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 DOCUMENTS 
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 REPORT 
 
 THE JOINT COMMITTEE OF THE 
 
 SENATE AND HOUSE OF REPRESENTATIVES 
 
 OF THE COMMONWEALTH OF PENNSYLVANIA 
 
 TO CONSIDER AND REPORT UPON A REVISION OF 
 
 THE CORPORATION AND REVENUE LAWS 
 
 OF THE COMMONWEALTH 
 
 TO THE LEGISLATURE 
 Pursuant to Joint Resolution of May 13, 1909 
 
 WITH 
 
 Containing the Testimony taken before the Committee 
 
 Index to Report, Fa e e 115Q 
 Index to Testimony, Faee 1165 
 
OEPT. 
 

 To the Senate and House of Representatives 
 
 of the Commonwealth of Pennsylvania: 
 
 Gentlemen: By concurrent resolution of your Honor- 
 able Bodies, approved by the Governor, May 13, 1909, 
 P. L., 944, it was provided as follows: 
 
 IN THE HOUSE OF REPBESENTATIVES, MAECH 30, 1909. 
 
 A CONCUBRENT BESOLUTION PROVIDING FOB THE APPOINTMENT OF 
 A JOINT COMMITTEE OF THE SENATE AND HOUSE OF REPBE- 
 SENTATIVES TO CONSIDER AND BEPOBT UPON A REVISION OF THE 
 IAWS OF THIS COMMONWEALTH RELATING TO CORPOBATIONS 
 AND TO BEVENUE; FOR THE EMPLOYMENT OF COUNSEL AND OTHEB 
 NECESSABY OFFICERS AND EMPLOYEES, AND GIVING IT THE AU- 
 THOBITY TO COMPEL THE ATTENDANCE OF PEBSONS AND THE 
 
 PRODUCTION OF BOOKS AND PAPEBS. 
 
 Resolved (if the Senate concur), That the President pro 
 tempore of the Senate shall appoint three Senators, and the 
 Speaker of the House of Representatives shall appoint three of 
 its members, which shall constitute a joint committee, whose 
 duty it shall be to consider the laws of this Commonwealth 
 relating to corporations and to revenue and the practical work- 
 ing thereof, and to report to the next Legislature whatever 
 changes may be deemed necessary therein, together with the 
 draft of an Act or Acts of Assembly to accomplish said changes, 
 and together with such recommendations as may be deemed 
 necessary relative to the administration of existing laws or as 
 to the enforcement of said suggested Act or Acts. Said Com- 
 mittee shall have power to elect its own chairman, to sit after 
 the adjournment of the Legislature, to employ legal counsel 
 and such other officers and employes as may be needed to enable 
 it to properly perform its duties as aforesaid; but its expendi- 
 tures shall be limited to the amount provided therefor in the 
 general appropriation bill to be passed at this session of the 
 Legislature, and shall be paid out of the State Treasury upon 
 vouchers signed by the Chairman of said Committee. 
 
 Said Committee shall also have power to issue subpoenas 
 signed by its Chairman, requiring the attendance of persons 
 and the production of books and papers, as in its judgment 
 will assist in the performance of its duties as aforesaid. 
 
 i 
 
 
. . Sajd, Committee, shall make a full report in writing to the 
 &6yeni(>r % ptf/th,e- < Commonwealth of its findings, with such rec- 
 ommendations as it may deem proper, six months prior to the 
 meeting of the General Assembly in the session of 1911. 
 Approved, the thirteenth day of May, A. D. 1909. 
 
 EDWIN S. STUART. 
 
 In compliance with the said resolution your committee 
 has the honor to report: 
 
 Pursuant to the direction of the resolution your Com- 
 mittee, July 1, 1910, submitted a report to the Governor, 
 and in it expressed the views of the Committee of the 
 proper course to be pursued in the performance of their 
 duties and their action thereabout and it will not be amiss 
 to repeat here. 
 
 After reciting the above Resolution the report pro- 
 ceeded: 
 
 It will be noted there are two subjects submitted for our 
 consideration: Kevenue, and a Revision of the laws of the 
 Commonwealth relating to Corporations, each of almost unlim- 
 ited magnitude and of vital interest and importance to the 
 people. For present consideration we will reverse their order 
 in the Eesolution. 
 
 The collection of revenue for the support of the Government 
 is a problem the solution of which has enlisted the best efforts 
 of man from the beginning of civilization, and divers are the 
 methods which have been used in the belief or hope that sat- 
 isfactory results would be attained; but whilst we have pro- 
 gressed in this, as in all else, and are nearer to the solution than 
 ever before, there is much yet to be done to accomplish that 
 uniformity and equalization contemplated by our Constitution 
 and laws. 
 
 We have approached the performance of the work entrusted 
 to us as respects State revenues fully appreciative of the fact, 
 which is conceded by the best informed authorities upon the 
 subject, that our "revenue laws have put us easily in the front 
 rank of American Commonwealths," and yet we know that there 
 is room for improvement, but just how changes can be made 
 which will effect a closer approach to equalization upon and 
 uniformity among all upon whom taxes should be imposed for 
 the support of the Commonwealth and for its legitimate ex- 
 
penditures, is a subject of the gravest concern to those who 
 would make the attempt. 
 
 This is not astonishing, for taxation is of all things a matter 
 in which the people of a popular Government are least willing 
 to depart from the long-accepted theories. They require first to 
 be convinced. But as taxation is a complex subject, and not 
 popularly entertaining, it is difficult to overcome the public 
 fear of making bad matters worse by new departures. 
 
 A law which has not the support of the great body of public 
 sentiment would not be wise or practical, and this is especially 
 true of legislation relative to taxation. 
 
 To the end that the opinions of all our people should be had 
 we have mailed upwards of forty-two thousand letters, sub- 
 stantially as follows: 
 
 * * * * * * * 
 
 DEAR SIR: The Legislature of Pennsylvania on May 13, 1909 
 (P. L. s 944), adopted the following resolution: 
 
 "Resolved, That the President pro tempore of the Senate 
 shall appoint three Senators and the Speaker of the House 
 of Eepresentatives shall appoint three of its members, which 
 shall constitute a Joint Committee whose duty it shall be 
 to consider the laws of this Commonwealth relating to 
 corporations and to revenue, and the practical working 
 thereof, and to report to the next Legislature whatever 
 changes may be deemed necessary therein, together with 
 the draft of an Act or Acts of Assembly to accomplish said 
 changes, and together with such recommendations as may 
 be deemed necessary relative to the administration of ex- 
 isting laws or as to the enforcement of said suggested 
 Act or Acts. * * * 
 
 "Said Committee shall also have power to issue subpoenas 
 signed by its Chairman, requiring the attendance of per- 
 sons and the production of books and papers, as in its 
 judgment will assist in the performance of its duties as 
 aforesaid." 
 
 ******* 
 
 The Committee is collecting data upon the formation, regu- 
 lation and taxation of corporations and the appropriation of 
 State Eevenue for all purposes, in this State, in all of the 
 United States, by the Federal Government, and by other nations. 
 These subjects are being specially discussed and legislated upon 
 at the present time throughout the world. 
 
 The Committee desires the co-operation of all interested in 
 these subjects, and requests your opinion as to any defexsts in 
 
the present laws of the Commonwealth relating to the forma- 
 tion, regulation and taxation of corporations, associations, 
 partnerships or individuals, the exemption of them or any of 
 them from taxation, the appropriation of the revenue of the 
 State, and any changes therein which you may think necessary. 
 You will notice that the Resolution requires a report of the 
 Committee to be filed with the Governor in July, 1910, and we 
 therefore request an early reply, as it is important that all sug- 
 gestions be received for consideration prior to the public 
 meetings which the Committee may hold. We should also be 
 glad to have from you the names and addresses of any persons 
 whom you may know who are specially qualified to give to the 
 Committee information or assistance in the consideration of 
 these most important subjects. 
 
 Very truly yours, 
 
 GABRIEL H. MOYER, 
 Secretary. 
 
 These letters were mailed to all of the individuals, institu- 
 tions and associations and corporations in the State as fol- 
 lows: 
 
 National Banks, 
 
 State Banks, 
 
 Trust Companies, 
 
 Savings Institutions and Bankers in the State, 
 
 Members of the Lawyers' Club, and of the Law Association 
 of Philadelphia, and 
 
 Members of the County Bar Associations and representative 
 Lawyers of Pennsylvania, 
 
 Newspapers in Pennsylvania, 
 
 Trade Journals, 
 
 Commercial Journals, 
 
 Medical Journals, 
 
 Dental Journals, 
 
 Legal Journals, 
 
 Members of the Pennsylvania Bar Association, 
 
 Trade Associations, 
 
 Business Associations, 
 
 Building and Loan Associations, 
 
 All Judges of all Courts, 
 
 Insurance Companies, 
 
 State Officials, 
 
 County Officials (every county), 
 
 Members of State Senate, 
 
 Members of House of Representatives, 
 
Mayors of principal cities, boroughs, &c., 
 
 Officials of Hospitals, 
 
 Homes, State Institutions, semi-State Institutions, 
 
 Manufacturing- Companies, 
 
 Gas Companies, 
 
 Water Companies, 
 
 Land Companies, 
 
 Land Improvement Companies, 
 
 Homestead Companies, 
 
 Hotel Companies, 
 
 Miscellaneous Companies, 
 
 Brick Companies, 
 
 Clay Companies, 
 
 Stone Companies, 
 
 Slate Companies, 
 
 Quarry Companies, 
 
 Bridge Companies, 
 
 Turnpike Companies, 
 
 Brewing Companies, 
 
 Distilling Companies, 
 
 Coal Companies, 
 
 Coke Companies, 
 
 Coal Mining Companies, 
 
 Oil Companies, 
 
 Mining Companies, 
 
 Light, Heat and Power Companies, 
 
 Market Companies, 
 
 Railroad Companies, 
 
 Railway Companies, 
 
 State Grange, 
 
 Transportation Companies, 
 
 Ferry Companies, 
 
 Telephone Companies, 
 
 Telegraph Companies, 
 
 Fertilizer Companies, 
 
 Electric Light Companies, 
 
 Foreign Corporations registered with the Auditor General. 
 
 And to thousands of representative citizens throughout the 
 State known to iis, or of whom we were informed, as being 
 interested in the subjects involved. 
 
 In fact, every interest of the Commonwealth affected by the 
 payment to, \>r expenditures by, the Commonwealth, or having 
 to do with the creation and regulation of corporations was so 
 recognized ; and appreciation of this recognition was duly ex- 
 pressed in several thousands of communications containing 
 
6 
 
 opinions, suggestions and recommendations almost as varied as 
 the number of writers, to all of whom we have replied, and 
 with many of whom we have discussed the subjects written of 
 to elicit the fullest exposition of their views. 
 
 We have also collected data upon both of the subjects the 
 formation and regulation of corporations and State revenues, 
 from all of the United States, from the Federal Government and 
 from Foreign Countries. 
 
 We have, after due notice published in all of the newspapers 
 of the respective localities, held public meetings as follows : 
 
 IN PHILADELPHIA, at which were heard Committees and repre- 
 sentatives from all Hospitals and all Charitable Institutions in 
 that City and surrounding Counties, Medical Societies, semi-State 
 Institutions, Educational Institutions, State Board of Public 
 Charities, Philadelphia College of Physicians, Financial Institu- 
 tions, Trust Companies, Section of American Bankers' Associa- 
 tion, Real Estate Brokers' Association, Association of Life In- 
 surance Presidents, Private Bankers' and Brokers' Associations, 
 Board of Revision of Taxes, County Officials, Manufacturers' 
 Club, Pennsylvania Manufacturers' Association, Pennsylvania 
 Tax Reform Association, Corporations of all classes and repre- 
 sentative men prominent in general activities, and county tax 
 officials from Montgomery, Chester, Lancaster, Berks, Delaware 
 and Bucks Counties. 
 
 IN PITTSBURGH, PA., at which were heard Committees and 
 representatives from all Hospitals, Homes and all other Chari- 
 table Institutions in that city and surrounding counties, Manu- 
 facturers, Bankers, Trust Companies, Savings Institutions, Coal 
 operators, Brokers and City officials, County officials, County Tax 
 Revision Board, Lawyers, Committees of Allegheny County Bar 
 Association, Real Estate Brokers, Single Tax Society, Educa- 
 tional Institutions, Chamber of Commerce, Board of Trade, 
 Chamber of Commerce of McKeesport, Pa., Chamber of Com- 
 merce of N. S. Pittsburgh, Insurance Companies, Allegheny 
 County Laundrymen's Association, Manufacturers' Association, 
 Corporations of all classes, the Mayor and representative men of 
 that locality. 
 
 IN WILLIAMSPOBT, PA., at which were heard Committees and 
 representatives from all Hospitals, Homes, and all other Chari- 
 table Institutions in Williamsport, Universities, Bar Associa- 
 tion, Board of Trade, Financial Institutions, Business and Trade 
 Associations, City and County Officials, Pennsylvania State 
 Grange, Manufacturing Companies, Corporations of all classes, 
 
Board of Assessors, Board of Revision of Taxes, Lawyers and 
 representative men of the locality. 
 
 IN ERIE, PA., at which were heard Committees and representa- 
 tives from all Hospitals, Homes and all other Charitable Institu- 
 tions in Erie and surrounding counties ; Financial Institutions, 
 City and County Officials, Manufacturers' Association, Board of 
 Trade, Chamber 01 Commerce, Business Men's Association, Bar 
 Association, Associated Charities, Manufacturing companies, 
 Corporations of all classes and representative men of the locality. 
 
 IN SCBANTON, PA., at which were heard Committees and rep- 
 resentatives from all Hospitals, Homes and Charitable Institu- 
 tions, City and County officials, Board of Associated Charities, 
 Board of Trade, Board of Control, Medical Societies, Bar Asso- 
 ciations, Merchants' Associations, Public Service Corporations, 
 Coal companies, Financial Institutions, Brokers, Manufacturing 
 companies, Corporations of all classes and individuals who were 
 the representative men of the locality. 
 
 These public meetings were given the widest publicity by the 
 newspapers in the several localities, and were the subject of 
 favorable editorial and news comment. We were cordially re- 
 ceived in these several cities, and the interest of the people in 
 our proceedings, and their knowledge and discussions of the 
 subject considered, were 'remarkable and helpful. 
 
 As the State should not collect revenue in excess of its re- 
 quirements and as there has been some criticism of appropria- 
 tions to Hospitals, Homes and other Charitable Institutions not 
 under State control (a total of $26,402,778.99, and for the years 
 1909-1910, $5,446,900), we have made inquiry, and are still in- 
 vestigating, as to the propriety of such appropriations and the 
 methods of the disposition thereof. Much valuable information 
 has been obtained which we believe will enable us to make rec- 
 ommendations to the Legislature which will be of benefit to 
 the Commonwealth and to the institutions. 
 
 To the subject of the revision of the corporation laws of the 
 Commonwealth we have given much consideration. The Penn- 
 sylvania Bar Association and the County Bar Association and 
 others believed to be specially qualified have been appealed to 
 for co-operation, to the end that our present system of laws for 
 the creation of corporations and their government may be im- 
 proved. We have received many suggestions for amendments to 
 present laws and for legislation covering subjects not heretofore 
 included. These suggestions, like those affecting the State reve- 
 nue, are many and varied, but we have deemed it unwise to at- 
 
8 
 
 tempt at this time to conclude our action thereon, believing 1 that 
 the importance of the subject justifies tne iise of all of the time 
 possible for their consideration, and we will, as soon as practi- 
 cable, submit to you a report thereon. 
 
 We have concluded that in view of the magnitude of the 
 subjects submitted to us a proper and comprehensive considera- 
 tion thereof at this time would be not only impracticable, but, 
 so far as to the attainment of beneficial results, impossible. 
 
 Before and at the time of the creation of this Committee there 
 were pending in Congress several measures affecting both the 
 subjects under consideration, notably the Act imposing an 
 excise tax on corporations, joint stock companies, associations 
 and insurance companies, which was approved August 5, 1909, 
 and it was not until December 3, 1909, that the Secretary of the 
 Treasury promulgated the regulations for the enforcement of 
 that Act, and litigation thereunder is still pending. 
 
 This and other proposed Federal legislation and the discussion 
 and litigation relating to the enforcement thereof have caused 
 before and during the whole of the time of the existence of 
 the Committee much unrest and anxiety among the corporations 
 of this State, from which the largest part of the State revenues 
 are derived. It is the consensus of opinion of those qualified 
 to know, in which we concur, that it is for the best interest of 
 the Commonwealth and for the general welfare of our people 
 that there should be no haste in the filing of our conclusions 
 until all possible investigation can be had. For these reasons 
 and in view of the numerous recent requests for further hear- 
 ings from associations and interests including nearly every 
 business activity, we have deemed it wise to defer our findings 
 and will present them to you at the earliest time practicable, 
 in the meantime continuing our inquiry. We beg to direct your 
 attention to the accompanying notes of testimony taken before 
 us, and a summary thereof. 
 
 Respectfully submitted, 
 
 JAS. P. McNICHOL, 
 
 Chairman . 
 WM. II. KEYSER, 
 WM. C. SPROUL. 
 JAS. F. WOODWARD, 
 D. HUNTER, JR., 
 GABRIEL II. MOYER, 
 Vice-Chairman and Secretary. 
 
Since the making of the report to the Governor your 
 Committee has given further publicity to the hearings and 
 to the subjects of their labors in general. All the news- 
 papers and journals of the State have have been requested 
 to give such notice and have generally complied. In all 
 to-date upwards of 82,000 letters requesting suggestions 
 and advice have been sent to persons and corporations 
 throughout the United States. 
 
 The result has been the receipt of a great number of 
 briefs, drafts of Acts, tables of statistics from public of- 
 ficials, pamphlets and the like. 
 
 Various tax reform associations have furnished your 
 Committee with the results of their work and have re- 
 quested co-operation. By direct communication with the 
 officials of the several States your Committee has been fur- 
 nished with State publications of corporations and taxes, 
 and much information as to the practical experience in the 
 operation of laws of other States has been obtained. 
 
 Since the report of July 1, your Committee has held 
 public meetings in Philadelphia and taken a large amount 
 of testimony from those voluntarily appearing before 
 them, which is transmitted herewith, together with that 
 previously taken and submitted to the Governor. 
 
 In all 177 persons spoke at these hearings, gave their 
 opinions and suggestions, and were questioned by your 
 Committee and Counsel. They included representatives 
 from tax reform associations, business men's associations, 
 boards of trade, the Pennsylvania State Grange, factories, 
 financial institutions, public service corporations, hospitals 
 and various public officials, county commissioners and con- 
 trollers, judges, county treasurers and professional men, 
 such as lawyers, doctors, real estate brokers and in- 
 terested citizens in general. Many thousands appeared 
 as spectators but affected by the subjects under considera- 
 tion. Many important suggestions were made. Your Com- 
 mittee gave the utmost latitude for discussion and sug- 
 gestion, both at the public hearings and by means of letters 
 2 
 
10 
 
 and arguments submitted to it in written form, and the 
 public hearings were a great practical success. 
 
 Counsel for the Committee attended all the hearings 
 and aided in questioning those who appeared, and in gen- 
 eral consulted with your Committee in all the steps taken 
 and conclusions arrived at. 
 
 At a meeting of the International Tax Association, held 
 in Milwaukee, Wisconsin, on September 2, 1910, Francis 
 Shunk Brown, Esq., the counsel of your Committee, at- 
 tended as a delegate of the Commonwealth of Pennsyl- 
 vania by appointment of the Governor, and obtained valu- 
 able information. 
 
11 
 
 CORPORATION LAWS. 
 
 While most of the information and argument addressed 
 to your Committee was on the subject of the revenue laws 
 of the State, yet a great deal of material was gathered 
 on the subject of the corporation laws generally which 
 was entrusted to them by the Resolution. 
 
 Aside from the Acts applying specially to all varieties 
 of corporations, and particularly to railroad, insurance 
 and banking corporations, some of which are incorpor- 
 ated under statutes existing prior to 1873, corporations 
 of the class known generally as business corporations are 
 incorporated in our State under the Act of April 29, 1874, 
 and its very numerous amendments and supplements, 
 which amount to the number of fifty-seven. In addition 
 there are over a hundred other Acts which apply to the 
 same subject. 
 
 It is an undoubted fact that in the thirty-six years dur- 
 ing which the law has been in existence, in consequence of 
 these supplements and amendments, the law has unavoid- 
 ably fallen into a state of contradiction and confusion on 
 many points (particularly by reason of subsequent amend- 
 ments ignoring those previously made), and is in some 
 other points not in accord with the modern trend of legisla- 
 tion. Many matters have been suggested as to which these 
 laws may be improved; and these have commended 
 themselves to your Committee. But they do not feel 
 that the situation is one which calls for a piece-meal re- 
 vision. The laws are familiar and have been construed 
 on most moot points, so that their operation upon every- 
 day matters is well understood. It is not deemed advis- 
 able to recommend any radical changes until a complete 
 revision of the whole body of the law can be presented 
 
12 
 
 as a corporation code or system, and such few matters as 
 need to be cleared up or supplied can be deferred until 
 that time. Such changes from the settled policy of the 
 State as are deemed presently advisable can be better 
 made in this way, and be better fitted to the body of the 
 existing law. 
 
 A uniform business corporation law is now under con- 
 sideration by the Conference of Commissioners on Uniform 
 State Laws. The first draft of such a law was made and 
 printed in December, 1909, and presented for public dis- 
 cussion and your Committee has been much interested in 
 its perusal. At the same time this is not the final draft 
 of the law, some parts of it having since been further re- 
 vised and furnished to your Committee; and a further 
 revision is to follow. The Commissioners have themselves 
 advised your Committee under date of October 21, 1910, 
 to defer action in this regard. In view of the very general 
 adoption of many of the laws recommended by this Con- 
 ference, Pennsylvania having adopted the Negotiable 
 Instruments law (1901, P. L., 194) and the Warehouse 
 Receipts law (1909, P. L., 19), your Committee feel that 
 before a general revision of the corporation law is under- 
 taken, the proposed uniform business corporation law 
 should have careful consideration. 
 
 Following the report of a special committee, the Penn- 
 sylvania Bar Association, at its meeting in 1910, adopted 
 a resolution for the appointment of a committee to draft 
 and present an Act to the next Legislature for the 
 appointment of a commission to revise and unify the 
 statutes of the State. The majority of the Bar Association 
 Committee has determined that the task of going over the 
 whole statute law is too much to be done in the first 
 instance, and has recommended that a definite branch of 
 the law be considered by such a commission to report to 
 the Legislature of 1913, and that the branch of the law 
 to be taken up should include, among other things, pri- 
 vate coroprations, meaning by this to exclude public ser- 
 vice corporations, insurance companies and the like. 
 

 13 
 
 If your committee is continued it will co-operate with 
 that of the Bar Association in the consideration of this 
 most important subject. This action of the committees of 
 the Bar Association successively narrowing the field of 
 proposed statutory revision is another evidence of the 
 very large nature of the task, which has made it im- 
 practicable if not impossible for your Committee, with 
 the means at its disposal, to do aught but lay some of the 
 ground for future work. 
 
 Your Committee, therefore, does not submit any recom- 
 mendations with respect to the laws in general governing 
 the organization and conduct of corporations. If the 
 duties of the Committee be continued, as hereinafter 
 recommended, this and other subjects not presently ripe 
 for legislation can be investigated and considered and re- 
 ported upon to the Legislature of 1913. 
 
14 
 
 FOREIGN CORPORATIONS. 
 
 There is one branch of this law, however, which has 
 an intimate relation to State revenue, and has been the 
 subject of much legislation in other States, with the course 
 of which this State has not kept pace, to wit: the treat- 
 ment of foreign corporations. The law relating to foreign 
 corporations in Pennsylvania is incomplete, and in some 
 particulars unwise. Your Committee, therefore, submits 
 drafts of proposed Acts with regard thereto (See pages 
 16 and 36), together with notes attached to each Act 
 explanatory of the provisions thereof. 
 
 The first of these Acts is a general foreign corporation 
 law relating to the subject of the registration of foreign 
 corporations in order to bring them within the reach of 
 the process of our courts for the benefit of our citizens 
 who deal with them, and within the reach of our taxing 
 authorities. While the existing laws provide for registra- 
 tion, designation of office and the appointing of agents 
 for the serving of process, many corporations fail to com- 
 ply with the law. It is ineffective in not providing a means 
 of reaching the corporation which ignores the law and de- 
 fies the penalties. It is well known that there are a great 
 many such corporations. This proposed Act (see page 16), 
 therefore provides for a means for regulating foreign cor- 
 porations by designating a State officer upon whom pro- 
 cess may be served, if the corporation fails to make a 
 designation. This has been the law with regard to foreign 
 insurance companies for many years in this State and 
 it is a very common provision elsewhere. Its validity 
 has been sanctioned by the Supreme Court of the United 
 States, as stated in the foot note to the Act. The Act also 
 
15 
 
 makes the modes of procedure uniform for all classes 
 of foreign corporations. 
 
 Existing penalties by way of fine and imprisonment for 
 failure to register have been preserved except the penalty 
 added to the law by judicial construction which declares 
 contracts made by unregistered foreign corporations TO 
 be void and permits no recovery at law upon them, how- 
 ever just the claims may otherwise be. This drastic ruling 
 has not been effective to compel compliance with the law 
 by the smaller and more irresponsible corporations, and 
 has been productive of great injustice in permitting the 
 escape of the payment of just debts in a way which 
 produced no State revenue (for the defect could not be 
 cured by registering and paying taxes), and put money 
 in the pocket of those with a sufficiently small conscience 
 to permit them to make the plea. This was recognized 
 by the Legislature of 1907 (P. L. 205), which passed an 
 Act validating such contracts theretofore made, on 
 registering and paying taxes and penalties. The Act as 
 drafted and submitted by your Committee makes this the 
 law for the future, and will produce greater revenue for 
 the State and at the same time do justice between private 
 litigants. If the Legislature does not amend the general 
 foreign corporation law by enacting this bill, it is recom- 
 mended that they alter the existing law in this regard in 
 accordance with the policy previously announced by it, 
 and to accomplish this a draft of Act is submitted herewith 
 modeled on the law of 1907. (See page 36.) 
 
 Foreign corporations which comply with our laws are 
 permitted to hold real estate in Pennsylvania by the pro- 
 posed Act. There have been numerous Acts permitting 
 certain classes of foreign corporations to hold real estate. 
 These Acts have been carelessly amended so that there 
 is much existing confusion in the laws, the opinion being 
 that some Acts have been impliedly but unintentionally 
 repealed by failure to refer to them in amending Acts. 
 If the Legislature is of opinion that foreign corporations 
 
16 
 
 in general be not permitted to hold real estate, it is recom- 
 mended that supposedly existing laws on the subject 
 should be put in one enactment in order that the law may 
 be clear and for that purpose a draft of Act is herewith 
 submitted. (See page 36.) 
 
 Other matters touched on in the general Act relate 
 especially to foreign corporations doing their principal 
 business here. Their foreign birth is an accident, and 
 their internal affairs should be subject to the jurisdiction 
 of our courts, and they should be forbidden the Federal 
 Courts as far as possible. 
 
 [The numbers in the text refer to the foot notes, beginning page 27.] 
 
 AN ACT TO REGULATE FOREIGN CORPORATIONS, THAT IS TO SAY. COR- 
 PORATIONS, JOINT STOCK COMPANIES. PARTNERSHIPS LIMITED, 
 PARTNERSHIP ASSOCIATIONS AND ALL ASSOCIATIONS HAVING ANY 
 OF THE POWERS OR PRIVILEGES OF CORPORATIONS NOT POSSESSED 
 BY INDIVIDUALS OR PARTNERSHIPS ORGANIZED UNDER ANY LAWS 
 OTHER THAN THQSE OF THIS COMMONWEALTH, DOING BUSINESS 
 
 IN THIS COMMONWEALTH. 
 
 SECT. 1. Be it enacted, etc. A foreign corporation shall not do 
 any business in this Commonwealth until said corporation shall 
 have established an office and appointed an agent for the trans- 
 action of its business therein. (1) 
 
 SECT. 2. It shall not be lawful for any such corporation to do 
 any business in this Commonwealth until it shall file in the office 
 of the Secretary of the Commonwealth, and in the office of the 
 Recorder of Deeds for the County in which its principal office 
 is located, a copy of its articles of incorporation or of its charter 
 or of the statute or legislative, executive or governmental acts 
 or other instrument of authority by which it was created and 
 all alterations and amendments thereof. (2) duly certified by 
 the authorized officer of the government under the laws of 
 which such corporation was organized, (3) and in the office of 
 the Secretary of the Commonwealth a statement under the seal 
 of said corporation and signed by the president attested by the 
 secretary thereof, showing the title and object of said corpora- 
 tion, the location of its principal office for the transaction of 
 business in this Commonwealth and the name or names of its 
 
17 
 
 authorized agent or agents therein. (4) A fee of One hundred 
 dollars ($100.00) for filing such statement shall be paid to the 
 Secretary of the Commonwealth for the use of the State. 
 
 SECT. 3. Any person or persons, agent, officer or employee of 
 any such foreign corporation who shall transact any business 
 within this Commonwealth for any such foreign corporation 
 without having complied with the provisions of this Act shall be 
 guilty of a misdemeanor and upon conviction thereof shall be 
 punished by imprisonment not exceeding thirty days and by a 
 fine not exceeding one thousand dollars ($1,000), or either, at 
 the discretion of the Court trying the same; (5) but the said 
 person or persons, agent, officer or employee, shall not be per- 
 sonally liable for any acts done in the transaction of business 
 within this Commonwealth for such foreign corporation, except 
 in the case of insurance companies. (6) 
 
 SECT. 4. If any foreign corporation shall do any business in 
 this Commonwealth without having complied with the laws of 
 this Commonwealth relating to the doing of business in this 
 Commonwealth by foreign corporations (7) all contracts re- 
 lating to such business made or to be performed within this 
 Commonwealth shall be void (8) and no action at law or in 
 equity for any cause of action arising out of such doing of 
 business shall be maintained by it in the Courts of this State, 
 (9) but if any foreign corporation, prior to the commencement 
 of an action on any contract made heretofore or hereafter 
 without having so complied, or prior to the commencement of 
 any other action, shall comply with said laws and shall also 
 pay the bonus on its capital stock required by law and all State 
 taxes for each year that it shall have done business in this 
 Commonwealth, together with such interest and- penalties there- 
 on as shall have been settled against it by the officers of this 
 Commonwealth, such contracts made prior thereto shall be vali- 
 dated and such foreign corporation may maintain action thereon 
 and all other actions both at law and in equity in the Courts 
 of this Commonwealth (10). 
 
 SECT. 5. The doing of business in this Commonwealth by any 
 foreign corporation shall be taken to be its irrevocable assent 
 to be sued in the Courts of this State upon any liability arising 
 out of acts done in the course of such business, irrespective of 
 Avhether such corporation be doing ousiness in this Common- 
 wealth at the time suit is brought. (11.) 
 
 SECT. 6. If all the agents designated by any foreign corpora- 
 tion shall die or resign or be otherwise disqualified to act as the 
 
18 
 
 agents of the corporation under this Act, or if their authority 
 to act as such be revoked, and such corporation shall not within 
 thirty days thereafter designate a new agent or agents, (12) or 
 if such corporation shall cease to maintain as one of its offices 
 the place designated as its principal office, and shall not desig- 
 nate another office in place thereof, (13) or if any foreign cor- 
 poration shall do any business within this Commonwealth with- 
 out the provisions of this Act being complied with, (14) the said 
 corporation shall be taken to have consented that the Secretary 
 of the Commonwealth or his Deputy shall be its agent for the 
 service of process, and that service upon him or his Deputy shall 
 be as effectual as though served upon an agent specially desig- 
 nated by such corporation under this Act, (15) provided, that 
 in case of service upon the Secretary of the Commonwealth or 
 his Deputy such process shall also be served upon such foreign 
 corporation, or upon the officers thereof wherever it or they may 
 be found, whether in this Commonwealth or not, in the same 
 manner as though found in this Commonwealth. (16) Such 
 service may be made by any competent person and proof thereof 
 made by his affidavit. Such service shall be made twenty days 
 before any judgment in such suit shall be rendered. (17.) 
 
 SECT. 7. Any foreign corporation may own or convey real es- 
 tate within this Commonwealth as fully as any corporation 
 might which was organized under the laws of this Common- 
 wealth for a similar purpose (18), Provided, that such corpora- 
 tions, at the time of acquiring title to the real estate, shall have 
 complied fully with the laws of this Commonwealth relating to 
 the doing of business in this Commonwealth by foreign corpora- 
 tions, and provided further, that nothing in this Act shall be 
 construed to exempt said real estate and such corporation from 
 taxation as otherwise required by law. 
 
 SECT. 8. The non-compliance by a foreign corporation with the 
 laws of this Commonwealth may only be taken advantage of 
 with respect to real estate by the Commonwealth itself, (19) 
 and before the same shall have come into the ownership of a 
 purchaser for value in good faith. (20.) 
 
 SECT. 9. The title to any real estate in this Commonwealth 
 now or heretofore held by, or in trust for, any such foreign 
 corporation, is hereby confirmed to tne same effect as if the 
 said real estate had been purchased, held or owned under the 
 provisions of this Act, upon the said corporation complying with 
 the laws of this Commonwealth relating to the doing of business 
 by foreign corporations and paying the bonus on its capital 
 stock required by law and all State taxes for each year that 
 
19 
 
 it shall have done business in this Commonwealtn, together with 
 such interest and penalties thereon as shall have been settled 
 against it by the officers of this Commonwealth. (21.) 
 
 SECT. 10. In all actions the compliance by a foreign corpora- 
 tion with the laws of this Commonwealth shall be taken as ad- 
 mitted unless the party asserting non-compliance shall put the 
 same in issue by special plea of appropriate character; and 
 when so put in issue the burden of proving compliance shall be 
 on the party asserting the same, and the certificate of the 
 proper public officers as to the facts connected with such com- 
 pliance shall be proof thereof. (22.) 
 
 SECT. 11. The Courts of this Commonwealth, both at law and 
 in equity, shall have jurisdiction over all matters concerning 
 the internal management of any foreign corporation doing 
 business in this Commonwealth, the principal office of which 
 for the doing of its business with the public shall be in this 
 Commonwealth, whenever it shall appear that the judgment 
 or decree of the Court can be enforced in this Common- 
 wealth. (23.) 
 
 SECT. 12. If any foreign corporation which has its principal of- 
 fice for the doing of its business with the public within this Com- 
 monwealth shall, without the consent of record of the adverse 
 parties, remove to a Federal Court any action pending against 
 it in any Court of this Commonwealth, excepting in such cases 
 as a corporation created under the laws of this Commonwealth 
 may do so, or shall without such consent begin an action against a 
 citizen of this Commonwealth in any Federal Court, or shall 
 upon the request of the adverse party refuse to discontinue 
 the same, such action on the part of the corporation shall for- 
 feit its right to do any business in this Commonwealth, and 
 it shall thereafter be deemed not to have complied wih the laws 
 of this Commonwealth. (24.) Such forfeiture shall be declared 
 by proceedings in the nature of a writ of quo warranto on the 
 suggestion of the Attorney General. (25.) 
 
 SECT. 13. The term "foreign corporation" as used in this Act 
 shall be construed to mean all corporations, joint stock com- 
 panies, partnerships limited, partnership associations and all 
 associations having any of the powers or privileges of corpora- 
 tions not possessed by individuals or partnerships, (26) or- 
 ganized under any laws other than those of this Commonwealth. 
 
 SECT. 14. The provisions of this Act shall apply to foreign 
 corporations of all kinds doing business within this Common- 
 wealth, including those foreign corporations now doing business 
 
20 
 
 in this Commonwealth, which shall comply with the provisions 
 of this Act within sixty days of its passage (27), and is intended 
 to supply a uniform system as to them. All Acts or parts of 
 Acts, general and special, and Acts applying to particular clnss 
 or classes of foreign corporations and inconsistent with the pro- 
 visions of this Act be and the same are hereby repealed. (28.) 
 
 SECT. 15. The following Acts and parts of Acts be and the 
 same are hereby repealed as to all matters arising after the 
 date of the approval of this Act. (29.) (30.) 
 
 So much of Section 3 of an Act entitled "An Act to facili- 
 tate the collection of debts against corporations," approved 
 March 21. 1849 (P. L. 216), as reads as follows: 
 
 "And in the commencement of any suit or action against any 
 such foreign corporation, process may be served upon any offi- 
 cer, agent or engineer of such corporation, either personally, 
 or by copy, or by leaving a certified copy at the office, depot or 
 usual place of business of said corporation, and such service 
 shall be good and valid in law to all intents and purposes." 
 
 Section 6 of an Act entitled "An Act relating to County 
 Prisons, to the Foster Home Association, . and ' Cawanesque 
 Plank Road Company, to apportion the rent of wharves au * 
 docks in the port of Philadelphia, and relative to the service 
 of process on foreign insurance companies and other cor- 
 porations." Approved April 8, 1851. (P. L. 353.) 
 
 An Act entitled "An Act relative to insurance companies." 
 Approved April 24, 1857. (P. L. 318.) 
 
 An Act entitled "A supplement to an Act in relation to in- 
 surance companies, approved April twenty-seventh, one thousand 
 eight hundred and fifty-seven." Approved April 8, 1868. (P. 
 L. 70.) 
 
 Section 13 of an Act entitled "An Act to establish an In- 
 surance Department." Approved April 4, 1873. (P. L. 20.) 
 
 An Act entitled "An Act to prohibit foreign corporations from 
 doing business in Pennsylvania, without having known places 
 of business and authorized agents." Approved April 22, 1874. 
 (P. L. 108.) 
 
 An Act entitled "An Act amending an Act. entitled 'An Act 
 to establish an insurance department,' approved the fourth 
 day of April, Anno Domini one thousand eight hundred and 
 seventy-three." Approved June 20, 1883. (P. L. 134.) 
 
 So much of Section 7 of an Act entitled "An Act to further 
 provide for the incorporation and regulation of mutual assess- 
 ment corporations for the insurance of lives, supplementary to 
 
21 
 
 an Act, approved May first, Anno Domini one thousand eight 
 hundred and seventy-six, entitled 'A supplement to Act to es- 
 tablish an insurance department.' " approved June 5, 1883 (P. L. 
 80), as reads as follows : "And it shall legally designate a person 
 or agent residing in this State to receive service of process for 
 said company, or in default of such designation, service of 
 process may be made upon the Insurance Commissioner of this 
 State, who shall be deemed its attorney for that purpose, and 
 he shall immediately notify any corporation or association 
 thus served." 
 
 Sections 1 and 2 of an Act entitled "An Act to authorize 
 certain corporations, incorporated and existing under the laws 
 of any other State of the United States, to purchase certain 
 real estate at judicial sales, and to hold and convey the same 
 under certain conditions." Approved May 23, 1887. (P. L. 176.) 
 
 An Act entitled "An Act to amend an Act, entitled 'An Act 
 relative to insurance companies,' approved April twenty-fourth, 
 Anno Domini one thousand eight hundred and fifty-seven, to 
 apply the provisions of said act to live stock insurance com- 
 panies and to give jurisdiction to aldermen, justices of the 
 peace and magistrates." Approved May 13, 1889. (P. L. 198.) 
 
 An Act entitled "An Act to provide for the person upon whom 
 service shall be had by legal process in the case of fraternal 
 beneficial and relief societies whose status is defined by the 
 Act of Assembly, entitled 'An Act defining fraternal beneficial 
 and relief societies and their status, authorizing them to create 
 subordinate lodges and to pay benefits, upon the sickness, dis- 
 ability or death of their members, from funds collected by dues 
 and assessments therein, providing far their registration in 
 the office of the Insurance Commissioner, and requiring that 
 they shall make annual reports to him. and exempting them 
 from taxation and from the supervision of the Insurance Com' 
 missioner,' approved the sixth day of April, Anno Domini one 
 thousand eight hundred and ninety-three." Approved June 25, 
 approved June 26, 1895, (P. L. 343), as reads as follows: 
 1895. (P. L. 280.) 
 
 So much of Section 2 of an Act entitled "An Act relative 
 to bonds, undertakings, recognizances, guarantees and other 
 obligations required or permitted to be made, given, tendered 
 or filed with surety or sureties, and to the acceptance as surety 
 or guarantor thereupon of companies qualified to act as such," 
 approved June 26, 1895 (P. L. 343), as reads as follows: 
 "And if such company is incorporated under the laws of any 
 other State or country than this State, it shall, in 
 
22 
 
 thereto, file a power of attorney appointing- some resident of 
 this State upon whom service process may be made as required 
 by existing- laws." 
 
 An Act entitled "An Act to extend for a further period of 
 five years the time during- which corporations incorporated 
 and existing under the laws of any other State of the United 
 States are now authorized by law to hold real estate heretofore 
 purchased at sheriff's or other judicial sales." Approved June 
 8, 1897. (P. L. 136.) 
 
 So much of Section 3 of an Act entitled "An Act regulating 
 foreign mutual savings fund or building and loan associations 
 doing business within this Commonwealth, and prescribing an 
 annual license fee to be paid by such associations," approved 
 May 11, 1901, (P. L. 153), as relates to the service of process 
 and the designation of an agent and service upon the Com- 
 missioner of Banking. 
 
 An Act entitled "An Act validating the title to real estate, 
 taken and held by corporations of other States, without first 
 having established known places of business and designated 
 authorized agents for the transaction of their business w r ithin 
 this Commonwealth." Approved April 25, 1907. (P. L. 105.) 
 
 An Act entitled "An Act validating contracts, bonds, or obli- 
 gations made by corporations of other States, without first 
 having established known places of business and designated 
 authorized agents for the transaction of their business within 
 this Commonwealth, and providing for the enforcement of the 
 same." Approved May 23, 1907. (P. L. 205.) 
 
 An Act entitled "An Act relating to the service of legal 
 process upon foreign insurance companies." Approved April 22, 
 1909. (P. L. 120.) 
 
 An Act entitled "An Act to enable foreign insurance corpo- 
 rations and joint stock companies to hold real estate in this 
 Commonwealth." Approved June 1, 1881. (P. L. 38.) 
 
 An Act entitled "An Act authorizing companies, incorporated 
 under the laws of any other State of the United States for 
 the manufacture of any form of iron, steel or glass, to erect 
 and maintain buildings and manufacturing establishments, and 
 to take, have and hold real estate necessary and proper for 
 manufacturing purposes." Approved June 9, 1881. (P. L. 89.) 
 
 An Act entitled "A Supplement to an Act, entitled 'An Act 
 authorizing companies, incorporated under the laws of any other 
 State of the United States, for the manufacture of any form of 
 iron, steel or glass, to erect and maintain buildings and man- 
 
23 
 
 ufacturing establishments, and to take, have and hold real 
 estate necessary and proper for manufacturing purposes,' ap- 
 proved the ninth day of June, one thousand eight hundred and 
 eighty-one, authorizing companies, incorporated under the laws 
 of any other State of the United States, for the conversion, 
 dyeing and cleansing of cotton, and other fabrics, to erect and 
 maintain buildings for such manufacturing purposes, and for 
 offices and salesrooms, or either, and to take, have and hold 
 real estate necessary and proper for such purposes." Approved 
 June 25, 1885. (P. L. 179.) 
 
 An Act entitled "A Supplement to an Act, entitled 'A sup- 
 plement to an Act authorizing companies, incorporated under 
 the laws of any other State of the United States, for the manu- 
 facture of any form of iron, steel or glass, to erect and main- 
 tain buildings and manufacturing establishments, and to take 
 have and hold real estate necessary and proper for manufactur- 
 ing purposes, approved the ninth day of June, one thousand 
 eight hundred and eighty-one, authorizing companies, incorpo- 
 rated under the laws of any other State of the United States, 
 for the conversion, dyeing and cleansing of cotton, and other 
 fabrics, to erect and maintain buildings for such manufacturing 
 purposes, and for offices and salesrooms, or either, and to take, 
 have and hold real estate necessary and proper for such pur- 
 poses,' approved twenty-fifth day of June, Anno Domini one 
 thousand eight hundred and eighty-five, conferring similar 
 powers upon companies, incorporated under the laws of any 
 other State of the United States for the manufacture of lumber 
 and wood products, and pyroligneous acids, acetate of lime and 
 charcoal, by the process of destructive distillation, or the prepa- 
 ration of cattle hair for use." Approved April 28, 1887. (P. L. 
 77.) 
 
 An Act entitled "An Act authorizing companies incorporated 
 under the laws of any other State of the United States for 
 the establishment, maintenance and continuance of a ferry or 
 for the maintenance and continuance of a bridge, between this 
 State and any other State, upon or over any river flowing 
 between said States, to erect and maintain piers and certain 
 other buildings and structures, to hold real estate in this State 
 and to mortgage, lease or convey the same." Approved June 
 6, 1887. (P. L. 352.) 
 
 An Act entitled "An Act authorizing companies incorporated 
 under the laws of any other State of the United States, for the 
 transportation of passengers and freight by steamboats or other 
 vessels, on rivers or other waters between this State and any 
 
24 
 
 other State, to hold real estate in this State, and to lease, 
 mortgage and convey the same." Approved the 17th day of 
 April, A. D. 1889. (P. L. 35.) 
 
 An Act entitled "A Supplement to an Act, entitled, 'A supple- 
 ment to an Act authorizing companies incoporated under the 
 laws of any other State of the United States for the manufac- 
 ture of any form of iron, steel or glass, to erect and maintain 
 buildings and manufacturing establishments, and to take, have 
 and hold real estate necessary and proper for manufacturing 
 purposes, approved the ninth day of June, one thousand eight 
 hundred and eight3 r -one, authorizing companies incorporated un- 
 der the laws of any other State of the United States, for the 
 conversion, dyeing and cleansing of cotton and other fabrics, 
 to erect and maintain buildings for such manufacturing purposes, 
 and for offices and salesrooms or either, and to take, have and 
 hold real estate necessary and proper for such purposes, ap- 
 proved the twenty-fifth day of June, A. D. one thousand and 
 eight hundred and eighty-five, conferring similar powers upon 
 companies incorporated under the laws of any other State of 
 the United States for the manufacture of lumber and wood pro- 
 ducts and pyroligneous acids, acetate of lime and charcoal, by the 
 process of destructive distillation or the preparation of cattle 
 hair for use,' approved the twenty-eighth day of April, one 
 thousand eight hundred and eighty-seven, conferring similar 
 power upon companies incorporated under the laws of any other 
 State of the United States, for the manufacture of carbon 
 dioxide and magnesia and the products thereof, and compo- 
 sitions, articles and apparatus from and in connection therewith, 
 and for the manufacture of cotton, velvet, and other fabrics, 
 and for the manufacture of extracts out of wood, bark, leaves 
 and roots, or any other extracts for tanning, cleansing, dyeing 
 or other purposes." Approved the 30th day of April, A. D. 1891. 
 (P. L. 39.) 
 
 An Act entitled "A Supplement to a supplement to an Act, en- 
 titled, 'A supplement to an Act authorizing companies incorpor- 
 ated under the laws of any other State of the United States for the 
 manufacture of any form of iron, steel or glass, to erect and 
 maintain buildings and manufacturing- establishments, to take, 
 have and hold real estate necessary and proper for manufacture 
 purposes,' approved the ninth day of June, one thousand eight 
 hundred and eighty-one, authorizing companies incorporated un- 
 der the laws of any other State of the United States for the con- 
 version, dyeing and cleansing of cotton and other fabrics to 
 erect and maintain buildings for such manufacturing purposes, 
 
25 
 
 and for offices and salesrooms, or either, and to take, have and 
 hold real estate necessary and proper for such purposes, approved 
 the twenty-fifth day of June, Anno Domini one thousand eight 
 hundred and eighty-five, conferring similar powers upon com- 
 panies incorporated under the laws of any other State of the 
 United States for the manufacture of lumber and wood prod- 
 ucts and pyroligneous acids, acetate of lime and charcoal by 
 the process of destructive distillation, or the preparation of 
 cattle hair for use, approved the twenty-eighth day of April, 
 one thousand eight hundred and eighty-seven, conferring simi- 
 lar power upon companies incorporated under the laws of any 
 other State of the United States for the manufacture of carbon 
 dioxide and magnesia and the products thereof, and composi- 
 tions, articles and apparatus from and in connection therewith, 
 and for the manufacture of cotton, velvet and other fabrics, and 
 for the manufacture of extracts out of wood, bark, leaves and 
 roots, or any other extracts for tanning, cleansing, dyeing or 
 other purposes,' approved the thirtieth day of April, Anno 
 Domini one thousand eight hundred and ninety-one, conferring 
 similar powers upon companies incorporated under the laws of 
 any other State of the United States for the manufacture or 
 printing of wall paper, lithographs or prints, and for mining 
 and manufacture of clay into brick tile and various other ar- 
 ticles and products produced from clay, and from clay and other 
 substances mixed therewith." Approved the 8th day of June, 
 A. D. 1893. (P. L. 389.) 
 
 An Act entitled, "An Act to amend an Act, entitled, 'An Act 
 authorizing companies incorporated under the laws of any other 
 State of the United States for the manufacture of any form of 
 iron, steel or glass to erect and maintain buildings and manu- 
 facturing establishments and to take, have and hold real estate 
 necessary and proper for manufacturing purposes,' approved the 
 ninth day of June Anno Domini one thousand eight hundred and 
 eighty-one, extending the same to companies formed for the pur- 
 pose of quarrying slate, granite, stone or rocks or for dressing, 
 polishing, working, or manufacturing the same, or any of them, 
 and to mineral springs companies incorporated for the purpose 
 of bottling and selling natural mineral springs water." Ap- 
 proved the 16th day of June, A. D. 1893. (P. L. 466.) 
 
 An Act entitled, "An Act to enable foreign corporations engag- 
 ed in this State in the publication and sale of books, tracts, 
 newspapers, etc., the net profits of which are by its charter or 
 governing body required to be applied to religious and charitable 
 uses, to hold real estate in this Commonwealth." Approved the 
 24th day of June, A. D. 1895. (P. L. 238.) 
 
26 
 
 An Act entitled, "An Act To amend an Act, entitled 'An Act 
 to amend an Act, entitled, "An Act authorizing companies in- 
 corporated under the laws of any other State of the United 
 States for the manufacture of any form of iron, steel or glass, 
 to erect and maintain ouildings and manufacturing 1 establish- 
 ments, and to- take, have and hold real estate necessary and 
 proper for manufacturing purposes," approved the ninth day of 
 June, Anno Domini one thousand eight hundred and eighty- 
 one, extending the same to companies formed for the purpose of 
 quarrying slate, granite, stone, or rocks, or for dressing, polish- 
 ing, working, or manufacturing the same, or any of them, and 
 to mineral springs companies incorporated for the purpose of 
 bottling and selling natural mineral springs water,' approved the 
 sixteenth day of June, Anno Domini one thousand eight hundred 
 and ninety-three." Approved the 19th day of April, A. D. 1901. 
 (P. L. 86.) 
 
 An Act entitled "An Act to amend an Act, entitled 'An Act to 
 amend an Act, entitled "An Act to amend an Act, entitled, 'An 
 Act authorizing companies incorporated under the laws of 
 any other State of the United States for the manufacture of 
 any form of iron, steel, or glass to erect and maintain buildings 
 and manufacturing establishments, and to take, have, and hold 
 real estate necessary and proper for manufacturing purposes,' 
 approved the ninth day of June. Anno Domini one thousand 
 eight hundred and eighty-one, extending the same to companies 
 formed for the purpose of quarrying slate, granite, stone, or 
 rocks, or for dressing, polishing, working, or manufacturing the 
 same, or any of them and to mineral springs companies in- 
 corporated for the purpose of bottling and selling natural min- 
 eral springs water," approved the sixteenth day of June, Anno 
 Domini one thousand eight hundred and ninety-three,' approved 
 the nineteenth day of April, Anno Domini one thousand nine 
 hundred and one; extending the same to companies formed for 
 the purpose of manufacturing and selling chemicals, foodstuffs, 
 cement and cement products, and the quarrying of cement rock.'' 
 Approved the 28th day of May, A. D. 1907. (P. L. 266.) 
 
 An Act entitled, "An Act to rmend an Act, entitled 'An Act 
 to amend an Act, entitled "An Act to amend an Act, entitled 'An 
 Act authorizing companies incorporated under the laws of any 
 other State of the United States for the manufacture of any 
 form of iron, steel, or glass, to erect and maintain buildings and 
 manufacturing establishments, and to take, have and hold real 
 estate necessary and proper for manufacturing purposes,' ap- 
 proved the ninth day of June, Anno Domini one thousand eight 
 
27 
 
 hundred and eighty-one, extending the same to companies form- 
 ed for the purpose of quarrying slate, granite, stone, or rocks, 
 or for dressing, polishing, working, or manufacturing the same, 
 or any of them, and to mineral springs companies incorporated 
 for the purpose of bottling and selling natural mineral springs 
 water, approved the sixteenth day of June, Anno Domini one 
 thousand eight hundred and ninety-three," extending the same 
 to companies incorporated for the purpose of manufacturing, 
 supplying and sale of ice, approved the nineteenth day of 
 April, Anno Domini one thousand nine hundred and one.' by 
 extending the same to companies incorporated for the manu- 
 facture of paper, wood-pulp, or chemical fibre." Approved the 
 27th day of April, A. D. 1909. (P. L. 173.) 
 
 NOTES. 
 
 (1). This is taken from the first section of the Act of April 
 22nd, 1874, P. L. 108, but dropping the plural of the words 
 "office" and "agent." The constitutional provision Article 16, 
 Section 5 is "no foreign corporation shall do any business in this 
 State without having one or more known places of business, and 
 an authorized agent or agents in the same upon whom process 
 may be served." The object of the constitution being to provide 
 some one upon whom process may be served, one agent will do 
 as well as several, especially since, under the service of process 
 Act of July 9, 1901, P. L. 614, writs may be served outside of the 
 county where issued. The decisions of Wall Paper Company's 
 Appeal, 15 Superior Ct. 407, and Phoenix Silk Manufacturing Co. 
 vs. Eeilly, 187 Pa. 526, holding that there must be an agent in 
 each office where business is transacted the failure to do so 
 making void contracts entered into at an office where there is 
 no such agent while required by the wording of the former 
 Act impose unnecessary acts on the corporation. The registered 
 agent is for service of process and not transaction of business. 
 As provided in the second section, more than one agent may 
 be designated, but not more than one agent and one office need 
 be. 
 
 (2). The requirement that the charter of the foreign cor- 
 poration showing the extent of its powers shall be recorded at 
 some central place where those doing business with it in the State 
 may have access to it in order to determine the extent of its 
 powers, assimilates the foreign to domestic corporations. The 
 following States have such a reqt. -rement : Alabama, Alaska, 
 Arizona, Arkansas, California, Colorado, Connecticut, Delaware, 
 Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maryland, Massa- 
 chusetts, Michigan, Minnesota, Mis:issippi, Missouri, Montana, 
 Nebraska, Nevada, New Jersey, New Mexico, New York, North 
 Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Caro- 
 lina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, 
 Washington, West Virginia, Wisconsin, Wyoming. (42.) 
 
28 
 
 Alaska, Arizona, Arkansas, California, Delaware, Idaho, Mon- 
 tana, Nevada, New Mexico, Utah, Virginia, West Virginia, Wy- 
 oming- (13) also require the charter to be recorded at the 
 principal place of business. This assimilates the foreign still 
 more to domestic corporations, and is convenient. 
 
 (3). This is stated in general language so as to cover special 
 cases, especially corporations irom foreign countries. 
 
 (4). This is laken from Section 2 of the Act of 1874. The 
 corporation is required, however, to state only its principal 
 office, for the reasons heretofore given. The agents may be more 
 than one, so that the contingencies of death, removal, etc., may 
 be provided against if the corporation desires. 
 
 The requirement that the certificate be preserved for public 
 inspection in each office, contained in the Act of 1874, has been 
 stricken out. This was useless, as tLe object was service of 
 process and not transaction of business, and the decision was 
 that the certificate might be kept in the safe and need not be 
 displayed. McManus Contracting Co. vs. McFadden, 33 Superior 
 Court, 355. 
 
 (5). This is taken from Section 3 of the Act of 1874. 
 
 (6). Under the authority of Lasher vs. Stimsou, 145 Pa. 30, 
 the agent of a non-registered foreign corporation is personally 
 liable on the contracts made for it on the ground that he im- 
 pliedly warrants his authority, and can have no authority 
 where he is not officially registered as the agent. This has 
 been limited to cases where the othr party did not know he 
 was dealing with a foreign corporation. Stoner vs. Phillipi, 
 41 Superior Court, 118. The distinction is difficult to draw 
 from the reasoning given for the decision in Lasher vs. Stim- 
 son, and as the corporation cannot set up its own failure to 
 register to avoid its contracts, Swan vs. Insurance Co., 96 Pa. 
 37, the principal is really liable. The real difficulty is to have 
 service of process on the principal. Where service can be ob- 
 tained, however, the other party obtains an opportunity to sue 
 the very person with whom he contracted, and a rule making 
 the agent personally liable is a harsh one, giving the other 
 party more than he bargained for. It is, however, the statu- 
 tory rule in Utah ; and in Idaho and Virginia the officers are 
 liable with the agents on contracts made before registration. 
 
 But this liability should be preserved as to foreign insurance 
 companies. The public does not deal with them on the same 
 footing- of equality, and the agent should be personally liable 
 if he assumes to deal on behalf of an irresponsible foreign 
 company, which has not provided for our citizens the security 
 required by our law. 
 
 (7). This language will cover failure to register with the 
 Auditor General and to pay bonus, to make annual reports and 
 to pay taxes as well as failure to register under the present 
 Act. 
 
 (8). As the law aims at the doing of business within the 
 State, both the making and the performing of contracts with- 
 out being registered should be "doing business" and this word- 
 ing makes it clear that both are included. 
 
 The law previously was that such contracts were void. This 
 
29 
 
 was not because of any express provisions in the Statute of 
 1874, although such provisions occur in other States, to-wit : 
 Alabama, Arizona, Arkansas, Florida, Michigan, Minnesota (if 
 suit removed to Federal Court), Mississippi, North Dakota, 
 Oklahoma, South Dakota and Wisconsin. (11.) It was the re- 
 sult of judicial construction of the effect of making the viola- 
 tion of the statute a misdemeanor. Delaware Kiver Quarry, 
 etc. Co. vs. Bethlehem & Nazareth Pass. Ky. Co., 204 Pa. 22; 
 Pittsburgh Con. Co. vs. West Side Belt It. R. Co., 154 Fed. Eep. 929. 
 
 The same conclusion has been reached in other States. 
 Boulden vs. Organ Co. 92 Ala. 182 ; American Ins. Co. vs. Stoy, 41 
 Mich. 385 ; Gary-Lombard Lumber Co. vs. Thomas, 92 Tenn. 587. 
 
 On the other hand certain States, (Connecticut, Maine, Mary- 
 land and Massachusetts), expressly provide that the contract 
 shall not be void ; and other States, including so radical a State 
 as Kansas, follow the doctrine that the penalty imposed by the 
 statute is the only penalty for failure to register, and the courts 
 will not add a further one. 
 
 (9.) The denial of the right of an unregistered foreign cor- 
 poration to redress in the State Courts is very common. The 
 following States deny it in actions founded on contract: Ar- 
 kansas, California, Idaho, Illinois, Indiana, Kansas, Maine, Mary- 
 land, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, 
 Montana, Nevada, New Jersey, New Mexico, New York, North 
 Carolina, Ohio, Oklahoma, Oregon. Ilhode Island, South Dakota, 
 Tennessee, Texas and Vermont. (27.) 
 
 And the following in actions of tort : Arkansas, California, 
 Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, 
 Minnesota, Missouri, Nevada, New Jersey, North Carolina, Okla- 
 homa, Oregon, South Dakota, Tennessee and Texas. (18.) Some 
 States, (among others Hawaii, Iowa and Utah), deny to such 
 corporations the benefit of the laws, which would seem to deny 
 access to the State Courts, although it has been decided to the 
 contrary, Booth vs. Weigand, 30 Utah, 135. In New York, Okla- 
 homa and Texas, among other States, the statute requires that 
 the corporation be registered at the time the contract is made 
 and a subsequent registration will not cure the defect. The 
 law was formerly to the contrary. Neuchatel Asphalte Co. vs. 
 N. Y., 155 N. Y. 373. The weakness of this provision is that 
 it does not prevent a suit in the Federal Courts having jurisdic- 
 tion in the State, Blodgett vs. Lanyon Zinc Co., 120 Fed. 893. 
 Or in the Courts of another State, Allegheny Co. vs. Allen, 69 
 N. J. L. 270; 196 U. S. 458. If the contract is void where made, 
 however, no suit may be brought on it in another State, Alle- 
 gheny Co. vs. Allen, supra. The effective provision is that given 
 here, to declare the contract void so that it may not be enforced 
 anywhere and to forbid access to our Courts for all causes of 
 action. 
 
 (10). The object of all these provisions, however, is to force 
 the foreign corporation to comply with our laws, both for pur- 
 poses of taxation and to bring it within reach of the process of 
 our Courts. Provisions such as have just been reviewed, of 
 course, operate very powerfully to both ends. But if the foreign 
 corporation had not complied at the time it made a contract, and 
 there is no way of curing the lapse, there is no incentive to the 
 
30 
 
 corporation to pay its taxes, and the result is not to benefit 
 the State but to benefit the other party to the contract. He 
 may take the fruits of it and not pay anything-, and this results 
 often in a very unjust enrichment of him, who may himself be 
 an unregistered foreign corporation. How unjust this is will be 
 seen by the cases cited above. In the Delaware River Quarry 
 case a recovery of nearly $30,000 for work done by a construction 
 company was refused, and in the West Side Belt Railroad Com- 
 pany case a recovery of over $325,000 was denied upon a claim 
 so far meritorious that it was based on an award of the Railroad 
 Company's engineer acting- as arbitrator. By the provisions of 
 this proposed Act the failure of the foreign corporation to pro- 
 vide an agent for the service of process is met by appointing the 
 Secretary of the Commonwealth such agent. The best way to 
 compel the payment of tax would be to impose severe penalties 
 for failure to do so, but permit relief upon full compliance with 
 our laws. This is the policy of the Stamp Acts enacted by Con- 
 gress. Documents coming within their provisions which were not 
 stamped when executed might be stamped on paying a small pen- 
 alty. This is also the policy of the Pennsylvania Act of May 23, 
 1907, P. L. 205, which validated contracts entered into by unreg- 
 istered foreign corporations upon registering and paying tax 
 before suit was brought. By its provisions, however, it was 
 retroactive only. The policy it indicates should be made per- 
 manent. 
 
 Your Committee feels that a change of the law in this regard 
 is especially important, and submits herewith a draft of a 
 separate Act (see page 36) to accomplish it, which should be 
 enacted if for any reason the general foreign corporation law 
 under discussion should not be approved. 
 
 (11). The necessity of this provision is evidenced by such 
 cases as St. Clair vs. Cox, 106 U. S. 350; Goldey vs. Morning 
 News, 156 U. S. 518 ; Mutual Life Insurance Co. vs. Spratley, 
 172 U. S. 602 ; Conley vs. Mathieson Alkali Works, 190 U. S. 406 ; 
 holding that it is necessary to jurisdiction over a foreign corpora- 
 tion that it shall be doing business in the State at the time 
 suit is brought. But the corporation may be sued with its assent 
 though it is not doing business, and the validity of such a pro- 
 vision as in this proposed Act to secure such assent is deter- 
 mined by such cases as Hill vs. Empire State Etc., Company, 156 
 Fed. Rep. 797 ; Home Ben. Soc. vs. Muehl, 109 Ky. 479 ; Germania 
 Ins. Co. vs. Ashby, 112 Ky. 303; Groel vs. United EL Co. 69 N. 
 J. Eq. 397; Mutual Reserve etc., Assn. vs. Phelps, 190 U. S. 147. 
 It is practically the law at the present time with regard to in- 
 surance companies. Act of April 4, 1873, P. L. 27. 
 
