying any 
 
304 
 
 HERTIG ON TAXATION. 
 
 city or municipality with water, 
 the legislature mav, by general 
 or special law, authorize any such 
 city or municipality having a pop- 
 ulation of five thousand (5.000) 
 or more, to levy an annual tax 
 or assessment upon the lineal 
 foot of all lands fronting on any 
 water main or water pipe laid by 
 such city or municipality within 
 corporate limits of said city, for 
 supplying water to the citizens 
 thereof, without regard to the 
 cash value of sucn property, and 
 to empower such city to collect 
 any such tax, assessment or fines, 
 or penalties, for failure to pay 
 the same, or any fine or penalty 
 for any violation of the rules of 
 such city or municipality in re- 
 gard to the use of water, or for 
 any water rate due for the same.] 
 [And, provided further, that 
 there may be by law levied and 
 collected a tax upon all inheri- 
 tances, devises, bequests lega- 
 cies, and gifts of every kind and 
 description, above a fixed and 
 specified sum, of any and all 
 natural persons and corporations. 
 Such a tax above such exempted 
 sum may be uniform, or it may 
 In* -graded or progressive, but 
 shall no! exceed a maximum tax 
 of five per cent.] 
 
 Sec. 2. The legislature shall 
 provide for an annual tax suffi- 
 cient to defray the estimated or- 
 dinary exnenses of the state for 
 each year ; and whenever it shall 
 happen that such ordinary ex- 
 penses of the state for any year 
 shall exceed the income of ^ the 
 state for such vear, the legisla- 
 ture shall provide for levying a 
 tax for the ensuing year, suffi- 
 cient with other sources of in- 
 come to pay the deficiency ^of the 
 preceding year, together with the 
 estimated expenses 01 such ensu- 
 ing year. [But no law levying 
 
 hcred to in so many cases that 
 it is not now reasonable to expect 
 that it will ever be overruled by 
 lh,-!t court." The commission here 
 meant the celebrated cag 
 Dartmouth College v. Woodward, 
 holding that a grant is an exe- 
 cuted contract, and as such can- 
 rot afterward be "impaired" by 
 any state. The commission, how- 
 ever, failed to s.ate that the 
 scope of the decision has been 
 much limited by subsequent deci- 
 sions; and the commission could 
 not have been expected to state 
 that the new jurisprudence will 
 not find it a titanic task to ex- 
 tract such sting as may still re- 
 main in Dartmouth College v. 
 Woodward. Many of- the states 
 have taken the precaution to 
 guard, with appropriate constitu- 
 tional plank, against any effect 
 of said decision that might other- 
 wise be felt in subsequent tax 
 contracts. Thus Colorado (con- 
 stitution of 1876) : "The power to 
 tax corporations and corpor- 
 ate property, real and personal, 
 shall never be relinquished or 
 suspended." Thus California 
 (constitution of 1879) : "Ihe 
 power of taxation shall never be 
 surrendered or suspended by any 
 grant or contract to which the 
 state shall be a party." The Cali- 
 frnia plank is in a favorite form 
 and prohibits as broadly though 
 not so concisely as the' commis- 
 sion plank.] 
 
 "Sec. 2. All taxes shall be uni- 
 form upon the same class of sub- 
 jects within the territorial limits 
 of the authority levying the taxes ; 
 and shall be levied and collected 
 under general laws for public 
 purposes." [This differs from a 
 well-known plank in the Penn- 
 sylvania constitution of 1873, only 
 by the addition of the words, 
 "for public purposes ;" which, 
 though "surplusage," do no 
 harm. It is a fundamental doc- 
 trine of tax law that a tax is not 
 a valid tax unless "for public 
 purposes." Perhaps the commis- 
 
HERTIG ON TAXATION. 
 
 305 
 
 a tax, or making other provi- 
 sions for the payment of inter- 
 est or principal of the bonds de- 
 nominated "Minnesota State 
 Railroad Bonds," shall take effect 
 or be in force until such law 
 shall have been submitted to a 
 vote of the people of the state 
 and adopted by a majority of the 
 electors of the state voting upon 
 the same.] 
 
 Sec. 3. Laws shall be passed 
 taxing all moneys,- credits, invest- 
 ments in bonds, stocks, joint stock 
 companies, or otherwise, and also 
 all real and personal prooerty, ac- 
 cording to its true value in 
 money; but public burying 
 grounds, public school houses, 
 public hospitals, academies, col- 
 leges, universities, and all semi- 
 naries of learning, all churches, 
 church property used for religious 
 purposes, and houses of worship, 
 institutions of purely public char- 
 ity, public property used exclu- 
 sively for any public purpose, and 
 personal property to an amount 
 not exceeding in value two hun- 
 dred dollars for each individual, 
 shall, by general laws, be exempt 
 from taxation. 
 
 sion thought that legislatures are 
 apt to forget this. See pp. 293-5, 
 above, for the Pennsylvania con- 
 struction of this plank's legal ef- 
 fect and its harmony with the 
 Fourteenth Amendment to -the 
 federal constitution.] 
 
 "Sec. 3. The legislature may by 
 general laws provide for the ap- 
 portionment to counties, of the 
 amount of revenue to be raised 
 therein for state purposes, and 
 may in any law providing for 
 such apportionment authorize 
 counties to select the subjects up- 
 on which revenue is to be raised 
 therein for state or county pur- 
 poses, and to apportion such rev- 
 enue among the cities, villages 
 and townships of the county." 
 [The commission offered this its 
 local option plank in harmony 
 with the view expressed in its 
 Report, p. 55: It should be left 
 to a large extent to the political 
 subdivisions of the state to de- 
 termine for themselves the ob- 
 jects for which revenue is to be 
 raised therein and the subjects 
 from which it is to be exacted." 
 Of this, more anon.] 
 
 "Sec. 4. The legislature may 
 by a general law or special act 
 may prescribe." 
 [The long dash indicates omit- 
 ted words which may be supplied 
 from the first proviso in Sec. i of 
 Art. IX. as it stands. The com- 
 mission, to have a fourth section 
 in place of the actual section 4, 
 which is obsolete by disuse and 
 superfluous by original sin 
 shifted into this order the first 
 proviso in Sec. I, that relating to 
 "assessments for local improve- 
 ments."] 
 
 The commission provided also for the repeal of sec. 17 of 
 article IX, which section got into the constitution by the amend- 
 ment route, Nov. 3, 1896. It relates to the taxation of sleeping 
 car, telegraph, telephone and express companies, to the taxation 
 
 Sec. 4. Laws shall be passed 
 for taxing the notes and bills dis- 
 counted or purchased, moneys 
 loaned, and other property, ef- 
 fects or dues of every description, 
 of all banks and all bankers, so 
 that all property employed in 
 banking shall always be subject to 
 a taxation equal to that imposed 
 upon the property of individuals. 
 
306 ( HERTIG ON TAXATION. 
 
 of "domestic insurance companies of the state of any kind," to 
 the taxation of mining properties, boom companies, and "of all 
 ship builders or owners doing business in the state or having a 
 port therein." 
 
 It is shabbily and ambiguously drawn, and drags itself through 
 its wearisome lines with a shambling helplessness that moves at 
 once to wonder and pity ; but it is not without advantage to the 
 state ; if it does not enlarge the horizon of the constitution by in- 
 telligent ascent to some Mount Pisgah of taxation, it at least 
 contrives to make an awkward rent in the sky. Upon the proper- 
 ties mentioned it authorizes the legislature to impose "a tax as 
 uniform as reasonably may be with the taxes imposed upon sim- 
 ilar property in said state, or upon the earnings thereof within 
 this state, but [said tax] may be graded or progressive, or both, 
 and in providing for such tax, or in providing for ascertaining the 
 just and true value of such property, it shall be competent for the 
 legislature, in either or all of such cases, to impose such tax upon 
 any or all property thereof within this state, and in either case by 
 taking as the basis of such imposition the proportionate business, 
 earnings, mileage or quantity of production or property now or 
 hereafter existing of any such companies, persons or owners, 
 transacted or existing in this state, in relation to the entire busi- 
 ness, mileage or quantity of production or property of such com- 
 panies, persons or owners as aforesaid ; or in such other manner, 
 or by such other method, as the legislature may determine." Pro- 
 viso that "this act shall not apply to property owned by railroads, 
 their lands and other property ;" proviso for distributing the taxes 
 on mining property "between the state and the various political 
 subdivisions thereof wherein the same is situated in the same pro- 
 portion as the proceeds of taxes upon real property are distrib- 
 uted ; further proviso that "nothing in this act contained shall 
 operate to authorize the assessment or taxation of land or ordinary 
 business blocks or property owned by any such corporation, per- 
 son, firm or company, except in the manner provided by the ordi- 
 nary methods of taxation." Whatever the net meanings of the 
 cumbrous authorizations conferred on the legislature by this sec- 
 tion 17, they would not be of any use under the flexible amend- 
 ments offered by the commission. That body, therefore, rightly 
 provided for the repeal of said section. 
 
 The struggle over the commission's amendments in the leg- 
 islature resolved itself in substance into a controversy as to wheth- 
 er an "open-door" constitution is better than a "closed-door" one. 
 Open-door or "wide-open"" amendments for both descriptions 
 were used to denote the same thing mean amendments giving to 
 the legislature far greater discretionary power than is left at the 
 
HERTIG ON TAXATION. 307 
 
 disposal of that body by the constitution as it is. The commission 
 defended itself in advance (Report, p. 53), and very neatly, with 
 reference to giving the legislature an entirely free hand as regards 
 exemptions from taxes. "Treated- as an original proposition, it 
 may well be questioned whether any class of property, save that 
 devoted strictly to public use, should be exempt. Abuses barnacle 
 themselves to the exemption of every other class of property. In 
 some instances they are very great and materially increase the 
 burdens borne by other classes. They offend both the letter and 
 the spirit of the constitution. Experience teaches that in taxation 
 when the law gives an inch an ell is taken. A more wholesome 
 public sentiment would perhaps be engendered if exemptions were 
 restricted wholly to public property." 
 
 It is interesting to note, in this connection, that custom and 
 the temper of their constituents have proved all sufficient in states 
 whose constitutions leave in matters of taxation to the legislature 
 open door and a free hand, to restrain from radical and startling 
 innovations in tax laws. It must be confessed, however, that the 
 greater the discretionary power of the legislature, the greater is 
 the opportunity for corrupt and unscrupulous members to levy 
 blackmail by threatening the various moneyed interests with to 
 them unpalatable legislation, and the greater is the need, and con- 
 sequently the greater effort on the part of the threatened interests 
 to elect, where possible, their own men to the legislature. But 
 good results are often worked out on lines far from ideal ; as Em- 
 erson says, in substance, "The ways of Providence and of a white- 
 chokered student of divinity are not the same ;" nobody has al- 
 leged that the Pennsylvania railroad ever went to a prim professor 
 of either ethics or political economy for a program ot the lines on 
 which, under the wide-open constitution of that state, it should 
 control the legislature ; and yet, whether designed in detail or 
 not by that very conservative corporation, the Pennsylvania rail- 
 road, its control of the legislature of its home state has resulted 
 in the best system of taxation that any state in the Union can 
 show. We are not called upon to fancy that the Pennsylvania 
 railroad aimed to benefit the public, or to benefit anything but 
 itself. It seemingly took the plan of procuring moderate taxation 
 for its own property by 1 seeing to it assiduously that no other 
 moneyed interest should escape. This cunning policy has given to 
 the state abundance of revenue and, as young Mr. Purdy ingenu- 
 ously confesses, practical immunity from the tax-reformer. It 
 must not, however, be assumed either that the Pennsylvania sys- 
 tem is perfect, or that it escapes all attempts at modification. 
 They created a tax commission there in 1887, and another in 
 1889. The first "reportod a revenue bill, a principal feature of 
 
308 HERTIG ON TAXATION. 
 
 which was the substitution of a single tax on corporations, to 
 take the place of the existing taxes thereon on capital stock, gross 
 receipts, and. loans or bonded indebtedness." EASTMAN, Taxa- 
 tion for State Purposes in Pennsylvania (Phila., 1898), p. 14. 
 The legislature took 1:0 action on the bill so. reported. The next 
 commission signaled itself by a divergence of opinion, its mem- 
 bers failing to agree on any measure. They "made individual re- 
 ports, suggesting various changes in methods of taxation, none 
 of which was made." EASTMAN, ibid. 
 
 "In 1892 a Pennsylvania Tax Conference was formed by the 
 representatives of various important interests in the state, an un- 
 official but highly respectable body, owing to the talents and earn- 
 estness of the members thereof. The object of the commission 
 was to supply statistics on which discussions of proposed changes 
 of taxation might be based. It has been mainly owing to the lack 
 of such data that former attempts to agree upon a revision of the 
 tax laws have failed. Two preliminary reports were made by this 
 conference, one containing much valuable information relative to 
 objects of taxation in Pennsylvania, and the other giving a com- 
 parative statement of the tax systems of all the states. The com- 
 mission finally reported * * * [a] revenue bill, introduced at 
 the session of 1895." * * * EASTMAN, xv. The legislature 
 proceeded, as regards the proposed measure, with extreme cau- 
 tion. It instructed by resolution the auditor-general "to procure 
 from all corporations in the state reports made in the manner re- 
 quired by the tax bi!4 then pending, and to make feigned settle- 
 ments thereon [make returns as if the bill were a law], in order 
 to ascertain whether the proposed system would produce an equal 
 amount of revenue with the old. Such reports were to be obtained 
 for two successive years. They have already been obtained for 
 one year, and have been recently required for the second year. It 
 is understood that the statistics thus far obtained have failed to 
 show that the proposed measure would produce the necessary 
 amount of revenue." EASTMAN, ibid. 
 
 Corporations in Pennsylvania pay an annual tax of five mills 
 upon each dollar of the actual value of the whole capital stock 
 of all kinds, including common, special and preferred. "The stock 
 must not be assessed at less than the average price at which it 
 shall have been sold during the tax-year, but it may and should be 
 appraised at more than such average price if the value of the cap- 
 ital stock between November ist and I5th was greater than such 
 average price." Commonwealth v. Pcnna. R. R., 145 Pa. 74, 
 ap. EASTMAN, 53. 
 
 Pennsylvania courts hold that "the tax upon capital stock of 
 corporations is a tax upon their property, franchises, assets and 
 
HERTIG ON TAXATION. 309 
 
 earning capacity." EASTMAN, p. 50, citing' Fox's Appeal, 112 
 Pa. 337, and other cases. They hold also that "the tax upon cap- 
 ital stock is constitutional." KASTMAN, p. 50, citing Common- 
 wealth v. National Oil Company, 157 Pa. 515, and Commonwealth 
 v. Mill Creek Coal Co., 157 Pa. 524. "So much of the capital 
 stock of corporations, limited partnership and joint-stock associ- 
 ations, organized for manufacturing purposes, as is invested in, 
 and actually and exclusively employed in carrying on manufac- 
 turing within the state (except companies engaged in the brewing 
 or distilling of spirits or malt liquors, and such as enjoy and ex- 
 ercise the right of eminent domain) is exempt from the tax on 
 capital stock, but so much of the capital stock of said companies, 
 so organized, as may be invested in any property or business not 
 strictly incident or appurtenant to their manufacturing business, 
 is subject to said tax." EASTMAN, pp. 59-60. 
 
 It is constitutional to exempt manufacturing corporations, 
 and in making such exemption it is constitutional to exclude from 
 it "corporations engaged in the manufacture of spirituous or malt 
 liquors, or having and enjoying the right of eminent domain. "- 
 EASTMAN, ibid. 
 
 Banks, savings institutions, and foreign insurance companies 
 are not subject to the foregoing mode of taxation. Private bank- 
 ers and brokers, incorporated banks and savings institutions (hav- 
 ing no capital stock) are subject to a tax of three per cent upon 
 the amount of their net earnings or income. All incorporated 
 banks, or those having corporate capital, may at their option pay 
 a tax of four mills on the dollar of the actual value of their shares, 
 arrived at by adding to the amount of capital stock paid in the 
 surplus and undivided profits ; or they may at their option pay 
 annually a tax of ten mills on the dollar of the par value of their 
 shares. Such option favors, of course, those banks whose surplus 
 and undivided profits aggregate more than one and one-half times 
 their capital. The payment of such tax exempts them from all 
 local taxation except on their real estate. By a fiction of law, 
 usual in the states, such tax is regarded as assessed upon and as 
 paid by the shareholders on their respective shares, though in 
 practical effect assessed to and paid by the bank. Foreign insur- 
 ance companies pay a tax of two 'per cent on premiums received 
 within the state, whether received "in money, or in the form of 
 notes, credits, or other substitutes for money." 
 
 In addition to the capital stock tax just described, "all trans- 
 portation and transmission companies of every description are 
 subject to a tax of eight mills on the dollar of their gross re- 
 ceipts derived from passengers and freight traffic transported 
 wholly within the state, and from telegraph, telephone and ex- 
 
310 HERTIG ON TAXATION. 
 
 press business done wholly within the state, .and all electric light 
 companies are subject to a like tax upon their gross receipts 
 [in so far as] derived 'from [their] business * [as] electric 
 light companies.' ' EASTMAN, p. 81. The tax on gross re- 
 ceipts applies to "every railroad company, pipe-line company, 
 conduit company, steamboat company, canal company, slack wa- 
 ter navigation company, transportation company, street passen- 
 ger railway company, and every other company, joint-stock as- 
 sociation or limited partnership, now or hereafter incorporated 
 or organized by or under any law of this commonwealth, or now 
 or hereafter organized or incorporated by any other state or by 
 the United States or any foreign government, and doing busi- 
 ness in this commonwealth, and owning, operating, or leasing 
 to or from another corporation, company, association, joint- 
 stock association or limited partnership, any railroad, pipe line, 
 slack water navigation, street passenger railway, canal, or other 
 device for the transportation of freight or passengers or oil, and 
 every telephone or telegraph company incorporated under the 
 laws of this or any other state or of the United States and doing 
 business in this commonwealth, and every express company, in- 
 corporated or unincorporated, doing business in this common- 
 wealth, and every firm, copartnership, or joint-stock company or 
 association doing express business in this commonwealth, and 
 every firm, co-partnership, or joint-stock company or associa- 
 tion doing express business in this commonwealth, and every 
 electric light company and every palace car and sleeping car 
 company incorporated or unincorporated, doing business in this 
 commonwealth." Act of June i, 1889. Sec. 23 (Pa. Laws of 
 1889, p. 420), Ap. EASTMAN, pp.' 81-2. This gross earnings tax 
 is historically a later tax than the tax on capital stock, and as the 
 capital stock tax. "is a tax, upon * property, franchises, as- 
 sets and earning capacity," (see above), it should follow logi- 
 cally fhat the Pennsylvania gross-earnings tax, if technically a 
 tax upon "property," is double taxation. The conclusion that it 
 constitutes double taxation may be avoided by holding that it is 
 technically a franchise tax and not a property tax. "The su- 
 preme court of the United States, in Phila. & Reading R. R. 
 Co. v. Penna, 15 Wall. 284, intimates that this may be the case, 
 and similar taxes in other states have been directly ruled to be 
 franchise taxes, notably in Maryland where it was held in State 
 v. [Baltimore & Ohio R. R. Co.] 48 Md. 49, that a similar tax 
 was not upon property, but 'a tax upon the franchise of the cor- 
 poration, measured by its business.' ' EASTMAN, p. 83. 
 
 The tax on gross receipts is subject to the limitation imposed 
 by the Constitution of the United States, as construed by the 
 
HERTIG ON TAXATION. 311 
 
 highest federal court, that such tax cannot lawfully be imposed 
 by any state 'upon so much of the gross receipts as is derived 
 from interstate commerce. Phila. & Southern S. S. Co. v. 
 Pennsylvania, 122 U. S. 326, which case questions in part the 
 case in 15 Wall. 284, though not its franchise intimation, except 
 to hold that in the case at bar, gross earnings tax was but a fran- 
 chise tax: Telegraph companies, for instance, ''are liable to 
 tax only on gross receipts derived from messages transmitted 
 wholly within the state." Western Union Telegraph Co. v. Pa. } 
 128 U. S. 39. In consequence of such rulings by the supreme 
 court of the United- States, Sec. 23 of the Pa. act of June i, 1889, 
 above cited conforms to them by limiting said tax to the gross 
 receipts "received from passengers and freight traffic trans- 
 ported wholly within this state, and from telegraph, telephone, 
 or express business done wholly within this state, or from busi- 
 ness of electric light companies, and from the transportation of 
 oil done wholly jwithin the state." 
 
 The third and further tax which corporations pay, the tax on 
 corporate loans, applies, of course, only to those corporations 
 which, have bonds or other evidences of indebtedness outstand- 
 ing. This tax, in form, is paid out of the lender's money, since 
 it is collected through the corporations; they by law must de- 
 duct the amount of the tax out of interest payments to the hold- 
 ers of their obligations. County and other municipal loans are 
 subject to the like tax; that is, the holder of county, city, or other 
 like bonds, must stand a deduction from the interest accruing 
 to him, which is held back by the county, city or other treasurer, 
 and is paid by such treasurer directly to the state. This tax on 
 corporate and municipal loans 'is at the same rate, "four mills 
 on the dollar of the nominal value thereof," and is of the na- 
 ture of an income tax. 
 
 "Inasmuch as such loans are always supposed to be of record 
 with the corporations, counties and municipalities issuing them, 
 it was deemed better for the purpose of accurately collecting 
 the tax thereon to make such corporate, county and municipal 
 obligations separate subjects of taxation, and to require the 
 treasurers of the corporations, counties, and municipalities is- 
 suing them to collect the tax by deducting it from the interest 
 paid thereon, rather than to depend upon the holders of the ob- 
 ligations returning them to the local assessors for taxation. "- 
 EASTMAN., p. 66. This tax is in fact, "the state tax imposed 
 and provided on mortgages, money owing by solvent debtors," 
 etc. Commonwealth v. Lehigli Valley R. R. Co., 120 Pa. 445. 
 By Section I, act of June I, 1889, as amended by the act of June 
 8, 1891, "all mortgages, all moneys owing by solvent debtors, * 
 
312 HERTIG ON TAXATION. 
 
 * * all articles of agreement and accounts bearing interest, 
 all public loans whatsoever, except those issued by this common- 
 wealth or by the United States," as well as certain other sub- 
 divisions of moneyed capital therein mentioned are "made tax- 
 able annually for state purposes at the rate of four mills on each 
 dollar of the value thereof." EASTMAN, p. 153. 
 
 "The tax upon the loans of counties and municipalities is 
 constitutional." EASTMAN, p. 69, citing Commonwealth v. Ches- 
 ter City, 123 Pa. 623. But "outstanding bonds of a city, pur- 
 chased by it, and held in its sinking fund, are not taxable, * * 
 nor are those which are overdue, outstanding, and unredeemed." 
 EASTMAN, pp. 69-70. 
 
 The application of the tax on loans is limited by a decision of 
 the supreme court of the United States to residents of the state ; 
 loans held by non-residents of Pennsylvania are not taxable by 
 her. State Tax on Foreign Held Bonds, 15 Wall. 300. While 
 such tax ultimately falls upon the borrower, that is in so far as 
 it may be effectively collected, yet so long as it is moderate in 
 amount, it is at least an open question if the lender would not 
 rather take a less interest and pay his four mill tax than get a 
 higher rate and at the same time perjure himself, or use other 
 devices to "cover" his bonds, mortgages and other "credits" 
 against an impending tax of 3 per cent on the capital thereby 
 represented. 
 
 The three taxes above described, as well as the others item- 
 ized below, are paid directly into the state treasury, which 
 receives an aggregate annual revenue of many millions of dol- 
 lars; in the year ending Nov. 30, 1899, which is the last whose 
 figures are before me the total gross revenue of the state treas- 
 ury of Pennsylvania was $15,158,462.15. Of this sum there was 
 received from the U. S. government on account of "war claims 
 for mobilization of troops," $164,983.10; deducting which leaves 
 revenue proper, $14,993,479.05. 
 
 I classify the receipts that go into the making up of this im- 
 mense sum, in the order of their size, and tabulate them here as 
 giving a better insight into the practical workings of the Penn- 
 sylvania system than many pages of comment: 
 From tax on capital stock (above described) . $4,575,511.88 
 From tax on personal property (bonds, mortgages 
 
 and other moneyed capital) 2,764,258.48 
 
 From tax on corporate loans (above described). . . 1,149,409.65 
 
 From tax on collateral inheritances 933,594.41 
 
 From bonus on charters (incorporations fees, 1-3 
 of i per cent in some cases, 1-4 of i per cent 
 in others) 780,626. 70 
 
HERTIG ON TAXATION. 318 
 
 From tax on corporate gross receipts (above de- 
 scribed) 748,214.37 
 
 From tax on premiums 646,775 . 75 
 
 From tax on bank stocks 548,810. 17 
 
 From retail liquor licenses 536,892.31 
 
 From mercantile licenses 518,148.65 
 
 From wholesale liquor licenses , , 448,686.74 
 
 From brewers' and distillers' licenses 244,235. 19 
 
 From bottlers' licenses 156,822.06 
 
 From tax on fees of office 151,599.65 
 
 From tax on writs, wills, and deeds 144,021 .22 
 
 From tax on income (3 per cent as described). . . . 96,126.06 
 
 From tax on gross premiums 61,882.87 
 
 From billiard licenses 42,466. 25 
 
 From interest on state deposits 36,424. n 
 
 From tax on building and loan association stock. . . 30,431 .71 
 
 From brokers' licenses 29,787.95 
 
 From personal fees 27,240. 53 
 
 From notary public commissions 22,150.00 
 
 From oleomargarine licenses .- 18,882.46 
 
 From theater and circus licenses 18,382.66 
 
 From eating-house licenses 17,794.24 
 
 From auctioneers' licenses 14,325.45 
 
 From fertilizer license fees 13,900.00 
 
 From annuity for right of way 10,000 . oo 
 
 From escheats 6,694 . 21 
 
 From fees for breach of oleomargarine laws 4>55 2 3 
 
 From tax on other gross receipts . 4,120.01 
 
 From peddlers' licenses 1,296.70 
 
 While there seems to be some doubt whether a strict construc- 
 tion of the Pennsylvania laws as they now are would authorize 
 the exemption of corporation property, corporation shares, mort- 
 gages, bonds, and other moneyed capital from all local taxation, it 
 seems to be the practice to construe them generally in favor of 
 such exemption. EASTMAN, 163. The state revenue is collected 
 through the counties. Out of the auditing and paying by the 
 state to the counties "all the expenses of collection of every kind" 
 incurred by them, including the remitting of uncollectible taxes, 
 etc., such auditing and paying being "matters of great labor 
 and considerable vexation of spirit to the Board of Revenue 
 Commissioners," grew the suggestion to the legislature, and its 
 'vloption thereof, that "a fixed proportion of the tax [so collected] 
 e-bould be returned to * * * [the counties] annually, the 
 (Tmnties to Day therefrom all expenses of every kind connected 
 with the tax." The proportion to be returned was first fixed at 
 
314 HERTIG ON TAXATION. 
 
 one-third. Act of June i, 1889. "In 1891, when there appeared 
 to be great danger of the passage of the 'Granger' Revenue Bill, 
 then pending, it was agreed as a sop to Cerberus, to increase the 
 proportion to be returned to three-fourths, which was accordingly 
 done, * * * It will probably be impossible for the Com- 
 monwealth ever to discontinue this donation and reassume its own, 
 no matter how badly it may need revenue." EASTMAN, 162, in 
 Note. The receipt by the counties of such large sums from the 
 state treasury tends to make them careful in considering proposed 
 changes in the system ; and besides does away with all wrangling 
 before a state board of equalization as to the valuations which 
 shall prevail in the respective counties. 
 
 The counties, therefore, have exclusive jurisdiction in the 
 matter of assessing property subject to local taxation. It is 
 assessed every three years "under the authority of the commis- 
 sioners of the several counties." Anyone dissatisfied with his 
 assessment may appear before the county commissioners and seek 
 to have it corrected. An appeal from the commissioners lies to 
 the court of common pleas, which is a court of general jurisdic- 
 tion. 
 
 Eastman's description of the property subject to local taxa- 
 tion in Pennsylvania is very simple : 
 
 . "i. Real estate, viz.: All houses, lands, lots of ground, and 
 ground-rents, mills and manufactories of all descriptions, all fur- 
 naces, forges, bloomeries, distilleries, sugar houses, malt houses, 
 breweries, tan yards, and ferries. 
 
 "2. The following personal estate, viz. : All horses, mares, 
 geldings, and cattle above the age of four years. 
 
 "3. All offices and -posts of profit, professions, trades, and 
 occupations, and all single freemen above the a<^e of twenty-one 
 years who shall not follow any occupation or calling." P. 235. 
 
 "So much of the real estate of public corporations a's may be 
 essential to the exercise of their corporate franchises is exempt 
 from all county and local taxation." EASTMAN, pp. 235-6, and 
 cases there cited. "The tracks, depots, rolling stock, etc., of rail- 
 road companies are, therefore, exempt from taxation for local 
 purposes, but the property of such public corporations which is 
 not essential to the exercise of their corporate privileges is so 
 taxable. 'Corporations formed for private purposes can claim no 
 exemption. Cwbp.n Iron Co. v. Carbon County, 30 Pa. 251. "Ma- 
 chinery so attached as to become fixtures is taxable as real estate. 
 Patterson v. Del Co., 70 Pa. 381." Ibid. 
 
 The above details as to taxation in Pennsylvania are particu- 
 larly appropriate for illustration and study in considering changes 
 proposed in those state constitutions which, like Minnesota's, limit 
 
HERTIG ON TAXATION. 315 
 
 closely the power of the legislature as regards the scope of tax 
 laws. Said details are of special importance, when it is remem- 
 bered that the legislative facts which they set forth arose under a 
 "wide-open" constitution, from which, in fact, the tax commis- 
 sion, as already stated, copied the principal one of the amendments 
 appended to i-ts code and recommended for adoption in Minne- 
 sota. 
 
 The constitution of Pennsylvania, as regards taxation, may be 
 said to have followed the law rather than to have caused the law 
 to follow it. Indeed, the supreme court of that state has said 
 that her present constitution, adopted in 1873, merely declares the 
 pre-existing law of taxation as it there prevailed. Constitutions 
 of the "wide-open" character may be classed as such by their ex- 
 press terms or by judicial construction. Pennsylvania's is of the 
 former, Wisconsin's and New Jersey's of the latter sort. It is 
 worthy of note that like stage of development of like people at 
 substantially the same time, in adjoining states much alike "in 
 needs and climate, has, in the case of Wisconsin and Minnesota, 
 drawn them very near together as regards the character and prac- 
 tical effect of their tax laws, notwithstanding the divergence in 
 their respective constitutions and statutes on this subject. Wis- 
 consin, with a much more stringent oath-bound law for assessing 
 property than Minnesota has, contrives to reach about the same 
 percentage of personal property as Minnesota. Minnesota has by 
 contract a gross earnings tax law for railroad corporations, as 
 already stated (ch. ix) ;Wisconsin has the like gross earnings tax 
 by . statute which her supreme court has sustained despite that 
 clause of her constitution which runs thus : "The rule of taxation 
 shall be uniform, and taxes shall be levied upon such property 
 as the legislature shall prescribe." This clause, by the way, is all 
 that the Wisconsin constitution says upon taxation. But how can 
 taxation be held "uniform" where an average tax of three per cent 
 is levied upon such "credits and other moneyed capital" as the as- 
 sessor may find, and a tax of three or four per cent is levied on 
 the gross income of railroads? It is, to borrow Hamlet's expres- 
 sion, "as easy as lying," and is usually achieved in much the same 
 way.. Of course, an exceptionally frank judge might say, and 
 with great propriety, that in so far as the law declares that it 
 values credits and moneyed capital at their "full and true value," 
 and levies a tax according to the same, the law is itself a liar, and 
 levies in fact an income tax as I have above (p. 269) demonr 
 strated in the case of bank stocks ; and he might further say that 
 the levying of a gross earnings tax is in effect an approach to the 
 only equality and uniformity within the power of the law to reach 
 even approximately, and so is not in conflict with the "uniform" 
 
316 HERTIG ON TAXATION. 
 
 clause in state constitutions. But judges are seldom that frank, 
 even when that perspicuous. 
 
 It is also worthy of note, as regards Wisconsin, that, although 
 she might constitutionally tax church property, graveyards, etc., 
 which many constitutions, including Minnesota's, expressly ex- 
 empt, yet neither in what she has chosen to tax or chosen to ex- 
 empt is there any matter showing abuse of legislative discretion, 
 or any marked departure from the practice in these respects pre- 
 vailing generally in the American states. This point is interest- 
 ing, because it refutes in a practical way the objections occasion- 
 ally made last winter to the amendments proposed by the tax com- 
 mission, that should they become a part of the constitution, Min- 
 nesota might use the privilege thereby open to her to tax church 
 property. And it is again and particularly worthy of note that 
 the simple taxation plank of her constitution has proven so satis- 
 factory to the people of Wisconsin, that it stands unamended, 
 and has so stood ever since Wisconsin's admission as a state into 
 the Union. 
 
 New Jersey is another state whose constitution, by its brevity 
 on the subject of taxation, readily lends itself to judicial construc- 
 tion giving to it a "wide-open" character. Paragraph 12 of sec. 7 
 of art. IV., of the New Jersey constitution, contains all that its 
 framers chose to say for the guidance and restriction of the legis- 
 lature in the matter of assessment for taxes. Said paragraph is 
 as follows : "Property shall be assessed for taxes under general 
 laws, and by uniform rules, according to its true value." 
 
 New Jersey, as the home of most of the "trusts," deserves 
 special mention. She encourages the large corporations to make 
 their technical home within her borders by enacting laws nicely 
 designed to secure to New. Jersey corporations all the advantages 
 of corporate organization combined with such strict imposition of 
 technical requirements, as will just save them from being ad- 
 judged "tramp" corporations. Wide-open, but not too wide-open, 
 is her policy in that behalf. A "tramp" corporation, by the way, 
 is one formed nominally in a given state, under the wide-open laws 
 thereof, its stockholders being practically all non-residents, and 
 the corporation keeping no books, no office, and transacting no 
 business in the state of its incorporation. The stockholders of a 
 "tramp" corporation are in fact partners, and subject to the unlim- 
 ited liabilities thereof. 
 
 New- Jersey, however, in building a comfortable and bomb- 
 proof technical home for vagrant corporations, charges an aris- 
 tocratic rental for the same aristocratic as compared with the 
 plebeian rates charged in some of the too wide-open states. Evi- 
 dently, however, she charges no more than "the traffic will bear/' 
 
HERTIG ON TAXATION. 317 
 
 or than her "high-rolling" lodgers are willing to pay. She not 
 only gets tidy fees for incorporations (aggregating $404,429.94 
 for the year ending Oct. 31, 190x3, and $588,319.30 for the year 
 ending Oct. 31, 1901), but she collects an annual tax of i-io of i 
 per cent on the capital stock of corporations at that rate on 
 amounts of capital ''up to and including three million dollars, 
 and at a less rate on amounts in excess of that sum." Besides 
 the fees above mentioned" received for incorporations in the two 
 years ending, respectively, Oct. 31, 1900, and Oct. 31, 1901, her 
 state tax on corporations other than railroad and canal corpora- 
 tions, for these two years, yielded $1,494,719.70 and $1,633,074.19. 
 She does not in so many words say, "Special rates to big trusts," 
 but her laws plainly imply that motto. Now it will naturally 
 occur to the unsophisticated reader that while such laws may 
 yield to New Jersey large revenues, it would seem that they do not 
 conform to her constitution, for that the taxes thereby collected 
 are not assessed "under general laws and by uniform rules, ac- 
 cording" to the "true value" of the property. Here, too, the 
 answer is easy. The New Jersey law calls this tax "an annual 
 license fee or franchise tax." "It is not a tax on property, and 
 not within the equality clause of the constitution." Standard Un- 
 derground Cable Co. v. Attorney General, i Dick. Ch. Rep. 270. 
 
 "It would appear, from a cursory reading of the tax laws of 
 New Jersey, that all the state taxes imposed thereby on corpora- 
 tions are denominated 'franchise taxes,' with the obvious intention 
 of placing them beyond the provisions of the equality clau?e of 
 the state constitution." EASTMAN, p. 50. 
 
 As might have been safely predicted in advance, the Minne- 
 sota tax commission's proposed amendments to the constitution 
 could no more run the gauntlet of further amendment and come 
 out whole than could the commission's proposed tax code. 
 Amongst others the attorney general of the state, W. B. Douglas, 
 proposed, in lieu of those offered by the commission, a somewhat 
 different set, and by no means lacking in merit. He prefaced his 
 new section i with a clause from that section nearly as it now 
 stands, "All taxes shall be as nearly equal as may be." This 
 sounds well ; and if the current estimate of the public mind be 
 correct, so that it is really attuned to the jingle of this phrase, 
 and would be suspicious of a constitution that should omit the 
 same, then its insertion and retention can be defended on diplo- 
 matic grounds. But without a special clause giving technical 
 significance to "equal," it offers us the alternative of becoming 
 meaningless or mischievous. There is an equality of rate and an 
 equality of ability to pay not measured by equality of rate or 
 equality of justice. The principle of equality of rate has been 
 
318 HERTIG ON TAXATION. 
 
 formally abandoned in some cases, as in the inheritance tax laws 
 and income tax laws ; and the state of Pennsylvania has gone so 
 far as to abandon it in taxing real estate. Equality of rate should 
 be abandoned in levying gross earnings taxes. A struggling elec- 
 tric railway may earn gross two or three thousand dollars per 
 mile; the Twin City Rapid Transit Company, operating in St. 
 Paul and Minneapolis, earns gross $12,500 per mile; the Metro- 
 politan Street Railway of New York city earns gross $75,000 ptrr 
 mile per annum. What of a gross earnings tax that would levy 
 the same per cent on all three? What in fine of a tax law that 
 derives pat illustration by comparing it to the proposition, All 
 gimlets shall bore holes "as nearly equal as may be" to auger- 
 holes ? 
 
 The attorney general further in his section i incorporated the 
 commission's curt declaration, "The power of taxation shall never 
 be surrendered or suspended ;" and to take a "bond of fate," 
 make assurance doubly sure, and have another thrust at the Dart- 
 mouth College case (p. 61, above), he closed the section by add- 
 ing, "All legislative enactments involving the same shall be sub- 
 ject to amendments or repeal." 
 
 His section 2 wholesomely nullifies the "All taxes shall be as 
 nearly equal as may be" of his section i, by making all taxes 
 "uniform upon the same class of subjects." For the rest, his 
 section 2 differs from the commission's section 2 only in dropping 
 out "within the territorial limits of the authority levying the 
 taxes." This omission was further precaution against local op- 
 tion in taxation. 
 
 His section 3 drops completely the local option provisions of 
 the commission's section 3, and consists wholly of a nearly exact 
 copy of the corresponding section in the constitution as it is. The 
 changes he makes are important, and would put taxation squarely 
 on the basis laid down in his section 2. Where the constitution 
 provides that "laws shall be passed taxing all moneys, credits," 
 etc., according to their "true value in money," Douglas in his 
 section 3 provides that they shall be taxed "on the basis set forth 
 in [his] said section 2," which permits the practical flexibility in 
 classification and rate so well illustrated in Pennsylvania practice, 
 and above set forth with some fulness of detail. His section 3 
 makes no other change in said section of the constitution, except 
 that in enumerating its exemption, he enlarges the constitution's 
 permitted individual exemption of personal property ($200.00) 
 to $300.00, but limits it to "the head of the family." 
 
 His section 4 is the same as tne commission's section 4, except 
 that he has "by general law," where the commission has "by a gen- 
 eral law or special act." On the whole it may be said that his 
 
HERTIG ON TAXATION. 319 
 
 amendments, if adopted, would, like those of the commission, 
 have signalled distinct progress, and probably have polled a larger 
 vote than the commission's on submission to the people. But as 
 neither set passed, further excursion into the realm of conjecture 
 need not pass. 
 
 State Auditor Dunn favored amendments exempting house- 
 hold furniture to the value of $350.00, exempting bank deposits 
 up to $400.00 for each individual, firm, or corporation, exempting 
 all state securities. Wallace (Rep.), of Hennepin, introduced 
 in the House a bill for amendments embodying Auditor Dunn's 
 recommendations. Representative Dunn (Rep.), of Hennepin, 
 offered a bill of his own differing materially in tKe amendments 
 it proposed from those of the commission, and more restrictive of 
 the powers of the legislature. 
 