 (12). The Act ol 1874 contains no provision for a substitution 
 of an agent in case the one appointed be, for any reason, dis- 
 qualified. The service of process Act of April 3, 1903, P. L. 139, 
 Eermits service of process by leaving at the place of business 
 f the agent is not there during business hours. It has been 
 decided that if the registered agent leaves the employ of the 
 corporation as its commercial agent, and is not found at the 
 place of business, the corporation nevertheless maintains him 
 as its registered agent and complies with the law so long as his 
 
31 
 
 authority as registered agent is not revoked. De La Vergne 
 Refrigerator Co. vs. Kolischer, 214 Pa. 400. But the agent may 
 die, or he may want to sue himself, and if no provision for com- 
 pulsory substitution is made the object of the law will be de- 
 feated. 
 
 (13). So, also, if the corporation shall cease to maintain the 
 office designated process cannot be served by leaving, or should 
 not properly be so served. 
 
 (14). Equally important is a provision by which corporations 
 which never comply with our laws and yet do business with us 
 may be subjected to the process of our Courts. 
 
 (15). Accordingly it is provided automatically in such cases 
 that a public official shall be the agent. A similar provision is 
 found in a great many of the States. 
 
 In some the Secretary of State is designated as agent for 
 service of process if the designated agent die or remove only: 
 Alabama, Arkansas, Idaho, Michigan, New Jersey, New Mexico, 
 Ohio, Oklahoma, Oregon, Vermont, Washington. (11.) 
 
 In others the Secretary of State is the agent, but the party 
 may serve any other agent at his option. This is the present 
 law of Pennsylvania with regard to insurance companies. Act 
 of April 4, 1873, Sec. 13 P. L. 27. So in Arkansas, Kansas, Maine 
 Massachusetts, Nebraska, Pennsylvania (ins.) and West Vir- 
 ginia. (7.) 
 
 In others the Secretary of State is the only agent for service 
 of process on foreign corporations and no other agent may be 
 served: Connecticut, Delaware, District of Columbia (fraternal 
 ins.) Kentucky (ins.) Minnesota (ins.) North Dakota and Wis- 
 consin. (7.) 
 
 In others the Secretary of State is the agent if no appointment 
 be made by the corporation : Arkansas, California, Idaho, 
 Louisiana, Nevada, North Carolina, Oklahoma, Oregon and 
 Washington. (9.) 
 
 It seems wise to permit the corporation to designate its own 
 agent so that notice may be more surely brought to it, but it is 
 best to provide very fully for cases in which the corporation 
 fails to comply with our law or to maintain its compliance. 
 
 The validity of the provision is attested by the case of Old 
 Wayne Mutual Life Association vs. McDonough, 204 U. S. 8. 
 
 This sentence should be read in connection with Section 5 
 and would only authorize such service in suits growing out of 
 business done within the State. Such service in other suits 
 would be invalid, as the McDonough case decides. The statute 
 usually requires the corporation to file a power of attorney 
 designating the State officer as its agent. Of that character 
 is the Pennsylvania law as to insurance. It has been decided 
 that on failure to file the power of attorney the State officer 
 nevertheless becomes agent for service of process. McCullagh 
 vs. Eailway Mail Assn. 33 Pa. C. C. 529; Diamond Plate Glass 
 Co. vs. Minn. M. F. I. Co., 55 Fed. 27; Ehrman vs. Ins. Co., 1 
 Fed. 471 ; Berry vs. Indemnity Co. 46 Fed. 439 ; Knapp vs. Natl. 
 M. F. I. Co. 30 Fed. 607 ; Lathrop Co. vs. Interior Etc. Co., 150 Fed. 
 666. It seems simpler to make the designation of agent au- 
 tomatic. 
 
32 
 
 It will be convenient at times to serve the Deputy, which 
 must, however, be specially authorized. Reynolds vs. Hepf asophs, 
 9 Dist. Kep. 622; McCann vs. Old Wayne Etc. Co. 10 J)ist. 
 Eep. 560. 
 
 (16). The necessity of designating some known person as 
 agent is that there may be somebody within the Sate upon whom 
 the process of the Courts can be served. Such process does not 
 run beyond the borders of the State, and the Courts have no 
 jurisdiction upon such service. While this satisfies the technical 
 requirement of the law, it is really a fiction, and justice is 
 better served by actual notice outside of the State than by con- 
 structive notice in it. Therefore, to do justice and bring actual 
 notice to the corporation, service is required also to be made 
 outside of the State. The usual provision of the State Statutes 
 is that the Secretary of State or State Auditor or Clerk of 
 Court shall mail a copy of the process to the office of the cor- 
 poration. These States are Alabama, Arkansas, Connecticut, 
 Delaware, (ins.) Idaho, Kansas, Kentucky, (ins.) Maine, Massa- 
 chusetts, Michigan, Nebraska, New Jersey, New Mexico, North 
 Dakota, Oregon, West Virginia, and Wisconsin. (17.) 
 
 Michigan requires the plaintiff himself to give mail notice. 
 Other States require nothing to be done after serving the State 
 official. Mailing of notice, however, is not as accurate as actual 
 service, and most of the statutes fail to provide for a case in 
 which the location of the company's office is not known to the 
 State official, and a still more difficult case where the company 
 may have no office. It seems better to provide, as Maryland 
 does, that there shall be actual service, and that this may be 
 made as though the corporation was in the State, so that service 
 may be made on an officer of the company or at the company's 
 office as shall be most convenient. 
 
 (17). Sufficient time should be allowed after this actual notice 
 for the corporation to interpose a defense if it has any. The 
 object is not to catch the foreign corporation napping but to 
 bring it within the jurisdiction of our Courts. Michigan and 
 Mississippi require thirty days' notice, and Oregon forty days. 
 
 (18). If we permit foreign corporations freely to do business 
 in this State, we should permit laem to own the necessary real 
 estate and not drive them to subterfuges such as domestic hold- 
 ing companies and trusteeships. The Act of April 26, 1855, P. L. 
 329, forbade foreign corporations to hold real estate and pro- 
 vided for its escheat to the State. This disability, however, can 
 be taken advantage of by the State only, taking proceedings to 
 escheat; Leazure vs. Hillegas, 7 S. & R. 313, and in practice such 
 proceedings are not taken by the Commonwealth. The only 
 reported instance is Commonwealth vs. New York, Lake Erie and 
 Western R. R. Co., 132 Pa. 591, overruling the same case 114 Pa. 
 340, which failed. Exceptions have been created, until in 
 practice they are nearly as important as the principal law. 
 Foreign corporations may purchase at judicial sales to protect 
 liens, Act of May 23, 1887, P. L. 176. ttpecial classes of foreign 
 corporations have been permitted to hold real estate : Insurance 
 companies, Act of June 1, 1881, P. L. 38 ; river transportation 
 companies, Act of May 25, 1887, P. L. 35 ; ferry and bridge 
 
33 
 
 companies, Act of May 25, 1887, P. L. 269 ; corporations for manu- 
 facturing iron, steel, paper, wood-pulp, chemical fibre, glass, 
 lumber, wood, cotton, velvet or other fabrics, for the dyeing, 
 etc., of cotton and other fabrics, for the manufacture of cer- 
 tain chemicals, wood extracts, tanning extracts, for the manu- 
 facture of wall paper, etc., brick, etc., Act of April 27, 1909, P. L. 
 173, which is the final amendment of a long series oi Acts of 
 1881, 1885, 1887, 1891 and 1893, for the quarrying of slate, granite 
 and other rocks, the bottling of mineral spring water, the manu- 
 facture of ice, the manufacture of chemicals, foodstuffs and 
 cement, Act of May 28, 1907, P. L. 266, which was a final 
 amendment of a series of Acts enacted in 1881, 1893 and 1901 ; 
 religious publication societies, Act of June 24, 1895, P. L. 238. 
 
 The provisions of these Acts have all been collected in one 
 statute of which a draft is presented herewith. Owing to con- 
 fusion in the various enactments as explained in a note to that 
 draft it may be desirable to re-enact these statutes in case 
 the provision now suggested is not approved. 
 
 The Legislature has also, by the Act of June 24, 1895, P. L. 
 2G4, validated all conveyances made by such foreign corporations 
 before proceedings are begun by the State. This Act applies 
 to future as well as past cases, and therefore makes unnecessary 
 the very numerous retroactive validating Acts which have been 
 passed by the Legislatures of 1861, 1S69, 1876, 1878, 1881, 1887, 
 1891, 1897, 1903, 1907 and 1909. 
 
 The laws of the following States permit foreign corporations 
 complying with the laws to hold real estate : Arizona, Arkansas, 
 Connecticut, Hawaii, Idaho, Illinois, Indiana, Iowa, (qualified) 
 Massachusetts, Minnesota, Missouri, Nebraska, (railroad and 
 mfg. and in cities) Nevada, New Mexico, New Hampshire, (mfg.) 
 New Jersey, New York, North Carolina, North Dakota, Oklahoma, 
 Oregon, South Carolina, (less than 500 acres) South Dakota, 
 Tennessee, Texas, Virginia, (Mfg. lim.) Washington, West 
 Virginia, Wisconsin, (less than 320 acres). (30.) 
 
 Besides Pennsylvania only Nebraska makes prohibition the 
 rule and permission the exception, and there the exception is 
 a large one applying to railroad and all manufacturing corpora- 
 tions and the holding of real estate in towns. It is evidently 
 aimed at farm land companies. Georgia fixed a maximum of 
 5,000 acres. The Act of Congress in force in the District of 
 Columbia and in the former territories of New Mexico and Okla- 
 homa forbids the holding of real estate by corporations where 
 more than 20 per cent, of the stock is owned by aliens. This is 
 also a statutory provision in Wisconsin. 
 
 The limit fixed in this Act is that imposed upon domestic 
 corporations of the same kind. 
 
 (19). This is the present law: Leazure vs. Hillegas, 7 S. & R. 
 313. It seems wise to make the provision iii order that a con- 
 trary construction may not prevail. 
 
 (20). This continues the policy of the present Act of June 
 24th, 1895, P. L. 264, which, however, is not expressly repealed. 
 
 (21). If this is to be the policy of the State for the future, 
 it should also be for the past, and it is in line with the numer- 
 ous validating Acts alreadj r referred to. 
 
 3 
 
34 
 
 (22). The present rule is that the burden is on the foreign 
 corporation to show that it has complied with the law, and is 
 lawfully doing business in the Commonwealth, in all cases. As 
 such proof in most cases will be a formal matter, it tends to 
 expedition and the avoidance of technicality, that a special issue 
 should be made of failure to comply, and it is in harmony with 
 the Act of June 24, 1885, P. L. 149, requiring an issue as to tne 
 existence of a corporation to be specially tendered. 
 
 But the burden of proof should be on the person having the 
 affirmative of the issue. 
 
 (23). Under the rule of Madden vs. Electric Light Co., 181 
 Pa. 617, and 199 Pa. 454; McCloskey vs. Snowden, 212 Pa. 249, 
 the Courts of one State will not hear causes involving- the in- 
 ternal management of corporations of another State. This is 
 because it involves dealing with the laws of another State, be- 
 cause the decree would only take effect in this State and there 
 would exist the anomaly of one result in one State where the 
 corporation operated and another result in another State, and 
 also because the enforcement of the decree would be difficult. 
 This applies to corporate elections, the compelling transfer of 
 stock by mandamus, improper conduct of officers, and kindred 
 matters. But where a corporation is merely incorporated 
 abroad, and comes into this State to do its principal business, 
 so that its officers and stockholders and books are all here, 
 convenience and justice to our citizens would lead us to grant 
 relief in our courts, and not drive a citizen to what is but the 
 nominal home of the corporation which may be on the other 
 side of the Continent, 'me practical difficulties are not insuper- 
 able, and if in a particular case they become so, the Act, by its 
 express provisions, will not apply. 
 
 (24). Provisions are found in the statutes of many States to 
 keep, foreign corporations out of the Federal Courts. These 
 States are Alabama, Indiana, Kentucky, Louisiana, Oklahoma, 
 Oregon, South Carolina and Wisconsin. (8.) 
 
 A State statute cannot oust the Federal Court from jurisdiction 
 of a particular case nor can it make the exercise of this right 
 a penal offense. Insurance Co. vs. Morse, 20 Wallace 445. But 
 as the State may exclude foreign corporations at will, it may 
 exclude them for invalid reasons, and a statute revoking the 
 corporation's license to do business because it exercised its right 
 of removal is valid. Doyle vs. Continental Ins. Co., 94 U. S. 535; 
 Security Mutual Etc. Co. vs. Prewitt, 202 U. S. 246. Following 
 the policy of permitting bona fide foreign corporations full privi- 
 leges under our laws, but encouraging corporations that really 
 intend to do business here to incorporate under our laws rather 
 than the laws of other States, the restriction is only imposed 
 on the latter class of corporations. 
 
 (25). While other statutes do not require proceedings in 
 Court, it seems fairer to do this and notice and hearing is then 
 provided for. 
 
 (26). This definition so far as applies to the word "corpora- 
 tion" is in part taken from the Constitution of Pennsylvania, 
 Article 16, Section 13, with the addition of some words to refer 
 to particular classes of quasi corporations. 
 
35 
 
 Complaint was made to your Committee of the difficulty of 
 determining whom to sue in the case of certain foreign partner- 
 ships operating under a system of quasi incorporation unknown 
 to our laws. Certain express companies are of this character. 
 These, however, are such special cases that it is difficult to pro- 
 vide for them by any more general words than are here used. 
 
 (27). The retroactive feature of this Act may be valid under 
 the decision of St. Mary's Petroleum Co. vs. W. Va., 203 U. S. 
 183, in consequence of the reserved power of the State to alter 
 charters. Uniformity is so desirable that the attempt should be 
 made to apply this Act to all. 
 
 (28). This section is so worded that Acts applying to service 
 of process on foreign insurance companies, such as the Act of 
 April 4, 1873, P. L. 27, foreign mutual benefit societies and other 
 kindred special laws shall be superseded, and the same pro- 
 cedure applied to all foreign corporations. This is advisable 
 unless there is a reason for special procedure with regard to a 
 particular class of corporations, and this is not the case as to the 
 matters covered by this Act. 
 
 (29). The repealing clause is also made special. There have 
 been omitted, however, the various acts validating conveyances 
 of real estate made by foreign corporations which were forbidden 
 to hold real estate. While the subject matter of these Acts is 
 covered by the present Act, yet as they are muniments of title, 
 it will be less disturbing to have them remain on the statute 
 books. 
 
 (30). The subject of the domestication of foreign corporations 
 as covered by the Act of June 9, 1881, P. L. 89, has not been cov- 
 ered in this Act, because it is so intimately connected with what 
 should be required of domestic corporations that it seems inad- 
 visable to recast the law at all until the subject of domestic 
 corporations is covered. The object should be to make the for- 
 eign corporation comply with the same provisions as a domestic 
 corporation. 
 
 The policy of requiring foreign corporations to give bail on 
 appeal and security for costs has not been altered, as the pro- 
 tection of our citizens requires it. The same consideration 
 applies to foreign attachment, in addition to the tendency to 
 discourage thereby the practice of going abroad to incorporate. 
 
 Some States require an investigation of the financial standing 
 of foreign corporations by the officer receiving the registration 
 and the refusal of registry to those which are irresponsible 
 and suggestions were made to your Committee that it be adopt- 
 ed by Pennsylvania. This is impracticable in a State so laige 
 as ours. It might lead to abuses, and seems premature until 
 we so supervise o'.ir own corporations. For purposes of taxation 
 reports of considerable fi illness as to their assets, etc., are now 
 made. 
 
AN ACT VALIDATING UNDER CERTAIN CONDITIONS CONTRACTS MADE 
 BY FOREIGN CORPORATIONS WHICH SHALL HAVE DONE OR SHALL 
 DO ANY BUSINESS WITHIN THIS COMMONWEALTH WITHOUT FIRST 
 HAVING COMPLIED WITH THE LAWS RELATING TO FOREIGN COR- 
 PORATIONS. 
 
 SECT. 1. Be it enacted, etc., that whenever any foreign corpora- 
 tion shall have done or shall do any business within this Com- 
 monwealth, without first having complied with the laws of this 
 Commonwealth relating to foreign corporations, all contracts 
 entered into in the course of such doing 1 of business shall be 
 binding upon the parties thereto, and such corporation may en- 
 force the same in the Courts of this Commonwealth or any other 
 Court having jurisdiction: Provided, that prior to commencing 
 a suit upon such contract, the said corporation shall have 
 complied with the laws of this Commonwealth relating to foreign 
 corporations : and, Provided further, that prior to commencing 
 such suit accounts for bonus on capital stock and all State taxes 
 for each year that it shall have done business in this Common- 
 wealth shall have been settled against such corporation in the 
 manner required by law, and paid by it, together with such 
 interest and penalties thereon as shall be shown by such 
 accounts. 
 
 NOTE. 
 
 This Act makes permanent the policy of the State indi- 
 cated by the Act of May 23, 1907, P. L. 205. which was retro- 
 active only; and also the Act of May 11, 1901, P. L. 172. It ap- 
 plies to a failure to register with the Auditor General as well 
 as the Secretary of the Commonwealth, the principle applicable 
 being the same. The considerations in its favor are given in 
 connection with a similar section in the general foreign corpora- 
 tion law recommended by your Committee (Section 4). The 
 passage of this Act, in addition to the general Act, is necessary 
 in order to provide for cases arising under the laws now in 
 existence. 
 
 AN ACT AUTHORIZING FOREIGN CORPORATIONS, THAT IS TO SAY, COR- 
 PORATIONS, JOINT STOCK COMPANIES. PARTNERSHIPS LIMITED, 
 PARTNERSHIP ASSOCIATIONS AND ALL ASSOCIATIONS HAVING ANY 
 OF THE POWERS OR PRIVILEGES OF CORPORATIONS NOT POSSESSED 
 BY INDIVIDUALS OR PARTNERSHIPS, ORGANIZED UNDER ANY LAWS 
 OTHER THAN THOSE OF THIS COMMONWEALTH. FOR CERTAIN 
 
37 
 
 PURPOSES, TO OWN REAL, ESTATE IN THIS COMMONWEALTH NECES- 
 SARY FOR THEIR CORPORATE PURPOSES UNDER CERTAIN CONDITIONS, 
 AND VALIDATING SUCH OWNERSHIP NOW OR HERETOFORE EXISTING. 
 
 SECT. 1. Be it enacted, etc., that it shall be lawful for any 
 foreign corporation organized for any one of the purposes set 
 forth in Section 2 of this Act, upon complying with all the laws 
 of this Commonwealth, to take, have and hold real estate in this 
 Commonwealth to an amount necessary and proper for corporate 
 purposes, and to erect and maintain buildings thereon, and to 
 mortgage, lease or convey the same or any part thereof and 
 otherwise deal with the same as fully as any corporation organiz- 
 ed under the general laws of this Commonwealth for the same 
 purpose, but not to any greater amount or of any greater income 
 or value. 
 
 SECT. 2. The purposes referred to in Section* 1 of this Act 
 are as follows: carrying on the business of insurance (1), for 
 the manufacture of any form of iron, steel or glass (2), or for 
 the conversion, dyeing and cleansing of cotton and other fabrics 
 (3), for the manufacture of any form of lumber or wood or of 
 pyroligneous acids, acetate of lime and charcoal by the process 
 of destructive distillation, or the preparation of cattle hair for 
 for use (4), or for the establishment, maintenance and continu- 
 ance of a ferry, or for the maintenance and continuance of a 
 bridge between this State and any other State, upon or over any 
 river flowing between said States (5), or for the transportation 
 of passengers and freight by steamboats or other vessels, upon 
 or over any river or waters, between this State and any other 
 State (6), or for the manufacture of cotton or velvet, or other 
 fabrics, or for the manufacture of carbon dioxide and magnesia 
 and the products thereof and compositions, articles and ap- 
 paratus from and in connection therewith, or for the manu- 
 facture of extracts out of wood, bark, leaves and roots, or any 
 other extract for tanning, cleansing, dyeing, or other purposes 
 (7), or for the manufacture or printing of wall-paper, litho- 
 graphs or prints, and mining and manufacture of any clay into 
 brick, tile aud various other articles and products produced from 
 clay, and from clay and other substances mixed therewith (8), 
 or for the quarrying of slate, granite, stone or rocks of any 
 kind, or for dressing, polishing or manufacturing the same, or 
 any of them, or for any mineral spring* company incorporated 
 for the purpose of bottling and selling natural mineral spring 
 water (9), or for the publication and sale of books, tracts, news- 
 papers, periodicals and such other business as is commonly con- 
 nected with publishing and book selling, the net profits of 
 
38 
 
 which are by its charter or governing body required to be ap- 
 plied to religious and charitable uses (10), or for any company 
 incorporated for the purpose of manufacturing, supplying or 
 sale of ice (11), or for the manufacture of cement rock or for 
 the manufacture and sale of chemicals, or the manufacture and 
 sale of foodstuffs and eatables, cement and cement products, 
 and the quarrying of cement rock (12), or for the manufacture 
 of any form of paper, wood-pulp, chemical fibre (13). 
 
 SECT. 3. The said corporations shall be taxable in like man- 
 ner as other foreign corporations and shall make like returns 
 to the Auditor General, and the said real estate shall be taxable 
 as other real estate. 
 
 SECT. 4. The title to any real estate in this Commonwealth 
 now or heretofore or hereafter held by, or in trust for, any 
 such foreign corporation is, upon complying with all the laws 
 of this Commonwealth relating to foreign corporations hereby 
 confirmed to the same effect as if the said real estate had been 
 purchased, held or owned under the provisions of this Act. 
 
 SECT. 5. The term "foreign corporation" as used in this Act 
 means every corporation, joint stock company, partnership lim- 
 ited, partnership association, and every association having any 
 of the powers or privileges of corporations not possessed by 
 individuals or partnerships, organized under any laws other 
 than those of this Commonwealth. 
 
 SECT. 6. The following Acts be and the same are hereby re- 
 pealed, but no rights heretofore acquired thereunder shall be 
 affected by such repeal. 
 
 (1). An Act entitled "An Act To enable foreign insurance 
 corporations and joint stock companies to hold real estate in 
 this Commonwealth." Approved the 1st day of June, A. D. 1881. 
 (P. L. 38.) 
 
 (2). An Act entitled "An Act Authorizing companies, incor- 
 porated under the laws of any other State of the United States 
 for the manufacture of any form of iron, steel or glass, to erect 
 and maintain building and manufacturing establishments, and 
 to take, have and hold real estate necessary and proper for manu- 
 facturing purposes." Approved the 9th day of June, A. D. 1881. 
 (P. L. 89.) 
 
 (3). An Act entitled "A Supplement To an Act, entitled 'An 
 Act authorizing companies, incorporated under the laws of any 
 other State of the United States, for the manufacture of any 
 form of iron, steel or glass, to erect and maintain buildings 
 and manufacturing establishments, and to take, have and hold 
 
39 
 
 real estate necessary and proper for manufacturing- purposes,' 
 approved the ninth day of June, one thousand eight hundred and 
 eighty-one, authorizing companies, incorporated under the laws 
 of any other State of the United States, for the conversion, 
 dyeing and cleansing of cotton, and other fabrics, to erect and 
 maintain buildings for such manufacturing purposes, and for 
 offices and salesrooms, or either, and to take, have and hold real 
 estate necessary and proper for such purposes." Approved the 
 25th day of June, A. D. 1885. (P. L. 179.) 
 
 (4). An Act entitled "A Supplement To an Act, entitled 'A 
 supplement to an Act auuiorizing companies, incorporated under 
 the laws of any otlier State of the United States, for the manu- 
 facture of any form of iron, steel or glass, to erect and maintain 
 buildings and manufacturing establishments, and to take, have 
 and hold real estate necessary and proper for manufacturing 
 purposes,' approved the ninth day of June, one thousand eight 
 hundred and eighty-one, authorizing companies, incorporated 
 under the laws of any other State of the United States, for the 
 conversion, dyeing and cleansing of cotton, and other fabrics, 
 to erect and maintain buildings for such manufacturing pur- 
 poses, and for offices and salesrooms, or either, and to take, have 
 and hold real estate necessary and proper for such purposes,' 
 approved the twenty-fifth day of June, Anno Domini one thou- 
 sand eight hundred and eighty-five, conferring similar powers 
 upon companies, incorporated under the laws of any other State 
 of the United States for the manufacture of lumber and wood 
 products, and pyroligneous acids, acetate of lime and charcoal, 
 by the process of destructive distillation, or the preparation of 
 cattle hair for use." Approved the 28th day of April, A. D. 1887. 
 (P. L. 77.) 
 
 (5). An Act entitled "An Act authorizing companies incor- 
 porated under the laws of any other State of the United States 
 for the establishment, maintenance and continuance of a ferry 
 or for the maintenance and continuance of a bridge, between 
 this State and any other State, upon or over any river flowing 
 between said States, to erect and maintain piers and certain 
 other buildings and structures, to hold real estate in this State 
 and to mortgage, lease or convey the same." Approved the 6th 
 day of June, A. D. 1887. (P. L. 352.) 
 
 (6). An Act entitled "An Act authorizing companies incor- 
 porated under the laws of any other State of the United States, 
 for the transportation of passengers and freight by steamboats 
 or other vessels, on rivers or other waters between this State 
 and any other State, to hold real estate in this State, and to 
 
40 
 
 lease, mortgage and convey the same." Approved the 17th clay 
 of April, A. D. 1889. (P. L. 35.) 
 
 (7). An Act entitled "A Supplement to an Act, entitled 'A 
 supplement to an Act authorizing companies incorporated under 
 the laws of any other State of the United States for the manu- 
 facture of any form of iron, steel or glass, to erect and maintain 
 building's and manufacturing establishments, and to take, have 
 and hold real estate necessary and proper for manufacturing 
 purposes, approved the ninth day of June, one thousand eight 
 hundred and eighty-one, authorizing companies incorporated un- 
 der the laws of any other State of the United States, for the 
 conversion, dyeing and cleansing of cotton and other fabrics, 
 to erect and maintain buildings for such manufacturing pur- 
 poses, and for offices and salesrooms or either, and to take, have 
 and hold real estate necessary and proper for such purposes, 
 approved the twenty-fifth day of June, Anno Domini one thou- 
 sand eight hundred and eighty-five, conferring similar powers 
 upon companies incorporated under the laws of any other State 
 of the United States for the manufacture of lumber and wood 
 products and pyroligneous acids, acetate of lime and charcoal, 
 by the process of destructive distillation or the preparation of 
 cattle hair for use,' approved the twenty-eighth day of April, 
 one thousand eight hundred and eighty-seven, conferring similar 
 power upon companies incorporated under the laws of any other 
 State of the United States, for the manufacture of carbon dioxide 
 and magnesia and the products thereof, and compositions, ar- 
 ticles and apparatus from and in connection therewith, 
 and for the manufacture of cotton, velvet, and other fab- 
 rics, and for the manufacture of extracts out of wood, bark, 
 leaves and roots, or any other extracts for tanning, cleansing, 
 dyeing or other purposes." Approved the 30th day of April, A. 
 D. 1891. (P. L. 39.) 
 
 (8). An Act entitled, "A Supplement To a supplement to an 
 Act, entitled 'A supplement to an Act authorizing companies 
 incorporated under the laws of any other State of the United 
 States for the manufacture of any form of iron, steel or glass to 
 erect and maintain buildings and manufacturing establishments, 
 and to take, have and hold real estate necessary and proper for 
 manufacture purposes,' approved the ninth day of June, one 
 thousand eight hundred and eighty-one, authorizing companies 
 incorporated under the laws of any other State of the United 
 States for the conversion, dyeing and cleansing of cotton and 
 other fabrics to erect and maintain buildings for such manu- 
 facturing purposes, and for offices and salesrooms, or either, and 
 
41 
 
 to take, have and hold real estate necessary and proper for such 
 purposes, approved the twenty-fifth day of June, Anno Domini 
 one thousand eight hundred and eighty-five, conferring similar 
 powers upon companies incorporated under the laws of any other 
 State of the United States for the manufacture of lumber and 
 wood products and pyroligneous acids, acetate of lime and 
 charcoal by the process of destructive distillation, or the prepara- 
 tion of cattle hair for use, approved the twenty-eighth day of 
 April, one thousand eight hundred and eighty-seven, conferring 
 similar power upon companies incorporated under the laws of 
 any other State of the United States for the manufacture of 
 carbon dioxide and magnesia and the products thereof, and com- 
 positions, articles and apparatus from and in connection there- 
 with, and for the manufacture of cotton velvet and other fabrics, 
 and for the manufacture of extracts out of wood, bark, leaves 
 and roots, or any other extracts for tanning, cleansing, dyeing or 
 other purposes,' approved the thirtieth day of April, Anno Domini 
 one thousand eight hundred and ninety-one, conferring similar 
 powers upon companies incorporated under the laws of any other 
 State of the United States for the manufacture or printing of 
 wall paper, lithographs or prints, and for mining and manufac- 
 ture of clay into brick tile and various other articles and 
 products produced from clay, and from clay and other substances 
 mixed therewith." Approved the 8th day of June, A. D. 1893. 
 (P. L. 389.) 
 
 (9). An Act entitled "An Act to amend an Act, entitled 'An 
 Act authorizing companies incorporated under the laws of any 
 other State of the United States for the manufacture of any 
 form of iron, steel or glass to erect and maintain buildings 
 and manufacturing establishments, and to take, have and hold 
 real estate necessary and proper for manufacturing purposes,' 
 approved the ninth day of June, Anno Domini one thousand 
 eight hundred and eighty-one, extending the same to companies 
 formed for the purpose of quarrying slate, granite, stone or 
 rocks or for dressing, polishing, working or manufacturing the 
 same, or any of them, and to mineral springs companies incor- 
 porated for the purpose of bottling and selling natural mineral 
 springs water." Approved the 16th day of June, A. D. 1893. 
 (P. L. 466.) 
 
 (10). An Act entitled "An Act to enable foreign corporations 
 engaged in this State in the publication and sale of books, 
 tracts, newspapers, et cetera, the net profits of which are by 
 its charter or governing body required to be applied to religious 
 and charitable uses, to hold real estate in this Commonwealth." 
 Approved the 24th day of June, A. D. 1895. (P. L. 238.) 
 
 4 
 
42 
 
 (11). An Act entitled "An Act to amend an act, entitled 'An 
 Act to amend an Act entitled "An Act authorizing- companies 
 incorporated under the laws of any other State of the United 
 States for the manufacture of any form of iron, steel or glass, 
 to erect and maintain buildings and manufacturing establish- 
 ments, and to take, have and hold real estate necessary and 
 proper for manufacturing purposes," approved the ninth day of 
 June, Anno Domini one thousand eight hundred and eighty-one, 
 extending the same to companies formed for the purpose of 
 quarrying slate, granite, stone, or rocks, or for dressing, pol- 
 ishing, working, or manufacturing the same, or any of them, 
 and to mineral springs companies incorporated for the purpose 
 of bottling and selling natural mineral springs water,' approved 
 the sixteenth day of June, Anno Domini one thousand eight 
 hundred and ninety-three." Approved the 19th day of April, 
 A. D. 1901. (P. L. 86.) 
 
 (12). An Act entitled "An Act to amend an Act, entitled 'An 
 Act to amend an Act, entitled "An Act to amend an Act, entitled 
 'An Act authorizing companies incorporated under the laws of 
 any other State of the United States for the manufacture of 
 any form or iron, steel, or glass to erect and maintain buildings 
 and manufacturing establishments, and to take, have, and hold 
 real estate necessary and proper for manufacturing purposes,' 
 approved the ninth day of June, Anno Domini one thousand 
 eight hundred and eighty-one, extending the same to companies 
 formed for the purpose of quarrying slate, granite, stone, or 
 rocks, or for dressing, polishing, working, or manufacturing the 
 same, or any. of them, and to mineral springs companies incor- 
 porated for the purpose of bottling and selling natural min- 
 eral springs water," approved the sixteenth day of June, Anno 
 Domini one thousand eight hundred and ninety-three,' approved 
 the nineteenth day of April, Anno Domini one thousand nine 
 hundred and one; extending the same to companies formed 
 for the - purpose of manufacturing and selling chemicals, food- 
 stuffs, cement and cement products, and the quarrying of 
 cement rock." Approved the 28th day of May, A. D. 1907. (P. 
 L. 266.) 
 
 (13). An Act entitled "An Act to amend an Act, entitled 'An 
 Act to amend an Act, entitled "An Act to amend an Act, en- 
 titled 'An Act authorizing companies incorporated under the 
 laws of any other State of the United States for the manu- 
 facture of any form of iron, steel, or glass, to erect and main- 
 tain buildings and manufacturing establishments, and to take, 
 have, and hold real estate necessary and proper for manufactur- 
 
43 
 
 ing purposes,' approved the ninth day of June, Anno Domini 
 one thousand eight hundred and eighty-one, extending the 
 same to companies formed for the purpose of quarrying slate, 
 granite, stone, or rocks, or for dressing, polishing, working, 
 or manufacturing the same, or any of them, and to mineral 
 springs companies incorporated for the purpose of bottling 
 and selling natural mineral springs water, approved the six- 
 teenth day of June, Anno Domini one thousand eight hundred 
 and ninety-three," extending the same to companies incorpo- 
 rated for the purpose of manufacturing, supplying and sale of 
 ice, approved the nineteenth day of April, Anno Domini one 
 thousand nine hundred and one,' by extending the same to com- 
 panies incorporated for the manufacture of paper, wood-pulp, 
 or chemical fibre." Approved the 27th day of April, A. D. 
 1909. (P. L. 173.) 
 
44 
 
 REVENUE LAWS. 
 
 The conclusions of your Committee on this subject, as 
 with reference to the corporation laws, are not at present 
 of a character sufficient to make any extensive alteration 
 in the present system. They are merely supplementary, 
 extending it along the same principal lines as before in 
 order to correct abuses, provide more revenue and equalize 
 burdens. Striking changes, which may yet be necessary in 
 the way of administration, require more mature delibera- 
 tion than there has been time to give, and more information 
 and data than are at present available. 
 
 Careful thought has been given, however, to many do- 
 tails in connection with 
 
 (A) The objects upon which State revenue is expended ; 
 
 (B) The increase of State revenue, 
 
 (C) The change of the burden of taxation; and 
 
 (D) The more effectual collection of the revenue in- 
 tended to be provided by existing laws. 
 
45 
 
 (A) EXPENDITURES. 
 
 APPROPRIATIONS TO CHARITABLE INSTITU- 
 TIONS. 
 
 Large amounts of money have been appropriated, as is 
 well known, for charitable institutions not controlled by 
 the State. Auditors, sent by the State, see that the money 
 is expended for the purposes for which it is appropriated, 
 but there is no supervision of policy or management other- 
 wise. Nor could there be either the Trustees or the State 
 must manage. 
 
 Pennsylvania has been a pioneer is this regard, and even 
 now leads all States. Beginning in 1850, with $65,767.85 
 given to four institutions, in 1863 there was an appropri- 
 ation of $146,800 to sixteen institutions. The amount 
 has increased gradually to $421,008.50 to eleven institutions 
 in 1873, to $1,228,276.20 to thirty-five institutions in 1887 
 (this, of course, covering two years), to $3,024,025 to one 
 hundred and forty-two institutions in 1901 (for two years), 
 and to $5,446,900 to two hundred and forty institutions 
 in 1909 (for two years). Since 1850 the total appropriation 
 to homes and hospitals has been $26,402,778.99. The fol- 
 lowing table has been prepared by the State Board of 
 Charities : 
 
46 
 
 Summary of Appropriations to Charitable Institutions for 
 Fifty -eight Years. 
 
 
 First 
 class. 
 
 Amount 
 first class. 
 
 Second 
 class. 
 
 Amount 
 
 second class. 
 
 Total 
 No. 
 
 Total 
 amount. 
 
 1850 
 
 3 
 
 $69,166 54 
 
 4 
 
 $65,767 85 
 
 7 
 
 $134 934 39 
 
 1851 
 1852 
 1853 
 
 3 
 3 
 3 
 
 70,109 00 
 80,417 00 
 44,600 00 
 
 3 
 
 4 
 4 
 
 33,000 00 
 48,000 00 
 62,000 00 
 
 6 
 
 7 
 7 
 
 103,109 00 
 128,417 00 
 106,600 00 
 
 1854 
 
 3 
 
 41,500 00 
 
 6 
 
 "67,000 00 
 
 3 
 
 108,500 00 
 
 1855 
 
 4 
 
 58,712 00 
 
 5 
 
 56,000 00 
 
 9 
 
 114,712 00 
 
 1856 
 1857 
 
 4 
 4 
 
 68,975 00 
 63,142 00 
 
 5 
 5 
 
 86,000 00 
 126,000 00 
 
 9 
 9 
 
 154,975 00 
 189,142 00 
 
 1858 
 
 4 
 
 57,045 00 
 
 7 
 
 132,500 00 
 
 11 
 
 189 545 00 
 
 1859 
 
 4 
 
 85,894 00 
 
 8 
 
 111,000 00 
 
 12 
 
 196,894 00 
 
 1860 
 
 4 
 
 138,961 00 
 
 6 
 
 115,750 00 
 
 10 
 
 254 711 00 
 
 1861 
 
 4 
 
 132,211 00 
 
 6 
 
 104,800 00 
 
 10 
 
 237,011 00 
 
 1862 
 
 4 
 
 91,800 00 
 
 7 
 
 114,280 00 
 
 11 
 
 206,080 00 
 
 1863 
 
 4 
 
 74,100 00 
 
 16 
 
 146,800 00 
 
 20 
 
 220,900 00 
 
 1864 
 
 4 
 
 108,530 00 
 
 22 
 
 171,147 07 
 
 26 
 
 279,677 07 
 
 1865 
 
 4 
 
 123,089 50 
 
 26 
 
 227,059 00 
 
 30 
 
 350,148 50 
 
 1866 
 
 4 
 
 143,200 00 
 
 7 
 
 188,369 70 
 
 11 
 
 331,569 70 
 
 1867 
 
 4 
 
 130,832 00 
 
 10 
 
 183,000 00 
 
 14 
 
 313,832 00 
 
 1868 
 1869 
 
 4 
 5 
 
 136,300 00 
 311,887 00 
 
 9 
 12 
 
 217,000 00 
 243,500 00 
 
 13 
 17 
 
 403,300 00 
 555,387 00 
 
 1870 
 
 5 
 
 222,355 26 
 
 10 
 
 173,000 00 
 
 15 
 
 395,355 26 
 
 1871 
 
 5 
 
 420,614 62 
 
 17 
 
 239,295 00 
 
 22 
 
 659,909 62 
 
 1872 
 
 5 
 
 179,800 00 
 
 10 
 
 365,686 24 
 
 15 
 
 545,486 24 
 
 1873 
 
 6 
 
 324,344 04 
 
 11 
 
 421,008 50 
 
 17 
 
 745,352 54 
 
 1874 
 
 8 
 
 695,150 00 
 
 13 
 
 222,016 78 
 
 21 
 
 917 166 78 
 
 1875-77 
 1877-79 
 
 8 
 9 
 
 825,875 00 
 1,793,029 76 
 
 13 
 ' 14 
 
 550,800 00 
 590,658 19 
 
 21 
 23 
 
 1,376,675 00 
 2,388,687 95 
 
 1879-81 
 1881-83 
 1883-85 
 1885-87 
 1887-89 
 1889-91 
 
 8 
 10 
 11 
 10 
 10 
 9 
 
 916,434 96 
 1,183,164 89 
 1,299,150 00 
 2,372,085 92 
 2,077,052 27 
 1,511,076 99 
 
 8 
 15 
 
 22 
 27 
 35 
 52 
 
 342,860 00 
 850,570 49 
 757,158 00 
 " 1,005,562 00 
 1,228,276 20 
 1,644,095 55 
 
 16 
 25 
 33 
 37 
 45 
 61 
 
 1,259,294 96 
 2,033,735 38 
 2,056,308 00 
 3,377,647 92 
 3,305,328 47 
 3,155,172 54 
 
47 
 
 Summary of Appropriations to Charitable Institutions for 
 Fifty-eight Years Continued. 
 
 
 First 
 class. 
 
 Amount 
 first class. 
 
 Second 
 class. 
 
 Amount 
 second class. 
 
 Total 
 No. 
 
 Total 
 amount. 
 
 1891-93 
 
 14 
 
 2,184,207 92 
 
 68 
 
 1,722,686 52 
 
 82 
 
 8,906,894 44 
 
 1893-95 
 
 15 
 
 2,194,086 37 
 
 95 
 
 2,496,515 64 
 
 110 
 
 4,690,602 01 
 
 1895-97 
 
 16 
 
 2,356,439 68 
 
 112 
 
 2,371,143 50 
 
 128 
 
 4,727,583 18 
 
 1897-99 
 
 15 
 
 2,606,386 66 
 
 118 
 
 2,434,687 43 
 
 133 
 
 5,041,074 09 
 
 1899-01 
 
 15 
 
 2,860,693 53 
 
 129 
 
 2,299,030 00 
 
 144 
 
 5,159,723 53 
 
 1901-03 
 
 19 
 
 3,277,790 00 
 
 142 
 
 3,024,025 00 
 
 161 
 
 6,301,815 00 
 
 1903-05 
 
 20 
 
 4,671,722 75 
 
 176 
 
 4,657,100 00 
 
 196 
 
 9,328,822 75 
 
 1905-07 
 
 34 
 
 6,858,179 18 
 
 177 
 
 4,142,550 00 
 
 211 
 
 11,000,729 18 
 
 1907-09 
 
 31 
 
 6,219,839 64 
 
 224 
 
 5,502,600 00 
 
 256 
 
 11 722 439 64 
 
 1909-11 
 
 31 
 
 6,323,837 65 
 
 239 
 
 5,446.900 00 
 
 270 
 
 11,770,737 65 
 
 
 
 
 
 
 
 
 Total 
 
 
 $55,458,788 13 
 
 
 $44,987,198 66 
 
 
 $100,445,986 79 
 
 
 
 
 
 
 
 
 The above statement does not include the special appropriations to the 
 indigent insane. This is shown on the next page. 
 
 First Class Includes State and semi-State institutions. 
 Second Class Includes private institutions. 
 
 Summary of Appropriations for the Care and Treatment 
 of the Indigent Insane. 
 
 Date. 
 
 1885) 
 
 Maintenance. 
 $1,050,000 00 
 
 Date. 
 
 1899 1 
 
 Maintenance. 
 $1 700 000 00 
 
 1886 J - 
 1887) 
 
 900,000 00 
 
 1900 J " 
 1901 ) 
 
 1 800 000 00 
 
 1888 J " 
 1889) 
 
 800 000 00 
 
 1902 j 
 1903) 
 
 2 000 000 00 
 
 1890 }- 
 1891. ) 
 
 900,000 00 
 
 1904 j " 
 1905) 
 
 2 100 000 00 
 
 1892 / 
 1893 ) 
 
 1 015 000 00 
 
 1906 j 
 1907) 
 
 2 500 000 00 
 
 1894 j " ' 
 1895) 
 
 1,000,000 00 
 
 1908 J ~~ 
 1909) 
 
 3 000 000 00 
 
 1896 J 
 
 
 1910 J 
 
 
 1897) 
 
 1 450 000 00 
 
 Total 
 
 $20,215 000 00 
 
 1898 J " 
 
 
 
 
48 
 
 The total appropriation of Massachusetts in 1908 for 
 charitable institutions and charitable work was $2,300,000. 
 Other States making similar appropriations are Delaware, 
 Illinois, Kentucky, Maine, Maryland, Massachusetts, New 
 Mexico, New Jersey, New York, North Dakota, Oregon, 
 Washington and Wisconsin. 
 
 New York appropriates no money to private charities. 
 In 1909 it appropriated to State institutions $3,225,000, 
 and to what are classified in Pennsylvania as semi-State 
 institutions (blind and deaf and dumb institutions) 
 $775,000. In the same class with New York are Arkansas, 
 California, Connecticut, Idaho, Indiana, Iowa, Michigan, 
 Minnesota, Missouri, Montana, Nebraska, Nevada, New 
 Hampshire, Ohio, Oklahoma, Tennessee, Texas, Utah, Ver- 
 mont and Wyoming. 
 
 A brief outline of the general character of these in- 
 stitutions, which are in whole or in part supported by the 
 State, and the sources from which they receive support 
 may throw some light upon this inquiry. 
 
 As to the insane, there are six State hospitals, located 
 at Harrisburg, Danville, Norristown, Warren, Dixmont 
 and Wernersville. 
 
 These institutions contain 8,749 indigent patients. Ex- 
 cept Dixmont, they are the property of the State, and 
 receive patients from the districts in which they are lo- 
 cated, except Wernersville, the Hospital for the Chronic 
 Insane, which receives them from every part of the State. 
 The cost of maintenance is divided. The county and 
 poor districts from w r hich an indigent patient is sent, pay 
 to the institution, for each patient, $1.75 per week. The 
 rest of the cost of maintenance and buildings is paid by 
 the State. The entire cost of maintaining the insane in 
 Pennsylvania is, approximately, $4,000,000 per year. 
 
 The other institutions of the State containing the indi- 
 gent insane are what is known as County Care Institutions, 
 and are in the following counties and cities : 
 
49 
 
 Adams County Insane Hospital, Gettysburg. 
 
 Allegheny County Hospital, Woodville. 
 
 Pittsburgh North Side City Home and Hospital, Ho- 
 boken. 
 
 Pittsburgh City Home and Hospital, Marshalsea. 
 
 Blair County Hospital for* the Insane, Hollidaysburg. 
 
 Chester County Hospital for the Insane, Embreeville. 
 
 Cumberland County Hospital for the Insane, Carlisle. 
 
 Elk County Asylum, St. Marys. 
 
 Erie County Home, Erie. 
 
 Franklin County Home, Chambersburg. 
 
 Jefferson County Asylum, Brookville. 
 
 Hospital for the Insane, Central Poor District, Retreat. 
 
 Lancaster County Hospital for the Insane, Lancaster. 
 
 Hospital for the Insane, Hillside Home, Clark's Summit. 
 
 Mercer County Hospital for the Insane, Mercer. 
 
 Philadelphia Hospital, Insane Department, Philadelphia. 
 
 Potter County Home, Coudersport. 
 
 Somerset County Hospital for Insane, Somerset. 
 
 Westmoreland County Home, Insane Department. 
 Greensburg. 
 
 Blakeley Home, Lackawanna County, Olyphant. 
 
 These institutions were built by and are owned by the 
 respective counties and cities in which they are located. 
 They are maintained by the counties, the State contribu- 
 ting to the county, for each patient, the sum of $2.00 per 
 week. The number in these institutions is 6,288, making 
 the entire indigent population over 15,000. 
 
 All the State institutions are crowded, and Blockley, in 
 the City of Philadelphia, is so over-crowded that it is 
 filled to almost double its intended capacity. 
 
 Two new State hospitals for the insane are in course 
 of erection ; one for the criminal insane, at Farview, Wayne 
 County, just fairly started, and one at or near Allentown, 
 called the Homoeopathic Hospital, which is approaching 
 completion. By the time they are ready to receive patients, 
 there will be enough surplus in the other State hospitals 
 
50 
 
 to fill every ward, and unless the Legislature, at the 
 coming session makes provision for the erection of a new 
 hospital or added wards to those in existence, there will 
 not be, in a short time, sufficient hospital accommodations 
 to care for the normal increase, which is about 600 a 
 year. It is thus apparent that every session of the Legis- 
 lature must provide for the care of at least 1,200 patients 
 additional, either by building a new hospital or by adding 
 wards to those already built. 
 
 The only possible alternative to this is the building of 
 hospitals by the counties, under the County Care Act. 
 
 From present appearances, it does not look probable that 
 many more counties will avail themselves of this Act. Two 
 districts, Schuylkill county and the Middle Coal Field 
 Poor District, composed of parts of Carbon and Luzerne 
 counties, have recently started proceedings looking to the 
 erection of hospitals, and have submitted plans. 
 
 As to the weak-minded, there are three institutions 
 devoted to their care, to wit: Elwyn, Polk and Spring 
 City. The first named is not a State institution. It re- 
 ceives by appropriation a certain amount per capita for 
 750 patients. Polk has 1,543 patients and is a State in- 
 stitution. Spring City is a dual institution, for the weak- 
 minded and epileptic. This institution is only partly fin- 
 ished, and contains 270 weak-minded and 87 epileptics. 
 
 Hospitals for the deaf, dumb and blind, as well as the 
 oral schools for the deaf mutes, are not State institu- 
 tions, nor under State control, though they are almost 
 wholly maintained by the State by a per capita appropri- 
 ation. 
 
 The only place for epileptics maintained by the State 
 is Spring City, and two private institutions, one in the 
 eastern part of the State, near West Chester, and the 
 other in the western part of the State, and both receive 
 State aid. 
 
 As to hospitals for the care of the sick and injured, 
 these consist of institutions wholly supported by the State, 
 
51 
 
 r 
 
 viz. : at Mercer, Blossburg, Hazelton, Phillipsburg, Scran- 
 ton, Ashland and Connellsville. 
 
 The inmates number over 12,000, and the cost of their 
 maintenance during the past year was $217,636.06. 
 
 The private hospitals receiving State aid number 142. 
 Their total cost for maintenance last year was approxi- 
 mately $4,938,577.11. The number of indoor patients 
 70,394, and the aggregate number of free hospital days 
 1,394,982, the free dispensary service amounting to 689,023. 
 The aid given to these institutions by the State for main- 
 tenance amounted to $3,768,500; for building, $651,500, 
 approximately. A table giving this information in greater 
 detail will be found elsewhere (see pages 69, 79). 
 
 There are also homes and kindred institutions. They 
 are all private. Those that receive State aid are 97 in 
 number. 
 
 The pauper class is cared for by the poor district 
 and always has been in this State. 
 
 The insane were formerly cared for in the poor dis- 
 tricts with the other poor. The burden was then borne 
 entirely by the county, city or poor district. After a 
 while the State began to shoulder part of the burden by 
 building and equipping the present State hospitals for 
 the insane, heretofore referred to. They care for all in- 
 digent patients sent to them, charging the poor district 
 $1.75 per week for each patient. Probably nearly 10,000 
 are cared -for in this way. The other 5,000 or 6,000 are 
 cared for in certain cities and counties which have 
 erected hospitals for that purpose, the State contributing 
 $2.00 a week for each patient's maintenance. There are 
 a few in the poor houses probably between 200 and 300 
 maintained entirely by the poor authorities. Counting 
 buildings and maintenance, probably more than three- 
 fourths of the cost of maintaining is borne by the State. 
 
 All of the weak-minded, who are in institutions, are 
 supported by the State, as are epileptics, save a few in 
 two small institutions, which receive State aid. 
 
52 
 
 The cost of maintaining the criminals, like that of the 
 poor, was formerly borne entirely by the county; but the 
 State took upon itself a part of the burden by erecting 
 what is known as the Eastern and Western Penitentiaries, 
 to which certain classes of criminals may be sent, the 
 counties from which they are sent paying the cost of main- 
 tenance, the State being at the cost of the buildings and 
 their maintenance, and of the officers and attendants. The 
 State also pays the salaries of the Judges. 
 
 The indigent inmates of the blind, deaf and dumb in- 
 stitutions, and schools for oral teaching of mutes, are 
 maintained substantially by the State So are the in- 
 mates of the House of Refuge and Morganza incorrig- 
 ible boys and girls. 
 
 Hospitals for the sick and injured, and homes for the 
 dependent and kindred institutions, except seven hospitals 
 heretofore referred to, are supported in part by the State. 
 
 It will thus be seen that while formerly none, or but very 
 few of the dependent, defective, or criminal classes were 
 supported by the State, she now supports wholly or in 
 part all except the poor in almshouses and certain hos- 
 pitals and homes supported by private charity. The ap- 
 propriation for all charities, including those above named 
 for the years 1909 and 1910, was $14,770,737 (see page 55). 
 
 In the public press and before medical societies there 
 has been much talk of a general but very abusive char- 
 acter about the mismanagement of many of the privately 
 managed institutions receiving State aid, particularly that 
 they were managed in the interest of the private prac- 
 tice of the principal physicians and surgeons connected 
 with them, both by way of self-advertisement and the 
 treatment of private patients. In spite of the very full 
 opportunity given to all persons to present their com- 
 plaints specifically to your Committee either in person 
 or by letter, no actual cases of abuse were revealed. The 
 charges remain only general as before, and your Com- 
 mittee believes it is a possibility to be guarded against 
 rather than a fact to be deplored and condemned. 
 
53 
 
 Complaint was made that the existence of hospitals 
 prevented any surgical practice by those not attached 
 to any hospital because unattached surgeons were not per- 
 mitted to perform operations in the hospitals. It was 
 urged that it should be made a condition of State aid 
 that they permit outside surgeons to come in. In view 
 of the delicate nature of a surgical operation and the 
 highly trained staff which is necessary during all stages 
 of the case, it would not be possible to maintain the abso- 
 lutely necessary discipline if an outsider attempted to 
 fit himself to the system. With the best will in the world 
 on both sides he would be so unfamiliar with the methods 
 in use that there could not but be confusion. In a limited 
 number of proper cases, however, your Committee is in- 
 formed that the hospitals permit outside surgeons to come 
 in, and a liberal rule in this regard should prevail. 
 
 It is a very generally held opinion although in this in- 
 stance also no specifications were made that the num- 
 ber of institutions is too large, and that their number 
 and location should be controlled in some way by the 
 Board of Public Charities or other similar body. The 
 objection to this is that it would operate as an unneces- 
 sary restriction upon private charity in the founding of 
 new institutions, and the remedy for any supposed abuse 
 in the way of starting unnecessary institutions with the 
 expectation and demand that they shall be kept up by 
 State aid, is in the self-restraint of the Legislature in 
 withholding appropriations from superfluous institutions, 
 or, as is herein recommended, appropriating only for actual 
 public work done. 
 
 Of the unwise appropriations of the past, however, 
 specific instances were given as follows : That appropria- 
 tions were made to hospitals before they were incor- 
 porated, or before a site was provided, without any pro- 
 vision by the hospital for maintenance, or before the 
 hospital was open for patients, or before any consider- 
 able sum had been secured as an endowment from private 
 
54 
 
 sources. Cases were mentioned of appropriations to some 
 institutions which were controlled by stockholders, though 
 the declaring of a dividend was forbidden. 
 
 Many complaints have been received for a number of 
 years on the policy of our State in this regard, not only 
 from institutions that do not receive it, but from the pub- 
 lic at large. 
 
 The objection is that the State money should only go 
 in relief of the sick or disabled poor, and that, as there 
 is no rule by which the money is apportioned among the 
 institutions, it may or may not be so used. A request 
 is made by the institution. On this a recommendation 
 is made by the Board of Public Charities, which, while 
 giving the matter careful attention, has no fixed rule. On 
 this the Legislature acts, changing in many instances the 
 amount recommended by the Board of Public Charities, 
 so that the recommendations of the latter have no practical 
 utility. Here again there is no rule. At the end of the 
 session the bounty of the Legislature having greatly ex- 
 ceeded the amount at its disposal, the Governor is called 
 upon to cut all the appropriations to fit the Treasury. 
 The result of these three operations, all proceeding with- 
 out rule, without the opportunity for hearing in many 
 cases, and without the balancing of conflicting claims, 
 results in the disproportion evidenced by the figures al- 
 ready given. The relation between requests of the 
 hospitals, the recommendations of the Board of Public 
 Charities, the appropriations by the Legislature, and 
 the final amounts approved by the Governor is shown by 
 the following table : 
 
55 
 
 > 
 
 af 
 IS 
 H- 
 
 05 O CO 
 
 g CO O GO T 
 
 - ^ CD" o" o i>* 
 
 SO ^H 10 CO Oi 
 
 33 T CO^ rH^ l>^ CO 
 
 ~ co" o" CM" co" 
 
 fl 05 CD CM Oi LO 
 
 -r3 CD" r-T rn" CM" 
 
 CD 
 
 o o o 
 
 o o o 
 
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56 
 
 There is no doubt in the vast majority of instances that 
 much public good has been done by the appropriations to 
 privately managed charities. But there is no guarantee, 
 and no way of guaranteeing that the money expended will 
 go wholly to the benefit of needy persons who should legiti- 
 mately be the object of State relief. Particularly is this so 
 where money is appropriated for purposes of permanent 
 construction and not for maintenance. 
 
 Since 1901 for building and betterment appropriations 
 have been made amounting to $115,000 to the Free Hospital 
 for Poor Consumptives at White Haven. This institution 
 now refuses State aid for maintenance, and in consequence 
 claims the right to, and does, refuse to receive free pati- 
 ents. Such a situation should be rendered impossible. 
 
 It is asserted that many institutions come into existence 
 depending on State aid for the maintenance of that ex- 
 istence, and that this results in an unnecessary multipli- 
 cation of institutions where one would serve, and the con- 
 sequent idleness of part of their equipment. At 
 times 3,000 hospital beds are vacant. Your Committee 
 recommend that such appropriations be made only for main- 
 tenance, and that the sums should be apportioned to the 
 free public aid given by the institution. In those rare 
 cases where an appropriation for construction would 
 be proper (as to supply a community needing and having 
 no hospital and no other means of securing one) 
 the grant of the State should be a lien on the 
 ground and buildings so that if the institution cease to be 
 privately maintained as theretofore, it might revert to the 
 State, and be continued by it. The first precedent may be 
 found in the grant to the Orthopedic Hospital of Philadel- 
 phia in 1871, and other precedents in many of the appro- 
 priation Acts of 1909, if not in other years. A draft of an 
 Act to that end is submitted as follows : 
 
57 
 
 AN ACT MAKING APPROPRIATIONS TO INSTITUTIONS NOT WHOLLY 
 MANAGED BY THE COMMONWEALTH OF PENNSYLVANIA. LIENS 
 
 ON THE PREMISES OF SUCH INSTITUTIONS FOR THE USE OF THE 
 COMMONWEALTH, AND PROVIDING FOR THE COLLECTION THEREOF. 
 
 SECT. 1. Be it enacted, etc., That any and all amounts here- 
 after appropriated by the Legislature of this Commonwealth 
 for the erection, enlargement or alteration of any building 1 or 
 buildings, or for any other permanent improvement in connec- 
 tion with any institution not wholly managed by the Common- 
 wealth of Pennsylvania, be, and the same are hereby made a 
 non-interest bearing lien on the premises of the institution 
 for which the appropriation is made. 
 
 SECT. 2. Within sixty days from the date of such appropri- 
 ation the Auditor General is hereby authorized and required to 
 transmit to the Prothonotary of the county in which such in- 
 stitution is located, to be by him entered of record, a certi- 
 ficate to the effect that the appropriation for which a lien is 
 created by the first section of this Act, has been made to such in" 
 stitution. The amount of such appropriation shall be a lien 
 from the date said certifictate is so entered of record, and 
 whenever the property of such institution shall be sold at a 
 judicial sale the amount of such lien shall first be allowed and 
 paid out of the proceeds of such sale before any judgment, mort- 
 gage or other claim which shall be entered of record or become a 
 lien after the entry of record of said certificate. 
 
 SECT. 3. In all cases where any such institution shall cease 
 to be used or fail to carry out the purpose for which it was 
 organized, it shall be lawful for writs of scire facias in favor 
 of the Commonwealth to issue on said liens and be prosecuted 
 to judgment and execution in the same manner as such writs 
 are ordinarily returnable. 
 
 In general, however, no appropriation should be made to 
 any institution until it owns its site and its buildings are 
 erected and equipped ready to begin business. Such an 
 institution can properly be made an instrument of the 
 Commonwealth for the help of the poor and a benefit to the 
 State. This method will operate as a check upon unneces- 
 sary institutions more than any supervision by the Board 
 
58 
 
 of Public Charities in advance as a prerequisite to the 
 granting of a charter. 
 
 There has been prepared by the Board of Public Chari- 
 ties for your Committee a table which shows as to most of 
 the hospitals of the State (only those which did not make 
 report being omitted) of free hospital days ; that is to say, 
 the total number of days that one free patient was treated 
 by the hospital, and also the cost of each day of such treat- 
 ment, the total cost of the free days, the State appropri- 
 ation and the excess or deficiency of appropriation pro- 
 portioned to the cost of free treatment and other valuable 
 information. 
 
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92 
 
 The results shown by this table vary considerably. In 
 the great majority of cases the cost exceeded the ap- 
 propriation, the total cost of free days being $2,718,374.45 
 and the appropriations (to these hospitals) being 
 $1,527,875. Only 21 hospitals received from the State 
 more money than they expended in free treatment. As 
 to some of these the excess was considerable in proportion 
 to the amount of money appropriated. On the other hand, 
 the excess of money spent in free treatment over appro- 
 priations varies greatly with the hospital. The Howard 
 Hospital of Philadelphia, spent $83,388 in free treatment, 
 and received only $5,000 from the State. The University 
 of Pennsylvania Hospital spent $134,278.92, and received 
 only $62,500. But as to thirteen hospitals the difference 
 was less than $1,000. The table also shows an extremely 
 varying unit of cost, running from $3.39 at the American 
 Oncologic Hospital, Philadelphia, $3.70 at the DuBois Hos- 
 pital, and $3.42 at The Packer Hospital at Sayre, to 63 
 cents at the Children's Hospital, Philadelphia, 95 cents at 
 St. Francis Hospital, Pittsburgh, and the like. This is the 
 result of the higher cost of treating special diseases like 
 cancer, and the greater cost of supplies in small hospitals 
 in remote districts, as well as difference in equipment. 
 
 In estimating the cost of free hospital days an element 
 must fairly be reckoned upon which does not appear in 
 the reports to the Board of Public Charities. This is the 
 expense of free dispensary work which in some hospitals 
 is very much larger than the cost of treating patients 
 in wards, which alone is taken in arriving at the cost of 
 "free hospital days." For instance, it appears from the 
 table (page 63), that the appropriation to the Medico- 
 Chirurgical Hospital of Philadelphia, for the year ending 
 May 31, 1909, was $30,239.10 in excess of the free hospital 
 days. But this does not give a true idea of the charitable 
 work of the hospital, as the partially free in-patients, ac- 
 cident, dispensary, electrical and X-ray patients are not 
 included in this total. The total amount expended for 
 
93 
 
 charitable patients for the twelve months ending May 31, 
 1909, is $68,354.98. The Mount Sinai Hospital in Phila- 
 delphia, for example, for the year ending May 31, 1909, 
 paid for free hospital days $24,823.26 and received a State 
 appropriation of $10,000. It has only 34 beds, but its 
 dispensary work extended to 51,474 patients. Methods of 
 reckoning the cost of this work could be best determined 
 by conference between the institutions involved and the 
 Board of Public Charities, or the Department of State 
 Charitable Institutions herein recommended (see page 99). 
 
 But even as to free hospital days, so-called, the method 
 of arriving at the cost varies with the bookkeeping 
 methods of the institution. Owing to the inter-relation of 
 expenses it is impossible to get an exact figure. Some 
 institutions divide the total cost of maintenance by the 
 number of hospital days, both pay and free, and get at 
 the cost of free hospital days by multiplying the quotient 
 by the number of free days. It is obvious that as the cost 
 of pay patients is much greater than that of free patients 
 the result considerably overstates the cost of free hos- 
 pital days. Other institutions, notably the Jefferson 
 Medical College Hospital, state separately the total cost of 
 maintaining free hospital days by employing an arbitrary 
 percentage method based, of course, upon general ex- 
 perience, but containing nevertheless an unascertainable 
 element of error. This method recognizes that pay pati- 
 ents cost more than free patients. The remedy is in a 
 uniform method of accounting, which can best be devised 
 by the Board of Public Charities or proposed Department 
 of State Charitable Institutions in conference with the 
 institutions interested. The combined experience of all 
 may give a percentage which will determine with fair ac- 
 curacy the cost of free patients. 
 
 The State aid, therefore, to each private charitable 
 institution should be in the form of a fixed sum for each 
 day a free patient is treated therein, the sum to be specially 
 determined for each institution according to its experi- 
 
94 
 
 ence of cost in the past. The wide variation in the unit 
 of cost above noted would prevent the use of an average 
 unit, which would produce an even greater inequality 
 than now exists. This sum also can best be fixed for each 
 one by the State Department which shall have the super- 
 vision of charities in consultation with the institution (a 
 similar work to that of which the result is given in the 
 table already mentioned), and your Committee recom- 
 mends that an application be required to be made to such 
 Department for this purpose, and proper consideration and 
 treatment thereof can then be had. As it is not possible to 
 determine in advance how many free patients will be 
 treated during the next two appropriation years, the sum 
 should be calculated on the basis of the amount expended 
 for the last two years. It will then operate as a reim- 
 bursement to the institution for money expended and 
 this is in line with the present policy of all such appropria- 
 tions, the law requiring that the money be spent and 
 vouchers furnished before the State relief is given. The 
 method is already provided by the Auditors of the State 
 for checking the application of the money, and this work 
 can be continued by the Department proposed. In order 
 not to unduly increase appropriations to charity, only 
 part of such cost should be assumed by the State, and your 
 Committee recommends that State aid be confined to two- 
 thirds of the sum so expended. Two-thirds of the cost 
 of free hospital days in the hospitals reported to the 
 Board of Public Charities is $1,812,249.62, and this ex- 
 ceeds the amount appropriated to those hospitals by only 
 $284,374.62. It is the expectation of your Committee that 
 the additional revenue necessary to make up this sum (to 
 which must be added the additional sum which will go to 
 the few hospitals not reporting) will be at hand. 
 
 As above shown the State bears part of the cost of 
 maintaining the poor insane in local insane hospitals, as 
 well as in State institutions. No State aid is extended to 
 the sick poor in the institutions maintained by local public 
 authorities. 
 
96 
 
 Your Committee recommends that State aid should also 
 be extended to these in the same way, that is, in proportion 
 to free hospital days. Data are not available for de- 
 termining the cost of this or the extent to which it would 
 oe possible with the existing revenue, but the principle is 
 worthy of the earnest consideration of the Legislature. 
 
 STATE INSTITUTIONS. 
 
 It was the opinion of some expressed to your Committee 
 that State charity could be better distributed through the 
 means of State institutions than through aiding private 
 charities. The practice of the States noted elsewhere in 
 this report (page 48) shows that the Pennsylvania system 
 in the extent to which it has gone, is the exception rather 
 than the rule. Your Committee is of the opinion that there 
 should be no radical change of our policy in this regard, 
 and that the present system is the most efficient in the 
 country. 
 
 Notwithstanding the failure of other States to follow to 
 any extent along the lines of Pennsylvania, her system is, 
 nevertheless, winning favor and has the approval of stu- 
 dents of the subject. We may expect to see the system 
 spread rather than to have it universally disapproved. The 
 extent of the relief afforded may be seen from the table 
 above (pages 46 ; 59). This immense amount of relief is of 
 unquestioned advantage to the State. It is largely in aid of 
 those to whom help in sickness is otherwise impossible. To 
 withdraw it suddenly would be inhuman, and the State and 
 county institutions are not equipped to either render the 
 assistance or to bear the burden. If any change is to be 
 made it should be by way of a very gradual reduction of 
 the relief, say by reducing the proportion of the cost of free 
 hospital days to which the State should contribute. Sud- 
 den readjustments of the ways in which the State money 
 
96 
 
 is expended are even more harmful than the sudden read- 
 justment of the burden of raising it. 
 
 Yet there is no question that State institutions are neces- 
 sary and that the first call upon the State Treasury for 
 this purpose should be by those institutions which the State 
 has undertaken, and which are dragging on unfinished and 
 of no use. There are now four such in a partially finished 
 state. The money which has been put into them has been 
 idle, so far as actual help to anyone is concerned, from the 
 date of the Acts creating them. These are the Eastern 
 Pennsylvania State Institution for the Feeble Minded and 
 Epileptic, State Hospital for the Criminal Insane, State 
 Hospital for Injured Persons of the Trevorton, Shamokin 
 and Mount Carmel Coal Fields, and the Homeopathic State 
 Hospital for the Insane near Allentown. Of these the first 
 (which is located at Spring City) has nearly 400 inmates, 
 all male, and there is no provision for females, for which 
 there is great need. This is only a small part of the accom- 
 modations intended to be afforded. The Rittersville Hos- 
 pital is nearing completion. It was authorized in 1901, 
 and construction was commenced in 1904. The Com- 
 mission has been insistent in their requests for money 
 to complete, but it was diverted to other uses. In 
 at least one case the appropriations for the construc- 
 tion of the Allentown Hospital asked for by the Commis- 
 sion for erecting it to enable it to complete it, and approved 
 by the Legislature have from the beginning been reduced 
 by the Governor because, as stated in his veto reductions, 
 there was not sufficient State revenue and this reduction 
 was made though he had advocated in his message to the 
 Legislature the completion of the institution, and recog- 
 nized the pressing need for the proper care of the insane, 
 whilst at the same time there were approved large ap- 
 propriations to institutions not under State control. 
 
 The Trevorton Hospital was given $60,000 by the Legis- 
 lature of 1907, but only $30,000 was approved by the 
 Governor. The Legislature of 1909 gave $75,000 for con- 
 struction and $50,000 for maintenance and the Governor 
 
97 
 
 approved this for only $25,000 each. The work has there- 
 fore stopped for lack of funds. The Farview Hospital was 
 given $250,000 by the Legislature of 1909, and the Gov- 
 ernor approved of only $100,000. 
 
 Your Committee earnestly urge upon the Legislature 
 that sufficient moneys be appropriated at this session of 
 the Legislature to at once complete these buildings and 
 that this demand in its entirety be a preferred claim upon 
 such part of the State revenue as should be devoted to 
 charity. The appropriations at each session should be 
 enough to carry on the work of each institution vigorously 
 and continuously to the next session. Waste by deteriora- 
 tion and idle capital, to say nothing of the need of aid to 
 the suffering, should not be permitted. 
 
 Secondary to these State institutions mentioned are 
 local insane hospitals which receive State aid under the 
 County Care Act, above mentioned. These deserve en- 
 couragement and it would be well to increase State aid 
 to them and thus encourage further building, either by 
 way of helping in erection or increasing the per capita 
 cost of maintenance. The actual cost of maintenance is 
 less than in State hospitals and the percentage of cures 
 is greater as the patients have more out-door life and 
 are more convenient to the visits of friends. 
 
 The weak-minded also need more State institutions 
 than the three already mentioned. The institution at 
 Spring City is intended for both weak-minded and epi- 
 leptic. The Board of Public Charities has recommended, 
 and your Committee endorses the recommendation, that 
 this institution, which is nearing completion, be diverted 
 solely to the care of the weak-minded and that provision 
 be made elsewhere for the epileptic. Weak-minded per- 
 sons who are scattered at large in great numbers (esti- 
 mated at 18,000 in Pennsylvania) throughout the country 
 are a menace to society and by themselves and their off- 
 spring recruit the largest part of the criminal and de- 
 pendent classes. 
 
 7 
 
98 
 
 The same conditions apply to the epileptic and an insti- 
 tution caring for 700 or 800 is now needed. In the insane 
 hospitals, now overcrowded, are from 2,500 to 3,000 feeble- 
 minded and epileptic people. 
 
 Tuberculous insane patients should be kept in a 
 separate institution, and if the recommendation of the 
 State Commissioner of Health be followed a hospital can 
 be erected at Cresson upon ground already belonging 
 to the State, in a particularly favorable locality. 
 
 Another need is the establishment of psychopathic wards 
 attached to some of the large general hospitals in the 
 cities where cases of neurasthenia, hysteria and other 
 mental states not amounting to insanity, can be investi- 
 gated and treated without the stigma attaching to resi- 
 dence in an insane asylum. 
 
 State institutions to take up the work of the local 
 privately-maintained homes and refuges are also needed. 
 There is no State institution for abandoned and neglected 
 children or for wayward girls. 
 
 The cost of the principal additional State institutions 
 needed is estimated as follows: 
 
 Hospital for the tuberculous insane, to be located at 
 Cresson, $240,000. 
 
 Two psychopathic wards to be attached, one to a hos- 
 pital in the East and the other to a hospital in the West, 
 $80,000 each, or $160,000. 
 
 Farm Colony for Epileptics (the Spring City Institution 
 to be devoted solely to the Feeble Minded), $600,000. 
 
99 
 
 DEPARTMENT OF STATE CHARITABLE 
 INSTITUTIONS. 
 
 Part of the delay in the completion of State institutions 
 may be traceable to the practice of creating a separate 
 commission to build each institution. The object of this 
 has been to commit such work to those most interested in 
 the subject in the hope that the best results would be 
 obtained, and whilst these commissions (of the present 
 unfinished institutions) appear to have labored zealously, 
 they have not been able to obtain the moneys to complete 
 their several institutions. It appears to your Committee 
 that if all of this work had been committed to the direction 
 of one State Department, with power to appoint necessary 
 architects, inspectors and employees, such Department rep- 
 resenting the State directly would have secured the moneys 
 needed and expedition in construction would have been 
 obtained. 
 
 Your Committee therefore recommends that the com- 
 missions to erect the hospitals at Trevorton, Farview and 
 Spring City, be abolished and their power transferred to 
 a State Department, and that the Commission to erect the 
 Homeopathic Insane Hospital near Allentown be given the 
 sum necessary to complete immediately. The Allentown 
 Hospital is so nearly completed that it can be finished by 
 the present Commission before the Department could be 
 organized. Acts to accomplish this are submitted herewith 
 (see page 101). 
 
 The Board of Commissioners of Public Grounds and 
 Buildings, as now constituted by the organization of the 
 Governor, Auditor General and State Treasurer, ex-officiis, 
 has not the time and facilities for such a large work, in 
 addition to the many duties of its members in their in- 
 dividual offices. The institutions are placed all over the 
 State. The work really requires the attention of special- 
 ists in addition to the architect in immediate charge of 
 each branch. 
 
100 
 
 Much the same considerations apply to the Board of 
 Public Charities as now constituted. Its members are 
 business men serving gratuitously, and while their ser- 
 vice has been devoted, they are scattered over the State, 
 and it is a physical impossibility to give sufficient atten- 
 tion as a Board to the work now in hand. The work of 
 erecting new buildings is not possible to them. 
 
 The Legislature of 1905 passed a well-considered bill 
 creating a Department of State Charitable Institutions, 
 which was vetoed by the Governor on the ground that it 
 covered the same ground as the Board of Public Charities, 
 which, nevertheless, was not abolished. 
 
 A comparison of the bill with the duties of that Board, 
 and of the Committee on Lunacy, which is part of it, dis- 
 closes that a great deal is omitted. The whole subject of 
 lunacy, and the visitation of correctional and reformatory 
 institutions, both State and local, would have remained 
 to the Board. Your Committee believes that the best in- 
 terests of the State would be served by entrusting all these 
 matters to such a Department, and discontinuing the 
 Board of Public Charities. No thought of inefficiency or 
 wilful neglect enters into this recommendation. It is 
 the product of the growth of our institutions to a point 
 where a volunteer Board has too much, to do. 
 
 Accordingly the bill has been revised to include all the 
 duties entrusted to the Board of Public Charities by the 
 Act of 1869 (P. L. 90) and its supplements, and to the 
 Committee on Lunacy by the Act of 1872 (P. L. 43), and 
 its supplements, and the repeal of those Acts. The Com- 
 mittee on Lunacy, however, is to retain its membership 
 of a lawyer and a physician with the addition of the Com- 
 missioners, and the aid of a Secretary. The administrative 
 work will doubtless fall upon the official members, and at 
 the same time the advice of the professional members will 
 be available. 
 
 The Act revised as referred to, is. suftjnitted herewith 
 (see page 105). 
 
101 
 
 AN ACT TO ABOLISH THE COMMISSION CREATED BY AJi '/A'pT H^TC 
 
 "AN ACT TO PEOVIDE FOB THE SELECTION OF" A SITE ' AND THiS 
 ERECTION OF A STATE HOSPITAL FOB THE TREATMENT AND CARE 
 OF THE CRIMINAL INSANE, TO BE CALLED THE STATE HOSPITAL 
 
 FOR THE CRIMINAL INSANE, AND MAKING AN APPROPRIATION 
 THEREFOR," APPROVED MAY 11, 1905, AND TO PROVIDE FOR THE 
 COMPLETION OF THE SAID HOSPITAL BY THE DEPARTMENT OF 
 STATE CHARITABLE INSTITUTIONS, AND MAKING AN APPROPRIA- 
 TION THEREFOR. 
 
 SECT. 1. Be it enacted, etc., That the Commission created 
 by the provisions of an Act entitled "An Act to provide for the 
 selection of a site and the erection of a State Hospital for the 
 treatment and care of the Criminal Insane, to be called the 
 State Hospital for the Criminal Insane, and making an ap- 
 propriation therefor," approved May 11, 1905, to select a site 
 and build an institution for the treatment and care of the crim- 
 inal insane of the Commonwealth and certain other insane 
 patients, be and the same is hereby abolished, to take effect 
 one month after this Act goes into effect. 
 
 SECT. 2. The existing Commission shall within one month af- 
 ter this Act goes into effect, deliver to the Department of State 
 Charitable Institutions all the records of its office and the tract 
 or tracts of land and buildings in course of erection thereon, 
 if any, selected for the said hospital. The said Department 
 shall thereupon proceed to select such other suitable tract or 
 tracts of land as may be necessary for the completion of said 
 hospital and grounds ; and said tract or tracts of land, so 
 selected and the cost thereof, shall be approved in writing by 
 the Governor before the purchase money shall be paid ; and the 
 deed or deeds for the same shall be taken in the name of the 
 Commonwealth; but nothing herein contained shall prevent the 
 said Department from receiving a deed to the Commonwealth, 
 in fee, for any land donated for the purpose aforesaid. Said 
 Department, subject to existing contracts of contractors and 
 architects, shall proceed with the completion of the plan of 
 said building or buildings, and shall prepare such other plan 
 or plans as may be necessary for the completion of said hospi- 
 tal, and shall have power to employ and fix the compensation 
 of an architect and a superintendent of construction and such 
 other persons as it may think necessary to employ to secure 
 the proper and economical construction of said building or 
 buildings. The money heretofore appropriated for the purchase 
 of suitable lands for a site for said hospital and for the con- 
 
102 
 
 6>f the said hospital not heretofore expended and the 
 y Ta.pi>rb'p*riated by this Act shall be expended under the 
 direction of the said Department and shall be drawn from 
 the Treasury t*s may be required for the erection and comple- 
 tion of said buildings and grounds on warrants signed by the 
 Commissioner of State Charitable Institutions. 
 
 SECT. 3. Said Department of State Charitable Institutions, 
 subject to existing contracts of contractors and architects, 
 shall proceed to erect and complete said buildings as soon as 
 possible compatible with the economical, substantial and skill- 
 ful execution of the work. 
 
 SECT. 4. Said Department of State Charitable Institutions 
 upon the completion of said hospital shall surrender its trust to 
 "The Trustees of the State Hospital for the Criminal Insane." 
 
 SECT. 5. For the purpose of completing said hospital the sum 
 of Six hundred thousand dollars is hereby appropriated an- 
 nually for the years 1911 and 1912 to be drawn as herein before 
 provided. 
 
 SECT. 6. All Acts or parts of Acts inconsistent herewith are 
 hereby repealed. 
 
 AN ACT TO ABOLISH THE COMMISSION CHEATED BY AN ACT ENTITLED 
 "AN ACT TO PROVIDE FOB THE SELECTION OF A SITE AND THE 
 ERECTION OF A STATE INSTITUTION FOB THE FEEBLE-MlNDED 
 AND EPILEPTIC, TO BE CALLED THE EASTERN PENNSYLVANIA 
 STATE INSTITUTION FOR THE FEEBLE-MINDED AND EPILEPTIC, 
 AND MAKING /N APPROPRIATION THEREFOR," APPROVED MAY 15, 
 1903, AND TO PROVIDE FOR THE COMPLETION OF SAID INSTITUTION 
 BY THE DEPARTMENT OF STATE CHARITABLE INSTITUTIONS. AND 
 
 MAKING .AN APPROPRIATION THEREFOR." 
 
 SECT. 1. Be it enacted, etc., That the Commission created by 
 the provisions of an Act entitled "An Act to provide for the 
 selection of a site and the erection of a State Institution for 
 the Feeble-Minded and Epileptic, to be called The Eastern 
 Pennsylvania State Institution for the Feeble-Minded and Epi- 
 leptic, and making an appropriation therefor," approved May 
 15, 1903, to select a site and build an institution for the care 
 and maintenance of epileptics an L idiotic and feeble-minded 
 persons of Eastern Pennsylvania, be and the same is hereby 
 abolished, to take effiect one month after this Act goes into 
 effect. 
 
 SECT. 2. The existing Commission shall within one month af- 
 ter this Act goes into effect deliver to the Department of State 
 
103 
 
 Charitable Institutions all the records of its office and the tract 
 or tracts of land and buildings in course of erection thereon, 
 if any, selected for the said institution. The said Department 
 shall thereupon proceed to select other suitable tract or 
 tracts of land as may oe necessary for the completion of said 
 institution and grounds; and said tract or tracts of land, so 
 selected, and the cost thereof, shall be approved in writing by 
 the Governor before the purchase money shall be paid, and 
 the deed or deeds for the same shall be taken in the name of 
 the Commonwealth ; but nothing herein contained shall prevent 
 the Commonwealth; but nothing herein contained shall 
 prevent said Department from receiving a deed to the Com- 
 monwealth in fee, for any land donated for the purpose 
 aforesaid. Said Department of State Charitable Instiutions 
 subject to existing contracts of contractors and architects, shall 
 proceed with the completion of the plan of said building or 
 buildings, and shall prepare such other plan or plans as may be 
 necessary for the completion of said institution, and shall have 
 power to employ and fix the compensation of the superintend- 
 ent of construction and such other persons as it may think 
 necessary to employ to secure the proper and economical con- 
 struction of said building or buildings. The money heretofore 
 appropriated for the purchase of suitable land for a site for 
 said institution and for the construction of the said institution 
 not heretofore expended and the money appropriated by this 
 Act, shall be expended under the direction of the said Depart- 
 ment of State Charitable Institutions and shall be drawn 
 from the Treasury as may be required for the erection and 
 completion of said buildings and grounds on warrants signed 
 by the Commissioner of State Charitable Institutions. 
 
 SECT. 3. Said Department of State Charitable Institutions 
 shall proceed to erect said buildings and complete the same 
 as soon as possible compatible with the economical, substan- 
 tial and skillful execution of the work with such funds as may 
 be appropriated, from time to time, by the Legislature. 
 
 SECT. 4. Said Department of State Charitable Institutions 
 upon the completion of the said institution shall surrender its 
 trust to "The Trustees of the State Institution for Feeble- 
 Minded of Eastern Pennsylvania." 
 
 SECT. 5. For the purpose of completing said institution the 
 sum of Seven hundred and fifty thousand dollars ($750,000) is 
 hereby appropriated annually for the years 1911 and 1912, to 
 be drawn as hereinbefore provided. 
 
 SECT. 6. All Acts or parts of Acts inconsistent herewith are 
 hereby repealed. 
 
104 
 
 AN ACT TO ABOLISH THE OFFICE OF COMMISSIONERS CREATED BY AN 
 ACT ENTITLED "AN ACT TO PROVIDE FOR THE SELECTION OF A 
 SITE AND THE ERECTION OF A STATE HOSPITAL FOR INJURED 
 
 PERSONS, TO BE LOCATED AT OR NEAR SHAMOKIN, IN THE COUNTY 
 OF NORTHUMBERLAND, TO BE CALLED A STATE HOSPITAL FOR 
 INJURED PERSONS OF THE TREVERTON, SHAMOKIN AND MOUNT 
 CARMEL COAL FIELDS, AND FOR THE MANAGEMENT OF THE SAME, 
 AND MAKING AN APPROPRIATION THEREFOR," APPROVED JUNE 13, 
 1907, AND TO PROVIDE FOR THE COMPLETION OF THE SAID HOS- 
 PITAL BY THE DEPARTMENT OF STATE CHARITABLE INSTITU- 
 TIONS, AND MAKING AN APPROPRIATION THEREFOR. 
 
 SECT. 1. Be it enacted, etc., That the office of Commissioners 
 created by an Act entitled "An Act to provide for the selection 
 of a site and the erection of a State Hospital for injured per- 
 sons, to be located at or near Shamokin, in the county of 
 Northumberland, to be called a State Hospital for Injured Per- 
 sons of the Treverton, Shamokin and Mount Carmel Coal Fields, 
 and for the management of the same, and making an appro- 
 priation therefor," approved June 13, 1907, to select a site and 
 build a hospital for injured persons to be located at or near 
 Shamokin, in the county of Northumberland, be, and the same 
 is hereby abolished, to take effect one month after this Act 
 goes into effect. 
 
 SECT. 2. The existing Commissioners shall within one month 
 after this Act goes into effect deliver to the Department of 
 State Charitable Institutions all the records of their office and 
 the tract or tracts of land and buildings in the course of erec- 
 tion thereon, if any, selected for the said hospital. The said 
 Department shall thereupon proceed to select such other tract 
 or tracts of land at or near Shamokin in Northumberland 
 county as may be necessary for the completion of the said hos- 
 pital and grounds, w r hich shall be approved by the Governor in 
 writing, and the deeds for the same shall be taken in the name 
 of the Commonwealth in fee. Said Department, subject to ex- 
 isting contracts of contractors and architects, shall proceed 
 with the completion of the plan of said building or buildings, 
 and shall have power to employ and fix the compensation of 
 the superintendent of construction of said buildings and such 
 other persons as they may think necessary to employ to secure 
 the proper and economical construction of said building or 
 buildings. The money heretofore appropriated for the con- 
 struction of the said hospital not heretofore expended and the 
 money appropriated by this Act shall be expended under the 
 
105 
 
 direction of the said Department and shall be drawn from the 
 Treasury as may be required for the erection of said buildings 
 on warrants signed by the Commissioner of State Charitable 
 Institutions. 
 
 SECT. 3. Said Department of State Charitable Institutions 
 shall proceed to erect and complete said buildings as soon as 
 possible compatible with the economical, substantial and skillful 
 execution of the work. 
 
 SECT. 4. Said Department of State Charitable Institutions 
 upon the completion of said hospital shall surrender their trust 
 to "The Trustees of the State Hospital of the Treverton, Sha- 
 raokin and Mount Carmel Coal Fields of Pennsylvania." 
 
 SECT. 5. For the purpose of completing said hospital the sum 
 of seventy-five thousand dollars ($75,000) is hereby appropriated 
 annually for the years 1911 and 1912 to be drawn as herinbe- 
 fore provided. 
 
 SECT. 6. All Acts or parts of Acts inconsistent herewith are 
 hereby repealed. 
 
 AX ACT CREATING A DEPARTMENT OF STATE CHARITABLE INSTITU- 
 TIONS AND A COMMITTEE ON LUNACY, SUBJECT TO THE DE- 
 PARTMENT, DKKIX1XC THE DUTIES OF EACH WITH RESPECT TO 
 
 STATE INSTITUTIONS AND CHARITABLE, REFORMATORY AND COR- 
 RECTIONAL INSTITUTIONS, JAILS, PRISONS, ALMS, POOR AND 
 WORK JTorsus, AND THE TREATMENT AND DETENTION OF THE 
 INSANE. AND MAKING. AN APPROPRIATION THEREFOR; REGU- 
 LATING THE TREATMENT AND DETENTION OF THE INSANE,* AND 
 
 ABOLISHING THE BOARD OF PUBLIC CHARITIES AND THE PRESENT 
 
 COMMITTEE ON LUNACY. 
 
 SECTION 1. Be it enacted, etc., That there is hereby established 
 a separate and distinct Department, to be known as the De- 
 partment of State Charitable Institutions, the Commissioner 
 of which said Department shall have charge of the erection of 
 all new State institutions, and supervision of all charitable 
 institutions, entirely or partly supported and maintained by 
 State appropriations, as to their affairs of all kinds, and ot 
 reformatory and correctional institutions, hospitals and houses 
 in which the insane are placed for treatment or detention, 
 city and county jails or prisons, and alms, poor and work 
 houses. 
 
 SECTION 2. The chief officer of the Department of State Charita- 
 ble Institutions shall be denominated the Commissioner of State 
 Charitable Institutions. He shall be appointed by the Governor, 
 by and with the advice and consent of the Senate, and shall hold 
 
 8 
 
106 
 
 his office for four years, and until his successor shall be duly 
 qualified, and he shall receive an annual salary of six thousand 
 dollars ($6,000), payable quarterly by a warrant drawn by 
 the Auditor General upon the State Treasurer. He shall appoint 
 one deputy, who shall perform the duties attached by law to the 
 office of Commissioner of State Charitable Institutions, during 1 
 the absence or inability of the Commissioner, and such other 
 duties as may be assigned him, whose salary shall be twenty- 
 five hundred dollars ($2,500) per annum, payable in the same 
 manner as that of the Commissioner, and shall give to the 
 Commonwealth a bond in the penalty of ten thousand dollars 
 ($10,000), with one or more sureties to be approved by the Gov- 
 ernor, conditioned for the proper and faithful performance of 
 his duties. The Commissioner shall also appoint three clerks, 
 one of whom shall be a trained stenographer, at an annual 
 salary of fourteen hundred dollars ($1,400) each, who shall dis- 
 charge such duties as he .shall assign them, and whose salary 
 shall be paid monthly, by warrant drawn by the Auditor Gen- 
 eral upon the State Treasurer. He shall also appoint one mes- 
 senger, who shall receive a salary of nine hundred dollars 
 ($900.00) per annum, to be paid in the same manner as the 
 salaries of the clerks. The Commissioner of State Charitable 
 Institutions may also, from time to time, appoint examiners, in 
 such number as may be necessary for the proper conduct of the 
 business of the Department, not to. exceed six in number, who 
 shall receive, when actually employed in making examinations 
 of the affairs of the various institutions of the State, 
 under the order of the said Commissioner, not to exceed eight 
 dollars ($8.00) per day, and also actual expenses incurred in 
 making such examinations; which compensations and expenses 
 shall be paid by warrant drawn' by the Auditor General upon 
 the State Treasurer. Within fifteen days from the time of the 
 notice of their appointment, the Commissioner and his deputy 
 shall take and subscribe the oath of office prescribed by the Con- 
 stitution, and file the same in the office of the Secretary of the 
 Commonwealth; and the Commissioner shall also give to the 
 Commonwealth a bond in the penalty of twenty thousand dollars 
 ($20,000), with two or more sureties to be approved by the 
 Governor, and conditioned for the faithful performance of his 
 duties. 
 
 SECTION 3. The Department shall be provided, by the proper 
 authorities, with suitably furnished offices at the State Capitol. 
 
 SECTION 4. It shall be the duty of the said Commissioner of 
 State Charitable Institutions to visit each of the said charitable, 
 
107 
 
 reformatory or correctional institutions within the State, re- 
 ceiving State aid, and each of the city and county jails and 
 prisons, and alms, poor and work houses, at least twice in 
 every calendar year, and to examine into the condition of all 
 buildings, grounds and other property connected with such 
 institutions and of all matters relating to its management, 
 financial or otherwise ; and for such purpose he shall have free 
 access to the grounds and buildings, all books, papers, property 
 and supplies, of any such institution ; and all persons con- 
 nected with any such institution shall give such information 
 and afford such facilities for such examination and inquiry as 
 the Commissioner may require. The Examiners appointed by 
 him shall have the same powers of investigation and right of 
 access in all of the said institutions under the control of the 
 Department. The Commissioner and Deputy Commissioner of 
 the said Department and the Exminers appointed by its Com- 
 missioner, are each hereby authorized to administer oaths in 
 examining any person or persons relative to any matters con- 
 nected with the inquiries authorized by this Act. 
 
 SECTION 5. The said Commissioner of the Department of 
 State Charitable Institutions shall prepare a series of inquiries, 
 with necessary accompanying blanks, to the several institu- 
 tions of charity, reformation and correction, in the State, and 
 to those having charge of the poor in the several counties 
 thereof, and any sab-division of the same, with a view to illus- 
 trate in his annual report the causes and best treatment oi 
 pauperism, crime, disease and insanity; he shall also return 
 and publish in his said report all desirable information concern- 
 ing industrial and material interests of the Commonwealth 
 bearing on this subject. 
 
 SECTION 6. It shall be the duty of all persons having charge 
 or oversight over the poor in any city or county of this State, 
 or in any sub-division thereof, and all persons having charge 
 or control of county jails or prisons or work houses, and of all 
 other persons having charge or control over any other charita- 
 ble, reformatory or correctional institutions not now by law 
 required to make an annual report of the condition of the 
 same, to make report, annually, to the said Commissioner of 
 the Department of State Charitable Institutions at such time 
 and in such manner as he shall prescribe, of such facts and 
 statements concerning the same as he may require, and all 
 charitable, reformatory and correctional institutions now re- 
 quired by law to make annual reports, shall hereafter make and 
 transmit the same to the said Commissioner on or before the 
 first day of December in each year. 
 
108 r 
 
 SECTION 7. The statements required to be made by the inspec- 
 tors, sheriffs or other person having- charge of any penitentiary 
 or jail within this State, under the provisions of the first sec- 
 tion of the Act approved the twenty-seventh day of February, 
 one thousand eight hundred and forty-seven, entitled "An Act 
 requiring- inspectors of prisons, sheriffs, prothonotaries, and 
 clerks of criminal courts and others to make annual returns 
 to the Secretary of the Commonwealth, and for other purposes" 
 shall hereafter be made to the Department of State Charitable 
 Institutions ; and it shall be the duty of the inspectors, sheriffs 
 and other persons having- charg-e of any penitentiary or jail 
 within this Commonwealth to keep the records of the peniten- 
 tiary or jail in their charge after forms to be prepared for and 
 furnished them by the said Department of State Charitable In- 
 stitutions so that the information and statistics intended to be 
 obtained under the first section of the Act of the twenty- 
 seventh day of February, one thousand eight hundred and 
 forty-seven, and such other information and statistics as the 
 said Department of State Charitable Institutions may deem 
 necessary, may be presented with accuracy and uniformity. 
 
 SECTION 8. It shall be the duty of the said inspectors, sheriffs 
 and other persons to make return of the statements required by 
 the seventh section of this Act to the said Department of State 
 Charitable Institutions within ten days after the first days 
 of January, April, July and October in each year if required 
 by said Department, for each of which statements the officer 
 making the same shall receive the sum of ten dollars, to be? 
 paid out of the county funds of the coimty for which said 
 statement shall be made, and upon the neglect or refusal to 
 make such statements in the manner and at the times required 
 by this Act, such inspector, sheriff or other person so neglect- 
 Ing or refusing, shall forfeit and pay a fine of not more than 
 $100.00 to be sued for and collected by the Commissioner in 
 the name of the Department of State Charitable Institutions for 
 the use of the Commonwealth. 
 
 SECTION 9. It shall be the duty of the Overseers and Directors 
 of the Poor, or other persons having charge of the poor in the 
 several counties, cities, boroughs and townships of this Com- 
 monwealth, arid of all directors and managers of charitable 
 and correctional institutions, of the Commonwealth receiving 
 State aid, to keep their records after the manner and in the 
 form to be prescribed by the Department of State Charitable 
 Institutions, and to make returns thereof to said Department 
 at such times as they may direct; and in default thereof, the 
 
109 
 
 person or persons so offending- shall forfeit and pay a fine of 
 not less than one hundred dollars, to be sued for and collected 
 by the Commissioner, in the name of the Department of State 
 Charitable Institutions, for the use of the Commonwealth. 
 
 SECTION 10. That before any county prison or county alms- 
 house shall be erected within this Commonwealth, the plan 
 of construction of such prison or almshouse, drawn sufficiently 
 in detail for clear comprehension thereof, shall be submitted 
 by the Commissioners of the county in which the same is to be 
 built, to the Department of State Charitable Institutions, and 
 shall be inspected and approved by said Department, and so 
 certified by the Commissioner of said Department upon the 
 plan, a copy of which shall be furnished by the Commissioners 
 at the time of their submitting- the original as aforesaid, and 
 shall be signed by the Commissioner of the said Department, 
 and shall be filed and remain in the office of the Secretary of 
 the Commonwealth ; and that so much of the first section of 
 the Act of April eighth, one thousand eight hundred and fifty- 
 one, as requires the report of plans of county prisons to be made 
 to and approved by the Secretary of the Commonwealth, be 
 and the same is hereby repealed. 
 
 SECTION 11. It shall also be the duty of the Commissioner to 
 make a biennial report to the Legislature of all matters con- 
 nected with his Department and said institutions and the finan- 
 cial management thereof as he may deem necessary, covering 
 the two years ending November thirtieth preceding. He shall 
 make like special reports to the Legislature when requested by 
 either House or any Committee thereof, and like reports to the 
 Governor on the first days of January and July in each year 
 with such suggestions as he deems proper. 
 
 SECTION 12. All charitable institutions not wholly managed 
 and maintained by the State desiring to receive State aid for 
 construction, improvement or maintenance shall before the 
 first day of October of each year immediately preceding the 
 biennial session of the Legislature inform the said Commis- 
 sioner in writing of the sum asked to be appropriated therefor 
 and the purposes for which required ; together with such min- 
 utely detailed information under oath as he may require to 
 determine the cost of free hospital, dispensary and all other 
 kinds of service therein and the amount thereof during the 
 two years then next preceding ; provided that such infor- 
 mation already furnished may be taken in whole or in part as 
 the information now required. Upon the receipt thereof the 
 Commissioner, after such investigation and consultation with 
 
110 
 
 the managers of such institutions as he may deem necessary, 
 shall determine and advise the Legislature in his report of the 
 said cost and the amount thereof according to the different 
 kinds of service, and this shall form the basis of the appro- 
 priation to snch institution for maintenance by the Legisla- 
 ture for the two following years. 
 
 SECTION 13. The Department of State Charitable Institutions 
 shall have supervision over all houses or places in which 
 any person of unsound mind is detained, whenever the occu- 
 pant of the house or person having charge of the lunatic re- 
 ceives any compensation for the custody, control or attendance, 
 other than as an attendant or nurse, and also of all houses or 
 places in which more than one such person is detained with or 
 without compensation paid for custody or attendance. 
 
 SECTION 14. The Commissioner of the Department of State 
 Charitable Institutions, a member of the bar of at least ten 
 years' standing and a practicing physician of at least ten years' 
 standing shall act as a Committee on Lunacy, which Com- 
 mittee shall at all times be subject to the authority and con- 
 trol of the Department of State Charitable Institutions. The 
 two professional members shall be appointed by the Governor 
 and confirmed by the Senate after the passage of this Act for 
 a term of five years or upon any vacancies occurring by death 
 or resignation for the unexpired term of such appointment, 
 or on expiration of the term of service, and the Governor upon 
 sufficient cause may in his discretion remove any member from 
 the office. The Committee shall choose a Chairman from their 
 number and a person to serve as Secretary for the current 
 year and annually thereafter in November. Two members shall 
 constitute a quorum of the Committee. The Secretary shall 
 receive an annual salary of three thousand dollars, with nec- 
 essary incidental expenses, to be accompanied with proper 
 vouchers payable quarterly by the State Treasurer, and he may 
 be removed at the pleasure of the Committee. 
 
 SECTION 15. The report of the said Committee on Lunacy 
 shall be published annually with that of the Department of 
 State Charitable Institutions. 
 
 SECTION 16. The Department shall have power, from time to 
 time, with the consent of the Chief Justice of the Supreme 
 Court and of the Attorney General, to ordain rules and regu- 
 lations on the following matters, so far as the same are not 
 inconsistent with any laws of this Commonwealth then in force, 
 and of any provisions of this Act : 
 
Ill 
 
 (1). The licensing of all houses or places in which any per- 
 son can be lawfully detained as a lunatic, or of unsound mind, 
 upon compensation paid to or received by the owner or occu- 
 pant of such house or place, directly or indirectly, for the care 
 of such lunatic, and also of all houses or places in which more 
 than one person of unsound mind is detained, or resides : Pro- 
 vided, That this clause shall not extend to any jail or prison: 
 And provided also, That the Department, with consent as afore- 
 said, may, from time to time, exempt any particular hospital 
 established by the State, or under any municipal authority, or 
 any eleemosynary institution from the obligation to apply for 
 or obtain a license, and no such institution now existing shall 
 be required to take out a license until required to do so by the 
 Department, with the consent aforesaid. 
 
 (2). Regulations to insure the proper treatment of persons 
 detained in any house or place, whether licensed or not, that 
 are subject to the provisions of this Act, and to guard against 
 haproper or unnecessary detention of such persons. 
 
 (3). Regulations of the forms to be observed warranting the 
 commitment, transfer of custody, and discharge of all luna- 
 tics, other than those committed by order of a Court of 
 Record, and as to these with the consent of the Presiding 
 Judge of the Court under whose order the person is detained. 
 
 (4). The visitation of all houses or places licensed under 
 this Act, or in which any persons are detained as lunatics, 
 and of all persons detained therein. 
 
 (5). The withdrawal of such licenses, and the imposition of 
 conditions under which they shall continue. 
 
 (6). Reports and information to be furnished by the man- 
 ager or managers of all houses or places for the detention or 
 treatment of the insane which are subject to the provisions 
 of this Act, and by Boards of Visitors. 
 
 (7). Regulations as to the number of persons that may be 
 detained, and the accommodations to be provided, and food, 
 clothing, fuel to be furnished, in any house or building, subject 
 to the provisions of this Act, the manner of such detention, and 
 the restraints imposed, the means of communication by those 
 detained, with relatives, friends and other persons outside the 
 houses and places of detention. 
 
 SECTION 17. There shall be appointed Boards of Visitors of 
 all houses or places, licensed under this Act, or in which any per- 
 son of unsound mind is detained and for the care and custody 
 of whom compensation of any kind is received or where more 
 than one such person is detained. One such Board shall be 
 
112 
 
 appointed in every county in which there is a house or place, 
 subject to the provisions of this Act, of not less than three per- 
 sons, and in each county where there are more than one such 
 house or place, the number constituting- the Board of Visitors 
 of such county shall be increased in the discretion of the Com- 
 mittee on Lunacy. 
 
 SECTION 18. The members of the Board of Visitors shall be 
 appointed by the Department of State Charitable Institutions 
 in each year, and shall continue until their successors arc 
 appointed, and the Department may remove the visitors, and 
 fill vacancies in the office. 
 
 SECTION 19. Women may be appointed members of the Boards 
 of Visitors, and at least once a year these Boards shall be filled 
 so that members who have failed to act shall be removed. 
 
 SECTION 20. It shall not be lawful for any person or persons 
 or corporations, not exempted from the obligation to obtain 
 a license under this Act, to keep or maintain a house or place 
 for the reception or custody of persons of unsound mind, with- 
 out having- received a license under this Act ; nor when such 
 license has expired or been withdrawn or suspended, and the 
 manager and occupant of any such house, within which more 
 than one person shall be detained, as being- a person of un- 
 sound mind, for compensation received, and the manager and 
 occupant of any such house or place wherein more than one 
 person is received and detained, with or without compensa- 
 tion, and while there is no license in force authorizing the 
 keeping of such a house or place, shall be deemed guilty of a 
 misdemeanor. 
 
 SECTION 21. Any person having charge or control of any 
 house or place subject to the provisions of this Act, used for 
 the detention, care or custody of a lunatic, who shall violate 
 or omit to observe any regulation of the Committee on Lu- 
 nacy, authorized by this Act, after a copy of the same has been 
 left at the said house or place or delivered to the person 
 named in the license, or to the manager of such house, shall be 
 deemed guilty of a misdemeanor; and all common law rights 
 of action or indictments are also reserved. 
 
 SECTION 22. The Department of State Charitable Institutions 
 shall, from time to time, provide for an effectual visitation 
 of all persons confined as insane in all places over which they 
 are given jurisdiction by this Act, and an inspection of sucb 
 houses or places of confinement, and of the mode of treatment 
 of the insane. 
 
113 
 
 SECTION 23. And the Department shall make rules to insure 
 to the patients the admission of all proper visitors, being" 
 members of their family, or personal friends, agents or attor- 
 neys, and compel obedience to such regulations. 
 
 SECTION 24. The detention of any person as insane in any 
 house or place, made subject to the provisions of this Act, 
 without compliance with the requisitions of this Act, shall be 
 a misdemeanor on the part of any person concerned in such 
 detention, who has omitted or permitted the omission of any 
 of the requirements, and the party aggrieved shall also be 
 entitled to his action for damages. 
 
 SECTION 25. No verdict or judgment shall be entered in any 
 action, nor shall any judgement be entered on any indictment 
 for such detention, as against any person or persons who are 
 subject to the regulations and provisions of this Act, who shall 
 have complied with the requirements of this Act ; unless the 
 Judge, after trial and verdict, shall certify that there was 
 proof, to his satisfaction, that the party charged acted with 
 gross negligence or corruptly, or that he acted without reason- 
 able or probable cause, or was actuated by motives other than 
 the good of the person restrained. 
 
 SECTION 26. In all buildings or establishments where an in- 
 sane person is detained, which are subject to the provisions 
 of this Act, there shall be kept the following books, which 
 shall be at all times open to the inspection of any member 
 of the Committee on Lunacy, or the Board of Visitors of the 
 proper county : 
 
 An admission book. 
 
 A discharge book. 
 
 A case book in which there shall be regularly entered all 
 the facts, bearing on each patient and his case. 
 
 A medical journal in which there shall be, at least once a 
 week, a statement written of all matters which are of special 
 importance, bearing on the treatment and condition of the 
 patients. 
 
 SECTION 27. No person shall be received as a patient for 
 treatment or for detention into any house or place, where 
 more than one insane person is detained, or into any house or 
 place where one or more insane persons are detained for 
 compensation, without a certificate signed by, at least, two 
 physicians, resident in this Commonwealth, who have been 
 actually in the practice of medicine for at least five years, 
 both of whom shall certify that they have examined sepa- 
 
114 
 
 rately the person alleged to be insane, and after such exami- 
 nation had, do verily believe that the person is insane, and 
 that the disease is of a character, which, in their opinion, re- 
 quires that the person should be placed in a hospital or other 
 establishment where the insane are detained for care and treat- 
 ment, and that they are not related by blood or marriage to 
 the person alleged to be insane, nor in any way connected aa 
 a medical attendant, or otherwise, with the hospital or other 
 establishment, in which it is proposed to place such person. 
 
 SECTION 28. The certificate above provided for shall have been 
 made within one week of the examination of the patient, and 
 within two weeks of the time of the admission of the patient, 
 and shall be duly sworn to or affirmed before anyone author- 
 ized to administer oaths by the laws of this Commonwealth, 
 who shall certify to the genuineness of the signatures, and to 
 the standing and good repute of the signers. And any person 
 falsely certifying as aforesaid shall be guilty of a misdemeanor, 
 and also liable civilly to the party aggrieved. 
 
 SECTION 29. No person alleged to be insane shall be received 
 into any house for treatment or for detention, unless at the 
 time of such reception the person or persons, at whose in- 
 stance the person is received, shall, by a writing signed, state 
 that the person has been removed, and is to be detained at his 
 or her request, under the belief that such detention is neces- 
 sary and for the benefit of the insane person. 
 
 SECTION 30. There shall also be delivered to the person or 
 persons having the supervision or charge of house, a written 
 statement of the following facts relative to the person to be 
 detained, signed by the person or persons at whose instance 
 the insane person has been removed and detained, or if the 
 facts be not known it shall be so stated. 
 
 (1). The name. 
 
 (2). Age. 
 
 (3). Kesidence for the past year, or for so much thereof as is 
 known. 
 
 (4). Occupation, trade or employment. 
 
 (5). Parents, if living. 
 
 (6). Husband or wife. 
 
 (7). Children. 
 
 (8). Brothers and sisters, and the residence of each of these 
 persons. 
 
 (9). If not more than one of these classes is known, the 
 names and residences of such of the next degree of relatives, 
 as are known. 
 
115 
 
 (10). A statement of the time at which the insanity has 
 been supposed to exist, and the circumstances that induce the 
 belief that insanity exists. 
 
 (11). Name and address of all medical attendants of the 
 patient during- the last two years. 
 
 SECTION 31. Should the person in charge of the house have 
 reason to believe that any of these statements have been omitted 
 through ignorance, and that the answers will be immediately 
 furnished, and no reason existing to doubt the good faith of 
 the parties, after inquiring of the person intended to be de- 
 tained, it shall be lawful to detain the person alleged to be 
 insane for such further period as shall be necessary to obtain 
 the said statements complete, but not exceeding seven days. 
 
 SECTION 32. Within twenty-four hours after any person is 
 received into any house for detention as an insane person, the 
 person in charge there shall enter or have entered in a book 
 kept for that purpose all the facts stated in the certificate or 
 documents required to be exhibited at the time of receiving the 
 patient, and shall file the originals and preserve them. The 
 regular medical attendant of the house shall, within twenty- 
 four hours after the reception of any patient, examine such 
 patient and reduce to writing ine results of such examination, 
 and enter the same upon a book to be kept for that purpose, 
 together with the opinion formed from such examination, and 
 from the documents received with the patient. 
 
 SECTION 33. In case the said medical attendant is of the 
 opinion that a detention is not necessary for the benefit of the 
 patient, he shall notify the person or persons at whose in- 
 stance the patient is detained, and unless such person shall, 
 without a delay not exceeding seven days, exhibit satisfactory 
 proof of such necessity, the patient shall be discharged from 
 the house and restored to his family or friends. 
 
 SECTION 34. At the time of such examination, the medical 
 attendant shall himself cause the patient distinctly to under- 
 stand, if he or she is capable of doing so, that if he or she 
 desires to see or otherwise communicate with any person or 
 persons, means will be provided for such interview or commu- 
 nication, and said attendant shall personally see that proper 
 means are taken to communicate this fact to the person or 
 persons indicated by the patient, and any proper person or per- 
 sons, not exceeding two, shall be permitted to have a full and un- 
 restrained interview with the patient. 
 
 SECTION 35. The statements furnished at the time of the re- 
 ception of the patient (and of the examination of the patient 
 
116 
 
 by the medical attendant of the house) shall be forwarded by 
 mail to the address of the Committee on Lunacy, within seven 
 days from the time of the reception of the patient, which shall 
 by them be entered in a book which they shall keep for this 
 purpose, and at least once in six months there shall be a re- 
 port made by the medical attendant of the house, on the 
 condition of each patient, tog-ether with such other matters 
 relative to the case, as the said Committee may require ; and 
 at any time such report shall be made upon the request of the 
 Secretary of the Committee on Lunacy. 
 
 SECTION 36. During- the detention of any person as insane, 
 any medical practitioner designated by him, or by any mem- 
 ber of his family, or "near friend," with the sanction of . a 
 Judge of a Court of Record of the county in which such in- 
 sane person resided at the time of his removal and detention, 
 shall be permitted, at all reasonable hours, to visit and ex- 
 amine the patient; and such medical attendant shall, unless 
 objected to by the patient, be permitted by request of his ot- 
 her family, or "near friend," and with the consent of the 
 physician in chief of the establishment, to attend the patient 
 for all maladies other than insanity, in the same manner as 
 if the patient were in his own home. 
 
 SECTION 37. All persons detained as insane shall be furnished 
 with materials and reasonable opportunity, in the discretion 
 of the superintendent or manager, for communicating, under 
 seal, with any person without the building, and such communi- 
 cation shall be stamped and mailed. They shall have the un- 
 restricted privilege of addressing communications, if they so 
 desire, not oftener than once a month, to any member of the 
 Committee on Lunacy. 
 
 SECTION 38. The provisions of this Act in respect of the ad- 
 mission or discharge of patients, shall not extend to insane 
 criminals in custody. Such persons shall not be received ex- 
 cept when delivered by a sheriff of the county or his deputy, 
 together with an order of the Court of the county in w r hich he 
 was arrested or convicted, having jurisdiction of the offense, 
 under the seal of the Court and signed by a law Judge. Nor 
 shall such criminals be discharged from a hospital or other 
 place of detention for the insane, saving on a like order, and 
 to the sheriff or his deputy producing such an order, and while 
 detained as an insane person, such criminal shall be so kept as 
 to insure his detention until duly discharged. Whenever any 
 person detained in any gaol or prison is insane, or in such a 
 condition as to require treatment in a hospital for the insane, 
 
117 
 
 it shall be the duty of any law Judge of the Court, under 
 whose order the person is detained, upon application, to direct 
 an inquiry into the circumstances, either by a commission, or- 
 otherwise, as he shall deem proper, with notice to the Com- 
 mittee 011 Lunacy; and if the Judge shall be satisfied that the 
 person confined requires treatment in a hospital, he shall 
 thereupon direct the removal of the said person from the gaol or- 
 pin son to a State hospital, which order shall be executed by 
 1 lie sheriff of the county or his deputy, and the actual ex- 
 penses of such removal, and the expenses of maintaining the 
 person, in the hospital, shall be paid by the county liable for 
 the maintenance of the said person in the gaol or prison from 
 which he is removed. 
 
 SKCTION 39. The trustees, managers and physician of any hos- 
 pital, in which a criminal is confined by order of any Court, 
 or in which a lunatic has been committed after an acquittal 
 of crime, shall not discharge, release or remove the prisoner 
 or lunatic without the order of a Court of competent juris- 
 diction ; and in case such lunatic, whether a convict or ac- 
 quitted, is not set at large but is to be removed to any place 
 of custody other than a hospital, the order for removal shall 
 not be made without notice to the Committee on Lunacy, and 
 time given them to investigate the case, and be heard on the 
 application. 
 
 SECTION 40. All persons that have been detained as insane 
 (other than criminal insane, duly convicted and sentenced by 
 a Court) shall, as soon as they are restored to reason and are 
 competent to act for themselves, in the opinion of the medical 
 attendant of the house, be forthwith discharged; and any per- 
 son so detained shall, at all times, be entitled to a writ of 
 habeas corpus for the determination of this question, and 
 on the hearing the respondent in that writ shall be required to 
 pay the costs and charges of the proceedings unless the Judge 
 shall certify that there was sufficient ground, in his opinion, to 
 warraiit the detention, and put the petitioner to his writ; in 
 ease the discharged patient be in indigent circumstances, such 
 person shall be furnished with necessary raiment, and with 
 funds sufficient for sustenance and travel to his home, to be 
 charged to the county from which such patient was committed. 
 
 SECTION 41. The Committee on Lunacy shall be notified of 
 all discharges w r ithin seven days thereafter, and a record of 
 the same shall be kept by the Committee. 
 
 SECTION 42. The Committee 011 Lunacy may, at any time, 
 order and compel the discharge of any person detained as in- 
 
118 
 
 sane (other than a person committed after trial and convic- 
 tion for crime, or by order of Court). But such order shall 
 not be made, unless notice be given to the person having charge 
 of the building in which the patient is detained, and to the per- 
 son or persons at whose instance the patient is detained, and 
 reasonable opportunity given them to justify a further deten- 
 tion, and the Committee shall not sign an order of discharge, 
 unless they have personally attended and examined the case of 
 the patient. 
 
 SECTION 43. Persons voluntarily placing themselves in any of 
 the houses provided for in this Act, and who may be suffering 
 from nervous diseases threatening mental disorder, may be re- 
 ceived for a period of one month or less, by an agreement, 
 which shall also specify the time, signed by them at the time 
 of admission, and they may renew said agreement at the end 
 of one month, but no agreement shall be deemed to authorize 
 their remaining, unless signed in the presence of some adult 
 persons attending as a friend of the person applying in the 
 presence of and also by the medical attendant. 
 
 SECTION 44. So much of the Act, entitled "An Act to provide 
 for the admission of certain classes of the insane into hospitals 
 for the insane, in this Commonwealth and their discharge 
 therefrom," approved the twentieth day of April, Anno Domini 
 one thousand eight hundred and sixty-nine, number fifty-four, 
 of the pamphlet laws of that year, as provides, "that insane 
 persons may be placed in a hospital for the insane by their 
 legal guardians, or by their relatives or friends in case they 
 have no guardians, but never without the certificate of two or 
 more reputable physicians, after a personal examination made 
 within one week of the date thereof, and this certificate to be 
 duly acknowledged and sworn to or affirmed before some mag- 
 istrate or judicial officer wlio shall certify to the genuineness 
 of the signature, and to the respectability of the signed," is 
 amended, and the persons thereby authorized to place an insane 
 person in a hospital, are required to observe the forms and con- 
 ditions, required by this Act, in exercising the powers con- 
 ferred by the said Act of the twentieth day of April, Anno 
 Domini one thousand eight hundred and sixty-nine, when the 
 insane person is placed in any house, hospital or place, which 
 is subject to the provisions of this Act. 
 
 SECTION 45. So much of said Act, as provides by section second 
 "that it shall be unlawful, and be deemed a misdemeanor 
 in law punishable by fine of not exceeding one hundred 
 
119 
 
 dollars, for any superintendent, officer, physician, or other 
 employe of any insane asylum, to intercept, delay or interfere 
 with, in any manner whatsoever, the transmission of any letter 
 or other written communication, addressed to an inmate of any 
 insane asylum to his or her counsel, residing in the county in 
 which the home of the patient is, or in the city or county in 
 which the asylum is located," is hereby amended so that the 
 same shall extend to the superintendents, officers, physicians, 
 servants or other employees of all hospitals, houses or places 
 for the treatment or detention of the insane which are subject 
 to the provisions of this Act. 
 
 SECTION 46. So much of the said Act as provides by section ten, 
 "If the superintendent or officer of any hospital for the insane, 
 shall receive any person into the hospital after full compliance 
 with the provisions of this Act, no responsibility shall be in- 
 curred by them for any detention in the hospital," as applies 
 to the superintendent or officers of any hospital house or place 
 made subject to the provisions of this Act, is repealed and in 
 place of the provisions of that Act, for the protection of such 
 superintendents or officers, the provisions of this Act for that 
 purpose are substituted. 
 
 SECTION 47. The managers and officers of any hospital or 
 licensed house or place, shall not be liable to the penalties im- 
 posed by this Act, and shall be entitled to all the protection 
 of this Act, in case of receiving for detention a lunatic, or al- 
 leged lunatic, without complying with the requisitions of the 
 Act, if the judge trying the cause shall certify that the said 
 officers and managers had good reason to believe that such 
 receiving and detention were necessary for the safety of the 
 lunatic, or other persons, and, that the delay required to comply 
 with the requirements of this Act would have been injurious to 
 the person detained or to other persons, and that Inhere is no 
 reason to believe that they, or any of them, were actuated by 
 improper motives. And within forty-eight hours after any 
 person is thus received, all the requisitions of this Act to au- 
 thorize a detention shall have been complied with, or the person 
 discharged from custody, and the officers of the hospital, or 
 place where such lunatic has been thus received, shall forthwith 
 notify the Department of State Charitable Institutions of the 
 facts connected with the reception and detention. 
 
 SECTION 48. Whenever any person shall be found by inquisition 
 returned, shall thereupon forthwith send to the Committee on 
 to be insane, the committee of the person or of the estate, and 
 also the clerk of the court into which the inquisition has been 
 
120 
 
 Lunacy at their principal office, a statement in writing, signed 
 by the committee of the lunatic, of the name, age, sex, and resi- 
 dence of the lunatic, and the residence of the committee, and 
 upon any change in the residence or place of detention of the 
 lunatic, shall forthwith notify the Committee on Lunacy of 
 MK'h change. The Committee on Lunacy, or any one or more 
 of the members of the committee, shall have power to visit 
 and examine the said lunatic, and authorize such visiting and 
 examination by their secretary, or any board of visitors, or one 
 or nrn-e members thereof, and by a physician, and the said 
 committee are authorized to apply to any court, having juris- 
 diction over the committee, or to a Judge of a Court of Common 
 Pleas, of the county in which the lunatic is a resident or de- 
 tained, tc make such orders for the maintenance, custody or 
 care of the said lunatic, and for the care and disposition of the 
 property of a lunatic, as the case may require. From any order 
 final or otherwise, thus made, an appeal may be taken to the 
 Supreme Court, but such appeal shall not be a supersedeas, un- 
 less so ordered by the Court making the order, or by a Judge of 
 the Supreme Court, on application and a hearing. 
 
 SECTION 49. The Committee on Lunacy are hereby author] xed 
 and empowered to transfer any such indigent insane persons in 
 county poor houses or almshouses or otherwise in the custody 
 of tne directors or overseers of the poor, to the State hospitals 
 for the insane for care and treatment, and at its discretion to 
 transfer any such indigent insane persons from the State hos- 
 pitals or asylums to the poorhouses, almshouses or prisons of 
 the several counties chargeable for their maintenance, or upon 
 being satisfied that any of the State hospitals for the insane 
 are overcrowded, to transfer patients or inmates from one State 
 hospital for the insane to another. The costs of such transfer 
 shall be paid out of the general appropriation for the care of 
 the insane, and upon certificate of the Committee on Lunacy 
 that such transfer has been made, and of its cost. The munici- 
 palities or persons liable to the institutions to which the com- 
 mitment was made shall, after this transfer, be liable to the 
 hospital for the insane to which such transfer shall be made. 
 
 SECTION 50. The expense of the care and treatment of the indi- 
 gent insane, in the State hospitals for the insane, is hereby 
 fixed at the uniform rate of one dollar and seventy-five cents 
 per week for each person, including clothing, chargeable to the 
 respective counties or poor districts from which such insane 
 shall come; and the excess over said one dollar and seventy- 
 
121 
 
 five cents shall be paid by the State, but in no case shall said 
 excess exceed two dollars and fifty cents per week for each 
 indigent insane person. 
 
 SECTION 51. Poor districts in this Commonwealth, which have 
 supplied or may hereafter supply a hospital for the care and 
 treatment of the indigent insane according to plans and speci- 
 fications approved by the Department of State Charitable Insti- 
 tutions, which said insane hospital shall be provided with all 
 the modern appliances for the treatment of the insane, with a 
 medical superintendent of experience in the treatment of mental 
 diseases and who shall be in actual practice for at least five 
 years, in which the said insane are attended by trained and 
 skilled nurses and in every way receive the same care and at- 
 tention as they would receive in any State hospital for the in- 
 sane, shall hereafter be entitled to the same allowance for the 
 care and treatment for the indigent insane as is herein given 
 to State hospitals for the insane. 
 
 SECTION 52. Any county, municipality, borough, or township 
 of this Commonwealth, which now has, or may hereafter supply, 
 erect and equip, a suitable institution for the maintenance, care 
 and treatment of its indigent insane, upon plans and specifi- 
 cations approved in writing by the Department of State Chari- 
 table Institutions shall receive from the State Treasurer the sum 
 of two (2) dollars per week for every indigent insane person of 
 such county, municipality, borough or township, so maintained, 
 who has been legally adjudged to be insane and committed to 
 such institution, or who may be transferred from a State hos- 
 pital for the insane to such local institution : Provided, That the 
 Department of State Charitable Institutions shall be satisfied 
 that the quality and equipment of such institution and the man- 
 ner of care and treatment therein furnished is proper and 
 suitable to the class or classes of the indigent insane so main- 
 tained, and shall so certify to the Auditor General before any 
 such payment shall be made. 
 
 SECTION 53. The Superintendent and Trustees of each of the 
 State charitable, reformatory or correctional institutions, 
 entirely or partially supported by State aid, shall, on or be- 
 fore the fifteenth day of May, August, November and Febru- 
 ary, if so directed by the Commissioner, cause to be pre- 
 pared estimates, in triplicate, giving in minute detail all 
 the expenses required for the institution for the ensuing xnree 
 months, to be paid for out of moneys appropriated by the State ; 
 two of such triplicate estimates shall be sent to the Commis- 
 
122 
 
 sioner, and the other retained on file in the office of the insti- 
 tution. The Commissioner may cause such estimates to be re- 
 vised, either as to quantity or quality of supplies, and the es- 
 timated cost thereof, and shall certify that he has carefully 
 examined the same, and that the articles contained in such es- 
 timate, so approved of revised by him, are actually required for 
 the use of the institution ; and shall, thereupon, present such 
 estimate and certificate to the Auditor General. Whereupon the 
 Auditor General shall authorize the Board of Managers or 
 Trustees or other managing officers of such institutions to make 
 drafts on him, as the money may be required for the purposes 
 mentioned in such estimates, and such drafts shall be paid, on 
 the warrant of the Auditor General, out of the funds in the 
 State Treasury appropriated for the support of such institu- 
 tions. In every such estimate there shall be a sum named, not 
 to exceed 5 per centum of the amount drawn from the State 
 during the preceding quarter, as a contingent fund, for which 
 no minute detailed statement need be made. No expenditures 
 shall be made from such contingent fund except in case of actual 
 emergency, requiring immediate action, and which cannot be 
 averted without loss or danger to the institution or the inmates 
 thereof. The treasurer of such institution shall not pay ac- 
 counts for goods furnished, and salaries of officers or employes, 
 out of any moneys appropriated by the State, without the cer- 
 tificate of the Superintendent of such institution, and the ap- 
 proval of the Commissioner. Nor shall the treasurer *of any 
 such institution pay accounts for supplies furnished to officers 
 or employes, out of such moneys, except on the certificate of the 
 superintendent that the same are drawn from the ordinary sup- 
 plies provided for the general use of the institution. No per- 
 son other than patients, officers or employes of such institutions, 
 and the families of the superintendent, medical officers or 
 stewards, necessarily residing therein, shall be allowed rooms 
 or maintenance in such institutions, except at a rate to be 
 fixed by the Auditor General and the Commissioner, with the 
 approval of the Governor. 
 
 SECTION 54. The treasurer of each charitable reformatory or 
 correctional institution receiving State aid, shall, on or before 
 the fifteenth day of June, September, December and March, 
 make to the Commissioner a full and perfect statement of all 
 receipts and expenditures of State moneys used, specifying the 
 several items for the last preceding quarter, and such statement 
 shall be verified by the affidavit of the treasurer, attached thereto, 
 in the following form : 
 
123 
 
 I treasurer of the 
 
 do solemnly swear that I have deposited in the bank all the 
 moneys appropriated by the State, and received by me on ac- 
 count of such during the last quarter, 
 
 and I do further swear that the foregoing is a true abstract of 
 all such moneys received and expenses incurred by me, or 
 under my direction, as such treasurer, during the quarter ending 
 on the day of , 19 
 
 SECTION 55. There shall be attached to such treasurer's state- 
 ment of State moneys so received and expended, the affidavit 
 of the superintendent, steward, or other officer having like 
 powers, to the effect that the goods and other articles therein 
 specified were purchased and received by him, or under his di- 
 rection, at the institution ; that the goods were purchased at 
 a fair cash market price, and paid for; and that he, or any 
 person in his behalf, had no pecuniary or other interest in the 
 articles purchased ; that he received no pecuniary or other 
 benefit therefrom, in the way of commission, percentage, de- 
 ductions or presents, or in any other manner, directly or in- 
 directly. He shall state the name or names of the person or 
 persons, or firm or corporation, from whom said articles were 
 purchased, and that the articles contained in such bill were 
 received at the institution; that they conform in all respects 
 to the invoice of goods received and ordered by him, both in 
 quantity and quality. Such statement shall be accompanied by 
 a voucher showing the payment of the several items contained 
 in the statement, the amount of such payments, and for what 
 the payments were made. Such vouchers shall be examined by the 
 Commisioner and, if found correct, shall be endorsed and for- 
 warded by the Commissioner, with the statement, to the Auditor 
 General, who shall have the power of final audit. If any voucher 
 is found objectionable, for any cause whatever, the Commis- 
 sioner or the Auditor General shall endorse his disapproval there- 
 on, with his reasons therefor, and return it to the treasurer 
 of such inst'tution, who shall present it to the board of 
 managers or trustees for correction, and immediately return it. 
 If it is then in correct form, and satisfactory to the Commis- 
 sioner and the Auditor General, it shall be filed. In the event 
 that it is still unsatisfactory, to either the Commissioner or 
 the Auditor General, the amount thereof shall be disallowed. 
 All vouchers and statements shall be filed in the office of the 
 Auditor General. 
 