 The judiciary committees of House and Senate finally intro- 
 duced into their respective branches each a bill for amendments. 
 These bills were much alike, showing that both committees were 
 moved by substantially like considerations the need of a compro- 
 mise between open-door and closed-door views. Each the House 
 and Senate bills (House File 55 and Senate File 90) as introduced 
 by their respective committees retained the stereotyped phrase, 
 "All taxes to be raised in this state shall be as nearly equal as 
 may be" ; retained also the established provision that taxable 
 property "shall have a cash valuation and shall be equalized and 
 uniform throughout the state," but qualified it with the import- 
 ant new condition "except as herein otherwise provided ; borrowed 
 from the commission and ornamented with joint terminal, "the 
 power of taxation shall never be surrendered, suspended or con- 
 tracted away" ; authorized the levy and collection of an annual tax 
 "upon franchises granted by public authority" (H. F. 55), "upon 
 all franchises granted by the state or any subdivision thereof" 
 (S. F. 90), or in lieu thereof such tax upon gross earnings as the 
 legislature might determine the "franchise or gross earnings 
 tax" so imposed to be "in addition to the tax on the real and per- 
 sonal property of such person or corporation" (House), no men- 
 tion of it as being in addition to something (Senate) ; retained 
 from the present constitution almost verbatim the inheritance 
 clause which stands at the end of section I, art. IX. ; retained the 
 "assessments for local improvements" clause of said section, to 
 which the Senate added in its bill the "water pipes" clause of the 
 same section. Both bills authorized a tax upon the income of all 
 credits owned by persons or corporations, "as such credits are 
 now or may be hereafter defined by law" "and also upon the 
 income of all persons in this state above the sum of one 'thousand 
 dollars per annum, not arising from such credits, or from property 
 
320 HERTIG ON TAXATION. 
 
 otherwise taxed in this state" such income tax to be "uniform 
 throughout the state," and to be levied at a rate "not to exceed 
 ten per centum upon the income from such credits, and at a rate 
 not exceeding four per centum upon such other income," The 
 House bill as to income tax was slightly broader than the Senate 
 bill the House aiming at a tax upon the income from all credits 
 and all personal property (these two together in the not-to-exceed- 
 ten-per-cent class) and at an income tax not exceeding four per 
 cent, on the income not arising from such credits and personal 
 property. The House bill also authorized "a registry tax upon all 
 real estate mortgages * * * in lieu of all other taxes on the 
 debt secured by such mortgages." Both bills guarded their in- 
 come and other special tax features from becoming oppressive, 
 the Senate bill by providing "that the credits above described shall 
 not be subject to other taxation than the income tax herein author- 
 ized, while the law imposing such income tax shall be in force" ; 
 the House bill by providing "that the credits and personal prop- 
 erty above described shall not be subject to other taxation than 
 the income or registry tax herein authorized, while the law im- 
 posing such income or registry tax shall be in force." 
 
 Both bills retained section 3 of article IX. of the constitution 
 except that they raised the now authorized individual exemption 
 of $200 to $300, but limited it to "one member of the same fam- 
 ily." They, each, retained nearly verbatim the first sentence of 
 section 2 of article IX. of the constitution, relating to providing 
 for an annual tax to defray the ordinary yearly expenses of the 
 state, and for levying a tax for the ensuing year to pay any de- 
 ficiency of the preceding year. Both made it mandatory on the 
 legislature to omit the annual state tax levy, "whenever the in- 
 come of the state from other sources shall be sufficient to defray 
 all of its ordinary expenses." Each guarded against caprice on 
 the part of the counties by providing that in case of omitted levy 
 for state purposes, the taxes for local purposes "shall be upon a 
 valuation of the property within the several counties and the sub- 
 divisions thereof, which shall be equalized and uniform through- 
 out each county. 1 ' Both bills avoided meddling with the question of 
 railroad taxation, each having the clause that "nothing in this act 
 contained shall be construed to affect, modify or repeal any law 
 providing for the taxation of the gross earnings of railroads." 
 
 The judiciary committee of the House was not a unit on its 
 bill, a minority favoring amendments which would throw the con- 
 stitution "wide open." Scattering amendments offered to the bill 
 gave occasion to show the disposition of the House. Its leader? 
 declared for a wide-open policy the sturdy Jacobson, to the as- 
 tonishment of many, coming out in favor of letting down the bars. 
 
HERTIG ON TAXATION. x 321 
 
 Certain amendments to the bill offered by Alley (Rep.), of Wright 
 county, and moving toward wide open result were adopted by 
 yeas 63, nays 48. Finally Roberts (Rep.), of Hennepin, moved 
 to strike out all of the bill except its enacting clause, and to in- 
 sert as an amendment to sections I, 2. and 3 of article IX. of the 
 constitution, the following lucid condensation of the wide-open 
 points, to be known and cited, after adoption, as section one of 
 said article IX.: 
 
 "The power of taxation shall never be surrendered, suspended 
 or contracted away, and all taxes shall be uniform upon the same 
 class of subjects and shall be levied and collected under general 
 laws for public purposes, but public burying grounds [etc., quot- 
 ing the positive exemptions as given in sec. 2, art. IX. of the con- 
 stitution, but for "church property used for religious purposes, 
 and houses of worship" substituting the simpler and severer 
 "church property used exclusively for religious purposes"] and 
 personal property to an amount not exceeding three hundred 
 ($300) dollars to each individual shall be exempt from taxation, 
 but such personal exemption shall not be allowed to more than one 
 member of the same family ; provided that nothing herein con- 
 tained shall be construed to affect, modify or repeal any law pro- 
 viding for the taxation of the gross earnings of railroads." 
 
 On March 6th, "the amendment offered by Mr. Roberts, being 
 in its nature a substitute for H. F. 55, was * * * adopted 
 upon motion of Mr. Roberts." Journal of the House, March 6, 
 1902. The bill, as so amended, "was then read for the third time 
 and put upon its final passage. * * * And the roll being 
 called there were yeas 65 and nays 45. * * * So the bill 
 passed and its title was agreed to." Id. 
 
 Of the 65 yea votes 50 were Republican and 15 non-Republi- 
 can ; of the 45 nays 38 were Republican and 7 non-Republican. 
 Of these 7 nays, 5 were Democrat and 2 Populist. Counting the 
 Fusionists or those officially listed as "Demo.-Peop." (three in 
 all) with the Populists there was a vote of 7 Populists for to 2 
 Populists against the bill. Leaving out the Fusionists there were 
 4 Populists for to 2 against. Of "straight" Democrats 8 were 
 for and 5 against the bill. Counting the three Fusionists as 
 Democrats, the Democrat vote was n for to 5 against the bill. 
 This vote, too, is in line with the other votes whose analysis I have 
 given : all show that there is an increasing number of important 
 questions not yet invaded and covered by party politics. 
 
 On the same day (March 6th) the Senate reached its own 
 bill for constitution' 5 ! amendments (S. F. 90), and debated the 
 features thereof in committee of the whole. An amendment of- 
 fered by Horton (Rep.), of Ramsey, making the gross earnings 
 
822 HERTIG ON TAXATION. 
 
 tax the sole tax on public service corporations, such tax to be 
 apportioned in distribution between state, county and other sub- 
 divisions as other taxes are, and to be exclusive of all other taxes 
 and special assessments, was voted down, as was also a somewhat 
 similar amendment offered by Sheehan (Rep.), of Ramsey. Va- 
 rious other senators criticised special features of the bill ; but 
 when it was put upon its passage, all the senators present (53) 
 voted for it, including those who had offered amendment and 
 those who had otherwise criticised. Of the 10 senators absent 
 or not voting, 4 were Republicans, and 6 Democrats and Popu- 
 lists. 
 
 The difference in the views of House and Senate as evidenced 
 by the constitutional amendments separately approved by each in 
 its respective bill as passed, necessitated the appointment by each 
 of a "conference committee," to remove, if possible, the differ- 
 ences in evidence. The two committees met and came to an agree- 
 ment. They had to agree more than once on account of some pro- 
 vision respectively agreed to proving distasteful to one branch or 
 the other of the legislature. An agreement which both branches 
 were willing to concur in was not reached until the last active 
 day of the session; and it seemed probable enough until final ac- 
 tion had been actually taken that no bill for constitutional amend- 
 ments would be passed. The chief bone of contention was the 
 franchise tax. Stockwell (Demo.-Pop.), of Hennepin, opposed in 
 the Senate to the last any bill for amendments to the constitution 
 except that which had been drafted and proposed by the tax com- 
 mission (see p. 303 above), but he stood practically alone in al- 
 legiance to the commission's bill. Horton (Rep.), of Ramsey, in- 
 sisted, in the Senate, that franchise or gross earnings taxes should 
 be "in lieu of all other taxes except real estate taxes for local im- 
 provements." He criticised the franchise tax provisions of the 
 bill (which finally passed both houses) as too restrictive, as mean- 
 ingless in part, and as contrary throughout to the spirit of real 
 tax reform. The House on March 8th, was in somewhat of an 
 uproar. Dunn (Rep.), of Hennepin, taking the floor said that 
 in some mysterious manner the report of the conference commit- 
 tee had been changed ; that in the exemption clause the word 
 "public" had been left out where it precedes "property" in the 
 constitutional phrase, "and public property used exclusively for 
 public purposes shall be exempt from taxation." J. A. Peter- 
 son (Rep.), of Hennepin, announced that he would offer an 
 amendment to the report of the conference committee to the ef- 
 fect that a general income tax be levied on all personal property 
 over $1,000. Such were some of the matters that contributed to 
 postpone final agreement until the last active day of the session. 
 
HERTIG ON TAXATION. 323 
 
 A joint resolution had already been passed to adjourn on March 
 nth. No bill can be passed on the last day of a session. The 
 9th of March fell on Sunday ; hence Saturday's continuing dis- 
 agreement meant a squeeze through on the last active day (Mon- 
 day, March loth), or it meant no constitutional amendments. 
 Bingham, of the Duluth Herald, described Saturday's peril in his 
 usual piquant way, and I quote the description as typical of the 
 haste and the uncertain fate which generally attend important 
 measures in the last days of American legislative sessions. 
 
 "The constitutional amendments got into a perilous condition Satur- 
 day afternoon. Just when everything looked lovely, and the conference 
 committee had agreed, and the senate had passed the bill agreed upon, 
 the house tackled the bill and made some changes in it. This necessi- 
 tated its going back to the conference committee, and to the senate again. 
 Then ensued a game of battledore and shuttlecock, with the bill as the 
 shuttlecock. After the conference committee had agreed again, Senator 
 Young and J. F. Jacobson, of the committee, stuck in some words that 
 were intended, they said, to be explanatory. They provided that the 
 franchise tax should be in addition to all other taxes. This has been 
 understood, but not expressed. When the senate found that this change 
 had been made there was a fight on it, and its consideration was put over 
 to today. This was looked upon by many of the "friends of the bill," 
 meaning those who have worked for the various tax bills that have gone 
 in, as meaning the defeat of the bill." 
 
 At last, in the afternoon of March loth, a final report of the 
 conference committee was laid before both houses. Doubtless 
 that there might be neither opportunity for clerical error nor 
 charge of tampering, the committee brought in an amendment 
 practically in the form of a new bill, to be substituted for the bill 
 as previously amended on first striking out all of the enacting 
 clause. The report, less the bill, or "amendment, " attached there- 
 to was in these words : 
 
 "The committee on conference to whom was referred H. F. 
 55 as the same had been amended and passed by the Senate, re- 
 spectfully report an amendment to said bill which is hereto at- 
 tached, and recommend that when so amended, said bill do pass. 
 E. T. Young, J. T. Alley, 
 
 Geo. P. Wilson, W. B. Anderson, 
 
 Enos Thompson, J. F. Jacobson, 
 
 G. W. Somerville, Carl Wallace, 
 
 A. Schaller, E. A. Whitford, 
 
 Committee on part of Senate. Committee on part of House." 
 
 Of the gentlemen serving on the committee, Schaller was the 
 only Democrat. 
 
 The Senate concurred in the report, after a short debate in 
 which Horton and Stockwell urged their respective views and 
 amendments already mentioned, and Young and Thompson de- 
 fended the bill. The test of strength came on putting to vote the 
 
324 HERTIG ON TAXATION. 
 
 question of concurring in the report. The vote for concurring 
 was 38 yeas as against 20 nays. "So the report was concurred in 
 and the" amendments were adopted." The bill was then put -on 
 its passage, and the vote showed that now that there was no fur- 
 ther opportunity for a different bill, some of the senators who 
 voted against concurring preferred to put themselves on record 
 as favoring this bill in preference to none. The vote on its pas- 
 sage was yeas 46, nays n. Buckman (Rep.), Dickey (Rep.), 
 Hawkins (Rep.), Hospes (Rep.), Me Arthur (Rep.), Reeves 
 (Rep.), Ryder (Rep.), who voted against concurring voted yea 
 on the passage of the bill. Ives and Sivright who voted against 
 concurring did not vote at all on the passage. Those who voted 
 nay, both as to concurring and as to passage, were Dart (Dem.), 
 Greer (Rep.), Morton (Rep.), McGowan (Dem.), Nixon 
 (Rep.), Potter (Rep.), Sheehan (Rep.), E. E. Smith (Rep.,, J. 
 H. Smith (Rep.), Stockton (Rep.), and Stock well (Demo.-Pop.). 
 Of the 38 who voted for concurring, there were 1 1 Democrats 
 and 2 Populists. 
 
 The House concurred with a rush, and when immediately af- 
 terwards the bill was put on its passage, the vote- was yeas 99 and 
 nays 3. Butler (Dem.), Herbert (Dem.) and Phillips (Rep.), 
 cast the nay votes. So the bill passed the House with the hearty 
 consent of all parties. 
 
 The bill so passed was duly approved by the Governor. Its 
 text is as follows, the words in black letters being already in the 
 constitution, and forming a part of the sections sought to be 
 amended, while the words in brackets are mine to point out cer- 
 tain differences .between the bill and the constitution : 
 
 Section 1. The power of taxation shall never be surrendered, suspended 
 or contracted away. The legislature shall provide for an annual tax sufficient 
 to defray the estimated ordinary expenses of tha state for each year and 
 whenever it shall happen that such ordinary expenses ' : for any year 
 
 shall exceed the income of the state for such year the legislature shall at 
 its next general session provide for levying a tax = sufficient to p:sy 
 
 such deficiency. And whenever the income of the state from other sources 
 shall be sufficient to defray all of its ordinary expenses without the levy 
 of any annual state tax, such tax levy shall lie omitted. All taxes to b-i 
 raised in this state shall be as nearly equal rs may be, and shall be It >\ i. d 
 and collected for public purposes only; and all property on which taxes are 
 to be levied, except as herein otherwise provided, shall hn^e a cash valua- 
 tion, and shall be equalized and uniform throughout the state; provided tbat 
 whenever the levy of a tax for' state purposes is omitted as above provided. 
 the taxes levied for local purposes shall be upon a valuation of the property 
 within the several counties and the subdivisions thereof which shall be 
 equalized and uniform throughout each county. The legislature rnay by gen- 
 eral or special law [present constitution: "by general law or special act"] au- 
 thorize municipal corporations to levy assessments for local improvements 
 upon the property fronting upon such improvements, or upon property bene- 
 fited thereby [present constitution: ' upon- the property to be benefited by 
 such improvements"]- or both, without regard to a cash valuation in such 
 manner as the legislature may prescribe. There may be levied and collected 
 an annual tax upon franchises granted by public authority, in addition to 
 the tax on the real property and other personal property of the person or 
 corporation holding such franchise; or in lieu of a tax on such franchise 
 alone, or in lieu of a tax on such franchise and the personal property used 
 
HERTIG ON TAXATION. 325 
 
 in connection with the exercise of the same, there may be imposed such tax 
 upon the gross earnings of the person or corporation holding such franchise 
 as the legislature may determine; and said tax shall be apportioned between 
 the state, counties and municipalities where such franchise is exercised, in 
 the same manner as real estate taxes are apportioned. There may be levied 
 and collected a transfer tax not to exceed five per centum upon the estates of 
 decedents, above a fixed and specified siun, which tax may be uniform or 
 graded or progressive. [Present constitution: "there may be by law levied 
 and 'collected a tax upon all inheritances, devises, bequests, legacies, and 
 gifts of every kind and description above a fixed and specified sum, of any 
 and all natural persons and corporations."] There may be levied and col- 
 lected a registry tax upon all real estate mortgages which shall be in lieu 
 of all other taxes on the debt secured by such mortgages; and a tax upon 
 the income from all credits owned by persons or corporations, as such credits 
 are now or may be hereafter defined by law, and also on the income arising 
 fiom all personal property, and also upon the income of all persons or corpo- 
 rations above the sum of one thousand dollars per annum, not arising from 
 such credits or from such personal property, or from property otherwise 
 taxed in this state. Such income tax shall be uniform throughout the stace 
 and may be graded or progressive or both, and shall be levied at a rate not 
 to exceed ten per centum upon the income from such credits, and upon the 
 income fiom personal property, and at a rate not exceeding four per centum 
 upon such other income. Laws shall be passed taxing all ! 
 
 real and personal property;- provided that credits and personal property shall 
 not be subject to other taxation than the income or registry tax herein au- 
 thorized, while the law imposing such income or registry tax shall be in 
 force; provided, public burying grounds, public schools, public hospitals, public 
 library associations, * * * colleges, universities and all seminaries of 
 learning, all churches and church property used exclusively for religious pur- 
 poses and institutions of purely public charity, and public property used ex- 
 clusively for * * public purposes, and personal property to an amount 
 not exceeding, * * three hundred dollars to each individual shall 
 ' f be exempt from taxation, but such personal exemption shall not be 
 allowed to more than one m amber of the same family. [Present constitution 
 exempts "personal property to an amount not exceeding in value two hun- 
 dred dollars for each individual" but does not, like the proposed amend- 
 ment, limit the exemption to "one member of the same family."] Provided, 
 further, that nothing in this act contained shall be construed to affect, modify 
 or repeal any law providing for the taxation of the gross earnings of rail- 
 roads. 
 
 W. B. Douglas, attorney general, has officially summarized 
 the effect of the fore^oinf amendment in case of its adoption. 
 The most important Dart of his summary, as directing attention 
 to those features of the amendment on which interest will centre, 
 are pam^-anhs 4-8 inclusive. I therefore quote them in full : 
 
 "4. The legislature is authorized to provide for the levy and collec- 
 tion of an annual tax upon franchises granted by public authority, in ad^i- 
 tion to the tax on real and personal property of the person or corporation 
 holding the same. 
 
 "5. The legislature is authorized to provide a tax upon the gross earn- 
 ings of any person or corporation holding such franchise, conditioned that 
 such gross earnings tax may be in lieu of a tax upon the franchise, or 
 upon the franchise and personal property as well. 
 
 "6. Authority is conferred upon the legislature to provide for the 
 levy and collection of a registry tax upon all real estate mortgages, which 
 shall be in lieu of all other tax upon the debt secured by such mortgage. 
 
 "7- The legislature is authorized to provide for a tax upon incomes 
 in excess of $1,000 per annum not arising from credits or personal prop- 
 erty, or from property otherwise taxed in this state, and also a tax upon 
 the income derived from credits as well as from personal property. Such 
 tax shall be uniform throughout the state, and may be graded or progres- 
 sive, or both, and shall be levied at a rate not to exceed 10 per centum 
 upon incomes derived from credits and personal property, and at a rate 
 not exceeding 4 per cent per annum upon such other incomes. In case 
 of the imposition of the registry tax above referred to, or of an income tax 
 
326 HERTIG ON TAXATION. 
 
 arising from credits or personal property, all credits and personal property 
 owned by the party against whom such registry or income tax is imposed 
 are exempt from all taxation while the law imposing such income or 
 registry tax is in force. 
 
 "In other words, where an income tax upon salaries or earnings of 
 individuals is provided for, all personal property and credits must still 
 be subjected to taxation, while in case of the imposition of an income 
 tax arising from credits and personal property, or of a registry tax, such 
 credits and personal property are exempted from taxation. 
 
 "8. The legislature is authorized to exempt personal property of each 
 individual to the extent of $300, provided the same shall not apply 01 
 be allowed to more than one member of the same family." 
 
 The Attorney General bluntly stated the effect of the amend- 
 ment according to its apparent literal meaning; he judiciously re- 
 frained from raising those technical points which would only con- 
 fuse the voters for whose information the law requires him to 
 make his summary. The method of taxing public-service corpor- 
 ations by taking a percentage of their gross earnings has much 
 to commend it. While taxing the net earnings is theoretically the 
 better way, taxing the gross earnings is the surer and the more 
 convenient way. Besides, if a gross-earnings tax be discreetly 
 graded, it is an eminently just tax. But all lies in the grading: 
 to tax a local street-car system in a small town, where, for in- 
 stance, the gross earnings are less than $2,000 per mile of line, 
 tax it at the same percentage of its gross earnings as you would 
 tax systems in .large cities earning, like the Twin City Company 
 in St. Paul and Minneapolis, $12,500 gross per mile, or like the 
 Metropolitan in New York, $75,000 per mile of track, would 
 mean either confiscation for the small-city system, or unjustly low 
 taxation for the large-city system. Gross earnings taxes, then, 
 should be wisely graded and classified. Would the amendment 
 authorize the legislature to classify the public-service companies, 
 and vary the percentage of the earnings tax according to the 
 classification ? It does not on its face so authorize ; but it con- 
 tains the words, "all property on which taxes are to be levied, ex- 
 cept as herein otherwise provided, shall have a cash valuation, 
 and shall be equalized and uniform throughout the state." The 
 amendment, then, does later "otherwise provide" for taxing cer- 
 tain properties, otherwise than by a rate on "a cash valuation." 
 Franchises are not, in express words, authorized to be taxed 
 otherwise than according to their cash valuation ; whether by im- 
 plication such authorization is given I need not discuss. I con- 
 ceive, however, that the right, which the amendment clearly gives 
 to the legislature to commute the tax on franchises and on "per- 
 sonal property used in connection with the exercise of the same" 
 into a . gross-earnings tax carries with it, beyond a reasonable 
 judicial doubt, the further right to classify the gross-earnings 
 
HERTIG ON TAXATION. 327 
 
 tax, and hence to fix different rates of the same according to the 
 varying abilities of the persons and corporations to which it may 
 be applied. For, if the commutation is based upon valuation of 
 the personal property and of the franchise taken together, then 
 there can be no equality and uniformity of taxation either in the 
 ordinary or in the proper technical meaning of equality and uni- 
 formity, unless the rate of the gross-earnings tax is made to vary 
 by an equitable classification. And should it be thought that by 
 implication the discretion of the legislature is not limited by the 
 primary basis of valuation, its discretion to classify the gross- 
 earnings tax into different rates for varying abilities, is equally, 
 or even more strikingly, apparent, subject always to the limita- 
 tion that the gross-earnings tax must be at a uniform rate in and 
 for each classification. With this interpretation, which I doubt 
 not will be judicially sanctioned, the amendment becomes a bet- 
 ter piece of legislative work than it would generally, on first read- 
 ing, seem to be. It would be still better if it did not limit to five 
 per cent, the "transfer tax" which it authorizes "upon the estates 
 of decedents." But the taxation of such estates is in its infancy 
 in Minnesota; and objection to the rate, as limited in the amend- 
 ment, should not cause any one to vote against its adoption. The 
 authorization of a registry fee on mortgages "in lieu of all other 
 taxes on the debt secured by such mortgages" is a good feature. 
 Such registry fee, when the legislature shall fix it, should be 
 made low, so as to discourage neither lending nor borrowing, 
 a~hd especially so as not to encourage evasion. It will then be a 
 new and considerable source of revenue, and will work no injury. 
 The income-tax features of the amendment are not free from 
 technical difficulties and close questions. But income taxation 
 is the only proper basis of taxation; and, as I have stated in vari- 
 ous forms throughout this book, is the real, if not the nominal, 
 basis of all direct taxes that last, or remain operative, through a 
 considerable period of time. The general' property tax does not 
 reach "credits" and other invisible property, largely because it 
 would confiscate if it should so reach. The theory of income taxa- 
 tion may be separated from the art of income-tax collection; and 
 they are necessarily separated in the proposed amendment, and 
 should be kept separate in the minds of voters. That is to say, 
 it could not have been made any part of the amendment to an- 
 ticipate and provide for the problems of income-tax collection. 
 It is a distinct advance in taxation for Minnesota to aim at tax- 
 ing incomes; and improved theory therein and the practical art 
 of collection will come with experience. That the income-tax 
 authorized by the amendment "may be graded or progressive or 
 both" is a feature in line with advanced ideas in taxation. It is 
 
328 HERTIG ON TAXATION. 
 
 but natural justice that the man with an income of $5,000.00 
 should pay more than five times as much income tax as the man 
 with only an income of $1,000.00. The voters of Minnesota 
 should adopt the amendment. 
 
 In close connection with the foregoing amendment should 
 be considered the act of April 6, 1901 (laws of 1901, ch. 150), 
 commonly called the Jacobson gross-earnings act, and mentioned 
 in a previous chapter of this work, as passed with a view to raise 
 the tax on gross earnings of railroads from three per cent, to 
 four. This act with the foregoing amendment to the constitu- 
 tion, and certain other amendments of minor importance, will 
 afford the voters of Minnesota an occasion to practice the ref- 
 erendum at the general election of 1902. The people of the 
 United States, that is to say those living in the states, are suf- 
 ficiently familiar with the referendum as a pait of the usual pro- 
 cess in adopting or amending state constitutions. The Jacob- 
 son gross-earnings act is submitted to the people under section 
 32a of art. III. of the state constitution, which section provides, 
 in substance, that any change in the present gross-earnings tax, 
 whether by repeal or amendment, shall before taking effect "be 
 adopted and ratified by a majority of the electors of the state vot- 
 ing at the election at which the same shall be submitted to 
 them." One defect of the Jacobson act, for believers in compe- 
 tition, is that it does not perpetuate the present discrimination in 
 favor of new railroads, whereby they pay an annual gross-earn- 
 ings tax of one per cent, for the first three years and two per 
 cent, for the succeeding seven years. It is a curious fact, when 
 one comes to examine it closely, that most of the recent tax leg- 
 islation pertaining to corporations tends to confirm and strength- 
 en monopolies and trusts. They are entrenched both in strength 
 to pay and in facilities for evading new taxes; fresh capital and 
 capital in moderate amounts are proportionately discouraged. 
 With reference to the Jacobson law, it is as if its friends had said 
 to the railroads in Minnesota: "We give it up; there will be no 
 new railroad enterprises in. Minnesota. You will doubtless keep 
 them out anyway; and so we are willing to strengthen your 
 monopoly, if you will pay the state one per cent. more. For that 
 additional one per cent we agree to begin taxing new railroads 
 off the earth before their last spilce gets cold." The real signifi- 
 cance of the fact that so much new tax legislation tends strik- 
 ingly to favor monopolies is that it is a virtual abandonment of 
 the principle of competition, and therefore is an unconscious step 
 towards closer state control and increased paternalism. 
 
 The most current objection to the Jacobson act is its doubtful 
 constitutionalitv. There would seem, however, to be no doubt of 
 
HERTIG ON TAXATION. 329 
 
 its entire validity in its application to railroads not operated un- 
 der those old franchises mentioned in Chapter IX of this work, 
 which carry a "contract" for exemption from any other tax than 
 an annual three per cent, on gross earnings. There is also a 
 "fighting chance" that it would be held constitutional by the su- 
 preme court of the United States on the grounds mentioned in 
 the same chapter in connection with my examination of cases 
 there cited. No doubt the railroads will contest its validity. 
 Perhaps they would not seriously object if they could count on 
 four per cent, as a finality; but they have the fresh example of 
 Wisconsin before their eyes to show that when a state has had 
 four per cent, for a while, the next step is to ask five and a half. 
 In fine, while the state of Minnesota is not putting forth her 
 tax issue with the railroads on the best possible lines, and is tol- 
 erably sure to meet with trouble and embarrassment in certain 
 stages of the contest, she can better afford to press it along the 
 Jacobson lines than not to press it at all; the three per cent "con- 
 tract" yoke seemingly riveted on her by federal decisions must 
 be broken ; new resources to that end will be enlisted in making 
 persistent attempt. Minnesota, however, has a distinct advan- 
 tage in clinging to the gross-earnings plan and to the consti- 
 tutional plank that neither the plan nor the rate can be changed 
 without a referendum to the people. Where, as in some of the 
 states, the railroads are annually assessed by a central board or 
 otherwise, there is each year an exasperating contest over the 
 railroad assessment. There is the temptation to use, and the 
 suspicion of having yielded to, undue influence; there is the op- 
 portunity and the temptation to pose by ostentatious "tail-twist- 
 ing;" there is discouragement to the better type of politician in 
 the thought that it may be hardly worth while to antagonize the 
 railroads to his personal fortunes, when a more pliable board 
 may next year undo a proper assessment. 
 
CHAPTER XVIII. 
 
 The boom and decadence of Ricardo's and Mill's Political Economy 
 Professors, salaries and self-conceit Induction and deduction Fields 
 that grow spurious metaphysics General refusal by professors and 
 others to stand by the old economy, after the German socialists and 
 Henry George had built upon it The author's still lingering fond- 
 ness for Ricardo Delicious irony of Providence that a Philistine 
 Bible should now rend the Philistine heart E. L. Godkin scores the 
 new economy Publication and boom of "Progress and Poverty" 
 Henry George, like Schopenhauer, complains of the professors Ric- 
 ardian rent as George's basis Theory of said rent too abstract for 
 practical utility The single tax in its hopes for reform Bare land as 
 a metaphysical entity Suppose the single tax to be in force! Aus- 
 tralian colonies and New Zealand by no means accept single tax 
 Whom exemption of improvements favors Single tax not new, 
 although independently rediscovered by George Voltaire and Proud- 
 hon as critics of the single tax Grimshaw, of Minneapolis, scores on 
 it with ten propositions Author reviews Seligman's review of the 
 single tax Herein of its fiscal, political, moral and economic defects 
 Inherent and unescapable self-contradiction between paternalism and 
 individualism in George's scheme Superior practical wisdom of New 
 Zealanders True significance of the single tax movement. 
 
 About the beginning of the last quarter of the iQth century 
 it began to be apparent to the rank and file of such men as felt 
 some interest for political economy, and whose reading of and 
 about it was mostly in English, that something particular was 
 astir in that field. They began to see what keener men saw or 
 suspected before, that "classical" political economy had been 
 served with notice to quit, and that with more or less of bad 
 grace it was obeying or about to obey. From 1817 on, Ricardo 
 had had a great boom. From the standpoint of the English phil- 
 istine, and of the professor who toadies to him, no other man had 
 such a certified right as Ricardo to settle disputed questions : 
 He had made a fortune; therefore, who' so competent to write on 
 the production and distribution of wealth? Robert Torrens 
 wrote in 1821: "With respect to political economy, the period 
 
HERTIG ON TAXATION. 331 
 
 of controversy is passing away, and that of unanimity rapidly 
 approaching. Twenty years hence there will scarcely exist a 
 doubt respecting any of its fundamental principles." More than 
 twenty years passed, and De Quincey, writing in 1844, and still 
 extravagantly praising Ricardo, found it necessary to explain 
 why "political economy does not advance," and to reinforce Ri- 
 cardo with a Logic of Political Economy. But when, in 1848, 
 appeared the Principles of Political Economy, by John Stuart 
 Mill, this work coming atop of Mill's previously published Es- 
 says on Sonic Unsettled Questions of Political Economy, was 
 received with extravagant applause, and for a time it seemed 
 that peace in political economy had almost come. "To many 
 students his book is the Alpha and Omega of political economy; 
 they know little of what was before, and imagine little which 
 can come after in the way of improvement." BAGEHOT. 
 
 Meanwhile, the "science" or, as some called it, the "art" of 
 political economy, had got firmly established on a salaried 
 basis. Princes and despots, philistines and duffers beamed on 
 it with their patronage. It was certain, and best of all, it was 
 "safe." Theology justified the ways of God to man; political 
 economy justified the ways of government to man: no Titans 
 more should menace the sky ; no more revolutionists make 
 thrones tremble. "It is now taught wherever knowledge is cher- 
 ished," was proclaimed early in the century; "it is now consid- 
 ered as forming an essential part of the education of princes," 
 was proudly added. And yet, reversing Galileo, it did not move 
 in any free orbital sense. Professor Cairnes, quoting in 1856 
 "the unlucky prophecy of Torrens," confessed that so far from 
 "unanimity" having come in political economy, the period of 
 controversy seemed "hardly yet to have begun" controversy 
 "not merely respecting propositions of secondary importance, 
 ***** but controversy respecting fundamental princi- 
 ples which lie at the root of its reasonings, and which were re- 
 garded as settled when Colonel Torrens wrote." The Character 
 and Logical Method of Political Economy. Henry Dunning 
 MacLeod, bringing out his Elements of 'Political Economy in 
 1857, was moved to do so because, as he thought, the works of 
 Adam Smith, Ricardo, and Mill "were merely a chaos of confu- 
 sion and contradictions." His views did not much shake classi- 
 cal political economy among English readers, though he made 
 a convert of Prof. Perry, him of the already quoted naive and 
 scrappy exchange notion of taxation. However, Bastiat in 
 French had largely anticipated MacLeod in the free-trade wing 
 of economy; and the German economist, Friedrich List (1798- 
 1846), was beginning to be heard abroad, especially in America, 
 
332 HERTIG ON TAXATION. 
 
 as warrant for a protection wing of the same. The article on po- 
 litical economy, written if Henry George states the date correct- 
 ly, in 1861, by Henry Carey Baird, and appearing in the Amer- 
 ican Encyclopedia, says amongst other things the following: 
 "The progress thus far made in political economy has been slow 
 and uncertain, and there is in its entire range hardly a doctrine 
 or even the definition of an important word which is universally 
 or even generally accepted beyond dispute." 
 
 But about the middle of the century, political economy had 
 its proudest strut. Professors and salaries had multiplied. Free- 
 trade, as apprehended in England, which is not free-trade at all, 
 but a customs tariff for revenue, and, in the case of tobacco, for 
 protection also this free-trade was insufferably conceited (a 
 quality it has not yet lost), and fancied it was going to sweep the 
 world. Of this middle-century period Cliff e Leslie says: "A 
 cavalry officer of the period before the Crimean war, when that 
 branch of the army was distinguished by the glory of a mustache, 
 used to say that no man could conceive the pitch to which human 
 conceit could soar unless he had served in a light dragoon reg- 
 iment. He was, however, mistaken. There was a being yet 
 more elate, with a sense of superiority over his fellow-creatures 
 in the economist who had Bastiat at his fingers* ends, and who 
 looked on political economy as a weapon by which he could dis- 
 comfit political adversaries, and on free-trade as a personal tri- 
 umph; though he had as much claim to renown for it as a pas- 
 senger in a Cunard steamer to the fame of Columbus." Polit- 
 ical Economy and Sociology, in the Fortnightly Reviezu, Janu- 
 ary, 1879. 
 
 It should be added here that classical political economy was in 
 the main deductive, though much may be, and has been, said to 
 redeem Adam Smith from the clog of such category. Deduction, 
 in general, may be described as a starting with a cock-sure glit- 
 tering generality, bearing it along, and trimming, compressing or 
 expanding the real world to fit into or fill out that generality. 
 To illustrate by a comparison frivolous in form, but pat in sub- 
 stance, the deductive process is much like the Irishman's con- 
 ception of casting a cannon, '"Take a hole, and pour the melted 
 metal around it!" Mathematics is deductive; but the axioms, 
 principles or generalities with which that science starts, are not 
 only cock-sure but sure in fact, unless indeed Euclid, like 
 Charles I., his Cromwell, justly found his Lobatchewski, and 
 unless but here is not the place to pursue further this very re- 
 condite subject. It is a fatal, an irresistible, tendency of the av- 
 erage professorial mind to erect an abstraction or set of ab- 
 stractions (ready-made and self registering, of mixed induction 
 
HERTIG ON TAXATION. 333 
 
 and abracadabra) into masterful operative things, and then "by 
 operose deduction," as Dr. Johnson would have said, extend the 
 sway of these abstractions or metaphysical entities into a com- 
 plete despotism over the, or rather over their, world, which they 
 would have us believe is also ours. As one of the professors 
 admits, "the analytical and speculative intellect is seldom keenly 
 alive to the interest, the freshness, and, above all, the exact val- 
 ues, of concrete facts." FRANKLIN HENRY GIDDINGS, Democ- 
 racy and Empire, 199. In short, the professorial mind instinc- 
 tively knowing that it would be swamped with detail, tries to re- 
 verse such result by swamping detail in professorial generali- 
 ties. Speculative philosophy, or the metaphysics of the schools, 
 affords many an instance of this, but in all honesty hardly pre- 
 tending to do otherwise. Political economy, Shakespearian crit- 
 icism, and other fields that could be mentioned, display a rank 
 and obscuring growth of spurious metaphysics, wherein that in- 
 competence which offers easy carving to well-wielded critical 
 knife, that unconscious metaphysical encroachment which re- 
 sembles stealthy appropriation are strangely and often ludi- 
 crously mingled. De Quincey with whom everything revolved 
 into metaphysics, and who said so, was so confident that the 
 right beginning for political economy is to begin with metaphys- 
 ical abstractions, that he made bold to assert there is no other 
 beginning. 
 
 Induction, which is the polar opposite of deduction, consists, 
 as generally apprehended, in drawing a general conclusion or 
 judgment from what has been observed in particular facts, or in 
 the presentation of particular phenomena. Wood in water al- 
 ways swims, is a good example of an induction, because, though 
 it sets forth a proposition that is not true, the consideration of 
 it sufficiently shows how one arrives at an inductive judgment; 
 shows also, by reason of its untruth in this case, the weak side 
 of induction resulting from the liability to error both in examina- 
 tion of the particular facts and in making a general conclusion 
 from an insufficient number of facts examined. The underlying 
 assumption in all induction is that Nature is uniform; and this 
 assumption may be regarded as itself an induction. That gold 
 is ductile, malleable, yellow, melts at such and such a tempera- 
 ture, is just so many times as heavy as its own bulk of water, in 
 very thin leaves transmits a greenish light, dissolves in such and 
 such acids, crystallizes in octahedrons, etc., presents a set or 
 assemblage of the uniformities of nature which we confidently 
 expect to be exactly present in all gold, in exactly like degrees. 
 No metallurgist in determining whether or not a given substance 
 is gold, thinks of testing it for all the uniformities which are in- 
 
334 HERTIG ON TAXATION. 
 
 separably associated with the scientific notion of 'that metal. 
 Whatever his favorite test may be, it is not likely to make appar- 
 ent more than two or three of the many uniformities that the 
 given substance would present under an exhaustive examination. 
 The induction that Nature is uniform, is made in effect long 
 before it is made in form, as is exemplified in the saying "A 
 burnt child dreads the fire." Now, in saying, as I did in the out- 
 set of this paragraph, that induction, as generally apprehended, 
 consists in concluding from the particular to the general, I meant 
 to imply that it need not, and, as some think, ought not to be 
 so apprehended; that, aside from the debatable ground o! apo- 
 dictic, or self-evident certainty, induction is better apprehended 
 as concluding from particular to particular, and not from par- 
 ticular to general, or, as some ivould say, from particular to uni- 
 versal. In other words, an induction should be accepted under 
 the reservation that here and now and as far as we can see, the 
 conclusion it sets forth is true. This reservation implies, of 
 course, that other and further experience may modify, or even 
 contradict, a proposition arrived at by induction. Furthermore, 
 the propositions or generalizations or abstract principles with 
 which Ri car do's or any system of deductive political economy 
 sets forth, must themselves be classified as inductions and very 
 imperfect inductions at that. ' Inductions of this kind are fre- 
 quently introduced with the formula, "everybody knows," or "it 
 is natural to suppose," etc. Bagehot for instance, did not hesi- 
 tate to take the universals, or abstract principles of Ricardo, 
 from which the latter had deduced his political economy, and 
 give to them the very form of imperfect or one-sided inductions 
 by limiting them strictly to the "here and now" of England. In- 
 ductions, then, either of the conscious and laborious kind, or of 
 the sort that finds its inductions ready-made and usable under 
 the formula, "it is natural to suppose" are the base and warrant 
 for all deductive systems, and furnish forth those glittering gen- 
 eralities with which they seek to conquer their worlds. I have 
 no objection to deduction as such, and I have clearly enough in- 
 dicated" the limitations of induction to show that however neces- 
 sary its use, caution therein is no less necessary. Induction and 
 deduction are to our reasoning processes much like the right 
 foot and the left foot to walking. Indeed, in this connection and 
 in this single tax chapter, it seems peculiarly appropriate to 
 quote Henry George: "So far as our reason is concerned, in- 
 duction must give the facts on which we may proceed to deduc- 
 tion. Deduction can safely be based only on what has been sup- 
 plied to the reason by induction; and where the validity of this 
 first step is called in question, must apply to induction for proof. 
 
HERTIG ON TAXATION. 335 
 
 Both methods are proper to the careful investigation that we 
 speak of as scientific: induction in its preliminary stages, when it 
 is groping for the law of nature; deduction when it has discov- 
 ered that law, and is thus able to proceed by a short cut from the 
 general to the particular, without any further need for the more 
 laborious and, so to speak, uphill method of induction, except it 
 may be to verify its conclusions." The Science of Political Econ- 
 omy, 95-6. 
 