 SECTION 50. All purchases for the use of the State charitable, 
 reformatory or correctional institutions receiving State aid, and 
 
124 
 
 paid for with moneys appropriated by the State, shall be made 
 for cash, and not on credit or time. Every voucher shall be duly 
 filled up at the time it is taken; and with every abstract of 
 vouchers paid there shall be proof, on oath, that the vouchee 
 was filled up and the money paid at the time it was taken. The 
 board of managers or trustees shall make all needful rules 
 and regulations to enforce the provisions of this section. The 
 Commissioner, his deputy, any manag'er or officer, trustee 
 or employee, of any such institution, shall not be interested, 
 directly or indirectly, in the furnishing- of any materials, labor 
 or supplies for the use of any such institution ; nor shall 
 any manager or trustee act as attorney or counsel for 
 the board of managers or trustees thereof. The Commis~ 
 sioner may arrange with the board of managers or trustees 
 of any such institution under his control for the purchase, 
 by contract, of such staple articles or supplies as may be 
 found feasible to purchase for the use of such institution, or 
 any of them. Such contracts shall be let only after advertise- 
 ment has been made by the trustees, in accordance with the di- 
 rections and subject to the approval of the Commissioner. The 
 contracts shall be let to the lowest bidder, and executed by the 
 president of the board of managers or trustees, subject to the 
 approval of the Commissioner. Every bidder shall be required 
 to file with the Commissioner a certified check, in the sum of 
 five hundred dollars ($500) as a guaranty of good faith and 
 his willingness to execute the contract if it should be awarded 
 to him. In the event of the successful bidder failing to qualify, 
 in accordance with the provisions of this section, the amount of 
 this check shall be forfeited to the Commonwealth, and the 
 contract shall be awarded to the next highest bidder. The suc- 
 cessful bidder shall give a bond to the Commonwealth, in a 
 sum to be approved by the Attorney General, for the faithful 
 performance of his contract. Each of such institutions may 
 manufacture such supplies and materials, to be used in the 
 institution, as can be economically and properly made therein, 
 with the approval of the Commissioner. When requested by 
 the Commissioner, the superintendents, managers or trustees 
 of such institutions, or any of them, shall meet at the office of 
 Ihe Commissioner, at Harrisburg, for the purpose of consider- 
 ing the feasibility of joint contracts. 
 
 SECTION 57. The Governor, Auditor General, and Commissioner 
 of State Charitable Institutions, or a majority of such officers 
 shall approve or reject all plans and specifications for any new 
 buildings, or for any unusual repairs or improvements for any 
 State charitable, reformatory or correctional institution, out of 
 
125 
 
 State moneys appropriated therefor, and no such building- 
 shall be erected, or such repairs or improvements made, until 
 the plans and specifications therefor have been so approved. 
 The contracts for such erection, repairs or improvements 
 may be let by the board of managers or trustees to 
 the lowest responsible bidder, after thirty days advertisement 
 in two newspapers of general circulation in the county wherein 
 said institution is' located; but such contracts must be ap- 
 proved by the Governor, Auditor General, and the Commis- 
 sioner, or a majority of them; and, subject to such approval, 
 such contracts may be sublet. A certified check, drawn upon 
 some legally incorporated bank or trust company of this State, 
 shall, in all cases, be required as an evidence of good faith, 
 upon all proposals for buildings, repairs or improvements, to 
 be deposited with the Commissioner, and in an amount to be 
 determined by him. All contracts for the erection, repairs or 
 improvements to said institutions shall contain a clause that 
 the contract shall be deemed executory only to the extent or 
 the moneys available, and no liabilities shall be incurred by 
 the State beyond the moneys available for the purpose. 
 
 SECTION 58. The board of managers or trustees of each of the 
 State charitable reformatory or correctional institutions re- 
 ceiving State aid, in addition to their other duties now required 
 by law, shall visit and inspect the institution, for which it is 
 appointed, at least monthly, and shall make a written report, 
 in duplicate, to the Governor and the Commissioners, within 
 ten days of each such visitation, to be signed by each member 
 making such visitation. Such report shall state, in detail the 
 financial condition of the institution visited, and such other 
 matters appertaining to the management and affairs thereof 
 as, in the opinion of the board, should be brought to the at- 
 tention of the Governor or the Commissioner and may contain 
 recommendations as to needed improvements or changes in the 
 institution or its management. 
 
 SECTION 59. No money shall be paid on any contract for repairs, 
 improvements or new buildings for any State charitable re- 
 formatory or correctional institution receiving State aid, until 
 the voucher for the same shall be approved by the board of 
 managers or trustees, and forwarded to the Commissioner, who 
 shall, if he approve the same, endorse his approval thereon, and 
 present the same to the Auditor General for his approval. If 
 the account be approved, the Auditor General shall draw his 
 warrant to the order of the contractor, who shall be paid by 
 the State Treasurer out of moneys appropriated for the repair 
 and improvements of such institution. 
 
126 
 
 SECTION 60. No warrant shall be issued by the Auditor General, 
 and no money fhall be paid by the State Treasurer, to the trus- 
 tees or managers of any such institution except upon a voucher 
 signed by the treasurer of said institution, and duly approved 
 by the Commissioner of State Charitable Institutions. 
 
 SECTION 61. The sum of seventy-five thousand dollars ($75,000), 
 or so much thereof as may be necessary, be, and the same is 
 hereby specifically appropriated for the purpose of paying the 
 salaries and expenses provided herein, the same to be on war- 
 rant drawn by the Auditor General on the State Treasurer, out 
 of moneys not otherwise appropriated by law. 
 
 SECTION 62. That the Act entitled "An Act to create a Board 
 of Public Charities," approved the twenty-fourth day of April, 
 1869, and the several supplements and amendments thereto, 
 are hereby repealed. 
 
 SECTION 63. That the Act entitled "An Act relative to the 
 supervision and control of hospitals or houses in which the 
 insane are placed for treatment or detention," approved the 
 eighth day of May, 1883, and the several supplements and 
 amendments thereto are hereby repealed. 
 
 SECTION 64. All Acts are parts of Acts inconsistent herewith 
 or supplied hereby be and the same are hereby repealed. 
 
127 
 
 (B) NECESSITY OF INCREASED STATE 
 EXPENDITURE. 
 
 The demand for better roads comes from all classes of 
 citizens, automobile owners, farmers and all others who 
 use the highways. It is elsewhere proposed that the tax on 
 automobiles shall be applied to the maintenance of im- 
 proved roads. All the increased revenue that could be 
 legitimately raised could be expended in this way with 
 benefit to the State. 
 
 The following table (see page 128) shows the improved 
 and unimproved roads of the Commonwealth outside of 
 Philadelphia. In spite of the'amounts already spent it ap- 
 pears that only a beginning has been made. 
 
 Since the organization of the State Highway Department 
 in 1903 we have spent $8,168,700 for the construction of 
 State highways with a total road mileage of 86,593. In 
 the last five years New York State has spent $26,000,000, 
 arid the counties $10,000,000 on main highways, though 
 its total road mileage is only 67,579 miles. In New Jersey 
 $6,000,000 has been spent on road construction, of which 
 the State 's share was $1,550,000 upon a mileage of 14,842. 
 Massachusetts in five years has spent $4,274,633 on a mile- 
 age of 17,145 and Maryland a total of $7,384,000 on a 
 mileage of 16,000. 
 
128 
 Mileage of Public Roads. 
 
 
 Improved. 
 
 Unimproved. 
 
 Total. 
 
 1 Adams 
 
 7.35 
 
 1,058.61 
 
 1,065.96 
 
 2 Allegheny 
 
 289 01 
 
 1,384.29 
 
 1,673.30 
 
 3 Armstrong 
 
 14.39 
 
 1,708.75 
 
 1,723 14 
 
 4 Beaver 
 
 10.03 
 
 1,099.18 
 
 1,109.21 
 
 5 Bedford 
 
 17.08 
 
 1,707.97 
 
 1,725.05 
 
 6 Berks - 
 
 131.00 
 
 2,293.10 
 
 2,424.10 
 
 7 Blair _ 
 
 39.70 
 
 696.15 
 
 735.85 
 
 8 Bradford - 
 
 24.07 
 
 2,437.85 
 
 2,461.92 
 
 9 Bucks 
 
 87.84 
 
 1,678.50 
 
 1,766.34 
 
 10 Butler 
 
 15.57 
 
 1,815.86 
 
 1,831.43 
 
 11 Cambria - 
 
 10.21 
 
 1,143.74 
 
 1,153.95 
 
 
 1.59 
 
 143 74 
 
 150.33 
 
 13 Carbon 
 
 12.17 
 
 500.18 
 
 512.35 
 
 14 Centre - 
 
 9.30 
 
 1,048.98 
 
 1,058. '28 
 
 15 Chester 
 
 170.09 
 
 2,366.02 
 
 2,536.11 
 
 16 Clarion 
 
 6.73 
 
 1,367.22 
 
 1,373.95 
 
 17 Clearfield 
 
 17.09 
 
 1,682.80 
 
 1,699.89 
 
 18 Clinton 
 
 8.44 
 
 566.41 
 
 574.85 
 
 19 Columbia 
 
 6.67 
 
 1,264.44 
 
 1,271.11 
 
 20 Crawford 
 
 16.55 
 
 2,150.52 
 
 2,167.07 
 
 21 Cumberland 
 
 13.28 
 
 1,212.30 
 
 1,225.58 
 
 22 Dauphin 
 
 14.50 
 
 1,032.05 
 
 1,046.55 
 
 
 220.15 
 
 310.31 
 
 530.46 
 
 24 x Elk 
 
 5.50 
 
 537.39 
 
 542.89 
 
 25 Erie - 
 
 18.92 
 
 1,647.52 
 
 1,666.44 
 
 26 Fayette 
 
 15.02 
 
 1,659.53 
 
 1,674.55 
 
 27 Forest - 
 
 3.79 
 
 370.66 
 
 374.45 
 
 28 Franklin 
 
 58.25 
 
 1,175.41 
 
 1,233.66 
 
 29 Fulton 
 
 
 683.41 
 
 683.41 
 
 30 Greene 
 
 14.00 
 
 1,484.77 
 
 1,498.77 
 
 31 Huntingdon 
 
 19.28 
 
 1,302.95 
 
 1,322.23 
 
 32 Indiana 
 
 18.59 
 
 1,911.10 
 
 1,929.69 
 
 33 Jefferson 
 
 9. SI 
 
 1,210.15 
 
 1.219.96 
 
 
 
 771.95 
 
 771.95 
 
 35 Lackawanna . 
 
 5.00 
 
 744.01 
 
 749.01 
 
129 
 
 Mileage of Public Roads Continued. 
 
 
 Improved. 
 
 Unimproved. 
 
 Total. 
 
 36 Lancaster - 
 
 216.25 
 
 2,574.50 
 
 2,790.75 
 
 37 L/awrence 
 
 9.36 
 
 855.76 
 
 865.12 
 
 38 Lebanon 
 
 108.00 
 
 722.77 
 
 830.77 
 
 39 Lehigh 
 
 25.52 
 
 1,175.22 
 
 1,200.74 
 
 40 Luzerne 
 
 47.07 
 
 1,520.04 
 
 1,567.11 
 
 41 Lycoming 
 
 15 60 
 
 1,655.38 
 
 1,670.98 
 
 42 McKean 
 
 9.60 
 
 741.30 
 
 750.90 
 
 43 Mercer _ _ 
 
 18.77 
 
 1,608.10 
 
 1,626.87 
 
 44 Mifflin 
 
 6.66 
 
 499.79 
 
 506.45 
 
 45 Monroe ._ _ 
 
 20.53 
 
 941.69 
 
 962.22 
 
 46 Montgomery 
 
 410.17 
 
 1,432.09 
 
 1,842.26 
 
 47 Montour 
 
 1.94 
 
 355.85 
 
 357.79 
 
 48 Northampton 
 
 26 30 
 
 1,047.16 
 
 1,073.46 
 
 49 Northumberland 
 
 12.18 
 
 1,166 14 
 
 1,178 32 
 
 50 Perry 
 
 1 55 
 
 997 35 
 
 998.90 
 
 51 Pike 
 
 5 00 
 
 546 73 
 
 551 73 
 
 52 Potter 
 
 11 09 
 
 1 124 15 
 
 1 135 24 
 
 53 Schuylldll 
 
 10 42 
 
 1 353 27 
 
 1 363 69 
 
 54 Snyder 
 
 2 05 
 
 785 80 
 
 787 85 
 
 55 Somerset _ _ __ 
 
 10.93 
 
 2,147.01 
 
 2,157.94 
 
 56 Sullivan _ 
 
 3.16 
 
 549.21 
 
 552 87 
 
 57 Susquehanna 
 
 
 1,998.12 
 
 1,993.12 
 
 58 Tioga __ 
 
 19 82 
 
 1,789 60 
 
 1,809.42 
 
 59 Union 
 
 4 78 
 
 488 97 
 
 493.75 
 
 60 Venango 
 
 10 63 
 
 1,154 92 
 
 1 165 55 
 
 61 Warren 
 
 13.40 
 
 1,061.57 
 
 1,074.97 
 
 62 Washington 
 
 9 2.07 
 
 2,165.35 
 
 2,187.42 
 
 63 Wayne 
 
 1.51 
 
 1,436.21 
 
 1,437.72 
 
 64 Westmoreland 
 
 4 70 
 
 2 737 99 
 
 2 761 99 
 
 65 Wyoming 
 
 1.55 
 
 741.10 
 
 742.65 
 
 66 York 
 
 18 44 
 
 2,653 60 
 
 2,672.04 
 
 
 
 
 
 Total 
 
 2 400 02 
 
 84 193 86 
 
 86 593 88 
 
 
 
 
 
130 
 
 The extension of improved roads on anything like the 
 scale thus suggested must be made on sound principles 
 of financiering by the expenditure of capital rather than 
 income. Capital can only be found by borrowing, as our 
 municipalities freely do for like purposes. The Constitu- 
 tion severely limits the borrowing power of the State by 
 providing (Article IX, Section 4) : 
 
 "No debt shall be created by or on behalf of the State except 
 to supply casual deficiencies of revenue, repel invasion, suppress 
 insurrection, defend the State in war, or to pay existing debt ; 
 and the debt created to supply deficiencies in revenue shall 
 never exceed, in the aggregate at any one time, one million 
 of dollars." 
 
 Our neighboring States are helping out the construction 
 of State roads by this means. New York authorized a 
 bond issue of $50,000,000 for highway improvement in 
 1905 although the State was already heavily in debt. 
 These bonds are being issued from year to year as author- 
 ized by the Legislature. Massachusetts has issued 
 $1,820,000 of bonds since 1906, the proceeds going to road 
 construction, and Maryland $6,000,000. 
 
 Your Committee is of opinion that our borrowing power 
 should be enlarged to meet the demand and thus enable 
 us to kep pace with our sister Commonwealths in this 
 respect. Your Committee recommends and submits here- 
 with a draft of a Joint Resolution to accomplish that pur- 
 pose. (See page 130.) 
 
 A JOINT EESOLUTION PBOPOSING AN AMENDMENT TO SECTION FOUR, 
 ABTICLE NINE OF THE CONSTITUTION OF PENNSYLVANIA. 
 
 Be it Resolved by the Senate and House of Representatives 
 of the Commonwealth of Pennsylvania in General Assembly met, 
 that the following amendment to Section 4, Article 9, of the 
 Constitution of Pennsylvania, be and the same is hereby pro- 
 posed in accordance with the eighteenth article thereof: 
 
131 
 
 That Section 4 of Article 9, which reads as follows : 
 "No debt shall be created by or on behalf of the State, except 
 to supply casual deficiencies of revenue, repel invasion, suppress 
 insurrection, defend the State in war, or to pay existing debt; 
 and the debt created to supply deficiencies in revenue shall never 
 exceed, in the aggregate at any one time, one million of dollars." 
 Be amended so that the same shall read as follows: 
 No debt shall be created by or on behalf of the State 
 except to supply casual deficiencies of revenue, repel invasion, 
 suppress insurrection, defend the State in war, construct and 
 improve its public highways, or to pay existing debt; and the 
 debt created to supply deficiencies in revenue shall never ex- 
 ceed, in the aggregate at any one time, one million of dollars. 
 
 Schools also demand increased expenditures. The State 
 Normal Schools claim that they should receive more State 
 money. The common school appropriations should be in- 
 creased not only to give greater efficiency in the manage- 
 ment of the schools, but to relieve the local taxes. One of 
 the requests of the Pennsylvania State Grange to your 
 Committee was for relief from the local taxation on real 
 estate. Coupled with this was the request that the State 
 pay the minimum wage to public school teachers for the 
 minimum term. This would necessitate the expenditure 
 of $40.00 per month for an average school year of 8J 
 months nearly, for 35,111 teachers, or the sum of 
 $12,537,740. If $50.00 per month were paid it would re- 
 quire $14,922,175. For the year ending June, 1909, the 
 total paid by the State for this purpose was $905,025.55, 
 and for the year ending June, 1910, the total was 
 $966,756.10. The common school appropriation for each 
 of the last two appropriation years was $7,500,000. If 
 the State assumed these wages of school teachers it would 
 mean an increase of from $5,000,000 to $7,500,000 per 
 year, and this is too great a burden for the State to 
 bear even with the increased revenue, this specific re- 
 
132 
 
 lief is not presently possible. But some substantial ad- 
 vance in that direction must shortly be made. 
 
 As elsewhere stated, money is needed for the completion 
 of State institutions now under way. This has been re- 
 peatedly recommended by the officials having them in 
 charge and has been recommended by the Governor. The 
 sums needed may be repeated here : 
 
 Homeopathic State Hospital for Insane 
 at Allentown, 
 
 Completion $ 663,000.00 
 
 Equipment 250,000.00 
 
 Miners' Hospital at Trevorton 150,000.00 
 
 Feeble Minded Institution at Spring City 1,500,000.00 
 Hospital for Criminal Insane at Farview 1,187,602.00 
 
 New institutions for tho care of the State's insane, 
 feeble minded or otherwise deficient persons, are recom- 
 mended elsewhere by the Board of Public Charities as 
 urgently needed. The sum required is estimated at 
 $1,000,000. 
 
 The State debt is overbalanced by the amount in the 
 Sinking Fund and has always been inconsiderable. In 
 this happy condition of affairs the State has always been 
 able to bring her receipts and expenditures approximately 
 even (subject to the uncertainties of calculation of the 
 revenues), as shown by the following table: 
 
 Surplus of Excess of 
 
 Receipts over Expenditures 
 
 Receipts Expenditures Expenditures over receipts 
 
 1905 $24,269,119.72 $26,930,538.67 $2,661,418.95 
 
 1906 25,818,924.03 25,574,200.42 $ 244,723.61 
 
 1907 27,027,132.72 24,589,725.79 2,437,406.93 
 
 1908 25,852,548.95 29,197,654.15 3,345,105.20 
 
 1909 29,101,183.70 30,021,773.57 920,589.87 
 
 24.43 27,657,399.88 1,289,024.55 
 
 With this showing, the balance being somewhat against 
 the Commonwealth, the increased expenditures necessary 
 can only be met by increases in State taxation. 
 
133 
 
 (C) CHANGE OF SUBJECTS OF 
 TAXATION. 
 
 The present division of subjects of taxation between the 
 State and the localities is an admirable feature which 
 should be preserved. The changes which should be made 
 are for the purpose of an increased revenue, and to 
 equalize burdens among the members of the classes as now 
 taxed. Among the many subjects of taxation suggested 
 your Committee has given special consideration to the 
 following : 
 
 DIRECT INHERITANCE TAX. 
 
 Pennsylvania was the first State in the Union to put in 
 force an inheritance tax, and with the exception of a tax 
 on bank dividends and on the recording of certain local 
 papers, etc., (Acts of 1825-1826, Chapter 2), this was the 
 first State tax of any kind in Pennsylvania ; the Act first 
 creating anything like a system of State taxation being 
 passed in 1831. Our tax on collateral inheritances was 
 introduced in 1826 and has remained in force with oc- 
 casional amendments to the present day. The tax was 
 placed at its present rate, at 5 per cent., in 1846. The 
 whole subject was codified in 1887 by "An Act to provide 
 for the better collection of collateral inheritance taxes/' 
 The policy thus begun in Pennsylvania in 1826 has spread 
 through most of the States of the Union and has extended 
 to direct as well as collateral inheritances. 
 
 Inheritance tax is no longer a mere theory, but an 
 established fact, and it has come to stay. A State properly 
 taxes a right of succession which its laws confer, and 
 such duty should be paid to the State which protects the 
 
134 
 
 rights of property. Inheritances are now taxed to a 
 greater or less extent in thirty-six States, and the tendency 
 is to pass Acts taxing lineal as well as collateral heirs and 
 at graduated rates. Twenty-one States of the Union tax 
 both direct and collateral heirs, viz : Arkansas, California, 
 Colorado, Connecticut, Idaho, Illinois, Louisiana, Massa- 
 chusetts, Michigan, Minnesota, Montana, Nebraska, New 
 York, North Carolina, Oregon, South Dakota, Utah, 
 Washington, West Virginia, Wisconsin and Wyoming. 
 
 Fifteen States levy a collateral tax only, namely, Iowa, 
 Kentucky, Missouri, New Hampshire, New Jersey, Ohio, 
 Pennsylvania, Tennessee, Vermont and Virginia, all at a 5 
 per cent, rate ; Maine, 4 per cent. ; Maryland, 2J per cent. ; 
 North Dakota, 2 per cent., and Texas from 2 to 12 per cent. 
 
 Only twelve States have no inheritance tax, namely, 
 Alabama, Arizona, Florida, Georgia, Indiana, Kansas, Mis- 
 sissippi, Nevada, New Mexico, Oklahoma, Rhode Island 
 and South Carolina. 
 
 The American Acts generally tax collaterals at the rate 
 of 5 per cent, and lineals from % per cent. (Connecticut) 
 to 3 per cent. (Louisiana), though Minnesota and Utah 
 make no distinction between direct and collateral heirs. 
 However, in all other cases in which direct heirs are taxed 
 the rates are much lower and the exemption (except in 
 Connecticut and North Carolina) much larger than for 
 collateral heirs. Many States graduate the tax in more 
 than two classes, according to the degrees of relationship 
 between the decedent and beneficiary. In 1897 Pennsyl- 
 vania enacted a direct inheritance tax law which exempted 
 estates of $5,000 in value. In consequence of the grading 
 effected by this exemption, the law was declared un- 
 constitutional by the Supreme Court and no attempt to 
 impose it in any form has since been made. A table is 
 submitted herewith (see page 152) showing the inherit- 
 ance tax laws in force in the various States of the Union 
 with respect to the rates and grading thereof both as to 
 the degrees of relationship and the size of the estate. 
 
135 
 
 Pennsylvania by taxing collaterals only seriously re- 
 stricts its revenue-producing power. The New York in- 
 heritance tax (5 per cent, collateral and 1 per cent direct) 
 averages more than $5,000,000 a year, while in Pennsyl- 
 vania the average annual receipts from our 5 per cent, 
 collateral inheritance tax in the past five years has been 
 $1,582,780.95. 
 
 Your Committee proposes a direct inheritance tax 
 therefore of 1 per cent, upon all estates not subject to the 
 collateral inheritance tax, and submits herewith a draft of 
 an Act for that purpose (see page 141). The Act sub- 
 mitted is based very largely on the Acts now existing 
 in this Commonwealth with reference to collateral inherit- 
 ance taxes. For the sake of uniformity both are pro- 
 vided for by the same statute. In its preparation your 
 Committee has aimed at the following: 
 
 1. A reasonable tax which will provide a fair revenue ; 
 
 2. One that is definitely fixed and easily computed ; 
 
 3. A tax avoiding double taxation, in the case of estates 
 >f citizens of those of our sister Commonwealths that pro- 
 dde a like exemption in favor of the estates of citizens of 
 
 us Commonwealth. 
 
 A reference to the table annexed to this report (see 
 ige 152), will show the reasonableness of the tax (5 
 >er cent, collateral and 1 per cent, direct) as compared 
 ith similar taxes in other States. Such an inheritance 
 has many advantages and is not open to any serious 
 Ejection. It is the price paid for the privilege given 
 law of taking by will or descent. It is a source of 
 jvenue which cannot be evaded, as the estates of de- 
 jedents must be inventoried and administered. It is 
 sasily collected and one that equitably apportions public 
 burdens in proportion to the ability to bear them. One 
 cause of the great popularity of the inheritance tax is that 
 it is imposed upon the person paying it at a time when 
 he least feels the burden, and when he is receiving a bene- 
 
136 
 
 fit more or less unexpected and which he receives by 
 virtue of State laws permitting the succession of prop- 
 erty at the time of death. It is taking something from 
 him before he gets it. 
 
 Your Committee is in hearty accord with the modern 
 tendency of legislation to graduate the rate of the tax 
 according to the size of the estate. This has been the 
 policy of Pennsylvania from the beginning in one par- 
 ticular, as estates of $250 and less have been exempted 
 by our collateral inheritance tax law. The Act of 1897 
 was in line with this policy. Inasmuch, however, as our 
 Constitution forbids this grading, owing to the require- 
 ment in Article 9, Section 1, that taxes shall be uniform 
 upon the same class of subjects, such a tax cannot now 
 be levied. 
 
 Your Committee, therefore, recommends that a constitu- 
 tional amendment be proposed permitting such a grading 
 and submits herewith a draft of a Joint Resolution for 
 that purpose (see page 150). 
 
 The amendment as drawn will provide for the grading 
 in this manner of other subjects of taxation as well as in- 
 heritances, and will permit the exemption of small estates 
 from all kinds of tax. It has been advocated, for ex- 
 ample, that $500 of moneyed investments be freed from 
 personal property tax. This, of course, is not now pos- 
 sible. The principle of graduation, that is, the laying 
 of a larger percentage on a larger sum seems to your 
 Committee both just and expedient, especially as applied 
 to inheritance taxes, in which a high progressive rate 
 should tend to counteract the piling up of colossal for- 
 tunes, which experience has shown are not conducive to 
 the public welfare. 
 
 They put into the hands of a very few an abnormal 
 power over the many, which no matter how well dis- 
 posed its possessors may be, can but be harmful to the 
 social and political sovereignty of the people. There 
 should be some remedy for such a condition where a 
 few, a very few, comparatively, can have such power. 
 
137 
 
 Your Committee in recommending the graduated taxes 
 well know that the small percentage suggested will have 
 little if any effect in securing a general distribution of 
 these fortunes, but the suggestion is made in the hope 
 that it will be the means of promoting discussion of 
 this most important subject, with a probable beneficial 
 result. The leading nations of continental Europe and the 
 Provinces of Canada have graduated inheritance taxes. 
 Such a tax has been approved by modern economists 
 and statesmen. Mr. Edwin R. A. Seligman, Professor 
 of Political Economy and Finance in Columbia Univer- 
 sity, a leading authority on taxation and a member of 
 the New York State Commission of 1906, fully discussed 
 this question in his work on Progressive Taxation, pages 
 213 and 215, with the conclusion "that the theory 
 of progression is more applicable to the inheritance tax 
 than to any other part of the fiscal system ; and that * * * 
 ********** some scale of progression is both desir- 
 able and practicable (Essays on Taxation, Chapter 5 the 
 Inheritance Tax, page 133). " The same authority says, "In 
 the United States also, there is now a decided movement 
 toward the progressive inheritance tax and it is more 
 than probable that progressive inheritance taxes will play 
 by no means an insignificant role in the fiscal systems of 
 the future" (Supra, pages 133, 135). Moreover, such a 
 has been sustained by the United States Supreme 
 /ourt, which decided in Magoun vs. Trust and Savings 
 Sank, 170 U. S. 283 (1898), that the progressive scale or 
 >rinciple of graduation in inheritance taxes was not in 
 violation of the Fourteenth Amendment. Under this de- 
 cision the principle of progression is applicable to the 
 direct taxes as well. Partly as a consequence of this de- 
 cision a number of progressive inheritance tax bills have 
 been introduced and now many of our State statutes show 
 graduated rates of tax. Ohio was the first State in the 
 Union to apply this principle to the inheritance tax, but 
 the tax now is in some degree progressive in sixteen States, 
 
138 
 
 as follows : California, Idaho, Illinois, Massachusetts, Min- 
 nesota, New York, West Virginia and Wisconsin have pro- 
 gressive rates for both direct and collateral heirs. In Ar- 
 kansas, Colorado, Nebraska, North Carolina, Oregon and 
 South Dakota the progressive rates apply only to distant 
 relatives and strangers in blood, while in Washington and 
 Texas they apply to all collateral heirs. However, our 
 own Legislature is subject to the above mentioned re- 
 striction in Article 9, Section 1 of our Constitution, which 
 as interpreted by our Supreme Court in Cope's Estate, 
 191 Pa. 1, decided in 1899, prevents the levying of such a 
 tax in Pennsylvania without some such constitutional 
 amendment as that proposed by your Committee. 
 
 Some States have got progressive taxation without 
 constitutional amendments. In South Carolina, for ex- 
 ample, where the State Constitution requires the Legisla- 
 ture to provide for a uniform and equal rate of assessment 
 and taxation and prescribes regulations to secure a just 
 valuation for taxation for all property, but provides ' ' that 
 the General Assembly may provide for a graduated tax 
 on incomes, ' ' the South Carolina Supreme Court in Alder- 
 man vs. Wells, 27 L. R. A. (N. S.) 864, in sustaining a 
 graduated income tax which exempts incomes under a 
 specified amount and increases the tax as the income 
 reaches stated amounts above that sum, said, "It is im- 
 possible to conceive how a tax on incomes could be 
 graduated without exempting some incomes or without 
 making the tax higher on some than others." Many of 
 the States have upheld the constitutionality of such a tax 
 by declaring it to be a tax on the devolution of property. 
 It is a tax not on wealth, but on the transfer of wealth. 
 Thus the Louisiana inheritance tax was originally upheld 
 by the Federal Supreme Court in Meger vs. Grima, et al., 8 
 Howard 490, as a simple regulation of inheritance. 
 
 Your Committee finds that other States than Pennsyl- 
 vania have had constitutional troubles in the taxation of 
 inheritances. One of the constitutional amendments 
 
139 
 
 adopted by New Hampshire in 1903 extended the permis- 
 sible objects of taxation to include franchises and "prop- 
 erty when passing by will or inheritance/' In Minnesota 
 the Supreme Court decided that a progressive inheritance 
 tax passed by the Legislature in 1875 violated the constitu- 
 tional requirement that all taxes must be "as nearly 
 equal as may be," both by its $2,000 exemption and by its 
 arbitrary schedule. In 1894, a constitutional amendment 
 authorizing a tax either proportional or progressive, but 
 not exceeding 5 per cent, on inheritances above a fixed 
 amount, was adopted. The amendment which was in the 
 form of a proviso added to the section enjoining equality 
 of taxation, reads as follows: "And providing 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 tax above such exempted sum may be uniform or it 
 may be graded or progressive, but shall not exceed a 
 maximum tax of 5 per cent." in 1905, a progressive in- 
 heritance tax was enacted which was held by the Supreme 
 Court of Minnesota in State ex rel Foote vs. Bazille, 6 
 L. R. A. (N. S.), 732, not to be contrary to the Constitution 
 as above amended and was sustained, the Court saying, 
 "The authority to make the tax graded or progressive 
 was incorporated in the law advisedly, and in view of the 
 well known and firmly established system of such taxa- 
 tion in force in this country based upon the wise and 
 wholesome doctrine that ability to pay is the true basis 
 for all taxation. Though it results in a measure in in- 
 equality, it conforms to a system sanctioned and supported 
 by the authorities generally and is not repugnant to con- 
 stitutional principles. * ' 
 
 It may be added that the new Constitution of Oklahoma 
 expressly authorizes progressive taxation of both direct 
 and collateral inheritances. In addition to the effect of 
 the amendment recommended by your Committee on the 
 
140 
 
 question of grading inheritance taxes, your Committee be- 
 lieves the amendment suggested to be in line with the 
 thought that a Constitution should be a declaration of gen- 
 eral principles rather than a specification of particulars. 
 The wording will permit greater freedom to the Legisla- 
 ture in taxing other property in this way, if the advance 
 of modern legislation, keeping pace with progressive 
 civilization, makes it advisable. 
 
 While it remains the policy of the State to give aid 
 to charity, it seems unnecessarily circuitous to levy a tax 
 upon bequests for that purpose. To exempt such bequests 
 merely means a gift in another form, and without the idle 
 act of taking away and then giving again. The amount 
 would not be large. For the years 1908, 1909 and eight 
 months in 1910 in thirty counties reporting to your Com- 
 mittee, the tax on bequests to charity as shown by the 
 local records amounts to $587,684.45. Such a concession 
 has been long asked for by those interested in charitable 
 work and it seems only just. The Constitution of the 
 State permits the exemption from taxation of "institu- 
 tions of purely public charity." The adoption of the 
 same language as the measure of the actual exemption 
 would exclude all gifts other than those going to the 
 benefit of persons who must otherwise be the subject of 
 State aid. Accordingly it is recommended that this ex- 
 emption be granted and an Act accomplishing that purpose 
 is submitted herewith (see page 150). 
 
 This exemption really forms part of the scheme of 
 taxation of inheritances, but is put in the form of a sep- 
 arate Act in order that it may be considered separately 
 for the convenience of the Legislature, and in order that 
 any alterations which are deemed advisable may be con- 
 veniently made without affecting the general scheme of 
 taxing inheritances by reason of creating unlawful ex- 
 emptions in that Act. 
 
141 
 
 AN Aci LAYING A STATE TAX ON ESTATES PASSING EITHER BY WILL 
 
 OB UNDER THE INTESTATE LAWS OF THIS COMMONWEALTH OB BY 
 DEED, GBANT, BARGAIN OB SALE, MADE OR INTENDED TO TAKE EF- 
 FECT AFTER THE DEATH OF THE GRANTOR OR BARGAINER AND 
 PROVIDING FOR THE COLLECTION THEREOF. 
 
 SECT. 1. Be it enacted, etc., That all estates, real, personal 
 and mixed, of every kind whatsoever, situated within this State, 
 whether the person or persons dying- seized thereof be domiciled 
 within or out of this State, and all such estates situated in 
 another State, territory or country, when the person or persons 
 dying- seized thereof shall have their domicile within this Com- 
 monwealth, passing from any person who may die seized or pos- 
 sessed of such estates, either by will or under the intestate laws 
 of this State, or any part of such estate or estates, or interest 
 therein, transferred by deed, grant, bargain or sale, made or 
 intended to take effect, in possession or enjoyment after the 
 death of the grantor or bargainer, to or for the use of father, 
 mother, husband, wife, children, and lineal descendants born 
 in lawful wedlock, children adopted according to law and their 
 lineal descendants, children of a former husband or wife, or 
 the wife or widow of the son of the person dying seized or 
 possessed thereof, shall be, and they are hereby made subject 
 to a tax of one dollar on every hundred dollars of the clear 
 value of such estate or estates, and at and after the same rate 
 for any less amount, to be paid to the use of the Commonwealth ; 
 and all such estates passing to any other person or persons or 
 to bodies corporate or politic in trust or otherwise shall be and 
 they are hereby made subject to a like tax of five dollars on 
 every hundred dollars ; and all owners of such estates, and all 
 executors and administrators and their sureties, shall only be 
 discharged from liability for the amount of such taxes or duties, 
 the settlement of which they may be charged with, by having 
 paid the same over, for the use aforesaid, as hereinafter directed. 
 
 SECT. 2. Where a testator appoints or names one or more 
 executors, and makes a bequest or devise of property to them, 
 in lieu of their commissions or allowances, or appoints them 
 his residuary legatees, and said bequests, devises, or residuary 
 legacies, exceed what would be a fair compensation for their 
 services, such excess shall be subject to the payment of the tax 
 provided by this Act; the rate of compensation to be fixed by 
 the proper Courts having jurisdiction in the case. 
 
 SECT. 3. In all cases where there has been or shall be a devise, 
 descent or bequest to take effiect in possession, or come into 
 
142 
 
 actual enjoyment after the expira.tion of one or more life es- 
 tates, or a period of years, the tax on such estate shall not be 
 payable, nor interest begin to run thereon, until the person or 
 persons, bodies corporate or politic liable for the same shall 
 come into actual possession of such estate, by the termination 
 of the estates for life or years, and the tax shall be assessed 
 upon the value of the estate at the time the right of possession 
 accrues to the owner as aforesaid: Provided, that the owner 
 shall have the right to pay the tax at any time prior to his 
 coming into possession, and, in such cases, the tax shall be 
 assessed on the value of the estate at the time of the payment 
 of the tax, after deducting the value of the life estate or estates 
 for years: And, provided further, that the tax on real estate 
 shall remain a lien on the real estate on which the same is 
 chargeable until paid. And the owner of any personal estate 
 shall make a full return of the same to the Register of Wills 
 of the proper county within one year from the death of the 
 decedent, and within that time enter into security for the pay- 
 ment of the tax to the satisfaction of such register ; and in case 
 of failure to do so, the tax shall be immediately payable and 
 collectible. 
 
 SECT. 4. If the tax provided by this Act shall be paid within 
 three months after the death of the decedent, a discount of 5 
 per centum shall be made and allowed; and if the said tax 
 is not paid at the end of one year from the death of the de- 
 cedent, interest shall then be charged at the rate of 12 per 
 centum per annum on such tax; but where from claims made 
 upon the estate, litigation, or other iinavoidable cause of delay, 
 the estate of any deeedent or a part thereof cannot be settled 
 up at the end of the year from his or her decease, 6 per centum 
 per annum shall be charged upon the tax provided by this Act, 
 arising from the unsettled part thereof, from the end of such 
 year until there be default : Provided further, that where real 
 or personal estate withheld by reason of litigation or other cause 
 of delay in manner aforesaid from the parties entitled thereto, 
 subject to said tax, has not been, or shall not be productive to 
 the extent of 6 per centum per annum, they shall not be com- 
 pelled to pay a greater amount as interest to the Commonwealth 
 than they may have realized, or shall realize from such estate 
 during the time the same has been or shall be withheld as afore- 
 said. 
 
 SECT. 5. The executor, or administrator, or other trustee, pay- 
 ing any legacy or share in the distribution of any estate, sub- 
 ject to the tax provided by this Act, shall deduct therefrom at 
 
143 
 
 the rate of one dollar or five dollars on every hundred dollars, 
 as the case may be, as provided in Section 1 of this Act, upon the 
 whole legacy or sum paid ; or if not money, he shall demand 
 payment of a sum, to be computed at the rate of tax chargeable 
 thereon, lipon the appraised value thereof, for the use of the 
 Commonwealth ; and no executor or administrator shall be com- 
 pelled to pay or deliver any specific legacy or article to be dis- 
 tributed, subject to tax, except on the payment into his hands of 
 a sum computed on its value as aforesaid ; and in case of neglect 
 or refusal on the part of said legatee to pay the same, such speci- 
 fic legacy or article, or so much thereof as shall be necessary, 
 shall be sold by such executor or administrator at public sale, 
 after notice to such legatee, and the balance that may be left 
 in the hands of the executor or administrator shall be dis- 
 tributed, as is or may be directed by law; and every sum of 
 money retained by any executor or administrator, or paid into 
 his hands on account of any legacy or distributive share, for the 
 use of the Commonwealth, shall be paid by him without delay. 
 
 SECT. 6. If the legacy subject to the tax provided by this 
 Act be given to any person for life, or for a term of years, 
 or for any other limited period, upon a condition or con- 
 tingency, if the same be money, the tax thereon shall be re- 
 tained upon the whole amount ; but if not money, applica- 
 tion shall be made to the Orphans' Court having jurisdiction 
 of the accounts of the executors or administrators to make 
 apportionment, if the case requires it, of the sum to be paid by 
 such legatees, and for such further order relative thereto as 
 equity shall require. 
 
 SECT. 7. Whenever such legacy shall be charged upon or pay- 
 able out of real estate the heir or devisee before paying the 
 same shall deduct therefrom the tax chargeable thereon, and 
 pay the amount so . deducted to the executor; and the same 
 shall remain a charge upon such real estate until so paid, and 
 the payment thereof shall be enforced by the decree of the 
 Orphans' Court in the same manner as the payment of such 
 legacy may be enforced. 
 
 SECT. 8. Whenever any real estate of which any decedent may 
 di is seized shall be subject to the tax provided by this Act, it 
 shall be the duty of executors and administrators to give in- 
 formation thereof to the Register of the county, where admin- 
 istration had been granted, within six months after they 
 undertake the execution of their respective duties, or if the 
 fact be not known to them within that period, within one 
 month after the same shall have come to their knowledge; and 
 
144 
 
 it shall be the duty of the owners of such estates, immediately 
 upon the vesting of the estate, to give information thereof to 
 the Register having jurisdiction of the granting of adminis- 
 tration. 
 
 SECT. 9. It shall be the duty of any executor or administrator, 
 on the payment of the tax provided by this Act, to take dupli- 
 cate receipts from the Register, one of which shall be for- 
 warded forthwith to the Auditor General, whose duty it shall 
 be to charge the Register receiving the money with the amount, 
 and seal with the seal of his office and countersiga the receipt 
 and transmit it to the executor or administrator, whereupon 
 it shall be a proper voucher in the settlement of the estate ; 
 but in no event shall an executor or administrator be entitled 
 to a credit in his account unless the said receipt is so sealed 
 and countersigned by the Auditor General. 
 
 SECT. 10. Whenever any foreign executor, or administrator, 
 or trustee, shall assign or transfer any stocks or loans in this 
 Commonwealth standing in the name of the decedent or in 
 trust for a decedent which shall be liable for the tax provided 
 by this Act, such tax shall be paid, on the transfer thereof, to 
 the Register of the county where such transfer is made; other- 
 wise the corporation permitting such transfer shall become 
 liable to pay such tax. 
 
 SECT. 11. Whenever debts shall be proven against the estate 
 of a decedent after distribution of legacies from which the tax 
 provided by this Act has been deducted in compliance with 
 this Act and the legatee is required to refund any portion of a 
 legacy, a proportion of the said tax shall be repaid to him by 
 the executor or administrator if the said tax has not been paid 
 into the State or County Treasury, or by the County Treasurer, 
 if it has so been paid. 
 
 SECT. 12. It shall be the duty of the Register of Wills of the 
 county in which letters testamentary or of administration are 
 granted to appoint an appraiser, as often as and whenever 
 occasion may require, to fix the valuation of estates which are, 
 or shall be, subject to the tax provided by this Act; and it 
 shall be the duty of such appraiser to make a fair and con- 
 scionable appraisement of such estates ; and it shall further 
 be the duty of such appraiser to assess and fix the cash value 
 of all annuities and life estates growing out of said estates, 
 upon which annuities and life estates the tax provided by this 
 Act shall be immediately payable out of the estate at the rate 
 of such valuation : Provided, That any person or persons, bodies 
 corporate or politic not satisfied with said appraisement shall 
 
145 
 
 have the right to appeal within thirty days to the Orphans* 
 Court of the proper county or city, on paying 1 , or giving se- 
 curity to pay, all costs, together with whatever tax shall be 
 fixed by said Court, and upon such appeal said Courts shall 
 have jurisdiction to determine all questions of valuation, and 
 of the liability of the appraised estate for such tax, subject 
 to the right of appeal to the Supreme or Superior Court as in 
 other cases. 
 
 SECT. 13. The compensation of such appraisers shall be as 
 follows, namely : For each and every day on which an ap- 
 praiser shall actually be engaged in making appraisements of 
 property subject to said tax, he shall receive the sum of two 
 dollars: Provided, That if, in the discharge of his duties, it 
 shall be necessary for him, the said appraiser, to travel from 
 his place of residence to appraise property subject to said tax, 
 he shall be allowed such actual necessary traveling expenses 
 as he may incur, which expenses shall be itemized in a sworn 
 statement to be returned to the Eegister and subject to the 
 final approval of the Auditor General. 
 
 SECT. 14. When, by virtue of the complicated nature of an 
 estate subject to the payment of the tax provided by this Act 
 the interest of the Commonwealth shall require the appoint- 
 ment as appraiser of said estate, of a person possessed of ex- 
 pert or technical knowledge to ascertain the value thereof, 
 reasonable additional compensation shall be allowed said ap- 
 praiser for the exercise of such expert or technical knowledge, 
 and in cases where, after the appointment of an appraiser to 
 appraise the value of said estate, it shall appear that the proper 
 appraisement of said estate will require the services of a per- 
 son possessed of expert or technical knowledge whereof the 
 appraiser appointed to appraise said estate is not possessed, he, 
 the said appraiser, may employ the services of a person pos- 
 sessed of expert or technical knowledge to assist him in the 
 appraisement of said estate, and for such services the person 
 so employed shall receive reasonable compensation: Provided, 
 That in all such cases the Register of Wills appointing the ap- 
 praiser shall certify to the Auditor General that there is actual 
 necessity for the appointment of an appraiser possessed of 
 expert or technical knowledge, or that the appraiser already ap- 
 pointed to appraise the estate in question should be assisted 
 by a person possessed of such knowledge, and no person shall 
 be appointed as such expert appraiser, or as expert assistant 
 to an appraiser, without the approval of the Auditor General 
 of said appointment first had and obtained, nor shall any pay- 
 
146 
 
 merit be made to any appraiser, or to any person employed by 
 him, under this section, until an itemized statement of the ser- 
 vices performed and the compensation recommended shall have 
 been rendered, under oath or affirmation, to the Auditor Gen- 
 eral for his approval and shall have received the same : And 
 provided further, That no clerk or other person employed in the 
 office of a Eegister of Wills shall be appointed an expert ap- 
 praiser of an estate subject to the payment of the tax provided 
 by this Act nor as an expert to assist the appraiser of such 
 estate. 
 
 SECT. 15. It shall be a misdemeanor in any appraiser, ap- 
 pointed by the Register to make any appraisement in behalf 
 of the Commonwealth, to take any fee or reward from any 
 executor or administrator, legatee, devisee, next of kin, or heir 
 of any decedent, and for any such offense the register shall dis- 
 miss him from such service, and, upon conviction in the Quarter 
 Sessions, lie shall be fined not exceeding five hundred dollars, 
 and imprisoned not exceeding one year, or both, or either, at 
 the discretion of the Court. 
 
 SECT. 16. It shall be the duty of the Register of Wills to enter 
 in a book, to be provided at the expense of the Commonwealth, 
 to be kept for that purpose, and which shall be a public record, 
 the returns made by all appraisers under this Act, opening an 
 account in favor of the Commonwealth against the decedent's 
 estate, and the Register may give certificates of payment of 
 such tax from such record, and it shall be the duty of the 
 Register to transmit to the Auditor General, on the first day 
 of each month, a statement of all returns made by appraisers 
 during the preceding month, upon which the taxes remain un- 
 paid, which statement shall be entered by the Auditor Gen- 
 eral in a book to be kept by him for that purpose. And when- 
 ever any such tax shall have remained due and unpaid for one 
 year, it shall be lawful for the Register to apply to the Orphans' 
 Court, by bill or petition, to enforce the payment of the same ; 
 whereupon said Court, having caused due notice to be given to 
 the owner of the real estate charged with, the tax, and to such 
 other persons as may be interested, shall proceed, according 
 to equity, to make such decrees or orders for the payment of 
 the said tax out of such real estate as shall be just and 
 proper. 
 
 SECT. 17. If the Register shall discover that any tax pro- 
 vided by this Act has not been paid over according to law, the 
 Orphans' Court shall be authorized to cite the executors or ad- 
 ministrators of the decedent, whose estate is subject to the 
 
147 
 
 tax, to file an account or to issue a citation to the executors, 
 administrators, or heirs, citing them to appear on a certain 
 day and show cause why the said tax should not be paid, and 
 when personal service cannot be had, notice shall be given for 
 four weeks, once a week, in at least one newspaper published 
 in said county ; and if the said tax shall be found to be due and 
 unpaid, the said delinquent shall pay said tax and costs. And 
 it shall be the duty of the Kegister, or of the Auditor Gen- 
 eral, to employ an attorney of the proper county, to sue for 
 the recovery and amount of such tax, and the Auditor Gen- 
 eral is authorized and empowered, in settlement of accounts 
 of any Register, to allow him costs of advertising and other 
 reasonable fees and expenses, incurred in the collection of the 
 tax. 
 
 SECT. 18. The Registers of Wills of the several counties of 
 this Commonwealth, upon their filing with the Auditor General 
 the bond hereinafter required, shall be the agents of the Com- 
 monwealth for the collection of the tax provided by this Act, and 
 for services rendered in collecting and paying over the same, the 
 said agents shall be allowed to retain for their own use 5 per 
 centum upon the tax collected, if the said tax shall amount to 
 a sum less than two hundred thousand dollars in any year; or 
 4 per centum upon the said tax, if the same shall amount to 
 two hundred thousand dollars and less than three hundred 
 thousand dollars in any year or 3 per centum upon the said tax, 
 if the tax collected shall amount to three hundred thousand 
 dollars or more in any year. 
 
 SECT. 19. The said Register shall give bond to the Common- 
 wealth in such penal sum as the Orphans' Court of the county 
 may direct, with two or more sufficient sureties for the faithful 
 performance of the duties hereby imposed, .and for the regular 
 accounting and paying over of the amounts to be collected and 
 received; and said bond, on its execution and approval by the 
 said Orphans' Court, to be forwarded to the Auditor General. 
 
 SECT. 20. It shall be the duty of the Register of Wills of each 
 county to make returns and payment to the State Treasurer of 
 all the tax provided by this Act which he shall have received, 
 stating for what estate paid, on the first Mondays of April, July, 
 October and January, in each year ; and for all taxes collected by 
 him, and not paid over within one month after his quarterly 
 return of the same, he shall pay interest at the rate of 12 per 
 centum per annum until paid. 
 
 SECT. 21. The lien of the taxes provided by this Act shall con- 
 tinue until the said taxes are settled and satisfied : Provided, 
 
148 
 
 That the said lien shall be limited to the property chargeable 
 therewith : And provided further, That all said taxes shall be 
 sued for within five years after they are due and legally de- 
 mandable, otherwise they shall be presumed to have been paid 
 and cease to be a lien as against any purchasers of real estate. 
 
 SECT. 22. In all cases where any amount of the tax provided by 
 this Act has heretofore been paid, or may hereafter be paid, 
 erroneously, either with respect to the amount of the estate or 
 the rate of the tax to the Register of Wills of the proper county, 
 for the use of the Commonwealth, it shall be lawful for the 
 State Treasurer, on satisfactory proof rendered to him by said 
 Kegister of Wills of such erroneous payment, to refund and pay 
 over to the executor, administrator, person or persons who may 
 have heretofore paid or may hereafter pay any of such tax in er- 
 ror, the amount of such tax thus erroneously paid: Provided, 
 That all such applications for the repayment of such aforesaid 
 tax, erroneously paid into the Treasury, shall be made within 
 two years from the date of said payment, except when the es- 
 tate, upon which such tax shall have been so erroneously paid 
 shall have consisted in whole or in part of a partnership, or 
 other interest of uncertain value, or shall have been involved in 
 litigation, by reason whereof there shaii have been an overvalua- 
 tion of that portion of the estate on which the tax has beeyv 
 assessed and paid, which overvaluation could not have been as- 
 certained witnin said period of two years ; then, and in such case, 
 the application for repayment may be made to the State Treas- 
 urer within one year from the termination of such litigation, or 
 ascertainment of such overvaluation. 
 
 SECT. 23. Property of a resident of the Commonwealth which 
 is not therein at the time or his death shall not be taxable un- 
 der the provisions of this Act if legally subject in another State 
 or country to a tax of like character and amount to that hereby 
 imposed, and if such tax be actually paid or guaranteed or se- 
 cured in accordance with law in such other State or country ; if 
 legally subject in another State or country to a tax of like char- 
 acter but of less amount than that hereby imposed and such tax 
 be actually paid or guaranteed or secured as aforesaid, such prop- 
 erty shall be taxable under this Act to the extent of the differ- 
 ence between the tax thus actually paid, guaranteed or secured, 
 and the amount for which such property would otherwise be 
 liable hereunder. Property of a non-resident decedent which 
 is within the jurisdiction of the Commonwealth at the time of 
 his death, if subject to a tax of like character with that imposed 
 by this Act by the law of the State or country of his residence, 
 
149 
 
 shall be subject only to such portion of the tax hereby imposed 
 as may be in excess of such tax imposed by the laws of such 
 State or country : Provided, That a like exemption is made by the 
 laws of such other State or country in favor of estates of citizens 
 of this Commonwealth, but no such exemption shall be allowed 
 until such tax provided for by the law of such other State or 
 country shall be actually paid, guaranteed, or secured in accord- 
 ance with law. 
 
 NOTES. 
 
 Section 1 is based on the first section of the Act of May 
 6, 1887, relating- to collateral inheritance taxes. The Two hun- 
 dred and fifty dollars exemption therein provided is dropped and 
 estates passing to "father, mother, husband, wife, children, and 
 lineal descendants born in lawful wedlock, or the wife, or wid- 
 ow of the son" and "children of a former husband or wife" of 
 the person dying seized heretofore exempt under Section 1, Act 
 May 1, 1887, P. L. 79, as amended by the Act of April 22, 1905, 
 P. L. 259, are made subject to a 1 per cent. tax. There is 
 also added to this class "children adopted according to law and 
 their lineal descendants." This changes the law as made by the 
 decision in Com. vs. Nancrede, 32 Pa. 389. The change better 
 accords with the spirit of the law and the provision in other 
 States. The Constitutional provision, Article 9, Section 1, de- 
 claring that all taxes shall be uniform upon the same class 
 of subjects, as interpreted in Cope's Estate, 191 Pa. 1, requires 
 the elimination of the Two hundred and fifty dollars exemption 
 as to direct inheritances, and it has seemed to your Committee, 
 therefore, more consistent to likewise strike it out as to collater- 
 als. 
 
 Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 are based on the like 
 sections of the Act of May 6, 1887. 
 
 Sections 13 and 14 are based on Sections 1 and 2 of the Act 
 of June 26, 1895, P. L. 325. 
 
 Sections 15, 16 and 17 are based on Sections 13, 14 and 15 of 
 the Act of May 6, 1887. 
 
 Section 18 is based on Act of May 14, 1891, P. L. 59, which 
 amended Section 16 of the Act of May 6, 1887. 
 
 Sections 19, 20 and 21 are based on Sections 17, 19 and 20 
 of the Act of May 6, 1887. 
 
 Section 22 is based on Act of March 25, 1901, P. L. 59, which 
 amended Act of June 12. 1878. 
 
 Section 23 is based on Section 3 of the Massachusetts Inheri- 
 tance Tax Act of June 12, 1909, P. L. 647. Its purpose is to 
 prevent double taxation and while giving a proper share of the 
 taxable estate to any State enacting a similar provision, to re- 
 lieve the estates of our citizens so far as they are taxed abroad 
 in such States. 
 
150 
 
 AN ACT TO EXEMPT FROM THE PAYMENT OF INHERITANCE TAXES 
 BEQUESTS AND DEVISES TO INSTITUTIONS OF PURELY PUBLIC 
 CHARITY. 
 
 SECT. 1. Be it enacted, etc., That hereafter all bequests and 
 devises to institutions of purely public charity shall be exempt 
 from liability for inheritance taxes. 
 
 A JOINT RESOLUTION, PROPOSING AN AMENDMENT TO SECTION ONE 
 OF ARTICLE NINE OF THE CONSTITUTION OF PENNSYLVANIA, 
 RELATING TO TAXATION. 
 
 SECT. 1. Be it resolved, etc., that the following is proposed as 
 an amendment to the Constitution of the Commonwealth of 
 Pennsylvania in accordance with the provisions of the eighteenth 
 article thereof. 
 
 SECT. 2. Amend Section 1 of Article 9 of the Constitution of 
 Pennsylvania, which reads as follows: 
 
 "All taxes shall be uniform, upon the same class of subjects, 
 within the territorial limits of the authority levying the tax, 
 and shall be levied and collected under general laws; but the 
 General Assembly may, by general laws, exempt from taxation 
 public property used for public purposes, actual places of re- 
 ligious worship, places of burial not used or held for private r 
 corporate profit, and institutions of purely public charity," so us 
 to read as follows : 
 
 All taxes shall be uniform upon the same class of subjects 
 within the territorial limits of the authority levying the tax. 
 and shall be levied and collected under general laws, and tlic 
 subjects of taxation may be classified for the purpose of laying 
 graded or progressive taxes, but the General Assembly may, 
 by general laws, exempt from taxation public property used 
 for public purposes, actual places of religious worship, places 
 of burial not used or held for private or corporate profit, and 
 institutions of purely public charity. 
 
 NOTE. 
 
 This form your Committee recommends for the purpose 
 of freeing the Legislature to apply the principle of grad- 
 uation as may be thought necessary, a freedom which most other 
 States have. If it be thought well, however, to confine the pres- 
 ent amendment to inheritance taxes the following alternative 
 is proposed) : 
 
151 
 
 All taxes shall be uniform, upon the same class of subjects, 
 within the territorial limits of the authority levying the tax, 
 and shall be levied and collected under general laws; but the 
 General Assembly may, by general laws, provide for a uniform or 
 graduated or progressive tax upon all estates passing either by 
 will or under intestate laws or by any instrument intended to 
 take effect after death, and exempt from taxation a fixed and 
 specified amount of such estate and public property used for 
 public purposes, actual places of religious worship, places of 
 burial not used or held for private or corporate profit and in- 
 stitutions of purely public charity. 
 
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156 
 
 TAX ON AUTOMOBILES. 
 
 The present Act of 1909 divides automobiles into three 
 classes. The first class (under 20 horse power), pays 
 $5.00; the second class (between 20 and 50 horse power), 
 pays $10.00, and the third class (over 50 horse power) , pays 
 $15.00. The number of automobiles registered to nearly 
 the close of the year 1910 is as follows : 
 Vehicles less than 20 horse 
 
 power 755 at $5.00 $3,775.00 
 
 Vehicles 20 horse power, but 
 
 less than 50 horse power 20,304 at 10.00 203,040.00 
 
 Vehicles 50 horse power or 
 
 more . 12,273 at 15.00 184,195.00 
 
 Total 33,332 $391,010.00 
 
 In addition there was received : 
 
 Dealers' registrations 2,908 at $5.00 $14,540.00 
 
 Motor cycle registrations 3,808 at 2.00 7,616.00 
 
 Chauffeurs' licenses 15,845 at 2.00 31,690.00 
 
 Special juvenile licenses 684 
 
 A grand total of 56,577 $444,856.00 
 
 New Jersey divides automobiles into three classes, the 
 points of division being at 10 and 30 horse power, and 
 taxes the classes $3.00, $5.00 and $10.00 respectively. 
 Massachusetts divides them into five classes with the points 
 of division at 20, 30, 40 and 50 horse power and taxes them 
 $5.00, $10.00, $15.00, $20.00 and $25.00 respectively. Con- 
 necticut divides them into five classes with the division at 
 20, 30, 35 and 40 horse power and taxes them $6.00, 
 $10.00, $15.00, $20.00 and $30.00 respectively. All these 
 States provide that the money thus raised shall be at the 
 disposition of the Commissioner of Highways, without fur- 
 ther appropriation to expend on the roads of the State. 
 
157 
 
 This tax can be collected with absolute certainty. 
 The automobile is a luxury which can easily bear the in- 
 creased tax and if the amount realized was expended in 
 the improvement of the roads, the owners of the automo- 
 biles would be so benefited that they would doubtless 
 cheerfully pay it. At the same time it would be a great 
 relief to local communities which are put to additional 
 expense in maintaining road surfaces injuriously affected 
 by automobile traffic. 
 
 Your Committee therefore recommends the imposition 
 of a tax of $25.00, $50.00 and $75.00 upon the respective 
 classes of registration of vehicles as now established. This 
 on the basis of 1910 would produce a revenue of 
 
 Under 20 horse power $18,875.00 
 
 20 to 50 horse power 1,051,200.00 
 
 50 horse power or more , 920,475.00 
 
 Total $1,954,550.00 
 
 Under the present law this fund is paid to the State 
 Elighway Department "to be used for the improvement of 
 the roads of this Commonwealth. ' ' It should also be avail- 
 able for maintenance of improved roads. 
 
 A draft of an Act to accomplish this change is accord- 
 ingly submitted herewith (see page 157). 
 
 AN ACT TO AMEND SECTIONS 2 AND 21 OF AN ACT ENTITLED "AN 
 
 ACT RELATING TO MOTOR-VEHICLES : REGULATING THEIR SPEED 
 UPON THE PUBLIC STREETS AND HIGHWAYS OF THE COMMON- 
 WEALTH OF PENNSYLVANIA; PROVIDING FOR THEIR REGISTRA- 
 TION, AND THE LICENSING OF OPERATORS,. BY THE STATE HlGH- 
 
 WAY DEPARTMENT; ESTABLISHING THE RIGHTS OF MOTOR- 
 VEHICLES UPON THE PUBLIC HIGHWAYS, WITH RELATION TO 
 OTHER VEHICLES ; REGULATING THE SERVICE OF PROCESS AND OF 
 PROCEEDINGS IN ACTIONS FOR DAMAGES ARISING THEREFROM ; 
 PRESCRIBING THE PENALTIES FOR VIOLATIONS OF THE PROVISIONS 
 OF THIS ACT, AND PROVIDING FOR THE DISPOSITION OF FINES 
 IMPOSED THEREUNDER." APPROVED APRIL 27, 1909. 
 