 The wide strokes and long dashes with which I am indicating 
 the decay of classical political economy seem to require for prop- 
 er balance the above sketch of its, and generally of deductive and 
 inductive, methods. Perhaps nothing contributed more power- 
 fully to such decay than the playing of its own deductive game 
 by the Germans, Rodbertus, Lassalle and Marx, and the Ameri- 
 can, Henry George, to unforeseen and unorthodox ends. But 
 direct attack came in as a close second. The very powerful and 
 influential British Association for the Advancement of Science 
 has an "Economic Section." In 1876, a motion was made with- 
 in the association to expel the Economic Section as having no 
 place in a scientific body; and, while the motion did not prevail, 
 it was almost as effective with the reading public as if it had pre- 
 vailed. In 1878, Ingram, the president of the same Economic 
 Section, had at it with a cut equally unkind, bluntly denied to 
 political economy any standing as a science, and gave articulate 
 and general voice to what had been rather a scattered than a 
 general consciousness, that "there is a general opinion among 
 those who still profess to think highly of the science that it has 
 seen its best days;" that, in short, "political economy is compre- 
 hended in the more general question of a scientific sociology." 
 Robert Lowe, M. P., took up the cudgels against Ingram; and 
 Cliffe Leslie, in the article already quoted from, completely pul- 
 verized Lowe, and put political economy on its only tenable bas- 
 is as "a department of the science of society which selects a spe- 
 cial class of social phenomena for special investigation, but for 
 this purpose must investigate all the forces and laivs by which 
 they are governed." The italics are mine. Leslie himself was a 
 professor of the rare kind possessing with up-to-date 
 knowledge an up-to-date style with which to express 
 it. He had that training in law which is really indis- 
 pensable to the making of a level-headed economist ; as a 
 professor of the craft he could not be ignored, and his style in- 
 sured him an attentive and pleasureable reading. His essays a 
 little before and a little after the beginning. of the last quarter 
 of the century drove^each a nail, for his circle of readers, into the 
 coffii? of classical or orthodox political economy. Men will no 
 
836 HERTIG ON TAXATION. 
 
 doubt continue to set up ready-made inductions, empty or hali 
 empty abstractions, as the basis of deductive systems, as propel- 
 ling and determining forces in all walks of professordom; but, 
 in political economy at least, they are now looked upon with sus- 
 picion if not with positive repugnance. Leslie in the same es- 
 say says, "A bold attempt may be made now and then hereafter 
 to rehabilitate Ricardo, but practically he is given up" Ricardo 
 whom "a sort of mythical glory surrounded," and whose repu- 
 tation had so "eclipsed Adam Smith's that for a while the latter's 
 Wealth of Nations was treated almost as obsolete." 
 
 I would fain linger yet a little on Ricardo. i delight to pic- 
 ture the man as described by Miss Edgeworth, ''face handsome 
 and manners delightful," and by John Stuart Mill who speaks of 
 "his benevolent counsel and kindliness of manner" in contrast 
 with his great book, Principles of Political Economy and Taxa- 
 tion, "so remote, so abstract, so neutral, not filled with passion," 
 and yet replete with economic pessimism. I delight to couple 
 with such picture of Ricardo for companion piece my mental 
 picture of Jonathan Edwards, personally so kindly, and walking 
 the floor in an agony of pity and terror for the countless wretch- 
 es whom his theological pessimism must logically consign to 
 everlasting Hell. Pleased with the decadence of the Ricardian 
 economy, I own to reading it still with more pleasure than 1 read 
 any of his critics and successors, and, I think, with equal profit. 
 They, indeed not infrequently remind me of their quasi yoke-fel- 
 lows, the commentators of Shakespeare. It is easy to imagine 
 the following gem of Ricardian criticism by Ricardo's latest edi- 
 tor, Prof. Conner, to have been written apropos of the Shakes- 
 peare First Folio: "So far is the work under consideration from 
 being a perfect work that it is disfigured by blemishes and de- 
 fects of very many kinds. Not only is it remarkable for infelic- 
 ity of language, with all of its fatal consequences of exaggera- 
 tion and obscurity, but the grammar itself is halting." * * * 
 "Introductory Essay" to Ricardo's Principles, etc. It seems 
 to me deliciously natural and fitting, but not, as to De Quincey, 
 a delicious wonder that Ricardo had set the professorial world 
 agog, that "he not in academic bowers, but oppressed by mercan- 
 tile and senatorial cares, had accomplished what all the univer- 
 sities of Europe and a century of thought had failed even to ad- 
 vance by one hair's-breadth." As Toynbee says, Ricardo "lived 
 in an age of economic revolution and anarchy." It was a mighty 
 achievement for him to impose on that age an economic peace 
 that lasted, though with some skirmishing, for nearly two gen- 
 erations. And though in a sense it is true that his "intensely 
 abstract science, deductive political economy * laid as 
 
HERTIG ON TAXATION. 337 
 
 a mask over the living world, and hid its face," it is also true that 
 this mask was not, nay is not, without some life of its own is 
 not since it still inspires the socialists and the single-taxers. It 
 is particularly delicious that out of Ricardo's book, dear to the 
 philistine heart, has been shaped the figure of nemesis to oppress 
 the philistine mind. "His book has been at once the great prop 
 of the middle classes, and their most terrible menace; the latter 
 because from it have directly sprung two great text-books of So- 
 cialism, Das Kapital of Karl Marx, and the Progress and Pov- 
 erty/ of Henry George. And yet for thirty or forty years Ricar- 
 do's writings did more than those of any other author to justify 
 in the eyes of men the existing state of society." TOYNBEE, 
 lecture on "Ricardo and the Growth of Rent." 
 
 Official German socialism having appropriated some of the 
 tenets of orthodox political economy, and making public claim 
 thereto in 1877; Henry George having done something in the 
 same kind but in a different way, and making his claim in that 
 behalf through Progress and Poverty, first published in 1879; 
 and there having been made, as already stated, some professo- 
 rial acknowledgment that the sick "economic man" was as good 
 as dead, all that remained to be done was to issue an official 
 certificate of death, and to pronounce the funeral oration. This 
 task was reserved for Professor J. K. Ingram the same In- 
 gram, I believe, who had already spoken out in 1878, and who 
 now in the Qth edition of the Encyclopedia Britannica supplanted 
 the orthodox political economy article in prior editions of that 
 work with an article big enough to make a book, and which was 
 afterwards reprinted as one. This article, or book (of easy refer- 
 ence since the Britannica is everywhere) "was written in the 
 'good God, good devil,' or historical style, and consisted in a 
 notice of the writers on political economy, from the most ancient 
 times, through a first, a second and a third modern phase, to the 
 coming or historical phase." HENRY GEORGE., The Science of 
 Political Economy, 206. The new fashion in political economy 
 was now fairly launched; the shackling old formulas broken; the 
 professors no longer professed the erstwhile alleged science. 
 They merely wrote about the books of those who had professed 
 political economy, and humbly, but usefully, collated and tabu- 
 lated and showed in graphic curves the raw facts on which the 
 new economy must feed. They even contrived, many of them, 
 to get into the broad current of a paternalism bearing them they 
 knew not and know not whither. E. L. Godkin, sometime 
 editor of the Nation and of the New York Evening Post, was 
 an individualist who relished ill the new economy. He held it as 
 lightly as he did Henry George, or for that matter as lightly as 
 
338 HERTIG ON TAXATION. 
 
 Henry George held it and him; but Godkin, as a hostile witness, 
 may be fitly cited to testify as to the effect of Ingram's Britan- 
 nica article: "[Ingram] helped to start crowds of young profess- 
 ors and labor agitators and politicians in search of a new econ- 
 omy which would shorten hours of labor, raise wages, humble 
 the employer, give the laborer a fair share in the luxuries of life, 
 and eventually abolish poverty."- -"The Economic Man," North 
 American Revie^tv, Oct., 1891. And in the same article, Godkin 
 further characterizes the new status of political economy: "There 
 have arisen a German school, an Austrian school, an English 
 school, a Russian school, and an American school, which all dif- 
 fer in the matter of 'method,' but all agree in repudiating Adam 
 Smith and his economic followers, in denouncing laissez faire, 
 laissez passer [let do, let pass], as an economic rule, in being 
 intensely 'historical' and in endeavoring to supply morality to 
 trade through some sort of governmental interference, not as 
 yet clearly defined. The scorn of the new schools for Smith 
 and Mill and Ricardo is indeed almost bitter, but their differ- 
 ences about 'method' that is, about the exact nature of the men- 
 tal processes by which they reach their conclusions are nearly 
 as numerous as those of the metaphysicians, and are apparently 
 likely to prove as barren." 
 
 In this Babel and babble of political economies which it 
 helped to create, George's Progress and Poverty, launching the 
 single tax in its modern form, was treated by the professors with 
 curt mention or silent contempt : It had, like many a famous 
 book before it, to struggle with the preliminary difficulty of get- 
 ting a publisher. On plates made at George's expense and from 
 which he had printed an "author's edition" (sold "at a good price" 
 in San Francisco), a New York firm charily printed the second 
 American edition, and a London firm finally "published it in 
 England, in sheets brought from the United States." The Eng- 
 lish firm "were on publication able to sell only twenty copies 
 in all the three kingdoms. But ere long it began to make its 
 way, and when toward the close of August, 1882, a six-penny 
 edition was issued, it began to sell in tens and scores of thou- 
 sands." HENRY GEORGE, A Perplexed Philosopher, 75. In fine, 
 the book circulated "in Great Britain as no economic work had 
 ever circulated before." Id. 73. It was also widely sold and 
 read in the United States and Australia. It was more than or- 
 thodox in favor of free-trade and fairly orthodox on Ricardo's 
 doctrine of rent; yet the professors would have none of it. The 
 German socialists drew from orthodox or classical political econ- 
 omy, that the people ought not, and some day would not, "stand 
 for" private ownership of capital; George drew from the like 
 
HERTIG ON TAXATION. 339 
 
 economy that the people ought not, and some day would not, 
 "stand for" private ownership of land. The professors, bound 
 in the main by inherent limitations (to say nothing of fealty to 
 the payers of their salaries) found it easier and more comfortable 
 to defend by abandoning political economy than to defend with 
 it. And George reckoned it as his particular grievance against 
 them that they gave him the cold cut, preferred to so abandon 
 the old economy rather than to completely recast it with him, 
 and to give him at the same time due credit for his share in the 
 process! "And so," he says, "while a few of these professional 
 economists, driven to say something about Progress and Pov- 
 erty, resorted to misrepresentation, the majority preferred to 
 rely upon their official positions in which they were secure by 
 the interests of the dominant class, and to treat as beneath 
 contempt a book circulating by thousands in the three great 
 English-speaking countries and translated into all the important 
 modern languages." Science of Political Economy, 204. 
 
 Private ownership of land begets rent ; the effect of material 
 progress is to increase the proportion of the product which goes 
 in payment of rent ; hence paroxysms of industrial depression, 
 and the persistence of poverty amid advancing wealth. Rent, 
 in a word is the devouring lion which the single-tax must devour 
 in turn. Such, in briefest form:, are George's main propositions 
 leading to, and stating the work expected of, his single-tax. 
 Rent, in its popular and commercial sense, must not be confound- 
 ed with "economic" rent, or, as it is sometimes called, Ricardian 
 rent so called because first clearly distinguished and formulat- 
 ed by Ricardo. "Commercial rent represents a price paid for the 
 use of land and improvements. A large part of it is interest 
 rather than rent. If we deduct the interest on improvements 
 from the commercial rent, the remainder is economic rent."- 
 HADLEY, Economics, 287. Now it is this economic rent that 
 George and his followers would confiscate by means of the sin- 
 gle-tax, rent, as George says, "used in the special sense or tech- 
 nical meaning which it has acquired since Ricardo's time as a 
 term of political economy." John Stuart Mill spoke of econom- 
 ic rent as- "the unearned increment of land values" ; and George, 
 having borrowed the expression, the vogue of his writings has 
 made the general public much more familiar with "unearned in- 
 crement" than with its synonym, economic rent. George himself 
 thought "net product" (the produit net of the Physiocrats) a 
 better term than economic rent (Political Economy, 150) ; but 
 he used "rent" and "unearned increment" together, and the pub- 
 lic caught at the more showy of the two. 
 
 Naturally, the single-tax, should it be adopted, would be a 
 
340 HERTIG ON TAXATION. 
 
 complete failure from George's standpoint, unless it should ver- 
 ify the doctrine of Ricardo which George adopts, that a tax im- 
 posed on economic rent is a tax on the landlord, and stays where 
 it is put, that is to say, cannot be diffused throughout the com- 
 munity. Followers of Ricardo are fond of claiming that it 
 can be demonstrated that such a tax cannot be diffused; that the 
 price of produce determines the amount of the rent, but rent 
 charge in no way affects the price of produce. Here George 
 had the old-school economists on the hip by agreeing with them, 
 and carrying the consequence of such agreement to a point 
 where, as he alleges, they could not in the interest of the dom- 
 inant class follow him. "From the time of Ricardo," says Selig- 
 man, "it has been well-nigh universally confessed that a tax on 
 land values, i. e., a tax on economic rent, will rail wholly on the 
 owner." But in political economy, no demonstration really dem- 
 onstrates, especially since the era of artificial monopolies has 
 set in;* and such acute thinkers as Isaac Sherman, "an eminent 
 
 *There are stiH those who would bumptiously degrade from the ranks 
 of thinkers any who deny Ricardo's doctrine of rent. Chas. W. McFar- 
 ; ane, Ph. D., in his book called Value? and Distribution (Phila. 1899), 
 gives fresh instance of such bumptiousness: "There is absolutely no 
 hope for any firm grasp of the most elementary problems of economic 
 theory until this fundamental concept, that rent is a surplus which does 
 not enter into the determination of price, has been made part of our 
 intellectual furnishing." p. 87. "That price determines rent is, in brief 
 the [Ricardian] doctrine of rent." p. 89. Hence, taking price, any price, 
 as a starting point, the tenant is paying all the rent that he can afford 
 to pay, with produce at the price given; and if the landlord, either be- 
 cause of an imposed single tax, or otherwise, should raise the rent on 
 him, he must quit, because the theory does not permit the tenant to 
 raise the price of produce to recoup himself for the increased rent. 
 Hence, also, if the theory, is true, a tax on rent must fall on the land- 
 lord. Of course, the owner of land, who also occupies it, enjoys the 
 economic rent thereof, the same as if it were paid to him by a tenant. 
 The "demonstration" of Ricardo's theory that price determines rent 
 is in substance as follows: The same market makes but one price for 
 the same thing at the same time. Here, then, is a controlling uniform- 
 ity. Nature has made soils and situations different. Here, then, is an 
 unescapable diversity. It is natural to suppose that A and B, farmers 
 selling in the same market are on the same footing and of the like de- 
 gree of content, if A occupying a farm pays on an average half the prod- 
 uce as rent to his landlord, and if B similarly situated but on a farm 
 producing half as much as A's pays no rent at all. If one farms under 
 his conditions the other will under his. "There are some lands in every 
 country whose produce just repays the expenses of cultivation, and 
 consequently," yielding "no margin for rent," are rent-free. There are 
 still other lands, which, as the prices of produce run for any given time, 
 do not at such time pay even the cost of production, and hence are not 
 cultivated. But population increases, and with it the demand for food 
 and the price thereof. A stretch of land that was worked rent-free be- 
 
HERTIG ON TAXATION. 341 
 
 citizen of the city of New York/' refuse to be bound by any Ri- 
 cardian demonstration. Sherman, over a quarter of a century 
 ago, "proposed a plan by which all state and local taxes at least 
 were to be levied on real estate ;" proposed it with a view to sim- 
 plicity and convenience of levy and collection, and in the belief 
 that it ought to be, and by virtue of its operation necessarily 
 would be diffused throughout, and borne by, the whole communi- 
 ty. The Shermanites, while literally single-taxers, are in ex- 
 pectation of results diametrically opposed to the Georgian single- 
 taxers. The expectations of the Georgites rest wholly in the be- 
 lief that Ricardo's doctrine is true, that the tax will stay where it 
 
 fore, because barely paying the cost of production, now yields rent; 
 and the more fertile soils that yielded rent before now yield an in- 
 creased rent, while the land that was too poor in quality of soil or top 
 remote in situation to be worked even rent-free, now comes into culti- 
 vation as yielding just enough to pay the cost of production, but pays 
 no rent. The same market, making the same orice to produce of poor 
 soil and of rich soil, enables the landlord to appropriate as his increment 
 of rent whatever net increment of price has been added to former 
 prices, that is, whatever increase of difference the new prices may have 
 made between cost of production and market price. Not only will in- 
 creased population, increased demand and increased prices bring into 
 cultivation the poorer soils, but also stimulate to a higher culture the 
 richer soils. It will ordinarily pay better the first time to expend an 
 increased "dose" of capital and labor for the higher cultivation of the 
 richer soils than it will pay to expend the like dose a second time. In 
 the end, such successive doses of increased capital and labor will prove 
 the law of "diminishing returns," when a final further dose of capital 
 and labor applied to the land can just be got back, and the tenant can no 
 longer, by higher and higher culture outstrip the landlord's share, which 
 is bound to leave the tenant no more than just that compensation for his 
 capital and labor which will prevent his quitting, which compensation is 
 lumped as "the cost of production." "So that," as the gentleman Perry 
 protestingly sums it up. "it is the sole interest of landlords, as such, that 
 population should be dense and food high, their interest being directly 
 antagonistic to that of the other classes of [the] community." 
 
 I quite agree with Prof. J. S. Nicholson that "whatever opinion is 
 held concerning the theoretical value of Ricardo's doctrine of rent, it 
 must * * be admitted that it is too abstract to be of practical utility.'' 
 Tenants' Gain not Land ords' Loss, ch VIII. In the statement of the 
 theory there is the implication of its working automatically in a friction- 
 less medium conditions just the opposite of those under which it must 
 work. We know that if special taxes were imposed on the lands of only 
 a few men in a given country, men whose holdings comprised only a 
 small percentage of the lands in such country, such taxes could not be 
 diffused; the isolated fact bearing upon the isolated individual practically 
 stops there. If a new special land-tax were imposed with tolerable uni- 
 formity on all land-owners everywhere, and continued from year to 
 year, the results might well conflict with any theoretical forecast there- 
 of. See p. 62 above for some particulars of the resisting medium which 
 cuts down the efficiency of abstract theory. 
 
342 HERTIG ON TAXATION. 
 
 is meant to be put, on the landlord, and so do away with the 
 monopoly in land. 
 
 The single tax, then, from the Georgian standpoint, would be 
 not only a tax for revenue, but also and preeminently a tax for 
 reform. The land-owners, seeing it take their economic rent, 
 would give little heed to the motives back of it, and would bluntly 
 call it a tax for robbery. The extent of the reforms hoped from 
 it are best shown by this quotation from the platform of the Sin- 
 gle-Tax League : "It would solve the labor problem, do away 
 with involuntary poverty, raise wages in all occupations to the 
 full earnings of labor, make over-production impossible until all 
 human wants are satisfied, render labor-saving inventions a bless- 
 ing to all, and cause such an enormous production and such an 
 equitable distribution of wealth as would give to all comfort, leis- 
 ure, and participation in the advantages of an advancing civiliza- 
 tion." With such an ideal before them, with a formula as simple 
 as the single tax to effect its realization, it is small wonder that 
 single taxers display their well-known enthusiasm and tenacity. 
 
 From the fact that the object of the single-tax is to confiscate 
 the technical Ricardian or economic rent, follows the further and 
 fairly well-known fact, that the single tax, in form, would be "a 
 tax on the value of the bare land irrespective of the buildings or 
 other improvements in or on the land." The form of the tax as 
 quoted is so described by Prof. Seli^man, in Essays on Taxation, 
 65. In assessing, for instance, farm lands, to levy the single tax, 
 the value for such purpose could be fixed only by deducting the 
 value of buildings, fences, drains, all fertilizers used at all past 
 times, the value of the labor and care in planting and looking after 
 groves, if not the trees thereof, etc. 
 
 Land, in the technical legal sense, includes the soil, the build- 
 ings on it, and such improvements as from their permanent and 
 really or technically inseparable nature the law holds to be land 
 as being a part thereof. The law as to what is and what is not 
 land is in its finer points highly artificial and technical, and often 
 conflicting; but in this matter it deals only with the tangible; it 
 does not attempt to separate mere qualities from the soil nor to 
 distinguish between the land and the capital which it has ab- 
 sorbed. It is not so with the single-taxers ; the land of the law is 
 physical ; the land of the single tax, metaphysical. George is 
 herein a strict follower of Ricardo who is highly metaphysical in 
 his description of the land that yields rent, "the original and in- 
 destructible powers of the soil." "Rent," says Ricardo, "is that 
 portion of the produce of the earth which is paid to the landlord 
 for the use of" these powers. A metaphysical basis for the exer- 
 cise of a right or the enforcement of a law, is always a slippery 
 
HERTIG ON TAXATION. 343 
 
 basis, until use and custom sand it over. To distinguish with 
 minuteness between the value of the bare land and the value of all 
 the improvements thereon and capital absorbed thereby, is mani- 
 festly impossible after its cultivation and improvement for a con- 
 siderable period. But it should be said, in justice to the single- 
 tax theory, that it does not aim at ideal accuracy in taxing merely 
 the rental value of the bare land, but aims only at a workable "rule 
 of thumb." As to separating for valuation the metaphysical land 
 from the improvements, George says : "No difficulty whatever 
 can attend the separation, if all that be attempted is to separate 
 the value of the clearly distinguishable improvements, made with- 
 in a moderate period, from the value of the land, should they be 
 destroyed. This, manifestly, is all that justice or policy requires. 
 Absolute accuracy is impossible in any system, and to attempt to 
 separate all that the human race has done from what nature 
 originally provided would be as absurd as impracticable. "- 
 Progress and Poverty, Book VIII., ch. IV. Assuming that some 
 state in the American union were to enact the single-tax theory 
 and that the latter would successfully run the gauntlet of constitu- 
 tionality, it may be safely assumed also that assessors would be 
 little embarrassed by metaphysical niceties. The real difficulty 
 of getting a single-tax law executed approximately close to the 
 letter and spirit of its theory, would lie in the human nature of the 
 assessor and the "dead-set" that would be made at him to dis- 
 criminate violently between the economic rental value of different 
 lands. Readers of these pages will have noted the great diversity 
 of assessed values within the same state, often within the same 
 city. Free caprice, that is, caprice at work without special pecu- 
 niary prize, plays a curious role in determining land values ; spur 
 caprice with the penalty of incurring and the prize of escaping 
 confiscation, and, as human nature runs in assessors, boards of 
 equalization and courts, we should see some amazing discrimina- 
 tions made and sustained. We should find in practice a cloud of 
 conflicting witnesses as to the different economic rental values of 
 the ground under A's lofty block and the ground showing in B's 
 naked lot across the street. An unconverted bench and bar, it is 
 almost certain, would cut the heart out of the single-tax law, by 
 "construction ;" and would most certainly do so, if its going into 
 effect should be attended with a great scare on the part of vested 
 interests. "Even Henry George admitted a few years ago [in an 
 address at Boston. Feb. 22, 1889] that if his scheme were put into 
 operation, it would cause the savings banks and life insurance 
 companies to fail, and that in an agricultural community it might 
 be difficult to raise the money thought to be needed for municipal 
 wants." Report of the Joint Special Committee on Taxation 
 
344 HERTIG ON TAXATION. 
 
 [Mass.], 1894, p. 38, as quoted by Seligman. The scare, then, of 
 vested interests is provided for in advance ; and that fact is but 
 one of many whose continued influence amounts to a practically 
 insuperable barrier to the adoption of the single-tax. 
 
 It is indeed little worth while to forecast the single-tax in 
 practical operation, when human nature as held by the effective 
 majority of the people is so firmly opposed to its adoption. Twen- 
 ty years is a long time in these days ; it is that long since Progress 
 and Poverty was in the sensational first flower of its great boom ; 
 but where is the single-tax and where is there any prospect of its 
 adoption ? George was much more than a mere author ; he was in 
 person an active and efficient propagandist; he lectured almost 
 everywhere and was heard by great crowds. He made converts 
 (as what propagandist will not?), and his followers, as a rule, 
 have been enthusiastic and tenacious. No doubt something has 
 come of it all: George and his disciples have manifestly influ- 
 enced legislation in certain localities, and inspired attempts at leg- 
 islation in other places. Perhaps New South Wales would not 
 have been so aggressively for free trade had it not been for 
 George's influence ; and there is hardly a doubt, though the prop- 
 osition is not undisputed, that his influence was strongly felt in the 
 making of New Zealand's land-tax law, and to a lesser degree 
 in that of New South Wales. The latter Australian colony ex- 
 empts entirely the land-owner's improvements, and exempts also 
 "the unimproved value" of his land to the amount of two hundred 
 and forty pounds, or nearly twelve hundred dollars, that is to say, 
 declares the land shall pay "such tax as parliament shall from time 
 to time enact for every pound of the unimproved value thereof 
 as assessed under the provisions of this act, after deducting the 
 sum of two hundred and forty pounds." Land and -Income Tax 
 Assessment Act, of 1895. The same act, however, provides com- 
 prehensively for the taxation of incomes, and therein has many 
 noteworthv features. But the levies as fixed by further acts of the 
 New South Wales parliament are at the rate of "one penny in the 
 pound of the unimproved value of all lands," less the exemption, 
 and "sixpence in the pound" on incomes exceeding two hundred 
 pounds per annum those over that amount, except in the case of 
 "companies" (corporations), being entitled to deduct two hun- 
 dred pounds. But "income derived from the ownership of land 
 subject to land tax," and "income derived directly from the use 
 or cultivation of land subject to land tax," are exempt. The law, 
 then, of New South Wales is tenderly protective of private land 
 ownership in tracts of any size ; it exempts land incomes, and 
 taxes other incomes at a rate six times as great as that of the land 
 tax. This is far, very far indeed, frorn the single tax, though they 
 
HERTIG ON TAXATION. 345 
 
 have followed George in exempting from taxation the improve- 
 ments on land. New Zealand, however, has much more of the 
 single-tax idea than New South Wales, inasmuch as she, unlike 
 the latter, has a progressive tax on land, the more the owner has, 
 the greater rate he pays. This is meant, of course, to discourage 
 large holders, but the tax is by no means confiscatory, though it is 
 said that under its influence sales of large holdings have been 
 much stimulated. The New Zealand law provides for taxing the 
 land of "every person and company being the owner of land" 
 such tax to "be assessed and levied upon the actual value of such 
 land, but the value of improvements upon all land owned by any 
 person or company up to three thousand pounds shall be deducted 
 from such assessed value, and any mortgage then due or owing 
 upon such land shall also be deducted from such assessed value." 
 Land and Income Assessment Act, for 1891. As amended by the 
 act of 1893, all improvements on the land are exempt from taxa- 
 tion. This act defines "actual value" as meaning "the capital 
 value for which the fee-simple of land with all improvements (if 
 any) could be purchased for cash." It defines "improvements" 
 substantially in the Henry George sense, that is, they "include 
 houses and buildings, fencing, planting, draining of land, clearing 
 from timber, scrub or fern, laying down in grass or pasture, and 
 any other improvements whatsoever, the benefit of which is un- 
 exhausted at the time of valuation." The act makes liberal ex- 
 emptions from land taxation. The value of improvements "up 
 to three thousand pounds" is deducted from "the assessed value 
 of mortgages and all the land of any owner ; and "the amount due 
 or owing on mort^ae-e" by such owner is also deducted. If the 
 remainder so obtained "does not exceed one thousand five hundred 
 pounds, there shall be deducted by way of exemption a sum of 
 five hundred pounds, after which the amount of such exemption 
 shall diminish by one pound for every two pounds that the as- 
 sessed value of the property increases, so as to leave no exemp- 
 tion on assessed values of more than two thousand five hundred 
 pounds." Provided, however, he shall have one exemption of 
 five hundred pounds, if the net remainder or assessment so arrived 
 at does not exceed two thousand five hundred pounds ; but if the 
 assessed value, * * * less deductions, shall exceed two 
 thousand five hundred pounds, then no exemption shall be al- 
 lowed." The exemption clause and its proviso are awkwardly 
 worded ; but the act elsewhere declares that mortgages shall be 
 assessed "as if they were land." Hence the mortgages which a 
 land-owner ozuns are assessed as part of his land, while those he 
 owes are deducted with improvements on the land. The progres- 
 sive, or "the graduated tax on land," is in addition "to the general 
 
346 HERTIG ON TAXATION. 
 
 land-tax of one penny in the pound." In determining the amount 
 liable to the graduated tax the value of all improvements is de- 
 ducted. Then if the assessed value so remaining is five thousand 
 pounds and less than ten thousand, the owner pays an extra tax 
 of "one-eighth of a penny in the pound sterling." This tax, by the 
 amended schedule, is increased by successive eighths of a penny 
 for every five thousand pounds increase in the valuation up to 
 thirty thousand pounds, when the tax is five-eighths of a penny in 
 the pound ; thence the increase of tax is by additional eighths of a 
 penny for each increase in valuation of ten thousand pounds, until 
 estates valued at between forty and fifty thousand pounds pay 
 seven-eighths of a penny; thence the additional eighths are put 
 on by leaps of twenty thousand pounds in the valuation, until the 
 graduated tax on estates of two hundred and ten thousand pounds 
 and upwards is two pence in the pound. The value of all im- 
 provements is deducted as well in assessing for the 
 graduated tax as in assessing for the ordinary tax, 
 but "No deduction shall be allowed * * * in respect of any 
 mortgage from the value of the land upon which such graduated 
 tax is payable in so far as such graduated tax is concerned." Now, 
 as there are 240 pence in a pound sterling, it is evident that even 
 for the land-owner holding land worth one million dollars or 
 more, the extra tax of two pence in the pound (a little more than 
 four-fifths of i per cent.), the New Zealand graduated tax, is by 
 no means confiscatory, especially iTTie'lmproves the land. When 
 it is added that New Zealand, too, has a comprehensive income- 
 tax system, it is very apparent that while the single-tax theory of 
 Henry George has germinated and borne fruit there, it has not 
 "bred true," as the saying is; has not reproduced its own kirrl. 
 The exemption of lard from taxation up to a certain value shows 
 in both New South Wales and New Zealand that the spirit of each 
 looks upon a reasonable, nay more, a liberal protection to the pri- 
 vate ownership of land as the indispensable foundation of good 
 government. 
 
 The first intent of the New Zealand democracy was to ex- 
 empt all improvements ; but, as aforesaid, the act oT 1891 exempt- 
 ed them to the value of three thousand pounds or about $15,000. 
 This was cautionary and experimental, it being then uncer- 
 tain whether the needs of the treasury could be met, if all im- 
 provements should be exempt. When it was found that the full 
 exemption could be safely made, the amendment of 1893 was 
 made enacting it. But by taxing mort^a^es, which cover, of 
 course, not only the bare land but its improvements also, the 
 latter do not entirely escape taxation. "The tax on mortgages 
 is of course a tax on improvements as well as on the land. The 
 
HERTIG ON TAXATION. 347 
 
 mortgage tax is also a tax on the borrower, since the lender 
 not only makes the borrowers pay the tax, but makes them pay 
 him a profit for handling it. The commissioner of taxes thinks 
 that this adds one-half of one per cent, to the rate of interest. "- 
 H. D. LLOYD, Newest England (N. Y. 1900), 114. 
 
 The exemption of improvements favors the city capitalist, 
 since his real estate has improvements much greater in propor- 
 tion to the value of his land than real estate, or broad acres, in 
 the country. But a large number of land-owners pay no tax 
 at all. "Something like eight thousand to ten thousand of the 
 small farmers out of sixteen thousand have been relieved of 
 taxation by the change from the property tax to the land and 
 income tax and pay nothing. Out of ninety thousand landown- 
 ers only thirteen thousand pay land-tax." Id. 116. "It is ex- 
 pressly planned," said a New Zealand official, "to exempt the 
 small owner and to free the struggling poor man." In fact, "the 
 receipts of the land tax are steadily decreasing year by year, 
 though land values are increasing." This is on account of the 
 liberal exemption of all improvements and of the land itself, so 
 long as the value of the latter does not exceed $2,500. "Both the 
 government and the private owners are cutting up large tracts 
 into smaller pieces. * * The tax is evaded, too, * * * 
 
 by dividing property of taxable size among the members of a 
 family into pieces small enough to be exempt." Id. 119. The 
 radicals already urge the government "to increase the gradua- 
 tion" both in the land tax and the income tax. 
 
 In New Zealand, "Henry George is everywhere spoken of 
 with the greatest admiration." The government knowing that 
 a tax on mortgages would be in effect a tax on improvements 
 would have willingly exempted mortgages, but did not 
 do so because it feared that "a .pure land-tax * * * would 
 not raise revenue enough." It seems, however, that Sir George 
 Grey, in 1878, introduced the land-tax into New Zealand finance 
 in a shape much the same as it has now ; but after one collection, 
 the tax was repealed and the favorite of the monopolists, the 
 property tax, replaced it." Id. 121. "Henry George was not in 
 it," the commissioner of taxes said emphatically in explaining 
 that the New Zealand tax was born before Henry George's ideas 
 were known. Ibid. "Henry George had little influence," an- 
 other authority declared. "He frightened us by the confiscatory 
 features of his plan." Ibid. It is plain from the foregoing that, 
 though the single-taxer may claim not without warrant that 
 George had some influence and attracted a great deal of admira- 
 tion, the distinctive feature of his system and the entire tech- 
 
348 HERTIG ON TAXATION. 
 
 nique of his theory have, in New Zealand as elsewhere, been re- 
 jected. 
 
 While the single tax on land is not new, and George was not 
 its first promoter (all of which with the necessary discrimination 
 he very candidly admitted), he claimed and, I have no doubt, 
 correctly that the notion of it came to him before he had hear:! 
 or read anything about his predecessors, the French school 
 founded by Quesnay and now generally called Physiocrats, 
 though in their own day and in their own nation they were gen- 
 erally called "the economists." A reviewer in the Moniteur*, 
 writing in the troublous times of the French Revolution, gives 
 the following summary of their tax doctrine: "The economists 
 say that the earth,. being the sole source of the yearly revenue of 
 a nation, "should be the sole source of its yearly expenditures ; 
 that the sum total of tax levies always and necessarily falls on 
 the sum total of landed properties ; that the landlord alone being 
 charged, on final analysis, with the payment of the tax, the best 
 form of collection is that which makes the landlord pay it in the 
 most certain, the least arbitrary, the least costly way; that this 
 form is that of the direct tax, that is to say, imposed directly 
 on the land; that, inasmuch as the final incidence of any indirect 
 tax is on the landlord, but in a roundabout way and with an ex- 
 pense that diminishes the net receipts from such tax, it is mani- 
 festly contrary to the true principles of taxation, to impose indirect 
 taxes." Reimpression dv I'Ancien Mcnitcur, Tome VII., p. 622. 
 Hence the physiocrat plan of a single tax on land, the once 
 much-talked-of impot unique. I remember to have read, when 
 a boy, and to have laughed over it, Voltaire's piquant satire, en- 
 titled "The Man With Forty Crowns," when I hadn't the re- 
 motest idea of its economic significance. It is about the single- 
 tax, and thrusts at it in Voltaire's characteristic way. The gos- 
 sips of that day record that his wit swept it clean out of serious 
 consideration with most Frenchmen. In treating the impot 
 unique as tantamount to George's single tax, I do not forget 
 certain differences between them, not material for this discus- 
 sion. Seligman so neatly gives the essence of Voltaire's satire : 
 I am always pleased with a chance to praise a professor that I 
 repeat it in Seligman's own words: "Voltaire pictured the posi- 
 tion of the French peasant toiling laboriously amid conditions of 
 unspeakable distress, but succeeding in getting from the soil a 
 product equivalent to forty crowns. The tax gatherer comes 
 along, finds that the peasant can manage to keep body and soul 
 together on twenty crowns, and takes away the other twenty. 
 Then the peasant meets an old acquaintance, originally poor, who 
 has been left a fortune of 400,000 crowns a year in money and se- 
 
HERTIG ON TAXATION. 349 
 
 curities. He rolls along the highway in a six-horse chariot, with 
 six lackeys, each with double the peasant's income; his maitre 
 d' hotel gets 2,000 crowns salary and steals 20,000; his mistress 
 costs 80,000 crowns a year. "You pay of course half your in- 
 come, 200,000 crowns, to the state?" asked the peasant. "You 
 are joking, my friend," answered he, "I am no landed proprietor 
 like you. The tax gatherer would be an imbecile to assess me; 
 for everything I have comes ultimately from the land, and some- 
 body has paid the tax already. To make me pay would be in- 
 tolerable double taxation. Ta-ta, my friend; you just pay your 
 single tax, enjoy in peace your clear income of twenty crowns; 
 serve your country well, and come once in a while to take dinner 
 with my lackey. Yes, yes, the single tax, it is a glorious thing." 
 Essays in Taxation, 77-8. 
 
 Proudhon, perhaps the most intense of all the writers on 
 economics, and a Frenchman very different from Voltaire, looked 
 upon the single tax, very much as if it were a magnifying glass 
 that would make more glaringly visible the manifold injustice 
 and imperfections of government. In his view, it would prove 
 so abominable in practice as not to be tolerated for a moment. 
 Said he: "All taxes, let it be said once more, all without excep- 
 tion, are stained with iniquity, end in iniquity. Who, then, does 
 not see that a single-tax system, in which there would be con- 
 centrated, by virtue of the exclusion of all others, the sum total 
 of fiscal iniquities, would impose a tax of prodigious iniquity, of 
 ideal iniquity so to speak, since the effect of it would be to show 
 in more violent relief the anomaly common to any sort of tax, 
 an anomaly felt and seen all the less the more it is diffused over 
 a variety of taxes?" 
 
 I introduce next a man keenly critical, and in that respect 
 like the two Frenchmen just quoted; but, unlike them, fairly rep- 
 resentative of current consciousness, as manifest, or easy to 
 make manifest, in the United States. What I call "current con- 
 sciousness" is the polar opposite of that "historical conscious- 
 ness" which has become so dear to the average professorial 
 mind. The chief practical difference between them is that his- 
 torical consciousness is an excellent thing to make a book about 
 for him to whom no other subject appeals more strongly, while 
 current consciousness is the potent but dimly apprehended factor 
 that is to give color and form to the next thing or things that is 
 or are about to become matter of history. Without at all trench- 
 ing on the question of what Time is, or what in the speculative 
 mind it is thought to be, we may say that, for us at least, there 
 has been more of real time in the last fifty years than in all the 
 cycles that had elapsed before. The human nature that is here 
 
350 HERTIG ON TAXATION. 
 
 and now eating its bread or bewailing its husks is not going to 
 change its forms and objects of Want and Will for any profes- 
 sorial delving into the buried sub-cellars of its remoter con- 
 sciousness. For the rest, these sub-cellars are very opaque to 
 the modern light. When individual figure and circumstance ap- 
 pear only in dim or distorted outline, what is to be said of the 
 composition and the grouping? We need not go so far as to 
 say with the notorious Englishman, "As to history I know that's 
 a lie;" but we may safely amend by saying, Most histories might 
 as well be lies. Thus, for illustration in our immediate field, 
 Burkhardt, "a celebrated German historian," was utterly mis- 
 taken "when he characterized the [Roman] aristocracy as resting 
 on the privilege of hereditary immunity from taxes. He mis- 
 interpreted the word immunities, which is applied to the sena- 
 tors, and means merely freedom from municipal taxes." J. B. 
 BURY,, History of the Later Roman Empire, I., 41. So, also, 
 and with equal pertinence to our field, come in the conflicting 
 theories as to the origin and prirnitive forms of land-ownership. 
 There- is a certain type of mind that, before answering the ques- 
 tion, Is this plan of taxation workable, is it the outgrowth of a 
 real need? will appeal to history to furnish at least a part of the 
 answer. Persons having such type of mind may become con- 
 verts or opponents according as they think the historical evidence 
 preponderates. But, in general, the effective propagandist be- 
 comes so, or is converted first by sentiment springing from what 
 lies near at hand; and it is only after his conversion that he re- 
 inforces his new position and new feeling with arguments from 
 the ancient law and the long-moldered prophets. History, then, 
 furnishes food and a modicum of motive power for the pedantic 
 herd ; she furnishes weapons to the controversialists of any 
 school ; and she serves as perpetual illustration of the fact that 
 her expounders are exceedingly fallible in their exposition, and 
 that their suppositions past is in general only a very spurious 
 sort of present. What sentimental dreams of a vanished past 
 might heap up in the form of mythical golden ages had we no 
 historic time at all, or what is the same thing no records there- 
 of, is a hypothesis too violent to follow; perhaps such dreams 
 would depart little further from the truth than those dreamed 
 by modern Germans on the brief mention of the ancient Ger- 
 mans by Julius Caesar in his Commentaries and on the more ex- 
 tended but unknowably misleading mention of them by Tacitus 
 in his Gcrmania. Historical facts are much like spent shot; the 
 force they once had is an extinct force, not indeed lost, but radi- 
 ated away out of all appreciable individual form. Admit that the 
 present statutes of Louisiana are largely traceable to the civil 
 
HERTIG ON TAXATION. 351 
 
 codes of Rome, yet even there old Rome has shot her bolt, as 
 such it is spent, transformed into new forms alive with new 
 forces. But a fact preserved in, and acting through, an ancient 
 writing has still some life of its own; hence the comparison of 
 such fact with spent shot is not so close and so just as the com- 
 parison therewith of the great mass of historical facts whose spe- 
 cific form has perished utterly. It is our present -and our 
 relatively immediate past that now make, repeal and amend 
 laws; it is our present and our relatively immediate past that 
 contain and measure the specific causes that will mould tomor- 
 row and the days that shall follow tomorrow. The man who is in 
 close touch with his present, is also, but perhaps not consciously, 
 in close touch with his relatively immediate past. I could not, 
 in a shorter paragraph, vouch for the value and credibility of cur- 
 rent American consciousness on the single-tax question; and to 
 that consciousness I now let William H. Grimshaw of Minne- 
 apolis give voice. 
 