158 
 
 SECT. 1. Be it enacted, etc., That Section 2 of an Act entitled 
 "An Act relating- to motor-vehicles : regulating their speed upon 
 the public streets and highways of the Commonwealth of Penn- 
 sylvania, providing for their registration, and the licensing of 
 operators, by the State Highway Department; establishing the 
 rights of motor-vehicles upon the public highways, with re- 
 lation to other vehicles; regulating the service of process and 
 of proceedings in actions for damages arising therefrom ; pre- 
 scribing the penalties for violations of the provisions of this 
 Act, and providing for the disposition of fines imposed there- 
 under." Approved April 27, 1909, which reads as follows: 
 
 "SECT. 2. Application for the registration of motor-vehicles 
 shall be made to the State Highway Department, or to a lawful 
 agent appointed by the Highway Commissioner. The applica- 
 tion shall contain the name, place of residence, and correct 
 post-office address of the owner; with a brief description of 
 the motor-vehicle, stating the name of the maker, the manu- 
 facturer's number, the character of the motive power, and the 
 rated horse-power. The said application shall be made upon a 
 blank provided for the purpose by the State Highway Depart- 
 ment. It shall be signed by the owner, and be verified by oath 
 or affirmation. Upon receipt of the application, and a fee of 
 five dollars ($5.00) for motor- vehicles of less than twenty 
 horse-power, ten dollars ($10.00) for motor- vehicles of twenty 
 horse-power or more and less than fifty horse-power, and fif- 
 teen dollars ($15.00) for motor-vehicles of fifty horse-power or 
 over, or in the case of a motor-cycle, two dollars ($2.00), the 
 State Highway Department shall register the said motor- 
 vehicle or motor-cycle in a book to be kept for that purpose ; 
 and shall issue to the owner a registration certicate, and two 
 (2) number tags having thereon the registration number, the 
 figures of which shall be not less than five (5) inches in height, 
 the maker's number of the car, the abbreviated name of the 
 State, and the year: Provided, however, That non-residents 
 of this Commonwealth shall be exempt for a period of ten (10) 
 days from the provisions of this section, if they have complied 
 with the requirements of the State in which they reside, and 
 display upon their motor-vehicle number-tags that indicate the 
 State by which they are issued and their register number : 
 Provided further, That this privilege shall not apply to resi- 
 dents of States which do not extend similar privileges to resi- 
 dents of this Commonwealth: Provided further, That motor- 
 cycles under this Act, in lieu of the specific form of tag or 
 tags as required herein, shall be required to have painted or 
 
159 
 
 attached on the rear mud-guard of such motor-cycle the regis- 
 tration number, in letters and figures of not less than 
 three inches in height and not less than three-eights of an 
 inch in width, which shall be displayed in some conspicuous 
 color or design other than that of which the said motor- 
 cycle is painted; but no metal sign shall be required in 
 order that the sajd letters and figures can be plainly readable. 
 The manner of numbering said motor-cycles shall be regarded 
 as a compliance with the terms of this Act, as though a tag 
 or tags had actually been furnished and supplied by the said 
 Highway Department. Any neglect or failure to carry out the 
 terms or provisions of this section as to numbers shall be con- 
 strued and regarded as a violation of this Act, with the same 
 force and effect as though the provisions herein mentioned in 
 regard to tag or tags had been violated. 
 
 "Applicants for registration or license who reside outside of 
 this State shall, in addition to the above requirements, desig- 
 nate in their application a resident of this State as their au- 
 thorized agent upon whom process may be served," be and the 
 same is hereby amended to read as follows : 
 
 SECT. 2. Application for the registration of motor-vehicles shall 
 be made to the State Highway Department, or to a lawful agent 
 appointed by the Highway Commissioner. The application shall 
 contain the name, place of residence, and correct post-office 
 address of the owner; with a brief description of the motor- 
 vehicle, stating the name of the maker, the manufacturer's 
 number, the character of the motive power, and the rated 
 horse-power. The said application shall be made upon a blank 
 provided for the purpose by the State Highway Department. 
 It shall be signed by the owner, and be verified by oath or 
 affirmation. Upon receipt of the application, and a fee of 
 twenty- five dollars ($25.00) for motor-vehicles of less than 
 twenty horse-power, fifty dollars ($50.00) for motor-vehicles of 
 twenty horse-power or more and less than fifty horse-power, 
 and seventy-five dollars ($15.00) for motor-vehicles of fifty 
 horse-power or over, or in the case of a motor-cycle, two dollars 
 ($2.00), the State Highway Department shall register the said 
 motor-vehicle or motor-cycle in a book to be kept for that pur- 
 pose and shall issue to the owner a registration certificate, and 
 two (2) number tags having thereon the registration number, 
 the figures of which shall be not less than five (5) inches in 
 height, the maker's number of the car, the abbreviated name 
 of the State, and year: Provided, however, That non-residents 
 of this Commonwealth shall be exempt for a period of ten (10) 
 
160 
 
 days from the provisions of this section, if they have complied 
 with the requirements of the State in which they reside, and 
 display upon their motor- vehicle number-tags that indicate the 
 State by which they are issued and their registry number : Pro- 
 vided further, that this privilege shall not apply to residents 
 of States which do not extend similar privileges to residents 
 of this Commonwealth: Provided further, That motor-cycles 
 under this Act, in lieu of the specific form of tag or tags as 
 required herein, shall be required to have painted or attached 
 on the rear mud-guard of such motor-cycles the registration 
 number, in letters and figures of not less than three inches in 
 height and not less than three-eighths of an inch in width, 
 which shall be displayed in some conspicuous color or design 
 other than that of which the said motor-cycle is painted; but 
 no metal sign shall be required in order that the said letters 
 and figures can be plainly readable. The manner of number- 
 ing said motor-cycles shall be regarded as a compliance with 
 the terms of this Act, as though a tag or tags had actually 
 been furnished and supplied by the said Highway Department. 
 Any neglect or failure to carry out the terms or provisions of 
 this section as to numbers shall be construed and regarded as 
 a violation of this Act, with the same force and effect as though 
 the provisions herein mentioned in regard to tag or tags had 
 been violated. 
 
 Applicants for registration or license who reside outside of 
 this State shall, in addition to the above requirements, desig- 
 nate in their application a resident of this State as their au- 
 thorized agent upon whom process may be served. 
 
 SECT. 2. That Section 21 of the said Act, which reads as follows : 
 "SECT. 21. The revenues derived from the registration of motor- 
 vehicles, and from licensing operators thereof, under the pro- 
 visions of this Act, shall be paid by the State Highway Depart- 
 ment to the State Treasurer, to be used for the improvement 
 of the roads of this Commonwealth," be, and the same is, 
 hereby amended to read as follows : 
 
 "SECT. 21. The revenues derived from the registration of 
 motor-vehicles, and from licensing operators thereof, under the 
 provisions of this Act, shall be paid by the State Highway De- 
 partment to the State Treasurer, to be used for the improvement 
 of the roads of this Commonwealth and the maintenance thereof" 
 
161 
 
 TAX ON ANTHRACITE COAL. 
 
 Many recommendations were made to your Committee, 
 that a tax be imposed on some of the natural resources 
 of the State, such as the gross production of mines, oil and 
 gas wells. This was one of the requests of the State 
 Grange. So far as these natural products come in competi- 
 tion with those produced by other States, it would be a 
 considerable burden upon the operation of such industries 
 in this Commonwealth to lay any tax. This would apply 
 to oil, gas and bituminous coal. It would in the end be a 
 tax upon the real estate from which such products were 
 derived, and would be an exception to the general policy 
 of the Commonwealth, not to tax real estate specifically 
 for State purposes, but to leave it to bear the principal 
 burden of local taxation. 
 
 As to anthracite coal, however, in which this Common- 
 wealth has a practical monopoly, competition would not 
 exist. Such a tax would be like the tax on gross receipts 
 of transportation and other similar companies, a tax on 
 business operations as to which there is more or less of 
 a monopoly. Moreover, as the tax could be laid on the 
 coal before it became the subject of interstate commerce, 
 a large part of the burden would be passed on, if any 
 change in price, to the citizens of other States. It is esti- 
 mated that 80 per cent, of this coal goes out of the State. 
 
 At the meeting held at Scranton disinterested public 
 men warmly advocated such a tax, and reference was made, 
 among other considerations, to the number of accidents 
 in the anthracite coal mines, which left a burden of dis- 
 abled men, widows and orphans to fall upon State aid. 
 The proportion is much greater in the anthracite regions, 
 being for 1908, 618 fatal and 3,526 non-fatal accidents 
 in the production of 70,238,530 tons of anthracite, to 531 
 fatal and 3,005 non-fatal accidents in the production of 
 118,313,525 tons of bituminous. The yearly averages in 
 10 
 
162 
 
 the anthracite mines up to 1907 showed deaths of 573, 
 leaving 322 widows and 770 orphans ; for the bituminous,. 
 475 deaths, leaving 252 widows and 546 orphans. 
 
 The Department of Mines made the necessity of re- 
 lieving this burden the subject of earnest comment in 
 its report of 1907, advised a tax of three-fourths of a cent 
 per ton on bituminous coal and one and one-half cents on 
 anthracite, the sum realized to be applied to this specific 
 purpose, and repeated the recommendation in 1909. 
 
 Your Committee therefore recommends the imposition of 
 a State tax of 2J per cent, of the value of all anthracite 
 coal at the mouth of the mine, as provided by the draft of 
 an Act submitted herewith. (See page 165.) 
 
 The product of anthracite coal in this Commonwealth 
 in the year 1908 amounted to 70,238,530 tons of the 
 value of $153,917,458, and in 1909 to 80,223,833 tons of the 
 value of $180,503,624. Upon the basis of the production 
 of 1908 the tax would realize $3,847,936.45, and upon the 
 basis of 1909 the sum of $4,512,580.60, and would form 
 very substantial addition to the State revenue. This wouL 
 be at the rate of approximately 5J cents per ton, ir- 
 respective of size. 
 
 One especially interesting suggestion made was that 
 the coal in situ be relieved of local taxation, and a por- 
 tion of the anthracite coal tax be returned to the countii 
 to compensate for this. It is often the case that the surfac 
 is owned by one person and the coal by another, the 
 division being horizontal instead of vertical. The coal is 
 then assessed separately as real estate, and whether as- 
 sessed this way or with the surface, the uncertainties of 
 valuation owing to ignorance of the extent of the coal 
 cause much difficulty and feeling between the taxing offi- 
 cials and owners. Instances may be found in the cases 
 of Delaware, Lackawanna and Western Eailway Com- 
 pany's Assessment, 224 Pa. 240, where the court held that 
 it was not uniform taxation to assess coal lands at a ratio 
 of actual to assessed value different from other lands ; and 
 
 
163 
 
 in Lehigh and Wilkes Barre Coal Company's Assessment, 
 225 Pa. 272, the court condemned the unvarying use of 
 the so-called ''foot-acre" method, whereby all coal in place 
 is valued according to a unit of cubical content, to wit, an 
 acre of coal a foot thick, without regard to quality and 
 accessibility, which greatly affect the actual value. Then 
 again, the County Commissioners of the different counties 
 adopt different values for the unit, Lackawanna county, 
 $200; Luzerne county, $67, and like variations in other 
 counties. These difficulties would be done away with by 
 the method suggested. On the other hand, there are prac- 
 tical difficulties in local distribution, owing to local taxes 
 for roads, schools, poor and the like in the subdivisions of 
 the counties. 
 
 As the primary purpose of the tax at this time is the 
 raising of State revenue, your Committee does not recom- 
 mend that the system of local distribution be now put 
 in effect. After the yield of the tax has been determined, 
 and statistics have been gathered as to the amount and 
 kind of local taxes to be displaced, a system may be es- 
 tablished by which from an increase of the State tax 
 the present local taxes may be supplied and discontinued. 
 Information on these points is still being sought, and if 
 proper data can be obtained and a practical scheme 
 worked out before adjournment of the Legislature, fur- 
 ther report on the subject will be made. 
 
 A somewhat similar suggestion as to timber was made, 
 that is, to exempt it from taxes until fit for market. The 
 situation is different. Timber land has no value apart 
 from timber until it is cleared, and in many localities 
 there would be little land left to pay the expenses of local 
 government. The coal is always fit for market, and i& 
 always being mined and revenue realized. But we must 
 wait for a revenue from timber in this way. 
 
 A draft of an Act laying an ad valorem tax on coal at 
 the mouth of the mine is therefore submitted herewith 
 (see page 165). An alternative is suggested in case 
 
1(54 
 
 it should be the opinion of the Legislature that it is more 
 desirable to lay the tax at a flat rate per ton (see page 
 165) . The tax according to value would be more uniform, 
 and the tax at a flat rate easier of ascertainment. 
 
 With respect to oil, gas and bituminous coal a tax of 
 the same amount laid by all of the States in which these 
 are produced which come in competition with the products 
 of our State without the necessity of a long haul to market, 
 would so equalize conditions that there would be no un- 
 fairness. West Virginia in particular is seeking a proper 
 method of taxing its oil and gas products. A conference 
 between these States would be beneficial to all concerned, 
 and your Committee recommends that an invitation be 
 extended to them to meet delegates appointed by the Gov- 
 ernor of Pennsylvania to discuss the subject, the expenses 
 of the delegates to be provided for in the general appro- 
 priation bill. For this purpose the following Joint Resolu- 
 tion is proposed : 
 
 A JOINT RESOLUTION PROVIDING FOR THE ISSUING OF AN INVITATION 
 TO NEIGHBORING STATES TO A CONFERENCE WITH RESPECT TO THE 
 TAXING OF OIL, GAS AND BITUMINOUS COAL. 
 
 Resolved, if the concur. That the Governor 
 
 of the Commonwealth be requested to issue an invitation to the 
 States of Ohio, West Virginia, and Maryland to participate in 
 a joint conference with this State upon the subject of a tax 
 of the same amount to be laid by each State upon oil, gas and 
 bituminous coal, and upon the method of laying the same ; and, 
 
 Be it further Resolved, That upon the Governor of the Com- 
 monwealth receiving- from the Governors of the States of Ohio. 
 West Virginia and Maryland an indication of the willingness 
 of their respective States to participate in such a conference, 
 the Governor be and he is hereby authorized to appoint three 
 delegates to meet and confer with delegates from all those 
 States when the same shall be designated, at a time and place 
 to be mutually agreed upon ; and 
 
 Be it further Resolved, That the expenses of such delegates be 
 paid out of a sum to be appropriated in the general appropria- 
 tion bill and be drawn from the State Treasury upon the warrant 
 of the chairman of the delegation, who shall be designated as 
 such by the Governor. 
 
165 
 
 AN ACT LAYING A STATE TAX ON ANTHRACITE COAL AND PROVIDING 
 FOR THE COLLECTION OF THE SAME. 
 
 SECT. 1. Be it enacted, etc., That hereafter every ton of an- 
 thracite coal of the weight of two thousand two hundred and 
 forty pounds avoirdupois mined in this Commonwealth shall be 
 subject to a State tax of five cents to be settled and collected as 
 provided by law for other State taxes. 
 
 (Or as an alternative title and first section.) 
 
 AN ACT LAYING A STATE TAX ON ANTHRACITE COAL AND PROVIDING 
 FOR THE COLLECTION OF THE SAME. 
 
 SECT. 1. Be it enacted, etc., That hereafter every ton of an- 
 thracite coal of the weight of two thousand two hundred and 
 forty pounds avoirdupois mined in this Commonwealth shall be 
 subject to a State tax of two and one-half per centum of the 
 value thereof at the mouth of the mine, to be settled and col- 
 lected as provided by law for other State taxes. 
 
 SECT. 2. Every operator of an anthracite coal mine or mines 
 in this Commonwealth shall report to the Auditor General in 
 the month of January in each year hereafter the number of such 
 tons of anthracite coal mined by such operator within the 
 calendar year then next preceding, and the value thereof at the 
 mouth of the mine. Such report shall be in writing under the 
 oath of the operator if an individual, or of one of them if more 
 than one individual, or of a principal executive officer if a cor- 
 poration, limited partnership or joint stock association. 
 
 SECT. 3. If any such operator shall fail to furnish such report 
 within the time required, it shall be the duty of the accounting 
 officers of the Commonwealth to add 10 per centum to the tax 
 for each and every year for which such report was not so 
 furnished, which percentage shall be settled and collected with 
 the said tax in the usual manner ol settling accounts and col- 
 lecting such taxes ; and if any individual operator or the officers 
 of an operator being a corporation, limited partnership, or joint 
 stock association, or any of them, shall intentionally fail to 
 make such report for three successive years, he or they shall 
 be deemed guilty of a misdemeanor, and on conviction thereof 
 shall be sentenced to pay a fine of five hundred dollars and 
 undergo an imprisonment not exceeding one year, or both or 
 either, at the discretion of the Court. 
 
 SECT. 4. If the Auditor General or State Treasurer is not satis- 
 fied with the report so made, they are hereby authorized and 
 
166 
 
 empowered to make an estimate of the number of tons mined 
 by the operator and to settle an account on the basis of such 
 estimate for the taxes, penalties and interest due the Common- 
 wealth thereon, with the right to the operator dissatisfied with 
 any settlement so made to appeal therefrom in the manner pro- 
 rided by law ; and if no such report is made the Auditor General 
 and State Treasurer shall make an estimate and settle an ac- 
 count as aforesaid, from which settlement there shall be a right 
 of appeal in the manner provided by law. 
 
 NOTE. 
 
 The classification of anthracite coal as distinguished from 
 bituminous coal has been sanctioned by long existing legis- 
 lation with reference to the different modes of inspection of 
 bituminous and anthracite mines and the classification sustained 
 in the case of Durkin vs. Kingston Coal Co., 171 Pa. 193. 
 
 By an Act of 1864, P. L. 218, a tonnage tax of 2 cents was put 
 on the products of mines. This was amended by an Act of the 
 same year, P. L. 988, continued by an Act of 1868, P. L. 108, and 
 finally abolished by an Act of 1864 P. L. 68. The latter Act 
 substituted a tax on the number of tons of coal mined or pur- 
 chased by companies engaged in the mining or purchasing and 
 selling of coal at the rate of 3 cents per ton. This was sus- 
 tained as a tax on franchises or privileges of the company and 
 the classification of these companies separately for purposes of 
 taxation was approved in the case of Kittanning Coal Company 
 vs. Commonwealth, 79 Pa. 103. 
 
 By the Act of 1879, P. L. 112, the tax was abolished as of July 
 1, 1881. It was held unconstitutional by the Supreme Court of 
 the United States as to interstate tonnage bv the case of Phila- 
 delphia & Reading R. R. Co. vs. Penna., 15 Wall. 232. 
 
 The method of report and settlement of the tax is based on 
 the method with regard to capital stock tax of corporations. 
 
167 
 
 MERCANTILE LICENSE TAX. 
 
 The largest number of protests made to your Committee 
 against existing taxes is that made against the mercantile 
 license tax. The principal complaint is that as a tax on 
 gross sales instead of on profit, it bears on those who do 
 a large volume of business in staple articles upon a small 
 margin of profit. As the tax bears equally upon all of 
 the competitors of such a merchant there is no preference 
 of any one, and the tax can easily be allowed for as an 
 item of expense of the business. The tax as now laid has 
 the advantage of being easily and accurately ascertain- 
 able. To ascertain the amount of profit would necessitate 
 far more inquisition than the present method, and this 
 matter of prying into the affairs of merchants is even now 
 a matter of complaint. The same difficulty of accurate 
 estimate would be met with in any attempt to tax on the 
 amount of capital involved in the business. The mercantile 
 license tax has existed in this State continuously in various 
 forms since the year 1821. It is not large in amount, being 
 only one mill on retail dealers, one-half mill on wholesale 
 dealers, and one-quarter mill on dealers at exchange. 
 Business of all kinds has become so accustomed to the tax 
 as to have adjusted itself thereto, and it seems only fair 
 that the private business man should bear part of the 
 burdens of the Government by which he benefits, when 
 corporations are called upon to bear so much heavier 
 burdens in the way of capital stock tax, and public service 
 corporations bear in addition a gross receipts tax of eight 
 mills upon the business which they conduct, which is also 
 a tax upon privilege and is laid in the same way. It is 
 proposed hereafter to impose a tax on manufacturing cor- 
 porations also, as some of the merchants have suggested, 
 so that this privilege will not escape. Money which is 
 active in business and is thus being repeatedly turned 
 over is specially fitted for taxation, and in all States is a 
 
168 
 
 special object of such taxation. If the money of the mer- 
 chant is not taxed, a large amount will escape its share 
 of the public burden. This is opposed to the principle of 
 equalizing taxes on property of the same class so far as it 
 is practical to subject it to successful taxation. 
 
 The cost of collecting this tax is not so large as might 
 be supposed. The average cost for the year 1907 was 
 10.6 per cent., and for 1908, 10.5 per cent. One of the 
 items in this cost is advertising of the mercantile tax 
 lists, which is now made everywhere except at Philadel- 
 phia, although there is authority to order it there. This 
 publicity is in line with the general movement for pub- 
 licity in all tax matters, a striking instance of which is the 
 provisions of the Federal Corporation Tax law. Many 
 recommendations have been made with respect to real 
 estate assessment, that lists be published of the values so 
 that the conflicting opinions and interests of neighbors 
 may produce greater equality in valuations. Your Com- 
 mittee thinks that if a list were published including not 
 merely the names and classification but also the amount 
 of business on which a tax is laid (which could be done 
 at slight expense) the lists would be of great value in 
 securing equalization. 
 
 They therefore recommend the enactment of the follow- 
 ing Act : 
 
 AN ACT RELATIVE TO MERCANTILE APPRAISERS' LISTS. 
 
 SECT. 1. Be it enacted, etc., That hereafter the Mercantile Ap- 
 praisers' Lists published in each county of the Commonwealth, 
 in addition to the names and classification of each person sub- 
 ject to license, shall also give the amount of the gross volume 
 of business transacted annually upon which the tax is assessed. 
 
 Your Committee therefore recommends that the mercan- 
 tile license tax be continued as now laid. 
 
169 
 
 TAXES ON INSURANCE COMPANIES. 
 
 Insurance companies now pay the capital stock tax if 
 they have capital stock, and the four mills tax on money 
 at interest (except in such extraordinary cases as that 
 of the Provident Life and Trust Company, elsewhere re- 
 ferred to), and an eight mills tax upon the premiums 
 received for business done within the State. Foreign com- 
 panies pay 2 per cent, of the premiums upon business 
 done within the State. Some of the companies, and also 
 the Insurance Commissioner, have advocated that the tax 
 on premiums be increased and all other taxes abolished. 
 This tax is like that on the gross receipts of certain public 
 service corporations. It is very easy to ascertain and col- 
 lect, as it falls upon all classes of companies alike, none 
 is able, by reason of special circumstances or any con- 
 cealment, to evade it. Such a tax would reach even the 
 evasive Provident Life and Trust Company. It should 
 extend to both foreign and domestic companies and all 
 those in the insurance business, except fraternal orders, 
 which stand on a different basis, to wit, that of benevol- 
 ence. 
 
 This, at the same time, would adjust the complaints 
 which are made even by our own insurance companies of 
 the excessive rate charged to foreign companies. The 
 practical result is to bear hard upon our companies when 
 they go abroad to do business, because they are met in 
 the most important States with a retaliatory tax of the 
 same kind, and hence do business there at a disadvantage 
 with their competitors. Under the very stringent pro- 
 visions of our law as to the registration and inspection 
 and reserves of foreign companies, our citizens are as 
 safe in dealing with them as with domestic companies, 
 and both should do business -upon the same basis. 
 
 It was represented by certain of the insurance com- 
 panies that a tax of 2 per cent, on the gross permiums 
 would yield a revenue which would be approximately equal 
 
170 
 
 to that derived from the present taxes, for which it is 
 substituted. The suggestion of this tax, however, unites 
 in the minds of the Committee with a demand for in- 
 creased taxation upon the insurance companies. These 
 companies have control of very large funds, and as such 
 form a concrete body of wealth which is easily and effi- 
 ciently taxed, and the burden of the tax thereby dis- 
 tributed over the portion of the community doing busi- 
 ness with them, a class well able to bear it. In this re- 
 spect they are analogous to banking institutions. 
 
 Your Committee, therefore, submits herewith a draft 
 of an Act designed to accomplish the result suggested, 
 and modeled upon the existing Act of 1895, imposing the 
 tax at the rate of 3 per cent, (see page 170). 
 
 AN ACT TO FURTHER AMEND SECTION 24 OF AN ACT ENTITLED "A 
 FURTHER SUPPLEMENT TO AN ACT ENTITLED 'AN ACT TO PRO- 
 VIDE REVENUE BY TAXATION/ APPROVED THE SEVENTH DAY OF 
 JUNE, ANNO DOMINI ONE THOUSAND EIGHT HUNDRED AND 
 SEVENTY-NINE," APPROVED THE 1ST DAY OF JUNE, ANNO DOMINI 
 1889. 
 
 SECT. 1. Be it enacted, etc., That Section 24 of an Act entitled 
 "A further supplement to an Act entitled 'An Act to provide 
 revenue by taxation,' approved the seventh day of June, Anno 
 Domini one thousand eight hundred and seventy-nine," approved 
 the 1st day of June, Anno Domini 1889, which as heretofore 
 amended reads as follows : 
 
 "That hereafter it shall be the duty of the President, Secre- 
 tary or other proper officer of each and every insurance com- 
 pany or association, incorporated by or under any law of this 
 Commonwealth, except companies doing- business upon the purely 
 mutual plan without any capital stock or accumulated reserve, 
 and purely mutual beneficial associations whose funds for the 
 benefit of members, their families or heirs are made up en- 
 tirely of the weekly or monthly contributions of their members 
 and the accumulated interest thereon, to make report in writing- 
 to the Auditor General, semi-annually, upon the first days of 
 July and January in each year, setting forth the entire amount 
 of premiums and assessments received by such company or 
 association during the preceding six months, whether said pre- 
 mium* and ****TTwnt vroro r*opiivpsr| in TOATiev w iti thft font* 
 
171 
 
 of notes, credits or other substitutes for money ; and every such 
 company or association shall pay into the State Treasury, 
 semi-annually, on the last days of January and July, in addi- 
 tion to any other taxes to which it may be liable under the 
 first and twenty-first sections of this Act, a tax of eight mills 
 on the dollar upon the gross amount of said premiums and as- 
 sessments received from business transacted within this 
 Commonwealth: Provided, That said reports shall be made 
 under oath or affirmation, and it shall be the duty of the ac- 
 counting officers of the Commonwealth to add 10 per centum 
 to the account of any company or association whose officers 
 shall neglect or refuse for a period of thirty days to make said 
 report, or to pay into the State Treasury the tax imposed by 
 this section : And provided further, That hereafter the annual 
 tax upon premiums of insurance companies of other States or 
 foreign Governments, shall be at the rate of 2 per centum upon 
 the gross premiums of every character and description received 
 from business done within this Commonwealth within the en- 
 tire calendar year preceding," be amended to read as follows : 
 That hereafter it shall be the duty of the President, Secretary 
 or other proper officer of each and every insurance company or 
 association of every kind whatsoever and wheresoever incorpo- 
 rated, including stock and mutual companies, and mutual bene- 
 ficial associations, doing business in this Commonwealth, to make 
 report in writing to the Auditor General annually in the month of 
 January in each year hereafter, setting forth the entire amount 
 of premiums and assessments received by such company or 
 association during the preceding calendar year, whether said 
 premiums and assessments were received in money or in the 
 form of notes, credits or other substitutes for money; and 
 every such company or association shall pay into the State 
 Treasury annually on the last day of January in each year a 
 tax of three per cent, upon the gross amount of such premiums 
 and assessments received from business transacted within this 
 Commonwealth : Provided, That said report shall be made under 
 oath or affirmation, and that it shall be the duty of the ac-. 
 counting officers of the Commonwealth to add ten per centum 
 to the account of any company or association whose officers 
 shall neglect or refuse for a period of thirty days to make said 
 report or to pay into the State Treasury the tax hereby im- 
 posed: And provided further, That the tax hereby imposed 
 shall be in lieu of any tax to which such companies might 
 otherwise be liable under the first section of this Act, and in 
 lieu of any tax to which it might otherwise be liable under 
 the twenty-first section of this Act as respects so much of its 
 capital as is invested in the business of insurance. 
 
172 
 
 TRANSFER COMPANIES. 
 
 In connection with the gross receipts tax, it may be well 
 to mention that companies transferring baggage and doing 
 a like business do not pay the tax. It might be supposed 
 that they were included in the term "express companies," 
 upon which a special Act of 1899 imposes the eight mills 
 gross receipts tax. But in practice the tax has not been 
 collected from these companies, and as their business is 
 exactly analogous to that of express companies and as 
 they are an important class of public service corporations, 
 your Committee recommends the imposition of the tax 
 upon them, and submits herewith a draft of an amendment 
 to the Act of 1899 above mentioned, to accomplish that 
 end (see page 172). 
 
 AN ACT TO AMEND SECTION 2 OF AN ACT ENTITLED "A SUPPLE- 
 MENT TO AN ACT ENTITLED 'AN ACT TO PROVIDE REVENUE BY 
 TAXATION,' APPROVED THE SEVENTH DAY OF JUNE, ANNO 
 DOMINI ONE THOUSAND EIGHT HUNDRED AND SEVENTY-NINE, 
 AMENDING AND EXTENDING THE PROVISIONS THEREOF," APPROVED 
 THE 28TH DAY OF APRIL, A. D. 1899. 
 
 SECT. 1. Be it enacted, etc., That Section 2 of an Act entitled 
 "A supplement to an Act, entitled 'An Act to provide revenue 
 by taxation,' approved the seventh day of June, Anno Domini 
 one thousand eight hundred and seventy-nine, amending- and 
 extending the provisions thereof," which reads as follows: 
 
 "SECT. 2. Every corporation, limited partnership, joint stock 
 association, partnership, firm or association of individuals, in- 
 corporated or unincorporated, engaged in the business com- 
 monly known as express business, shall pay to the State Treas- 
 urer, for the use of the Commonwealth, a tax of eight mills 
 upon the amount of their gross receipts from express business 
 done wholly within this State, the said tax shall be paid semi- 
 annually upon the last days of January and July in each year; 
 and for the purpose of ascertaining the amount of the same, 
 it shall be the duty of the Treasurer, or other proper officer 
 of the said corporation, limited partnership, joint stock asso- 
 ciation, partnership, firm or association of individuals, to trans- 
 
173 
 
 rn.it to the Auditor General a statement, under oath or affirma- 
 tion, of the amount of gross receipts of the said corporation, 
 limited partnership, joint stock association, partnership, firm, or 
 association of individuals, incorporated or unincorporated, de- 
 rived from all sources, and of the gross receipts from business 
 done wholly within the State during the preceding six months 
 ending upon the first days of January and July in each year ; 
 and if any such corporation, limited partnership, joint stock 
 association, partnership, firm, or association of individuals, in- 
 corporated or unincorporated, shall neglect or refuse for a 
 period of thirty days after such tax becomes due to make said 
 returns, or to pay the said tax, the amount thereof, with an 
 addition of 10 per centum thereto, shall be collected for the 
 use of the Commonwealth as other taxes are recoverable by 
 law. No other tax upon express receipts, or upon the privilege 
 of transacting express business, shall be collected without 
 further authority of law to be hereafter enacted : Providing, 
 That this Act shall not be construed to repeal or take the place 
 of the tax upon capital stock now imposed by law; but the 
 tax on gross receipts hereby imposed shall be in addition to 
 the tax on capital stock imposed by existing law upon any of 
 the corporations, companies or associations hereby taxed," be, 
 and the same is hereby amended so as to read as follows : 
 
 SECT. 2. Every corporation, limited partnership, joint stock 
 association, partnership, firm, or association of individuals, in- 
 corporated or unincorporated engaged in the business of carry- 
 ing baggage or persons or in the business commonly known as 
 express business, or in any other business of a like character 
 and commonly known as transfer companies, express companies 
 and companies doing similar business, shall pay to the State 
 Treasurer, for the use of the Commonwealth, a tax of eight 
 mills upon the amount of their gross receipts from transfer, 
 express and similar business done wholly within this State, the 
 said tax shall be paid semi-annually upon the last days of 
 January and July in each year; and for the purpose of ascer- 
 taining the amount of the same, it shall be the duty of the 
 Treasurer, or other proper officer of the said corporation, limited 
 partnership, joint stock association, partnership, firm, or asso- 
 ciation of individuals, to transmit to the Auditor General a 
 statement, under oath or affirmation, of the amount of gross 
 receipts of the said corporation, limited partnership, joint stock 
 association, partnership, firm, or association of individuals, in- 
 corporated or unincorporated, derived from all sources, and of 
 the gross receipts from business done wholly within the State, 
 during the preceding six months ending upon the first days 
 
174 
 
 of January and July in each year ; and if any such corporation, 
 limited partnership, joint stock association, partnership, firm, 
 or association of individuals, incorporated or unincorporated, 
 shall neglect or refuse for a period of thirty days after such 
 tax becomes due to make said returns, or to pay the said tax, 
 the amount thereof, with an addition of 10 per centum thereto, 
 shall be collected for the use of the Commonwealth as other 
 taxes are recoverable by law. No other tax upon transfer, ex- 
 press and similar receipts, or upon the privilege of transacting 
 transfer, express and similar business, shall be collected with- 
 out further authority of law to be hereafter enacted : Provid- 
 ing, That this act shall not be construed to repeal or take the 
 place of the tax upon capital stock now imposed by law ; but 
 the tax on gross receipts hereby imposed shall be in addition to 
 the tax on capital stock imposed by existing law upon any of 
 the corporations, companies or associations hereby taxed. 
 
175 
 
 EXEMPTION OF SAVINGS INSTITUTIONS FROM 
 FOUR MILLS TAX. 
 
 The Legislature of 1909, P. L. 298, exempted savings 
 institutions not having a capital stock from the four mills 
 tax on monied investments, with the proviso that this 
 should not relieve from payment corporations which had 
 issued loans free of tax. This Act is wrong in principle. 
 These institutions are not charitable organizations. While 
 few in number, they have the control of a great amount 
 of money, the total deposits amounting (November 6, 
 1909), to $167,068,144.72), of which the Philadelphia 
 Savings Fund Society alone had $92,259,930.43. 
 
 The passage of this Act was advocated on the plea that 
 it would benefit the depositors in this class of depositories 
 whose funds are largely made up of small savings. But 
 the result intended has not been accomplished. While in 
 theory a tax on the creditor, it really falls upon the debtor, 
 and yet though exempt from the tax there has been no 
 change influenced by the Act in the rate of interest de- 
 manded by these institutions since its passage. 
 
 Nor has the exemption benefited the depositors. The 
 rate of interest paid (3.65 per cent.) is the same as before, 
 and the money realized has gone to swell the already large 
 surplus which is never divided, and for the Philadelphia 
 Savings Fund alone amounted, on November 10, 1910, to 
 $9,574,159.36. 
 
 If the interest charged was lower than the current rate 
 (because of the exemption from the four (mills tax), 
 it would appear to tend to favoritism in the granting of 
 loans, and it could not be otherwise than a profitable 
 abuse. Indeed, it is not difficult to conclude that the only 
 material benefit because of this exemption will accrue 
 to those corporations or other borrowers who are able, 
 through their relations with the officials of the institu- 
 tions, to do business with them and save the tax, and there 
 
176 
 
 can be no legal or moral reason for an exemption from 
 which there could possibly flow such a preference. 
 
 If there could be a legal exemption from taxation of 
 the man who has but small savings, one which could 
 fairly tend to his thrift and uplift, your Committee would 
 be only too glad to make a recommendation to that end, 
 and in that spirit have elsewhere suggested the adoption 
 of a Constitutional Amendment which will, if adopted, 
 secure such a result (see page 150). 
 
 As this Act of May 1, 1909, P. L. 298, serves no useful 
 purpose its repeal is recommended, and a draft of an Act 
 therefor is herewith submitted (see page 176). 
 
 It may be well to call attention to the evils attendant 
 upon the accumulations of reserve and surplus in 
 institutions of this sort, and of insurance companies. 
 This subject was very thoroughly exposed in the in- 
 vestigation of the New York insurance companies in 
 1905; and the opportunities given to their managers for 
 profit through the wielding of such sums, even in invest- 
 ing them with perfect safety. All the profits of our 
 savings funds should go to depositors. But the margin 
 between the rate of interest on investments and the rate 
 paid depositors, permits the accumulation of a surplus, 
 laid away under the guise of providing for the unlikely 
 contingencies of a remote day, far beyond what appears to 
 your Committee to be the necessity of the case. No case 
 of actual abuse yet appears, but the best safety lies 
 in fear, and your Committee will be gratified if their fur- 
 ther investigations find a way of limiting these funds. 
 
 AN ACT TO REPEAL AN ACT ENTITLED "AN ACT TO AMEND THE FIRST 
 
 SECTION OF AN ACT, ENTITLED 'A FURTHER SUPPLEMENT TO AN 
 ACT, ENTITLED "AN ACT TO PROVIDE REVENUE BY TAXATION," 
 APPROVED THE SEVENTH DAY OF JUNE, ANNO DOMINI ONE 
 THOUSAND EIGHT HUNDRED AND SEVENTY-NINE,' APPROVED THE 
 FIRST DAY OF JUNE, ONE THOUSAND EIGHT HUNDRED AND 
 EIGHTY-NINE, AS AMENDED BY AN ACT APPROVED THE EIGHTH 
 DAY OF JUNE. ANNO DOMINI ONE THOUSAND EIGHT HUNDRED 
 AND NINETY-ONE, ENTITLED 'AN- ACT TO PROVIDE INCREASED 
 
177 
 
 BEVENUES FOB THE PUBPOSE OF BELIEVING THE BUBDENS OP 
 LOCAL TAXATION, BEING SUPPLEMENTABY TO AN ACT, ENTITLED 
 "AN ACT TO PBOVIDE BEVENUE BY TAXATION," APPBOVED THE 
 SEVENTH DAY OF JUNE, ANNO DOMINI ONE THOUSAND EIGHT 
 HUNDBED AND SEVENTY-NINE, AMENDING THE FIBST, FOUBTEENTH, 
 SIXTEENTH, TWENTIETH, TWENTY-FIBST, TWENTY-FIFTH, AND 
 TWENTY-SIXTH SECTIONS OF AN ACT SUPPLEMENTABY THEBETO, 
 
 WHICH BECAME A LAW ON THE FIBST DAY OF JUNE, ANNO 
 DOMINI ONE THOUSAND EIGHT HUNDBED AND EIGHTY-NINE, EN- 
 TITLED 'A FUBTHEB SUPPLEMENT TO AN ACT, ENTITLED "AN ACT 
 TO PBOVIDE BEVENUE BY TAXATION," APPBOVED THE SEVENTH 
 DAY OF JUNE, ANNO DOMINI ONE THOUSAND EIGHT HUNDBED 
 AND SEVENTY-NINE,' AND PBOVIDING FOB GBEATEB UNIFOBMITY 
 OF TAXATION BY TAXING ALL OF THE PBOPEBTY OF COBPOBATIONS, 
 LIMITED PABTNEBSHIPS, AND JOINT STOCK ASSOCIATIONS HAVING 
 CAPITAL STOCK, AT THE BATE OF FIVE MILLS ON EACH DOLLAB 
 
 OF ITS ACTUAL VALUE, BY BELIEVING AND EXEMPTING FBOM THE 
 PROVISIONS THEBEOF SAVINGS INSTITUTIONS HAVING NO CAPITAL 
 STOCK," APPBOVED MAY 1, 1909. 
 
 SECT. 1. Be it enacted, etc., That an Act entitled "An Act to 
 amend the first section of an Act, entitled 'A further supple- 
 ment to an Act, entitled "An Act to provide revenue by taxation," 
 approved the seventh day of June, Anno Domini one thousand 
 eight hundred and seventy-nine,' approved the first day of June, 
 one thousand eight hundred and eighty-nine, as amended by an 
 Act approved the eighth day of June, Anno Domini one thou- 
 sand eight hundred and ninety-one, entitled "An Act to provide 
 increased revenues for the purpose of relieving the burdens of 
 local taxation, being supplementary to an Act entitled 'An Act 
 to provide revenue by taxation,' approved the seventh day of 
 June, Anno Domini one thousand eight hundred and seventy- 
 nine, amending the first, fourteenth, sixteenth, twentieth, twenty- 
 first, twenty-fifth, and twenty-sixth sections of an Act supple- 
 mentary thereto, which became a law on the first day of June, 
 Anno Domini one thousand eight hundred and eighty-nine, en- 
 titled 'A further supplement to an Act, entitled "An Act to pro- 
 vide revenue by taxation,' approved the seventh day of June, 
 Anno Domini one thousand eight hundred and seventy-nine," 
 and providing for greater uniformity of taxation by taxing all 
 of the property of corporations, limited partnerships, and joint 
 stock associations having capital stock, at the rate of five mills 
 on each dollar of its actual value," by relieving and exempting 
 from the provisions thereof savings institutions having no cap- 
 ital stock," approved May 1, 1909, be, and the same is hereby 
 repealed. 
 
178 
 
 CAPITAL STOCK TAX ON MANUFACTURING COR- 
 PORATIONS. 
 
 There is a very general feeling throughout the State, 
 to which the Pennsylvania State Grange gave particularly 
 forceful expression, that manufacturing corporations, like 
 other corporations, should pay tax upon the capital 
 stock. This tax is imposed on the value of the assets as 
 represented by the capital stock, but as it is not imposed 
 upon other similar non-corporate assets, it is in effect a tax 
 on the privilege of existing as a corporation. These cor- 
 porations share, with others, this governmental privilege. 
 The only ground for the exemption is the supposed en- 
 couragement that has thus been given to the location of 
 manufacturing industries within the State. Primarily, 
 however, the location of a manufacturing plant will depend 
 upon the nearness to source of supply or to markets, or to 
 supply of labor or the like, and the imposition of the tax, 
 while a material element, is a minor one. Pennsylvania 
 and New York alone treat manufacturing corporations dif- 
 ferently from other general business corporations with re- 
 spect to State taxes, and the pre-eminence of these States 
 in that regard is largely due to natural advantages. New 
 York exempts only those corporations which employ 40 
 per cent, of their capital in manufacturing within the 
 State. Even a manufacturing State like Massachusetts 
 does not so favor them. From the expression of opinions 
 before it, your Committee believes that manufacturers 
 themselves feel that as they have been exempt from 1885 
 on the theory of "infant industries," a small tax would 
 be now not an appreciable burden. In order, however, that 
 there need be no sudden readjustment of the conditions 
 under which the manufacturer may conduct his business, 
 in competition with like activities in other States, the tax 
 ought to be a small one. 
 
 A change in the subject of taxation is often more op- 
 
179 
 
 pressive than an existing unjust tax, because the incidence 
 of the tax has been determined, consciously or uncon- 
 sciously, and allowance for it has been made. 
 
 The capital stock of manufacturing corporations doing 
 business in this State in 1905 (the last estimate avail- 
 able), amounted to $1,600,000,000, now, probably, 
 $2,000,000,000. A tax of one mill on this latter amount 
 would yield to the State the substantial sum of $2,000,000 
 per year, and your Committee recommends that it be laid. 
 
 A draft of an Act to accomplish this result is here- 
 with submitted (see page 181). 
 
 By the same Act your Committee proposes to stop a 
 gap in the existing law which the Legislature of 1907 
 made a possibly ineffectual attempt to fill. Companies 
 doing an insurance business, as well as a general trust 
 company business notably the Provident Life and Trust 
 Company, of Philadelphia hold certain investments for 
 their insurance department reserves. It was first decided 
 at the suit of this company that these assets should not 
 be reckoned as part of the capital stock, as they did not 
 belong to the stockholders. (Com. vs. Provident Life and 
 Trust Co., 9 District Rep. 479.) It was then attempted 
 to impose the four mills tax on money at interest upon 
 these assets ; but this was successfully resisted on the ground 
 that they were owned by the company in its own right 
 and not as trustee for its policy holders, and hence ex- 
 empt from the four mills tax, under the express wording 
 of the Act of 1891, imposing the capital stock tax. 
 (Provident Life and Trust Co. vs. Durham, 212 Pa. 68) 
 Accordingly the Act of 1907, P. L. 430, declared that 
 the exemption should not extend to securities in which 
 the stockholders did not have the entire equitable interest, 
 thus attempting to exclude the shadowy borderland within 
 which these $30,000,000 of assets fell. 
 
 But in giving a title to this Act a mistake was made. 
 In the body of the Act the section intended to be amended 
 was correctly quoted, and in the marginal note to the 
 
180 
 
 Pamphlet Laws it is correctly called the Act of 1893. 
 But in the title, the Act to be amended is called the Act 
 of June 27, 1879. The parent Act of all this series is an Act 
 of 1879, which has long since been superseded. But it is 
 the Act of June 7, not June 27. In spite of this the Court 
 of Common Pleas No. 2, of Philadelphia, has decided that 
 the assets in question (now amounting to fifty million dol- 
 lars) do not come within the wording, at the same time 
 declaring the title correct. Your Committee would recom- 
 mend an alteration in the wording of the Act as in the draft 
 submitted herewith, and also a correction of the title to 
 meet a possible adverse decision by the Supreme Court, 
 where the case is now on appeal. 
 
 Capital stock not invested in manufacturing is taxed 
 at five mills, as heretofore. 
 
 ARTIFICIAL GAS COMPANIES. 
 
 Since the exemption of manufacturing companies from 
 capital stock tax by the original Act of 1885 imposing 
 this species of tax, gas companies have been exempt on 
 the ground that they were manufacturing companies. Com- 
 monwealth vs. Allegheny Gas Co., 1 Dauph. 93 ; Common- 
 wealth vs. Chester Gas Co., 5 Dauph. 121. At the same 
 time it was held that their competitors, the electric light 
 companies, were subject to this tax. Commonwealth vs. 
 Northern Electric Light and Power Company, 145 Pa. 
 105. By the Act of 1889, the electric light companies 
 were also subjected to the tax of eight mills on the gross 
 receipts, which is laid on transportation companies of 
 various sorts. As a result, the gas companies, many of 
 which have a local monopoly unlike the electric light 
 companies, are free from two taxes which their com- 
 petitors bear. Your Committee is of opinion that the 
 imposition of both these taxes on gas companies would 
 equalize taxes on concerns which are legitimate competi- 
 
181 
 
 tors of one another, and at the same time would secure 
 a substantial item of revenue. As long as the expense 
 of electric light continues greater, and with the increased 
 use of gas as domestic fuel, these companies will con- 
 tinue to thrive. The local monopoly given them by law 
 makes them (like coal) a natural subject of taxation. 
 
 In the draft of the Act imposing capital stock tax on 
 manufacturing corporations (see page 181) there has 
 therefore been inserted, also, appropriate words to impose 
 on artificial gas companies the regular capital stock tax of 
 five mills. 
 
 An amendment to the Act of 1889, imposing the 
 gross receipts tax on these companies, is also submitted 
 herewith (see page 183). 
 
 AN ACT TO FURTHER AMEND SECTION TWENTY-ONE OF AN ACT 
 ENTITLED "A FURTHER SUPPLEMENT TO AN ACT ENTITLED 'AN 
 ACT TO PROVIDE REVENUE BY TAXATION/ APPROVED THE SEVENTH 
 DAY OF JUNE. ANNO DOMINI ONE THOUSAND EIGHT HUNDRED 
 AND SEVENTY-NINE," APPROVED JUNE 1, 1889. 
 
 SECT. 1. Be it enacted, etc., That Section 21 of an Act entitled 
 "A further supplement to an Act entitled 'An Act to provide 
 revenue by taxation,' approved the seventh day of June, Anno 
 Domini one thousand eight hundred and seventy-nine," approved 
 June 1, 1889, which as heretofore amended reads as follows : 
 
 "SECT. 21. That every corporation, joint stock association, lim- 
 ited partnership and company whatsoever, from which a report 
 is required under the twentieth section hereof, shall be subject 
 to and pay into the Treasury of the Commonwealth, annually, 
 a tax at the rate of five mills upon each dollar of the actual 
 value of its whole capital stock of all kinds, including- com- 
 mon, special and preferred, as ascertained in the manner pre- 
 scribed in said twentieth section, and it shall be the duty of 
 the treasurer or other officers having charge of any such cor- 
 poration, joint stock association or limited partnership, upon 
 which a tax is imposed by this section, to transmit the amount 
 of said tax to the Treasury of the Commonwealth within thirty 
 days from the date of settlement of the account by the Auditor 
 General and State Treasurer: Provided, That for the purposes 
 
182 
 
 of this Act, interests in limited partnerships or joint stock 
 associations shall be denied to be capital stock and taxable 
 accordingly: Provided also, That corporations, limited partner- 
 ships and joint stock associations, liable to tax on capital stock 
 under this section, shall not be required to make any report 
 or pay any further tax on mortgages, bonds and other securi- 
 ties owned by them in their own right; but corporations, 
 limited partnerships and joint stock associations holding such 
 securities as trustees, executors, administrators, guardians, or in 
 any other manner, shall return and pay the tax imposed by 
 this Act upon all securities so held by them as in the case of in- 
 dividuals : And Provided Further, That the provisions of this 
 section shall not apply to the taxation of so much of the capi- 
 tal stock of corporations, limited partnerships or joint stock 
 associations, organized for manufacturing purposes, which is 
 invested in and actually and exclusively employed in carrying on 
 manufacturing within the State, except companies engaged in 
 the brewing or distilling of spirits or malt liquors and such as 
 enjoy and exercise the right of eminent domain ; but every manu- 
 facturing corporation, limited partnership or joint stock asso- 
 ciation shall pay the State tax of five mills herein provided, 
 upon such proportion of its capital stock, if any, as may be 
 invested in any property or business not strictly incident or 
 appurtenant to its manufacturing business, in addition to the 
 local taxes assessed upon its property in the districts where 
 located, it being the object of this proviso to relieve from State 
 taxation only so much oi the capital stock as is invested purely 
 in the manufacturing plant and business : Provided further, In 
 case of fire or marine insurance companies the tax imposed by 
 this section shall be at the rate of three mills on each dollar 
 of the actual value of the whole capital stock," be and the 
 same is hereby amended so as to read as follows : 
 
 SECT. 21. That every corporation, joint stock association, 
 limited partnership, and company whatsoever, from which a 
 report is required under the twentieth section hereof, shall be 
 subject to and pay into the Treasury of the Commonwealth, 
 annually, a tax at the rate of five mills upon each dollar of the 
 actual value of its whole capital stock of all kinds, including 
 common, special and preferred, as ascertained in the manner 
 prescribed in said twentieth section; and it shall be the duty 
 of the treasurer or other officers having charge of any such cor- 
 poration, joint stock association, or limited partnership, upon 
 which a tax is imposed by this section, to transmit the amount 
 of said tax to the Treasury of the Commonwealth within thirty 
 days from the date of the settlement of the account by the 
 
183 
 
 Auditor General and the State Treasurer: Provided, That for 
 the purpose of this Act, interests in limited partnerships 01 
 joint stock associations shall be deemed to be capital stock, and 
 taxable accordingly : Provided also, That corporations, limited 
 partnerships, and joint stock associations, liable to tax on capital 
 stock under this section, shall not be required to pay any 
 further tax on the mortgages, bonds, and other securities owned 
 by them, which form part of its capital stock surplus and un- 
 divided profits belonging to the whole body of stockholders or 
 members as such; but corporations, limited partnerships, and 
 joint stock associations, owning or holding such securities as 
 trustees, executors, administrators, guardians, or in any other 
 manner than as aforesaid, shall return and pay the tax 
 imposed by this Act upon all securities so owned or held by 
 them, as in the case of individuals ; And Provided Further, That 
 the capital stock of corporations, limited partnerships and 
 joint stock associations organized for manufacturing purposes 
 which is invested in and actually and exclusively employed in 
 carrying on manufacturing within tJie State, except companies 
 engaged in the brewing or distilling of spirits or malt liquors, 
 and the manufacture of artificial gas, and such as enjoy and 
 exercise the right of eminent domain, shall be taxed at the rate 
 of one mill upon each dollar of the actual value thereof; but so 
 much thereof as may be invested in any property or business not 
 strictly incident or appurtenant to its manufacturing business 
 shall be taxed at the rate of five mills upon each dollar of the 
 actual value thereof: Provided further, In case of fire and ma- 
 rine insurance companies, the tax imposed by this section shall 
 be at the rate of three mills upon each dollar of the actual value 
 of the whole capital stock. 
 
 AN ACT TO AMEND SECTION TWENTY-THBEE OF AN ACT ENTITLED 
 "A FURTHER SUPPLEMENT TO AN ACT ENTITLED 'AN ACT TO 
 PROVIDE REVENUE BY TAXATION/ APPROVED THE SEVENTH DAY 
 OF JUNE, ANNO DOMINI ONE THOUSAND EIGHT .HUNDRED AND 
 SEVENTY-NINE," APPROVED JUNE 1. 1889. 
 
 SECT. 1. Be it enacted, etc., That Section 23 of an Act entitled 
 "A further supplement to an Act entitled 'An Act to provide 
 revenue by taxation, approved the seventh day of June, Anno 
 Domini one thousand eight hundred and seventy-nine," approved 
 
 Jrt-nf* 1. 1RRQ. w>n^>i rear! .s 
 
184 
 
 SECT. 23. That every railroad company, pipe line company, 
 conduit company, steamboat company, canal company, slack 
 water navigation company, transportation company, street pas- 
 senger railway company, and every other company, joint stock 
 association or limited partnership, now or hereafter incorpor- 
 ated 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 business in this Commonwealth, and owning, operating 
 or leasing to or from another corporation, company, associa- 
 tion, 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 of the United States 
 and doing business in this Commonwealth, and every express 
 company, incorporated or unincorporated, doing business in this 
 Commonwealth, and every firm, co-partnership or joint stock 
 company or association doing express business in this Common- 
 wealth, and every electric light company, and every palace car 
 and sleeping car company, incorporated or unincorporated, doing 
 business in this Commonwealth, shall pay to the State Treasurer 
 a tax of eight mills upon the dollar upon the gross receipts of 
 said corporation, company or association, limited partnership, 
 firm or co-partnership, received from passengers and freight 
 traffic transported wholly within this State, and from telegraph, 
 telephone or express business done wholly within this State, 
 or from business of electric light companies and from fhe trans- 
 portation of oil done wholly within the State ; the said tax 
 shall be paid semi-annually upon the last days of January 
 and July in each year; and for the purpose of ascertaining 
 the amount of the same it shall be the duty of the treasurer 
 or other proper officers of the said company, firm, co-partner- 
 ship, limited partnership, joint stock association or corporation 
 to transmit to the Auditor General a statement, under oath or 
 affirmation, of the amount of gross receipts of the said com- 
 panies, co-partnerships, corporations, joint stock associations, or 
 limited partnerships derived from all sources and of gross re- 
 ceipts from business done wholly within the State, during the 
 preceding six months ending on the first days of January and 
 July in each year; and if any such company, firm, co-partner- 
 ship, joint stock association, association or limited partnership 
 or corporation, shall neglect or refuse for a period of thirty 
 days after such tax becomes due to make said returns or to pay 
 the same, the amount thereof, with an addition of ten per 
 
185 
 
 centum thereto, shall be collected for the use of the Common- 
 wealth as other taxes are recoverable by law : Provided, That 
 in any case where the works of one corporation, company, joint 
 stock association or limited partnership are leased to and op- 
 erated by another corporation, company, association or limited 
 partnership, the taxes imposed by this section shall be appor- 
 tioned between the said corporations, companies, associations or 
 limited partnerships in accordance with the terms of their re- 
 spective leases or agreements, but for the payment of the said 
 taxes the Commonwealth shall first look to the corporation, 
 company, association or limited partnership operating the works, 
 and upon payment by the said company, corporation, association 
 or limited partnership of a tax upon the receipts as herein 
 provided derived from the operation thereof, the corporation 
 company, joint stock association, or limited partnership from 
 which the said works are leased, shall not be held liable under 
 this section for any tax upon the proportion of said receipts re- 
 ceived by it as rental for the use of said works." 
 
 be and the same is hereby amended to read as follows : 
 SECT. 23. That every railroad company, pipe line company, 
 conduit company, steamboat company, canal company, slack 
 water navigation company, transportation company, street pas~ 
 senger railway company, and every other company, joint stock 
 association or limited partnership, now or hereafter incorpo- 
 rated 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 business in this Commonwealth, and owning, operating, 
 or leasing to or from another corporation, company, associ- 
 ation, joint stock association or limited partnership, any rail- 
 road, pipe line, slack water navigation, street passenger rail- 
 way, canal or other device for the transportation of freight or 
 passeng-ers or oil, and every telephone or telegraph company in- 
 corporated under the laws of this or any other State or of the 
 United States and doing business in this Commonwealth, and 
 every express company, incorporated or unincorporated, doing 
 business in this Commonwealth, and every firm, co-partnership, 
 or joint stock company or association doing express business in 
 this Commonwealth, and every electric light company, and every 
 artificial gas company, and every palace car and sleeping car 
 company, incorporated or unincorporated, doing business in this 
 Commonwealth, shall pay to the State Treasurer a tax of eight 
 mills upon the dollar upon the gross receipts of said corpo- 
 ration, company or association, limited partnership, firm or co- 
 
186 
 
 partnership, received from passenger 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, or from business of artificial 
 gas companies, and from the transportation of oil done wholly 
 within the State; the said tax shall be paid annually in the 
 month of January of each year for the last preceding calendar 
 year; and for the purpose of ascertaining the amount of the 
 same, it shall be the duty of the Treasurer or other proper 
 officer of the said company, firm, co-partnership, limited part- 
 nership, joint stock association or corporation, to transmit to 
 the Auditor General a statement, under oath or affirmation, of 
 the amount of gross receipts of the said companies, co-partner- 
 ships, corporations, joint stock associations or limited partner- 
 ships derived from all sources, and of gross receipts from busi- 
 ness done wholly within the State, during the preceding cal- 
 endar year, and if any such company, firm, co-partnership, joint 
 stock association, or limited partnership or corporation, shall 
 neglect or refuse for a period of thirty days after such tax 
 becomes due, to make said returns or to pay fhe same, the 
 amount thereof with an addition of ten per centum thereto, shall 
 be collected for the use of the Commonwealth as other taxes are 
 rcoverable by law : Provided, That in any case where the works 
 of one corporation, company, joint stock association or limited 
 partnership are leased to and operated by another corporation, 
 company, association or limited partnership, the taxes imposed 
 by this section shall be apportioned between the said corpo- 
 rations, companies, associations or limited partnerships in ac- 
 cordance with the terms of their respective leases or agreements, 
 but for the payment of the said taxes the Commonwealth shall 
 first look to the corporation, company, association or limited 
 partnership operating the works, and upon payment by the said 
 company, corporation, association or limited partnership of a 
 tax upon the receipts as herein provided derived from the oper- 
 ation thereof, the corporation, company, joint stock association 
 or limited partnership from which the said works are leased, 
 shall not be held liable under this section for any tax upon the 
 proportion of said receipts received by it as rental for the use of 
 said works." 
 
187 
 
 LOCAL REAL ESTATE OF PUBLIC SERVICE 
 CORPORATIONS. 
 
 By existing laws the real estate of railroad and other 
 public service corporations which is necessary to their op- 
 eration is not taxable locally, as other real estate. So far as 
 the actual right of way of a railroad is concerned, this pol- 
 icy is unquestionably sound. The value of such a right of 
 way is not the same as that of another piece of real estate 
 of! equal area. It is part of an integral system stretching 
 in many cases across the State, and the valuation of a 
 comparatively small section of it is not only beyond the 
 capacity of the local assessor, but would result in un- 
 avoidable inequality and injustice in the conflict be- 
 tween various localities. For this reason other States 
 which permit such a taxation also have machinery by 
 means of State Boards of Equalization, which we have 
 not, and the like, for adjusting the valuation among the 
 several communities. This system has been the subject 
 of much friction and litigation. 
 
 In Philadelphia and Pittsburgh, however, by virtue of 
 special Acts of long standing the real estate of railroads, 
 which is not part of the right of way (except water stations 
 in Philadelphia), has been subject to local taxation. The 
 consequence is that such structures as passenger and 
 freight depots, coal tipples, office buildings and the like, 
 which can easily be valued as pieces of real estate, with 
 the improvements thereon, apart from their connection 
 with the actual line of tracks, have been taxed for general 
 governmental purposes, and also for municipal improve- 
 ments. 
 
 Under the present construction, the law universally per- 
 mits local taxation of such property which is remote from 
 and disconnected with the operation of the road. The 
 same rule has been extended to gas, water, electric, bridge 
 and numerous other public service corporations, and so 
 
188 
 
 far as concerns pipes, mains, wires, bridge structures and 
 the like, your Committee feels that it should be maintained 
 for the same reason. 
 
 Even the exemption of pieces of real estate which might 
 stand alone, such as power houses and railroad stations, 
 is attended with difficulty because a large part of their 
 value depends on their connection with the system, and 
 standing alone they may be worth little more than the 
 ground. 
 
 Your Committee feels that the whole subject is attended 
 with such difficulties of practical administration, when 
 their great hope has been to reduce those difficulties, that 
 they do not recommend any change in this regard at pres- 
 ent. Other States and the United States are considering 
 this matter. It would be better to get the full result of 
 their deliberations and experience before moving our- 
 selves. At the same time, an Act which it is believed would 
 accomplish the change is submitted herewith, with a note 
 giving the history of the law and the reason for the 
 language used, if the Legislature deem the change de- 
 sirable and practical. 
 
 AN ACT TO RAISE REVENUE BY SUBJECTING TO TAXATION CERTAIN REAL 
 ESTATE NOT HERETOFORE TAXABLE AS SUCH. OF RAILROAD COM- 
 PANIES, STREET RAILWAY COMPANIES, CANAL COMPANIES, BRIDGE 
 COMPANIES, GAS COMPANIES, PIPE LINE COMPANIES, FERRY COM- 
 PANIES, ELECTRIC LIGHT, HEAT AND POWER COMPANIES, WATER 
 COMPANIES, TELEGRAPH COMPANIES, TELEPHONE COMPANIES, EX- 
 PRESS COMPANIES, AND OTHER PUBLIC SERVICE CORPORATIONS OF 
 THE SAME OR OTHER KINDS. 
 
 SECT. 1. Be it enacted, etc., That all real estate of railroad 
 companies, street railway companies, canal companies, bridge 
 companies, gas companies, pipe line companies, ferry companies, 
 electric light, heat and power companies, water companies, 
 telegraph companies, telephone companies, express companies, 
 and other public service corporations of the same or other 
 kinds, which has not heretofore been taxable as such, except 
 
189 
 
 the right of way. road bed and superstructure of railroad com- 
 panies, the tracks and right of way of street railway companies 
 the bed, berme-bank and tow path of canal companies, such por- 
 tion of the bridges of bridge companies as may be necessary 
 to span the gap, the pipes or mains of gas companies and pipe 
 lines companies, the poles and wires of electric light, heat and 
 power companies, telegraph companies and telephone companies, 
 and the pipes or conduits of water companies, is hereby made 
 subject to taxation by counties, cities, boroughs, townships, 
 school districts and other municipal corporations, the same as 
 other real estate. 
 
 SECT. 2. All Acts or parts of Acts, general, special or local, 
 inconsistent herewith, be and the same are hereby repealed. 
 
 NOTE. 
 
 By the long settled construction of the laws of the Com- 
 monwealth (particularly the Acts of 1834 and 1844), that part 
 of the real estate of railroads wiiich was indispensable to the 
 proper exercise of the corporate franchises, or reasonably neces- 
 sary to the business of the corporation and which constitutes a 
 part of its corporate machinery, was not taxable locally, because 
 it entered into the value of its franchises as a whole and was 
 taxable as such. Numerous decisions have pretty well settled 
 what was and what was not within this principle. By these 
 decisions practically the only property outside of Philadelphia 
 and Pittsburgh subject to taxation for local purposes was shops 
 for original construction of rolling stock, warehouses, coal yards, 
 coal chutes, wood yards, houses used for boarding employes and 
 buildings remote from the right of way used as general offices. 
 By the Act of April 21, 1858, P. L. 385, Section 1, applying only 
 to Philadelphia, "the offices, depots, car houses and other real 
 
 property of railroad corporations the superstructure of 
 
 the road and water stations only excepted," were subjected to 
 City taxation. An Act applying only to Pittsburgh did the like 
 for all "real estate" in the city. Act of January 4, 1859, P. L. 
 828, Sec. 3. In construing the Philadelphia Act it has been held 
 to exempt only the "road bed" or "right of way" under the word 
 "superstructure," and all else, except water stations specifi- 
 cally mentioned, is liable for municipal assessment as well as 
 taxes proper. Philadelphia vs. P. & K. E. Co., 177 Pa. 292. Ac- 
 cordingly the words so used are adopted by the proposed Act in 
 order that the settled construction may be applied to the great 
 variety of circumstances which may arise under the new law. 
 
 The same rule with respect to the taxation of the real estate 
 of railroad companies has been held to apply to street railway 
 companies, canal companies, bridge companies, gas and pipe line 
 companies, electric light, heat and power companies, and water 
 companies, and the real estate which has been deemed necessary 
 
190 
 
 to the proper exercise of their corporate franchises has been 
 exempted from local taxation. Such exempted property included 
 practically all the real estate of these companies, and the only 
 real estate taxable was such as may be disconnected with the 
 actual operation of the plant or property, as, for example, resi- 
 dences of officials or employes, mountain lands of water com- 
 panies, tanks of pipe line companies, etc. Under the Act as pre- 
 pared a great dea 1 of the property of these companies will be 
 taxable, such as car barns of street railway companies, power 
 houses of electric light companies, gas plants of gas companies, 
 reservoirs of water companies, etc., and only the property specifi- 
 cally mentioned, such as rights of way, poles, wires, pipes, con- 
 duits, tracks, etc., will be exempt. 
 
191 
 
 (D) COLLECTION OF REVENUE. 
 
 One of the most striking features of our present system 
 of taxation is the much greater relative efficiency of the 
 collection of taxes as compared with other States. The 
 State taxes, such as collateral inheritance taxes, capital 
 stock '-axes and gross receipts taxes, are easy to get at be- 
 cause either the subjects of taxation are matters of in- 
 evitable public record, or the corporations paying the tax 
 are compelled to record themselves in order to preserve 
 their legal existence ; and each individual taxable is there- 
 fore within reach of the Auditor General's office so that 
 it may be compelled to render an account. 
 
 The principal exception is to be found in foreign corpora- 
 tions, and the foreign corporation law, herein suggested 
 (page 16), will tend to force these to register in greater 
 numbers than before. The greater powers of investiga- 
 tion given to the Auditor General by other Acts which 
 your Committee recommends will also aid in this regard. 
 
 Another possible exception is found in those corpora- 
 tions which are chartered by the courts and are only re- 
 quired to record their charters locally. While most of 
 these are not for profit (and are so classed in the books), 
 yet some may engage in business occupations as for ex- 
 ample, baseball and exhibition companies and these are 
 now required by law to register with the Auditor General. 
 But it is not necessary to their existence that they should 
 do so. If the granting of a charter is reported by the 
 Prothonotary of the court to the Auditor General a means 
 of checking like the report of judgments and mortgages 
 recorded the information will be in the hands of the 
 State authorities and a means of compelling reports can 
 
192 
 
 be found. A draft of an Act to this end is herewith sub- 
 mitted (See page 193). 
 
 The same observations apply to the tax on corporate 
 loans where the treasurer of the corporation is made 
 the assessor and collector, although it is really a tax on 
 the creditor of the corporation. He is required to deduct 
 the tax from the interest paid the creditor, and the cor- 
 poration is liable personally for his doing so. The same 
 is done by treasurers of municipalities and the like who 
 have no interest to fail in their duty. The law intends, 
 under the name of "incorporated districts," that school 
 districts should also make this return, and the Attorney 
 General has so ruled (35 Pa. County Ct. Rep. 606). The 
 Auditor General had not previously required this, and 
 the reports are not even now actually made. To avoid 
 misunderstandings by officials and tax payers an amend- 
 ment to the law expressly including them is herewith 
 submitted (see page 193). Even the dealer who pays a 
 mercantile license tax is more within the reach of taxing 
 officials than the ordinary tax payer because he must 
 make himself known to the world, and his tranactions 
 are matters of record because of the necessities of his 
 business. 
 
 In the matter of the general tax on certain personal 
 property, the success of Pennsylvania has been so great 
 as to win the praise of economists. Prof. Charles J. 
 Bullock, of Harvard University, addressing the second 
 International Tax Conference at Ontario, Canada, says 
 of Pennsylvania: "The success achieved with im- 
 perfect laws and methods of administration has been little 
 short of surprising, and should lead the candid student 
 to revise his ideas of the impossibility of taxing intangible 
 wealth." 
 
 But the imperfections which do exist are the same in 
 kind as elsewhere. They are only less in degree. Your 
 Committee has therefore given special consideration to 
 this subject. 
 
193 
 
 AN ACT PROVIDING FOB THE BEPORT TO THE AUDITOR GENEBAL BY THE 
 PROTHONOTARIES OF THE COURTS OF COMMON PLEAS OF COR- 
 PORATIONS INCORPORATED BY SUCH COURTS. 
 
 SECT. 1. Be it enacted, etc., That the Prothonotary of each 
 Court of Common Pleas in this Commonwealth shall report to 
 the Auditor General each month the names of the corporations 
 incorporated by the said Court, with the names and addresses 
 of the directors thereof, and for so doing shall receive a fee 
 of one dollar from each of such corporations. 
 
 AN ACT AMENDING SECTION FOUR OF AN ACT ENTITLED "AN ACT 
 IMPOSING ADDITIONAL TAXES FOR STATE PURPOSES AND TO 
 ABOLISH THE REVENUE BOABD," APPBOVED THE THIRTIETH DAY OF 
 
 APRIL, A. D. 1864. 
 
 SECT. 1. Be it enacted, etc., that Section 4 of an Act entitled 
 "An Act imposing additional taxes for State purposes and to 
 abolish the revenue board," approved the thirtieth day of April, 
 A. D. 1864, which reads as follows: 
 
 "SECT. 4. That the Treasurer of each County and City, the 
 burgess, or other chief officer, of each incorporated district, or 
 borough of this Commonwealth, within ninety days after the 
 passage of this Act, shall make return, under oath or affirmation, 
 to the Auditor General, of the amount of scrip, bonds or cer- 
 tificates of indebtedness, outstanding by said county, city, dis- 
 trict, borough or incorporation, as the same existed on the first 
 day of January, one thousand eight hundred and sixty-four, and 
 of each succeeding year thereafter, together with the rates of 
 interest thereon, at each of those periods, under the penalty 
 of five thousand dollars, the amount to be settled by the Auditor 
 General, and the amount thereof sued for, and collected, as debts 
 due by defaulting public officers are collected ; Provided, That 
 on the receipt of said returns, the Auditor General shall proceed 
 to settle the accounts of each county, city and borough with 
 the Commonwealth, fix the State tax due, and unpaid, and trans- 
 mit notice of the amount, by mail, to officers making said re- 
 turns ; and that if the amount so found due shall not be paid 
 within sixty days, the Attorney General shall sue and collect the 
 same, with interest, from the date of such settlement ; and here- 
 after it shall be the duty of the treasurer, of every county, city, 
 borough and incorporated district, in this Commonwealth, to 
 deduct the said State tax, on payment of any interest, or divi- 
 11 
 
194 
 
 dend, on debts due by the county, city, borough, or incorporated 
 district, and pay the same over to the State Treasurer, within 
 thirty days after the said interest, or dividend has fallen due." 
 
 Be and the same is hereby amended so as to read as follows : 
 
 SECT. 4. That the treasurer of each school district, county 
 and city, the burgess or other chief officer of each incorporated 
 district or borough of this Commonwealth, within ninety days 
 after the passage of this Act, shall make return, under oath or 
 affirmation, to the Auditor General, of the amount of scrip, 
 bonds, or certificates of indebtedness, outstanding by said county, 
 city, incorporated district, school district, borough, or incorpora- 
 tion, as the same existed on the first day of January, one 
 thousand eight hundred and sixty-four, and of each succeeding 
 year thereafter, together with the rates of interest thereon, 
 at each of those periods, under the penalty of five thousand 
 dollars, the amount to be settled by the Auditor General, and 
 the amount thereof sued for, and collected, as debts due by de- 
 faulting public officers are collected; Provided, that on the re- 
 ceipt of said returns, the Auditor General shall proceed to 
 settle the accounts of each county, city, incorporated district, 
 school district and borough with the Commonwealth, fix the 
 State tax due, and unpaid, and transmit notice of the amount, 
 by Inail, to officers making said returns ; and that if the amount, 
 so found due shall not be paid within sixty days, the Attorney 
 General shall "sue and collect the same, with interest, from the 
 date of such settlement ; and hereafter, it shall be the duty of the 
 treasurer of every county, city, borough, school district and in- 
 corporated district, in this Commonwealth, to deduct the said 
 State tax, on payment of any interest, or dividend, on debts 
 due by the county, city, borough, school district, or incorporated 
 district, and pay the same over to the State Treasurer within 
 thirty days after the said interest, or dividend, has fallen due. 
 
195 
 
 COLLECTION OF PERSONAL PROPERTY TAX. 
 
 In the reports of all tax commissions and in the discus- 
 sion of all tax reform associations, the most popular sub- 
 ject, and the one upon which there is the most universal 
 agreement, is the difficulty of collecting the personal prop- 
 erty tax. This tax has existed in most States (unlike 
 Pennsylvania), in the form of a constitutional require- 
 ment of a uniform tax on all personal property according 
 to value. The exemption of property difficult to reach was 
 therefore impossible, and theoretically every chattel and 
 every credit was taxed. Owing to the possibility of con- 
 cealing personal property human nature has not resisted 
 the temptation to do so, and the collection of the tax has 
 in these other States been an utter failure not yielding a 
 tithe as much as is yielded by the tax on real estate, 
 although the known value of personal property is much 
 greater. The success of Pennsylvania is largely owing 
 to the wisdom of that constitutional provision which per- 
 mits the Legislature to single out for taxation such classes 
 of personal property as it desires. For many years a tax 
 has been more or less successfully collected in Pennsyl- 
 vania directly from the taxpayer on what might be de- 
 scribed generally as moneyed investments, these being 
 specified by the statute as mortgages, notes, bonds, judg- 
 ments, public loans, corporate bonds, accounts bearing 
 interest and the like. By reason of a system whereby 
 the Recorder of Deeds reports to the local assessors all 
 mortgages recorded, and the Prothonotary all judgments, 
 this class of securities is generally reached by the assessors 
 and taxed. Real estate is successfully taxed because it 
 is visible. 
 
 But a large part of the money at interest intended to 
 be taxed is not reached, because there is no source of in- 
 formation except the honesty of the person making the 
 return; and this universal experience proves to be in- 
 
196 
 
 sufficient. Stocks and loans of foreign corporations held 
 by residents, and money invested abroad, on mortgage, for 
 example, come within this class, and your Committee does 
 not present any method for checking the returns in this 
 regard, except by an increase of the investigating powers 
 of the Auditor General as hereinafter discussed. 
 
 The class of investment represented by deposits in our 
 banking institutions of all kinds which bear interest can 
 be reached in the same way as corporate loans to residents 
 of Pennsylvania, to wit, by compelling the bank, trust 
 company, savings institution or other depository to assess 
 and pay the tax, deducting it from the interest credited 
 to the deposit ; and this method has been strongly urged. 
 It is the intention of the present laws that these moneys 
 should be taxed so that no greater hardship will be ex- 
 perienced by the taxpayer, and a more efficient collection 
 insured. The amount of deposits in State banking institu- 
 tions on November 6, 1909, was as follows : 
 
 Saving institutions : 
 
 Deposits subject to check $ 1,531,616.07 
 
 Deposits on time 165,536,528.65 
 
 State banks : 
 
 Deposits subject to check 40,170,050.96 
 
 Deposits on time 74,029,894.92 
 
 Demand certificates of deposit 634,601.3P 
 
 Time certificates of deposit 8,374,210.64 
 
 Saving fund deposit 3,055,517.56 
 
 Trust companies : 
 
 Deposits subject to check 268,611,490.03 
 
 Demand certificates of deposit 4,363,031.11 
 
 Deposits, special time 29,445,720.86 
 
 Time certificates of deposit 29,754,707.11 
 
 Deposits, saving fund 73,266,543.83 
 
 Total ^ _ $698,773,913.13 
 
197 
 
 As all of these, except some of the check accounts in 
 banks outside of the large cities, draw interest, a tax of 
 four mills would realize a sum approaching $2,795,095.65 
 
 The best information to your Committee is that there 
 is reported for taxation less than one-tenth of the moneys 
 on deposit in the institutions above mentioned. The fact 
 is that taxables have been informed by the taxing officials 
 that such moneys are not within the law. 
 
 Such a system was actually provided by the old Act of 
 April 30, 1864, P. L. 218, which first extended to corpora- 
 tions the method of tax collection theretofore employed 
 with regard to municipal loans. It mentioned specifically 
 interest paid to depositors as well as to bond-holders. 
 
 There are also to be considered deposits in National 
 Banks in Pennsylvania which amounted, on September }, 
 1910, to $675,173,053.00, but not much of which bears in- 
 terest, and the Postal Savings Banks recently authorized 
 by Congress. 
 
 The applicability of the law to these institutions created 
 by the United States must be very doubtful. An Act of 
 Congress (Revised Statutes, Section 5219), permits State 
 taxation of the shares of National Bank stock in the names 
 of the share-holders. Without permission it could not be 
 done. The permission is so worded that it would probably 
 not extend to deposits, and while the tax on deposits is 
 not a tax on the bank, the imposition of the duty of assess- 
 ing and collecting would be a burden which would 
 interfere to some extent with its operations and with its 
 attractiveness to customers. The Postal Savings Bank 
 accounts are to draw 2 per cent, interest. As they would 
 easily escape taxation by the failure of the depositor to 
 return them they would have a great advantage over State 
 institutions paying nominally 2 per cent., but really 1 6/10 
 per cent, because as to their depositors the tax would be 
 enforced. The result, therefore, would bear hard upon 
 the State institutions. 
 The principal reason moving your Committee to reject 
 
198 
 
 the proposition in its present form is the real injustice 
 of the tax as now laid as applied to moneys on deposit. 
 The tax is one of four mills on the property of the de- 
 positor. This is not burdensome as to securities where the 
 rate is 5 per cent, or even 4 per cent., but where it is 
 below that, especially where it is as low as 2 per cent., 
 the tax lops off a great part of the income derived. In 
 fact, it operates unequally in that respect, although it 
 seems never to have been attacked on that ground. 
 Doubtless for this reason there has been such general 
 acquiescence in the loose construction of the law which 
 permits taxpayers to neglect to return these deposits for 
 personal property tax. The same result has been reached 
 in other States where all property is required to be taxed 
 at the same rate and where the tax, if actually enforced, 
 would eat up all the income. The fair method would be to 
 impose a percentage tax upon the interest. Then the 
 burden would be borne equally by all moneyed invest- 
 ments. The tax payer would not have the same excuse for 
 evasion and an efficient method of administering the law 
 would not cause such practical injustice. The adjustment 
 of a proper percentage, however, depends upon accurate 
 information as to the various classes of securities now 
 making up the property on which the personal properry 
 tax is levied, the amount of each and the rate of interest 
 of each class. This detailed information is not within the 
 possession of the State's Departments and could only be 
 got at by a prolonged research and tabulation in each of 
 the counties. Returns are made to the Auditor General 
 in a lump sum and even in the county the tax is assessed 
 to each individual in the same way. The rates of interest 
 likewise could only be ascertained by investigating the 
 market. Your Committee has endeavored to obtain suffi- 
 cient data upon which to base a recommendation as to the 
 fair, proper percentage of interest to be charged. Each 
 trust company, savings institution, bank or other deposi- 
 tory in the State, upwards of twenty-three hundred in 
 
199 
 
 number, was requested to furnish the requisite informa- 
 tion and many did, others did not. It was impossible from 
 the information received to form a proper conclusion. In 
 this and similar efforts your Committee has been hampered 
 by lack of appropriation and hence is unable to suggest 
 the proper rate for this tax so as not to lessen the present 
 revenue derived. They propose, however, if continued in 
 their duties to make this a subject of investigation in the 
 expectation that a satisfactory result can be attained. 
 
 The Pennsylvania State Grange made earnest represen- 
 tations to your Committee upon the difference between the 
 amount of tax paid by real estate and that paid by personal 
 estate and corporate property in proportion to the esti- 
 mated value of each class of property. But they advisedly 
 did not recommend the adoption of the discredited system 
 that all classes of personal property be taxed, or that both 
 real and personal property be taxed at the same rate. 
 Such a system, or lack of system, results in even greater 
 injustice to real estate because by reason of the escape 
 of personal property, the real estate bears the burden in 
 fact, though it is not intended to do so in theory. The 
 best system of taxation is that where fact and theory most 
 closely coincide, because property values then adjust 
 themselves to a known rate of taxation which is actually 
 collected. But where the tax on one class is not actually 
 collected, the avoiding of taxes discriminates against the 
 honest taxpayer and produces an uncertain effect with re- 
 spect to the ultimate burden of the tax. It was testified 
 by many of the witnesses before your Committee that resi- 
 dents of Philadelphia, for example, avoid personal prop- 
 erty tax by claiming in Philadelphia that they reside in one 
 of the counties in which her suburbs are located, and in 
 that locality claiming that they live in Philadelphia, or by 
 some influence or other entirely avoiding the visit or action 
 of the local assessor. Your Committee is of opinion that 
 the greater centralization of the assessment of this tax 
 would result in its more efficient collection according to 
 law, and that this is the result to be sought. 
 
200 
 
 This subject is one which your Committee thinks should 
 receive its principal attention if continued as hereinafter 
 recommended. 
 
 The State Grange presented a suggestion that the State 
 should "give the local Governments authority to tax per- 
 sonal and corporate property in each unit of Government." 
 
 To give local Governments authority to tax personal 
 property would again be a reversal of the settled policy 
 of the State which has worked so satisfactorily. Most of 
 the States suffer severely as to matters of administration 
 from the attempt to give local assessors and authorities the 
 valuation of corporate franchises and other intangible 
 property. This results either in gross injustice to the 
 corporations, necessitating an elaborate system of adjust- 
 ment by a State Board of Equalization ; or more often an 
 under-valuation through the influence they may exert on 
 an irresponsible local assessor. California, for example, 
 after investigation by a special and later by a permanent 
 tax commission, has proposed an elaborate constitutional 
 amendment to accomplish just what Pennsylvania has al- 
 ways done, to wit, commit the valuation of the State-wide 
 property of the large public service corporations to officials 
 with State-wide knowledge and power. So with regard 
 to personal property in general. It has been the experi- 
 ence of all communities that this can best be done by State 
 officials free from local influence and possessed of the ut- 
 most powers of investigation, and so far as it is now done 
 by local assessors it is not done so thoroughly as it might 
 be. This was practically the unanimous opinion of the 
 county officials who appeared before the Committee. The 
 under-paid, untrained local assessor depending for re- 
 election on the votes of those whom he assesses has only 
 the supposed advantage of greater knowledge of local con- 
 ditions. Under the circumstances of modern life he will 
 know comparatively little of his neighbors' affairs and will 
 assess for the most part those with whom he has little if 
 any acquaintance. 
 
201 
 
 The Legislature of 1905 (P. L. 186), passed an Act giv- 
 ing the Auditor General large supervisory powers over 
 local assessors with regard to the return of the personal 
 property tax. This Act authorized the Auditor General 
 to make a revised return of personal property tax for any 
 taxable, when the local assessors, County Commissioners, 
 or Board of Revision failed to do so. For this purpose he 
 may examine the returns of mortgages recorded made by 
 the Recorders of Deeds and of judgments made by the Pro- 
 thonotary (which they are required to make to him also), 
 and examine witnesses, etc. The County Commissioners 
 and Boards of Revision are required to file with him dupli- 
 cate returns of personal property tax made by them. The 
 Auditor General may then enforce the collection and em- 
 ploy counsel if necessary. 
 
 With regard to the practical enforcement of this Act, 
 the Auditor General found that his clerical force and ap- 
 propriation were not sufficient to do the work, and the At- 
 torney General advised him (see 31 Pa. County Court 
 Rep. 249), that no attempt could be made to enforce it 
 until an appropriation was made. In fact, the Auditor 
 General advises your Committee that the present force of 
 his office is inadequate for the work committed to it in- 
 dependent of that Act. One corporation tax clerk with 
 the assistance of the Chief Clerk, is required to handle the 
 whole matter of settling corporation taxes, which for the 
 year ending November 30, 1909, amounted to 
 $17,256,332.25. This necessarily results in the uninten- 
 tional evasion of taxes from mere lack of time for critical 
 examination. It is quite impractical, for example, to 
 make any investigation outside of the office, though the 
 law authorizes it. A proper equipment would result in 
 increased revenue many times its cost. 
 
 Your Committee accordingly recommends that the 
 Auditor General be supplied with five additional clerks 
 to attend to tax matters at salaries adequate to secure 
 capable men, and a draft of an Act is submitted herewith. 
 (See page 209). 
 
202 
 
 The draft of another Act submitted below (see page 206) 
 provides additional machinery by which the Auditor Gen- 
 eral, through expert accountants and counsel, as well j,s 
 through the clerks regularly attached to his office, may 
 investigate and supervise the return of the personal prop- 
 erty tax along with property which should escheat and 
 the like. 
 
 Quite as important is the investigation of corporations 
 outside of the Auditor General's office in the field. This 
 would include the searching out of corporations which 
 make no report, and the investigation of the facts of re- 
 ports. 
 
 These investigations would result in a very large amount 
 of increased revenue, which has been estimated at 
 $5,000,000. A specific instance of failure by corpora- 
 tions to report their assets properly for capital stock 
 tax, or at least to report it uniformly, was brought to 
 the attention of your Committee in the matter of valua- 
 tion of real estate. Some companies report their real 
 estate at the value of the local assessment; some at the 
 value at which they carry it upon their books ; some which 
 have buildings which are theoretically subject to deprecia- 
 tion, have charged off upon their books an arbitrary sum 
 each year, so that the book value shows a very large loss, 
 when the actual value may have appreciated. A notable 
 instance is the new building of the Girard Trust Company 
 in Philadelphia. This cost millions of dollars, and yet it 
 has all been charged to profit and loss, and is in a way 
 treated by the company as advertising. The structure, 
 however, has an actual value, even though it be only the 
 capitalized value of the advertising which accrues and 
 should be included in any valuation of its assets. Yet 
 the Auditor General for lack of facilities has no means of 
 investigating all these innumerable cases and is forced 
 to rely upon the face of the reports made to him by the 
 corporations themselves. 
 There are now only; four traveling auditors, whose time 
 
203 
 
 is entirely taken up with investigating appropriations to 
 charitable institutions and the accounts of county officers 
 reporting to the Auditor General. This force should be 
 largely increased. 
 
 Another Act forming part of the policy concentrating 
 in the hands of the Auditor General the control of tax 
 assessments is one submitted below (see page 209) which 
 puts under the supervision of the Auditor General the 
 bringing of suit for the personal property tax and giving 
 a right to assess it in another year than that for which 
 it is payable. The circumstances which make this Act ad- 
 visable are more fully explained in a note appended to the 
 Act, and it will correct what has been a very grave abuse 
 in many cases which have not appeared in the reports. 
 It was testified before your Committee by the Chairman 
 of the Board of Revision of Taxes in Philadelphia that at 
 least one case had occurred where a citizen had for years 
 made a false return. It only appeared when his estate was 
 inventoried at his death. On his heirs being confronted 
 with the false statements which he had made they volun- 
 tarily paid hundreds of thousands of dollars in taxes rather 
 than have this conduct brought to light. 
 
 Although there are severe penalties for the taxable who 
 makes a false return and for the assessor who connives 
 at it, it is remarkable that there has never been a prose- 
 cution for either of these offenses. There can be no 
 doubt that false returns are made, known to be such by 
 the assessor. If the officials would prosecute the offen- 
 ders a substantial increase of revenue would result, and 
 those who honestly bear the burden would be better 
 satisfied. In all of the discussions before your Committee 
 the principal objection to any of our tax laws was in- 
 equality in enforcement. President Hadley is quoted 
 as saying, (and it expresses a great deal of sound tax 
 economics) : 
 
 "A tax which aims to be equal, but is ineffectual, produces 
 a kind of inequality, tending to increase as time goes on, and 
 
204 
 
 worse than all other kinds ; but a tax which aims to be 
 effective, even in apparent disregard of equality, tends by a 
 constant process of economic adjustment to be more and more 
 equal." 
 
 Your Committee were deeply impressed with the broad 
 views expressed by the citizens who appeared before 
 them. All are willing to bear their share provided others 
 similarly situated do likewise, and such a result should 
 be the earnest effort of all officials. 
 
 Your Committee believes that the centralization of the 
 control of tax assessments is the principal remedy for the 
 evils mentioned. Philadelphia and Allegheny counties 
 have a step in the right direction in the system of appoint- 
 ment of assessors by the Board of Revision of the County. 
 This exists in Philadelphia by virtue of special Acts of 
 1865 and 1867 and in Allegheny by an Act of 1905. After 
 a general investigation of the subject and conclusions of 
 Tax Commissions of other States, your Committee agrees 
 with the conclusion of the Minnesota Legislative Refer- 
 ence Department in its Comparative Digest of State Legis- 
 lation relating to Permanent Tax Commissions. "The 
 tendency of recent legislation is apparently toward an 
 increased concentration in the hands of the State Tax 
 Commission of authority over local tax officers." 
 
 Greater intelligence, experience and fairness in adminis- 
 tration as a result of this high-class work not exposed to 
 local influence would prevent "tax dodging" and unequal 
 valuation. The work should be centered in the hands of 
 the Auditor General, who should have control of his agents 
 in the various localities. Owing to the vast nature of the 
 questions of policy involved and the innumerable details 
 necessary to consider in adjusting the old system to the 
 new, it has not been possible for your Committee to present 
 a complete scheme for that purpose. They recommend, 
 however, most earnestly, that authority be given to con- 
 tinue their labors with an adequate appropriation for 
 clerical assistance and the advice of counsel, and if the 
 
205 
 
 authority be given they propose to make this one of their 
 principal objects during the two years until the next 
 meeting of the Legislature, giving it with this added as- 
 sistance the same expenditure of time which they have 
 gladly given during the past two years. At the same 
 time your Committee can consider the other matters re- 
 ferred to at various places in this report which they have 
 necessarily left unfinished for the reasons given. 
 
 It is therefore recommended that the Joint Resolution 
 under which your Committee has acted be again adopted. 
 
 It has been suggested to your Committee that the 
 City of Philadelphia furnishes a community in which the 
 system of State supervision of tax collection might well 
 be put in operation as a test. The system exists there 
 in part by reason of the fact that the Board of Revision 
 of Taxes, existing under special Acts, appoints the as- 
 sessors, who are salaried officers who should, because of 
 the method of selection, be of a grade superior to the 
 elected assessors throughout the State. The Board of 
 Revision is appointed by the Judges of the county. If 
 this appointment was entrusted to the Auditor-General, 
 so that its members were responsible to him, and he could 
 thus have their hearty co-operation in employing the 
 supervisory powers over assessments given by the Act of 
 1905, and the powers of investigation and employment 
 of assistants given him by other statutes suggested here- 
 with, the proposed system would be in full force and 
 could be there given a fair trial. Your Committee submits 
 this to the Legislature for its consideration in case it 
 should be deemed advisable to try it, but makes no recom- 
 mendation upon the subject. In case the trial is to be 
 made, a draft of an Act to that end is submitted herewith 
 (see page 206). 
 
206 
 
 AN ACT CREATING IN COUNTIES CONTAINING MORE THAN 1,250,000 
 INHABITANTS A BOARD OF REVISION OF TAXES FOB STATE AND 
 COUNTY PURPOSES, AND PRESCRIBING THE POWERS AND DUTIES 
 THEREOF. 
 
 SECT. 1. Be it enacted, etc., That in counties of this Common- 
 wealth containing- a population of more than 1,250,000 there is 
 hereby created a Board of Revision of Taxes consisting of three 
 persons. The members of the said Board shall be appointed by 
 the Auditor General, and not more than two members of the 
 Board shall be members of the same political party. Each mem- 
 ber shall hold office for the term of three years, and the first 
 members of the Board shall be appointed for the terms of one, 
 two and three years respectively. The member whose term 
 first expires shall be Chairman of the Board, and the member 
 whose term last expires shall be Secretary of the Board. A 
 majority of the Board shall constitute a quorum. 
 
 The salary of each member of the Board shall be $6,000 per 
 annum payable by the county. 
 
 SECT. 2. The said Board of Revision of Taxes shall make all 
 assessments and valuation of property, both real and personal, 
 taxable for State and county purposes. They shall divide the 
 county into convenient districts not exceeding the number of 
 townships, or wards in cities which they may rearrange 
 from time to time, and shall appoint for each district two as- 
 sessors at a salary of $3,000 each per annum to be paid by the 
 county, whom they may remove for incompetency or neglect of 
 duty, and in each district one assessor shall be appointed from 
 the political party polling the majority of votes in the county, 
 and the other shall be appointed from among the other parties. 
 
 SECT. 3. The said Board of Revision shall issue their precept 
 to the several assessors of the county in each year, requiring the 
 assessors to return the names of all persons in their respective 
 districts, and all property taxable by law for State or county 
 purposes, together with a just valuation of the same in the 
 manner prescribed by law, for the triennial assessment, and 
 they shall receive the returns of the assessors. 
 
 SECT. 4. The Board shall have power to revise and equalize 
 the assessments, by raising or lowering the valuations, either 
 in individual cases, or by townships, cities, boroughs, or other 
 political divisions of the county, to rectify all errors, to make 
 valuations where they have been omitted, and to require the 
 attendance of the assessors, or other citizens, before them for 
 examination, on oath or affirmation, either singly or together, 
 
207 
 
 with power to forfeit the pay of assessors ratably to their an- 
 nual compensation, for each day's absence, when their attend- 
 ance is required, and the said Board of Revision shall hear all 
 the appeals and applications of the taxpayers, subject to an 
 appeal from their decision to the Court of Common Pleas of the 
 county, whose decision shall be final, and if the appeal to the 
 Court shall be groundless, the appellant shall pay all the costs 
 of Court; the County Commissioners shall have no power to 
 correct or revise the taxes ; the Board of Revision shall hear 
 the taxpayers of the respective townships, cities, boroughs, or- 
 other political divisions of the county in succession, of which 
 notice shall be given, as required by law, and the said Board 
 of Revision shall, alone by a majority of them, exercise all the 
 powers heretofore vested in the County Board of Revision in 
 each of such counties; they shall meet as often as is necessary 
 to despatch the business which their duties require of them, 
 and shall hold stated meetings on the first Saturday of each 
 month. 
 
 SECT. 5. The said Board of Revision of Taxes shall have geri- 
 eral supervision of assessments and assessors in said counties 
 and the collection of taxes therein, and the correction of all 
 valuation and return therefor ; and they shall issue the pre- 
 cepts to, and receive the returns of, the assessors, procure the 
 assessment books, and cause the duplicates to be made out and 
 issued to the officer or officers charged by law with the receipt 
 of taxes, make the returns required by law to the State Revenue 
 Board and have the exclusive custody and control of all books 
 relating to the assessment of taxes, and keep them arranged ac- 
 cording to townships, cities, boroughs, or other political sub- 
 divisions of the county and dates ; and also have the custody 
 and control of the duplicates of surveys, when the same shall 
 have been made by the Department of Surveys which may ex- 
 ist in said counties; they may issue certificates to show how 
 property has been assessed, to be used with the same effect as 
 the original books of assessment, as evidence in relation to the 
 title of property ; they shall report to the Councils of all cities 
 in said counties, through the Mayor, the aggregate of the as- 
 sessments, on or before the first day of November in each year. 
 
 SECT. 6. It shall be the duty of the Board of Revision immedi- 
 ately after the annual assessment in each year to classify the 
 real estate so assessed in such a manner and upon testimony 
 adduced before them, as to discriminate between the rural and 
 built-up portions of said county, and they are hereby required 
 to certify to the Councils of all said cities on or before the 
 
208 
 
 first day of November in each year, the valuation of the built-up 
 portions, the valuation of the rural or suburban property, and 
 the valuation of lands exclusively used for agricultural and 
 farming purposes respectively. 
 
 SECT. 7. This Act shall go into effect the first Monday of 
 January, 1912. 
 
 SECT. 8. All Acts and parts of Acts, general, local and special, 
 inconsistent with or supplied by the provisions of this Act be, 
 and the same are hereby repealed. 
 
 NOTE. 
 
 The Legislature of 1901 attempted to alter the mode of 
 appointment of the Board of Revision of Taxes in Philadel- 
 phia by making them elective in counties co-extensive with 
 the boundaries of cities of the first class. This was held un- 
 constitutional. Blankenburg vs. Black, 200 Pa. 629. But coun- 
 ties may be classified by population for purposes of providing 
 governmental machinery. Lloyd vs. Smith, 176 Pa. 213. It was 
 decided in the case of Commonwealth vs. Collier, 213 Pa. 138, 
 that the Act of 1905, P. L. 47, providing a special Board of Re- 
 vision of Taxes for Allegheny County under a classification of 
 counties between three hundred thousand and one million was 
 constitutional, because the duties of the Board extended to State 
 as well as county taxation, and the members were not county 
 officers within the meaning of Article XIV, Section 4, of the Con- 
 stitution, which provides "County officers shall be elected at 
 the general elections." 
 
 In this proposed Act the phraseology of previous Acts has been 
 substantially retained. 
 
 Tour Committee believes that a State conference on 
 taxation, to be participated in by public officials and repre 
 sentative citizens from all parts of the State, together with 
 your Committee, would be of great value. It would be an 
 extension of the public hearings already held. Your Com- 
 mittee, if continued in its duties, proposes to call such a 
 conference, requesting the participation of the Auditor 
 General, Attorney General and Secretary of Internal Af- 
 fairs, the Mayor of each City, a representative of each 
 Board of County Commissioners and Board of Revision of 
 Taxes, all County Controllers, a representative of each 
 
209 
 
 Board of Trade in the several Cities of the State, a repre- 
 sentative of each University or College in the State having 
 a course in Economics or Finance, and others specially in- 
 terested in such subjects. 
 
 The International Tax Association holds each year a 
 conference similar to the one held this year at Milwaukee 
 and attended by counsel for your Committee. The next 
 one will be held at Richmond, Va., September 5, 1911. 
 \ our Committee, if continued, proposes to make provision 
 for taking part in this conference and the one which may 
 be expected to follow in 1912. 
 
 Uniformity of taxation is also one of the principal 
 topics of investigation by the National Civic Federation 
 which has in the last month organized a Pennsylvania 
 Council. The co-operation of this Council with your Com- 
 mittee will be earnestly desired. 
 
 AN ACT AUTHORIZING THE AUDITOR GENERAL TO EMPLOY FIVE CLERKS, 
 AND MAKING AN APPROPRIATION THEREFOR. 
 
 SECT. 1. Be it enacted, etc., that the Auditor General is hereby 
 authorized and directed to employ five clerks to be known as 
 Tax Clerks at an annual salary of Five thousand dollars each, 
 whose duty it shall be to do such work in connection with any 
 and all matters in any wise pertaining to State taxation and 
 such other work of his office as the Auditor General may direct 
 and for the payment of the salaries of the said tax clerks, two 
 years, the sum of Fifty thousand dollars is hereby appropriated 
 to be paid out of any moneys in the Treasury not otherwise 
 appropriated. 
 
 AN ACT TO PROVIDE FOR THE BETTER COLLECTION OF MONEY AND 
 TAXES DUE THE COMMONWEALTH AND PROPERTY BELONGING TO 
 OR LIABLE TO ESCHEAT TO THE SAME. 
 
 SECT. 1. Be it enacted, etc., That the Auditor General at his 
 discretion shall have authority to cause to be commenced in 
 the name of the Commonwealth in any Court of the Common- 
 wealth having jurisdiction any appropriate suit at law or in 
 
210 
 
 equity for any money or taxes due the Commonwealth, or prop- 
 erty belonging- to or liable to escheat to the same, and a remedy 
 by means of such suit is hereby provided whether it be now au- 
 thorized by law or not. and any action at law or in equity, both 
 by bill in the nature of a bill of discovery in equity or otherwise, 
 which may be necessary for the ascertainment of the fact as to 
 whether such money, taxes or property exists and is due the 
 Commonwealth, whether the defendant or defendants therein 
 have or have not made any or all reports thereof required by 
 law. 
 
 SECT. 2. For the purpose of investigating- the books, accounts, 
 documents or papers of any person or corporation liable by 
 law to make report to the Auditor General for the purposes of 
 taxation or payment of bonus, the Auditor General may employ 
 from time to time one or more expert accountants who shall 
 have power to inspect the same and report thereon, and shall 
 receive a reasonable compensation to be fixed by the Auditor 
 General. 
 
 SECT. 3. For the purposes of prosecuting the actions hereby 
 authorized, and aiding in the investigation of the facts con- 
 nected therewith, the Auditor General may from time to time 
 employ one or more counsel learned in the law who shall re- 
 ceive a reasonable compensation to be fixed by the Auditor 
 General. 
 
 SECT. 4. If any person or corporation shall fail to comply 
 with any summons of the Auditor General for the attendance 
 of persons or for the production of books, accounts, documents 
 or papers, or shall refuse to be sworn as a witness, or refuse 
 to testify fully as such, or if any person or corporation shall 
 refuse to permit any person designated by the Auditor General 
 to inspect books, accounts, documents or papers as required by 
 law, the Auditor General may apply by petition in the name of 
 the Commonwealth to the Court of Common Pleas having 
 jurisdiction, and the Court shall make such order on reasonable 
 notice to such person or corporation as shall compel compliance 
 with the law, and the violation of such order shall be a con- 
 tempt of such Court and punishable as such. The remedy 
 herein provided shall be in addition to other remedies and 
 penalties provided by law. 
 
 NOTE. 
 
 The existing powers of the Auditor General with regard to 
 the investigation of facts and the employment of counsel are 
 as follows: 
 
211 
 
 Act of March 30, 1811, 5 Sin., 228, Stewart's Dig. 3676, (the 
 fundamental law giving the Auditor General settlement of ac- 
 counts, under which all tax accounts are settled) which pro- 
 vides that he may "compel all persons in the receipt or 
 possession of public moneys to render to him their accounts," 
 and for that purpose he may force the attendance of wit- 
 nesses and administer oaths and compel the exhibition of "all 
 official or public books, accounts, documents, or papers, which 
 have any relation to or connection with any public account." 
 He may also proceed by commission with interrogatories. 
 
 According to the first part of the section this would include 
 "all accounts between the Commonwealth and any person or 
 persons, body politic or corporate, as well as those with the 
 officers of the revenue," and other persons receiving public 
 money. 
 
 By the fourth section any person attending and refusing to 
 answer may be committed by the Auditor General. This may 
 not be valid for lack of judicial power in the Auditor General. 
 
 By the thirty-first section, in order to secure the attendance 
 of witnesses in relation to any public account already fur- 
 nished or to be furnished, the Auditor General may issue a 
 writ to the sheriff to summon the persons, and upon failure 
 after thirty days to appear, may issue a writ of attachment 
 commanding the sheriff to commit the person. The same ob- 
 jection applies to this. 
 
 Section thirty-two provides the same procedure for the pro- 
 duction of books, etc., and there is a penalty on the sheriff 
 and jailer for failing to obey the Auditor General's writs. 
 
 Commonwealth vs. Edgerton Coal Co., 164 Pa. 284, on page 
 303, refers to these powers of the Auditor General as very 
 searching without any particular comment on the validity of 
 the provisions or otherwise. 
 
 Act of April 26, 1855, Section 14, P. L. 332, Stewart's Dig., 
 389. When the Auditor General shall believe "that any prop- 
 erty shall be defeasibly held * * * * or that the income 
 of any corporation or Association as aforesaid shall exceed the 
 limit allowed by law," he may call for a return, and if it be 
 not made he may file a bill of discovery. This is the Act for- 
 bidding the holding of real estate by foreign corporations and 
 would not apply to other cases of escheat. 
 
 Counsel to aid the Auditor General in the performance of his 
 duties may be employed under the 
 
 Act of April 17, 1861, P. L. 371, Stewart's Dig., 3682, author- 
 izing the Auditor General or Attorney General to employ resi- 
 dent attorneys to assist at the trial of cases and prosecution 
 of claims, for a "reasonable compensation as the circumstances 
 would justify, or as may have been agreed upon" and shall be 
 allowed by the Auditor General. 
 
 Act of April 7, 1870, Section 1, P. L. 57, Stewart's Dig., 
 3G85, providing that where a debtor to the Commonwealth shall 
 suffer a claim to be unpaid for 60 days, he shall pay a com- 
 mission of 5 per cent, to counsel or attorney of the Common- 
 wealth, in addition to other penalties, provided that no more 
 than $7,000 be paid for professional services in any year and 
 that the surplus be paid into the State Treasury. 
 
 Act of April 28, 1840, Section 23, P. L. 473, Stewart's Dig., 
 
212 
 
 388, authorising- the Auditor General to take all such legal 
 measures as may be by him deemed expedient, to recover all 
 moneys due to the Commonwealth from any and every person or 
 persons upon settlement of their accounts ; and for this purpose 
 he may employ "any attorney or counsel which he may 
 deem necessary," who shall receive reasonable and just com- 
 pensation. 
 
 This provision only applies after the settlement of accounts, 
 and it does not permit expressly proceedings to get informa- 
 tion on which to settle accounts, nor does the Act of 1861. 
 
 Act of April 21, 1857, Section 2, P. L. 266, Stewart's Dig., 
 371, requires the Auditor General and State Treasurer to place 
 in the hands of the Attorney General for collection debts 
 due the Commonwealth from all sources, unpaid for ten days, 
 and he shall proceed by suit to collect the same. The fifth 
 section makes it the duty of the Attorney General to cause to 
 be collected by law, all moneys appearing by the records of 
 the Auditor General and State Treasurer. 
 
 By the Act of July 15, 1897, Section 2 ; P. L. 291, the Auditor 
 General may employ expert accountants "to examine the ac- 
 counts of county officers and all institutions receiving State 
 aid in whole or in part," the compensation and expenses to be 
 fixed by the Auditor General. He has no authority to appoint 
 expert accountants for any purpose beyond this. 
 
 The Act of April 17, 1905, Section 1 (P. L., 186), gave the Audi- 
 tor General exclusive power in the making of returns of per- 
 sonal property tax where no return was made by the taxable, or 
 where the assessors or Board of Eevision or County Commis- 
 sioners made what he considered to be an improper return. 
 The work was so vast, however, that it required an additional 
 force of clerks and appropriation which were not then given 
 and have not since been given, and the Act has therefore been a 
 dead letter. This has been elsewhere referred to. 
 
 AN ACT TO PROVIDE FOR THE ASSESSMENT AND COLLECTION OF TAXES 
 ON PERSONAL PROPERTY. 
 
 SECT. 1. Be it enacted, etc., That all taxes on personal property 
 for the year 1911 and every year thereafter may be recovered 
 by the Commonwealth by an action of assumpsit in any Court 
 having jurisdiction, in addition to any other manner provided 
 by law\ 
 
 SECT. 2. Such actions shall be condiicted under the direction 
 of the Auditor General, and for that purpose he may employ one 
 or more counsel at a reasonable compensation to be fixed by him. 
 
 SECT. 3. In all cases where no assessment for personal prop- 
 erty tax shall have been made against a person or persons, cor- 
 poration, limited partnership or joint stock association, liable 
 therefor for any year, and in all cases where any false return 
 
218 
 
 or returns of such taxes shall have been made by any persons or 
 persons, corporation, limited partnership or joint stock associa- 
 tion liable therefor, and no revision of such return shall have 
 been made by any officer charged by law with such revision, 
 the Auditor General may at any time within twenty-one years 
 thereafter, make a return or revised and corrected estimated 
 return thereof and proceed to the collection of the taxes as 
 required by law. 
 
 NOTE. 
 
 This is designed to meet such glaring cases as those of 
 which one came to light in the case of Schmuck vs. Hart- 
 man, 222 Pa. 190. In that case a taxable for the years from 
 1876 to 1884 made no return of personal property for taxation 
 and from 1885 to 1907 returned amounts increasing from $4,080 
 to $6,000. At his death, by reason of the information disclosed 
 by the inventory of his estate, the County Commissioners assessed 
 taxes against him upon money at interest on mortgage in the 
 State of Ohio, increasing from $30,000 in 1876 to $727,020 in 
 1907. The Court held that there was no authority of law to 
 make an assessment for personal property tax in any year ex- 
 cept that in which the liability arose, and that as liability to 
 pay taxes does not arise from a contractual obligation there 
 could be no action at law for them unless specially allowed. 
 This reaffirmed the decision in Williamson's Estate, 153 Pa. 508, 
 where a taxable made no return and was assessed a tax and 
 penalty upon $67,500. The inventory of his estate at his death 
 showed $2,500,000. 
 
 Obeying the principle of law that there should be an end to 
 litigation, however, it is provided that where the taxing officers 
 do make a revision of the return presumably after investiga- 
 tion the matter shall not be again reopened. The remedy in 
 such cases lies only with the fidelity of the taxing officers. 
 
214 
 
 AUDITOR GENERAL'S DEPARTMENT 
 
 In investigating the work of the Auditor General's De- 
 partment in the collection of taxes your Committee finds 
 that it is hampered both by insufficient equipment for the 
 work entrusted to it (as hereinbefore pointed out) and by 
 inconveniences and abuses which have arisen through 
 the attempt to apply old methods to new circumstances. 
 The fundamental Act governing tax settlements and ap- 
 peals is still the Act of 1811. Under it appeals to the 
 courts may be made without many of the safeguards sur- 
 rounding other litigation, and they are made with the 
 greatest freedom. No affidavit is required (as is universal 
 in other branches of legal procedure, even in the smallest 
 cases) that the appeal is not intended for delay. A graver 
 matter is that the reports to the Auditor General are not 
 required to state details but only conclusions, and a lump- 
 ing figure in the report may conceal a claim for exemption 
 from taxation which is not known to and not passed upon 
 by the tax officials. Upon appeal the proceedings are de 
 novo with the burden on the corporation or other appellant, 
 and new questions are and may be raised which no op- 
 portunity was given to the Auditor General to consider. 
 Freedom of appeal to our courts should be coupled with 
 fairness and expedition, and the appeal should be a genuine 
 reconsideration of the Auditor General's conclusion, and 
 not itself an original proceeding as to the matters at issue. 
 With proper information before him that officer can arrive 
 at the proper result and the collection of taxes be 
 facilitated. Drafts of Acts to these ends are submitted 
 herewith (see page 216). 
 
 Corporate bonds held by non-residents are not subject to 
 taxation in Pennsylvania. In the case of negotiable bonds 
 which are somewhat difficult at times to trace it is an 
 easy matter for the corporation treasurer to include only 
 those which he is quite certain without too much effort 
 
216 
 
 are held by residents, crediting them to non-residents when 
 their whereabouts are not absolutely known. Nevertheless, 
 the burden is on him under the law to make adequate ef- 
 forts to ascertain the whereabouts of all bonds, and in 
 order to enable the Auditor General to judge of the 
 adequacy of those efforts he should be required to give 
 them in detail. A draft of an Act to compel this is sub- 
 mitted herewith (see page 217). 
 
 It appears that an existing law requires certain officials 
 having the distribution of funds derived from the sale of 
 corporate property to make certain that its State taxes 
 are paid by receiving a certificate that the Auditor General 
 has had notice thereof. This law is not generally observed 
 for lack of a penalty on non-compliance, and because no 
 question of title is involved. A compulsion of such com- 
 pliance would result from the imposing of personal 
 liability on such non-judicial officials as are charged with 
 this duty, and a draft of an Act for this purpose is sub- 
 mitted herewith (see page 217). 
 
 A relatively small matter, yet one causing a good deal 
 of difficulty to small corporation taxpayers who try to 
 report their taxes without the aid of a lawyer (as they 
 should be able to do), is the awkward wording of the Act 
 of 1885 with regard to corporation loan taxes. The Act 
 directs the Treasurer to deduct a tax of three (changed to 
 four) mills "on every dollar of the interest paid.'* But 
 it has been decided that the tax referred to is the tax of 
 four mills annually on each dollar of the principal of 
 the bond, and that the sum so calculated should be de- 
 ducted from the interest (Delaware Division Canal Co. 
 vs. Com., 123 Pa., 594 ; Com. vs. Wilkes Barre, 8, Scranton 
 Ry. Co., 162 Pa., 614), and not, as the language literally 
 means, four mills on each dollar of the interest, the word 
 * ' of " being properly read * * off . ' ' The blanks used by the 
 Auditor General print the Act only. They should also con- 
 tain the explanation and thus avoid misunderstanding. 
 
216 
 
 AN ACT BEGULATING APPEALS FROM TAX SETTLEMENTS OF THE 
 FISCAL OFFICERS OF THE COMMONWEALTH. 
 
 SECT. 1. Be it enacted, etc., In every appeal from a tax set- 
 tlement of the fiscal officers of the Commonwealth an affidavit 
 of the parties appellant, or some one of them, or one of their chief 
 officers or of their agent or attorney, shall be filed that said 
 appeal is not taken for the purpose of delay, but because ap- 
 pellants believe they have suffered injustice by the settlement 
 from which they appeal. Said affidavit may be made before any- 
 one authorized to administer oaths. 
 
 SECT. 2. On any appeal from a tax settlement of the fiscal 
 officers of the Commonwealth no matter shall be subject to 
 review or correction that was not brought to the attention of 
 said officers in the reports or affidavits relating- thereto, filed 
 with said fiscal officers by said parties appellant. 
 
 AN ACT REGULATING REPORTS FOR THE PURPOSES OF TAXATION BY 
 CORPORATIONS, JOINT STOCK ASSOCIATIONS AND LIMITED PART- 
 NERSHIPS, ANY PART OF THE CAPITAL STOCK OR INDEBTEDNESS 
 OF WHICH IS NOT TAXABLE UNDER THE LAWS OF THIS COM- 
 MONWEALTH. 
 
 SECT. 1. Be it enacted, etc., That hereafter it shall be the 
 duty of the President, Chairman or Treasurer of any corpo- 
 ration, joint stock association or limited partnership required 
 by law to make a report in writing- to the Auditor General, and 
 any part of the capital stock or indebtedness of which is not 
 taxable under the laws of this Commonwealth, to add to said 
 reports statements, under oath, setting forth in full the data 
 on which exemptions from taxation under the laws of this 
 Commonwealth are claimed, and otherwise to state specifically, 
 under oath, all information necessary to determine the amount 
 of exemption to which such corporation, joint stock associ- 
 ation and limited partnership is entitled, and, in the case of 
 companies operating partly in other States, and taxed on a 
 mileage basis, to so state specifically the total mileage of 
 said companies, as well as the mileage wholly within Pennsyl- 
 vania, in order that the tax may be prorated according to such 
 mileage. 
 
 SECT. 2. No report of any such corporation, joint stock 
 association or limited partnership not containing such infor- 
 mation as is herein provided shall be received or filed by the 
 Auditor General. 
 
217 
 
 AN ACT BEGULATING REPORTS FOR THE PURPOSES OF TAXATION BY 
 CORPORATIONS, ANY OF THE SCRIP, BONDS, CERTIFICATES OR OTHER 
 EVIDENCES OF INDEBTEDNESS OF WHICH ARE HELD BY RESIDENTS 
 
 OF THIS COMMONWEALTH. 
 
 SECT. 1. Be it enacted, etc., That hereafter it shall be the 
 duty of each Treasurer of any corporation required by law to 
 make a return for tax on loans to the Auditor General of this 
 Commonwealth, to report on oath specifically and in detail the 
 facts showing the kind and degree of his efforts to ascertain 
 the residence of the holders of the scrip, bonds, certificates or 
 other evidences of indebtedness issued by said corporation in 
 order that it may affirmatively appear in his return that he 
 has used the utmost diligence to . ascertain said residence, and 
 that the manner in which he has discharged the duty imposed 
 by law to ascertain the amout of the indebtedness of such 
 corporation owned by residents of this Commonwealth shall 
 affirmatively appear in his return. 
 
 SECT. 2. No report of any such corporation not containing 
 such information as is herein provided shall be received or filed 
 t>v the Auditor General. 
 
 AN ACT TO AMEND AN ACT ENTITLED "AN ACT TO AID THE AUDITOR 
 GENERAL IN THE COLLECTION OF TAXES DUE THE COMMON- 
 WEALTH FROM CORPORATIONS, LIMITED PARTNERSHIPS, AND JOINT 
 STOCK ASSOCIATIONS," APPROVED MAY 25, 1907. 
 
 SECT. 1. Be it enacted, e,tc., That Section 3 of an Act entitled 
 "An Act to aid the Auditor General in the collection of taxes 
 due the Commonwealth from corporations, limited partnerships, 
 and joint stock associations," approved May 25, 1907, which 
 reads as follows : 
 
 "SECT. 3. No distribution of the proceeds arising from the 
 sale of property of a corporation, limited partnership, or joint 
 stock association, by a trustee, assignee, receiver, master or 
 other official, shall be approved or authorized by the Court hav- 
 i n g jurisdiction unless there be filed therein a certificate from 
 the Auditor General, under his hand and the seal of the De- 
 partment, showing that notice of such sale was filed with him 
 in accordance with the provisions of this Act," be, and the same 
 is hereby amended to read as follows : 
 
218 
 
 SECT. 3. No distribution of the proceeds arising from the sale 
 of property of a corporation, limited partnership, or joint stock 
 association, by a trustee, assignee, receiver, master or other 
 official, shall be approved or authorized by the Court having 
 jurisdiction unless there be filed therein a certificate from the 
 Auditor General, under his hand and the seal of the Department, 
 showing that notice of such sale was filed with him in accordance 
 with the provisions of this Act, and in case distribution is made 
 without the filing of such certificate the trustee, assignee, re- 
 ceiver or other non-judicial officer shall be personally liable to 
 the Commonwealth for the sums due to it. 
 
 UNIFORMITY OF REPORTS. 
 
 Complaints were made to your Committee with regard to 
 the variation in the reckoning of the year, or division 
 thereof, for which reports for purposes of taxation are 
 required to be made to the Auditor General by various 
 corporations and others. An outline of the existing law 
 and the contrariety of provision on the subject will be 
 found in a note to the Act submitted with this report (see 
 page 219). The Auditor General's office has strongly 
 recommended that all such reports be made for the same 
 year. The calendar year recommends itself to your Com- 
 mittee as the most convenient natural division. It is the 
 year provided by the Federal Corporation Tax Law, and 
 it was testified before your Committee that the Interstate 
 Commerce Commission, whose year now ends June 30, is 
 likely to change its year to conform with the Federal tax 
 year. The convenience and accuracy of such uniformity is 
 so obvious that your Committee has no hesitation in fol- 
 lowing the suggestion and in recommending the enact- 
 ment of the law to secure this end, of which a draft is 
 submitted herewith (see page 219). 
 
 Of course, the alteration of the time of making report 
 will result in the payment of all State taxes at the same 
 time, and this will doubtless be a great convenience to the 
 taxpayers and those having to deal with the Auditor Gen- 
 eral's Department. 
 
219 
 
 AN ACT REGULATING THE MAKING OF CERTAIN REPORTS AND STATE- 
 MENTS TO THE AUDITOR GENERAL FOR PURPOSES OF STATE 
 
 TAXATION. 
 
 SECT. 1. Be it enacted, etc., That all reports and statements 
 required to be made by law to the Auditor General for purposes 
 of State taxation by any person, persons, corporation, limited 
 partnership or joint stock associations, shall be made in the 
 month of January of each year, and shall cover the next pre- 
 ceding calendar year, and payment of all such taxes shall be 
 made in the month of February then following- : Provided, That 
 the time of making such reports and statements by public offi- 
 cers shall remain as now provided by law. 
 
 NOTE. 
 
 The variety of the times at which reports are now required 
 is shown by the following: 
 
 Premiums of insurance companies Semi-annually on the first 
 days of July and January. Act of June 28, 1895, P. L. 408. 
 
 Stock of trust companies Annually on or before June 20. 
 Act of June 13, 1907, P. L. 640. 
 
 Gross receipts of transportation and other companies 
 Semi-annually before July 31 and January 31. Act of June 1, 
 1889, P. L. 420, Sec. 23. 
 
 Bank stock Annually on or before June 20. Act of July 
 15, 1897, P. L. 292. If "lO mills on the par value of the stock 
 be paid before March 1, certain exemptions from taxation are 
 secured. This will not be altered by the present act. 
 
 Capital stock Annually in the month of November for the 
 calendar year. Act of June 8, 1891, P. L. 229. 
 
 Corporate loans Annually on the first Monday of November 
 for the calendar year. Acts of June 30, 1885, P. L. 193, and 
 June 8, 1891, P. L. 229. 
 
 Net earnings of certain corporations (applicable only to cor- 
 porations without capital stock) Annually on first Monday 
 of November. Act of June 1, 1889, P. L. 420. 
 
 Matured stock of building associations The law is indefi- 
 nite, and they are therefore made for the calendar year as soon 
 after its close as convenient. Act of June 22, 1897, P. L. 178. 
 
 Gross receipts of private bankers Annually on the first 
 Monday of December, for year ending November 30. Act of 
 June 27, 1895, P. L. 396. 
 
 Notaries Public Annually on or before December 31. Act 
 of May 20, 1865, P. L. 846. 
 
 Orders for wages Annually on the first day of November. 
 Act of June 24, 1901, P. L. 596. Sec. 1. 
 
 The times of payment directed by these Acts vary consider- 
 aby with relation to the time of report. But the practice is 
 common to await a settlement by the Auditor General and State 
 
220 
 
 Treasurer, and notice thereof, as interest does not begin to run 
 until that time. This will doubtless continue to be done. 
 
 The proviso excepts the returns of public officers. The princi- 
 pal retiirn is that of municipal loans, and these are now 
 requird to be made for the calendar year. The numerous 
 other requirements for the return of petty taxes and license 
 fees are too many and complicated to be changed by a general 
 Act and they are therefore left untouched. 
 
 ESCHEATS. 
 
 Existing legislation in regard to escheats is only efficient 
 after full information is given to the Auditor General. 
 There is a large class of property, however, which is not 
 reached and yet is particularly liable to escheat by reason 
 of being overlooked by those settling estates. This is 
 moneys deposited in bank, securities in safe deposit vaults 
 and corporate stock and bonds. If this has no known 
 owner which is presumed from its lying unclaimed for 
 a sufficient length of time the benefit of it should go to 
 the State and not to the institution into whose lap it thus 
 falls by reason of the ineffectiveness of present laws. At 
 the same time abundant opportunity and time should be 
 offered to the real owner to reclaim it from the State if 
 he appears. There are existing laws providing for the 
 report to the State officials and the payment into the State 
 Treasury of unclaimed bank deposits, but owing to the 
 fact that there is no adequate penalty, the law is not fully 
 observed. In the year 1909, for example, only $1,562.40, 
 in 1908, $1,625.55 and in 1907, $2,583.97 was paid into the 
 State Treasury by Savings Institutions, under the Act of 
 1872, with regard to unclaimed deposits. There must be 
 much more than this. 
 
 Accordingly your Committee recommends the enact- 
 ment of a bill, of which a draft is submitted herewith 
 (see page 221). 
 
 An amendment is needed to the General Escheat A (ft of 
 1889 to meet the defect pointed out in Bousquet's Estate, 
 
221 
 
 206 Pa. 534, which strictly construed the description of 
 an owner of property who has "been unknown for a period 
 of seven years." The owner had been missing for many 
 years, and the Court said that the owner of the fund had 
 never been unknown. It was his present whereabouts that 
 were unknown. Such an amendment is accordingly sub- 
 mitted herewith (see page 225). 
 
 AN ACT PROVIDING FOR THE REPORT TO THE AUDITOR GENERAL AND 
 ESCHEAT TO THE COMMONWEALTH UNDER CERTAIN CONDITIONS 
 OF DEPOSITS OF MONEY; DEPOSITS OF MONEY. STOCKS, BONDS, 
 NOTES, PAPERS AND OTHER SECURITIES AND ALL OTHER VALUABLES 
 OF THE SAME OR ANY OTHER KIND FOE SAFE KEEPING; AND 
 STOCKS AND DIVIDENDS, AND THE PRINCIPAL AND INTEREST OF 
 BONDS, NOTES, CERTIFICATES AND OF ALL AND ANY OTHER KINDS 
 OF INDEBTEDNESS OF CORPORATIONS, LIMITED PARTNERSHIPS AND 
 PARTNERSHIP ASSOCIATIONS/ AND PROVIDING FOR THE ENFORCE- 
 MENT OF THE SAME. 
 
 SECT. 1. Be it enacted, etc., That every bank, savings institu- 
 tion, trust company, safe deposit company and every person, firm 
 and corporation receiving deposits of money, shall in the month 
 of January in every year hereafter file with the Auditor General 
 a report under oath of air deposits of money with the interest 
 and profits accrued thereon which have not been increased or 
 diminished or credited with interest in the pass book at the 
 request of the depositor within seven years last preceding such 
 report. Such report shall show the amount of such deposit of 
 money, and the name and address of the depositor. 
 
 SECT. 2. Every person, firm and corporation in this Common- 
 wealth receiving deposits of money, stocks, bonds, notes pa- 
 pers and other securities or other valuables of the same or 
 any other kind for safe keeping, shall in the month of January 
 in every year hereafter file with the Auditor General a report 
 under oath of all such deposits to which access has not been 
 actually had by the owner or owners thereof within seven years 
 last preceding such report. Sucn report shall give the names 
 and addresses of the depositors, and the nature and amount of 
 the deposit, if known. , 
 
 SECT. 3. Every corporation, limited partnership and partner- 
 ship association organized under the laws of this Commonwealth 
 
222 
 
 shall in the month of January in every year hereafter file with 
 the Auditor General a report, under the oath of one of its 
 executive officers having personal knowledge thereof, of the 
 names and addresses of all stockholders to whom a dividend or 
 dividends shall have been declared and who have not claimed the 
 same for seven years next preceding, together with the amount 
 of such dividend and the kind and number of shares on which 
 the same shall have been declared ; and also the names and 
 addresses of all holders of bonds, notes, certificates and of all 
 and any other kinds of indebtedness of said corporations, lim- 
 ited partnerships and partnership associations who shall not 
 have claimed for seven years next preceding the principal or 
 interest due on the same, together with the amount of such in- 
 terest and of the principal of such bonds, notes, certificates 
 and other kinds of indebtedness. Should the names and address- 
 es of said stockholders, holders of such bonds, notes, certificates 
 and other kinds of indebtedness be unknown to the executive 
 officers of any such corporation, limited partnership or partner- 
 ship association a report shall nevertheless be filed as hereinbe- 
 fore provided setting forth the amount and nature thereof and 
 all other information in the possession of such corporation, lim- 
 ited partnership or partnership association, concerning said 
 stocks, bonds, notes, certificates and other kinds of indebtedness. 
 
 SECT. 4. Such reports shall be preserved by the Auditor General 
 in his office for public inspection, and he shall keep for public 
 inspection an index of the names of all persons so reported to 
 him, the amount and nature of the property involved, and the 
 person or corporation reporting it. 
 
 SECT. 5. When any sucn deposit of money or unclaimed divi- 
 dend or interest or principal of any bonds, notes, certificates 
 and all or any other kinds of indebtedness of such corporations, 
 limited partnerships and partnership associations shall have 
 been so reported to the Auditor General for seven successive 
 years, it shall, upon demand by him, be paid to the State Treas- 
 urer for the use of the State together with the interest and 
 profits accrued thereon by the person, firm or corporation 
 making such report ; and a report of such payment shall be made 
 to the Auditor General and be entered by him in said index. 
 