 Grimshaw, in certain lectures locally well known, has taken 
 the ground that whatever of vogue the single tax has attained 
 is due to the ingenuity and sincerity of Henry George rather than 
 to any merit in the single-tax scheme. His argument against 
 George's plan is based on the hypothesis of its adoption by the 
 American people and of its continuing in force according to the 
 Georgian intent long enough for the results of its adoption to 
 become manifest an hypothesis, certainly, to which no single- 
 taxer should object. The hypothetical results are condensed by 
 Grimshaw into ten. propositions, as follows : 
 
 "i. The single tax would exclude all other forms of taxation, 
 therefore protection would cease, and free trade take its place, 
 and all revenues now collected by tariff, fines, stamps and licenses 
 would be abandoned and abolished. 
 
 "2. The single tax would eventually make common property 
 of land. Much of it would go back to the state, and socialism, 
 pure and simple, would be the result. 
 
 "3. It would increase the opportunities of the rich to become 
 richer, by removing the tax from their money, bonds, stocks, 
 mortgages, which would be to the detriment of the poor. 
 
 "4. Its adoption would drive nearly all capital into other 
 untaxable property, leaving the poor to use the land and pay the 
 tax. 
 
 "5. By dispensing- with all fines, stamps and licenses, sa- 
 loons, distilleries, brothels, moonshiners, fakirs, venders, peddlers 
 ".nd auctioneers would swarm into the cities and on our streets, 
 jeopardizing legitimate business. 
 
 "6. It would break all large holders of real estate, as well as 
 
352 HERTIG ON TAXATION. 
 
 all holders of mortgages on the same, and cause world-wide dis- 
 aster. 
 
 "7. It would destroy the symmetry of our architecture. The 
 poor would congregate in hovels upon squatters' land, while the 
 rich would build forty and fifty-story buildings on as small a 
 piece of land as possible. 
 
 "8. The system of taxation now in vogue is too much like the 
 single tax. Land is already taxed too high, while other property 
 is allowed to escape. 
 
 "9. By rendering the security of mortgages worthless, the 
 savings bank would be unable to pay depositors, and again the 
 poor would suffer nearly all the hardships. 
 
 "10. Throwing aside all other objections, the single tax is so 
 impracticable it can never be adopted. The original owners and 
 mortgagors would fight for their equity to the verge and reality of 
 revolution.". '' 
 
 As comparatively few persons advocate, or think seriously 
 about, absolute free trade, without which the single tax could not 
 be single, Grimshaw scores by dwelling on some of the more ap- 
 parent results of real free trade. Nor does he forget the usual 
 arguments in favor of protection, as that ''the average locomotive 
 used on our railroads costs thirteen thousand dollars," of which 
 ten thousand represents the wages of skilled labor, "while only 
 three thousand represents material" ; and that another machine, 
 the linotype, costs thirty-five hundred lollars, "three thousand 
 for skilled labor, five hundred for material." What would mater- 
 ially cheapen the market price of these and the like Manufactures, 
 he argues would necessarily cut the wages of the workmen. He 
 mentions that under absolute free trade the enormous revenues 
 collected by the federal government from duties, stamps, and in- 
 ternal revenue taxes, in short all of the present federal revenues, 
 would wholly disappear. What would the people think of raising 
 by a special land-tax the vast revenue needed by the federal gov- 
 ernment? How would they relish dropping the internal-revenue 
 tax on whisky yielding $84,00x3,000 annually, and the tax on to- 
 bacco yielding $64,000,000? 
 
 That the single-tax would result in socialism, he argues, be- 
 cause from the non-payment of taxes, the state would take pos- 
 session of most of the land, make the farmer its tenant, and "when 
 the state owns all the land, and the people lose all right and title 
 to their home, then the first step has been taken toward national 
 socialism. * * * Liberty, patriotism, justice, charity, benev- 
 olence and courage are all flowers that blossom under the roof we 
 call our own, especially that to which we have a warranty deed. 
 * * * Few men possess patriotism enough to take up arms ifi 
 
HERTIG ON TAXATION. 353 
 
 defense of a boarding house. Common property of land means 
 very common people on the land." 
 
 Under his third proposition, Grimshaw enumerates some of 
 the superior advantages and opportunities of him who under the 
 single tax system would invest a fortune in anything but land, 
 and independently falls into a line of illustration not .unlike that 
 used by Voltaire in "The Man with Forty Crowns." He illus- 
 trates further the superior advantage which the great capitalist, 
 even as a land-owner, would have over the owner whose capital 
 should be all invested in an unimproved lot. The rich man 
 covers his entire lot with a palatial mercantile building. "Thirty 
 stories * * of steel construction ; * * * foundation 
 
 of granite ; * * three or four sub-cellars. He veneers the 
 
 exterior of his building with rare and costly marble, and wain- 
 scots the interior with Mexican onyx." He exhausts every de- 
 vice of architect and builder to enhance the safety, comfort and 
 splendor of the building. He fills it with merchandise worth mil- 
 lions of dollars, and comprising every article that may minister to 
 human need and human luxury. And yet "the single tax theorist 
 advises," that he be made to pay no more tax than his neighbor 
 with the bare lot and no money to improve it. "One lot covered 
 with oyster cans and rank weeds, and surrounded by bill boards ; 
 the other covered with a palatial building, thirty stories in height," 
 with improvements and merchandise aggregating many millions 
 of dollars, "and each to be taxed exactly the same, without regard 
 to improvements, buildings or goods. To me this proposition 
 borders on insanity." Again: "it is estimated that the railroads 
 pay annually forty-five million dollars to the different states for 
 taxes. Every one knows they do not pay enough." 
 
 What kind of reform is it that would take the tax off all railroad 
 property except their right of way and their terminals ? How 
 will it sit on street or granger politician who complains of na- 
 tional bank monopolies, when the single. tax shall "remove the 
 tax from every cent of their capital," exempt their deposits, 
 stocks, bonds and mortgages ; "in fact, tax nothing but the lot 
 upon which their building stands?" How will farmer A like to 
 see the banks exempted, the village money-lender exempted, the 
 railroads substantially exempted, and his neighbor B taxed no 
 more on his farm than A is taxed on his own ? A "breaking in a 
 new farm without capital and B running an old farm with in- 
 herited wealth," and fancy live stock, commodious buildings, all 
 manner of machinery, and even a fine orchard. 
 
 The theory of Grimshaw's fourth proposition is that the pick 
 of the opportunities to pay the rental value of the bare land and 
 still make a profit on the improvements, would be taken by, or 
 
354 HERTIG ON TAXATION. 
 
 continued in, the rich, and that whatever abundance of landed 
 opportunity might remain for the poor man, would be so burdened 
 with the single tax, as to leave him only a scanty subsistence as 
 his reward for working the land. 
 
 Under his fifth proposition, Grimshaw mentions the proved 
 efiicacy of a tax for regulating saloons, street fakirs, and all those 
 lines of street hawking and vending which are "a detriment to 
 all landlords and tenants alike." The single tax would, of course, 
 leave no choice except as between entire suppression, gratuitous 
 licensing by favoritism, and free open opportunity to all comers. 
 In the latter contingency, "every blear-eyed tramp in the country 
 who could raise the price of one month's rent and four gallons 
 of cheap whiskey, would * * * proceed to the manufacture 
 of drunkards." In illustration of the importance and ease of col- 
 lection of license revenues, he gives the following statement of 
 the moneys collected by the city of Minneapolis for the year 1898, 
 "in the shape of fines and licenses" : 
 
 300 Saloons $307,000 . oo 
 
 Horse Express 777 
 
 Cabs and Hacks 369 . oo 
 
 Peddlers 4,085 . oo 
 
 Junk Dealers . . . > 1,572.00 
 
 Pawnbrokers and Auctioneers 2 A 2 S - 00 
 
 Scavengers 375 . oo 
 
 Billiard Tables 1,000.00 
 
 Circuses i ,274 . oo 
 
 Employment Bureaus 922 . oo 
 
 Dog Tax 7,500.00 
 
 Miscellaneous 400 . oo 
 
 Total $327,699.00 
 
 "Now why," he asks, "should the city sacrifice this amount of 
 funds ? Is it simply that the same amount may be raised by way 
 of a single tax on land? Will some one explain, or give a good 
 reason for removing this tax of $307,000 from the rum-sellers of 
 this city, and placing it on the home of thej)oor,.jLnan?" 
 /l In talking to a Minneapolis audience, Grimshaw was talking 
 to persons who had been passing through a bitter experience as 
 to the effect of high taxes, and, I may add, of unequally high 
 taxes on real estate. To such audience it came home with special 
 emphasis that though land-owners in the aggregate have a monop- 
 oly of the land, the individual land-owner, or monopolist, is at 
 times a very sore and sorry monopolist. Stating that seventy 
 per cent of land-owners "are bankrupt under the present system," 
 he argued that two-thirds of the aggregate taxes of the country 
 
HERTIG ON TAXATION. 3. f >5 
 
 are obtained from taxes on improvements and other personal 
 property, from fines, licenses, and tariff; hence if the remaining 
 third levied on land values has already bankrupted more than 
 two-thirds of the land owners, it is plain that to raise all the tax 
 by direct assessment on the lands "would certainly bankrupt them 
 all." "In Hennepin county, the average piece of unimproved real 
 estate is confiscated by way of taxation every ten years, and under 
 the single tax method, the same thing would be accomplished in 
 less than half the time." The going into effect of the single tax 
 would so reduce the value of real estate that it "would not sell 
 for the average mortgage." 
 
 Under his seventh proposition, the keynote is that "people will 
 not beautify or adorn habitations which they feel to be a tempor- 
 ary abode." There is much truth in this; but it should be noted 
 also that where the tenure is secure and fixed at a satisfactory 
 rental through a long term, magnificent improvements are often 
 made, as under the ground rent system in large cities. But with 
 a capricious rental, to be changed at short intervals by an assessor, 
 and under a system of doubtful durability and of doubtful legal 
 effect, it is certain that only temporary improvements would be 
 made. Whether, as Grimshaw argues, the landlord for whom he 
 was making plans for a two-story apartment building having one 
 hundred feet front and an average height of twenty-five feet, 
 would, immediately upon the adoption of the single tax, reverse 
 the proportions and make his building one hundred feet high and 
 twenty-five feet wide, would, I take it, depend upon what con- 
 fidence the landlord might have in the duration of the single tax. 
 In the face of what would seem to him a revolutionary measure, 
 he could profitably pause awhile before building at all. He might 
 even make calculation that the single tax would last just long 
 enough to send many a choice lot to the bargain counter, and be 
 repealed after bargain-hunters had got what they should happen 
 to want. In which case he would save his money against the 
 right time to buy. But a fairy-tale hypothesis putting on the 
 sober garb of reality, is an irresistible reminder of Napoleon's 
 hundred-day government after his fairy-like return from Elba. 
 Technically the Empire with its rigid police system was restored ; 
 in fact the policemen themselves were like persons in a day 
 dream, practically unable themselves to account for the relaxation 
 they permitted from the former rigidity. 
 
 Under his eighth proposition, Grimshaw. said with much ear- 
 nestness : 
 
 "The buildings in this or any other city are not assessed 
 enough. The unimproved lots in this and every other city are 
 assessed too much. The governmental expense each year for 
 
356 HERTIG ON TAXATION. 
 
 protecting and preserving the buildings is much greater than for 
 land, and the taxes for such protection should be greater instead 
 of less than for land. Everybody who knows anything at all 
 about the fearful burdens of taxation, that are absolutely threat- 
 ening the actual confiscation of most of the lands in this city, 
 knows that the general taxes are a simple feather weight com- 
 pared to the crushing, grinding, insupportable, weight of special 
 taxes. And now let us look at this matter just as it is, and see 
 how small, how utterly insignificant, a part of the actual heavy 
 burden of taxation is borne by buildings and improvements when 
 compared with the land. Of course, you will understand I am 
 speaking only of city property. The following figures I have re- 
 ceived from the auditor of Hennepin county : 
 "For curb and gutter taxes ; the lands bear it all and 
 the buildings bear none. The tax for this pur- 
 pose for the year 1898 was $ 9,256.00 
 
 "For water main taxes; the land bears it all and the 
 buildings none. The tax for this purpose for the 
 
 year 1898 was 310,000.00 
 
 "For sewer taxes ; the land bears all and the buildings 
 bear none. The tax for this purpose for the year 
 
 1898 was 56,956. oo 
 
 "For sidewalk taxes ; the land bears all and the build- 
 ings bear none. Tax for this purpose for the year 
 
 1898 was 99,39! o 
 
 "For pavement taxes ; the land bears all and the 
 buildings bear none. The tax for this purpose 
 
 for the year 1898 was 7> 2 55 
 
 "For sprinkling taxes ; the land bears all and the 
 buildings bear none. Tax for this purpose for 
 
 the year 1898 was 106,823 . oo 
 
 "For tree planting taxes ; the land bears it all and the 
 buildings none. The tax for this purpose for the 
 
 year 1898 was 15,000.00 
 
 "For street and alley opening taxes ; the land bears it 
 all and the buildings none. The tax for this 
 
 purpose for the year 1898 was 6,515 . oo 
 
 "For the revolving fund taxes ; the land bears it all 
 and the buildings none. The tax for this pur- 
 pose for the year 1898 was 31,000.00 
 
 "For the enormous confiscating park taxes ; the lands 
 bear it all and the buildings none. The tax for 
 this purpose for the year 1898 was 140,866.00 
 
 "This makes a total of $539,166.00 
 
HERTIG ON TAXATION. 357 
 
 "For the repairs and renewals of the water mains, of the sew- 
 ers, of the sidewalks, of the pavements, of the curb and gutter, 
 of re-planted trees, of park improvements, incredibly large sums 
 are assessed every year, and every dollar of it is heaped upon the 
 land and none upon the buildings. Now remember that this tax 
 is raised by assessment of so much per front foot, regardless of 
 the improvements on the land. Vacant lots and improved lots 
 suffer the same assessment. By the time we have paid for all of 
 the improvements on both sides of our vacant corner lots, we 
 have bought the property the second time. Many people have 
 lost their property, owing to this exorbitant special tax on land, 
 and if all the tax was placed on land as is desired by the single- 
 taxer, the result would be that the state would soon take posses- 
 sion of the land. All of these special taxes are required by the build- 
 ings on land. Without the buildings there would be no tenants, and 
 without tenants the lands would not be in need of cither sewer, 
 pavement, water main, curb, gutter, sprinkling, or any other of the 
 necessities that the buildings require. Hence, I say, that these 
 special taxes should be borne partly by the structures on the land, 
 and in proportion to their size and height. The lands around the 
 parks should be taxed but little, and the elegant homes should be 
 taxed more than at the present. Far the heaviest item of 
 the city's expenses for which taxes are collected is for the_fire_ 
 -^department, which includes all of the expenditures for horses, 
 carriages, hose carts, for engines, for extinguishers for water 
 power, for ladders, for hose, for engine-houses, for telegraph 
 wires, boxes and fixtures, for the army of men constantly on duty 
 day and night, and for the thousands of other incidental expenses 
 which are incurred on account of the buildings, and none whatever 
 on account of the land. What justice is there in taxing land a cer- 
 tain price per front foot for water mains when 'they are put in 
 solely to accommodate and protect the buildings. The same 
 question can be asked in regard to sewers. In short, the build- 
 ings are the actual occasions for more than nine-tenths of the ex- 
 pense for which special taxes are assessed, while the lands already 
 pay more than nine-tenths of those same taxes caused by the 
 buildings. Now in sober candor and common honesty, should 
 any more of those burdens occasioned by the buildings be trans- 
 ferred from the buildings to the land ? Ap;ain I insist, that the 
 proposition of the single tax to place all tax on the land is the 
 most senseless, absurd and unjust scheme ever originated in thr 
 mind of man." 
 
 Under his ninth proposition, Grimshaw touched, but only in 
 criticism of the single tax, what is in fact the burning point in 
 all schemes for the redistribution of property, the cataclasm of 
 
358 HERTIG ON TAXATION. 
 
 ^ + 
 
 the small security-holder, of the savings-bank depositor. Giving 
 the census figures of 1890 to the effect that savings deposits were 
 then in this country the enormous aggregate of $1,524,844,506, 
 and predicting a handsome increase to be shown by the figures for 
 1900, [I note in the treasury statistics savings deposits, in 1901, 
 were $2,597,094,580], he said : "Most of this money is loaned on 
 real estate security, and most of it is the savings of poor people. 
 Change the conditions, and we change the security ; tax the prop- 
 erty higher, ard the security at once becomes weaker. Un- 
 thoughtful people would jeopardize this vast hoard of money b ir 
 changing our present system of taxation. Any savings tanker of 
 prominence will tell you that the most dreaded thing in his busi- 
 ness is to take real estate by foreclosure for money loaned on the 
 same." As I stated above, George himself admitted that the 
 putting of his system into effect would ruin the savings banks. 
 
 Under his tenth proposition, Grimshaw emphasizes what oc- 
 curs at once to every practical reader of human nature in connec- 
 tion with the single tax, and which banishes it forever to the 
 realm of the impossible, the people do not, and never will, want 
 the single tax. On this proposition it is useless to multiply opin- 
 ions. 
 
 Prof. Seligman in his Essays in Taxation, pp. 64-94, reviews 
 the single tax with sufficient candor and fulness. Against him 
 at least the complaint which George made, as above set forth, of 
 unfair treatment at professorial hands does not lie. Against the 
 single tax "as a practical method of tax reform," Seligman 
 urges four classes of defects . the_fiscal~def ects , the political de- 
 fects, the moral defects, and the economic defects. 
 
 The chief fiscal defect of the single tax is its lack of elas- 
 ticity. In sound public finance one of the great aims is "to avoid 
 a surplus as well as a deficit." Many taxes may be suddenly- 
 lowered, immediately decreasing the revenue; few can be mi.de 
 to give a suddenly increased vield. Elasticity can be secured 
 only by taxing a number of objects, "so that the shrinkages or 
 deficits temporarily due to the one class may be made good by the 
 increase or surplus -revenues of the other class." It is well- 
 known that income taxes are elastic, and in England the income 
 tax is the stand-by "to preserve the equilibrium of the budget." 
 [The English income tax, at a rate greatly increased on account 
 of the Boer war, has given fresh proofs of its elasticity and of the 
 financial reserve power it embodies.] The single tax is by its 
 very purpose and intent non-elastic, "since according to the 
 theory of the advocates, the total rental value" of the land is to 
 be taken. "Where nothing has been left, nothing more can be 
 taken" ; and the single tax would be helpless to increase the rev- 
 
HERTIG ON TAXATION. 359 
 
 enues in case of emergency. Though the total rental value were 
 not taken, yet a direct tax on the unimproved value of the land 
 would be far more inelastic than other taxes. The single tax 
 would show another fiscal weakness by intensifying "the in- 
 equalities resulting from unjust assessments." [The caprice in 
 assessments has already been sufficiently mentioned. Compare 
 Proudhon's ascription of "fiscal iniquities" to the single tax, and 
 my comment above on Grimshaw's condemnation of trie single 
 tax.] 
 
 The political defects of the single tax are three : it would pre- 
 clude the use of import duties for any purpose ; "would render it 
 impossible for governments to utilize the taxing power as a politi- 
 cal or social engine" [or to tax for any reform other than its in- 
 tended breaking up of the land monopoly] ; would, thirdly, accen- 
 tuate whatever danger there may be for democracy in the pay- 
 ment of taxes by a small class and in the voting thereof by a large 
 class. Whoever has a bias for free-trade may have some leaning 
 toward the single tax, because the latter by its very terms pro- 
 claims free-trade; but "whatever we may think of the economic 
 justification of import duties, it must be recognized that they may 
 sometimes form an important political weapon." We could not, 
 under the single-tax system, tax state bank-notes out of circula- 
 tion, nor levy a high tax on opium to discourage its consumption, 
 nor tax oleomargarine "to ensure the purity of butter," nor deal 
 with the drink question through the imposition of high licenses. 
 This "salutary power" of regulation would be entirely taken away 
 by the single tax. Moreover, its imposition would take away 
 "from the vast majority of citizens the sense of their obligation 
 to the government," would "divorce their economic interests from 
 those of the state" ; for the "unearned increment" flowing silently 
 and noiselessly into the treasury would do away with the need of 
 a budget, and thus diminish perceptibly the citizens' sense of re- 
 sponsibility. The contest against unjust taxation has been in inti- 
 mate relation with liberty ; England's constitutional history, the 
 American Revolution, the French Revolution, all attest the prim- 
 acy of tax questions in the stru g^les of the people. [It must be 
 conceded that Seligman presents here a curious contradiction, and 
 makes curious assumptions. Either the assumed noiseless work- 
 ing of the single tax and its consequent diminishing of the sense 
 of responsibility would take place because it would work well 
 and thereby satisfy the popular sense of justice, or because it 
 would work ill and thereby enually satisfy the people's sense of 
 justice. Therefore the people's sense of justice would be indif- 
 ferent to the well or ill working of the tax ; therefore the people 
 have no sense of justice responsive to the well or ill working of 
 
360 HERTIG ON TAXATION. 
 
 
 / 
 
 a tax ; therefore the professor must rely on some unnamed tcrtium 
 quid for having historically stirred the people to take up arms 
 against unjust taxation! If, however, the professor has assumed 
 that a tax system that will keep the people on edge all the time 
 affords the true measure for tax reform, I submit that he ought to 
 champion rather^than oppose the single tax.] 
 
 In arraigning and trying the single tax for moral defects, 
 Seligman easily proves his case. - I do not think it necessary to 
 set forth his facts and his reasons. Property in land has as fully 
 the sanction of the social consciousness as property in anything 
 else. That is a fact which we shall not get back of, nor get rid 
 of. We may curse with Rousseau the rogue who first staked off 
 a piece of ground and called it his own ; we may trace after a 
 fashion the evolution of the sentiment and with it of the legal doc- 
 trine that it is right and of right for land to go to a man and his 
 heirs forever ; we may bewail the contradiction between sophisti- 
 cated conscience and natural right ; we may, and in so far as we 
 try, surely will, make some enthusiastic converts to the view that 
 land ought never to have been appropriated, and ought now to be 
 expropriated ; but we shall never very seriously lessen poverty by 
 our progress alone such lines. The big land-owner and the little 
 land-owner present a united front as to their vested rights in land ; 
 and the social consciousness of which they control a very in- 
 fluential part will hold with them that property in land is entitled 
 to substantially the same protection as other property. For the 
 rest, loose capital is as .vital, to the working of land, or nearlv so. 
 as is the land itself. Who has not in the newer settlements of the 
 United States seen capital able to command a high rent for its 
 land by furnishing" the seed and farm implements, while free land 
 hard by remained untilled? Moreover, land, while fixed in site 
 and limited in quantity, is virtually as fluid a property as any 
 other. Whoever commands money, credit or other forms of loose 
 capital has a lien to that extent on all the land there is whether 
 land may be acquired for private ownership, as under the present 
 svstem, or only for tenure under the state as contemplated by the 
 George system. Whence it follows that a new distribution of 
 opportunities to occupy land, would soon be marked with the old 
 iniquities in land-holding. The unregulated opportunities of capi- 
 tal would act as a flux on the new land-holdings, and melt them 
 down, so to speak, into matter circulating freely in the old chan- 
 nels of capital and opportunity, with little scourine awav of the 
 old shoals of iniquity. Hence the land-owner is rieht in claimine 
 that there is neither eood sense nor eood morals in discriminating 
 against his landed propertv. The Georgian system would sacri- 
 fice the land to paternalism, and at that price purchase unlimited 
 
HERTIG ON TAXATION. 361 
 
 individualism for all other properties. George himself wrote: \ 
 "The sphere of government begins where the freedom of com- 
 petition ends, since in no other way can equal liberty be assured. 
 But within this line I have always opposed governmental inter- 
 ference. I have been an active, consistent and absolute free- 
 trader, and an opponent of all schemes that would limit the free- 
 dom of the individual. I have opposed every proposition to help 
 the poor at the expense of the rich. I have always insisted that 
 no man should be taxed because of his wealth, and that no mat- 
 ter how many millions a man might rightfully get, society should 
 leave to him every penny of them." A Perplexed Philosopher, 
 p. 92. The New Zealanders showed vastly more practical wis- 
 dom; they recognized, and rightly, that just because of his wealth 
 a man should be taxed ; that not all land but some land should be 
 placed by means of the graduated tax within easy reach of state 
 ownership. And it might as well be formally recognized every- 
 where that the owner of property holds it in trust for the people ; 
 that if he handles it as a discreet trustee with a sense of his re- 
 sponsibility, the state will, as it ought to, continue him in his 
 trusteeship ; that such responsible trusteeship is the sole atonement 
 which the owners of large fortunes can make for the possession 
 thereof, whether theft, thrift, or sheer good luck contributed most 
 to their riches. Responsible . trusteeship must be guided by en- 
 lightened social consciousness, and yield to it as readily as an Eng- 
 lish ministry does to an adverse vote calling for surrender of of- 
 fice. The Civil Nation shall be the organ, and the New Juris- 
 prudence the sanction, of the right social consciousness. 
 
 Under the heading of economic defects, Seligman considers 
 the single tax from three points of view, how it would work on 
 poor and new communities, how it would work "on farmers and 
 the agricultural interests in general," and how it would work on 
 rich communities. He somewhat overstates the case against the ' 
 single tax in its application to new communities. It is not true 
 that "land can be secured by any one on the payment of a merely 
 nominal sum," when he "goes to the virgin soil of the Northwest 
 and stakes out his farm." Land has been in many new communi- 
 ties very cheap, but never at a merely nominal price, at least after 
 taxation had been fairly launched. Land speculators in some con- 
 fidential relation to railroads have often obtained at nominal 
 prices, considerable bodies of lands embraced in grants to rail- 
 roads, and even enjoyed, by crafty device, the same immunity 
 from taxation that the railroads had. But the actual settler on 
 virgin soil soon finds out after getting title to his farm, that its 
 value is much more than nominal on the assessor's roll. This is 
 especially true in new communities through which railroads pass. 
 
b62 HERTIG ON TAXATION. 
 
 Many a farm, for instance, within forty miles of the Northern 
 Pacific railroad cost the first owner $2.50 per acre in payment of 
 the land to the United States, besides fees and expenses. A man 
 "filed" under the homestead act on a good quarter section in the 
 "big bend" of the Sheyenne river, in what is now the state of 
 North Dakota. By residence and improvement for a period of 
 five years he could have got title from the United States free of 
 cost except a moderate "proving-up" fee ; but the imperative ne- 
 cessity for capital at any price no city doctrinaire can realize the 
 hardship, the almost insuperable difficulty, of making a farm with- 
 out capital or credit impelled this man to negotiate a loan of 
 $800.00, secured by a mortgage on his farm. To so mortgage 
 he had first to commute his homestead and pay the government 
 $400.00 for anticipating the title which he could otherwise have 
 got free at the end of five years' residence. He had also to pay 
 the costs of proving up and a commission of five per cent, on the 
 face of the loan to the agent who procured it for him. When the 
 whole transaction was completed he had $300.00 in money, and 
 there was a mortgage of $800.00 bearing ten per cent, interest on 
 his commuted homestead, which was now also duly listed for 
 taxation, as it could not have" been while title to the fee was in the 
 government. I have thus vouched with an instance from real 
 life and with a "human document" how far from the truth is often 
 the notion that in new communities the soil is of only nominal 
 value. A newly settled country may enjoy a "boom" of consider- 
 able proportions, after which the price of lands may be very low 
 indeed, considerably lower than their assessed value ; but owners 
 generally pay the high taxes on them in the hope of a rise in 
 actual values after the dull times shall have passed. At the same 
 time, while Seligman overstates the conditions in new communi- 
 ties in saying "there is practically no land value," and that "a tax 
 on the land values would be lamentably inadequate," we may well 
 agree with him that the single tax in new communities would 
 strikingly show its economic defects. Taxes there are almost in- 
 variably high, and soon confiscate unimproved lands without the 
 aid of the single tax. But the confiscation is not at once appar- 
 ent, and so the owners pay, or the tax-title man buys, and the 
 state gets its revenue, which it could hardly do if the tax for 
 each year were twice or thrice as high. The figures which Selig- 
 man quotes from the census of 1890, make a special case against 
 the single tax for that time and for the states he mentions, Mon- 
 tana with 58 millions assessed personalty and 55 millions assessed 
 realty, Wyoming with 20 millions of personalty and 13 millions 
 of realty, New Mexico with 28 as against 15 millions, Arizona 
 with 18 as against 10 millions the assessed aggregate values of 
 
HERTIG ON TAXATION. 363 
 
 personalty and realty respectively. In a rancher's county, for 
 instance, where the land mostly belongs to the United States, and 
 the taxable property is nearly all live stock, the single tax would 
 not do at all unless it be taken as a fact that almost no revenue 
 is needed there. 
 
 Seligman is more at ease in pointing out the economic defects 
 of the single tax in relation to poor communities, that is to com- 
 munities where the lands and the population are mostly agricul- 
 tural. He cites the testimony of one of the single-taxers before 
 the Massachusetts tax commission. Asked "how will it be pos- 
 sible for this poor town, in which there is very little land value 
 to raise its taxes ? the witness was compelled to reply that it 
 would be impossible for the community to do so, and he suggested 
 that the expenses of the poor communities should be defrayed 
 in large part from the revenues of the rich communities." Selig- 
 man concludes justly that "if the single tax is unable to defray 
 even the local expenses of a poor community, not to speak of that 
 community's share of general state or federal expenses, it is clearly 
 beyond the realm of practical politics." 
 
 He is equally correct in pointing out its economic defects in 
 relation to rich communities. The single tax would exempt im- 
 provements on the, land in city and country alike. But the wealth 
 represented by improvements on city land is relatively much 
 greater than that represented by improvements on country land. 
 In the state of Pennsylvania, for instance, we can readily see how 
 the single tax would favor the city as against the country. "The 
 proportion of land values to total valuation of all [real] prop- 
 erty is in the [city] county of Philadelphia, thirty-six per cent. ; 
 in the agricultural counties of Sullivan and Greene, eighty-one 
 per cent, and seventy-five per cent., respectively." Thus, if for 
 state and federal purposes the single tax should be levied at a 
 uniform rate throughout the state it would exempt relatively 
 much more wealth in the cities than in the country. This would 
 hold good in any state, if the same rate of tax were levied on the 
 bare land values in both city and country : the percentage of im- 
 provements on city land is always more than on country land 
 "If, therefore, all improvements were to be entirely exempted,- 
 the only result of a tax on land values would be to make the 
 farmers pay more than they do at present." [Strictly speaking, 
 this conclusion which Seligman draws from his facts does not 
 militate against the single tax as the same is usually conceived 
 by the disciples of George. It would follow from their conception 
 that, under the single tax, the state would anyway become, or 
 nearly so, the universal landlord ; in which case it would further 
 follow, and for the single-taxers ingloriously, that the state would 
 
364 HERTIG ON TAXATION. 
 
 get what rent it could with practically little or no regard for uni- 
 form rates. Hence, the preliminary effect of the single tax as 
 between city and country would be of minor importance, though 
 no doubt the country lands would be the first to succumb to the 
 single-tax confiscation, always supposing the system to be in 
 operation long enough to register its logically necessary results. 
 Of course, to those single-taxers who, like Isaac Sherman, do not 
 believe the single tax would confiscate land values, Seligman's 
 argument must needs give pause.] 
 
 Finally, Seligman shows the economic defects of the single 
 tax in its application to rich urban communities. It would abolish 
 there the tax on houses, since buildings of some kind, aside from 
 the mains and wires of public service companies are substantially 
 all the improvements that there are to exempt on city lands. But 
 vacant lots would not be built over as if by magic, nor rents fall, 
 nor the wages of workmen rise, nor a period of general prosperity 
 be ushered in. There is no fund floating about in the air to be 
 condensed into houses by the imposition of the single tax. "The 
 amount of loanable capital in the money market at any one time is 
 definitely fixed." [The sentence just quoted is grossly mislead- 
 ing. There is, of course, an ultimate quantitative limit to the 
 "amount of loanable capital" ; but, at no time is the limit "defin- 
 itely fixed." It is nearest to the fixed point in times of panic, 
 when money is tied up by fear, credit paralyzed, and loans are 
 made only at usurious rates, or, if made through the usual chan- 
 nels, are made under pressure to avert failures that would height- 
 en the panic ; when, in short, there is no money to be had for 
 new undertakings. In ordinary times, the amount of loanable 
 capital for any special kind of undertaking, as house-building in 
 or near the centres of capital and of population, is limited only 
 by the psychological quality of the lenders in relation to the pros- 
 pective results of the loans which they can make. That is to 
 say, opportunities for making tempting loans will be scarce be- 
 fore the supply of ready capital shall become low. Seligman is 
 entirely right in asserting that there would be no magic in the 
 single tax to cover vacant lots with houses ; but it is not that capi- 
 tal would ordinarily be shut out or be cut short in such enter- 
 prises by any quantitative limit of its own : the psychological 
 qualities of the capitalist would make his class timid in the out- 
 set as to investments in houses on a single-tax basis ; hence .money 
 for house-building would at first be scarce. With confidence in 
 house loans and house investments restored, if it should be, 
 confidence in safety and confidence in prospective profits, there 
 would be abundance of capital for loans and investments. But 
 capital would expect to pay the "economic rent" of the land and 
 
HERTIG ON TAXATION. 365 
 
 handsome profits to itself ; and if it should so pay, the funds for 
 such payments must first come out of the tenants' pockets, just 
 as they do now. Where, then, would any special advantage come 
 in for the tenant and the workman? Manifestly none.] 
 
 On the special point of the single tax in relation to the rents 
 of the tenement-house population, Seligman puts forth amongst 
 others the all-sufficient consideration, as it seems to me, that "the 
 only result, in this direction, of the single tax would be, as a 
 matter of fact, that people would pay their rent to the state in- 
 stead of to private individuals." [This states the form of the re- 
 sult correctly enough; but the net result might well be much 
 worse than it is at present. With all the greed, that is now sub- 
 divided and flowing in multiple tax channels, concentrated into 
 one such channel how should the state escape being a greedy 
 landlord ?] 
 
 "Finally," continues Seligman, "we may ask how the wages of 
 the workman are to be increased by the single tax. Wages can 
 be increased only through an increase of capital or through an 
 increase of the efficiency of the laborer. [The argument in no 
 wise stands or falls with the questionable proposition in abstract 
 economics laid down in the preceding sentence.] Taxation in 
 itself cannot accomplish either of these results. [Certainly not 
 "in itself" ; but the right of taxation, under the right statesman- 
 ship, is a potent means for changing, and creating opportunity, 
 and for keeping open the channels of opportunity.] To turn 
 economic rent over to the state cannot increase capital one whit, 
 nor can it augment the efficiency of the laborer. [This is true in 
 application to the revenues derived from any tax system that does 
 not propose to depart from present aims and methods in the distri- 
 bution of such revenues ; but it does not thence follow that a new 
 and bungling tax system would not decrease capital and diminish 
 the efficiency of the laborer.] Not only can the single tax have no 
 influence on the wages of labor, but as we have seen it cannot 
 decrease the rentals of the tenement-house population. The 
 whole dream of economic felicity thus resolves itself into mere 
 mist, into mere nothingness ; the tenement-house population 
 would derive as little advantage as the American farmer from the 
 single tax." [I quite agree with Seligman's general conclusion, 
 though freely criticising his argument in detail. I see no positive 
 element in George's single-tax system, that would even tend to 
 benefit anybody, if the system were adopted, put in force, and kept 
 so over a considerable territory. I conceive, however, that if a 
 single-tax principality, so to speak, of quite limited area, could be 
 erected in some choice locality in the United States and enjoy 
 free trade with our country throughout its extent, then such 
 
366 HERTIG ON TAXATION. 
 
 principality, under the single-tax system, might become enor- 
 mously prosperous, as a port of refuge against the taxation of 
 personal property. Immense amounts of floating capital, huge 
 stocks of merchandise, all manner of articles of luxury and staple 
 need, would be gathered there, and go thence untaxed into out- 
 side channels of trade. Tax-dodging persons of wealth would 
 reside there, do their utmost to make it the Plutopolis of America. 
 Economic rent might soar above the needs of taxation, and much 
 of it remain where it does now, in the pockets of the private own- 
 ers. But this supposed prosperity would be entirely due to special 
 advantage and special privilege, to the toleration of the United 
 States, as the prosperity of the bank at Monte Carlo is due to the 
 like sort of toleration, it paying in fact all the taxes of the princi- 
 pality of Monaco.] 
 
 The true significance of the single-tax movement lies in the 
 evidence which it has furnished of the wide-spread discontent 
 with present social conditions, in its making the people familiar 
 with the notion of taxation as an engine of social reform, in its 
 contribution to the overthrow of the old political economy by 
 carrying some propositions thereof a stretch further than the 
 professors dared to do. As Thorold Rogers, a distinguished 
 English economist, said, George's theory "is entirely the outcome 
 of economic fallacies hitherto treated as indisputable truths." His 
 disciples should now modify their master's theory ; for Henry 
 George builded better than he knew, very different from what he 
 thought he. knew. But his memory deserves none the less their 
 affectionate regord, and his efforts kindly appreciation in the 
 hearts of any friends of the people. 
 
CHAPTER XIX. 
 
 The general property tax divided against itself. Break-down of the 
 ad valorem tax on personal property. New York, Wisconsin, Indi- 
 ana, Ohio, Kansas, North and South Dakota, Washington, Tennes- 
 see, Farm taxes on an income basis. Two golden rules of taxation. 
 Tax-dodging in Connecticut. The Civil War income tax. Needed 
 Amendment of Federal Constitution. Income tax popular with the 
 British masses. Its origin and results in Great Britain. The so- 
 called "unit rule" violates income-tax principle. Chicago corpora- 
 tions and the unit rule in the circuit court of the United States. 
 
 My address to the tax committee of the Minnesota House and 
 a miscellaneous audience, on February Hth, was perhaps the 
 most elaborate of any made in the course of the numerous hear- 
 ings on taxation at the special session of 1902. Having had 
 throughout this book the advantage of a different form of ex- 
 pression, I have not herein needed to reproduce that speech ; ajid 
 on account of its being unwritten, I could not in any event give 
 more than its substance. I criticised many features of the general 
 property tax, and particularly the form of its personal property 
 features as set forth in the tax commission's proposed code, criti- 
 cised and killed as more fully set forth in previous chapters. I 
 did not, however, advocate the entire abandonment of the personal 
 property tax as a tax on the capital value or sunken 
 capital value of such property. Personal property in its' 
 more tangible forms, may be assessed and taxed as 
 readily as real estate; and, with exemptions authorized in 
 some of the states ($200.00 permitted by Minnesota's present con- 
 stitution, $300.00 by proposed amendment), and particularly with 
 the present easy practice of assessors, such assessment and taxa- 
 tion of tangible personal property will occasion little inconveni- 
 ence, whatever may be the other features of any tax system of 
 which such assessment and taxation form part. But the partial 
 one may say practically the complete breakdown of the general 
 
368 HERTIG ON TAXATION. 
 
 property tax is inevitable whenever it attempts to tax the capital 
 value of moneys, credits and other easily hidden personalty. In 
 such case the tax law becomes at once divided against itself ; it 
 virtually avows, with its, let us say average three per cent, rate, 
 that it will confiscate moneys and credits ; it disavows, with the 
 same rate, that it will confiscate realty and visible personalty. It 
 abides, in general practice, by its avowals and disavowals, con- 
 fiscating moneys, credits, etc., by a face valuation, and sparing 
 realty and visible personalty by a much lower valuation. It is 
 useless to mince matters : human nature will not, and ought not, 
 submit to paying, by way of a tax, three or more per cent, on 
 mortgages according to their face value, when, by investing in 
 land, or otherwise, the capital represented by the mortgages, the 
 tax would be a third or less than a third of the mortgage tax. 
 To say, as is often said, that if all were honest, and if all would 
 consent, or were forced to be taxed on their invisible property, 
 there would be such a lowering of rates that no hardship would 
 be felt by anybody, is the most barren of propositions. To con- 
 clude thence that the way to tax reform lies through drastic laws 
 to reach invisible property and equalize assessed values is to en- 
 graft on barren theory still more barren action. The average 
 human nature of taxpayer and tax-dodger makes no such mistake. 
 
 In Illinois and Iowa, they are now trying to get substantial 
 uniformity of valuations by taking, in the former state 20, and in 
 the latter 25, per cent, of the "true cash value" as the taxable 
 value. Mention has been made in chapter XIIL, above, of the 
 effect of such law on real estate assessments in Iowa. I have re- 
 cently procured a special report in this matter from an Iowa ex- 
 pert, which more than confirms my conclusion as stated in that 
 chapter. "It is true," he says, "that the assessed value of the real 
 property of the state of Iowa does not exceed 18 per cent, of its 
 real value, and the percentage of personal property a little less.- I 
 am not now including the personal property which escapes taxa- 
 tion altogether by concealment, but confine myself to the property 
 at its actual value upon the assessment rolls." Hence, even in Iowa 
 there would be a differential of about 33 per cent, in favor of the 
 owner of ordinary personal property as against the 
 owner of moneys and credits; for each $1,000 worth of ordinary 
 or average personal property would be assessed at $170.00 or a 
 little less, while moneys and credits, taken at their face would be 
 assessed at $250.00 for the same actual value. 
 
 Here is an example of the differential in favor of real estate 
 as against "moneyed capital," both being under one ownership, 
 and the figures taken from an actual tax-paying experience in 
 Minnesota. Mention has been already made of the rule adopted 
 
HERTIG ON TAXATION. 869 
 
 by the Minnesota board of equalization for .assessing shares in 
 banks, whereby after deducting the bank's real estate from capital, 
 surplus and undivided profits, the shares are assessed as personal 
 property of the value of 50 per cent, of the remainder. An in- 
 corporated bank in Minnesota had invested $31,000 of its capital 
 in an office building, on which for five years, 1893-1897 inclusive, 
 it paid taxes separately, like any individual real estate owner, to 
 the average annual amount of $329.00. Its average capital for 
 these five years not invested in real estate was $67,000. Yet on 
 such remainder of its moneyed capital it paid for said five years 
 an average annual tax of $1,276.00. In other words that part 
 of its capital that was invested in real estate paid an average an- 
 nual tax just rising one per cent., while the part not in real estate 
 paid an average annual tax 'just under two per cent. Such are 
 the equality and uniformity of taxes as guaranteed by American 
 constitutions ! Such the "enforced proportional contributions" 
 of the Maine Judges, of Justice Cooley, of the Century Diction- 
 ary. 
 
 Before me are the figures which I used in said address to illus- 
 trate the breakdown of the personal property tax. They all tell 
 substantially the same story. The state board of equalization in 
 New York be^an to be in 1859, when personal property was as- 
 sessed at not quite 25 per cent, of the aggregate of the total values 
 of realty and personalty. In twenty years, 1879, the assessed 
 values for the whole state were : 
 
 Real estate . $2,333,669,813 
 
 Personal property 352,469^320 
 
 In said twenty years assessed values of real estate had more 
 than doubled, while values of personalty had increased less than 
 one-sixth. In ten years more, 1889, the figures stood : 
 
 Real estate $3,213,171,201 
 
 Personal property 354,258,556 
 
 In 1901 : 
 
 Real estate $5,093,025,771 
 
 Personal property 593-895,907 
 
 It is common knowledge that the personal property in New 
 York state increased much more rapidly than real estate there ; 
 yet now personal property represents but a trifle more than ten 
 per cent, of aggregate assessed values, while the new and com- 
 paratively poor states of North Dakota and South Dakota show 
 for the year 1900 respectively personal property valuations of 26 
 and 25 per cent, of their combined valuations of realty and per- 
 sonalty. 
 
 Nothing illustrates more strikingly the break-down of personal 
 property taxes in the rich state nf New York than the pointing 
 
370 HERTIG ON TAXATION. 
 
 out of special instances thereof in particular localities, for in- 
 stance, in Erie county, where, in 1901, the aggregate assessed 
 value of the realty was $277,307,745 ; and of personalty, $9,981,- 
 125. That is to say, where the personalty value was less than 
 four per cent, of the whole ! Nothing more strikingly marks a 
 lost cause than the joyous shouts of its adherents over an insig- 
 nificant victory. Thus, in Greene's Annotated 1 Ta.r Law of the 
 state of New York (second ed. Albany, 1901), p. 265, the board 
 of supervisors of Washington county is commended for "the 
 vigorous measures taken in that county to effect a proper enforce- 
 ment of the law." But what did these "vigorous measures" ef- 
 fect? Easily told : the local assessors, in 1895, "increased the as- 
 sessment of real estate in that county over- the assessment of 1894 
 by $1,989,976, or from nearly fifteen and one-half millions to 
 nearly seventeen and one-half millions ; and they added, speaking 
 roundly, one million dollars to the personal property assessment, 
 made it $3,461,766 instead of $2,448,790. In percentage fig- 
 ures, they raised the realty by 13 per cent, and the personalty bv 
 41 per cent. This sounds well ; but the halo of it is shrouded in 
 mist, when one makes the simple calculation that after the raise, 
 the aggregate value of personalty was only 16 2-3 per cent, of 
 the whole ! a little more than three per cent, less than was the 
 percentaee of personalty to combined realty and personalty in 
 "poor bleeding Kansas" in 1900. The percentage of personalty 
 values in Kansas that year was a little over 20 per cent. Of how 
 little ultimate avail was the lauded victory in Washington coun- 
 ty, New York, is apparent from a late report of the comptroller 
 of the state (Albany, 1902, p. 736), making Washington county a 
 backslider in these figures: 
 
 Assessed values of her realty $16,083,302 
 
 Assessed values of her personalty 1,840,790 
 
 That is to say, personalty less than 10 per cent, of the whole ! 
 
 Wisconsin has a tax system not unlike that of Minnesota, 
 but the former state differs from Minnesota in that the Wiscon- 
 sin "owner of moneys, notes, morte r ap"es or other credits or secur- 
 ities" must make iron-clad oath to the correctness of his list ; and 
 I have already described the facetious law in Wisconsin that for- 
 bids the assessor from recantine under oath what he has once 
 officially sworn to. Chapter XTV., above. The Wisconsin tax 
 commission complains, however, that "no penalty is imposed for 
 failure to make such [sworn 1 statement, and ordinarily it is not 
 made." Report, p. 25. A first examination of the Wisconsin 
 code led me to believe that so far as oaths JTO that code is quite 
 ri^id, and that from their failure to be at all efficient, the vanity 
 of the numerous oaths in the buried code of the Minnesota tax 
 
HERTIG ON TAXATION. 371 
 
 commission could be argued without going further. The easiest 
 way to circumvent an oath is to avoid making it. That way is 
 taken when the taking of it involves no penalty ; when such way 
 is closed, a little practice in perjury makes another way of nearly 
 equal smoothness and leading to the same end. For the rest, 
 Minnesota and Wisconsin tax about the same percentage of per- 
 sonalty. In 1898, the total values of Wisconsin realty and per- 
 sonalty were $628,504,011, of which $108,513,489, or a little over 
 17 per cent, of the whole, was personalty. These were the values 
 as returned by local assessors ; but the state board of Wisconsin 
 changed the figures somewhat, making the aggregate values of 
 realty and personalty for the state even $600,000,000, of which 
 sum personalty was made to represent $117,716,969, or a little 
 more than 19 per cent, of the whole. 
 
 In 1899, the far-off state of Washington had of values as 
 finally equalized, the following: 
 
 Real estate $172,129,311 
 
 Personal property 36,507,245 
 
 Which makes the percentage of Washington personalty 17^2 
 per cent. 
 
 Mention has been made of the fact that the Minnesota tax 
 commission went to Indiana for many features of their proposed 
 code ; also of the efforts made in Indiana to assess property of 
 all kinds at the true value thereof. Chapter XIII. , above. I 
 take the following figures from the report of the state auditor of 
 Indiana for 1899, P- I2O: 
 
 "Total true value of taxables" for 1898 $1,311,508,008 
 
 True value of railroads 153,659,348 
 
 True value of telephone, telegraph, express and 
 
 sleeping car properties 5,189,324 
 
 True value of realty and personalty .$1,152,659,336 
 
 True value of personal property 295,032,580 
 
 That is to say, of the a^^re^ate of realty and personalty iust 
 a little more than 25 per cent, represents personal property. But. 
 while I have shown in Chapter IX., above, that, as in the case of 
 Greene countv. Pa., the value of personal p^ooerty in old coun- 
 ties of the strictly rural type is about 25 per cent, of the aggre- 
 gate true values of realtv and personalty therein, it may be 
 safely assumed that in Indiana as a whole, where, in the last de- 
 cade of the iQth century, the capital employed in manufactures 
 alone leaped from $16^.000000 to $234.000,000, where there are 
 many laree and flourishing towns and cities. the nersonal prop- 
 ertv other than railroad, telenhone, tele^ranh. express and sleep- 
 ing car property is worth *i le^st as much as the realty. "It has 
 
372 HERTIG ON TAXATION. 
 
 been stated by many economists and statisticians, and generally 
 accepted as truth by others, that taxable personal property prob- 
 ably exceeds in value the taxable real property in all the older 
 states and equals it in the newer sections." Report of Wis, Tax 
 Com. p. 65. In any event, when the lauded Indiana system places 
 no greater percentage of personal property on the assessment roll 
 than is so placed in the newer and poorer states of North and 
 South Dakota with only the ordinary assessment machinery, it 
 is apparent that Indiana reaches little or no more invisible per- 
 sonal property than is reached elsewhere, though, of course, she 
 cannot quite compete with the state of New York for the banner 
 breakdown of the general property tax. In fine the net effect of 
 strenuous effort to reach personal property for taxation, under 
 any of the American systems, is to make the countrv counties pav 
 a greater percentage of the state taxes than thev otherwise would. 
 The report of the Ohio tax commission made in December, 1893, 
 is pretty nearly conclusive on that point. As one illustration in 
 point, the commission reached the conclusion that under Ohio's 
 very drastic tax law, where they employ special inauisitors or 
 "ferrets" to collect otherwise evaded taxes, and pav them 20 per 
 cent, of the amounts so collected, nearlv half the bank deposits, 
 that is to say $32.000,000 out of $70,000,000 in the counties other 
 than the five leading citv counties, were returned for taxation, 
 but that out of about $128000.000 on deposit in said five counties 
 containing the cities of Cincinnati, Toledo, Cleveland, Dayton 
 and Columbus, onlv the sum of $6,088,096 was returned for taxa- 
 tion. "In the sprine of 1802 there were on deposit in the various 
 banks (national, state, and savings) of the city of Cleveland ^bout 
 $63.000,000. Of this monev there was returned for taxation in 
 that same vear onlv ST. 800. c;o3 ; and about half of this sum wqs 
 derived from the township outside of fhe citv." As quoted by 
 WFLLS, Theory and Practice of Taxation, 42^-426. 
 
 The commission further snvs : "The svstem as it is actuallv 
 administered results in debauchin^ the moral sense. It is a scho^ 
 of penury. It sends lar^e amounts of nronertv into hiding Tf 
 drives capital in laree quantities from the state. Worst of all. if 
 imposes uniust burdens upon various classes in the communitv : 
 upon the farmer in the countrv, all of whose pronertv is taxed 
 because it is tangible ; upon the man who is scrupulouslv honest ; 
 and upon the prtardian, executor and trustee, whose accounts are 
 matters of public record. These burdens are uniust because bv 
 the svstem as administered these people pay the taxes which 
 should be paid bv their neighbors." And the commissioners for- 
 tifv their position bv addino- that "these conclusions -^re in accord 
 with all current authorities on the subject." Id, 426. This com- 
 
HERTIG ON TAXATION. 373 
 
 mission, appointed by William McKinley as governor of Ohio, 
 had four members two Republicans and two Democrats. 
 
 The Wisconsin tax commission, in mentioning that in their 
 "state the ratio of the assessed value of personalty "to the total 
 assessed value of real and personal property, is 19.62 per cent/' 
 adds : "This, it may be remarked, is a larger proportion than is 
 shown by many of the states. The smallest proportion we find is 
 in Tennessee (12.29), where they claim to have made special ef- 
 forts to reach personalty for taxation, and this only emphasizes 
 the facility with which personal property eludes the utmost vigi- 
 lance of tax laws and taxing officers." Report, p. 65. New 
 York for certain years, and especially for certain localities, must, 
 however, be conceded the banner for evading personal property 
 taxes, a victory over Tennessee all the more decisive in view of 
 the conceded great wealth of the "Empire State." 
 
 1 have frequently insisted upon ana illustrated the proposition 
 that all taxes, in so far as they do not confiscate, must be income 
 taxes in substance whatever may be their form. A further il- 
 lustration of this truth is furnished by the Wisconsin tax com- 
 mission. They sent out to a large list of "selected farmers" a 
 schedule of inquiries "calculated to discover," among other things, 
 "the ratio of expense to gross income of agriculture," and the 
 "percentage of gross income and of income from operation the 
 farmer pays in taxes." Out of 6,000 farmers thus questioned by 
 letter and written schedule about 1,500 replied. Of those reply- 
 ing, 954 "were able to make a statement of gross earnings of 
 their farms and the amount of taxes paid upon the assessment 
 of 1899. * * * These reported their gross earnings to be 
 $871,351, of which amount $37,297 was paid in taxes. Computed 
 on the percentage basis the 954 farmers representing 64 counties 
 paid 4.2 per cent, of their gross receipts in taxes." A smaller 
 number, 656, had so kept their accounts as to be able to report 
 both their gross income and their income after expenses were 
 paid, $687,469 and $204,152 respectively. "In other words, the 
 ratio ot gross expenses to gross income was 70.3 per cent. The 
 taxes paid by these 656 farmers averaged 13 per cent, of their 
 income from operation that is, 13 per cent, of the income remain- 
 ing alter expenses of operation were paid." Report, pp. 56-57. 
 Now, while it is very probable that expert book-keeping, had it 
 been possible for these farmers, would not have given the same 
 aggregate result as that which was footed up from their actual 
 figures, yet, whether the exact truth lies up or down from the 
 result given, the proposition that taxes which do not confiscate are 
 in effect income taxes, whatever their name, is alike confirmed 
 and iliiisl. rated. Estates and trust funds are now generally in- 
 
374 HERTIG ON TAXATION. 
 
 vested in securities paying a little less or a little more than four 
 pc.- cent. If such income be called net income and pay in taxes 
 13 per cent., like the Wisconsin farmers, the holder of a security 
 bearing four per cent, per annum would pay in taxes, on the 
 revenue from a thousand dollars, $5.20 and enjoy free of taxes 
 the remaining $34.80 ; whereas, if taxed on its capital value, as in 
 most of the states and at the rate therein prevailing, the holder 
 would pay in taxes nearly all and, in exceptional cases, more than 
 all of the annual revenue derived from such bond would pay, 
 that is, if assessed at all. Evasion of taxes under such circum- 
 stances is not only inevitable, but goes as far as any extenuating 
 circumstance can to make perjury justifiable. When the law and 
 its official expounders alike lie, alike flaunt their hollow pretense 
 of equality and uniformity, average human nature, as exemplified 
 in the security-holder, will not hesitate to follow the example of 
 lying law and lying judges. A golden rule, then, of practical 
 taxation is that the state must tax moneys, mortgages, and other 
 "credits" and invisible personalty on the income basis, or else 
 practically not tax them at all. But capital, under modern con- 
 ditions, is very movable and very liquid. There is absolute free 
 trade between the states of the American Union ; business of tre- 
 mendous magnitude may be carried on in a given state without 
 the taxable presence of the capital embarked in that business. 
 The several states, in the individual capacity of their citizens, are 
 eager competitors in business and desirous to attract within their 
 boundaries capital and the tangible instrumentalities of commerce. 
 They delight in ports with a large shipping registry, delight m 
 mills, elevators and factories. A second golden rule, then, of 
 practical taxation as between competing states, is that ships, ele- 
 vators and factories should be subjected to a small but certain 
 income or privilege tax. 'Compare, in this connection, the ob- 
 servations in chapter XIV. on taxing ships and grain ; and see 
 the magnificent revenues collected in Pennsylvania, all on the in- 
 come and privilege basis, as set forth in chapter XVII. of this 
 work. 
 
 A tax on mortgages cannot be evaded if levied in the form of 
 a registry tax ; but as such tax is in its general effect a tax on 
 the borrower, it, if levied at all, should be levied at a very low 
 rate, say not exceeding one quarter of one per cent, per' annum. 
 So also a tax on bank deposits may be collected, if levied upon the 
 banks themselves and at a rate as low as that suggested for mort- 
 gages both such taxes to be in lieu of other taxes on mortgages 
 and deposits. To make taxes of the kind mentioned low and cer- 
 tain is to play the best card for attracting and retaining capital in 
 the competition between states ; and the revenue yielded by such 
 
HERTIG ON TAXATION. 375 
 
 taxes would be considerable in lieu of the present evaded taxes 
 at current rates. Wells mentions the constantly diminishing per- 
 centage of notes, bonds and money at interest found by assessors 
 in Connecticut prior to 1889. Though forming ten per cent, of 
 the aggregate valuation of that state in 1855, the percentage of 
 these items was, in 1865, only "about seven and one half per cent; 
 in 1875 a little over five per cent, and in 1885 about three and 
 three-quarters per cent. ; and yet during the period covered by 
 these statistics it is probable that the amount of state, railroad, 
 municipal and farm-mortgage bonds owned by the citizens of 
 Connecticut increased to an extent equal to at least one-half the 
 valuation of all the other property in the state returned and made 
 subject to taxation." Theory and Practice of Taxation, 415-16. 
 The reason was that these items when found were taxed at "from 
 one to two or more per cent," and hence the inevitable tax- 
 dodging. "Not a bond was returned as owned in the rich city 
 of Meriden. The twenty thousand inhabitants of the thriving 
 city of Waterbury managed to scrape together only seven hun- 
 dred and fifty dollars in bonds. So far as cash is concerned, 
 there never was a community since mankind emerged from a state 
 of barter that got along with so little." Ibid'. But when in 1889 
 a new law went into effect making the tax on notes and bonds one- 
 fifth of one per cent, per annum in lieu of other state or local 
 taxation, the amount of bonds and notes that owners registered 
 in five months after the law went into effect was something over 
 $30,000,000, of which the state treasurer said, "probably at least 
 three-fourths have never paid any taxes whatsoever." It does 
 not by any means follow that the new law uncovered all the tax- 
 able notes and bonds ; but its operation was sufficient to enforce 
 my point that if these kinds of property are to be reached at all 
 in owners' hands it can be only by a specially low tax. 
 
 The specially low taxes which I favor on the class of prop- 
 erties above mentioned are, of course, only another application 
 of the income-tax principle. At the same time the favor with 
 which the income tax has come to be looked upon in the United 
 States, is, in some respects, rather a reaction against the manifold 
 shortcomings of the general property tax than the outgrowth of 
 opinion based on clear understanding of the merits and difficulties 
 of the income tax. A word of caution against over-sanguine ad- 
 vocacy of the income tax is entirely pertinent. Prof. R. T. Ely 
 who has clone much zealous and creditable work in the cause of 
 tax reform, and who is a friend to the income tax, is justly 
 enough of the opinion that it is more suitable for the national 
 government than to the several states. The income tax, he says, 
 "although it has been very frequently tried, has never worked 
 
376 HERTIG ON TAXATION. 
 
 very well in any of our commonwealths." Cosmopolitan Maga- 
 zine, XXX., 307. But this applies only to income taxes as 
 such when attempted by the states and in no way derogates from 
 the proposition which I have so frequently urged, that the states 
 in levying their usual and familiar, as well as their newer, taxes 
 should always keep in line with the income-tax principle. Since 
 the federal income-tax act of 1894 has been declared unconstitu- 
 tional, the government at Washington is virtually barred out from 
 making an effective income-tax law. 
 
 The federal income-tax law which grew out of the Civil War, 
 and which after numerous amendments was repealed, and ceased 
 to be in force in 1872 was a fairly good revenue yielder, but was 
 the subject of much adverse criticism. The total collections un- 
 der it from September I, 1862, the date of the organization of 
 the office of the commissioner of internal revenue, to the 3Oth of 
 June, 1872, were : 
 
 From the general income tax $341,706,036 
 
 From the special income tax of 1864 29,381,862 
 
 Of the general income tax, there was paid : 
 
 By individuals $260,700,986 
 
 By banks as withheld from dividends and surplus . . . 29,048,443 
 By insurance companies as withheld from dividends. 5,680,392 
 By railroad companies as withheld from dividends. . 20,655,808 
 By railroad companies as withheld from interest on 
 
 bonds 9,852,202 
 
 By United States as withheld from salaries 13,772,062 
 
 I take these figures from the report of the commissioner of in- 
 ternal revenue made Nov. 3oth, 1872. It is apparent, there- 
 fore, that the government went not only to the sources of income 
 and took toll there, but went to the income in individual hands 
 and took toll there regardless of the source. Thus the man whose 
 income was derived wholly from dividends on bank stocks, from 
 stocks in insurance companies and railroad companies and from 
 interest on railroad bonds, had a certain percentage thereof with- 
 held from him by the respective corporations, which paid such 
 withheld percentage directly to the government, while another 
 chop was cut out of the remainder after it reached his hands, if 
 the income so received by him was above the amount exempted. 
 The incomes exempted at first were those under $600.00; after- 
 wards, $1,000; still later, they were exempt up to $2,000. On in- 
 comes over the exemption and up to $5,000, the tax was 5 per 
 cent. ; from $5,000 to $10,000, the tax was 7^/2 per cent., and on 
 incomes of $10,000 and upwards, the tax was 10 per cent. "In 
 1872," says AVells, "with an exemption of $2,000, only 72,949 
 persons in the United States, out of a population of over 39,000,- 
 
HERTIG ON TAXATION. 377 
 
 ooo, admitted under oath that they were in receipt of any income 
 liable to taxation in excess of the exemption. Those only who 
 were officially and intimately connected at this time with the inter- 
 nal revenue department of the United States treasury can form 
 any adequate idea of the amount of perjury and fraud that char- 
 acterized and pervaded the country, during the years 1867 to 
 1872, as the outcome of the then existing system of internal 
 revenue." Theory and; Practice of Taxation, pp. 528-529. 
 
 The art of income-tax collection has not in the United States 
 gone beyond the rudimentary stage. Collection is complete in di- 
 rect proportion to our reaching the source of income. Every 
 property within the United States that creates shares of stocks or 
 issues of bonds, every state, city, county or district that issues 
 bonds is a fountain of personal property whose streams are lost 
 and hidden when they reach the individual owner, but whose vol- 
 ume at the fountain head can be accurately measured and taxed. 
 Go to the source and tax there ! With appropriate amendment 
 of the federal constitution, practically all of the great volume of 
 bonds of every kind, all the shares of stocks in corporations and 
 all other corporation securities would come within the reach of 
 the taxing power. I say appropriate amendment of the federal 
 constitution, because only in that way can full taxation of such 
 properties be reached at a reasonably uniform rate. If all of the 
 states but one or two could be depended upon to follow a uni- 
 form policy in this matter, and there were no technical obstacles 
 to fustrate such policy, it would still fail to reach satisfactory re- 
 sults, because the one or two states pursuing a different policy 
 could balk in great measure the legislation of the others. With 
 absolute free trade between the states, some of them, like* New 
 Jersey, are sure to take advantage of the opportunity thus af- 
 forded to make special revenues by offering special privileges and 
 special protection to corporate and other wealth. By amendment 
 of the federal constitution, the limitation on taxation fixed by 
 the United States supreme court in the Foreign-held Bond case 
 (15 Wall.), can be equitably modified, so that no American bonds 
 or other American securities, whether held outside the United 
 States, or within the United States but outside the state where 
 issued shall escape their just share of taxation. In short, to 
 reach the source we need the proper means. It has been custom- 
 ary and not inappropriate to speak of the federal constitution as 
 an instrument that is practically non-amendable, except under the 
 stress of civil war ; but nobody has seriously tried to amend it by 
 first taking a rational census, so to speak, of the wants of the peo- 
 ple, and then urging them to the work "in their sovereign and 
 collegiate capacity." Guerilla offerings of amendments there 
 
378 HERTIG ON TAXATION. 
 
 have been in abundance ; and such will never get inside the skir- 
 mish lines. The significance of President Roosevelt's current ad- 
 vocacy of constitutional amendment is that it is high recognition 
 of, meeting with popular response to, the fact that government 
 according to the glittering generality of the party platform and 
 the gaseous interpretations of the spellbinder is no longer what' 
 the people want, and that there must be a genuine "new depart- 
 ure." 
 
 The urgent needs of the people, in relation to the revenue side 
 of the government at Washington are 
 
 . I. A more frugal and more productive use of the national 
 moneys. 
 
 2. To have the national government, under appropriate con- 
 stitutional amendment, collect and equitably distribute certain 
 revenues among the several states, particularly the revenue aris- 
 ing from the taxation of what may be called inter-state commerce 
 securities. 
 
 What I have said in this chapter in reference to amending the 
 federal constitution, is merely to call attention to a particular 
 phase of the art of collecting income taxes in the United States. 
 Prof. Ely has signaled what he holds to be the needs of the fed- 
 eral government for its own financial ends: i. Flexibility in 
 its revenue system ; 2. Power to avail itself of the national re- 
 sources ; 3. A tax system which shall compel wealth to bear its 
 due share of burdens. It has, however, sufficient power of flexi- 
 bility, except in so far as its present constitutional limitation in 
 the matter of income tax may be reckoned as too rigid. It has 
 power to use the inheritance tax, subject only to the rule of geo- 
 graphical uniformity. And, as included in the right to regulate 
 inter-state commerce, it has probably the right to tax the same, 
 which Prof Ely thinks "would be a movement in the direction 
 of justice." In any event, the financial power of the United 
 States government is already enormous, far beyond its apparent 
 needs. As already said, federal frugality and federal distributive 
 agency are our urgent needs. I reserve these and other matters 
 pertaining to the federal Constitution for my forthcoming work 
 on that instrument. 
 
 Returning to the income tax and again affirming the justice 
 of the income tax principle, I will mention "McCulloch's adapta- 
 tion of Pope's lines," which I doubt not will be freely quoted of 
 the income tax, when it comes to be generally adopted in the 
 United States: 
 
 ''Whoever hopes a faultless tax to see 
 
 Hopes what ne'er was, is not, and ne'er shall be." 
 
 At the same time, the income tax is popular with the masses, 
 
HERTIG ON TAXATION. 379 
 
 and once discreetly established will have come to stay. This is 
 shown by English experience and the general adoption of the in- 
 come tax by self-governing English colonies. In 1867, the right 
 of suffrage was very much extended in England ; and the people, 
 it is said, made use of their new power to continue the income tax. 
 The following brief account o the origin and conditions of the 
 modern British income tax is very clear and instructive: 
 
 "The income-tax was imposed by Mr. Pitt to defray some of 
 the cost of the European and American wars: it was abolished 
 when the wars ceased. Sir Robert Peel reimposed the tax, as a 
 temporary measure to relieve the country of the crushing burden 
 of protective duties ; Mr. Gladstone continued it, also distinctly 
 as a temporary measure, to complete the work of free trade ; al- 
 ways with the promise of its abolition when the fiscal reform was 
 completed. The Crimean War and the Indian Mutiny caused de- 
 lay. The work was practically completed, free trade was estab- 
 lished, and in 1874 Mr. Gladstone proposed to redeem his prom- 
 ises, and abolish the tax. The reform act of 1867 had, however, 
 flooded the electorate with voters who, although they benefited 
 more than any other classes from the establishment of free trade, 
 declined to ratify the promises by which these benefits had been se- 
 cured to them. The burden of the income-tax did not fall on 
 them, and they declined to relieve those on whom it did fall. This 
 was the beginning of. the modern fiscal system, with the income- 
 tax as a permanent factor. Since then a silent revolution has 
 progressed, which has steadily increased the proportion of the 
 burden of taxation falling upon income-tax payers, and lessened 
 the proportion falling on all other classes." JOSEPH ACKLAND, 
 in Contemporary Review, May, 1901. 
 
 The same writer estimates that only about one-eighth of the 
 British people are directly affected by the income tax, and that 
 over 96 per cent, of the payers of income tax belong to the mid- 
 dle classes. He objects to it as being inquisitorial, and, because 
 is takes in one sum the payment for one year, as violating the 
 "convenience" rule of Adam Smith, whose four canons of taxa- 
 tion are in substance that the qualities of a good tax are equality, 
 certainty, convenience and economy. Wells, who was no friend 
 of income taxes, thought that for various reasons the British in- 
 come tax is "far more" efficient "than can be expected under ex- 
 isting conditions in the United States." He says further : "The 
 annual reports of the British commissioners of the inland revenue 
 always mention extensive evasions of the income tax. For the 
 year 1864-65 the amount of such evasion was estimated to have 
 been equal to about one-sixth of the revenue collected under it. 
 [Eighty-three and one-third percentage of honesty in returning 
 
380 HERTIG ON TAXATION. 
 
 property for taxation is not so bad!] The demoralizing effects 
 which are inevitably produced by the habit of making false re- 
 turns respecting income are regarded by many British authorities 
 as far more deplorable than those resulting from any other in- 
 equality contingent on this form of taxation, as the transition 
 from a fraud upon the government to a fraud upon the public is 
 comparatively easy." Theory and Practice, pp. 526-527. 
 
 The percentage of the total British revenues collected by 
 means of the income tax has been steadily increasing for some 
 years. According to Ackland, above cited, this percentage was 
 6.76 in 1875 16.23 in 1885, 19.84 in 1895, and 22.80 in 1901. Ac- 
 cording to the Statesman's Year Book for 1902, it yielded 13,470,- 
 ooo pounds sterling for the fiscal year ending March 31, 1893, and 
 26,920,000 pounds for the fiscal year ending March 31, 1901. 
 The estimated yield for the year ending March 31, 1902, was 
 33,800,000 pounds. But the tax was only sixpence in the pound 
 (2 l / 2 per cent) in 1893, seven pence in 1894, eight pence in 1895. 
 On account of the Boer war it was raised to twelve pence in 1901, 
 and to fourteen pence in 1901. Complaint is made that the reve- 
 nues of English railways are falling off because the people, on 
 account of higher income tax, do not travel so much as they did. 
 Incomes to the amount of 160 pounds are exempt ; "incomes be- 
 tween 1 60 pounds and 400 pounds receive an abatement of 160 
 pounds ; while incomes between 400 and 500 pounds are permit- 
 ted to deduct 100 pounds." SELIGMAN, Essays in Taxation, p. 
 312. Certain small allowances are also made for life insurance 
 premiums paid by the victim. The gross annual income assessed 
 in 1900, or the gross annual value of "property and profits as- 
 sessed to the income tax in the year ended April 5, 1900, in the 
 United Kingdom," (Statesman's Year Book, 1902), was 788,023,- 
 603 pounds. But it must not be forgotten "that the English sys- 
 tem is not a tax on general income, but on product," including 
 income from commercial pursuits, the annual value of lands and 
 houses, of railways, mines and quarries, gas works, water works, 
 canals, inland navigation, iron works, etc. This caution illustrates 
 the difficulties in comparing the tax systems of different coun- 
 tries. Compare p. 14, above, and the citation from Adolph Wag- 
 ner in note thereto. The general fact relating to income taxes 
 should also be mentioned, that the (formal) income tax in coun- 
 tries where the general condition of the people is extreme pov- 
 erty, is a failure. The British found that it would not work in 
 India. 
 
 The so-called "unit rule" for taxing the franchises of cor- 
 porations is in violation of the income-tax principle, and hence 
 will need to be much modified in practice. In one group of cor- 
 
HERTIG ON TAXATION. 381 
 
 porations all operating in Chicago, and all before the federal cir- 
 cuit court as complainants in a recent case, a reductio ad absurd- 
 urn of the letter of the rule was clearly worked out. The 
 literal application of the rule made a difference from one year to 
 another of more than $15,000,000 in the aggregate valuations of 
 said group of corporations, and that without any material change 
 having occurred in their physical condition and earnings. See pp. 
 229,302, above, where this rule is quoted and mentioned. The 
 full report of the case to which the Minneapolis Tribune referred 
 in the passage quoted from that journal is now before me. The 
 re-assessment for 1900 which was before the court had been made 
 as a result of mandamus proceedings, in which the supreme court 
 of Illinois had, on appeal, sustained the letter of the unit rule. 
 It must be noted, however, that the "literal application" of the rule 
 in these cases had not been made by the state board of equaliza- 
 tion for both years (1900-1901), but only for the year 1900, under 
 the compulsion of the peremptory writ of mandamus. The board 
 had seemingly used its discretion for 1901, or at least had not fol- 
 lowed the stock quotations in assessing for the latter year. And 
 the court remarked : "If, between these two assessments, a consid- 
 erable disparity should exist, the increase ought to be found in the 
 assessment for 1901, and not in that for 1900.'" But in whatever 
 way the unit rule works, or is worked, so long as it is apparent 
 that the assessments by it artificially "jacked up," cannot stand 
 with reasonable uniformity for two successive years, so long- is 
 it equally apparent that it does not embody rational taxation. The 
 1901 assessment of these corporations, it must be remembered, had 
 not been impeached. The following is an abstract of the figures 
 before, and the result reached by, the court : 
 Chicago Union Traction 'Company- 
 Reassessment of for 1900, a little over $14,000,000 
 
 Assessment of for 1901, about 8,000,000 
 
 "A loss of about 40 per cent." 
 Chicago Consolidated Traction Company 
 
 Reassessment for 1900, a little over 3,750,000 
 
 Assessment for 1901, about 2,000,000 
 
 Drop "about 47 per cent." 
 People's Gas Company 
 
 Reassessment for 1900, over 12,500,000 
 
 Assessment for 1901, about 8,500,000 
 
 Drop "about 32 per cent." 
 Chicago City Railway 
 
 Reassessment for 1900, a little over 6,000,000 
 
 Assessment for 1901, a little over 4,250,000 
 
 Drop "about 30 per cent." 
 
382 HERTIG ON TAXATION. 
 
 Chicago Telephone Company- 
 Reassessment for 1900, a little less than 2,600,000 
 
 Assessment for 1901, a little over 1,700,000 
 
 Drop of about 34^2 per cent. 
 Chicago Edison 'Company- 
 Reassessment for 1900, a little over 2,400,000 
 
 Assessment for 1901, a little over 1,300,000 
 
 Drop about 46 per cent. 
 South Chicago City Railway- 
 Reassessment, 1900, nearly ' 570,000 
 
 Assessment for 1900, a little less than 300,000 
 
 Drop about 47 per cent. 
 
 "These assessments, so widely divergent, were upon the same 
 properties, by the same board, entered almost on the same day. 
 The dates as of which they spoke were, it is true, a year apart, 
 the one being of the first of April, 1900, the other of the first of 
 April, 1901. But the tide of stock quotations, and the tide of cur- 
 rent values, were higher on the latter day than [on] the former. 
 But both [of these assessments] cannot be vindicated. 
 In the very nature of things, One or the other has been made up 
 under some species of fraud, mistake or coercion. * * 
 The record convinces us that the assessment of other property 
 throughout the state, including railroad for the year 1900, as 
 finally equalized by the state board of equalization, did not exceed 
 seventy per cent of the cash value [of which only 20 per cent was 
 taken and extended as the taxable value according to the Illinois 
 statute.]" 
 
 The court, however, would not grant an injunction except "on 
 terms," and these were that the companies plaintiff should first 
 pay to the proper officers, in addition to the tax which they had 
 already paid upon their first assessment for 1900, additional taxes 
 for that year, according to the following rule : 
 
 "The basis shall be the true net earnings of the several com- 
 plainants for the year covering Aoril i, 1900, proper allowance 
 being made for depreciation and replacement, but not for exten- 
 sions ; and reduced further by the amount of additional taxes that 
 the enforcement of this rule produces. Upon this basis the value 
 of complainants' capital stock, including franchises and tangible 
 property, shall be capitalized on a ratio of six per cent, [capital 
 value enough to produce at six per cent the net earnings so 
 found] ; this eaualized by reduction of thirty per cent, [because 
 other propertv in Illinois had been valued at only 70 per cent, of 
 its cash value] ; and then divided by five [to comply with the Illi- 
 nois statute prescribing 20 per cent, of the value as the taxable 
 value.] The sums thus produced will be regarded as the true re- 
 
HERTIG ON TAXATION. 383 
 
 assessments for the year 1900. Upon this the tax will be ex- 
 tended at the true rate for 1900, * * * not to exceed eight 
 and thirty-seven-hundredths per cent, [from which will be sub- 
 tracted the taxes already paid for the year 1900], and the balance 
 will be the sum required." Chicago Union Traction Co. v. State 
 Board of Equalization, 114 Federal Reporter, 557. Modified as 
 the re-assessment for 1900 was by this order, its effect was to give 
 to Chicago a handsome increase over the taxes paid by the cor- 
 porations under the routine and ridiculously low first assessment 
 for 1900. The net earnings basis adopted by the court would 
 make the assessments for 1900 approximate those for 1901, that 
 is, lower them from 30 to 47 per cent, from the re-assessment 
 made by the board as a result of the mandamus proceedings. The 
 ground of the federal court's decision was that the re-assessments, 
 under compulsion of mandamus, "did not * * * express the 
 real judgment of the state board as an independent tribunal, and 
 were therefore, in effect, fictitious judgments," and hence were in 
 violation of the federal constitution as taking or about to take 
 property "without due process of law." 
 
CHAPTER XX. 
 
 That taxes which do not confiscate are in effect income taxes, is no nov- 
 elty Taxes in general should fall on income, but the state has full 
 right, and sometimes ought, to impose them on capital Excise taxes 
 are in form taxes on neither income nor capital Weakness of the unit 
 rule The incidence of taxation Wells disgusted with Seligman 
 Salient points in the latter's book on "Shifting and Incidence" An 
 Italian striving to outdo Germany Negative and skeptical views of 
 incidence Pioneers of equal diffusion Canard and his followers 
 Thiers and Wells American Bible Society helps to pay whisky and 
 tobacco taxes ! Ricardo once more, his followers and critics Essen- 
 tials of incidence for Americans. 
 
 Insisting in these pages, as I have done more than once, that 
 all taxes, except in so far as they confiscate, are income taxes in 
 fact, whatever their form, I do not mean to imply that such pro- 
 position is a novelty or a personal discovery. "Income is now so 
 generally recognized as the normal source of taxation that it is 
 somewhat surprising to find that it has been only after property 
 and other taxes have failed to produce the revenue required that 
 the plan of a direct taxjon income has been adopted." P. \LCXAYK, 
 Die. of Polit. Econ. III., p. 521. On the proposition that income 
 is the normal source of taxation, rests the "general rule of tax- 
 ation sometimes laid down that it should fall on income, and not 
 on capital." Though one believe in the truth of the proposition 
 and in the soundness of the "general rule" which I have just quot- 
 ed in J. S. Mill's words, it by no means follows that there should 
 be no exceptions to the rule. The state has a lecral right to tike 
 capital by taxation; and such right is just as valid, just as well 
 grounded, as the right to take by taxation a portion of the citi- 
 zen's income. Thus Mill himself does not "attach any import- 
 ance, in a wealthy country, to the objection made against taxes 
 on legacies and inheritances, that they are taxes on capital," 
 though, "it is perfectly true that they are so." Polit. Econ. Book 
 V., ch. ii., sec. 7. Even where the state by her taxes does not 
 intend to confiscate, the effect of all systems of fixation, as we 
 find them, results in partial confiscation. Whenever the state 
 
HERTIG ON TAXATION. 385 
 
 levies a tax upon wholly unproductive property, or upon produc- 
 tive property an annual tax greater than its annual income, or 
 upon certain kinds of property a tax which materially reduces the 
 net income from such property below the percentage of net in- 
 come yielded by most other kinds of property, in each of these 
 cases there is partial confiscation in the sense which I attacn to the 
 word. Taxation, then, is confiscation to the extent that it takes 
 from individual or corporation the individual or corporation cap- 
 ital, using "capital" in the sense thereto attached by expert ac- 
 countants. "To provide that taxation shall fall entirely on in- 
 come, and not at all on capital, is beyond the power of any system 
 of fiscal arrangements." MILL, ibid. Ordinarily and normally, 
 therefore, both direct and indirect taxes are, "and of right ought 
 to be," paid out of income ; but partially and exceptionally some 
 part of them is always paid out of capital. What taxes shall be 
 purposely levied for payment out of capital is a question of dis- 
 creet statesmanship. Strictly speaking, an indirect tax, such as 
 the excise or any tax on commodities, is in form neither a tax on 
 income nor a tax on capital ; what it is in fact depends on the 
 circumstances of >those who consume the commodities so taxed. 
 