 SECT. 6. At any time within twenty-one years after such pay- 
 ment of a deposit of money, dividend, or interest or principal 
 of any such bonds, notes, certificates, or other kinds of in- 
 debtedness of such corporations, limited partnerships and part- 
 nership associations to the State Treasurer, the persons who 
 
223 
 
 would have been the lawful owners of such deposit, dividend, 
 or interest or principal of any such bonds, notes, certificates or 
 other kinds of indebtedness, had it not been so paid, or their 
 legal representatives, shall receive the same out of the State 
 Treasury out of moneys otherwise unappropriated, upon the 
 warrant of the Auditor General on the State Treasurer, upon 
 the production to the Auditor General of satisfactory proof of 
 such ownership. 
 
 SECT. 7. When any such unclaimed stocks of said corpora- 
 tions, limited partnerships and partnership associations or 
 any such deposit of money, stocks, bonds, notes, papers, other 
 securities or other valuables of the same or any other kind for 
 safe keeping, shall have been so reported to the Auditor Gen- 
 eral for seven successive years, the Auditor General shall there* 
 upon appoint an escheator to conduct proceedings for the 
 escheat of the same in the manner provided by law. 
 
 SECT. 8. No fee shall be paid to any informant for informa- 
 tion leading to the escheat of any property which shall have 
 been theretofore reported at any time under this Act. 
 
 SECT. 9. The failure to make any report required by this Act 
 shall subject the person, firm, corporation, limited partnership 
 or partnership association so failing to a penalty of fifty dol- 
 lars a day, for each day such failure continues, to be recov- 
 ered by the Commonwealth. The failure to pay to the State 
 Treasurer any such deposit of money or dividend or interest 
 or principal of any bond, note, certificate, or all or any other 
 kind of indebtedness of such corporation, limited partnership or 
 partnership association upon demand shall render the person, 
 firm, corporation, limited partnership or partnership associa- 
 tion so refusing liable to an action by the Commonwealth to 
 recover such deposit with interest at 12 per centum per annum. 
 
 SECT. 10. Nothing in this Act shall be construed to prevent 
 the escheat of property to the Commonwealth in the way other- 
 wise provided by law for lack of next of kin or a known owner. 
 
 SECT. 11. All the Acts or parts of Acts inconsistent with the 
 provisions of this Act be, and the same are hereby repealed. 
 
 SECT. 12. The following Acts and parts of Acts be, and the 
 same are hereby repealed. 
 
 An Act entitled "An Act requiring banks and other corpo- 
 rations to give notice of unclaimed dividends, deposits and bal- 
 ances in certain cases." Approved March 6, 1847. (Pamphlet 
 Laws 222.) 
 
224 
 
 Section 52 of an Act entitled "An Act regulating banks." 
 Approved April 16, 1850. (Pamphlet Laws 477.) 
 
 Sections 2 and 3 of an Act entitled "An Act relating to un- 
 claimed deposits in savings banks, and transfer of stock/' 
 Approved April 17, 1872. (Pamphlet Laws 62.) 
 
 An Act entitled "An Act relating to the return of moneys 
 escheated to the Commonwealth." Approved June 4, 1885. 
 (Pamphlet Laws 73.) 
 
 An Act entitled "An Act to amend the first section of an act, 
 entitled 'An Act relating to the return of moneys escheated to 
 the Commonwealth,' approved the fourth day of June, Anno 
 Domini one thousand eight hundred and eighty-five, extending 
 the same to certain other cases of escheat." Approved June 
 25, 1895. (Pamphlet Laws 283.) 
 
 NOTE. 
 
 Existing laws practically cover only bank deposits. They are 
 as follows: 
 
 Act of March 6, 1847 (P. L. 222), applying to banks, savings 
 institutions, loan companies and insurance companies, which 
 declare dividends or profits among the stockholders and re- 
 quiring publication in the newspapers of dividends unclaimed 
 for three years, and not increased or diminished or receiving 
 interest within three years. The penalty is personal liability 
 by the cashier to the owner with 12 per cent, interest. Three 
 years after the first publication the dividend shall escheat to 
 the Commonwealth and the owner may claim it at any time 
 thereafter. There is 110 further penalty for failure to publish 
 and no penalty at all for failure to pay to the Commonwealth. 
 
 Act of April 16, 1850 (P. L. 477), requires the cashier of 
 every bank to forward to the Auditor General a list of divi- 
 dends and deposits unclaimed and not increased or diminished 
 for three years. There is no penalty. 
 
 Act of April 17, 1872 (P. L. 62), requires a savings fund, 
 savings institution or savings bank to pay to the State Treas- 
 urer deposits not demanded for thirty years, and permits the 
 real owner to recover it from the State Treasury after that 
 time by action in the Courts. There is no penalty for failure 
 to make report, but small sums are paid. 
 
 The laws of other States are not very complete on this sub- 
 ject. The primary object seems to be publicity for the benefit 
 of the owner or next of kin. New York, for example, has 
 elaborate provisions for report to the Banking Commissioner 
 and the indexing of reports as well as for publication. Maine 
 and New Jersey, as well as New York, require newspaper ad- 
 vertising. None of these three provide for escheat to the State. 
 Maine and Massachusetts only escheat deposits remaining un- 
 claimed in the hands of receivers of a bank. Ohio has much 
 
225 
 
 the most complete system, providing- for annual reports to the 
 Probate Judge, which are recorded for public inspection ; and 
 after eight years the deposits are paid to the County Treasurer 
 and may be reclaimed at any time on proof of ownership. 
 
 Sufficient publicity will be provided by the public reports in 
 the office of the Auditor General duly indexed, to which all per- 
 sons settling- estates will naturally resort to look for un- 
 claimed deposits. This, and the right to recover with a long- 
 period of limitation on the right, abundantly protect the de- 
 positors, and the State should have the benefit of money not so 
 claimed. 
 
 AN ACT TO AMEND SECTIONS Two AND THREE OF AN ACT ENTITLED 
 
 "AN ACT DEFINING AND REGULATING ESCHEATS IN CASES WHEBE 
 PROPERTY IS WITHOUT A LAWFUL OWNER. AND PROVIDING FOR 
 MORE CONVENIENT PROCEEDINGS RELATIVE TO THE SAME," APPROV- 
 ED THE SECOND DAY OF MAY, ONE THOUSAND EIGHT HUNDRED 
 AND EIGHTY-NINE; EXTENDING THE SAME TO OTHER CASES OF 
 
 ESCHEAT. 
 
 SECT. 1. Be it enacted, etc., Inat the second section of an Act 
 entitled "An Act defining and regulating escheats in cases 
 where property is without a lawful owner, and providing for 
 more convenient proceedings relative to the same," approved 
 the second day of May, one thousand eight hundred and eighty- 
 nine, which reads as follows : 
 
 "Whensoever any money, estate or effects, shall have been 
 or shall hereafter be paid into or deposited in the custody of 
 any Court of this Commonwealth, or shall be in the custody 
 of any depository, or of any receiver or other officer of said 
 Court and the rightful owner or owners thereof shall have been 
 or shall be unknown for the space of seven years, the same shall 
 escheat to the Commonwealth, subject to all legal demands on 
 the same." 
 
 Be and the same is hereby amended to read as follows: 
 
 Whensoever any money, estate, or effects, shall have been 
 or shall hereafter be paid into or deposited in the custody of 
 any Court of this Commonwealth, or shall be in the custody of 
 any depository or of any receiver or other officer of said Court, 
 and the rightful owner or owners thereof shall have been or 
 hall b unknown for the space of even year*, or shall have 
 made no demand therefor for the space of seven years, the 
 ame shall escheat to the Commonwealth, subject to all legal 
 demands on the same. 
 
 12 
 
226 
 
 SECT. 2. That the third section of the said Act which reads 
 as follows : 
 
 "Whensoever any trustee or other person is or shall be seized 
 of any property or estate, real or personal, in a fiduciary 
 capacity, and shall file an account of the same in any Court 
 in this Commonwealth, and whensoever it shall appear that the 
 cestui que trust or beneficial owner of said property or effects, 
 or any part thereof, has been unknown for a period of seven 
 years, and still remains nnkown, then, and in such case, so 
 much of said property or effects as belonged to said unknown 
 cestui que trust, or beneficial owner, shall escheat to the Com- 
 monwealth, subject to all legal demands on the same." 
 
 Be and the same is hereby amended to read as follows : 
 
 It shall be the duty of every trustee, guardian, committee, 
 executor, administrator, assignee, or other person acting in a 
 fiduciary capacity, who shall be seized or possessed of any 
 property or estate, real or personal, of which the cestui que 
 trust or beneficial owner shall have been unknown to him for 
 a period of seven years, and still remains unknown, or has 
 made no demand for said property or effects for a period of 
 seven years, to file an account thereof in the proper Court, and 
 so much of said property or effects as belonged to said cestui 
 que trust or beneficial owner, and is not claimed at the audit 
 of said account, shall escheat to the Commonwealth, subject 
 to all legal demands on the same. 
 
 STATE EXPENSES. 
 
 A useless item of State expense which was constantly 
 brought to the attention in examining the Appropria- 
 tion Acts, is the printing thereof in full in the pamphlet 
 laws for public distribution. All that is necessary for 
 public information is the name of the Department or 
 institution receiving the appropriation, the amount re- 
 ceived, the purpose in brief and the reduction of the ap- 
 propriation by the Governor, if any. This information 
 could easily be tabulated. 
 
 The result will also save bulk. Of the volume of 1909, 
 containing 1,042 pages, fully one-third is taken up with 
 
227 
 
 printing and indexing these Acts, which contain 1,228 
 items. 
 
 Your Committee therefore proposes an Act for that 
 purpose (see page 227). 
 
 AN ACT IN RELATION TO THE PRINTING OF APPROPRIATION BILLS IN 
 THE PAMPHLET LAWS. 
 
 SECT. 1. Be it enacted, etc., That hereafter the Secretary of 
 
 the Commonwealth shall not furnish to the Public Printer for 
 
 printing in the Pamphlet Laws the full text of appropriation 
 
 bills, but shall furnish instead a tabulated list of said bills 
 
 ! giving the date, the purpose of the appropriation, the amount 
 
 ! thereof, and the amount approved by the Governor, and this 
 
 table shall be printed in the Pamphlet Laws instead of the full 
 
 text of such Acts as heretofore. 
 
228 
 
 INCOME TAX AMENDMENT TO FED- 
 ERAL CONSTITUTION. 
 
 An amendment to the Constitution of the United States 
 has been proposed to the States by Congress to meet the 
 decisions of the Supreme Court of the United States that 
 the income tax is a direct tax and must be apportioned 
 among the States by population. The proposed amend- 
 ment is : 
 
 "The Congress shall have power to lay and collect 
 taxes on income, from whatever source derived, with- 
 out apportionment among the several States, and with- 
 out regard to any census or enumeration. ' ' 
 
 Arguments against the approval of this amendment were 
 made before your Committee, and others have been 
 brought to its attention by the public prints. 
 
 It is argued that this is a source of revenue which should 
 be reserved for the States. It is also argued that it is a 
 direct reversal of the policy of the Constitution which will 
 produce the very evil intended to be guarded against, to 
 wit, the imposition of taxes by the more numerously repre- 
 sented States upon the wealthier States. As the constitu- 
 tional requirement of uniformity would not apply to a tax 
 levied under this amendment, Congress might go so far 
 under the control of partisans as to direct the tax only at 
 certain of the wealthy Eastern States by name, and exempt 
 the others entirely. Under our system of equal representa- 
 tion by States in the United States Senate it is quite pos- 
 sible, if not probable, for the representatives of a minority 
 to out-vote the representatives of the majority of citizens, 
 
229 
 
 and still more so, to out-vote a preponderance of wealth. 
 The States of New York, Pennsylvania, Ohio and Illinois 
 contain approximately a third of the population and ap- 
 proximately three-fifths of the wealth. When the income 
 tax was levied under the Act of Congress of 1861 the States 
 of New York and Pennsylvania paid nearly half of the 
 tax. It is argued that these possibilities are not merely 
 speculative, and that in framing a constitution possibil- 
 ities should be considered. 
 
 The intention of the Constitution was that the expend- 
 itures of the States should be met by direct levies of taxes 
 on lands and accumulated property, and those of the 
 Federal Government for the most part by indirect taxes. 
 This in principle is the way in which the methods of raising 
 revenue are divided between our Commonwealth and its 
 subdivisions. There was reserved, however, to the Federal 
 Government the power to lay direct taxes in case of need, 
 but in order that it might not be exercised except on neces^ 
 sity, and, that the State might have opportunity to pay 
 its quota without the interference of the Federal tax 
 gatherer, it was directed that the tax be apportioned 
 among the States according to population. This took the 
 place historically of the requisitions on the States which 
 were the inefficient means of raising revenue under the 
 Confederation. 
 
 Such a need has never arisen, and never will. The 
 indirect taxes can be extended sufficiently to meet all de- 
 mands of a greatly extended Federal power. Internal 
 revenue alone is capable of supplying it all. Forty-five 
 years ago, when the wealth of the country was much less 
 than now, it yielded $300,000,000 a year under the stress 
 of war measures. 
 
 The wording of the proposed amendment, which per- 
 mits the laying of an income tax on incomes "from what- 
 ever source derived" would permit the laying of a tax 
 upon incomes from State securities, and thus reverse the 
 wise settled policy of the present Constitution that the 
 
230 
 
 United States should not tax State agencies, and that the 
 State should not tax agencies of the United States. As 
 "the power to tax is the power to destroy," and as there 
 will be no requirement of uniformity or apportionment 
 among the States, the Federal Government might coerce 
 the States by taxing its State loans or the loans of its 
 constituent municipal bodies out of existence, as has been 
 done with State bank notes. 
 
 Unofficial reports disclose in addition that the amend- 
 ment has been ratified by five States, as follows: Ala- 
 bama, Georgia, Kentucky, Mississippi and Oklahoma. 
 Three States, to wit, Massachusetts, New York and Vir- 
 ginia, failed to ratify the amendement, and in Louisiana 
 it is to be submitted to a referendum vote in the year 
 1912. 
 
 Your Committee submits these observations as they have 
 been given to it, but without recommendations, although 
 it is not amiss to say that no representations in its favor 
 have been made. 
 
 REQUESTS OF STATE DEPARTMENTS. 
 
 Your Committee requested the Attorney General, the 
 Auditor General, the Secretary of the Commonwealth, the 
 Railroad Commissioners, the Secretary of Internal Af- 
 fairs, the Insurance Commissioner, the Commissioner of 
 Banking, the Secretary of Agriculture, the Department 
 of Health, the State Highway Commissioner, the Com- 
 missioner of Forestry, the Commissioner of Fisheries, 
 the Factory Inspector and the Department of Mines, to 
 suggest to the Committee changes of the laws desired 
 by their Departments. 
 
 To this replies have been received as follows : 
 The Attorney General recommended, though not offi- 
 cially, "that the entire legal business of the Common- 
 wealth should be in charge of the Attorney General's De- 
 
231 
 
 partment. " It seems to your Committee that it insures 
 promptness and avoids circuity of communication if those 
 having charge of the legal work of each department should 
 be under the control and direction of the State officer 
 having charge of the prosecution of the work and in direct 
 touch with him. The Attorney General being a co-ordin- 
 ate officer of the government, there may well be a con- 
 flict of authority on matters of policy, which cannot be 
 overcome. Your Committee assumes that in all matters 
 of Governmental and public policy the Auditor General 
 and the heads of all other Departments of State Govern- 
 ment would, of course, seek the co-operation of the At- 
 torney General and be guided by his advice. 
 
 The Attorney General also recommended that corpora- 
 tion taxes should have preference out of any fund arising 
 through judicial sale, and that such sale should not be 
 valid until a certificate has been filed that there were 
 no unpaid taxes, or if the certificate should show that 
 there were such taxes, they should first be paid. This 
 seems to be covered by the Act of June 1, 1889, Sec- 
 tions 31 and 32, P. L. 437. The policy is the same as 
 that in the Act of May 25, 1907, P. L. 250, referred to 
 elsewhere. (See page 217.) 
 
 The suggestion, however, unites with that of the Audi- 
 tor General in a special communication to your Com- 
 mittee recommending that liens for State taxes be re- 
 corded only in the Department of the Auditor General. 
 The Act of 1889, above referred to, says that State 
 taxes shall be first paid out of the proceeds of judicial 
 sale prior to other liens, although entered after the taxes 
 accrued. This is the present system as to local real es- 
 tate tax. But the Act of April 16, 1827, P. L. 471, re- 
 quiring the Auditor General to record settlements for 
 the purposes of lien in the county a soon as possible, 
 is still in force. (William Wilson, etc., Go's. Estate, 
 150 Pa. 285; Gladden vs. Chapman, 188 Pa. 586.) 
 The result is that it is a great labor to file these liens in th 
 
232 
 
 proper county and to follow them up and beyond the 
 strength of the Auditor General's force. It would greatly 
 facilitate collection if the liens need appear of record only 
 at Harrisburg, and this should be coupled with the utmost 
 facilities for making and obtaining searches Every cor- 
 poration which mortgaged its property would be under 
 compulsion from the mortgagee to keep up taxes, and the 
 intent of the law would not be defeated by the provisions 
 of an old statute. While this would be a reversal of the 
 present system, it seems to your Committee that it would 
 prove of great value and not inconvenient to those having 
 to deal with corporations. 
 
 They therefore present a draft of an act to accomplish 
 this result. (See page 232.) 
 
 The Auditor General, in addition to matters elsewhere 
 referred to, as to which his recommendations have in 
 large part coincided with your Committee's own con- 
 clusions, has suggested that each assessor get a small fee, 
 say five cents, for each person from whom he procured a 
 return of personal property tax. It is thought that this 
 would produce great diligence on his part. Your Com- 
 mittee feels that the diligence in this regard might be ex- 
 cessive and assessors tempted to secure returns from great 
 numbers of persons who were known not to be taxable 
 simply to claim the fee. 
 
 The Auditor General also suggested a stock transfer tax 
 like that of New York. The volume of stock transfers in 
 this State is, of course, not nearly so great as that of 
 our sister State, and your Committee does not feel that the 
 making of such transactions with us should be hampered 
 in this way. 
 
 Ajf ACT B1LATING TO TAXATION, AND BONUS ON CAPITAL STOCK. 
 
 SECT. 1. Be it enacted, etc., That taxes of every kind, including- 
 taxes on loans and bonus on capital stock with interest and 
 penalties thereon due from any corporation, limited partner- 
 ship or joint stock association of any kind, whether foreign or 
 
233 
 
 domestic, to the Commonwealth shall be liens upon the real 
 estate of such corporation, limited partnership, or joint stock 
 association within this Commonwealth from the time of the 
 filing of a settlement thereof in the office of the Auditor Gen- 
 eral. Such liens may be sued out by writ of scire facias and 
 execution in the usual manner, and shall be first paid out of the 
 proceeds of any judicial sale of such real estate before any 
 taxes, municipal claims, mortgages, arrears of ground rent, 
 judgments and all other liens and estates whatsoever and 
 whether the same shall accrue before or after the filing of such 
 settlement, provided such settlement shall have been on file and 
 indexed in the Auditor General's office one week before such 
 sale. 
 
 SECT. 2. Upon the judicial sale of the personal estate of any 
 such corporation, limited partnership or joint stock association, 
 such taxes and bonus shall be first paid out of the proceeds 
 thereof before an}' and all other taxes, pledges, chattel mort- 
 gages, judgments, debts, liens and estates whatsoever and 
 whether the same shall accrue before or after the filing of 
 such settlement : Provided, That such settlement shall have 
 been on file and indexed in the Auditor General's office one week 
 before such sale. 
 
 SECT. 3. The Auditor General shall keep an alphabetical in- 
 dex of the corporations, limited partnerships and joint stock 
 associations against which such settlements shall have been 
 filed, which shall be open to inspection by any person ; and he 
 shall, upon the written application of any person and the pay- 
 ment of a fee of twenty-five cents for the use of the State, fur- 
 nish to such person a certificate showing whether any such set- 
 tlements are on file in his office against any corporation, lim- 
 ited partnership or joint stock association, and if so, for 
 what taxes or bonus, from what date and for what amount. 
 
 SECT. 4. Section four of an Act entitled "An Act relative to 
 the distribution of money arising from sheriffs' and coroners' 
 sales; and relative to the duties of the Auditor General and 
 County Commissioners." approved April 16, 1827 (P. L. 471), 
 be and the same is hereby repealed. 
 
234 
 
 The Secretary of the Commonwealth recommended that 
 "the present laws remain as they are so far as they affect 
 this Department. ' ' 
 
 The Pennsylvania State Railroad Commission informed 
 your Committee that it had not formulated any amend- 
 ments to the corporation or revenue laws of the Common- 
 wealth. 
 
 The Insurance Commissioner recommended that in place 
 of the various taxes laid upon insurance companies and 
 their estates, that an increased tax on the premiums be 
 laid, and that this be extended to all companies except 
 fraternal orders. This matter has been elsewhere dis- 
 cussed. 
 
 The Secretary of Agriculture recommended that "all 
 property of every class, whether real or personal, should 
 be made to bear an equal proportion of the burdens of 
 taxation for State as well as local purposes. " It seems to 
 your Committee that so far as this is a suggestion that it 
 should be attempted to tax all personal property alike, 
 it is a step away from Pennsylvania's ancient and admir- 
 able system toward the system of which other States are 
 gradually getting rid. As elsewhere noted it results only 
 in real estate and the honest owner of personal property 
 continuing to bear the burden, while the tax dodger 
 escapes. 
 
 The Department of Forestry has no recommendations. 
 
 The Department of Fisheries recommended the imposi- 
 tion of a small license fee on several devices not covered by 
 the present fish code. These, however, were stated to be 
 trifling and the Commissioner proposed to submit them 
 to the Legislature in a separate communication. 
 
 The Factory Inspector recommends that all steam boil- 
 ers in the State, except locomotives and boilers in private 
 houses which carry a pressure under ten pounds, be sub- 
 jected to State inspection and a charge made of $5.00 for 
 internal examination and $3.00 for external examination, 
 
235 
 
 no boiler to be inspected more than once a year. He re- 
 ports that there are in the State from 45,000 to 50,000 
 boilers and that the number is rapidly increasing; that 
 the cost of inspection can be kept within $50,000 a year 
 with a force of 25 inspectors to be made a part of his de- 
 partment without creating a separate department and the 
 expense incident thereto. This would mean a substantial 
 revenue to the State. The work is now being done by 
 casualty companies, 97 per cent, of whom are foreign and 
 the fees therefor are going out of the State. He has pre- 
 pared an Act to accomplish this end. If the work now 
 done by individuals can be as effectively done by 
 State officials and will result in increase of the State 
 revenue (of which the Committee is not informed, but as- 
 sumes that the Factory Inspector believes it can) the 
 bill should commend itself to your Honorable Bodies. 
 
 The Factory Inspector also recommends a tax on coal 
 and oil. This matter has been discussed elsewhere. 
 
 The Department of Mines recommended that the coal 
 industry be so taxed as to provide a fund to take care 
 of the employees injured while at work and those depend- 
 ent upon them. In discussing the laying of a tax on an- 
 thracite coal your Committee has indicated that the fund 
 thus derived will work to this end by reason of the in- 
 creased aid to charities which can be given. 
 
 STATE CENSUS. 
 
 Without adequate facilities for collecting original 
 statistical information upon the subjects of investigation, 
 your Committee has been greatly hampered by the entire 
 lack of such data as were needed gathered elsewhere. The 
 Census of the United States was ten years old and de- 
 ductions from such figures were only guesses. Evem 
 the information thus given was not at all of the character 
 required. The Bureau of Industrial Statistics, admirable as 
 
236 
 
 its work is, covers only a small part of the field and is 
 compelled to depend on information voluntarily given. 
 Accurate and recent figures could nowhere be obtained, 
 for example, as to the capitalization of manufacturing 
 corporations in the State, the amount of local taxes raised 
 on anthracite coal, the amount of estates which would be 
 subject to direct inheritance tax, and dozens of other sub- 
 jects of which your Committee sought to treat. Agricul- 
 tural statistics which would be of great value are not 
 obtainable. 
 
 Massachusetts takes a most thorough census every tenth 
 year midway between the censuses of the United States and 
 it has proved of the greatest value to the State. The ma- 
 chinery of her Census Bureau is made use of by the United 
 States Census Bureau, and a compensation for it paid to 
 the State which goes very far toward reducing the net 
 cost. Your Committee believes that a similar census 
 would prove of the greatest value to this, much larger, 
 wealthier, but surely not less progressive State, and 
 strongly recommends legislation to that end. 
 
 Owing to these difficulties your Committee is unable to 
 present a comprehensive summary of the amount of taxa- 
 tion which it is believed will be raised as a result of the 
 measures hereby recommended. In connection with some 
 particular items an estimate is given but this is as far 
 as they can safely go. 
 
 Your Committee feels, on the whole, that to this point 
 their work, under the circumstances which they have had 
 to meet, has been in a large part preliminary only. 
 Realizing the need, as stated, for more State revenue and 
 for the correction of some abuses long complained of and 
 very patent, they have submitted measures which they 
 
237 
 
 believe are conducive to those ends. Your Committee begs 
 the earnest attention of the Legislature to its recommenda- 
 tions and confidently believes that your earnest interest 
 and co-operation in the consideration of the subjects en- 
 trusted to them will be productive of results beneficial to 
 the Commonwealth and her many activities. 
 Respectfully submitted, 
 
 JAS. P. McNICHOL, 
 Chairman ; 
 
 WM. H. KEYSER, 
 
 WM. C. SPROUL, 
 
 JAS. F. WOODWARD, 
 
 D. HUNTER, JR., 
 
 GABRIEL H. MOYER, 
 
 Vice Chairman and Secretary. 
 
239 
 
 THE JOINT COMMITTEE OF THE SENATE AND 
 HOUSE OF REPRESENTATIVES OF THE COM- 
 MONWEALTH OF PENNSYLVANIA TO CONSIDER 
 AND REPORT UPON A REVISION OF THE COR- 
 PORATION AND REVENUE LAWS OF THE 
 COMMONWEALTH. 
 
 Philadelphia, Pa., January 28, 1910. 
 
 Public meeting of the Committee held at Room 496, City 
 Hall, Philadelphia, Friday, January 28, 1910, at 11.00 
 o'clock A. M. 
 
 Present : Hon. James P. McNichol, Chairman ; Gabriel 
 H. Moyer, Vice Chairman and Secretary ; Wm. C. Sproul, 
 William H. Keyser, James F. Woodward, David Hunter, 
 Jr., of the Committee ; Francis Shunk Brown, Esq., Coun- 
 sel. 
 
 Mr. McNichol : This Committee was appointed by the 
 State Legislature for the purpose of investigating the 
 taxation laws and revenue laws and the expenditures of 
 funds paid into the State Treasury. We have selected 
 Francis Shunk Brown as the attorney representing this 
 Committee. He has gone into this matter very thorough- 
 ly for the last three months, and he will detail to the la- 
 dies and gentlemen present the purposes and the program 
 that has been arranged for the conduct of these meetings. 
 
 Mr. Brown : Mr. Chairman and Gentlemen of the Com- 
 mittee, Ladies and Gentlemen : It is hardly necessary to 
 tell an audience such as this of the causes which prompted 
 the Legislature of Pennsylvania to provide for the ap- 
 pointment of the Committee which is sitting here today. 
 The subject of taxation has been agitating not only all 
 of the States of this Union, but all countries of the earth, 
 
240 
 
 and as many other States have been making a move 
 towards the investigation of this subject, it was emi- 
 nently fitting that the State of Pennsylvania should make 
 a similar effort. 
 
 Mr. Chairman, I think it would be well to read the Act 
 of Assembly at this point, so that everyone present may 
 know the scope of this Committee's work. 
 
 "A concurrent resolution providing for the appoint- 
 ment of a joint Committee of the Senate and House of 
 Representatives to consider and report upon a revision 
 of the Laws of this Commonwealth relating to corpora- 
 tions and to revenue ; for the employment of counsel and 
 other necessary officers and employes, and giving it au- 
 thority to compel the attendance of persons and the pro- 
 duction of books and papers. 
 
 "Resolved, That the President pro-tempore of the Sen- 
 ate shall appoint three Senators, and the Speaker of the 
 House of Representatives shall appoint three of its mem- 
 bers, which shall constitute a joint committee whose duty 
 it shall be to consider the laws of the Commonwealth 
 relating to corporations and to revenue and the practical 
 working thereof, and to report to the next Legislature 
 whatever changes may be deemed necessary therein, to- 
 gether with the draft of an Act or Acts of Assembly to 
 accomplish said changes, and together with such recom- 
 mendations as may be deemed necessary relative to the 
 administration of existing laws or as to the enforcement 
 of said suggested Act or Acts. Said Committee shall 
 have power to elect its own Chairman, to sit after the ad- 
 journment of the Legislature, to employ legal counsel and 
 such other offcers and employes as may be needed to 
 enable it to properly perform its duties as aforesaid ; but 
 its expenditures shall be limited to the amount provided 
 therefor in the general appropriation bill to be passed 
 at this session of the Legislature, and shall be paid out 
 of the State Treasury upon vouchers signed by the Chair- 
 man of said Committee. 
 
241 
 
 "Said committee shall also have power to issue sub* 
 poenas signed by its chairman, requiring the attendance of 
 persons and the production of books and papers, as in its 
 judgment will assist in the performance of its duties as 
 aforesaid. 
 
 "Said Committee shall make a full report, in writing, 
 to the Governor of the Commonwealth of its findings, with 
 such recommendations as it may deem proper, six months 
 prior to the meeting of the General Assembly in the ses- 
 sion of 1911." 
 
 Now, this Act was approved May 13, 1909. Imme- 
 diately thereafter this Committee proceeded to search for 
 information. It has gathered data from all over the 
 world ; it has collected all of the laws from the different 
 States of the Union; it has also collected the reports of 
 commissions similar to this which have from time to time 
 been appointed by these States, and has considered the 
 result of their labors. We have delayed public meetings 
 for the reason that the National Government, as you all 
 recall, in the summer of last year, passed an Act which 
 directly applied to the taxation of corporations, and it 
 was deemed unwise by this Committee that there should 
 be any further consideration or public consideration or 
 agitation of this subject at that time or at least until the 
 Secretary of the Treasury and other officials should 
 have perfected some scheme so that we might know how 
 it affected, directly or indirectly, the interests of our 
 people. That was done in December of last year. In 
 fact, we are still considering it, but I think it has gotten 
 into such shape that this Committee is justified now to 
 proceed with its public meetings and in the further per- 
 formance of its duties. 
 
 Of course, you will all appreciate that the first thing 
 to consider is that before the Commonwealth of Pennsyl- 
 vania should levy taxes from her people, they should be 
 in some way or other determined by the expenditures, 
 the uses which are to be put these moneys, and the thought 
 
242 
 
 
 
 was that as the private hospitals or institutions not under 
 
 State control, but receiving State aid, demand each year, 
 say $10,000,000 and received, as I recall last year, 
 $5,000,000 it would be a good starting place to determine 
 and ascertain whether or not the State of Pennsylvania was 
 properly appropriating these moneys. That is, whether or 
 not if it was whether it was doing it in a way from which 
 it was getting a return which would justify such an ap- 
 propriation; in other words, whether these moneys were 
 being used not in the way intended to be used. This is an 
 investigation to determine whether the Commonwealth 
 is getting a dollar's return for every dollar's expenditure, 
 and if not, whether some scheme which would probably 
 be more economical could be devised for obtaining the 
 same results. 
 
 Now, I have sent, in the performance of the duty of 
 this Committee, or the Committee has had sent out since 
 December 1st, 23,000 letters. They have gone to all the 
 National Banks, State Banks, Trust Companies, Savings 
 Institutions, Bankers, The Lawyers Club, Philadelphia, 
 Law Association, Philadelphia, Lawyers in Pennsylvania. 
 Newspapers in Pennsylvania, Trade Journals in Pennsyl- 
 vania, Commercial Journals in Pennsylvania, all County 
 Bar Journals in Pennsylvania, Dental Journals in Pennsyl- 
 vania, Legal Journals in Pennsylvania, All County Bar 
 Associations in Pennsylvania, Pennsylvania Bar Associa- 
 tion, Trade Associations in Pennsylvania, Business Asso- 
 ciations in Pennsylvania, Building and Loan Associations 
 of Pennsylvania, all Judges of all Courts in Pennsyl- 
 vania, Insurance Companies,' State Officials, County Offi- 
 cials (every county) Members of State Senate, Members 
 of House, Mayors of principal cities, boroughs, etc., Hos- 
 pitals, Homes, State Institutions, semi-State Institutions, 
 Manufacturing Companies in Pennsylvania, Gas Compa- 
 nies, Water Companies, Land Companies, Land Improve- 
 ment Companies, Homestead Companies, Hotel Com- 
 panies, Miscellaneous Companies in Pennsylvania. Brick 
 
243 
 
 Companies, Clay Companies, Stone Companies, Slate Com- 
 panies, Quarry Companies, Bridge Companies, Turnpike 
 Companies, Brewing Companies, Distilling Companies, 
 Coal Companies, Coke Companies, Coal Mining Companies, 
 Oil Companies, Mining Companies, Light, Heat and Power 
 Companies, Market Companies, Railroad Companies, Rail- 
 way Companies, Transportation Companies, Ferry Com- 
 panies, Telegraph Companies, Telephone Companies, Fer- 
 tilizer Companies, Electric Light Companies. There is 
 now being sent a circular letter to all foreign corpora- 
 tions doing business in Pennsylvania, in so far as they are 
 registered with the Auditor General. 
 
 That letter recited the resolution in substance ; and fur- 
 ther: 
 
 ''The Committee is collecting data upon the forma- 
 tion, regulation and taxation of corporations and the ap- 
 propriation of State Revenue for all purposes, in this 
 State, in all of the United States, by the Federal Govern- 
 ment, and by other nations. These subjects are being 
 specially discussed and legislated upon at the present 
 time throughout the world. 
 
 "The Committee desires the co-operation of all inter- 
 ested in these subjects and requests your opinion as to 
 any defects in the present laws of the Commonwealth 
 relating to the formation, regulation and taxation of cor- 
 porations, associations, partnerships or individuals, the 
 exemption of them or any of them from taxation, the ap- 
 propriation of the Revenue of the State, and any changes 
 therein which you make think necessary. 
 
 "You will notice that the resolution requires a report 
 of the Committee to be filed with the Governor in July, 
 1910, and we therefore request an early reply, as it is im- 
 portant that all suggestions be rtceived for consideration 
 prior to the public meetings which the Committee may 
 hold. We should also be glad to have from you the 
 names and addresses of any persons whom you may know 
 who are specially qualified to give to the Committee infor- 
 
244 
 
 mation and assistance in the consideration of these most 
 important subjects." 
 
 I might say that up to date the Committee has received 
 approximately 5,000 replies to this communication, with 
 all manner of suggestions for other laws covering all sub- 
 jects which are included in the general scheme of the 
 Commonwealth's taxation, and, personally, I have been 
 very much gratified by the interest that the people of this 
 Commonwealth have taken in this subject. That is just 
 merely preliminary to our meeting to be considered today 
 and for general information. I assume the first one to 
 call in order would be to hear from our State Board of 
 Charities, as being the supervisory body of these insti- 
 tutions, and I would call upon the Secretary, who is here 
 to represent them, Mr. Bromley Wharton. 
 
 Mr. Wharton, do you wish to make any preliminary 
 statement or remarks? If not, I have some questions I 
 would like to ask you. 
 
 Mr. Wharton : I would be glad to answer any questions. 
 
 By Mr. Brown: 
 
 Q. Upon what does the State Board of Charities make 
 its recommendations to the Legislature for appropriations 
 to institutions not under State control ? 
 
 A. Upon the reports which we gather from those insti- 
 tutions, of which I have a copy. This report shows the 
 financial statement, the number of hospital days, free hos- 
 pital days, based upon the free work done by the hospital. 
 
 Q. What investigation is made by the Board itself in 
 addition to the report which you receive ; what do they do 
 to verify this? 
 
 A. The Legislature of 1907 gave the Board of Chari- 
 ties two assistant general agents. Those two men in con- 
 nection with the Secretary and General Agent visit these 
 institutions, sometimes two and three times a year when 
 it is necessary to verify the reports furnished yearly at 
 the end of the fiscal year, May 31, to the Board. 
 
245 
 
 Q. What has been the result of the personal investi- 
 gations which have been made by the Board as to the 
 use of the State's money given these institutions? 
 
 A. On the whole, I would say it was wisely used, ex- 
 ceedingly so. 
 
 Q. How about economically used; does that "wisely" 
 include economically? 
 A. Yes, I would say economically. 
 
 Q. Has your experience in these investigations pre- 
 pared you to make any suggestions as to the consolidation 
 of any of these institutions, whether that could be wisely 
 done in the way of economy? 
 
 A. Well, I think that depends on the localities. I 
 think in some of the larger cities the consolidation of 
 some of the hospitals would be beneficial. 
 
 Q. Would that in any way diminish the advantages 
 which the people would receive because of the accessi- 
 bility of the several hospitals which might be consoli- 
 dated? 
 
 A. That, of course, would depend on circumstances. 
 There are cases where two large hospitals are near each 
 other; they might be consolidated. I do not mean where 
 they are far apart. 
 
 Q. How many hospitals have they in the State of Penn- 
 sylvania, if you recall, 154 or something like that? 
 A. One hundred and forty-seven, receiving State aid. 
 
 Q. In how many counties? 
 A. Sixty-seven. 
 
 Q. In how many counties? 
 
 A. Sixty-seven 147 hospitals, 93 homes. Of course, 
 I am not going into State institutions. 
 
 By Mr. McNichol : 
 Q. How many State institutions? 
 A. Twenty-four. 
 
246 
 
 Q. Located where? 
 
 A. Insane : Norristown, Danville, Warren, Harrisburg. 
 Q. Can you have those scheduled for us? 
 A. Yes, sir, we can do anything you want, I will 
 submit that. 
 
 By Mr. Brown: 
 
 Q. What counties have no hospitals? About how 
 many, not to go into details, because you have the table? 
 
 A. Eighteen. 
 
 Q. There are eighteen counties in this Commonwealth 
 that either have no hospitals or have no hospitals receiv- 
 ing State aid? 
 
 A. Yes, sir. 
 
 Q. How are the people there provided for? 
 
 A. By the nearest hospital. For instance, Adams 
 County, I will give you this as an illustration, the nearest 
 hospital is the Todd Hospital in Carlisle, Cumberland 
 County, and in Bucks County the nearest hospital would 
 be Frankford, on the outskirts of Philadelphia, and the 
 Norristown Hospitals; Cameron County would be Elk 
 County ; Carbon would be Wilkesbarre and Allentown. I 
 have all these worked out for you. 
 
 Q. What is the proportion of the amount that these 
 several hospitals receive from private sources as com- 
 pared with the State aid? 
 
 A. Well, I have to quote here. I will take some of 
 the big Philadelphia hospitals and some of the hospitals 
 outside. I will submit this to you: Take May 31, 
 to May 31, 1909, one year, take the Jefferson Hospit 
 From their reports I take these figures : their receipts froi 
 all sources would be $211,481; the State contributed 
 that for one year $80,000, leaving a balance of $131,< 
 The University Hospital receives $198,864; of that 
 State contributed $62,500, leaving a balance of $136,< 
 
247 
 
 By Mr. Moyer : 
 
 Q. Have you anything there that shows the amount 
 received from donations? 
 
 A. Yes, sir, I can give you that. 
 
 Q. Not from the pay of patients? 
 
 By Mr. Brown : 
 
 Q. I presume in your items of receipts there would be 
 interest on the investments? 
 
 A. Yes, sir. 
 
 By Mr. Moyer : 
 
 Q. Pay patients, too? 
 
 A. Pay patients, yes. The University Hospital, from 
 donations for current expenses, $8,376.89. I have got 
 this in detail for every hospital in the State. 
 
 By Mr. Brown : 
 
 Q. How did that proportion compare with the other 
 sections of the State? I mean, do the other institutions 
 throughout the State receive private donations that com- 
 pare to the same proportion as those two institutions you 
 have mentioned. 
 
 A. Yes, sir, all through the State they receive private 
 donations, from fairs, entertainments and various other 
 ways and means of raising money. In looking over it I 
 see the donations are given of all other hospitals. 
 
 Q. The donations from the State have been annually 
 increasing as I understand. Have the private donations 
 been increasing in like ratio? In other words, has the 
 State appropriation tended to a diminution of the gifts 
 from private donations either during life or by will? 
 
 A. Yes, I would say they have, for the reason that if 
 I have so much money given to me you are not likely 
 to give me the same amount of money. In Pittsburgh, 
 however, within the last few years, in making our recom- 
 mendations to the Legislature, in many cases they have 
 
248 
 
 said if the Legislature will give us so much they would 
 duplicate it. I refer to the South Side Hospital particu- 
 larly, to which a great deal of money has been given, and 
 I find that often to be the case where we have made a 
 recommendation that they have duplicated the amount, 
 even giving more than the Legislature has given. 
 
 Q. How does it apply to other sections of the State? 
 
 A. Some other sections have done the same way. Elk 
 County particularly comes to my mind, where the Hills 
 have given a great deal of money. 
 
 Q. Have you made any investigation to ascertain 
 whether or not the increase in the request for appropria- 
 tions has been in proportion to the accretion of the capi- 
 tal of the Commonwealth? 
 
 A. No, sir, not particularly. 
 
 By Mr. Moyer: 
 
 Q. Can you furnish us with a list of endowment funds 
 of these several institutions ? 
 
 A. I think I can, yes, sir. 
 
 By Mr. Brown : 
 
 Q. How do other States provide for the institutions? 
 
 A. There are thirty-four States, from what I gather, 
 that only contribute to the State institutions; out of the 
 total thirty-four contribute to the State institutions, make 
 appropriations to State institutions only. 
 
 Q. Have you attempted or has your Board attempted 
 to ascertain the reason for this? 
 
 A. No, we have not. 
 
 Q. Why the State of Pennsylvania should be an ex- 
 ception to the general rule? 
 
 A. We have not. Today the condition that is confront- 
 ing us in this State is different. Pennsylvania is a big 
 workshop, with its factories, its mines and mining inter- 
 ests. When we consider that in Allegheny county there 
 are 60,000 employed in the mine and steel district, it re- 
 quires hospitals. 
 
249 
 
 By Mr. McNichol : 
 
 Q. Has not the State provided hospitals of that charac- 
 ter for such people? 
 
 A. Not in Allegheny county. 
 
 Q. Has it inaugurated the system within the last four 
 years ? 
 A. Yes. 
 
 Q. Under State supervision? 
 A. Yes, sir. 
 
 By Mr. Moyer : 
 
 Q. The Miners 'hospitals? 
 A. Miners' hospitals. 
 
 By Mr. McNichol : 
 
 Q. What is your thought as to that system in com- 
 parison with the one in operation in Philadelphia ? 
 
 A. They are necessary, there is no doubt about it. 
 
 Q. I mean as to the management and efficiency of the 
 same? 
 
 A. The management and efficiency of the State hos- 
 pitals we consider very good. 
 
 Q. How could you give any comparison to the system 
 in operation in Philadelphia ? Have you made any observa- 
 tion of it in person? 
 
 A. No, sir. 
 
 Q. Do you not think that that would be information 
 which the Legislature should have when it is condering 
 this subject? 
 
 A. Undoubtedly. While we have this many hospitals 
 concentrated throughout the City, in the mining regions 
 they do not always cover the amount of ground we care 
 for. 
 
 Q. Well, they will eventually do that when we give 
 them sufficient money? 
 
 A. Take Jefferson County, Punxsutawney, through the 
 
250 
 
 soft coal region, we have not any raining hospital right 
 there. Near there there is a private hospital. 
 
 Q. You gave us a receipt of the different hospitals :n 
 Philadelphia. Is there incorporated in that all the money 
 these hospitals receive outside of private donations, pri- 
 vate rooms and things of that kind? 
 
 A. That is for maintenance. I am not discussing the 
 buildings at all. 
 
 Q. Jefferson Hospital receives $211,000? 
 
 A. Yes, sir. 
 
 Q. Of which $80,000 comes from the State? 
 
 A. Yes, sir. 
 
 Q. Do you want us to believe that $131,000 is all that the 
 Jefferson receives from all sources outside of private sub- 
 scriptions ? 
 
 A. That is all the receipts that I have here. 
 
 Q. Well, I know, but how thoroughly have you gone 
 into the receipts? 
 
 A. Well, I can only take this that has been given to me 
 under oath. 
 
 Mr. Brown: Mr. Potter is here representing the Jef- 
 ferson Hospital. 
 
 Mr. Wharton: For instance, from patients, I will give 
 you the detail of the total which you hold in your hand : 
 
 From patients full paid $71,403 
 
 From patients part paid 12,691 
 
 From State appropriation 80,000 
 
 From municipal appropriation, annual 375 
 
 From donations for current expenses 5,654 
 
 From investments for income 13,754 
 
 From nurss for service 5,342 
 
 From all othr sources 7,094 
 
 From sale of drugs 15,166 
 
 Making a total of $211,481 for that year, leaving a defici 
 for the year of $1,403. 
 
251 
 
 By Mr. McNichol : 
 
 Q. Nurses are paid for by the patients of the hospitals ? 
 A. Yes, sir, but they may have nurses outside. 
 Q. Principally hospital nursing? 
 A. Yes, sir. 
 
 By Mr. Hunter : 
 
 Q. Do v you know whether or not any of the institutions 
 receive aid from the counties in which they are located ? 
 
 A. In this case I have before me, the Municipal, the 
 City of Philadelphia gives $375 for the ambulance, and in 
 some cases I can tell you that. I will submit this 
 to you. In some cases I find they give a small amount. It 
 is very small. 
 
 Q. Do you think the county should contribute to the 
 support of these hospitals 1 
 
 A. Yes, where they can, but there are so many counties 
 in debt, the taxes, county taxes, and township taxes are 
 so high, and road taxes and so on, they do not have the 
 money to do it. The State being out of debt, they look 
 to the State to help them. 
 
 By Mr. Brown: 
 
 Q. Mr. Wharton, in your opinion is there any necessity 
 for the construction of State institutions additionally, and 
 if so, for what purpose? 
 
 A. I think there is, especially for the insane. We have 
 over 16,000 insane in Pennsylvania. We are overcro\vded 
 in Philadelphia County. We are overcrowded in State 
 institutions and it is of great importance to have these 
 institutions completed that are under way. For instance, 
 Allentow r n, which should be completed at once, and in 
 Southwest Pennsylvania Dixmont is overcrowded. 
 
 Q. When was Allentown commenced ; 1901, was it not ? 
 
 A. 1901 or 1902. 
 
 Q. And it is not finished yet ? 
 
 A. Is not finished yet, and in my opinion, if it is of iin- 
 
252 
 
 portance, the system of giving small amounts to hospitals, 
 instead of giving the amount necessary to complete it 
 and have the thing done, of every session of the Legis- 
 lature, giving a couple hundred thousand dollars, it is all 
 wrong. For instance, at Allentown we are commencing 
 to re-paint and varnish some of the rooms anyway before 
 the buildings are ready. 
 
 Q. Is it your opinion, assuming that the State has not 
 sufficient to do both at the same time, that the construction 
 of the State institutions should be preferred ? 
 
 A. Absolutely. They should take care of the State in- 
 stitutions first, and then after they have done that give 
 them what they need. 
 
 Q. Does the State ever give to the State institutions 
 all that is needed for the completion of its buildings ? 
 
 A. Not in my recollection. 
 
 Q. In other words, it has been pared down at the re- 
 quest of private institutions ? 
 
 A. It has always been pared down to some extent. 
 
 Q. You have been asked by Mr. Hunter, of the Com- 
 mittee, about the counties, why the counties cannot sup- 
 port the institutions; I am asking the result of your in- 
 vestigation as well as your personal opinion? 
 
 A. So far as my investigation has gone, the counties 
 are mostly in debt. It is very hard to get the County Com- 
 missioners to take care of the almshouses and the jails 
 proper. I am having a great deal of trouble to get at- 
 tention and money for the almshouses and jails. When it 
 comes to a hospital, they will not listen to such a thing. 
 
 Q. In other words, the demands of patients for rooms in 
 those institutions, almshouses, exceeds the supply. You 
 think the State institutions should be completed first ? 
 
 A. I do. 
 
 Q. And would the completion of the State institutions 
 have affected the appropriations for these several institu- 
 tions in the last five years, if you can give it to me off 
 hand without hunting up data ? 
 
253 
 
 A. I do not think it would affect them very much, to 
 some extent it might, probably a small amount, but if it 
 was divided up equally it would have not been a great 
 hardship. I think we could have built Allentown and 
 completed Spring City without great hardship. 
 
 Q. Has the investigation of the Board been in the di- 
 rection of determining whether or not these institutions 
 are using the State money economically; in other words, 
 getting a dollar for a dollar? 
 
 A. We have been in regards to State institutions some- 
 times; we thought they were extravagant. I have often 
 asked them whether they had to do this or that and asked 
 for explanations. You know every institution has its own 
 Board of Directors and they are managed independently, 
 that is to say each institution buys for its own institution. 
 It is a thing we have not gone into very carefully. 
 
 Q. You have not considered whether or not it would be 
 better for the State of Pennsylvania to purchase the several 
 supplies which these institutions use in large quantities 
 and then distribute them among all on requisition ac- 
 cording to their needs? 
 
 A. I should think it would be a good business policy, it 
 looks that way. If we could buy 15 or 20 carloads of flour, 
 instead of buying a few hundred barrels, you might get it a 
 great deal cheaper. 
 
 Q. Has the Board made any investigation to ascertain 
 as to the prices paid and made a comparison as to whether 
 or not that could be done, or is that your personal opinion? 
 
 A. It is my personal opinion. We have not gone into 
 the question of contracts. 
 
 By Mr. McNichol: 
 
 Q. Has the State Board of Charities taken up the ques- 
 tion as to whether a central board having supervision 
 over all of these State institutions would be able to more 
 economically run those institutions ? 
 
 A. We have never taken that question up. 
 
254 
 
 Q. Do you not think it is the duty of the State Board of 
 Charities to recommend to the Government and State Leg- 
 islature such things as that ? 
 
 A. I never considered it in that way, Senator. 
 
 Q. I know, but this is an age of consolidation wherein 
 one central office is used for the distribution of all the 
 paraphernalia and matters of that kind in government ? 
 
 A. It might be. Of course, we have discussed the thing 
 among ourselves, but we have never made any recom- 
 mendations. 
 
 Q. Is not that the condition of the State of Pennsylvania 
 today, an accumulation of thoughts and ideas without any 
 centralization ? 
 
 A. Yes, it is. There is something in what you say. 
 
 Q. And there has been no attempt to remedy that by 
 suggestion from the State Board of Charities ; the Legisla- 
 ture is pretty sure to act upon suggestions from people in 
 those positions, and they have failed to furnish those in 
 the last five or six years in my knowledge, and now we 
 are asking for those thoughts? 
 
 A. It is the first time in my knowledge that the Legisla- 
 ture has ever asked for their opinion. 
 
 Q. Would it not be the thought of a man engaged in a 
 work of that kind that he would be apt to give the best 
 ideas or thoughts without having to be called? 
 
 A. My idea and recommendation has never been seri- 
 ously considered. 
 
 Q. Possibly because it was not very seriously made. 
 
 A. I beg your pardon. I think the recommendation we 
 made at the last session of the Legislature was seriously 
 made. 
 
 Q. The last vital suggestion made by yourself was the 
 economical management of the whole proposition? 
 
 A. We have never had any time to discuss it ; the bills 
 we proposed were never heard. 
 
255 
 
 By Mr. Brown : 
 
 Q. Your supervisory board visits these institutions and 
 reports whether or not the moneys which they request are 
 sufficient amounts or proper amounts, and they are to ap- 
 prove or disapprove them? 
 
 A. Yes, sir. We make our recommendations under the 
 Act of 1869 to the Legislature. We are to report to the 
 Legislature. As I told you, the basis of everything is 
 these reports we get. 
 
 Q. Suppose the institution wants $50,000 for mainten- 
 ance and $50,000 for buildings, and one or two thousand 
 dollars for fire appliances and a sewer disposal plant and 
 a half a dozen other things, what does the Board do to as- 
 certain whether those items are proper on which they could 
 make a recommendation to the Legislature? 
 
 A. We discuss that with people who come before us ; we 
 interrogate them and then we send an agent, and members 
 of the Board, if there is any question, go to the institution, 
 or we have reports as to the necessity of these things be- 
 fore us, and then we recommend to the Legislature, not 
 always what they ask for. 
 
 Q. No, I notice in the Markleton Free Hospital they 
 asked for $30,000 maintenance and $5,000 for buildings, 
 and the application was disapproved. Taking that for a 
 concrete illustration, what was the cause of your disap- 
 proval of their application ? 
 
 A. In that case we thought it was a tuberculosis in- 
 stitution, and as Dr. Dixon and the Department of Health 
 have taken care of that class, we did not approve it. It 
 afterwards turned out that it was a general hospital, and 
 we recommended some $5,000. 
 
 Q. What do you do in cases of institutions reporting 
 deficits ; I notice a, number of institutions report deficits ; 
 some are approved and some are disapproved; in other 
 words, they have overrun the appropriations? 
 
 A. As a rule we do not make any recommendations for 
 deficits. There may be one or two isolated cases. 
 
256 
 
 By Mr. McNichol : 
 
 Q. What effort do you make in cases of State institu- 
 tions receiving their appropriations and having a defi- 
 ciency at every session of the Legislature, to find out 
 whether that deficit is a proper one ? 
 
 A. Up to the last session there was always a deficiency 
 bill. We never opposed those bills, because as a rule we 
 thought they were proper. The insane hospitals particu- 
 larly, they have been all right, because the population 
 has been increasing right along. In the private institu- 
 tions you refer to ? 
 
 Q. I refer to the State institutions? 
 
 A. Yes, the State institutions, we never have opposed 
 any of those. 
 
 Q. Do you not think the Legislature should be informed 
 as to what brought about the deficiency, and the calcula- 
 tions of the authorities based on their reports ? They come 
 into the Legislature with $85,000 or $100,000 deficiency 
 in a period of two years? 
 
 A. Well, if you remember for some years the mainten- 
 ance of the insane hospitals has been about $2,000,000, 
 and we increased that $500,000 and we found that was not 
 sufficient. I went before the Committee, I think the Chair- 
 man of the Appropriation Committee will bear me out, and 
 they increased it to $3,000,000. 
 
 By Mr. Brown: 
 
 Q. I notice in reading your report and considering the 
 report of the Board that the per capita cost seems to vary 
 in each institution. Have you endeavored to ascertain why 
 that is? 
 
 A. In the larger hospitals greater population is probably 
 the chief thing. In the country it varies in the different 
 localities. I find in the mining regions those things arc 
 higher. 
 
 Q. Take, for instance, the Pennsylvania Institution for 
 the Blind at Overbrook. I notice the cost of maintenance 
 
257 
 
 is $2.70 per capita, and at a similar institution for the 
 blind at Pittsburgh it is $3.50 per capita ; they are both in 
 cities ? 
 A. Yes, sir. I cannot explain that. 
 
 Q. I notice also in some of your recommendations you 
 attach a condition recommending the appropriation, pro- 
 viding the institution itself raises so much. "Why is that 
 done for some and not for others; is there any general 
 actuating motive or principle? 
 
 A. There is. In some cases we think they have not done 
 as much for private charity as they ought. We know the 
 locality ; the community is rich enough to do something for 
 that hospital and very often we put that proviso on. 
 
 Q. Then you do consider the element of private con- 
 tribution in recommending the appropriation? 
 
 A. Yes, certainly we do, and where a hospital has done 
 a great deal towards private charity we consider it. 
 
 By Mr. McNichol : 
 
 Q. That pertains to hospitals largely? 
 A. I am considering private hospitals. 
 
 By Mr. Moyer: 
 
 Q. Is it not a fact in nearly all cases they are very 
 anxious to load the burden of taxation and burden of 
 supporting hospitals on the State, and exonerate them- 
 selves thereby? 
 
 A. Yes, in many cases. 
 
 Q. You find that pretty generally true? 
 A. Yes, sir. 
 
 By Mr. Brown: 
 
 Q. To what do you attribute that, purely self-preserva- 
 tion? 
 
 A. I think so. 
 
 Q. To let somebody else carry the load? 
 
 A. It is probably a human trait. 
 13 
 
258 
 
 By Mr. Moyer : 
 
 Q. You do not want us to infer that that is the general 
 condition ? 
 A. Oh, no. 
 
 Q. The manner in which you treated it might lead the 
 people to believe that was a general condition? 
 
 A. Very often in some towns doctors may have a private 
 hospital, and the doctors may have a disagreement and 
 they go out and start another hospital. 
 
 Q. In other words, it is a disagreement amongst the 
 medical fraternity? 
 
 A. Sometimes. 
 
 Q. Is it a gentlemen's agreement? 
 
 A. A gentlemen's agreement. 
 
 By Mr. Brown: 
 
 Q. In your opinion does that element figure very largely 
 in the matters in this Commonwealth ? 
 
 A. No, not exactly. 
 
 Q. As I understand you, they are isolated cases? 
 
 A. They are isolated cases. 
 
 Q. Is there anything else you want to say for the benefit 
 of the Committee? 
 
 A. I will hand over some statements to you. 
 
 By Mr. Sproul: 
 
 Q. I would like to ask Mr. Wharton one question. Is 
 it your opinion that the general result of this system as 
 practiced in Pennsylvania has led to as good or better 
 care of the worthy and deserving poor in the hospitals 
 and institutions of the State, than in other States which do 
 not make these appropriations? 
 
 A. In my slight experience in other States, I think our 
 system is better. 
 
 Q. Do you not think they are better cared for in Penn- 
 sylvania than in other States? 
 
 A. I do. 
 
259 
 
 Q. You think there are more facilities and more pro- 
 visions for taking care of poor people, especially consider- 
 ing the large proportion of the population of this State 
 which is engaged in what you call precarious occupa- 
 tions ? 
 
 A. Yes, sir, I do, and I think it is less trouble to get 
 a worthy man in an institution. There is less red-tape 
 about it. I think there is more charity. I wanted to sub- 
 mit this, the amount of maintenance expended from June 
 1, 1907, to May 31, 1908. That is the, maintenance en- 
 tirely. 
 
 By Mr. McNichol : 
 
 Q. Mr. Wharton, I think if you will get up a statement 
 with the recommendations of the Board of Charities and 
 give us their ideas and views, what they would suggest 
 and recommend in that particular line of work, it will 
 give us the information we are seeking and we will not 
 have the trouble of hunting through memoranda and 
 papers of that kind to get an outline of what we want. 
 
 A. I did not know exactly what you wanted. 
 
 Q. We think the Board of Charities should at least be 
 able to give us some recommendations on which we would 
 base our report? 
 
 A. We would be very glad, indeed, to do it. That is all 
 I have to submit. 
 
260 
 
 DR. CHARLES C. HARRISON, University of Pennsyl- 
 vania, called. 
 
 Mr. McNichol: What do we understand the Doctor is 
 going to speak about? 
 
 Mr. Brown: The thought is this, these gentlemen have 
 been invited here today to consider the subject from the 
 standpoint which I indicated in my brief opening, and I 
 propose, with the approval of the Committee, to ask ques- 
 tions similar to those asked of Mr. Wharton, to get their 
 views and their judgment. These men asked here to-day 
 are representative citizens of this Commonwealth, and I 
 think we are entitled to have the benefit of their best 
 judgment and their experience. 
 
 Dr. Harrison : Have you any questions you desire to ask 
 me? 
 
 Mr. Brown : Do you desire to say anything preliminary ? 
 
 Dr. Harrison: No, sir, I would be very glad to answer 
 any questions, to save the time of the Committee. 
 
 By Mr. Brown: 
 
 Q. Do you think the State of Pennsylvania should ap- 
 propriate money for institutions not under her control? 
 That is a very comprehensive question, now. 
 
 A. I think it ought to do so, under very wise discretion 
 and knowledge of each case. 
 
 Q. Take, for instance, the one that is nearest to your 
 heart, take the University of Pennsylvania. Do you think 
 the State of Pennsylvania should appropriate money t< 
 various institutions, and if so, why? 
 
 A. Of course, there is a moral reason and a legal reasoi 
 why the State of Pennsylvania should contribute to th< 
 support of the University of Pennsylvania. The very firs 
 Constitution of the State provided that one or more institi 
 tions of learning should be supported and maintained 
 
261 
 
 the State of Pennsylvania. That was as early as '76, and 
 the State of Pennsylvania. That was as early as '76, and 
 State in the Union which has such a provision in its Consti- 
 tion. Further than that, while the organic relation be- 
 tween the University and the State has not been so close 
 that it is a State controlled institution, by the courtesy of 
 the University the Governor of the Commonwealth has 
 from the beginning been an ex-officio trustee of the 
 University and we have been obliged to make our returns 
 to every session of the Legislature of our needs, so that 
 they might be supplied by the Legislature. 
 
 t Q. Is it your thought, speaking from a constitutional 
 standpoint, that that assistance which was originally given 
 when our institutions were in their almost primeval con- 
 ditions, certainly elementary conditions, should be con- 
 tinued now when the people are so prosperous ? 
 
 A. I think that is a question which lawyers will have 
 to answer. "We are advised by the highest counsel of the 
 State of Pennsylvania, as I recall, that the State of Penn- 
 sylvania is under legal obligations to the University of 
 Pennsylvania. I could not as a layman answer that ques- 
 tion. You can answer that question. 
 
 By Mr. McNichol : 
 
 Q. Under legal obligations or moral obligations? 
 
 A. I think, Mr. McNichol, under legal obligations to the 
 University of Pennsylvania. I believe the highest legal 
 authority in the Commonwealth would say that the State 
 of Pennsylvania is legally bound to maintain the Uni- 
 versity. 
 
 Q. Would it be possible to have that opinion filed with 
 the Committee ? 
 A. I think it would. 
 Q. We would like to have it. 
 
 By Mr. Brown : 
 
 Q. Take the next reason, as to the utility of the in- 
 
262 
 
 stitution and its part in promoting the welfare of our 
 people as a reason for it, what is your thought on that? 
 
 A. Well, the answer which I would make to that ques- 
 tion would be this : There are now at the University of 
 Pennsylvania 5,033 students ; of that number about 3,500 
 come from the State of Pennsylvania. 
 
 Q. Including Philadelphia? 
 
 A. From the State of Pennsylvania. Of the total num- 
 ber at the University, which is now 5,033 students, under 
 500 instructors 3,500 or precisely 3,495, 1 say in speaking 
 round numbers 3,500 come from the State of Pennsylva- 
 nia.. I cannot say that this year every county in the State 
 of Pennsylvania, every one of the 67 counties is represented 
 in the University, but last year all but one county in 
 Pennsylvania was represented at the University. I infer 
 that this year every county has been represented, because 
 there is a very large increase in ratios. 
 
 By Mr. Moyer. 
 
 Q. Are there any free scholarships granted by the 
 University ? 
 
 A. Dr. Smith, who is here, has a list of the scholar- 
 ships; he has that in detail and will leave that with the 
 Committee; he has full information upon that point. I 
 would like to say this briefly, taking as little time as 
 possible, that I think it is well understood, of course, 
 without my trying to explain it, that almost every interest, 
 every human interest in which this Commonwealth is con- 
 cerned, has its origin in the work which is done at the 
 University of Pennsylvania, and that the 5,000 young men 
 who are working there do represent all the interests in 
 life which the Commonwealth enjoys. That is, you may 
 take the scientific work they are doing, or the chemistry, 
 or the engineering, or the work they are doing in their 
 preparation to become teachers, and there are great num- 
 bers of those, or the work they are doing in preparation 
 for admission as members of the bar or medicine. That 
 
263 
 
 is, you can hardly conceive of any one of the activities of 
 the Commonwealth whose origin has not been at the 
 University of Pennsylvania. 
 