 No legislative act is more unwise than providing for a tax 
 which shall manifestly confiscate in whole or in part, if the sole 
 purpose of such act or the sole effect thereof lies in an immediate 
 increase of public revenue. I speak, of course, from the present 
 standpoint of the American states, neglecting the extraordinary 
 emergencies which might be invoked to justify such confiscation 
 solely for revenue. Suppose an immensely valuable property to 
 be seriously crippled or impaired in market value by such partially 
 confiscatory tax ; if it is corporate property, the "lamb" share- 
 holders will be the first to sell their holdings, while the more 
 reckless and daring speculators will be left in full control and 
 will use their power to wrest from succeeding legislatures a repeal 
 or substantial modification of the law that shook out the "lambs." 
 They will be aided in this by the natural apathy which succeeds 
 a raid and by the evidence of disaster to unintended victims of the 
 same. Expropriation is the proper sequel of stealthy appropria- 
 tion ; but the "tail-twisting" which flows from moral indignation 
 and that which flows from corrupt aim are alike objectio-^Me 
 in result, and from the standpoint of result are on much the same 
 plane of statesmanship. The see-saw in assessed valuations that 
 would result in attempting to apply literally the so-called "unit 
 rule" a see-saw to which would contribute not only the normal 
 fluctuations of the stock exchange but the more violent ones 
 caused by the occasional application of the rule itself n. see-saw 
 to which would additionally contribute not only th : ^ner^e^i? 
 
386 HERTIG ON TAXATION. 
 
 action of those directly interested and spurred by the most power- 
 ful motives that greed can furnish, but also the inevitable relapse 
 of the taxing authorities from spasmodic and ill-judged "reform," 
 who is there in the thinking class that need be told twice, that 
 in the troubled financial pool by such see-saw created, your shark 
 alone would prove to be the superior swimmer? The variation 
 of $15,000,000 in assessed valuations from one year to another, 
 whatever the cause, as shown in the Chicago case reviewed at 
 the close of the last preceding chapter, is a strong enough sup- 
 porting fact. But I again touch on problems which must be left 
 to the New Jurisprudence and the Civil Nation ! 
 
 Readers of these pages can attest to having found them rea- 
 sonably free from the metaphysics of taxation. I have, in that 
 connection, successfully resisted the temptation to cite and scalp 
 certain German authors. If the subject were sufficiently poeti- 
 cal, or even if I were, like Mr. Richard Watson Gilder of the 
 Century Magazine and of the Century Dictionary, sure, in any 
 event, to be heard by the muses, I should certainly invoke their 
 aid to carry me over "The Shifting and Incidence of Taxation," 
 without letting me lapse into metaphysics. That quoted phrase, 
 by the way, is the title of one of Seligman's books, in 314 pages 
 of long primer text lines four inches long and 37 of them to the 
 page. The question, then, as to who evades and who finally pays 
 taxes, is not, as Prof. Adams holds services for which one pays 
 fees are, outside of "quantitative" estimation (p. 91, supra), but, 
 in a sense, may be measured by the size of the book which Prof. 
 Seligman has devoted to it (New York, 1899). I have not- be- 
 fore me the earlier edition, published, I believe in 1892, and which 
 David A. Wells called "a somewhat complete review of the con- 
 flicting theories advanced by participants" "in the great difference 
 of opinion" as "to the method or extent to which taxes diffuse 
 themselves after their first incidence." Wells is, however, un- 
 gracious enough to say that from this "somewhat complete re- 
 view" of such "conflicting theories * * * one rises with a 
 feeling of weariness and disgust." Theory and Practice, p. 569. 
 Such, however, is not my feeling as regards Seligman's book. 
 That "the body of a dead enemy smells always good," is a most 
 shocking sentiment, in the crude and literal sense, in the bar- 
 barous sequence, of its historical setting ; but in a figurative sense, 
 and as applying to the common enemy (figures in the politico- 
 economic Dunciad) whose bodies Seligman has embalmed with 
 professorial spices in his Shifting and Incidence, I find myself 
 sufficiently responsive to the sentiment to say, at least, that these 
 embalmed bodies are rather pleasing than otherwise. I fancy 
 
HERTIG ON TAXATION. 387 
 
 that one reason for the "weariness and disgust" of Wells is the 
 fact that Seligman "stigmatizes" the Wells theory "of the non- 
 diffusion of taxes on land" "as so very superficial as scarcely to 
 deserve a refutation." Theory and Practice, p. 590. 
 
 "Who pays your tax?" asks the rugged-minded Anglo-Sax- 
 on; and is likely to be greeted with the kindred and emphatic 
 answer, "I pay it myself." But this, like "the sun do move" of 
 the colored preacher, is too, too plain, and lacks the haziness of 
 atmosphere as well as of some other things. The average book- 
 keeper pays the tax, and charges it to "expense," which consti- 
 tutes its final incidence or lighting place so far as he and his em- 
 ployer are concerned. They would know better and different, 
 perhaps, if they should consult that modern Italian, Prof. 'Conig- 
 liani. The old Italians, in Latin Rome, had the rare good fortune 
 to have only the Greeks to imitate in art, poetry and philosophy, 
 and imitated as best they could ; the modern Italians, in their debt 
 and anarchist-ridden Italy, are additionally cursed with German 
 pedantry, and now strive as zealously to imitate that as their fore- 
 bears did to pattern after the Greeks. Conigliani wrote a book 
 whose title, translated, runs, "General Theory of the Economic 
 Effects of Taxes: a Sample of Pure Economics" (Milan, 1890). 
 This seems to have paralyzed the book trade in Milan, for eight 
 years afterwards he brought out a second book in Modena, en- 
 titled "The Reform of the Laws on Local Taxes," and of the 
 moderate compass of 751 pages all, like the players' play in 
 Hamlet, "writ in choice Italian." Seligman lets the first book 
 speak for itself by giving and translating a characteristic passage ; 
 he speaks for the second, by calling it an "admirable book which, 
 like so many recent works by Italian writers, fairly staggers the 
 reader with its wealth of material and evidences of wide read- 
 ing." I mention both books and quote Seligman's paragraph 
 from the first, to show the American tax-levier and tax-payer that 
 they may well claim forgiveness as not knowing what they do: 
 "A tax of given intensity and extension falls with the less in- 
 tensity and extension on individual economies, and produces a 
 less unequal effect on economic society, in proportion as society 
 is more developed. The incidence, when it does not have a con- 
 siderable extension or intensity, assumes the less easily the char- 
 acter of a change in activity, in proportion as society is more ad- 
 vanced. Finally the change in consumption will take place with 
 greater disturbance of the equilibrium in the degree of the satis- 
 faction of wants, and therefore with less change in the internal 
 arrangement of individual economy, in proportion as the social 
 environment in which these chanees of taxation take place is 
 more advanced." 'And this, Conigliani tells us,' "completely ex- 
 
388 HERTIG ON TAXATION. 
 
 hausts the general theoretic problem of the effects of taxation." 
 Shifting and Incidence, p. 171. "After that," as the French say, 
 "-one must draw up the ladder" : there is need of a break in con- 
 tinuity in that direction. 
 
 "In the process of taxing," says Seligman in his introduction, 
 "we must distinguish three conceptions. First, a tax may be 
 imposed on some person ; secondly, it may be transferred by him 
 to a second person ; thirdly, it may be ultimately borne by this 
 second person or transferred to others by whom it is finally as- 
 sumed. The process of the transfer of a tax is known as the 
 shifting of the tax, while the settlement of the burden on the 
 ultimate taxpayer is called the incidence of the tax. The inci- 
 dence of the tax is therefore the result of the shifting [when in- 
 deed the tax is shifted], and the real economic problem lies in the 
 nature of the shifting," [after in any given case it has first been 
 determined that there are shif tings.] 
 
 As I mean to be very simple and must' needs be brief in my 
 own treatment of this subject, I will let the negative and skepti- 
 cal voices be heard first as preparatory to what I believe may be 
 said of positive and practical value. "An English parliamentary 
 committee on local taxation, presided over by one o>f the foremost 
 of England's practical and theoretical economists, George J. Gos- 
 chen, reported in 1872 that they could not tell, and no man could 
 possibly find out, whether the tax on the occupier of houses was 
 paid by the tenant or the owner of the land." DENSLOW, Eco- 
 nomic Philosophy, p. 459. 
 
 * * * "Where m relation to so many taxes it is impossible 
 for statesmen to agree as to where the incidence of the tax actual- 
 ly rests, yet the tax produces the revenue and the citizen prospers 
 the question where it rests becomes a mere philosophical and 
 metaphysical subtlety, of no more practical importance than the 
 question where the ultimate responsibility for human conduct 
 rests, or where the human will begins, or where in economics the 
 cost of production begins whether with the final process, or 
 with the production of the implements, and if so whether pro- 
 duction shall be deemed to include invention of the implements, 
 in which case the effort to compute the cost of producing a bushel 
 of corn would carry us back to the beginning of the world. Such 
 subtleties may be, and largely through Mill's influence are, mis- 
 taken" for economic science, but they have nothing to do with it, 
 but belong to the widely different domain of metaphysical gym- 
 nastics." Id. 460. 
 
 Denslow's book, by the way, is another of those books which 
 the professors pass over in silence, largely, perhaps, because he 
 "skinned to a finish" the free-trade wing of them, an achievement, 
 
HERTIG ON TAXATION. 389 
 
 for the rest, that does not quite vouch for Denslow's inerrancy. 
 He by no means confesses impotence on the question of incidence, 
 but cuts it short with a "not worth while." Adolph Held, on the 
 , contrary, takes the purely skeptical position, that, whether worth 
 our while or not to know where a tax finally alights, it is past 
 our finding out. "He was an acute thinker," says Seligman, "and 
 a man of the noblest ideals ; but he became so imbued with the 
 idea that all of the old political economy was worthless that his 
 strictures are as often false as true." The pity of it that he could 
 not have sat awhile at the feet of Prof. Summer of Yale, or 
 basked in the pervading cheerfulness of Prof. Hadley of the 
 same! ''From Held, therefore," concludes Seligman,. though not 
 precisely in this connection, "we learn nothing positive." It is, 
 however, always a cheerful and a noteworthy, because rare, fact, 
 when a schooled German is willing to admit that a given subject 
 is beyond the reach of his knowledge, though for him to say so 
 it takes 73 pages of the Turbijiger 1 Tim-cscript for the Entire 
 Range of Stale-knouiedgeship. 
 
 From negative theories of incidence, the transition is easy 
 and natural to theories which affirm positively but on such terms 
 as largely negative the importance of what they do affirm. Such 
 a theory Seligman calls "the equal-diffusion theory." Lord 
 Mansfield, in a speech in the House of Lords, put forth at least 
 the germ of an equal-diffusion theory. This speech, delivered in 
 1766, is a clear and cogent argument in favor of the right of Eng- 
 land to tax her colonies, and expressly waiving discussion of 
 "the expediency of the tax," which he correctly declared "must 
 necessarily be taken separate, if there is any true logic in the 
 world." In arguing that a prior speaker had made a false dis- 
 tinction between "internal and external taxes" Mansfield said : 
 "The noble lord who * * * denied * * * the right of 
 * * * Parliament * * * to lay internal taxes upon the 
 colonies, allowed at the same time that restrictions upon trade, 
 and duties upon the ports, were legal. But I cannot see a real 
 difference in this distinction ; for I hold it to be true, that a tax 
 laid in any place is like a pebble falling into and making a circle 
 in a lake, till one circle produces and gives motion to another, 
 and the who-le circumference is agitated from the centre. For 
 nothing can be more clear than that a tax of ten or twenty per 
 cent, laid upon tobacco, is a duty laid upon the inland plantations 
 of Virginia, a hundred miles from the sea, wheresoeve^ the to- 
 bacco grows." Mansfield, however, says Seligman, "made no 
 further application of the doctrine." 
 
 A contemporary of Mansfield in an anonymous essay (Lon- 
 don, 1767), cited by Seligman, reasoned acutely enough that 
 
390 HERTIG ON TAXATION. 
 
 "every new tax does not only affect the price of the commodity 
 on which it is laid but that of all others, whether taxed or not, 
 and with which, at first sight it seems to have no manner of con- 
 nection. Thus, for instance, a tax on candles must raise the 
 price of a coat, or a pair of breeches ; because out of these, all the 
 taxes on the candles of the wool-comber, weaver, and the tailor, 
 must be paid." Entirely in this line is the very modern instance 
 so pleasantly put forth by Wells : 'The American Bible Society 
 is always in part loaded with whisky and tobacco taxes paid by 
 the printers, papermakers and bookbinders, or by the producers 
 of articles consumed by these mechanics, and reflected and em- 
 bodied in their wages and the products of their labor according 
 to the degree of absence of competition from fellow-mechanics 
 who abstain from the use of these and other taxed articles. "- 
 Theory and Practice, 585. 
 
 The equal diffusion theory, as germinal with Mansfield and 
 other English writers and with the Italian Verri, whose Medita- 
 tions on Political Economy came out in 1771, seems "to have 
 passed unnoticed" (Seligman, p. 125), until in 1801, the French- 
 man Canard made it his own and winged it for self-sustaining 
 flight in his Principles of Political Economy. He concludes that 
 "the tax you lay on one branch of industry is like the blood-let- 
 ting which the surgeon does on your arm : the vein he pricks is no 
 poorer in blood after the operation than all the other parts of the 
 body." In taxation, then, it is the first pain of the new tax that 
 counts, the friction it produces before equilibrium returns, which 
 friction throws business out of gear for the time being. Hence 
 one can boldly put forth "this great truth, that every old tax is 
 good, and every new tax is bad." Disciples, therefore, of Canard 
 have improved on the master, the Frenchman, Cherbuliez, by 
 declaring stability to be "the most essential merit, mobility the 
 gravest defect that a practical system can have" ; the German, 
 Prittwitz, by declaring, with relentless logic that the only right 
 way to tax is to make the tax laws fixed and unchangeable, and 
 that thus the worst thinkable system the worst, that is, in its 
 first ooeration becomes in time as good as the best ! Thiers is 
 looked upon by Selieman as sharine with Canard "the doubt- 
 ful honor" of founding- this "optimistic theory." Thiers thought 
 that a tax "is indefinitely passed on, and tends to meree into the 
 price of things, to such extent that each bears his part of it, not 
 in proportion to what he pays the state, but in proportion to what 
 he consumes. * * * The tax bounds back and glances on 
 indefinitely, and between bounding^ back and glancines on be- 
 comes finally an integral part of the price of things. I call this 
 the diffusion of the tax." Hence follows that "the greatest pur- 
 
HERTIG ON TAXATION. 391 
 
 chasers and consumers are everywhere the greatest taxpayers." 
 The phrase "diffusion of taxes," invented by Thiers, has become 
 of current use by subsequent writers on taxation. Thiers, how- 
 ever, could not go to the full logical length of his theory, and be 
 indifferent -as to the system of taxation to be adopted. "God 
 preserve me from such a heresy !" he exclaims. 
 
 "The most noteworthy modern follower of Thiers is the Aus- 
 trian professor, [Lorenz von] Stein." SELIGMAN, p. 131. This 
 is an unkind cut at our American, Wells, whom Seligman ac- 
 knowledges to be "the chief representative [in America] of this 
 easy-going, complacent doctrine." P. 133. Not that Stein es- 
 capes criticism at Seligman's hands ; far from it : he scores on 
 the Austrian professor with the charge that the latter has put 
 forth a conception such "that even all subsequent German writers 
 have declared themselves unable to understand what it means," 
 and whose mystery Seligman therefore excuses himself "from at- 
 tempting to unravel." I fear me that Seligman is a trifle pre- 
 judiced against Stein, for that the latter makes light of the 
 "shifting of taxes." And then, too, Seligman seems timid about 
 using the resources of the American language in translating 
 Stein. 1 have no such timidity. So translated Stein says : "The 
 doctrine of the shifting of the taxes, is one of the most wonderful 
 'ballings-up' of a notion (eine der wunder-lichsten Be.^riffsver- 
 wirrungenj that there has ever been in science. * * * In 
 place of the unclear notion of the shifting of taxes, I launch the 
 clear notion of the 'coughing-up' of the same. The aggregate 
 sum of all taxes must annually, as surplus of production, be real- 
 ly and truly 'coughed up' by the people !" 
 
 Enough of the equal-diffusion theory ; like all of the general 
 tax theories its chief sin is in disloyalty or indifference to facts. 
 We have seen in the sinele-tax chapter, above, one phase of ab- 
 solutism in theories of incidence, the doctrine that a tax on eco- 
 nomic rent falls upon the landlord. It was further absolute and 
 fundamental with Ricardo that laborers are practically exempt 
 from taxation, because they have nothing to pay taxes with ; for 
 "wages never continue much above that rate which nature and 
 habit demand for the support of the laborer" ; hence taxes on 
 wages will raise wages. A tax on necessaries will do the same, 
 because they must be bought with wages ; and, the theory as- 
 suming that wages before the tax was imposed were just suffi- 
 cient to buy necessaries, the laborer must now get higher wages 
 to pay for the higher necessaries, which the theory also assumes. 
 "The only difference between a tax on necessaries," said Ricardo, 
 "and a tax on wages is, that the former will necessarily be ac- 
 companied by a rise in the price of necessaries, but the latter will 
 
392 HERTIG ON TAXATION. 
 
 not." But taxes on wages, by thus raising them, "diminish the 
 rate" of the employer's profit ; "consequently neither the stock- 
 holder, the landlord, nor any other class but the employers of 
 labor will contribute" toward, or receive the incidence of, such 
 taxes. RICARDO, Principles of Political Econ., ch. XVI. But 
 Ricardo made his facts as inflexible as his logic, and practically 
 disregarded the cruel lowering to which even a wretched standard 
 of comfort may yield. J. S. Mill points out that the incidence 
 of a tax on wages "is very different, according as the wages taxed 
 are those of ordinary unskilled labor, or are the remuneration of 
 such skilled or privileged employments, whether manual or intel- 
 lectual, as are taken out of the sphere of competition by a natural 
 or conferred monopoly." In other words, he who works for 
 wages or a salary, and gets good wages, something more than 
 enough to live on according to the average standard of comfort 
 in his class, or enough to live on according to an elastic standard, 
 cannot shift a tax on his wages ; but such tax may reduce him 
 "prematurely to that lower state," which, according to the Ricar- 
 do-Mill theory is his ultimate doom, in which he shall barely sub- 
 sist, and against which the socialists and Henry George react so 
 energetically. Perhaps it was merely some shred of latent optim- 
 ism in Ricardo and his followers that drew the conclusion, that 
 because the laborer had just enough before, to live somehow, he 
 must necessarily to still live 'somehow get higher wages after a 
 tax or other circumstance should have raised the price of neces- 
 saries. But what are the facts ? Speaking of the time of Eliza- 
 beth, Thorold Rogers says: "Prices rose 150 per cent., and the 
 wages of labor were almost stationary. Wages do not rise with 
 prices. To assert that they do, or will, is either ignorance or dis- 
 honesty." Economic Interpretation of History (N. Y., 1888), 
 p 37. "According to all experience, whether within modern ob- 
 servation, or recorded by history, it may be laid down as an estab- 
 lished maxim, that labor is the last of the objects of exchange to 
 rise in consequence of dearth or depreciation, and that conversely 
 the price of labor is last to fall in consequence of increased abund- 
 ance of commodities, or of increased value of money." THOMAS 
 TOOKE, A History of Prices (London, 1858) II., p. 71. In Spain, 
 "the influx of specie [from Mexico and Peru] produced a diminu- 
 tion in the value of money, and habits of lavish expenditure in 
 the rich; rents were raised, all the necessaries of life advanced 
 in price, and of the wealth poured into the country in full streams, 
 all that reached them was in the shape of more abundant aims, 
 which made them more dependent than they were before, without 
 preventing them from being more miserable." The Same (p. 
 72) citing the Quarterly Review, Vol. XV., p. 192. 
 
HERTIG ON TAXATION. 398 
 
 "I'll, tell you," said in substance Ferdinand Lassalle to the 
 Prussian judges, "when and how a tax that raises the price of 
 bread raises also the laborer's wage. When, as in Ireland and 
 with the Indian ryot, wages are already at the lowest subsistence 
 point, then in truth a higher price for grain is followed by a 
 higher wage. The higher price means hunger, special diseases 
 for the underfed, atrophy, starvation. I reier you to Malthus, 
 to Mill's History of India, to Raynal's work on the Indies. We 
 know these phenomena at home under the name of the 'Silesian 
 Weavers' Typhus.' And now when the destroying angel has 
 raged long enough among the workers, when the 'preventive 
 and destructive checks' oi Malthus have thinned their ranks 
 enough, then, my lords, ah then, with the supply of workers 
 cut down to correspond with the demand, will wages rise to the 
 point of representing the indispensable necessaries of life!" And 
 he charges the "augurs of science," the professors, with re- 
 luctant and reticent knowledge of these facts. But many of the 
 professors, at least of the more modern ones, have done good 
 work in criticising the general and absolute theories of the inci- 
 dence of taxation. Seligman, for instance, concedes that "the 
 imposition of a tax on wages injures the workman both tempor- 
 arily and permanently." 
 
 "Taxation of the capitalists' share of the national income 
 gives rise to more difficult problems than those connected with 
 rent. Between the doctrine of Turgot that a tax on profits is 
 always, and that of Ricardo that it is never shifted, we have to 
 take an intermediate position." C. F. BASTABLE,, Public Finance 
 (second ed. London, 1895), p. 354. This passage from Prof. 
 Bastable affords a good illustration of the progress that is cur- 
 rent in modern professordom, of the dawning and sometimes 
 full-shining conviction that absolute theories in economics 
 are now outworn. That things "seem," or things 
 "tend," to be or to do so and so, is now as common a conclusion 
 with the professors as their older-time cock-sure conclusion that 
 things are, or things d\o, so and so. An "intermediate," or 
 middle position is also taken by the capitalist : he is delighted 
 to have the incidence, or stroke, of taxation alight on either 
 side of him, while he, in the middle, remains untouched. As 
 to the taxation of interest, which is the matter directly in view 
 by Bastable in the quoted passage, the American capitalist, at 
 least, is very successful in holding the middle position described. 
 The current quotations of ^/ 2 and 4 per cent, railroad bonds at 
 near and above par show that nobody in the United States even 
 seriously thinks of paying a tax on interest as such. For the 
 rest, the system in general use throughout the United States. 
 
394 HERTIG ON TAXATION. 
 
 of taxing banks and trust companies by levying a tax on their 
 shares and on their realty, exempts from specific taxation both 
 the principal and the interest of the notes, bonds and other like 
 securities which they own. And as I have said in the preceding 
 chapter, the individual holder of such securities cannot be ef- 
 ficiently reached except by reaching their source. These con- 
 siderations apply in great measure to all loose, or very movable, 
 capital; but, as Bastable justly observes (p. 355), ''capital once 
 invested, the difficulty of withdrawing it places the possessor 
 for the time being in the same position as the landlord." And 
 so he modestly concludes : "A tax on fixed capital would thus 
 seem to resemble in its effects a tax on rent, and to be equally 
 untransferable." Ibid. All absolute theories of the incidence of 
 taxation read themselves out of court, so to speak, at the outset 
 and by the very statement of their conditions. The conditions 
 presuppose uniformity of operation through uniformity or equal- 
 ity of the taxes to which the theory is applied. But there is no 
 uniformity or equality of such or of any taxes : they must vary, 
 as well in rate as in their effect, according to the varying cir- 
 cumstances of the taxpayers and the varying strictness of their 
 enforcement. Thus J. S. Mill : "A tax on profits, like a tax on 
 rent, must at least in its immediate operation fall wholly on the 
 payer. All profits being alike affected [the impossible result of 
 any tax], no relief can be obtained by a change of employment. 
 If a tax were laid on the profits of any one branch of productive 
 employment, the tax would be virtually an increase of the cost of 
 production, and the value and price of the article would rise ac- 
 cordingly ; by which the tax would be thrown upon the consumers 
 of the commodity and would not affect profits." Principles of 
 Polit. Econ. Bk. v. ch. iii. Sec 3. But the theory that a tax 
 upon "the profits of any one branch of productive employment 
 * * * would te thrown upon the consumers" rests likewise on an 
 assumption not wholly ungrounded in fact but insufficient for 
 the broad base of such theory, the assumption "that the dealer 
 or producer had been obtaining normal profits before the imposi- 
 tion of the tax" (Bastable, p. 347 ), and that he would quit his 
 "one branch" so taxed unless he could now add the tax to his 
 prices, make sales accordingly, and keep on "obtaining normal 
 profits." The assumption is based on the underlying assumption 
 of "perfect mobility" of capital I borrow the expression from 
 Bastable which may be given concrete form by supposing that 
 if tin-plate makers are specially taxed, one or more of them will 
 promptly go to making hoop-iron, which for the sake of the 
 theory is not so taxed ; whereupon tin-plate will rise in price, and 
 profits become normal in that line. But Bastable, as we have 
 
HERTIG ON TAXATION. 335 
 
 seen above, is well aware that such supposed "one branch" may 
 be operated by fixed capital which cannot escape the tax, and 
 which, as we know sometimes happens, is kept at work in the 
 same branch until its owners become bankrupt. On the theory 
 that monopoly prices yield much more than normal profit, it is 
 allowed that, "so far as producers' gains are at all of the nature of 
 monopoly, taxation will remain on them/' BASTABLE, p. 348. Se- 
 ligman, discussing an hypothetical "uniform tax on all capital," 
 which he frankly states is "an impossibility in the modern world," 
 makes his argument applicable to a uniform tax as well on all in- 
 terest as on all capital, and concludes that such tax must fall on 
 the capitalist ; for "there would be no way for him to shift the 
 burden." 
 
 Amongst English-speaking farmers, the expression is not in- 
 frequently heard, "the farmer pays for all," implying that he 
 also pays taxes for all. It would be curious if this expression 
 could be traced to the doctrine of the illustrious Englishman, 
 John Locke, who was prior to the Physiocrats in propounding 
 the theory that taxes finally alight upon the land. Locke wrote 
 in 1691, or perhaps the next year, this proposition of incidence: 
 "Taxes, however contrived, and out of whose hand soever im- 
 mediately taken, do, in a country, where the great fund is in land 
 for the most part terminate upon land." As quoted by Selig- 
 man, p. 71. In support of this view, Locke, in some respects 
 anticipates the theories of Ricardo, but colors them with the hues 
 of life, and carries their effects a step farther than Ricardo cares 
 to do. Thus, as to the effect of a tax on the laborer, Locke 
 says: [Either] "his wages must rise with the price of things, 
 to make him live, or else, not being able to maintain himself and 
 family by his labor, he comes to the parish [in modern American, 
 goes to the poorhouse] ; and then the land bears the burthen a 
 heavier way." Note Locke's vivid presentation of the reason 
 (better known in Ricardo's abstract form) why there can be no 
 tax on laborers : Pay it the "poor laborer and handicraftsman 
 cannot: for he just lives from hand to mouth already." With 
 Locke, however, and reflecting the conditions about him, the 
 farmer is not the owner of the land, but only a "rack-renter or 
 under tenant," to whom it is "the same thing" "whether he 
 pays all his rent to the king or his landlord." As tenant, his 
 "bargain and profit is the same, whether the land be charged, or 
 not charged with an annuity" [or annual tax.] Hence, if the 
 tax is laid directly upon the land, the owner cannot shift it. So 
 also, if it be laid on commodities, he must pay "more for wages 
 as well as other things, whilst he sells his corn and wool ; either 
 at the same rate, or lower, at the market (since the tax laid up- 
 
396 HERTIG ON TAXATION. 
 
 on it makes people less forward to buy), [and] must either have 
 his rent abated, or else break and run away in his landlord's debt, 
 and * * so the yearly value of the land is brought 
 
 down, and who then pays the tax at the year's end but the land- 
 lord?" Id. p. 72. Locke is as emphatic as any that came after 
 him in affirming that a tax on commodities raises the price to 
 the consumer: "Tis plain the merchant and broker neither will 
 nor can [pay such tax] ; for if he pays more for commodities 
 than he did, he will sell them at a price proportionately raised." 
 In a famous passage which Seligman says "is the first instance in 
 English literature of any allusion to the term 'direct taxes/' 
 Locke puts it to the landlord to decide whether to pay "the 
 public charges" straight, or through his tenant, and thereby 
 receive a lower rent: "The- merchant (do what you can) will 
 not bear it : the laborer cannot, and therefore the landowner must ; 
 and whether he were best to do it, by laying it directly where 
 it will last settle, or by letting it come to him by the sinking of 
 his rents, which when they are once fallen, every one knows are 
 not easily raised again, let him consider." Id. p. 73. 
 
 It is noteworthy, in connection with Locke's or any theory of 
 the absolute incidence of taxes on land, that Ferdinand Lassalle, 
 the Hebrew socialist agitator (the romance of whose life and 
 death George Meredith has so admirably turned to artistic use in 
 The Tragic Comedians), took the ground that indirect taxes are 
 the means used by the dominant classes of society, the Haves, to 
 shift the burden of taxation from their own onto the shoulders 
 of the poor, the Have-nots, meaning by indirect taxes not only 
 the ordinary taxes on consumption, or on commodities, cut also 
 taxes on business and land (die Gewerbesteuern und die Grund- 
 'steuern), which he held to be shifted to the shoulders of the poor, 
 who in Prussia had not sunk so low as the Irishman at home and 
 the Indian ryot, but could still yield up a little more before reach- 
 ing the -starvation point. Using the public revenues of Prussia 
 for 1855, as the basis of his argument, he maintained that out of 
 the total revenues for that year, that is, 108,930,000 thaler, de- 
 ducting the state's income from its lands, etc., 11,967,000 thaler, 
 and income taxes, etc., which he held to be direct, 12,848,000 
 thaler, there would remain in round numbers 85,000,000 thaler, 
 to be put down as the total of the Prussian indirect taxes for that 
 year. Lassalle's book-keeping differed from that of the state in 
 that he put down as indirect taxes land taxes amounting to 10,- 
 000,000 thaler ''which indeed had been directly collected from the 
 landowner hut bv the latter had been shifted onto prain prices 
 and so had finally been paid by grain consumers ;" differed also 
 in that Lassalle put down as indirect the business, or privilege. 
 
HERTIG ON TAXATION. 397 
 
 tax of 2,900,000 thaler. As every one must consume, and the 
 poor on account of their relatively greater numbers not only con- 
 sume in the aggregate much more than the rich, but each poor 
 family consumes individually, and must consume nearly the 
 whole family income, indirect taxes are therefore a monstrous 
 engine of oppression by which the bourgeoisie exploit the poor. 
 For putting forth such doctrine based on the above figures, the 
 Prussian authorities prosecuted Lassalle criminally for "endan- 
 gering the public peace by stirring up the inhabitants of the state 
 to hatred and contempt of each other." The lower court found 
 him guilty, sentenced him to four months' imprisonment and to 
 pay the costs, besides ordering the destruction of all copies of 
 the address in which he had put forth the doctrine in question 
 The court of appeal, however, commuted the sentence into a fine 
 of 100 thaler, which result was considered a triumph for Lassalle. 
 It is from the pamphlet embodying his former utterances and in- 
 tended to be read before the appellate court that I have taken the 
 above figures, and made the paraphase further above quoted, 
 telling how a tax. on the necessaries of life raises wages, when 
 it does raise them. Lassalle was a powerful "controversialist, and 
 the doctrine as put forth by him may be regarded as little less ef- 
 fective for conviction than if it were strictly true. Single-taxers, 
 like Thomas G. Shearman, are as declamatory of the evils and in- 
 cidence of indirect taxation as was Lassalle. There is, how- 
 ever, nothing original or striking in Lassalle's views that the 
 Prussian land tax of his day was an indirect tax and finally 
 alighted on the consumers of grain. He based it on the doctrine 
 of Ricardo, "but if a land-tax be imposed on all cultivated land, 
 however moderate that tax may be, it will be a tax on produce, 
 and will therefore raise the price of produce/' Lassalle's editor, 
 however, points out that Ricardo's dictum rests on the supposi- 
 tion that the grain market be naturally or artifically limited, which 
 was not the case in Prussia at the time of which Lassalle spoke, 
 there being then and there free trade in grain ; hence the Prussian 
 land-tax could not unconditionally be held to have the effect of 
 an indirect tax. 
 
 A tax on land is as good as any to use for showing those sim- 
 pler and more practical workings of incidence which are not be- 
 yond every-day capacity and which all ought to bear in mind. If 
 any man fairly well content with modern conditions of industry 
 and luck, has thriven and made money, and, desires, let us sup- 
 pose, to lead the life of a country gentleman, or independent far- 
 mer in any of the prosperous rural counties of Minnesota, for 
 instance, that one which had the lowest tax rate in 1901 (pp. 118- 
 120, above), we may suppose him to buy a section of land there 
 
398 HERTIG ON TAXATION. 
 
 at $40.00 per acre, or, in round numbers, at three times the aver- 
 age assessed value of acres in that county (^$13.55), bringing" 
 his primary investment to $25,600. He has duly weighed the fact 
 that the taxes for 1901, on said section, at 16.8 mills on the dol- 
 lar of assessed valuation were $130. If he assumes that taxes 
 there will be steady and average the same sum on his section 
 thenceforward, and that money is worth to him 6 per cent., he 
 may look upon the annual tax charge as if it were the interest 
 of a perpetual mortgage having a principal of $2,166.67. By tak- 
 ing that sum, and making it earn 6 per cent., it will just clear 
 his taxes. If he could commute his taxes by -paying them once 
 for all, and receive the guaranty of the state that his land should 
 thereafter remain untaxed, he might be willing to pay $2,500, or 
 i-io of what the land cost him; or, if the one who sold to him 
 had had the like guaranty from the state, he would have will- 
 ingly added that $2,500 to his purchase price. It is apparent, 
 therefore, that in buying the land, always supposing him to have 
 thought of all these things, he knew that he was buying only 
 10-11 of its net use, or, as people commonly say, was buying 
 an "equity" equal in value to 10-11 of the full value. But, 
 whether he thought of all these things or not, they were self- 
 registering in effect, and he bought and paid for just the equity 
 mentioned and no more. Technically, therefore, the public auth- 
 orities may be regarded as coproprietors with him, and as claim- 
 ing and taking annually the rental value of i-n of the whole, 
 commuted as above said into an annual payment of $130. But on 
 this state of facts the actual interest which he bought in his sec- 
 tion will remain forever untaxed. Such exemption from taxa- 
 tion is called in the books the effect of "capitalization of the 
 tax ;" and some writers have held that "because of this capita-- 
 ization, a land tax is no tax at all." SELIGMAN, p. 139. Our pur- 
 chaser of the section being, according to the hypothesis, a man 
 "fairly well content with modern conditions," and having thriven 
 under them, cannot be heard to complain that the $2,500 which 
 he withheld from paying because of the state's perpetual inter- 
 est in the land had already been taken elsewhere from his private 
 fortune by the state ; nor can he be heard to complain of the 
 seeming tax on his section, since he is merely the agent >f the 
 state in collecting 1 it from himself or from his tenants and in 
 paying it over. But now if his county treasurer should default 
 in the sum of $50,000 or any sum, and the same should not he 
 recovered; or if the' county and school officials should make in- 
 discreet expenditures on roads, bridges, county buildings, 
 school-houses and the like (say 50 per cent, in excess of actual 
 needs or of usable value),- then to the extent of his pro rata share 
 
HERTIG ON TAXATION. 399 
 
 of such default or excess, our purchaser of the section is taxed 
 beyond peradventure, and he cannot shift the tax. It is as if, on 
 going to pay the state its usual $130.00, he had been robbed of the 
 same or a. portion thereof, and had to make good the robbery. 
 That which we plainly see can have no appreciable influence on 
 his markets or other opportunities, and which, as money, might 
 just as well have been saved as not, is clearly a tax whiich re- 
 mains on the payers. If, on the other hand, our supposed tax- 
 payer is a practical reformer, becomes influential in his new 
 county, and through his efforts local expenditures are cut down, 
 so that his taxes are less than $130.00 per year, he has suc- 
 ceeded, for the time in wresting an additional equity from the 
 state, and the incidence of the pro rata amount of such saving is 
 just as plainly on him as the above-supposed pro rata of in- 
 creased taxes would be upon him. Moreover, if he is public-spir- 
 ited as well as thrifty, he may point out the need of increased ex- 
 penditures, and such increase may follow therefrom ; in which 
 case, too, the incidence of his pro rata of the increase is plainly 
 upon him, and there can be no shifting ; but it is like the incidence 
 of the seed corn which he plants in his fields he expects it to 
 alight on him, and to his advantage in the future. To the extent 
 also that the $130.00 of ordinary annual tax is discreetly ex- 
 pended, the public authorities give to him the substantial own- 
 ership of the state's one-eleventh of his section. In the supposed 
 case, as local to Minnesota, only one-eighth (cut down this year 
 to probably one-tenth) of the $130.00 goes to the state treas- 
 ury ; the remainder is expended within his county, and if not dis- 
 creetly expended neither cause nor remedy is far to seek. The 
 $16.00 or $13.00 going out of the $130.00 into the state treasury 
 ought to be precious in his eyes as evidence of how light the bur- 
 den of state government can be made, and as offering some 
 guaranty that such burden will continue light. 
 
 In the case supposed, we have been able to follow the inci- 
 dence, because we have been able to follow the facts ; have been 
 able to follow them because able to isolate them, without wrench- 
 ing them away from important modifying facts, whose influence 
 would continue though neither measured nor measurable. But 
 when we proceed further, and ask what taxes, if any, our man 
 pays to the government at Washington, the answer is not so 
 easy. When there. is a stamp tax on bank checks, telegrams and 
 the like, he will be able to tell accurately some items of federal 
 taxation whose incidence is on him. Whether his hired men use 
 whiskey and tobacco or not, it is probable that the wages he pays 
 them are somewhat higher how much no man can tell on ac- 
 count of federal taxes on these commodities, because, in theory, 
 
ioo HERTIG ON TAXATION. 
 
 their use enters into the standard of living which stands in some 
 relation to the average wage. If there is a duty on coffee, and 
 an act of congress soon to take effect with intent to give "a free 
 breakfast table," he may make a nice calculation in advance as to 
 how much it will save him on coffee only to learn with more 
 or less chagrin a few weeks later that Brazil has taken advantage 
 of our act of congress by laying an export duty on the fragrant 
 berry, and that coffee is only a shade lower since our duty was 
 taken off an actual occurrence of the year 1880. He may or 
 may not know that one of the exploded sophisms of free trade is 
 that "when foreign countries protect any class of manufactures 
 they thereby acknowledge that they cannot compete with us [the 
 English] in our own or in any neutral markets, and that by the 
 conditions of the problem it is impossible that they should do so ;" 
 but yet may be aware of the fact that as long ago as 1877 the 
 imports of manufactured goods into Great Britain were, includ- 
 ing metals, to the amount of 64,635,418 pounds sterling goods 
 almost the whole of which were "protected" in the countries ex- 
 porting them. But if an expert accountant, and especially if fa- 
 miliar with large affairs, he will know that there is a considerable 
 difference between the factory cost of goods and such cost plus 
 a pro rata of fixed charges which go on whether the factory runs 
 or not ; and will find it entirely simple and natural that Alfred 
 R. Wallace should write in the Nineteenth Century for July, 
 1879, that most of the protected goods sent to England are sent 
 there, in fact, "because they afc protected, the manufacturers 
 finding it to their advantage to work to the full power of their 
 plant and capital, selling the larger portion of their output at a 
 good profit in the home market, and with the surplus under-sell- 
 ing us which they are enabled to do, because all the fixed charges 
 of the manufacturers are already paid out of the profits of the 
 domestic trade." In such case, too, he will not be surprised to 
 learn that French silks can be bought in New York at con- 
 siderably less than the ordinary price of the like goods in France 
 added to our duty on the same ; and may be quite willing to let 
 the professors sness at what the like silks would cost if our 
 "barbarous tariff" were accommodated to professorial "ideals. 
 Before clamoring to attack trusts from the tariff-reform sally 
 port, he might consider such facts as that "Marshall Field, the 
 leading importer and dry-goods merchant of Chicago, stated in 
 1882 that in all ordinary woolen and cotton goods, for common 
 wear by the business men and working classes, the American 
 market "(though surrounded by an average 45 per cent, tariff) is 
 the cheapest market in the world ;" might desire to get at the bot- 
 tom facts regarding current prices which correct statements 
 
HERTIG ON TAXATION. 401 
 
 would give covering a wider range than Marshall Field's ; and 
 might reflect that the usual dense ignorance not only as to what 
 comparative prices are but also as to what elements in what pro- 
 portion enter into them, is the worst possible foundation for an 
 opinion as to what prices ought to be. He might, in the end be 
 uncertain whether in his particular situation he paid any federal 
 taxes at all, and regret only that the government at Washington 
 does not use with quite the best discretion its vast revenues. If 
 a reader of this book, it might occur to him that if the trusts can 
 defeat a well-directed effort to make them treat their employes 
 right, treat the public right, and pay a handsome tax out of the 
 right profits, they will be equally successful in defeating any 
 scheme of tariff reform that shall call out their opposition ; and 
 that it will save a good deal of time to find out the extent of their 
 and our power by moving on the right lines from the start. 
 
 One of the practical questions in the incidence of taxation 
 that need not be, yet generally is, neglected, is the question aris- 
 ing in particular cases, why is there no incidence at all? Why 
 does the tax yield no revenue ? Take, for instance, the attempted 
 tax on grain in. elevators in North Dakota, pp. 191-193, above. 
 I mention it merely in further illustration of the fact that when 
 we can follow the facts, until they become too complex and too 
 numerous, we can follow also the incidence and non-incidence of 
 the tax. I have mentioned above, p. 370, that in Erie county, 
 New York, the assessed value of personal property for a given 
 year is less than four per cent, of the aggregate value of realty 
 and personalty there ! Now the very important port and city of 
 Buffalo are in that very county. There are vast elevators, right 
 in the main highway of Northwestern commerce. Does anybody 
 suppose that grain in those elevators pays any tax, or has any 
 assessed value there ? Not a bit of it. Useless to study the New 
 York code on taxing personal property : that code is strictly car- 
 rying on its main function getting its tax provisions evaded ! 
 Saying nothing, for the present, of the protection to grain by its 
 exemption from tax, while in transit ; saying nothing of the faci- 
 lities offered for carrying wheat tax-free in Duluth and in her 
 sister citv hard by in Wisconsin, Buffalo itself, without those 
 other facilities, is practically a sufficient reason why any attempt 
 to assess and tax grain at full value this side of there, is doom- 
 ed to failure. Moreover, to the extent of the cost occasioned by 
 the inconvenience of dodging- the ^rain tax and by the conse- 
 quent loss of the otherwise fuller use that might be made of local 
 elevators, the North Dakota farmer is taxed on his grain through 
 the short-sightedness of his legislature ; and this tax, whatever 
 it mav be neither vields revenue nor can be shifted. It stays on 
 
402 HERTIG ON TAXATION. 
 
 the farmer. Considerations like these ought to move to the re- 
 pealing of foolish grain-taxing laws and to blocking the proposed 
 enactment of like laws in any of the Northwestern states. 
 
 The most important general fact in incidence, one that can- 
 not be eliminated where questions of incidence take a wide range, 
 is that taxes are always unequal. This is in no case more true 
 than where the tax has the seeming of equality as in license taxes. 
 Where a license tax is in the same sum for all engaged in the 
 business so taxed, it may prompt those engaged therein to strug- 
 gle at the old. prices for a greater volume of trade than they had 
 before the license was imposed, to recoup themselves by larger 
 sales for smaller profits on individual transactions. Here the 
 consumer does not pay the tax, but rather those who are crowded 
 out of business and lose the whole or a portion of their capital 
 in quitting. The American states may be called different coun- 
 tries having a common external tariff, substantially a common 
 market and absolute free trade with each other. Here the actual 
 fact and the importance of inequality of taxation are very appar- 
 ent. Where the general conditions of the race are much the same, 
 special and sudden handicaps put promptly out of the running 
 those on whom they first alight ; at least there is no way for the 
 more recklessly taxed states and subdivisions to shift the part of 
 the burden which is really such, though in a more metaphysical 
 aspect of the case it may well be that there is an incidence of pro- 
 fit on the wiser states over and above what they directly save by 
 prudent taxation, as the frugal workman may profit in a higher 
 wage by reason of the more expensive standard of living adopted 
 by the average workman. 
 
 In practical statesmanship, it should be ever present to the 
 mind both as guide and warning that, as average human nature 
 looks at it, the incidence of taxation is just where at first glance it 
 seems to be, on the person taxed and on the owner of the thing 
 taxed. There is considerable of sound instinct in the conclusion 
 that average human nature leaps to on this subject ; and the prac- 
 tice of taxation should conform the tax laws to it as near as may 
 be. Where the people are wrong, it is only the plain facts kept 
 before them or the complex facts exposed with candor and sim- 
 plicity that will set them right. I am a firm believer in the capac- 
 ity and the will of the people to take an advanced course, and ar- 
 rive at right conclusions, in the grave and difficult problems dis- 
 cussed or mentioned in this book : they need only the right aids, 
 divorced from the jargon and the remoteness of the schools. 
 
HERTIG ON TAXATION. 408 
 
 GENERAL PROPERTY TAX ONCE MORE. 
 
 [Read in connection with pp. 367-373, above. .] 
 This book has much outgrown the size first planned for it ; 
 and, though it is not to be classed as small, remains still of mod- 
 erate compass in comparison with most works on like subject. 
 Prof. Georg Schanz, for instance, has written a work of "prodig- 
 ious proportions" (5 large octavo vols., aggregating more than 
 2,000 pages, Stuttgart, 1890), all devoted to the taxes of little 
 Switzerland. But he could hardly do less, to carry out the plan 
 suggested in his title, which is, in English translation, ''The Taxes 
 of Switzerland in their Development since the beginning of the 
 Nineteenth Century." Having a federal government, in some 
 respects not unlike ours, and having much local independence with 
 accompanying distinct taxation in her twenty-five separate can- 
 tons, Switzerland has had a mass of tax experience in no way 
 measured by her narrow geographical area ; and, as Seligman 
 says, she "is the only European country where the general prop- 
 erty tax still plays an important role." But, "the one great effort 
 of the Swiss legislatures during the past half-century has been to 
 supersede the general property tax, not necessarily by the income 
 tax, but by some form of income taxation by some system which 
 directly or indirectly makes not property, but product, the basis 
 of taxation." Essays in Taxation, pp. 384-386. "Switzerland, like 
 the United States, has tried all forms of assessment for the general 
 property tax- self-assessment and official assessment, oaths and 
 no oaths, publicity and secrecy ; and these have proved equally 
 inefficient." Id. 387. She has, however, one drastic measure, 
 "developed in the last few decades," that has novel features. "As 
 soon as a taxpayer dies, his entire property is seized by the gov- 
 ernment and held until an exact inventory is made. If this dis- 
 closes fraud in the previous self-assessments, punitive taxes must 
 be paid, rangine in some cantons over a period of ten years. 
 * It has done s^ood service in increasing the tax receipts, 
 and it forms today one of the chief subjects of dispute in the 
 Swiss cantons." Id. 387-388. Such a measure, however, would 
 ill accord with the legislative tenderness for decedents' estates 
 shown in America (p. 254, .above) ; and the superior risror of the 
 Swiss is further shown by their advanced stand on inheritance 
 taxes. Switzerland has passed beyond the collateral inheritance 
 tax ; for her system "applies to all inheritances and bequests, with 
 a rate ranging from a fraction of one per cent, in Zusr, to as much 
 as twenty-five per cent, or even more for non-relatives in Uri."- 
 Id. 388. 
 
APPENDIX A. 
 
 [To be read in connection with statement of Minnesota's area (p. 103, 
 supra) : also in connection with pp. 54-57, 144.] 
 
 It may perhaps please those who are fond of the classification, 
 "lies, damned lies and statistics," to know that the (N. Y.) World 
 Ahnanac for 1902, gives Minnesota's area as 79,997 square miles; 
 the (N. Y.) Tribune Almanac for the same year, 79,205 square 
 miles; the (N. Y.) World Almanac for 1901, 86,335 square miles; 
 the Century Cyclopedia of Names, 83,365 square miles ; the official 
 report of the state Geological survey, 84,286 square miles ! Vol- 
 taire's line of verse, 
 
 "And that's the very way they write you history !" 
 is classical. The average man, certainly the average hack, employed 
 on dictionaries and encyclopedias, abhors, or rather has no need of 
 the exact fact. It is said that Caleb Gushing marked for the sur- 
 prised publishers some 5,000 errors in a Webster's unabridged dic- 
 tionary. However that may be, it is certain that the big loose- 
 jointed dictionaries and encyclopedias that publishers parade, and 
 owners fancy, as "up to date," are so far unreliable that the careful 
 worker will fear, even where he perforce trusts them. I fancy 
 that any greasy Jew money-changer could tell you, if he would, 
 the weight and fineness of a silver rouble. For complete darkness 
 on this point and for slipshod statements of value that could hard- 
 ly be better in their kind if inspired by conscious desire to take 
 the booby prize, consult the big dictionaries, beginning with the 
 Century and thence up or down, according as you grade the 
 others. You read of a ship anchoring in a certain road, think of 
 the Monitor-Merrimac battle in Hampton roads, perhaps recall 
 road as used in "The Two Gentlemen of Verona." You would 
 pare the haziness from your notion of maritime road with the 
 ed^e-tools for such surgery to be found in the Century Dictionary. 
 Here is the Century definition, flanked by three illustrative ex- 
 tracts, a definition telling you, in substance, that a road is any old 
 unsheltered water surface near shore, "where vessels may an- 
 chor !" Here are the very words of the Century definition, to 
 prove my paraphrase : "A place near the shore where vessels may 
 anchor, differing from a harbor in not being sheltered." As dic- 
 tionary-makers borrow and steal from each other, the reader, if 
 curious, can trace the delicious evolutionary leaps and bounds by 
 
HERTIG ON TAXATION. 405 
 
 which the Century hack finds a road for the wave-tossed skipper 
 off Cape Hatteras, off the Skelligs, or off anywhere, wind and 
 weather permitting. I take the liberty of inserting a few words of 
 my own, bracketed, in the following quoted illustrative definitions 
 of road maritime: 
 
 "A place [what kind of place?] where ships may ride at an- 
 chor at some distance from the shore/' WEBSTER, Unabridged 
 Die. Another question suggested by the above and by the follow- 
 ing definition, Is some a cable's length or what? Do ships some- 
 times ride at anchor on shore ? Is there no road where ships close- 
 ly hug the shore ? Now, try this : "A place at some distance from 
 the shore, where vessels may ride at anchor." WORCESTER, big 
 Dictionary, citing Dana, presumably as authority for the defini- 
 tion, but giving no quotation. A somewhat better definition than 
 either of the foregoing is given in a dictionary (Stormonth's) 
 published by the virtuous Harpers before their financial downfall. 
 That definition inserts "safely" before "ride at anchor;" but hav- 
 ing no limitation of why or where is still incomplete. The Web- 
 ster and Worcester definitions, vague and foolish as they are, evi- 
 dently form the groundwork of the Century, definition ; only the 
 Century lexicographer rashly attempted to cure, after a fashion, 
 that vagueness. His reader and his unlucky star furnished him 
 with an ancient reference, "Harbours they have none, but exceed- 
 ing good Rodes" and with a hack-clincher from B. Taylor, 
 "The anchorage, however, is an open road, and in stormy weather 
 it is impossible for a boat to land." Thus furnished, he begot his 
 definition, and launched a lexicographical lie, gross and palpable. 
 The world has some famous roads; the better the road, the surer 
 shelter it affords. Only a road is not land-locked like an ideal har- 
 bor ; it is in general open to wind and wave in certain directions. 
 According to Littre the French call a good south road, one where 
 there is shelter from the south wind. Littre's general definition of 
 road (rade) is "an extent of sea fenced in part by land more or 
 less elevated and affording anchorage sheltered from wind and 
 wave coming in a certain direction." Bayard Taylor had doubtless 
 seen many a road, and his use of open in such connection ought 
 to have been evidence to anybody except American dictionary and 
 magazine hacks that an open road connotes roads a good deal less 
 open. 
 
 Let a gross blunder once lodge in a big dictionary ; and, if one 
 not likely to shock numerous readers, it has an excellent show for 
 perpetuity. A seaman would hardly take the trouble to find out 
 what a land-lubber fancies a road to be ; and the land-lubbers have 
 evidently been satisfied to know that it means some place where 
 ships may anchor. ' Now this Century blunder has already got it- 
 
406 HERTIG ON TAXATION, 
 
 self "conveyed" in Pistol's sense to another big dictionary the so- 
 called Standard of Funk & Wagnalls. Their hack had evidently 
 sublime confidence in the Gilder gang ; and his strenuous effort to 
 "convey" the pith of prior definitions under original rearrange- 
 ment of their bark is almost amusing. Thus : "an open place [open 
 to what?] at some distance from the shore, [he mildly resents as 
 not quite elastic enough the Gilderian near "the shore," and so 
 prefers Webster], where ships may ride at anchor; not sheltered 
 like a harbor [in this slightly disguised conveyance the hack made 
 an unconscious random shot only "some distance from" the 
 truth] ; a "roadstead." This last word is defined in turn, with 
 careful retention of the Century. precision, as "a place of anchor- 
 age off shore without harbor protection." 
 
 As to the Century' definition, it does not a priori seem quite im- 
 possible that the editor of the magazine so named and the hack 
 of the so-named dictionary, exchanged places once in a while, and 
 specially for this occasion. Or we may indeed surmise that Mr. 
 Richard Watson Gilder, master of the Century crew, and so hu- 
 mane, it's said, that he weeps over some four hundred and eighty- 
 eight manuscripts, all equally fit for his magazine, yet all doomed 
 each month to rejection, simply gave to some tired hack a breath- 
 ing spell, made easy transition from rhythmic words about words 
 to prosy words about words, and, leaning on the Webster and 
 Worcester props aforesaid, himself mapped out the roadless road 
 of the Century definition. 
 
 The soulful sonnets published under Mr. Gilder's name will 
 hardly be claimed for any one else 275 years hence. In any event, 
 I hasten to be a far better witness for him than the much-quoted 
 Meres dared to be for Shakespeare : I am firmly convinced that 
 Mr. Gilder is himself the "only begetter" of the Gilder sonnets, 
 in the plain straight meaning of "begetter," and that he did not 
 buy the right to parade as their author from Edna Dean Proctor, 
 Ella Wheeler Wilcox, Lottie Linwood, or any other that I could 
 mention. But he owes it to himself to make the title to his dic- 
 tionary labors equally clear. It would be edifying to know that 
 he rested himself on dictionary work after, let us suppose, the 
 pleasing punishment he had just borne in giving birth to some 
 such sonnets as these : 
 
HERTIG ON TAXATION. 407 
 
 DOUBTS AND QUESTIONINGS. 
 
 My father was a preacher; so am I his son, 
 
 Conclusion pregnant of a comma which I now accouch. 
 But halt, self-scrutinizer ; needs her virtue one? 
 
 Nay, rather let unpointed inference avouch 
 The mother heart beat true ! Fie on't, oh fie, 
 
 That pride in such poor quip holds sponge from such bare 
 
 question ! 
 I said my father: he flatly let them fry 
 
 In plain hell-fire ; I tip to them suggestion. 
 He dared them go to Hell ; I dare "to be pure," 
 
 To conquer "civic wrong;" patter of "journey trod upward;" 
 Like Browning, praise the sting, smart, lash cock-sure 
 
 Balm for all somewhere beware of drifting tupward 
 Damn us moderns anyway : "Cupid's nectar cup" 
 Ithic-ethic all our lay "downward and not up!" 
 
 AN EXCURSION TO HELLAS, WHEREIN NEW BLOOD FOR ODYSSEAN 
 
 TRENCH. 
 
 Nay I will this once talk plain. "Sweet" and "dear," 
 
 "Dear heart, sweet heart," burden of Bok's bosh and mine, 
 Let be. If in thes-e dreams seem spirits near 
 
 Help, Prospero and Ariel's cloven pine 
 "Free from the impertinence and warp of flesh," 
 
 Though this same pen has praised them, bide they must, 
 To yield my question answer. Thou, Cressid, fresh 
 
 To view as when poor blooming Cefeus lipped for lust 
 Thou Troilus madest happy, speak, oh speak, 
 
 Tongue quickening first with sip of heart's pure blood ;- 
 Say if "talks with girls," where preachments tart or meek 
 
 Mouth matron and mould maid, had done you any good ; 
 Say if reading mine or Harpers' monthly rot 
 Had spared you levying blackmail, or what? 
 
APPENDIX B. 
 
 PERTAINING TO MATTERS CIVIL. 
 
 Several years ago I projected, and wrote articles of incorpora- 
 tion for, a proposed institution of civil education, to be called 
 "The Civil Institutes of Minnesota," and to have the powers and 
 privileges of an incorporated college, or educational society, with- 
 in the state mentioned. The matter was not carried beyond some 
 private discussion as to trustees and endowments between myself 
 and a few friends ; and I thought it better, at least for a time, to 
 carry on in a different way certain of the work then planned. The 
 limitations, then, of "professors," as occasionally mentioned or 
 implied in the foregoing pages, is no new subject for me; but I 
 hasten to add that I do not lack in appreciation of the good work 
 that many of them are doing in spite of the defects in college 
 ideals, college systems and college government, of which the pro- 
 fessor is but one evidence, and to which my criticisms are in 
 greater measure directed. In the Atlantic Monthly for April, 
 1900, "One of the Guild," from the safe shelter .of that anonymous 
 description, intones "The Perplexities of a College President." 
 It is probable that the timidity which, outside the noisy field of 
 campaign literature, is the dominant factor in American letters 
 will be effective to keep secret the name of the writer and the 
 colleges which he refers to. He contrasts the plenary authority 
 conferred upon the general manager of a business enterprise with 
 the divided and enfeebled authority conferred upon a college presi- 
 dent greatly to the disadvantage of the president and his college. 
 The professorial office was, and too often is yet, the means of 
 perching "high upon a pinnacle, above effective criticism and quite 
 beyond the reach of complaint. * * * A full professor rarely 
 died and never resigned. The removal of the head of a depart- 
 ment for inefficiency was almost unknown ; in fact, it may be said 
 to have been entirely unknown :" when the professor's "incompe- 
 tency became unbearable," he was not so often removed as he was 
 "retired upon half pay." One of the functions of the up-to-date 
 cpllege president is to get along the best he can in a make-shift 
 sort of way, "to do the work of three men because the other 
 two are at least not ready to co-operate with. him, * * * 
 to supplement the inefficiency of others, and to furnish enthusiasm 
 
HERTIG ON TAXATION. 4U9 
 
 enough not only to carry himself over all obstacles and through 
 all difficulties, but to warm blood in the veins of others whose tem- 
 perature never yet rose above thirty-four degrees Fahrenheit. 
 * * * * It goes without contradiction that in our colleges 
 and universities there is practically no educational supervision 
 whatever. It is doubtful if the bravest college president in the 
 country would quite dare to go into a department and make an 
 issue on the methods of instruction obtaining therein ; and it is 
 still more doubtful if he would be sustained by his board if he 
 did this. The average board would probably suggest to him that 
 he 'would better get at it in some other way/ wisely neglecting 
 to state in what other way." He quotes one toplofty professor as 
 saying: "For the president even to inquire as to the methods of 
 my department is to express dissatisfaction. If he were entirely 
 satisfied, he would not inquire. To inquire, therefore, is simply 
 to offer me an insult." And the anonymous president closes a 
 long paragraph with, "surely, folly and unwisdom can go no fur- 
 ther, but both go to this limit far too often to-day." He reports 
 "one of the brightest and most promising of the younger presi- 
 dents" as declining "a unanimous and pressing call to the head- 
 ship of one of the most notable institutions in this country." Asked 
 why, the president of such brightness and promise explained : 
 "Because even casual inquiry showed that two old and decadent 
 men controlled the board ; two old and decadent men, and three 
 men weak in education but strong in scheming and wire-working, 
 controlled the faculty ; and all the old grannies in the community 
 and in the denomination [note the 'denomination'], who thought 
 the institution their private property, controlled both the board 
 and the faculty and the president was supposed to cut between 
 these three, satisfy all, and shift for himself." 
 
 Mention has been made (p. 92, above) of "the degradation of 
 the professorial office" as lamented by Prof. Ladd, of Yale. The 
 Atlantic article just cited may be looked upon as further proof 
 of how easy it is to impeach the professorial office by testimony . 
 from within. I go no further than to say that where the professor 
 delivers himself on those problems, whose solution is not to be 
 tested in the laboratory or on the blackboard, problems of life 
 and mind that come home to the business and bosoms of men, 
 there is a general presumption that he is wrong. The historical 
 method is there with his full present approval to aid anyone who 
 cares to make the census of his hits and misses. That he should 
 be wrong oftener than right is the natural sequence of the condi- 
 tions under which he professes, and especially of the temperament 
 which prompted him in the first instance to embrace them, or 
 which (making proper allowance for youth and inexperience) 
 
410 HERTIG ON TAXATION. 
 
 suffered him later to be content with them. To strengthen his 
 hand where he is right, and to promote conditions which tend to 
 make him right, is one of the new civil problems. The solution, 
 however, does not lie in the direction pointed out in journalistic 
 comment on Prof. Ladd's lament, increase his dignity and influ- 
 ence by paying larger salaries ! 
 
 What I have called in this book the New Jurisprudence will be 
 in its first stage the beginning of "law reform by private enter- 
 prise." The weightiest of civil problems converge about this sub- 
 ject. It is the fashion to talk of trends and tendencies ; doctrinaire 
 reformers and grave professors alike regard them as soon or not 
 quite so soon to become crystallized into clearly shaped result. 
 The men of trends and tendencies are generally content, or rather 
 by personal limitations are forced, to be impotent, and generally 
 disappointed, spectators of what a timid and lukewarm, or confi- 
 dent and hostile, bench and bar will do with and against the stream 
 of tendency. Conditions in such kind always present themselves 
 to me under this general form : average human nature, so placed 
 individually as to be capable of forming an effective majority in 
 the proposed field of operation, will make its trends and tendencies 
 effective only in so far as it finds in the right man and the right 
 men an organ duly operative in every department of civil govern- 
 ment.- For illustration, there is now indicated in the United States 
 a plane of cleavage or line of division between the extremely rich 
 and those controlling, or directly benefited by, great collective 
 wealth on the one side, and the remainder of the inhabitants on the 
 other side. There is no present union or harmony amongst those 
 who have the larger numerical end of the division. Included 
 among them are the very poor, whose cause, if espoused by the 
 very poor alone, would never triumph; the moderately poor ; the 
 somewhat better off ; a great many concerns, or firms, that would 
 have seemed very rich some years ago ; and, finally, the fairly 
 wealthy in considerable numbers. There is somewhat of common 
 aim, more of common envy, and most of common fear. If not the 
 very best conditions, they are still conditions that promise material 
 for an effective majority, through which the people as a whole 
 may, and of right ought to profit. But the battle is not easy ; and 
 the right jurisprudence, if not quite indispensable to the winning, 
 must certainly be found for fostering and retaining the right 
 fruitage of victory. 
 
 The law as apprehended from its routine and technical side 
 is necessarily a halting, often a despairing, leader. Along its blind 
 side operates the great fact that tremendous law-making is often 
 the immediate fruit of the law's paralysis makes great leaps 
 which the law shall afterwards bridge with feeble metaphysical 
 
HERTIG ON TAXATION. 411 
 
 strands. Conscious deliberation, constitutional conventions, re- 
 ports of conference committees and the like may find the work 
 which they failed to do supplemented in a startling way. I would 
 have the New Jurisprudence forestall the dramatic effect of such 
 supplements by obviating their necessity. In short, the making, 
 amending and enforcing of constitutions and laws that shall fill the 
 needs of the people must be the ideal and the only ideal of the 
 New Jurisprudence. 
 
 The people, it must not be forgotten, are often influenced by 
 the names, but care little for the forms of things, if such forms in 
 fact or deceptive seeming are the means of their gaining a sub- 
 stantial advantage. Immediate history furnishes striking proof. 
 If Theodore Roosevelt, reviving Jackson's dictum that the execu- 
 tive in swearing to support the Constitution swears to support it as 
 he understands it ; and if Roosevelt, in the name of the Constitu- 
 tion, in the name of the maxim that "the safety of the people is 
 the supreme law," and in the name of Lincoln and precedents by 
 him, and even by Grover Cleveland furnished were to cast 
 about for summary means of ending in the workingman's favor 
 the anthracite coal strike, there would be only a matter of easily 
 crossed form between him and the putting into force of summary 
 measures backed by the military arm of the government. Who 
 doubts that the people would applaud ? Who believes that Con- 
 gress would impeach? Yet who is not sure that among those 
 who would applaud are many having no active sympathy for the 
 striking workman ? And who does not see that each day's con- 
 tinuance of the strike furnishes new and stronger evidence that 
 the people are getting ready to accept undisguised paternalism? 
 
 We come soon to the question of ways and means, of terms 
 and conditions, for the acquiring by the people of such carrying 
 systems and other properties as they need in their sovereign and 
 collective capacity. The people need the right specialized organ 
 for negotiating the surrender to them of such property ; and in 
 the case of the purchase of the same or of some of them by pol- 
 itician's bad bargain before the creation of such organ, they need 
 the right voice to proclaim their notice of Us pende'ns, so to 
 speak, affecting with intention to tax specially or to convert into 
 annuities for a term of years, the principal or the interest of such 
 securities, or such portion thereof, as the government shall have 
 foolishly and prodigally expended in such purchase. The people 
 shall never be estopped from amending or undoing a foolish or 
 corrupt bargain to which their government shall have been a par- 
 ty. The expediency of undoing in a given case shall be open to 
 question, the right of it, never. 
 
 Just as much as the people in their collective capacity, the 
 
412 HERTIG ON TAXATION. 
 
 individual in his personal capacity needs the right organ (or rep- 
 resentation), the right safeguards, the right guaranties. I see no 
 insoluble difficulty in constructing a paternal system which shall 
 leave it in the power of the individual to be less concerned about, 
 and less subject to, his fellows than he is in current states of so- 
 ciety. My paternalism is to be the synthesis of governmental 
 and individual right and function, but without merger. The 
 Civil Nation will need all sorts of activities, and will certainly 
 need and have room for all sorts of sturdy individualities not 
 hitherto with tolerable uniformity pronounced criminal. Here, 
 as in the last preceding paragraph have been indicated phases in 
 which the New Jurisprudence shall be specially diligent. 
 
 Each the part of this appendix relating to professorial work 
 and the part of graver import following thereupon have been 
 written with direct reference to making an avowed beginning of 
 needed practical work in the directions indicated. Thus we need 
 in our universities the right professors of applied economics and 
 applied jurisprudence. I would neither damn with faint praise 
 nor yet curse with sweeping censure ; but between the two I may 
 say that one man should fill the chair for both of these sciences, 
 and that such chair is everywhere vacant. I believe, however, 
 that the right man and the right men can be developed, and to 
 such end seek to direct every line in the foregoing pages that 
 has remote or immediate reference to professors. 
 
 I would found the National Civil Society, and without such 
 end had not written this book, nor the one (now nearly done) 
 entitled Anarchism and Counter- Anarchism, nor undertaken my 
 magnum opus (now well under way), The Constitution of the 
 United States. The Civil Society is intended to perform the 
 functions, as near as may be, of a voluntary state, with the frank- 
 est and fullest allegiance to the established agencies of govern- 
 ment, and with just as frank and just as full a determination to 
 amend and modify those agencies in the direction of its own pro- 
 gram of government by all constitutional and lawful means. 
 Against the time when the inevitable busybody shall hint of es- 
 oteric doctrine and esoteric purpose, I will say now that there 
 will be neither esoteric doctrine nor esoteric purpose. The presi- 
 dent and founder of this society will naturally fix the terms of 
 membership therein. To further unity of program and concen- 
 tration of effort, and especially to develop the right successor, 
 each president will retain his office for a considerable period. 
 
 The Civil Publishing 'Company, about to be incorporated, will 
 soon publish The Civilian, a monthly serial at 50 cents per an- 
 num. The critical and constructive work required by what may 
 
HERTIG ON TAXATION. 418 
 
 now be called the Civil Plan will find expounding voice in its 
 pages. 
 
 This, my book on Taxation, for which advance orders have 
 been taken at $1.00 per copy, will hereafter be sold at $1.50 per 
 copy, as the work is much larger than it was at first expected to 
 be. Advance orders will, of course, be filled at the price first 
 named. Orders for the book and subscriptions to the Civilian 
 may be sent to me, at 615 I2th Ave. S. E., Minneapolis. I shall 
 be pleased to hear from such persons as may be interested in the 
 work planned for the National Civil Society. 
 
 C. M. HERTIG. 
 
INDEX. 
 
 [The heads, or summaries, of chapters, will be found only in the body 
 of the work, each at the beginning of its chapter. The chapters (I-XX 
 inclusive) begin respectively on the following numbered pages : 13, 38, 
 46, 49, 63, 77, 84, 100, 107, 126, 138, 162, 169, 183, 209, 246, 282, 330, 
 367, 384-] 
 
 Absolutism, caution against, 14, 16; 
 Prof. Adams furnishes case of, 91. 
 
 Acquiescence, passive, usual state of 
 mind with the governed for the 
 governors, 27; to create -and keep 
 happy medium in, the routine 
 game of practical politics, 27; to 
 do and get doing acquiesced in 
 the sum and substance of govern- 
 ment, 72. 
 
 Adams, Prof. Henry Carter, as ev- 
 idencing drift toward paternalism, 
 47; condemns benefit and pur- 
 chase theories of taxation, 47; edi- 
 fying a rebours on fees, 91; makes 
 a prize sophism, 91-92; professori- 
 al decadence in re, 92. 
 
 Alabama, constitution of 1819 on 
 proportional taxation, 51. 
 
 American, average, best fellow in 
 the world, but cares little for lives 
 of black or brown, 33; specific in- 
 stance of his feeling in this be- 
 half, 33-4; cheerful over the mani- 
 fest destiny of which he is instru- 
 ment, 33. 
 
 American language, resources of for 
 translation dissolve Stein's ambi- 
 guity, 391. 
 
 Anarchism, Huxley on individualism 
 as leading to, 66; those who sigh 
 after the ideals of, 66. 
 
 "Anarchism and Counter-Anarch- 
 ism," Hertig's forthcoming book 
 on, 19. 
 
 Anarchists, relation between and 
 abuses of taxation, 19. 
 
 Anarchy, free silver as alleged stalk- 
 ing-horse for, 32; the, of confusion 
 and disorder in tax reform move- 
 ments and tax laws, 164. 
 
 Appendix A., notes discrepancy in 
 statistics, censures dictionary- 
 
 makers and praises dictionary 
 poets, 404-407. 
 
 Appendix B., on professorial limi- 
 tations as seen from within; 
 when presumption applies that 
 professors are oftener wrong than 
 right; on new jurisprudence, na- 
 tional civil society, and the Civil- 
 ian (periodical) in aid of the 
 "Civil Plan," pp. 408-413- 
 
 Assessment, values as per, see As- 
 sessor; total of in Minnesota from 
 1860 to 1901, 114-116; of certain 
 counties, and the rates in, 116-125. 
 
 Assessor, guesses modestly in Amer- 
 ica, 114; his values compared with 
 the selling prices of real estate 
 in Iowa, Wisconsin, Minnesota, 
 Pennsyvlania, and Indiana, 171- 
 181; work of under proposed tax 
 code, 195-199; proposed fines for, 
 197; returns to county auditor, 
 198-199; warned against "anarchy," 
 199; oath of to his returns, 199; 
 may not in Wisconsin recant what 
 he has sworn to, 200; oath and 
 bond of, 200; values Red River 
 Valley lands at 20 per cent, of 
 their worth, 213. 
 
 Atlantic Monthly, sad and serious 
 editor of in the limitations of his 
 virtue, 151. 
 
 Audacity, author's (preface), VIII. 
 
 Auditor, county, hard-worked under 
 proposed code, 198-199, 201, 203, 
 
 233- 
 
 Augustus, Caesar, bolder in de- 
 bauchery than moderns, 146. 
 
 Autocrat, do we need? 168. 
 
 Bagehot, Walter, on "primitive no- 
 tion of taxation," 17-18: caught by 
 showiness of Second Empire, 28 
 (note). 
 
416 
 
 HAVE YOU READ APPENDIX B? 
 
 Bankers, alarmed by proposed code 
 of Minnesota tax commission, 209- 
 212; impressed by Grover Cleve- 
 land's blatherskite comptroller of 
 the currency, 210; got satisfactory 
 amendment to the proposed code, 
 210; pay a high, but still a compro- 
 mise, tax, 21 1 ; how their shares 
 are assessed, 211; arguments of 
 various, 212-213; how their high 
 tax on nominal capital becomes a 
 moderate income tax, 269. 
 
 Bismarck, on state as paternal agen- 
 cy, 29. 
 
 Black, Jeremiah S., judicial utter- 
 ance on taxation as plunder, 17. 
 
 California, her constitution of 1849 
 and that of 1897 provide for pro- 
 portional taxation, 51. 
 
 Caligula, mentioned, 146, 147, 148. 
 
 Century Dictionary. (See "Diction- 
 ary.") 
 
 Civil Nation, reference to a new, 
 (preface) xi, 58, 75; relation of to 
 New Jurisprudence, 58, 62; organ 
 of right social consciousness, 361. 
 (See New Jurisprudence.) 
 
 Civil War, cost $9,000,000,000, 30; 
 simplicity of slavery issue therein, 
 30. 
 
 Classification, primary of public rev- 
 enues, (preface) viii; disputatious 
 domain of (preface) ix. 
 
 Cleveland, Grover, as inconsistent 
 individualist in re oleomargarine 
 tax of 1886, 25-6 (note) as ox- 
 head leader, 35-6; trusts not 
 averse to, 36. 
 
 Collectivism, enforced and universal, 
 an idle dream, 75. 
 
 Colonial problems, author's position 
 on, 32-4. 
 
 Congress of U. S., first taxes im- 
 posed by, 19-20; may tax for re- 
 form under revenue guise, 22-5; 
 Philadelphia of 1744, called "zeal- 
 ots of anarchy" by Dr. Johnson, 
 41; of U. S. in 1901-2 wrestles with 
 bills to supress anarchy, 41. 
 
 Conscience, collective oi effective 
 majority, is, in final analysis, the 
 only check on destructive or con- 
 fiscatory taxation, 26. 
 
 Constitution of U .S., limitations of 
 as to taxation not quantitative, 
 26; Hertig on, mention (preface) 
 
 xi, 32; Fourteenth Amendment to, 
 restrains little on tax matters, 59, 
 60; Madison on, 67; may be made 
 retrospective by amendment, 80-1; 
 draws hard and fast line only in 
 formal and comparatively unim- 
 portant matters, 81-2; allegations 
 of how affected by judge-made 
 law, 287; its limitations distin- 
 guished from those of state con- 
 stitutions, 291; its technical limita- 
 tions of the taxing powers of the 
 states, 291-298; of the taxing pow- 
 ers of congress, 298-301; unit rule 
 does not violate, 301-302. 
 
 Constitutions, state and national, no 
 effective check on power of taxa- 
 tion, 59-6i; various state cited, 51; 
 flexibility of written, 81-3. 
 
 Cooley, Judge Thomas M., tax def- 
 initions of cited and criticised, 49- 
 54; as a jurist must compromise 
 with his individualism, 69; moved 
 by Louisiana lottery to favor ex- 
 treme paternal measure on part of 
 federal government, 71; comment 
 on his opinion in People v Town- 
 ship, 72-6. 
 
 Corporations, (see "public service 
 companies," also, "steel trust," 
 etc.); "tail-twisting" of, contrast- 
 ed with head-twisting, 269; the 
 unit rule and in Chicago, 301-302, 
 380-383; tail-twisting of per unit 
 rule or otherwise, poor statesman- 
 ship, 385-386. 
 
 Counties, finances and valuations of 
 certain in Minnesota, 116-125; 
 true relation of personal to real 
 property in an old and typical ru- 
 ral county (Greene Co., Pa.), 119; 
 financing of new, 123; low rate of 
 taxation does not necessarily 
 prove better management, 124; 
 the three urban of Minnesota as 
 tax-payers, 124-125. 
 
 "Credit," a, is valued comparatively 
 higher than other property by as- 
 sessors, if assessed at all, 184; 
 compared with "faith," as the lat- 
 ter is defined by St. Paul, 184- 
 185; what is a, 190-191; illustrates 
 breakdown of general property 
 tax, 367-368. 
 
 Cummins, A. B., governor of Iowa, 
 has trouble with minority ap- 
 
INDEX. 
 
 417 
 
 pointments for Democrats, 243, 
 
 Dakota, county, town and school 
 warrants in, 121-123; futile grain 
 taxing in north, 192-193. 
 
 Data and facts, highly necessary, 
 but it is not every judgment that 
 they enlighten, 15-16. 
 
 Definition, all is dangerous, 39, 53 
 (note) ; of taxes and the right to 
 tax, 39-43, 44-5; of Dr. Johnson as 
 rewritten by the author, 42-3; tax 
 definitions from French sources, 
 43~5; he who frames should recall 
 what he knows, 54 (note), 70. 
 
 Democratic party, Oxhead leader- 
 ship of,. 34-7, recruiting ground for 
 man witli right sort of issues, 37; 
 as a "nearly solid minority," in 
 Wisconsin takes the railroad side 
 of tax fight, 88; in Minnesota, 
 conservative on taxation, 233; did 
 not vote solid on Minnesota tax 
 measures, 233; a dissolving quan- 
 tity in Iowa, 243. 
 
 Denslow, Van Buren, cited apropos 
 English tobacco tax, 21; comment 
 by on Munn v. Illinois, 68; on 
 incidence of taxes, 388; not men- 
 tioned by professors, perhaps be- 
 cause he mopped floor with their 
 .free-trade wing, 388. 
 
 Dictionary, French Academy's def- 
 inition of tax, 43; Littre's, 44; 
 Century's quoted and criticised, 
 53-7; divers laxities and inaccura- 
 cies of the Century, 54-57, appen- 
 dix A; of tax commission's as to 
 personalty discussed, 188-190. 
 
 Domain, of U. S. and compulsory 
 revenue (preface), viii-ix; of U. 
 S. and of states presents interest- 
 ing questions, 95. (See eminent 
 domain.) 
 
 Double taxation, as proposed by 
 tax commission, 189; Massachus- 
 etts practices it, 189. 
 
 Dunn, Robert C, State auditor of 
 Minnesota, 55; efficient officer, 246; 
 and Jacobson, sturdy characters, 
 260-261; remarks of on Jacobson 
 bill, 263-265'. (See Jacobson.) 
 
 Effective majority, distinction be- 
 tween and numerical majority, 
 26-7; may coincide at times with 
 numerical majority, 27; generally 
 meets with passive acquiescence 
 
 from the numerical majority, 27; 
 is supreme power of every com- 
 munity, 42; shifted by successful 
 revolution, 43; collective consci- 
 ence of much the same as Aus- 
 tin's "positive morality," 80; de- 
 termines and enforces constitu- 
 tional limitations, 85. 
 
 Elevators should pay moderate 
 franchise tax according to cap- 
 acity, but none on grain, 193-4; 
 how wheat was assessed at 
 seven cents per bushel, 194. 
 
 Eminent Domain, nature and im- 
 portance of (preface), ix-x. 
 
 Etymology", Seligman's attempt to 
 show evolution of tax by, 14-15 
 (note). 
 
 Exemption, of personal property 
 from taxation, 213-216. 
 
 Farmers, position and petition of, in 
 reference to tax commissions' 
 code, 222-225; a natural stump 
 speaker of them favors drastic tax 
 code, 225; pay a gross income tax 
 in Wisconsin of 4.2 per cent., 373; 
 or 13 per cent, of net income, 
 373; facts for them to remember 
 in the incidence of taxation, 400- 
 402. 
 
 Fees, as a branch of public revenue 
 (preface), ix-x; Wagner devotes 
 166 pages to, ix-x; relatively un- 
 important in United States, 90; 
 pay expense of maintaining courts 
 in Bavaria, 90; individualist con- 
 ception of with English and 
 American judges, 90; in justice 
 courts quantitative, 92; may be 
 really or spuriously quantitative, 
 92; reference to abuse of denounc- 
 ed by Bentham, 299. 
 
 France, tobacco monopoly in, 95-7; 
 per capita taxation in, 98. 
 
 Gilder, Richard Watson, American 
 poet, 144 (note) ; muses always 
 hearken to him, 386; dictionary la- 
 bors and soulful sonnets of, Ap- 
 pendix A., 403-406. 
 
 Goethe, quoted on laws and rights 
 as inherited disease, 21. 
 
 Government potent factor in, is 
 what men believe, 99. 
 
 Grain, awkwardness of taxing, 191- 
 4; taxing possessor of (North Da- 
 kota case) in lieu of owner, 192-3; 
 
418 
 
 HAVE YOU READ APPENDIX B? 
 
 in elevators should not be taxed 
 but moderate franchise tax should 
 be imposed according to elevator 
 capacity, 193-194; arguments on 
 the taxing of, 219-221; anticipated 
 results of attempting to tax at full 
 value, 219-220; author argues that 
 grain should not be taxed at all, 
 220-22 1. 
 
 Great issues, an embarrassment to 
 bankrupt statesmanship 27, 29, 30- 
 
 Great Northern Railroad, hung up 
 on the way to Puget Sound, 101 ; 
 helped to completion by selling 
 bonds at 72^/2 cents on the dollar, 
 101 ; is a corporation created by 
 the Territory of Minnesota, in 
 1856, 108; original charter name 
 was Minneapolis and St. Cloud 
 Railway Company, 108; began with 
 the ''Manitoba" system in 1879, f 
 which it became the lessee in 1890, 
 and of which it owns all the stock, 
 126, 128, 131; financial operations 
 of, 128-137; has yielded in extra 
 profits more than $200,000,000, 134- 
 136. 
 
 Grimshaw, William H., discusses and 
 condemns single tax, 351-358. 
 
 Gross earnings tax, in Minnesota, 
 107-11 1; in Wisconsin, 113; a dis- 
 creetly graded for public-service 
 companies, 269; a just tax, if so 
 graded, 326; in relation to Jacob- 
 son act, 112, 328-329. 
 
 Hawthorne, Nathaniel, the problem 
 of Nero's character, 140. 
 
 Hennepin, Father, calls buffalo the 
 "wild ox," 100. 
 
 Herbert, Auberon, on state-given 
 education from stand-point of in- 
 dividualism, 63-5. 
 
 Hill, James J., splendid brigand, 
 ioi ; had close squeeze to finish the 
 Great Northern Railway, 101-102; 
 he and his friends got predecessor 
 of Great Northern in 1879, 127; 
 has certain qualities of Napoleon, 
 138; of excellent natural character, 
 r 38-139; has clean legal title to 
 fruits of his brigandage, 157; 
 weakness for diamonds, 158. 
 
 Hobbs, meaning of his proposition, 
 "no law can be unjust," 43. 
 
 Illinois, reference to constitutions of, 
 
 5 1 - 
 
 Incidence, of discount on county 
 -warrants, 121-122; of taxation, 
 wide variance concerning, 215; of 
 consumption tax on laborers, 215; 
 of taxes generally, 386-402. 
 
 Individualism, current and mixed in 
 bad case, 58, 63, 65-6; general cur- 
 rent of American jurisprudence 
 sets away from, 66-8; a proposition 
 of that makes for paternalism, 76. 
 
 Individualists, must choose between 
 author's paternalism and worse, 
 58; one of the genuine on state- 
 given education, 64-5; all make 
 grudging concessions to govern- 
 ment, 77. 
 
 Income tax, all collectible and non- 
 confiscatory taxes are income 
 taxes in substance, even when not 
 so in form, 269; and the proposed 
 amendment of Minnesota consti- 
 tution, 324-328; Wisconsin farmers 
 pay a gross of 4.2 per cent., 373; 
 principle of must be applied to 
 credits, if the latter are taxed at 
 all, 374-3/5; caution against over- 
 sanguine expectation from, 375; 
 more suitable for federal govern- 
 ment, 375-376; yield of civil war 
 income tax, 376; exemptions and 
 collections under it, 376-377; art 
 of collecting and amendment to 
 constitution of U. S., 377-8; origin 
 and workings of in Great Britain, 
 379-380; unit rule violates princi- 
 ple of, 380-383; taxes, in general, 
 should fall on, 384-385. 
 
 Iron mines, proposed taxation of 
 and the steel trust, 258-266; assess- 
 ed value of raised from $13,000,- 
 oco to $30,000,000, 265; independ- 
 ent ones, under present condi- 
 tions, a fiction, 267-8. 
 
 Issues, great, relation of to bank- 
 rupt statesmanship, 27, 29; dis- 
 tinction between issues great in 
 themselves and issues great in 
 quantitative results, 30-1; issues 
 struggling toward greatness but 
 masked by simple slogan, 31; is- 
 sue of 1896 so masked, 31. 
 
 Italy, taxation as robbery in, 18-19; 
 taxation as cause of anarchism in, 
 19; justice a myth in, 19. 
 
INDEX. 
 
 419 
 
 Jacobson, J. F., questions on gross 
 earning bill of, 112-113, 328-329; 
 offers and gets accepted a delu- 
 sive amendment, 235-238; 1902 
 tax-bill of, 257-281; tried his 
 "damnedest," 261; as controversial- 
 ist, debater and sturdy character, 
 223-224, 238, 260-261. 
 
 Japan, collossal folly of in aping for- 
 eign ways, 32. 
 
 Johnson, Dr. Samuel, on the right 
 to tax the American colonies, 40; 
 describes right to tax and defines 
 tax, 40-1; calls American con- 
 gress "zealots of anarchy" and 
 "impudent congress of anarchy," 
 41 ; according to, no tax law un- 
 just, 43. 
 
 Judges, sophism of to uphold taxes 
 as proportional, 59; do not often 
 nor very well discuss ultimates of 
 government and of jurisprudence, 
 78. 
 
 Justice, legal and ethical sometimes 
 distinct, 82. 
 
 Labor, representatives of organized, 
 argue for tax exemptions, 213; 
 and against property tax on ships, 
 grain and bank deposits, 215. 
 
 La Follette, Robt. M., as Republic- 
 an leader in Wisconsin for tax and 
 election reforms, 87; elected gov- 
 ernor in 1900, in spite of opposi- 
 tion of machine Republicans, 87; 
 insists that platform pledges must 
 be kept, 88; signals corrupt use 
 of wealth as greatest danger men- 
 acing Republican institutions, 89; 
 asks if American people shall be- 
 come masters or victims of col- 
 lossal wealth, 89; author draws 
 from his words a conclusion which 
 La Follette would hardly sanction, 
 89. 
 
 Law, and its heirlooms, an eternal 
 hereditary disease, 21; law, no 
 positive is legally unjust, 43; no 
 tax law is unjust from Johnson's 
 standpoint, 43; interposes practi- 
 cally no barrier between wealth 
 and confiscatory taxation, 61: of 
 federal constitution as bearing on 
 taxing powers, 291-302; causes and 
 conflicts of judge-made, 285-291, 
 302-303. 
 
 Lecky, W. E. H., on the regime of 
 
 Napoleon III., 28, (note); his 
 Democracy and Liberty a pessi- 
 mistic book, 61 ; sees serious 
 clouds on our horizon, 61; his ex- 
 aggerated estimate of constitu- 
 tional limitations on taxation, 61. 
 
 Legal profession, positive morality 
 of as proximately determining 
 factor in American constitutional 
 law, 82; nature of its positive 
 morality, 82. 
 
 Legislature of Minnesota, (see ''Per- 
 sonal Mention"); authorizes ap- 
 pointment and fixes duties of tax 
 commission, 162; meets in' special 
 session, 163; general capacity and 
 good intent of, 164-167; the diffi- 
 culties facing it, 167; public hear- 
 ings before tax committees of, 
 209-231, 263-275; popular branch of 
 takes up and kills proposed tax 
 code, 231-245; analysis of tax 
 measures passed by in extra ses- 
 sion, 246-257; how representatives 
 passed and senate killed Jacob- 
 son's tonnage and franchise tax 
 bill, 257-281; its projected consti- 
 tutional amendments, 283-284, 303- 
 328. 
 
 Leopardi, Giacomo, quoted, 105. 
 
 License fees, when imposed for rev- 
 enue are imposed in the exercise 
 of taxing power, 52. 
 
 Limitations, of taxing and other 
 powers, rest in collective consci- 
 ence, 26; implied or expressed in 
 all grants and constitutions, 77; 
 assassination as, 78; positive mo- 
 rality the sole sanction and guar- 
 antor of constitutional, 79; of fed- 
 eral and state constitutions in par- 
 ticular cases, 285-302. 
 
 Liquor, naive theory of constitution- 
 al liberty formerly held by vendors 
 of, 69. 
 
 Live stock, breeders of, oppose high 
 assessments on, 222. 
 
 "Loading," as a means of taking 
 profits and of concealing railroad 
 earnings, 131. 
 
 Machiavelli, quoted in re princelings 
 of Romagna, 16; Napoleon did not 
 need advice of in reference to 
 amours, 146. 
 
 Maine, Sir H. Sumner, on taxation 
 by Indian kings, 17; on distinction 
 
420 
 
 HAVE YOU READ APPENDIX B? 
 
 between power to tax and power 
 to exact rent, 17. 
 
 Majority, nominal or numerical, dis- 
 tinguished from effective, 26-27; 
 see "effective majority." 
 
 "Manitoba" Company, the, popular 
 name for St. Paul, M. & M. Rail- 
 way Company, 126; profitable from 
 the outset, 126-128; its cash, stock 
 and bond dividends, 127-128; leas- 
 ed to Great Northern Railway 
 Company for 999 years, 128; its 
 capital stock of $20,000,000 after- 
 wards bought by Great Northern 
 for $25,000,000 of * the latter's 
 stock, 131-132. 
 
 Marshall, Chief Justice, power to tax 
 power to destroy, 298; on effect of 
 state power to tax federal instru- 
 mentalities, 299. 
 
 Massachusetts, reference to consti- 
 tution of, 51; goes far in limiting 
 individual right, 51; taxes property 
 of. t side her boundaries, 189. 
 'Medium, abstract theory must face 
 a resisting, 153. 
 
 Michigan, supreme court of holds 
 rtate may still tax dram shops, 
 though constitution forbids the li- 
 censing thereof, 59 (note). 
 
 Minnesota, population and growth 
 of compared with other states, 100- 
 104; buffalo meat served by hotels 
 of in 1880, 100; prairie chickens 
 near leading cities of in 1890, 101; 
 fertility and commerce of sup- 
 ported the unfinished Great North- 
 ern railroad, 101; her showing 
 with other states in 1900, 102- 
 104; area of compared with that 
 of some other states, 103-104; may 
 support population of many milli- 
 ons, 103-104; her tax problems in 
 close relation to those of other 
 states, 104-105; once the physical 
 backbone of this continent, 105; 
 should not in exulting over 
 growth forget growth's problems, 
 105-106; her gross earnings tax on 
 railroads, and its yield, 107-113; 
 owns bonds, land contracts and 
 lands to aggregate of $20,000,000 
 in value, 116; her assessed valua- 
 tions and rates of taxes for certain 
 years, 114-116; her counties from 
 a tax-paying standpoint, 116-118, 
 
 119-120, 124-125; legislature in 
 1901 authorizes appointment of 
 tax commission, 162; governor 
 calls special session for February 
 4th, 1902, 163; constitution partly 
 copied from Ohio's, 183; and 
 prescribes "true value in money" 
 for assessed value, 183; practice 
 and custom nullify the letter of 
 her constitution as regards assess- 
 ments, 184-188; tax work erf her 
 legislature in 1902 (see legisla- 
 ture); her constitution difficult to 
 amend, 282-285; struggle in pro- 
 posing amendments, 283-285, 303- 
 324; proposed amendments to 
 constitution set forth and anal- 
 yzed, 303-3M. 317-328. 
 
 Missouri, reference to constitution 
 of, 51-52. 
 
 Moliere, reference to his M. Jour- 
 dain, 20. 
 
 Money, what is in tax-law, 190, 236; 
 a bank credit is, 190, 236. 
 
 Monopoly, Proudhon's notion of 
 taxes as protecting, 44; modern 
 tax legislation as strengthening, 
 and so giving unconscious aid to 
 paternalism, 328. 
 
 Morality, positive, as arbiter of sov- 
 ereign and constitutional limita- 
 tions, 79-83; of legal profession, 
 82-83- 
 
 Montesquieu, in favor with the 
 framers of our constitution, 44; 
 his definition of public revenues, 
 
 44- 
 
 Napoleon, established tobacco mo- 
 nopoly in France, 95; his "sweet" 
 way with plutocrats, 96 (note.); as 
 achieving the purple with charac- 
 ter formed and remaininp f consis- 
 tent, 141; contrasted with Marcus 
 Aurelius, 141 ; his pessimistic views 
 of human nature, 141-142, 145; 
 liked willing rather than brainy 
 men, 143; despised social conven- 
 tions, 144-145; even as consul was 
 sole ruler, 143-144; Hugo's lines 
 on the emperor in the consul, 144; 
 the kernel of truth in his cynical 
 view of conventions, 145; blind 
 side of his character, 145; was still 
 the child of his time and to some 
 extent of its limitations, 146-147; 
 his narrow view of individual 
 
INDEX. 
 
 right, 146-147; colossal imagina- 
 tion of and the wild dreams of 
 the Roman empeiors, 147. 
 
 Napoleon III., as furnishing exam- 
 ple of bankrupt statesmanship, 27- 
 29; flourishing trumpets to dis- 
 tract attention, 28; regime of fee- 
 ble, despotic and lavish of public 
 moneys, 28; Bismarck's deeper 
 grasp in contrast with, 29; his 
 government a type of parasitic pa- 
 ternalism, 28 (note). 
 
 Nelson, Knute, U. S. senator, com- 
 pares victory of 1896, with trium- 
 phant result of the civil war, 31. 
 
 Nero, problem of his character from 
 artist's standpoint, 139-140, 148; as 
 seen from without, 148; as tax-re- 
 former, 149; splendidly lavish, 156. 
 
 New England could shout itself 
 hoarse on chattel slavery, pipes 
 thin on industrial slavery, 30; can- 
 not furnish the code nor the know- 
 ledge of human nature to hunt 
 down industrial slavery, 30. 
 
 New Jurisprudence authoritative 
 voice of civil nation, 58, 62; rigor 
 of in forfeiting charters, 160; but 
 will not forget limitations of 
 equity, 161 ; to furnish civil na- 
 tion with right conception of jus- 
 tice, 289; problems for, 386. 
 
 Oath, listing under, not obligatory 
 in Minnesota, 114; number and 
 rigor of oaths proposed by the 
 tax commission, 195-199; wheth- 
 er cross-examination of tax-dodg- 
 er under should be imperative, 196- 
 197; code impeaches efficacy of, 
 199-200, 203; a merciful one, 199; 
 assessor in Wisconsin may not 
 contradict his, 200; foolish multi- 
 plication of, 200-201; counts for lit- 
 tle in tax-matters, 201; perjury by 
 means of an easy step beyond 
 plain lying, 222. 
 
 Ohio, constitution of condemns poll- 
 taxes, 50; uniformity clause of 
 copied in Minnesota, 183; in North 
 Dakota. 193; her tax commission's 
 report cited, 372-373- 
 
 Oleomargarine, tax on to protect 
 butter, 23-26. 
 
 Optimism, a shallow, the painted 
 idol of timid and servile minds, 53; 
 
 Paternalism, author frankly favors, 
 
 58; how genuine individualism 
 feels when face to face with, 64-65; 
 evidence of in constitutional inter- 
 pretation, 66-68; not necessarily 
 enforced collectivism, or doctrin- 
 aire socialism, 75; a proposition it 
 holds with individualists, 76. 
 
 Pennsylvania, tax system of con- 
 ceded by Lawson Purdy to be best 
 of the American systems, 230; 
 wide-open constitution of in mat- 
 ters of taxation construed, 293- 
 295; tax-system of in practice, 
 307-315- 
 
 People in their collective capacity a 
 sovereign body, 79; in their sov- 
 ereign capacity incapable of legal 
 limitation, 80; right to abolish, al- 
 ter or amend constitutions always 
 retained by, 80; collective consci- 
 ence the only limitation of, 80-81; 
 grave problems of government and 
 the like are not beyond their cap- 
 acity, 402. 
 
 Perjury, drastic tax bill as premium 
 on, 212; plain lying about taxable 
 property as steps to, 222; colored 
 widow in Chicago prosecuted for 
 in re tax schedule, 236. (See 
 "oath.") 
 
 Personal mention of Minnesota leg- 
 islators, in. query, 188-194; (Senat- 
 . or Wilson); in controversy, 
 223-244 (Jacobson with Ste- 
 phens); as questioning Law- 
 son Purdy, 228-230 (Dowling, 
 J. A. Peterson, Riley, Washburn, 
 Wilson) ; as writer, 232 (Senator 
 Roverud); as politician, 238 (Sen- 
 ator Baldwin) ; as making motions, 
 offering amendments and debat- 
 ing, 238 (J. A. Peterson), 234-235 
 (Hickey, Jacobson, Laybourn, 
 Roberts, Sageng), 238-244 (Hurd, 
 Jacobson, Larson, Oppegaard, 
 Pennington, J. A. Peterson, 
 Plowman, Roberts, Sageng, Sch- 
 urman, Stark, Von Wald, Wal- 
 lace), 253-255 (Senators Brower, 
 Schel'bach, Snyder), 258-261 
 (Armstrong, Jacobson, Johnson, 
 Laybourn, Roberts), 262-263 (Sen- 
 ators Baldwin, Dougherty, Ives, 
 Knatvold, McCarthy, McGovern, 
 McKusick, Schaller, Sheehan, 
 Somerville, Wilson), 276-281 (Sen- 
 
422 
 
 HAVE YOU READ APPENDIX B? 
 
 ators Brower, Fitzpatrick, Hor- 
 ton, Ives, Johnson, Jones, Mc- 
 Carthy, Ryder, Sheehan, Sny- 
 der, Thompson, Underleak, 
 Young); as jurist, 254 (W. B. 
 Anderson) ; as voting on meas- 
 ures, 216 (personal property, ex- 
 emption), 240 (Jacobson and Wal- 
 lace amendments to tax code), 242 
 (Plowman's amendment, Pennirig- 
 ton's amendment) 243-245 (killing 
 tax code), 261 (passing Jacobson 
 bill), 280 (killing same in senate), 
 283-284 (Senator H. J. Miller's 
 proposed amendment to constitu- 
 tion, Nichols' same in house), 321 
 (Alley amendments, Roberts do. to 
 constitution), 322 (constitutional 
 amendments in senate), 324 (pass- 
 ing said amendments); as voting 
 and reporting in committees, 275, 
 
 323- 
 
 Personal property, tax on as gener- 
 al property tax must be at same 
 rate as on realty, 184; "credits" 
 assessed higher than the things 
 which make them, 184-185; one 
 reason for evading tax on, 185; tax 
 commission thinks that in few, if 
 any, states more than 25 per cent. 
 is listed for taxation, 186; various 
 branches of tax on condemned, 
 186-187; drastic provisions as to 
 taxing virtually admit failure of 
 the whole plan, 188-207; dictionary 
 of taxable criticised, 188-191; dras- 
 tic provisions for listing and tax- 
 ing proposed by tax commission 
 and analyzed by author, 194-207; 
 pursuing the sick, absent or fratid- 
 ulent lister of, 197-203; fining and 
 removing the assessor, 197-198; 
 tangible may be taxed on same 
 basis as realty without serious in- 
 justice, 228; taxation of enforced 
 by torture in old Rome, 230 
 (note) ; facts and figures showing 
 breakdown of general tax on, 367- 
 373; how laws for taxing are di- 
 vided against themselves, 368- 
 369; percentage of in New York, 
 North Dakota, South Dakota, 
 Kansas, Indiana, Washington, 
 Wisconsin, and Tennessee, 369-372. 
 (See "assessment," also "coun- 
 ties.") 
 
 Perry, Prof. Arthur L., cited by 
 Wells as "most economists," 46; 
 on taxes is naively touching, 46- 
 47; his standpoint out of date, 47; 
 converted by MacLeod, 331. 
 
 Petitions, of farmers and others 
 touching proposed tax code, 223; 
 weak evidence of what they pro- 
 fess, 223; dispute concerning good 
 faith in signing, 223-224. 
 
 Philippines, will be held though it 
 costs life of every native, 32-34; 
 resolution in re before the senate 
 of Minnesota, 33-34 (note) ; issue 
 of counts for little in practical poli- 
 tics, 34-35. 
 
 Pioneer and prairie finance, as run 
 on orders or warrants^ 121-123. 
 
 Plutocracy, not without likeness to 
 Neronocracy, 153-155; particular 
 crimes of 153-155; its war on To- 
 ledo, 153-155- 
 
 Plutocrat, the American, accepts 
 his environment, 149; amiable 
 enough at the outset, 150; ludicr- 
 ous side of, 150-152; the politi- 
 cian despises while he fries him, 
 150; university president warns 
 young men against his spirit, 151; 
 stands high with Prof. Sumner of 
 Yale, 151; "generally comes out on 
 top," 152; may rebuke the ambi- 
 tion to be rich, 152; a time in his 
 career when for $25,000 or so he 
 would have bound himself to be 
 good, 152; stealing part of his for- 
 tune his chief individual crime, 152; 
 not individually responsible for his 
 more atrocious crime, 152-153; his 
 class judged by the worst speci- 
 mens of him, 153; shrinks from 
 no crime on sufficient occasion, 
 I53-J56; buys a Democratic legis- 
 lature, 155; may, like Nero, be a 
 lavish giver, 156; may be bitten by 
 the professor he feeds, 156; recon- 
 ciles patriotism with piracy, 156- 
 157; robs because the right op- 
 portunity is present, 157; must 
 have ideals of some sort. 158; 
 may be knocked out by the taxing 
 power, 159; has right of way until 
 rightly barred, 159-161; new juris- 
 prudence can reach him, 160-161; 
 the tenure of his vested rights," 
 161. 
 
INDEX. 
 
 423 
 
 Police power, elastic cover for cer- 
 tain taxes, 59; license taxes impos- 
 ed under, 69-70; sarcastic and 
 grave legal views of, 83. 
 
 Political Economy, caution as to ac- 
 cepting formulas of, (preface) yii; 
 theories gone bankrupt littering 
 path of 15-16; theory alone not 
 sufficient for greatest genius in, 
 16; D. A. Wells on general bank- 
 ruptcy of in re taxation, 38; prev- 
 alent mistake of writers in, 48; 
 and the single tax, 330- 
 366 (all of ch. xviii) ; when the 
 classical was served with notice to 
 quit, 330; boom of from Ricardo 
 to Mill, 330-331; protesting voices, 
 331-332; its salaried basis and self- 
 conceit, 331-332; its metaphysics, 
 332-335; German socialists and 
 Henry George press it into their 
 service to the great disgust of the 
 professors, 335, 337; jarred by 
 British Association, Cliffe Leslie 
 and Encyclopedia Britannica, 335, 
 337; Ricardo, Jonathan Edwards, 
 Shakespeare commentators and 
 the Philistines, 336-337; Henry 
 George and E. L. Godkin on the 
 new economy, 337-33&; "Progress 
 and Poverty," based on Ricardo, 
 is born and boomed, 33^-339; 
 George's theory all wrong unless 
 Ricardo's doctrine of rent is true, 
 340; alleged demonstration of said 
 doctrine, 340-341, (note); a pro- 
 fessor of the new reviews George, 
 358-365; economists cited and ap- 
 proved in reference to income as 
 normal source of taxation, 384- 
 385; economists on the incidence 
 of taxation, 386-397. 
 
 Population, comparative, of various 
 states, 100-104; Donisthorpe's re- 
 flections on a dense, 105-106; nine 
 states having an aggregate area 
 but little larger than Minnesota's 
 have a population of 9,000,000,104. 
 
 Populists, as recruiting ground, 37; 
 lively enough, and why hopeful, 
 167; "did not quite vote as a unit 
 in Minnesota tax matters, 233. 
 (See personal mention.) 
 
 Price of, and where to procure this 
 book. (See last page of Appendix 
 B.) 
 
 Professorial decadence, a professor 
 laments, 92. 
 
 Propositions, general, based on the 
 valuation and taxing of Teal es- 
 tate, 181-182. 
 
 Protection, utterance on in debates 
 of first congress, 19-20; British to- 
 bacco tax as covert example of, 
 20-21; Garfield thought the fath- 
 ers well posted on, 67; in connec- 
 tion with the incidence of federal 
 taxes, 399-401. 
 
 Proudhon, J. B., on taxation as the 
 shield of monopoly, 44; on single 
 tax as the sum total of fiscal in- 
 iquity, 349. 
 
 Public service companies, heard in 
 opposition to Jacobson bill by sen- 
 ate committee, 268-275; the small- 
 er ones feared confiscation, 268; 
 author suggests gross earnings 
 tax, discreetly graded, as best 
 way to tax them, 269; comptrol- 
 ler of Twin City company on taxa- 
 tion of as compared with railroad 
 taxation, and generally, 270-274; 
 earnings of certain ones, 270-274; 
 other companies protest, 274-275; 
 unit rule for taxing, 301-303, 380- 
 383; proposed constitutional 
 amendment as affecting in Min- 
 nesota, 324-328. 
 
 Purdy, Lawson, a single-taxer, ad- 
 dresses large audience, 226-230; 
 keeps single-tax in background, 
 226-228; questioned by Minnesota 
 legislators, 228-230. 
 
 Railroads, how they oppose paying 
 any more taxes in Wisconsin, 87- 
 89; taxation of in Minnesota, 107- 
 113; ideals of Minnesota and Wis- 
 consin compared as to taxing, 
 113; earnings and profits of in the 
 Hill, or Great Northern system, 
 127-136; their taxes compared with 
 those of street railways, 270-272. 
 
 Real estate, assessed values of. com- 
 pared with selling prices of in va- 
 rious states, 171-181; assessed 
 higher compared with actual value 
 in the city of Milwaukee than 
 e 1 sewhere in Wisconsin, 175; 
 over-assessed in Minnesota cities, 
 and in some rural counties, 177- 
 180: only occasionallv Drofitable 
 as an investment, 177-180; in- 
 
424 
 
 HAVE YOU READ APPENDIX B? 
 
 stances of its over-assessment in 
 St. Paul, 178 (note); five propo- 
 sitions based on the valuation and 
 taxing of, 181-182; underassess- 
 ment of in Red River Valley, 213; 
 taxed on basis of 18 per cent, of 
 true value in Iowa, 308; differen- 
 tial in favor of between its as- 
 sessed value and that of moneys 
 and credits, 368-369. 
 
 Reform, taxation for, comes late in 
 civilization, 21; Hamilton favored 
 excise tax partly for, 21 ; most 
 governments too hard pressed for 
 money to experiment with taxa- 
 tion for, 21-22; United States gov- 
 ernment an exception, 22; in- 
 stances of taxation for by United 
 States, 22-23; rationale of suc- 
 cessful taxation for, 22, 25; D. A. 
 Wells opposed to, 25, 68; Justice 
 Story gives wide sweep to taxa- 
 tion for, 70-71 (note.) 
 
 Republican party, as party of ac- 
 complishment, 32; is now short of 
 issues, 35-36; has substitute for is- 
 sues in Roosevelt, 35; dilemma of 
 magnates between their own and 
 the voters' choice, 36; taking up 
 tariff-reform evidence of issue ta- 
 ble swept clean, 36; good recruit- 
 ing ground for man with right is- 
 sues, 37; in relation to tax reform 
 in Wisconsin, 87-89. 
 
 Revenues, public, are by gift, by 
 contract, by compulsion (preface) 
 viii; other than from taxes little 
 heeded in U. S.; 90. 
 
 Road maritime, gross blunders of 
 the Century and other dictionaries 
 in defining, 54-55, and Appendix 
 A. 
 
 Robbery, tribute akin to, 13; taxa- 
 tion for, meaning of as applied to 
 taxation, 16-19. 
 
 Roman emperors, various ones men- 
 tioned for comparing ancient and 
 modern influence of power on 
 character, 139-141, 146-149, 155- 
 156; Augustus as debauchee, 146; 
 the wicked and Napoleon, 141-148; 
 no term in English to express 
 their absolute dominion, 147; mod- 
 ern despots tame and petty com- 
 pared with, 148; vice never more 
 extravagant or uncontrolled than 
 
 under, 149; in re taxation, 149; 
 in what respects modern pluto- 
 crats do not imitate, 155-156; Car- 
 acalla a lavish giver, 156; grind- 
 ing taxation under later emperors, 
 230 (note). 
 
 Roosevelt, Theodore, as personal 
 substitute for other issues, 35; pity 
 on the whole, if not allowed to 
 demonstrate that the office lim- 
 its the knight, 37. 
 
 Ruble, sloppy valuation of in Cen- 
 tury Dictionary, 54-55 (note); see 
 also Appendix A. 
 
 Russian despotism, relation between 
 and Russian revolutionists, 19. 
 
 Say, J. B., quoted on the euphemis- 
 tic names of tax, 15 (note); on 
 rationale of plucking the peasant 
 in France, 18. 
 
 School houses, built for fraudulent 
 gain, 122-123. 
 
 School taxes, some individualists 
 look on as robbery, 20; unjust 
 from individualist point of view, 
 64-65; sometimes founded in 
 fraud, 122-123. 
 
 "Scrap," as taxable personalty, 189- 
 190. 
 
 Seligman, Prof. E. R. A. on pri- 
 mary classification of public rev- 
 enues (preface), viii-ix; his brief 
 mention of eminent domain and 
 penal power (preface), ix-x; lists 
 taxing power under the "forms ot 
 fees, special assessments, and tax- 
 es" (preface), x; jars Prof. Perry 
 and others, 47; on fictional distinc- 
 tion between police power and 
 taxing power, 59 (note) ; on fees 
 and assessments cited and criti- 
 cised, 93-94; his enumeration of 
 thirteen different bases for taxing 
 corporations in the United States, 
 98; review of his review of the 
 single tax, 348-349, 358-365; his 
 "Shifting and Incidence of Taxa- 
 tion," 386' sundry quotations 
 from, 387-391. 
 
 Ships, folly of applying property tax 
 to, 189/216-219; taxable only at 
 home port, 218; Governor Van 
 Sant on taxing, 217-218; capital 
 tax on easily evaded,, 218-219; 
 Minnesota legislature wise on this 
 point, 234. 
 
INDEX. 
 
 425 
 
 Silver, would not have been remon- 
 etized though Bryan had been suc- 
 cessful, 31 (note); real issue of 
 1896 not dead with, 32. 
 
 Single tax, in connection with L. 
 Purdy's address, 226-231; chapter 
 XVIII of this book devoted to 
 evolution and criticism of, 330- 
 366; relation of to classical polit- 
 ical economy (see that title) ; pub- 
 lication and boom of "Progress 
 and Poverty," 338-339; meant to 
 be a reform tax, 342; its land and 
 the land of the law, 342-343; diffi- 
 culty in executing single tax law, 
 343-344; human nature insuperable 
 barrier to its adoption, 344, 352, 
 358: not adopted in the South Sea 
 colonies, 344-348; the single tax 
 of the Physiocrats, 348; Voltaire 
 and Proudhon on the, 348-349: 
 Grimshaw, of Minneapolis, rakes 
 the, fore and aft, 351-358; review 
 of Seligman's review of the, 358- 
 365; true significance of, and praise 
 for George, 366. 
 
 Single-taxer, a, before the Minne- 
 sota legislature, 226; limitations of, 
 226-228; most effective argument 
 lies in pointing out the flaws in 
 the general property tax, 226-227; 
 Trios. G. Shearman as one having 
 acumen and stating practical diffi- 
 culty in making single-tax effect- 
 ive, 227; loves simplicity of classi- 
 fication, 228. 
 
 Slavery, chattel, issue of, simple and 
 semibarbarous, 30; industrial, pre- 
 sents great issue, 30. 
 
 Special assessments, branch of tax- 
 ing power (preface), x; intermedi- 
 ate between fees and taxes, 93; 
 generally compulsory and often 
 confiscatory, 93; Seligman on cri- 
 ticised, 93-94. 
 
 States, in the American Union, gov- 
 ernments of may tax home indus- 
 tries to death, but can't reach ef- 
 fectively the means or the goods 
 of interstate commerce, 22; com- 
 parative population of various 
 100-103; anarchy of tax reform 
 movements and tax laws in, 164. 
 
 Statesmanship, best luck for the 
 bankrupt sort is to meet corres- 
 ponding opposition, 27; that of Na- 
 
 poleon, III, typically bankrupt, 
 27-29; is doing nothing against 
 the next panic, 32. 
 
 Steel trust, the, as apprehended by 
 legislature, 259-260; alleged to 
 hold Duluth as a rotten pocket 
 borough, 259; allegation denied, 
 .259-260. 
 
 Stein,- Lorenz von, Austrian profes- 
 sor, quoted in new translation, 
 391. 
 
 Steuart, Sir James, an economist be- 
 fore Adam Smith, pithy saying of 
 quoted, 16. 
 
 Story, Justice, on taxation for ends 
 other than revenue, 70-71 (note). 
 
 Street Railways, taxation of in 
 Minnesota, 113-114; arguments 
 concerning before Minnesota sen- 
 ate committee, 268, 270-274; earn- 
 ings and comparative taxation of, 
 270-274; unit rule and the, in Chi- 
 cago, 301-303, 380-383. 
 
 Supervisor of assessment, county, 
 reconimended by tax commission, 
 202; duties of, 202-5; pleasures and 
 opportunities of, 202-5; compelled 
 by law to impeach the law, 204, 
 compensation of, 204-205. 
 
 Switzerland, large work on taxes 
 of, 403; personal property and in- 
 come taxes in, 403. 
 
 Tail-twisting as means of reputa- 
 tion, 27; as bad statecraft, 385. 
 
 Tax, successive names of as showing 
 
 . historical development, 15 (note); 
 definitions of, (see definition) ; na- 
 ture of (see taxation) ; is a "ca- 
 lamity," 44; Paul Leroy-Beau- 
 lien's definition of excellent in 
 precise but narrow formality, 45; 
 contribution as euphemism for, 
 45; Cooley's definition of quoted 
 and criticised, 49-53; proportional, 
 or equal and uniform, as applied 
 to neither useful nor true, 50-52; 
 poll-taxes "grievous," 50-52; broad 
 powers included in the power to 
 levy, as per Justice Story, 70-71 
 (note) ; must be for a public 
 purpose, a proposition well tak- 
 en, in so far as not identical, 72; 
 Cooley's distinction between the 
 object which authorizes and that 
 which does not, 72-74; yield of 
 fine and license taxes in Minneap- 
 
426 
 
 HAVE YOU READ APPENDIX B? 
 
 olis, 354; special taxes in Minne- 
 apolis borne exclusively by land, 
 356; true reason for condemning 
 insurance theory, purchase theory, 
 benefit theory or any exchange 
 theory of, 47; power to, when 
 none to license, 59 (note); what 
 taxes are in substance as distin- 
 guished from form, 85; contrast 
 between United States and Eu- 
 rope in re, 98; total in Minnesota 
 for various years, 115; yield of 
 gross earnings in 1891 and 1901, 
 113; on inheritances, 251 (see in- 
 heritance tax). 
 
 Taxation, formula of as regards re- 
 sult and purpose, 13; robbery in 
 name of, 16-19; form of in rude 
 and remote beginnings indistinct 
 and of little practical avail, 14; 
 real beginning for us is "in the 
 middle," 14; professorial theories 
 not likely to change current of, 
 14-15; kinds of (for robbery, rev 
 enue, reform) never quite distinct 
 in time, coexistence, or purpose, 
 16; by canal ring in New York, 
 16-17; by Indian monarchs took 
 nearly all but means of bare sub- 
 sistence, 17; for revenue pure and 
 simple not rare in America, 19; 
 for revenue and incidental protec- 
 tion by first congress under the 
 constitution, 19; British sugar duty 
 as tax for revenue, 20; apparently 
 for revenue, yet covering other 
 motives, illustrated by British to- 
 bacco tax, 20-21; for reform re- 
 quires considerable development 
 of civilization, 21; National and 
 state conscience is the only limit 
 to, 26; under regime of Napoleon 
 III kept low by borrowing, 28 
 (note) ; puts statesmanship on final 
 proof, 29; noisy agitation of may 
 cover barrenness of ideas, 29-30; 
 author's views on make lock-step 
 with his views on government, 30; 
 chaff of for next year's seed, 37; 
 embarrassing subject for political 
 economists, 38; speaks with clear 
 voice from platform of common 
 sense and discreet opportunity, 38; 
 author's formula, taxation for rob- 
 bery, etc., not a definition of, 39; 
 figurative statement of what strict 
 
 individualists would allow to be, 
 39; definition of, and of taxes, be- 
 set with practical and metaphysical 
 pitfalls, 39-40; "Taxation no tyran- 
 ny" as applied by Dr. Johnson to 
 the American colonies, 40; uni- 
 formity as working basis of 
 practically abandoned by Amer- 
 ican jurisprudence and states 
 manship, 59; entire wealth of 
 the country in easy legal 
 reach of, 61 ; author takes 
 as he finds, 62; individualist ap- 
 prehension as to tremendous pow- 
 ers of, 77; viewed from its formal 
 side has no limit, 86; limited on its 
 substantial side only by quantity 
 of takable wealth, 86; in United 
 States dwarfs other sources of 
 public revenue, 90; of railroads by 
 gross earnings in Minnesota, 108- 
 109, 113; by same in Wisconsin, 
 113; of street railways, 113-114; 
 of personal property, 183-208; ex- 
 emption of personal property 
 from, 213-216; before the Minne- 
 sota House, 231-245; before the 
 Senate, 246-256, 261-263, 275-281; 
 judge-made conflict between Min- 
 nesota and Ohio constitutions on, 
 285-290; and the federal constitu- 
 tion, 291-301; under wide-open 
 constitutions, 306-317; under pro- 
 posed constitutional amendment, 
 324-328. 
 
 Tax Commission, of Minnesota, au- 
 thorized, 162; scope of, 162-163, 
 membership of, 163; regrets lack 
 of time and means to accumulate 
 tax data, 169; finds startling dis- 
 regard of law, 176; its conclusions 
 as to real estate valuations not 
 quite justified, 177; proposed code 
 of, a warning example; accepts 
 but laments its slavery to the con- 
 stitution, 185, 187; calls evasion of, 
 personal property tax universal, 
 186; does not favor taxing mort- 
 gages, 186; nor credits, 187; de- 
 spairs of marked reform under 
 present constitution, and favors 
 income tax, 187; weighted with 
 self-contradiction, 188; has luke- 
 warm faith in its proposed code, . 
 188; drastic provisions interesting 
 and why, 188; its dictionary of 
 
INDEX. 
 
 427 
 
 taxable personal property criti- 
 cised, 188-190; particular provi- 
 sions by for taxing personal prop- 
 erty, 191-205; its own duties and 
 compensation as therein pre- 
 scribed, 205-207; code of and the 
 hunchback story, 207; two mem- 
 bers of defend their work, 214, 
 221-222; quoted and praised, 247- 
 2 535 proposed constitutional 
 amendments offered by, 303-305. 
 
 Taxing power, wide range of pur- 
 pose in, as per Justice Story, 70- 
 71 (note) ; real limitation of lies 
 in opposition of adverse interests, 
 62, 86, 88; power of adverse inter- 
 ests illustrated in Wisconsin, 62, 
 86, 88; virtually admits inefficiency 
 by resorting to drastic measures, 
 186-188, 198, 199-202, 204; defect- 
 ive in collecting real estate taxes 
 under former Minnesota laws, 
 246-247; the "Anderson bill," as 
 an aid to, 247-249; how weakened 
 by "refundments," 248-249. 
 
 Tilden, Samuel J., quoted in re ca- 
 nal ring robbers and inequality of 
 human justice, 16-17. 
 
 Tobacco, British tax on protective 
 of British maufactures, 20-21; 
 monopoly in sale and manufacture 
 of a vast state industry in France, 
 95-98; and yields French govern- 
 ment an enormous revenue, 95- 
 98. 
 
 Tribute, simplest form of much the 
 same as robbery, 13; when makes 
 a first step toward taxation, 13-14. 
 
 United States, government of, in po- 
 sition to make financial experi- 
 ments, 22; has no police or regu- 
 latory power over kind and qual- 
 ity of manufactured articles, except 
 indirectly under cover of revenue 
 laws, 22; its successful taxing of 
 state bank notes out of circula- 
 tion, 22; its attempt to drive oleo- 
 margarine from the markets, 23- 
 26; may pass a so-called "pure- 
 food" law in guise of a revenue 
 measure, 25; revenue and per cap- 
 ita taxation in 1860, 98. (See Con- 
 stitution.) 
 
 Value, meaning and synonyms of, in 
 tax phraseology, 191. 
 
 Valuation, of real and personal 
 property in Minnesota, 114-116; in 
 certain counties thereof, 116-125; 
 ratio of assessed to true, as re- 
 gards realty, in Iowa, Wisconsin, 
 Minnesota, Pennsylvania, and In- 
 diana, 171-181; must be annual for 
 taxing personal property, 191; of 
 realty has two-year intervals or 
 longer, 191. 
 
 Van Sant, S. R., Governor of Min- 
 nesota, calls special session, 163; 
 his discreet and sufficient reasons 
 for so doing, 163-164; judicious 
 words of on shipping interests, 
 217-218. 
 
 Vessels. (See ships.) 
 
 Voltaire, ridicules single tax, 348- 
 
 349- 
 
 Wagner, Adolph, cited on the prac- 
 tical difficulties to be overcome in 
 comparing tax systems, 14 (note). 
 
 Waterson, Henry, in re tariff reform 
 and Cleveland, 36. 
 
 Wells, David A., against oleo-mar- 
 garine tax, 25; on bankruptcy of 
 political economy in re taxation, 
 38; on proportional taxes as 
 meaning equal and uniform, 57 
 goes to absurd lengths as doctrin- 
 aire and individualist, 57-58; his 
 individualism contrasted with the 
 real thing, 64-66; on power of tax- 
 ation as limited generally and to 
 public purposes, 66-67, 68-72; 
 where Cooley fails him, 69-71; 
 quoted in re taxation in Rome, 
 230 (note); on the hidden bonds, 
 etc., in Connecticut, 375; on fed- 
 eral income tax, 376-377; on Brit- 
 ish do., 379-380; his "weariness 
 and disgust" over Seligman's book 
 on "The Shifting and Incidence of 
 Taxation," 386-387; on the whis- 
 key and tobacco tax paid by the 
 American Bible Society, 390. 
 
 Wisconsin, movement for higher 
 taxation of corporations in, 86-88; 
 current history in shows the deep 
 collateral problems into which tax 
 questions revolve, 89. 
 
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 University of California 
 
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