 Q. Assuming that there is not sufficient revenue to 
 properly provide according to the requests of these several 
 institutions, and there is admitted that there should be 
 additional State institutions or the finishing of present 
 State institutions, which do you think should be pre- 
 ferred; have you given that subject any thought, any 
 serious thought, I mean, for the purpose of public expres- 
 sion ? If you have not, I cannot expect you to answer it. 
 
 A. I have not given the subject thought. Of course, 
 naturally ,the State would, in my judgment, be called 
 upon to complete the institutions which it has under its 
 own control and which it had undertaken to erect and 
 maintain. There is another question involved in that, of 
 course. 
 
 Q. Those of the insane, indigent, the weak minded, and 
 similar institutions? 
 
 A. It seems to me in any case where the dependent 
 classes of the Commonwealth are involved, that they 
 should have a prior claim upon the Commonwealth. 
 
 Q. Have the State appropriations, from your experi- 
 ence, tended to diminish private contributions? 
 
 A. Well, I would rather speak conservatively of the 
 University of Pennsylvania. 
 
 Q. I will not say private contributions, but I would 
 say the contributions which you have been able to get? 
 
 A. I have a statement during the past thirteen years 
 of the relation of the State aid and private gifts to the 
 University of Pennsylvania. 
 
 Q. How does that compare generally ? 
 
 A. During the last thirteen years, that is, from 1894 
 and 1895 to 1907 and 19081 have not taken the last legis- 
 lative grant which has been just coming in the State 
 of Pennsylvania contributed towards the educational work 
 
264 
 
 of the University of Pennsylvania, I mean outside of 
 its hospital work, and when I say educational work I in- 
 clude also the veterinary department, which is almost a 
 State institution and should be so considered, the total 
 of $693,000 in round numbers. The total of gifts and 
 bequests at the same time for educational purposes was 
 about $6,500,000, so that the relation of the State aid 
 educationally to the University of Pennsylvania and the 
 relation of private gift has been about ten per cent., but 
 this entirely excludes any computation of the income from 
 investments or the income from tuition fees. 
 
 Q. Those are direct contributions? 
 
 A. Those are, absolutely, made current by the University. 
 
 Q. You have mentioned about the money which has come 
 in. We have received a number of letters complaining 
 about the time of the year when the State appropriations 
 are available? 
 
 A. "We have no complaint to make about that at all. I 
 have the hospital figures also. 
 
 Q. To what uses are the State moneys put by your in- 
 stitution, have you any special account? 
 
 A. They are applied precisely for the purposes for 
 which application was made. That is, during the last 
 session of the Legislature a grant w r as made of $130,000, 
 for two years, for the current expenses of the University, 
 including equipment. We have not drawn upon that fund 
 yet; it will be drawn upon and applied for the purposes 
 for which it was made. Another grant was made for the 
 veterinary department, which will be applied to that de- 
 partment. 
 
 Q. What do you include in current expenses? 
 
 A. Anything excepting the building account. 
 
 Q. The maintenance? 
 
 A. The maintenance of the University, what we call 
 the general maintenance of the University. 
 
 Q. Is there any limitation upon the access that charity 
 patients have to your institution? 
 
265 
 
 A. There is none, Prof. Smith, who is in charge of 
 that, is prepared to answer you any question on that point, 
 and he can answer any question in relation to internal 
 management better than I can. 
 
 Q. Have you given any thought to the question of 
 whether or not it would be better for the State of Penn- 
 sylvania to purchase the supplies which these institu- 
 tions use and then distribute them on requisition; take, 
 for instance, flour, sugar, salt and staple articles? 
 
 A. Those are bought under the direction of the hos- 
 pital, and Mr. McFadden can answer that question better 
 than I can. 
 
 By Mr. McNichol : 
 
 Q. What is your appropriation for 1909 and 1910? 
 
 A. The last session of the Legislature made an appro- 
 priation of $480,000, and that was divided in three de- 
 partments; $150,000 given for educational purposes, of 
 which $20,000 was for the library of the University, and 
 $130,000 for maintenance, that was $150,000, and $130,000 
 was given to the veterinary department, making $280,000, 
 and $200,000 to the University Hospital, making $480,000. 
 
 Q. What was your appropriation for 150 years up to 
 within ten years ago? 
 
 A. Well, until about 15 years ago we received very little. 
 
 Q. About $30,000, was it not? 
 
 A. No, more than that. In 1838 the Legislature of 
 Pennsylvania made a grant for five years of a thousand 
 dollars a year to the University, but it only paid $500 of 
 its last payment, so that as a matter of fact we received 
 $4,500 of the $5,000 which was granted. I would like, 
 Mr. Chairman, to put you in mind of this fact, that 
 these gifts which I have stated here, which, added to 
 the hospital gifts, make nearly $8,000,000 in the last 
 fifteen years, are really gifts to the Commonwealth of 
 Pennsylvania, and just in so far are additions to the Treas- 
 ury of Pennsylvania, because none in the audience or 
 14 
 
266 
 
 community will say that if the University of Pennsyl- 
 vania did not exist the State of Pennsylvania would 
 not itself maintain the University, just as all the States 
 to the west of us do. That would certainly cost 
 the State during every legislative period $2,500,000, so, 
 looking at this question of the contributions to the Uni- 
 versity of Pennsylvania, which has this relation organic 
 to the State, I think it ought to be upon the minds of 
 every one in this audience and the Committee that they 
 are gifts to the Treasury of the Commonwealth. 
 
 By Mr. Sproul: 
 
 Q. Have you any information with you which will show 
 how the donations which are given by the State to the 
 University of Pennsylvania compare with the appropria- 
 tions made by other States to their principal educational 
 institution ? 
 
 A. Mr. Sproul, compared with the State to the west of 
 us particularly and that is one of the great dangers 
 which the University of Pennsylvania is encountering at 
 this time, that is, while the University is entirely out of 
 debt, and we do not owe a dollar, we need millions of 
 dollars to do things which we are not able to do because 
 we have not the money and the State has not given us 
 the money. More money has been raised by private gift 
 to the University of Pennsylvania in the last fifteen years 
 than has been raised for any single public purpose within 
 the State of Pennsylvania since the landing of William 
 Penn. That is the record which the University wishes 
 to present to you to-day. But the States to the west of 
 us, beginning with Ohio, are giving a million of dollars 
 where the State of Pennsylvania gives this University 
 $100,000. The appropriations of the State of Illinois are 
 two and one-half millions of dollars for educational pur- 
 poses, where we get $150,000. 
 
 Q. The University of Illinois? 
 A. Yes, sir. 
 
267 
 
 Q. They have a number of colleges in Illinois ? 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. Assuming all these millions are needed, and the 
 State of Pennsylvania cannot under her present taxing 
 system collect them, have you folks given any thought 
 to any method by which the State can raise these addi- 
 tional sums? Do you think there should be a more strin- 
 gent application of the law of taxation of personal prop- 
 erty? 
 
 A. I think that is a very fair question. I think it is a 
 question which the economists ought to meet. 
 
 Q. The question is now, if these moneys are all needed, 
 how are we to get them; are we to enforce more strin- 
 gently our laws for the collection of personal property 
 tax, tax manufacturing companies, are we to go out and 
 tax as they are doing in England, everything that is in 
 sight and more? We would like to get the thought of 
 your department, of your University, on that subject. 
 
 A. If you would like our views, we will submit them 
 to you. 
 
 Q. I speak upon the subject of the tax on personal 
 property as one directly interested on the subject. Is 
 there anything else you desire to say? 
 
 A. Not unless you have a question to ask me. 
 
 By Mr. Mover: 
 
 Q. You made a statement a moment ago that the State 
 of Pennsylvania contributed $100,000 towards the Uni- 
 versity of Pennsylvania, and that as compared to other 
 Commonwealths west of us, it is quite a small amount? 
 
 A. Yes. 
 
 Q. Do those same Commonwealths contribute anything 
 towards private charity? 
 
 A. I am not able to answer that question. I do not 
 believe that there are as many charitable gifts by the 
 
268 
 
 Legislature as there are in the State of Pennsylvania, 
 but I am pretty well occupied and I have not had very 
 much time to go outside of my work. 
 
 Q. Does the State of Ohio have a University main- 
 tained entirely by the State? 
 
 A. I think, practically. I heard that question asked 
 at a meeting in New York a few months ago, and the 
 President of the University stated that it was supported 
 by the State entirely. 
 
 Q. It is not as large as yours ? 
 
 A. Not as large as ours, but growing very rapidly; but 
 the total of private gifts to the University since its in- 
 ception had not exceeded $100,000. 
 
 Q. Practically a State institution, pure and simple? 
 
 A. Absolutely, yes, sir. 
 
 By Mr. McNichol : 
 
 Q. Would it be well, from a financial standpoint of 
 view, to consolidate the educational features of the Com- 
 monwealth by centralizing our appropriations in one State 
 institution, rather than handing it out to State colleges 
 and places of that kind; in other words, you could handle 
 all of the business that would be necessary if the Legis- 
 lature deemed it wise to make an appropriation covering 
 all that you need or anybody claimed you performed, 
 which the State college is practically undertaking to di- 
 vide from its infancy, practically a young institution? 
 
 A. Of course; the State College is the agricultural and 
 grain college of the State, but I would rather speak for 
 the University. 
 
 Q. We are now getting down to what would be the 
 best method of carrying these things out at the least pos- 
 sible cost? 
 
 A. There are undoubtedly too many institutions in the 
 State of Pennsylvania ; very many too many. 
 
 By Mr. Brown : 
 
 Q. Coming down to our own home, what is your though 
 
 
 
269 
 
 about consolidating any institutions here in Philadelphia? 
 Could they be consolidated and not use their usefulness ? 
 
 A. I think there could be consolidation to a certain 
 extent, which would be most economical and very fruitful 
 in results in every way. I do not think you want to 
 lose sight of the fact that there ought to be a certain 
 amount of competition. 
 
 Q. Do you or do you not think that the medical men, 
 for instance, and those who are especially interested in 
 these institutions, should get together and see if they 
 cannot devise some way or make some suggestions as to 
 a more economical use of the State money appropriated 
 to those institutions? 
 
 A. I believe there could be a saving of money, and an 
 increase in efficiency, in standard, too, but at the same 
 time I think there ought to be more than one institution, 
 because, if there is only one institution, that institution 
 may not keeep up to the highest state of efficiency all 
 the time. 
 
 By Mr. McNichol: 
 
 Q. It would be a harder problem to consolidate all the 
 medical institutions under one head, don't you think? 
 
 A. I heard of that question, the suggestion that it would 
 be beneficial to make a consolidation, in the minds of 
 certain men, and steps might be taken towards that end. 
 I think the question might arise as to how the Legislature 
 would regard a question of that kind. 
 
 By Mr. Sproul : 
 
 Q. It would be hard to reconcile the doctors, too, would 
 it not ? 
 
 A. Of course, many institutions exist not for the sake 
 of the community, but for the sake of the physicians. 
 That is perfectly true, as we all know. 
 
 By Mr. Brown: 
 
 Q. Is there any way of obviating that question or ameli- 
 
270 
 
 orating it ; have yon given any thought as to how it could 
 be lessened? 
 
 Mr. McNichol: I do not think that is a fair question. 
 
 Dr. Harrison: I want to speak for the University, and 
 I do not wish to speak concerning any institution. 
 
 Q. Is there anything more you wish to say, Doctor? 
 
 A. Not unless I am asked a question. We have nothing 
 else to offer unless we are asked. If I have satisfactorily 
 answered the questions which the Committee has asked 
 me, the University will rest its case now. 
 
271 
 
 DOCTOR SMITH, University of Pennsylvania, called. 
 
 By Mr. Brown : 
 
 Q. For what purposes are the moneys of the State used 
 by the University of Pennsylvania? 
 A. The largest sums have been given to its hospital. 
 
 Q. And how is it used, for what purpose? 
 A. I think I shall have to refer that question to Mr. 
 McFadden. 
 
 Q. Have you any special thought of your own which 
 you wish to express here on this subject ? 
 
 A. You asked Provost Harrison a question in regard to 
 what the University was doing in the way of free scholar- 
 ships, and as I happened to know something about that 
 gift of the University to the State, I handed to him this 
 morning, and he has asked me to present it to you. It is 
 briefly this: That this year there are in the University of 
 Pennsylvania 307 students whose tuition is remitted There 
 are to-day 91 students holding senatorial scholarships. 
 There are 13 holding gubernatorial scholarships, making a 
 total of 104 students under those lists. The University has 
 given, in addition, 49 scholarships to the high schools of 
 this State, to the High Schools at Harrisburg, Altoona, 
 Johnstown, and three schools in Pittsburg, Scranton, Erie, 
 pilkes-Barre, and so on. Then there are a number of 
 scholarships, or a number of students, who have free tu- 
 ition because of a needy students' aid fund, which is 
 provided for by the University. I think when you come 
 to consider the appropriations of the State to the Uni- 
 versity, you should not lose sight of what the University 
 is giving to the boys of this State in the way of free 
 tuition. Multiply 307 by 150 and you know exactly 
 what we are giving this year in the way of free tuition. 
 Of course, $150 is the lowest tuition fee, $200 being the 
 
272 
 
 fee in the schools of engineering, in the medical schc 
 and other departments; law is $150, I think. 
 
 Q. Has the University kept any record of what becom< 
 of all these boys after they leave ; do they stay in Pem 
 sylvania and does the State of Pennsylvania receive 
 benefit of their education, or do they go elsewhere and go 
 the whole country. 
 
 A. The whole country benefits by it. 
 
 Q. Can you give us an idea of what percentage 
 them will stay in Pennsylvania? 
 
 A. I cannot off-hand, but I could furnish you this ii 
 formation. 
 
 By Mr. Sproul: 
 
 Q. There are Pennsylvania boys who receive the edi 
 cation ? 
 
 A. Yes. 
 
 By Mr. McNichol: 
 
 Q. Before you leave, the Legislature and this Com- 
 mittee wants to know your views as to the economical 
 question in regard to the appropriation being distributed 
 throughout the State to several institutions and the present 
 subject concentration of its appropriations to one main 
 institution; have you any views on that subject as to the 
 benefit that would be derived by the whole State? 
 
 A. I do not think I am prepared to speak on that. I 
 would rather speak for the University. 
 
 Q. Is it simply because you do not want to interfere 
 with the other institutions ? 
 
 A. No; I am not sufficiently well acquainted with what 
 they are doing. 
 
 Q. We will come back to this proposition. The Uni- 
 versity of Pennsylvania does not have different branches 
 of her institution separated into different parts of the 
 City of Philadelphia or throughout the State of Pennsyl- 
 vania ? 
 
 A. No. 
 
273 
 
 Q. Will you tell us why? 
 
 A. Well, we think that the dental department, for ex- 
 ample, prospers better when it is under the wing of an 
 educational department such as the college; that inde- 
 pendent institutions in veterinary medicine and in medi- 
 cine have all found it to their advantage to come in con- 
 tact with the collegiate department. They are all seeking 
 that help, and the independent institution is slowly dis- 
 appearing. 
 
 Q. And all those branches of the University feel it 
 beneficial to come under the wing of the main body? 
 
 A. Yes, sir. 
 
 Q. And that applied to the State -of Pennsylvania 
 would be beneficial? 
 
 A. I would say so, yes, sir. 
 
274 
 
 MR. McFADDEN, University of Pennsylvania, called. 
 
 By Mr. Brown: 
 
 Q. Can you tell us how the appropriation of the State 
 to the University is expended? 
 
 A. If it is given for maintenance it is expended for 
 maintenance, and if it is given for building it is expended 
 for building. 
 
 Q. What does maintenance include? 
 
 A. It includes everything excepting buildings and re- 
 pairs. 
 
 Q. The purchase of supplies? 
 
 A. The purchase of supplies. 
 
 Q. In your opinion, would it be more economical for the 
 supplies to be furnished by the State and distributed 
 among the several institutions on requisition? 
 
 A. I do not think so. 
 
 Q. You think you can buy as closely in the quantities 
 in which you buy as a State officer could in larger quan- 
 tities ? 
 
 A. I do not know that we buy any cheaper, but we can 
 use the goods more beneficially. Under our system we 
 have a contract every three months, make a new contract 
 every three months, except those things like green goods 
 in the market, and we take each day the supply to the 
 hospital. Our refrigerator only holds enough for one 
 day's use and there is no extravagance, and the thing is 
 empty at night. 
 
 Q. Do you hold the same opinion the Provost has ex- 
 pressed, that the University is needing not only what she 
 has received, but should receive millions more? 
 
 A. Yes, sir, certainly. 
 
 Q. That is your thought ? 
 
 A. Certainly. 
 
275 
 
 Q. Assuming that this State cannot pay these millions 
 or appropriate these millions on present revenues, is it 
 your thought that other measures should be adopted for 
 the collection of more revenue? 
 
 A. I have not given that sufficient thought. I think 
 the State is entitled to take care of its hospitals and take 
 care of the citizens of the State. 
 
 Q. You consider that a pressing claim and a moral 
 obligation on the State to do it ? 
 
 A. I think the State has taught the citizens of Pennsyl- 
 vania to expect that assistance. 
 
 Q. You consider it a high moral obligation on the part 
 of the Commonwealth to do that for the people? 
 
 A. Absolutely. As long as they taught the child, the 
 child must be maintained. 
 
 Q. Have you given any thought as to a more stringent 
 enforcement of the collection of personal taxes? 
 
 A. No, I have not. 
 
 Q. Or the taxing of other subjects for the purpose of 
 raising revenue? 
 
 A. No, I have not. 
 
276 
 
 MR. WILLIAM POTTER, Jefferson Hospital, called. 
 
 Mr. Potter : I would like to say, Mr. Chairman and Gen- 
 tlemen of the Committee, Mr. Counsel and Ladies and Gen- 
 tlemen, just a few words in a general way about all hospital 
 work in the Commonwealth of Pennsylvania. I have had 
 some experience in other States, notably in Missouri, where 
 I have a married daughter living, and I know that the 
 system of Pennsylvania of taking care of her sick and poor 
 is being seriously thought of being followed in other States, 
 and I think in a general way that there is an evolution 
 going on all over the world, or what might be called a trend 
 towards socialism. All we have got to do is to look at the 
 old age pension law in England and the budget discussions 
 there to-day to know that this is the time when those that 
 have money are going to be compelled to look after those 
 that have not, and I believe myself that the present con- 
 ditions existing in Philadelphia, in Pennsylvania, of sup- 
 porting the University of Pennsylvania, while there may be 
 some reforms instituted, I believe in a general way it is 
 the system that is more apt to be followed by other States, 
 and I would extremely regret seeing this State go away from 
 it. But what I am here for to-day is not to speak for the 
 general hospital work; that I have no doubt will be amply 
 and ably agitated by the different representatives here. 
 What I would like to say is upon a subject which has not 
 yet been discussed, and that is the question of medical 
 education in the Commonwealth of Pennsylvania, and if it is 
 your desire I will either answer questions on that line or 
 proceed. I believe medical education in Pennsylvania to- 
 day can only be supported in one of two ways. It is a well- 
 known fact, gentlemen of the Committee, that Pennsylvania 
 has been a medical center since Revolutionary days. Our 
 prestige to-day is being seriously threatened, and threat- 
 ened in the direction of New York, of Chicago, of Baltimore 
 and of Boston, and it is due to this fact, that the cost of 
 
277 
 
 medical education has become so tremendously expensive 
 that it has appealed to the multi-millionaires of this country 
 who have given millions of dollars to those cities for medi- 
 cal education, and Pennsylvania has got to be kept in the 
 running or our young men are going to leave Pennsylvania 
 where they have been getting their medical education, and 
 going to those cities who offer special facilities it is utterly 
 impossible for us to offer, and I want to say I am not 
 speaking for my own institution. I am speaking for every 
 medical teaching institution in the Commonwealth of 
 Pennsylvania, and I particularly include the University, 
 the Hahnemann, the Medico- Chirurgical, the Western 
 Women 's, and the institution over which I have the honor 
 to preside. This has got to be solved in one or two ways. 
 The fees from the students are not sufficient. Medical 
 education has increased tremendously in cost, because it is 
 absolutely vital in the education of students that they 
 shall have hospital experience. The greatest living author- 
 ity to-day is Dr. Osier. Dr. Osier says the student of 
 medicine should be thrown into the hospital during his 
 junior and senior years. Therefore they cannot get that 
 hospital practice unless we have the facilities, and I am 
 happy to say that as a result of the increased interest in tak- 
 ing care of the hospitals of the State I say without contra- 
 diction that the sick and the poor can get better hospital 
 treatment in the State of Pennsylvania than in any other 
 Commonwealth in the United States. Now, it is absolutely 
 necessary for this hospital practice for the medical students. 
 We will either have to go to the multi-millionaires and ask 
 them to give us their millions of dollars to keep us in proper 
 competition with our rival cities, or the State will have to 
 help us out. I have never gone before any Legislature in 
 the position of a supplicant or asking for alms, I have 
 always gone in the feeling of mutual agreement, that it 
 was just as much to the interest of the State to help us, 
 as it was for us to ask the State to help us in the matter of 
 medical education. I do not know of any way of helping 
 my fellow men better than in taking the young men of the 
 
278 
 
 country and educating them to go out and administer to 
 the sick and suffering, and at the same time in getting that 
 education by administering to the sick and suffering in the 
 hospitals of this great Commonwealth, in this great City. 
 
 By Mr. Brown : 
 
 Q. What is the average number of your students who 
 stay in the several counties of this Commonwealth? 
 
 A. The great bulk of them are from Pennsylvania, but of 
 course our students are from every State in the United 
 States also, and we have them from different parts of the 
 world. Pennsylvania is celebrated all< over the world as a 
 medical center. 
 
 Q. Your thought is that while the money is directly ap- 
 propriated to Jefferson, for instance, several counties are 
 benefited because of the location in their midst of men 
 specially skilled by reason of their instruction here ? 
 
 . A. Not only that, Mr. Brown, but also you will find all 
 over this State that in complicated cases where the family 
 physician is doubtful, they will send them down to the 
 City or they will ask the City doctor to go there in con- 
 sultation, but those cases will be sent to the hospitals here. 
 
 Q. Has there been any special improvement in the medi- 
 cal profession throughout the State, say within the last 
 fifteen or twenty years, which you could in any way at- 
 tribute to the benefits received from State appropriations? 
 
 A. There is no question about it. There is no profession 
 that has increased proportionately more than the medical 
 and surgical profession has. 
 
 Q. You think part of that might be properly attributed 
 to the appropriation from the State, the additional help 
 given ? 
 
 A. I know it. I know in this great new hospital there 
 is to be a tablet placed in the very center of it to the 
 Commonwealth of Pennsylvania, to the Legislature of Penn- 
 vsylvania, who made possible this new hospital. I know it is 
 almost directly to the State aid of these institutions that 
 they are all in the splendid condition they are in to-day. 
 
 
270 
 
 Q. What is your thought, assuming that the State of 
 Pennsylvania is to-day not able to pay these large sums 
 to these institutions, or larger sums, what is your thought 
 as to the levying of additional taxes, or enforcing the pres- 
 ent laws more stringently, the collection of personal prop- 
 erty and other taxes ; I am asking you as a business man ? 
 
 A. I did not come here prepared to answer any questions 
 of that character, but I should say one of the laws that 
 ought absolutely to be insisted upon is the collection of the 
 tax on personal property. I agree with Benjamin Har- 
 rison, who said that the meanest citizen and most un- 
 patriotic was the man who did not pay his personal 
 property tax, as he was the man that had means enough 
 set aside to invest outside of his regular business, and I 
 think those taxes ought to be collected, if they are not. 
 I only infer from what you said that possibly they are not 
 collected. 
 
 Q. Assuming that they are not, do you think the demands 
 or requirements of your and similar institutions justifies 
 the strict enforcement of those laws relating to them? 
 
 A. I do. 
 
 Q. That is your thought as a business man. How is the 
 State money spent in your institution? 
 
 A. We have never received any moneys except for main- 
 tenance, and in the earlier part of these proceedings I 
 remember the Chairman asked the question as to whether 
 $231,000 was all the money that had been received by 
 Jefferson. Not at all. That is all the money that has been 
 received for the support and maintenance of the hospital. 
 That does not include any donations for construction or for 
 buildings or anything like that. 
 
 Q. Have you given any thought as to whether or not the 
 supplies common to these several institutions could not be 
 more economically bought by one person and distributed 
 among them, like the Pennsylvania Railroad, for instance, 
 has a purchasing department which purchases supplies for 
 
280 
 
 all its stations ; would not such a scheme as that be practi- 
 cable ? 
 
 A. I do not know that I am prepared to answer that for 
 this reason, that in the special institution that I am connect- 
 ed with, a teaching hospital, doctors have such a variety of 
 desires in their purchases, and the different minutise that 
 enters into the purchases of a teaching hospital that it 
 would not be practicable to have it bought by somebody 
 who is not an expert, and while it might be a good thing for 
 general hospitals, I do not know that it would be a good 
 thing for teaching hospitals, unless some arrangement might 
 be made for purchasing. 
 
 Q. Has the appropriation of State moneys tended to 
 lessen the interest of the institutions towards obtaining 
 private subscriptions? 
 
 A. I do not think I can answer that. I know there has 
 been a great deal of money raised by personal donations, 
 I do not think that could ever be thoroughy answered un- 
 less the State aid ceased and we were up against it and had 
 to do it. It would take princely donations to do it. 
 
 Q. Do you think those interested in the institution make 
 the same effort to obtain gifts that they would otherwise 
 have made if they had not the State aid ? 
 
 A. I can say this, so far as the people interested in the 
 institution are concerned, they give just as liberally now, 
 receiving the State aid, as they would if they did not as 
 if the State did not give a dollar. 
 
 Q. How about the free beds in your institution? 
 
 A. It is almost absurd. Almost every bed in this place 
 is free. The percentage of free beds has increased tremen- 
 dously, so that the only charge we ever make there for any- 
 body that can afford to pay is forty cents, or a dollar a day, 
 but if they cannot it is free anyhow. I know we have 
 often gone to the extent of having committees getting up 
 little entertainments, all the time trying to get money. 
 Even with the liberal State aid we are getting, we cannot 
 make both ends meet. 
 
 Q. Do you not think it is probable that the authorities 
 
281 
 
 in the institutions arc lax in making collections, due to the 
 charity laws or State aid received? 
 
 A. It has not been our experience. 
 
 Q. Is it not probable that patients who might be able 
 to pay but have not paid and have been discharged, that 
 the hospital might have said, ' ' We will just charge that up 
 to charity cases ? ' ' 
 
 A. There might be something in that. I believe it is 
 better to have a hospital abused in that respect, than not 
 to be in a position to treat the poor when they come in, 
 and I do not think there is anything like the abuse that is 
 generally supposed, because there is pretty thorough super- 
 vision anyhow. 
 
 Q. Supposing the State has not sufficient revenue to con- 
 struct her State institutions and at the same time give as 
 she is giving to private institutions, which do you think 
 should have the precedence? 
 
 A. The first thing you ought to look after your insane, 
 but I think the very next pressing thing is to look after the 
 sick poor. 
 
 By Mr. Moyer : 
 
 Q. Has your hospital a heavy endowment fund? 
 
 A. Not as heavy as we would like to have it, but we have 
 got pretty close to $400,000 in our endowment fund. 
 
 Q. You have had that for some years? 
 
 A. Yes, and adding to it constantly. I do not believe 
 there is a single institution going before the Legislature for 
 State aid that would not feel better if they did not have 
 to do it, but we see it is a necessity. 
 
 By Mr. Brown : 
 
 Q. Do you think the State of Pennsylvania exercises a 
 proper supervision over your institution to see that the 
 money is properly expended ? 
 
 A. I think our friend Wharton is very zealous. 
 
 Q. I asked this for the purpose of drawing you out, not 
 that I have any opinion or belief on it. 
 
 A. We live in the glare of publicity all the time, so far 
 as that is concerned. 
 
282 
 
 CHARLES D. BARNEY, called. 
 
 By Mr. Brown : 
 
 Q. Do you desire to make any preliminary remarks be- 
 fore I ask you a few questions ? 
 
 Mr. Barney: Nothing except that I would like to say 
 Mr. Potter stole most of my ideas but I do wish to lay 
 emphasis on one idea he expressed, so far as the State of 
 Pennsylvania giving money to the indigent poor is con- 
 cerned, I do not think they ought to take the back track 
 on that, because the other States do not do it as we have 
 done, and we will be a lesson to the rest of the United 
 States and perhaps the world. Let up keep on in the good 
 work and they will come into line finally, because there 
 is no question about the wisdom and godliness of it. 
 
 Q. Assuming that we ought to keep on, of course that 
 means additional expense, because the population is con- 
 stantly increasing, what do you think about the advisability 
 or the justice of the State levying additional revenues for 
 this purpose? 
 
 A. I think they will have to do it. I think we have got 
 very wise men at Harrisburg who can easily take care of 
 that. I say so far as the taxes are concerned there will be 
 no trouble about that, the wiseacres at Harrisburg can 
 easily handle that. They are there for that purpose and 
 can easily do it. 
 
 Q. Take the personal property tax, do you think this 
 additional money should be raised by a more stringent en- 
 forcement of that law? 
 
 A. I do. I would raise the money in any way, and have 
 an income tax if necessary. 
 
 Q. Then you think the end would almost justify any 
 means ? 
 
 A. I do by all means. 
 
283 
 
 By Mr. Sproul : 
 
 Q. Do you think a tax on stock transactions would be 
 
 A. I used to be in the stock business, I do not know much 
 about it now. Yes, I would tax stocks. 
 
 Q. Is the New York tax a hardship ? 
 
 A. It is considered so by them over there, but they hate 
 to give up. I do not think it would be for us, we are more 
 liberal. 
 
 Q. It would not be so hard? 
 
 A. No, I think you could levy a tax on that. 
 
 By Mr. BroAvn : 
 
 Q. You stand on a very broad platform on the subject 
 of revenue? 
 
 A. I was brought up in this school, never mind what the 
 taxes are; spend the money; the more money you spend, 
 the more you will have to spend. 
 
 Q. Have you given any thought to the question of 
 the consolidation of these institutions at all, whether or 
 not they could be consolidated without lessening their 
 usefulness ? 
 
 A. I do not see why we ought to consolidate. 
 
 Q. You could consolidate but the others would not ? 
 
 A. The others can very easily, I am told. I believe in 
 consolidation. I think the doctors should consolidate. 
 
 Q. You believe that in union there is strength? 
 
 A. I do, indeed. 
 
 By Mr. Sproul: 
 
 Q. The doctors and preachers would oppose it? 
 A. Well, they are amenable to reason. 
 Q. The lawyers are not? 
 
 A. Well, lawyers can be handled when we get them on 
 the operating bench or table. 
 
 By Mr. McNichol : 
 
 Q. That is about the only place you can handle them ? 
 A. Well 
 
284 
 
 By Mr. Brown : 
 
 Q. What do you think about the purchase of supplies; 
 do you think that it could be done more economically by a 
 central bureau? 
 
 A. My present view is that it could not. 
 
 Q. It could not ? 
 
 A. No. I think if you have a State purchasing agency 
 you would have an awful howl, and the whole thing would 
 mean graft. 
 
 Q. You speak of graft. Would there be any more danger 
 of that from one man, than there would be with all these 
 147 institutions; do you not think there would be more 
 opportunity for grafting among 147 than there would be 
 with one ? 
 
 A. I do not say that there would be graft. There would 
 be more accusations of graft. The institutions who did not 
 know anything about it would be up in the air. As to the 
 other question about there being graft in our institutions, 
 I cannot conceive of that going on to any great extent, be- 
 cause in all our institutions we have some of the best men 
 in the community on the board and they are able to take 
 care of affairs, and they certainly know a good thing when 
 they see it, and if they have a steward or purchasing agent 
 making a lot of money, it don't take a long time to find 
 it out. 
 
 Q. My thought was perhaps the various supplies could be 
 purchased more cheaply by one man than by having 156 
 different institutions doing it ? 
 
 A. I do not think so. You have had one expression to 
 this effect that estimates are given out or bids received for 
 the supply of staple articles and all that sort of thing in 
 such quantities as they can use. If you buy a larger quan- 
 tity and it goes to waste or is destroyed, there is no econ- 
 omy in that. I think the thing is all right. There is a 
 movement on foot in New York now for the hospitals to 
 consolidate as a purchasing agency among themselves for 
 the supply, for instance, of gauzes and things like that that 
 
285 
 
 do not spoil. I just learned about it yesterday, and we have 
 been discussing that a great deal and are going to take it up 
 and find out what is in it. If they are going to make any- 
 thing by the arrangement we are going to be in it over here, 
 all the hospitals. 
 
 Q. Like the Pennsylvania Railroad? 
 
 A. You say the Pennsylvania purchasing agent. He does 
 not buy for the Reading or for any other railroad. He 
 buys for that railroad. We thought of joining together and 
 exchanging views and buying a whole lot of flour to dis- 
 tribute around among ourselves, we know what this one 
 pays for flour or another one pays for flour or sugar, but 
 there is competition in the sales among the sellers that will 
 fix all that. There would not be anything saved by buying 
 a great deal, I do not think. 
 
 Q. Assuming there is not enough money for the State 
 institutions and these private institutions, what is your 
 idea as to who should receive the precedence? 
 
 A. The State institutions, by all means. 
 
286 
 
 MR. HENRY F. WALTON, President Medico-Chi. 
 Hospital, called. 
 
 Mr. Walton: Mr. Chairman and Gentlemen: I cannot 
 too strongly endorse what Col. Potter has said with re- 
 gard to the charitable side of the teaching institutions 
 of the City. I, as President of the Medico-Chirurgical 
 Institution for the past two years, have had an oppor- 
 tunity to know the good side of the charity dispensed 
 by the State of Pennsylvania. Everyone knows the in- 
 terest that I take in the disposal of the State's money 
 to the various charitable institutions of the State. I 
 want to say that I consider the worthy sick poor are as 
 much entitled to the charity of the State as I do the in- 
 digent or poor insane. 
 
 By Mr. McNichol: 
 
 Q. Do you consider that the worthy sick poor receive 
 the consideration from the hospitals such as you are re- 
 ferring to, as well as they do from the municipal institu- 
 tions ? 
 
 A. County almshouses outside of the large cities I 
 do not consider they do, no, sir. I do not consider that 
 the county poorhouses in the State of Pennsylvania out- 
 side of the large cities extend the proper treatment, 
 surgical treatment, and the proper medical care that is 
 given and administered by such hospitals as we have in 
 Philadelphia and as can be found in other counties. 
 
 By Mr. Brown: 
 
 Q. Why is that? 
 
 A. Simply because they do not have the facilities. 
 
 Q. Suppose the State of Pennsylvania were to establish 
 a central or easily accessible hospital with local dispen- 
 saries in every county throughout the State? 
 
287 
 
 A. Now you are talking. I have thought about that 
 subject. 
 
 Q. What effect would that produce? 
 
 A. That is a very serious subject for thought and con- 
 sideration. 
 
 By Mr. McNichol: 
 
 Q. Suppose the State of Pennsylvania came to the 
 County of Philadelphia for financial support? 
 
 A. They do come, sir. I should like to think about 
 that subject a little more. I want to say this, it has al- 
 ways been my thought that where the counties through- 
 out the State have sent their patients to Philadelphia 
 institutions, like our teaching institutions especially, for 
 treatment, that the money appropriated to those counties 
 for the maintenance of their patients should be handed 
 over to these institutions here in Philadelphia. I mean 
 by that that today perhaps not every county is repre- 
 sented in a bed in the Medico-Chi, and m the Jefferson 
 and in the University Hospitals, but nearly all of them 
 all the time are represented there. The peculiar and se- 
 vere cases which are sent to us from the various counties 
 throughout the State, and which we always accept, the 
 majority of them are too poor to pay us anything, and 
 where they are maintained in our institution out of the 
 appropriation given to us by the Legislature, plus the 
 private charity, and the county that sends the patient 
 there is free from his expense, we should get the money 
 that is appropriated to the county. 
 
 By Mr. Sproul: 
 
 Q. They are maintained under a State appropriation? 
 
 A. Yes, they are entitled to the ratio we are entitled 
 to per capita, except that we r as a teaching institution 
 here, have a greater burden to bear than the other insti- 
 tutions which do not have the educational opportunities 
 attached to them. 
 
288 
 
 By Mr. Brown: 
 
 Q. Why should not the counties be required to have 
 a hospital and then receive aid from the State? 
 
 A. I will say it is a question whether it is not less ex- 
 pensive to have them sent here. For instance, I will il- 
 lustrate: A man in the Pennsylvania Steel Works, at 
 Steelton, is injured by an explosion and he is taken to 
 one of the hospitals ; say, for instance, at Harrisburg ; the 
 Harrisburg Hospital thinks the oculist at the Medico-Chi- 
 rurgical can do that man some good. The man works for 
 a dollar a day and he has a big family of children. He 
 goes to the 'phone and telephones us and we tell him 
 to send him down. He notifies our hospital that he will send 
 him down on the next train. Our ambulance is at the 
 station to meet him and we take him in and take care 
 of him and give him treatment. Still the county that 
 gets an appropriation from the State is not charged with 
 that man's maintenance, it comes off of us. Now, I only do 
 this to illustrate the terrible expense which is attached 
 to the running of our institution as compared with the 
 other smaller institutions. We are supposed to adminis- 
 ter our charity in Philadelphia. Well, we do not do any- 
 thing of the kind. We do not go out of the State, it is 
 true. I was asked this morning to take a man in from 
 New Jersey, a very serious case. I told them I did not 
 see how we could afford to do it. These are questions 
 which ought to be considered, and I am in favor of the 
 most strict observations by the State or control of the 
 State over its institutions, so far as the expenditure of 
 the State money is concerned, whether by the State 
 Board of Charity or by the establishment of a bureau at 
 Harrisburg, or whatever it may be. I agree with what 
 has been said here today, and my report on my investi- 
 gation of the insane institutions of the State will show 
 you that there are not two of them that are maintained 
 and have the same cost per capita of maintenance ; there 
 are no two of them that keep the same set of books ; there 
 
289 
 
 are no two of them that pay the same money for clothing 
 or supplies. They are all run upon a different basis, and 
 I think that the State cannot be too strict in the control 
 of the expenditure of this money. I would be very glad 
 for the State to come into our institution and if there is 
 any grafting going on over there I want to know it, and 
 I think I would know it. We maintain today at the Medi- 
 co-Chirurgical Hospital one of the lowest costs per capita 
 for the maintenance of patients of any institution in the 
 country, and I want to say to you, Mr. Brown, that ii' 
 you will travel over the United States and visit the hos- 
 pitals and insane asylums and public institutions as I 
 have done, you will be very proud to find that there is 
 not a single one of them that I have ever visited that I 
 did not find the graduates in medicine coming from one 
 of the four or five colleges in Philadelphia. In fact, in 
 some of them all their doctors are from Philadelphia in- 
 stitutions. I say to you very frankly, that I, as Presi- 
 dent of the Medico-Chirurgical Board, intend at the next 
 session of the Legislature to ask for an appropriation 
 toward the educational side of our institution. As Col. 
 Potter has told you, I know of no institution whose stu- 
 dent body, the income from which maintains it, in the 
 country today, and we cannot subject ourselves and the 
 position we occupy as connected with that institution in 
 worrying almost every day and trying to get somebody 
 to contribute some money to help us keep it in a proper 
 condition and pay our expenses. 
 
 By Mr. Brown : 
 
 Q. Have you made any investigation in other States 
 as to how they do this? 
 
 A. Yes, and I want to say the system in Pennsylvania 
 is admired by every State in the Union. I do not know 
 of a single State that does not administer charity in this 
 way, except where they give as a reason that they are too 
 poor to do it. You make better citizens; you raise the 
 15 
 
290 
 
 standard of our people by administering this charity 
 through the State to your people. The State of Penn- 
 sylvania is a rich State, and you gentlemen, members of 
 the Legislature, will have no trouble to raise increased 
 revenues if you want to do it, in my judgment. I should 
 think a good while before I would vote for a bill to tax 
 the manufacturing companies in the State of Pennsyl- 
 vania, the manufacturing concerns, and I might say 
 if you will turn back to the files of the session of 1905 
 you will find a bill there that I helped to prepare putting 
 four mills tax on coal, which will greatly increase the 
 revenues of the State. Let some of our natural resources 
 help to pay this increased revenue and give increased 
 privileges to our people. I did not come here to express 
 any certain opinion upon this subject, but by reason of 
 my official association with gentlemen who are .my col- 
 leagues, by reason of my public service at Harrisburg, 
 I must confess I have formulated some opinions on some 
 of these questions. I should be very glad to have you 
 come over and visit our institution, and any suggestions 
 you might make would be gladly received, but I should 
 hate to see the time come when Pennsylvania should sud- 
 denly withdraw her support from the maintenance of 
 these great charities. 
 
 Q. Should the State institutions in course of construc- 
 tion wait while these appropriations are made? 
 
 A. Not at all, sir, it is not necessary. State institutions 
 are well cared for. I believe a greater improvement has 
 been made in the building, in the course of treatment, 
 maintenance, and in everything connected with her State 
 institutions during the past three years, than has been 
 made in any ten previous years. I know what I talk 
 about. 
 
 Q. Do you think it is wise to have them take, for in- 
 stance, the Allentown Insane Asylum, started in 1901 
 wait while other institutions receive appropriations, the 
 reason being given that there is not enough money to go 
 
291 
 
 around, or should that institution have been completed 
 lorg since, say within the first two years? 
 
 A. 1 do not think it is a good reason. 
 
 Q. You think that should have been finished first? 
 
 A. I think, in the first place, if that institution had been 
 so constructed that when it was half finished it could have 
 been used, and then when the other quarter is put 
 on that could have been used, and so on until it was 
 completed, it would have probably been the better way to 
 have constructed it, but in view of its peculiar construc- 
 tion and these plans having been adopted years ago, I do 
 not see that the State could have done anything else except 
 what she has done in that regard. I am Chairman of the 
 Commission and Senator Sproul is the Treasurer of the 
 Commission for the construction and erection of the crim- 
 inal insane institution at Fairview, 27 miles north of 
 Scranton. I am also a member of the Board of Commis- 
 sion for the construction of the Home for Feeble Minded 
 and Apoplectic at Spring City. After the work had pro- 
 ceeded on that institution for two and one-half years I 
 prepared an act of the Legislature, a proposed act which 
 was passed, which put the State in possession of that 
 institution. The Commission is still in existence. The 
 Board of Trustees was appointed by Governor Stuart soon 
 after his inauguration, and that institution, which is over 
 half completed has been occupied and is occupied today 
 and contains 500 feeble minded and apoplectic children of 
 the State. It will not be completed for perhaps two or 
 two and a half years. That was at my suggestion/ 
 There was some little complication there, but it was easily 
 overcome. Both Boards are now in control and are work- 
 ing in harmony, and I think the institution will reflect 
 great credit and honor on the State. 
 
 By Mr. McNichol : 
 
 Q. Don't you think, Mr. Walton, that in these enlight- 
 ened days it is almost criminal that an operation of that 
 kind should take almost ten years to complete it? 
 
292 
 
 A. Yes, undoubtedly it is, but appropriations have come 
 in so slowly and the plans of the institution were such 
 that no part of the building could be used until it was 
 completed. 
 
 Q. Are there any operations which would take two 
 years to complete, which involve the expenditure of a 
 million dollars? I think it is a shame that there should 
 be such a delay in completing a structure so badly needed 
 by the State? 
 
 A. If you will pardon me, you know how things were 
 done before you and I went to Harrisburg. 
 
 Q. No, I do not. That is what I am trying to find out, 
 how they were done. 
 
 A. So far as this consolidation of these smaller hospitals 
 is concerned, I think it would be wise 
 
 Q. Before we get to consolidation, let us get to the main 
 proposition. Do you think, as an experienced legislator, 
 that a commission to point out the site and for the erection 
 of these hospitals and things of that kind is the proper 
 method to solve construction? 
 
 A. If you will read 
 
 Q. You have got the law with you, but I am asking 
 your experience of six or eight years? 
 
 A. No. I recommended on my report in the criminal 
 insane matters the creation of a department at Harrisburg 
 to supervise all bureaus and boards of charities. 
 
 Q. Appointed by the Governor? 
 
 A. If you will read my report you will find the Act I 
 drafted in that report. There were five Acts drafted 
 during the Session of 1907; four of them were passed 
 and one was not. I do not think that Act came out of 
 Committee. 
 
 Q. Do you not think that the department for construc- 
 tion of public buildings, appointed by the Governor, with 
 the same facilities and powers as the Secretary of State 
 
293 
 
 and things of that kind would be the proper and business- 
 like method to do it? 
 
 A. I think a great deal of improvement can be made 
 on the present method. 
 
 Q. If we had our institutions under course of construc- 
 tion all completed, that would practically take care of all 
 the wants and necessities from the standpoint of the 
 different counties concerning these different institutions, 
 and they would be under the administration of the State? 
 
 A. Yes, sir. I want to say in regard to these smaller 
 hospitals, I think if some arrangement could be made by 
 which they would be willing to amalgamate with the 
 larger institutions, and especially the teaching institu- 
 tions, that they could be handled and the same number of 
 beds maintained at a much cheaper cost per capita. 
 
 Q. We would be pleased if you woulu give .us some 
 suggestions as to what would be a proper restriction to be 
 placed upon ambitious doctors who desire to have 
 hospitals under their care? 
 
 A. I think you ought to have a law on the statue books ; 
 I think the Legislature should pass a law which shall 
 provide that no hospital shall be organized in the future 
 and receive State aid, except under certain conditions. 
 Now, what those conditions should be I am not prepared 
 to say, but I mean to say that you should put upon the 
 books a law which will be a notice to the medical fra- 
 ternity, or to any other element, which for financial 
 reasons might want to start an institution, that certain 
 things must be complied with before State aid can be 
 given, and I think in that way you would prevent the 
 formation and the organization of these institutions, a 
 good many of which are simply brought together for the 
 gratification of a few professional men. 
 
 By Mr. Sproul: 
 
 Q. Would you vest that authority in a board? 
 A. I would rather talk with you on the side about that. 
 
294 
 
 I do not want to express iny views publicly here today 
 unless T got your advice upon the subject. You have had 
 almost as much experience with these institutions as I 
 have, and while you feel, I presume, that something 
 should be done I do I would rather sit down and dis- 
 cuss it with you before I give you any definite idea of 
 what I think you ought to do. 
 
 By Mr. McNichol : 
 
 Q. You are occupying a different position from what 
 we do; you have been on the inside of the matter and 
 we are only on the outside ; we want to know your 
 opinion ? 
 
 A. Fortunately, or unfortunately, I have to be on both 
 sides. 
 
 By Mr. Brown : 
 
 Q. Do you not think these institutions should get 
 together wherever they can and try to formulate some 
 scheme tending to benefit the public and in the line of 
 economy ? 
 
 A. Yes. I believe the State could save a lot of money if 
 pome system is adopted.- In other words, I think if we 
 fan run a hospital bed for $2.02 per capita cost of main- 
 tenance a year, I do not see why the rest of them should 
 not do it. The smaller ones, of course, cannot do it 
 because they cannot buy in quantities as we do; we buy 
 m quantities. I cut out the market business in our insti- 
 tution and save 20 .per cent, by it. Our superintendent 
 does not go to market, he buys wholesale. 
 
 Q. You have done a little figuring on it. What have 
 you figured out that the State of Pennsylvania could 
 save by purchasing these supplies through a State officer? 
 
 A. I would not like to name the figure, but I think by 
 buying in a quantity you can buy cheaper. For instance, 
 we can take a half of beef over in our institution and hang 
 it up ; we pay eight cents a pound for it. We are careful 
 
295 
 
 of it and use every particle of that beef. We have got 
 it in cold storage and we can keep it there as well as any 
 other person who has got the same facilities, and we have 
 it carved up and served until it is all used. But here is 
 a small hospital that has to go out and buy the fillets of 
 beef and they must buy in small quantities; they have 
 to go in the market and buy, not having the cold storage 
 facilities. 
 
 Q. Have you learned in your investigation that some 
 of these hospitals, because of the time of year they receive 
 the State money, go into debt for these things? 
 
 A. Sure. 
 
 Q. And await the appropriation by the State? 
 A. Yes, sir, very often. 
 
 Q. Does that mean increased expense? 
 
 A. I do not know of any single instance in my ex- 
 perience where we ever voted a dollar to an institution 
 that incurred a debt except one. I think we helped to 
 pay one mortgaged debt of one poor institution. Outside 
 of that the State institutions come in, and, of course, we 
 had to pay their debts. 
 
 Q. I am referring now to the incurring of the obliga- 
 tions before the stated periods, before they received their 
 money from the State? 
 
 A. They certainly do. For instance, we get our money 
 every three months from the State. We must pay our 
 bills and send the receipted vouchers to Harrisburg before 
 we trot that money, and the consequence is we have not 
 got money enough. We put up security and pay it and pay 
 5 per cent, additional. We are paying all the time 
 interest on money we borrowed to tide us over until we 
 got our quarterly remittance from the State. I think the 
 State of Pennsylvania is big enough to trust these institu- 
 tions for three months. I do not believe there is very 
 much graft in all these institutions. That is my opinion 
 about it. I think there are a good many mistakes made 
 
296 
 
 in the administration in the affairs of some of the insti- 
 tutions, but I really think they could handle their money 
 better by having the money advanced for the payment of 
 their bills, without necessitating the borrowing of money. 
 
 Q. There is no law with regard to that. Is not that 
 just a rule of the Auditor-General for his convenience? 
 
 A. Yes, the Auditor-General thinks he ought to have 
 the receipted vouchers before he pays the money. 
 
 Recess until 2 o'clock P. M. 
 
297 
 
 AFTERNOON SESSION. 
 
 The Committee met at Room 496, City Hall, Philadel- 
 phia, at 2 o'clock P. M. Present as before. 
 
 DR. LAWRENCE FLICK, President, White Haven Sana- 
 torium Association, called. 
 
 Dr. Flick: Mr. Chairman and Gentlemen: I would 
 like to say, briefly, that so far as the information which 
 I have been able to gather enables me to judge, we have 
 in Pennsylvania an almost perfect system of public char- 
 ity, and adequate laws to administer that charity, but 
 we have not, perhaps, got the machinery to administer 
 it as perhaps we would like to have it administered. Our 
 Constitution undoubtedly countenances the idea of pro- 
 viding charity for the indigent, and I believe under our 
 Constitution the hospitals are entitled to State aid, and 
 the Legislature has made laws in creating the State Board 
 of Charities by which the administration of our chari- 
 ties should be made perfect, but unfortunately the laws 
 which are on the statute books cannot be enforced be- 
 cause we have not the proper machinery for enforcing 
 them. I would be exceedingly sorry if anything were done to 
 change the system in Pennsylvania. I think it is one of 
 the things of which Pennsylvanians have reason to be 
 proud that they have such a system. I do think we should 
 find, however, a way of getting the proper control and in- 
 spection over the administration of our charities, and if 
 you gentlemen can devise a more perfect system of con- 
 trol, I do not believe there is anything else to be done to 
 make our system as perfect as it can be made. 
 
 By Mr. Brown : 
 
 Q. You have been in charge of an institution for the 
 care of the afflicted. From your experience in the conduct 
 of that institution, what remedy have you to recommend ? 
 16 
 
298 
 
 A. Well, the remedy I have to suggest is that we have 
 a State Board of Charities, or State Department of Chari- 
 ties, which will give the control and supervision which 
 the law contemplates. There are some little details in 
 the administration of State aid which, I think, are a little 
 indefinite. One was referred to this morning, namely, that 
 bills have to be paid in advance and receipts presented 
 before the management of an institution can get the as- 
 sistance given by the State. That becomes exceedingly 
 embarrassing to an administration that wishes exactly to 
 do the right thing. In the first place, it necessitates bor- 
 rowing money to pay the bills, and in that way it puts the 
 institution to an unnecessary expense. In consequence, 
 it does not enable the management of an institution to 
 use its resources to the best advantage. 
 
 Q. Have not the managers of these institutions had prac- 
 tically unlimited sway in their conduct ; I mean they have 
 not been substantially interfered with, either by the State 
 Board of Charities or by any other institute, have they? 
 
 A. I do not think they have been interfered with enough 
 by the State Board of Charities. I do not think the in- 
 stitutions get enough supervision. I think there should 
 be machinery in the State Board of Charities which would 
 enable that Board to know accurately what is done in 
 every hospital in the State, and how it is done, and as 
 the law says, whether that hospital is administered for the 
 best interests of the entire State. I think if that were 
 done, we have got that supervision. I think it would be 
 much easier for the institutions who wish to conduct 
 their institutions in an economical and honest way. It 
 would give them the supervision that perhaps doctor their 
 reports and do not always show on the surface what they 
 are doing. 
 
 Q. What would be their object in doing that, to increase 
 the contributions from the State? 
 
 A. I was looking over the Auditor-General's report this 
 morning, or the report of the State Board of Charities, 
 and I noticed in one place where the report gave the cost 
 
299 
 
 of maintenance of a State institution at $8.90 a week. 
 I then turned over to another table to satisfy myself whether 
 that really was inaccurate, that report in the other part 
 of the book, and I found that that institution had 129 
 beds, with an average of 124 free days, and had resources 
 of $80,000. Now, it don't take much figuring to show that 
 those two tables do not correspond. In other words, in 
 one place it was reported that maintenance was $8.90 a 
 week, and in the other, if that report was correct, it would 
 be about $12 or $15 a week. Now, as I say, we want ac- 
 curate data and we want accurate supervision and busi- 
 ness management of our institutions, and that is what the 
 law contemplates in the State Board of Charities. 
 
 Q. Is the State Board of Charities in a position to give 
 such supervision? 
 
 A. No, sir, it is not. 
 
 Q. From your acquaintance with it? 
 A. It is not. 
 
 Q. It has abundance of law, has it not? 
 
 A. It has abundance of law, but apparently no machinery 
 and apparently no money to do it with. That is just a 
 characteristic of the whole subject. 
 
 Q. Has not the Commonwealth of Pennsylvania a right 
 to rely on these institutions, that they will deal in good 
 faith in the use of these moneys? Should there be a still 
 closer espionage, as has been suggested, to watch these 
 different institutions in the use of this money that is ap- 
 propriated in pure charity? 
 
 A. You and I know human nature well enough to know 
 that it is business. People will sometimes do things with 
 the very best intentions and have the very best purpose 
 in view which do not come out as expected. I do not be- 
 lieve there is any dishonesty in the management of our 
 hospitals. I do not believe there is any intentional mis- 
 representation. I take no stock in the statements made 
 about graft, but I do believe that through ignorance and 
 
300 
 
 through the desire of the management of institutions to 
 do a great deal and make a good showing in their par- 
 ticular institution, that business methods are forgotten 
 and money is sometimes expended in a way which it had 
 better not have been, and there is where we need the 
 State Board of Charities ' absolute control, and to put busi- 
 ness methods into the way of doing things. You have con- 
 fidence in the management of your business and your em- 
 ployees, and yet you make rules in the conduct of your 
 business which makes it an impossibility for them to do 
 wrong, not because you do not trust them, but because 
 you want methods which make wrong impossible. 
 
 Q. * ' Lead us not into temptation. ' ' 
 
 A. That is what we want. Let us have rules and busi- 
 ness in the administration of our charity, which makes 
 wrong impossible and economy absolutely necessary, and 
 I believe we have plenty of moneq we are spending 
 plenty of money to take care of every sick person in Penn- 
 sylvania. Bight here I want to direct attention to one 
 thing, that in spite of the fact we are spending from five 
 to six million dollars annually for public charity in the 
 care of sick and the various things that come from sick- 
 ness, we exclude from our hospitals, almost absolutely, 
 certain diseases, which are the greatest menace to the wel- 
 fare of the community of any disease we have to deal 
 with. I do not think that hospitals, especially which get 
 State aid, should make provision for every poor man or 
 woman who needs assistance, irrespective of the disease 
 from which he is suffering. 
 
 Q. Whether contagious or otherwise? 
 
 A. Whether contagious or otherwise. It is up to the 
 hospital at this present day of scientific advancement of 
 medicine to make such provisions in hospitals that there 
 is no danger from contagion. The acutely contagious dis- 
 ease we cannot take care of in a hospital. 
 
 Q. What do you mean by acutely contagious diseases? 
 
 A. Such as smallpox and measles, but there are other 
 
 I 
 
301 
 
 contagious diseases, such as syphilis, tuberculosis and gon- 
 orrhoea, that can be taken care of.. 
 
 Q. Can those be treated in the hospitals? 
 
 A. In a hospital that has been made properly for those 
 diseases, not in the wards. We have evidence of a prac- 
 tical character that this thing can be done. The Pas- 
 teur Institute, in Paris, has done this in the asylums of 
 Paris for many years, and done it successfully. If they 
 can do that in Paris, we can do it here in Philadelphia. 
 As I say, when the State is spending the amount of money 
 we are spending for the care of the sick poor, we should 
 spend it for those who are suffering from diseases which 
 are a menace to the public. That, to my mind, is the 
 chief reason why the State can give aid to protect the well 
 against the sick. 
 
 Q. You think it is not vitally necessary that the State 
 should especially assist institutions for the treatment of 
 tubercular trouble, for instance? 
 
 A. I think it would be better if the State was not to 
 do that. In the present state of public opinion it is nec- 
 essary, but it would undoubtedly be much more economical 
 and much better for the traveling public at large if all 
 tubercular diseases were taken care of at public hospitals. 
 According to the State Board of Charities we have from 
 three to five thousand vacant beds every day of the year. 
 If we could use those vacant beds, in which we have an 
 investment of from three to ten million dollars, and they 
 could be used without danger to anyone, for the care of 
 the poor consumptive, we could stamp out tuberculosis 
 in Pennsylvania in ten years, at an outlay of from five 
 to ten million dollars; whereas at the rate we are going 
 now it will cost us from fifty to a hundred million dol- 
 lars, and take many years. 
 
 Q. Could that be done and not in any way impair the 
 use of the hospital for the treatment of other diseases? 
 A. Not at all. 
 
302 
 
 Q. How do the medical fraternity feel on the subject, 
 is there any concensus of opinion, or is this simply your 
 personal view ? 
 
 A. I am afraid I stand in a very small minority, but 
 I believe I can satisfy any reasoning person who is wil- 
 ling to be satisfied. 
 
 Q. How long have you been engaged in the treatment 
 of tuberculosis? 
 A. Twenty years. 
 
 Q. Of course, you consider yourself an expert on the 
 subject ? 
 
 A. I am willing to consider myself an expert so far as 
 I follow my own reasoning, and so long as I can see that 
 two and two makes four I am willing to say it is four. 
 
 Q. Is there any other place outside of Paris, and in 
 Paris to what extent is this confusion or commingling of 
 patients suffering from different kinds of contagious dis- 
 eases ? 
 
 A. The Pasteur Institute is 'for the study of diseases, 
 and for the reason that they have all kinds of diseases, 
 and they lake all forms of contagious diseases, they have 
 demonstrated the fact that it can be done successfully 
 without endangering anyone. 
 
 Q. That is, all under the same roof? 
 
 A. All under the same roof. 
 
 Q. Has it ever been attempted in this country? 
 
 A. It has not; but formerly, before we were so much 
 afraid of tuberculosis, every hospital, to some extent, did 
 take consumptives, and I think very likely without any 
 danger to anyone else. They did not take them under 
 the most scientific methods, but we can nowadays take 
 tuberculosis in every hospital by simply going to the trouble 
 of having a separate department, without any danger to 
 anyone else. That is as cleverly demonstrated scientifically 
 as can be. 
 
 Q. Would that require separation? 
 
 A. It would require separation. 
 
303 
 
 Q. Nurses and all? 
 
 A. A separate department of nurses. 
 
 Q. Would it not necessitate a change in the hospitals? 
 
 A. Any of our large hospitals in Philadelphia have the 
 resources. Any hospital that has a hundred beds or at- 
 tendants would not be put to any extra expense. Small 
 hospitals would be put to a relatively small expense, which, 
 however, compared with the cost itself to the Common- 
 wealth, would be nothing. 
 
 Q. You are reported as having stated before the gen- 
 eral meeting of the medical society, in September, 1909, 
 " State appropriations should be made to all hospitals on 
 the basis of private resources, etc. " What was your thought 
 you had in mind on that ? 
 
 A. My thought is this, the best way you can judge the 
 good work which a hospital does is in the support which 
 it gets from its neighbors. If you have a hospital doing 
 certain work in a certain community, and it is getting 
 liberal support, that is evidence that it is doing good work, 
 and it is the best criterion you have as to the merits of 
 that hospital. For every dollar which the Commonwealth 
 spends in a certain defined community, for the care of 
 the sick, enough people in that locality will be interested 
 in the success of that institution to contribute liberally 
 to the support of that institution also. That, I think, is 
 the history of at least every institution of which I have 
 any knowledge. Now, in the different parts of the Com- 
 monwealth, say two counties or three counties, if the popu- 
 lation of the counties is not large enough, if the counties 
 would combine to have a hospital and give their support 
 to that hospital, and the State gives encouragement, just 
 as we do with the tariff, put a bonus upon their good 
 work, and do that all through the Commonwealth, and 
 give support to those institutions in comparison to what 
 they do themselves and the expense to which they can 
 demonstrate the usefulness of their institution, the State 
 would save a great deal, because the people themselves 
 
304 
 
 would be encouraging the charity, and the State would 
 simply give enough to help out the requirements of that 
 locality. 
 
 Q. You are also quoted as saying, " Strange to say, if 
 all the money expended," etc. Is that based upon sta- 
 tistics, your statement there ? 
 
 A. I think I could furnish statistics to support that. 
 
 Q. For Pennsylvania? 
 
 A. For Pennsylvania. I think they are supplied. You 
 take the mortality from tuberculosis and fever alone, and 
 the sickness caused by it would constitute at least one-third 
 of all the suffering of humanity in Pennsylvania, and 
 if you add the other two you will probably make it a 
 good deal more than 15 per cent. 
 
 By a Member of the Committee : 
 
 Q. What would be your idea of State aid, based upon 
 per capita? 
 
 A. I think it would be a much fairer system than we 
 have now. I do not know that it would be the best sys- 
 tem, but it is the system adopted in a good many States. 
 
 Q. You think it would be an improvement over the 
 present system? 
 
 A. Very little improvement. 
 
 Q. What is your ground for that statement? 
 
 A. It would compel all hospitals to go on a common 
 basis in their expenses. In other words, if a hospital 
 found it could get, say, $7, $9 or $10 a week for each pa- 
 tient per capita, if they went above that they would have 
 to find the means to raise the money, it would be the way 
 of telling the very thing that was discussed here this 
 morning, a common standard of expense. We have hos- 
 pitals that run along very successfully on $7 and $9 a week. 
 The Phipps Institute for five years for seven years 
 has averaged a little less than $9 a week, and includes in 
 that scientific work; not teaching work, because I do 
 think the teaching institution requires a higher standard, 
 
305 
 
 but on a business basis the Phipps Institution has been 
 able to do good work on less than $9 a week. If the State 
 would make the per capita $2, it would enable the State 
 institutions to get down as near as possible to a common 
 basis. I think that would be a great advantage. I think 
 if a per capita arrangement was made, there should be 
 a class for educational institutions by themselves; they 
 have to have a higher basis. 
 
 By Mr. Brown : 
 
 Q. You think they should be preferred? 
 
 A. I think they shoujd be preferred, and I do say, as 
 was said this morning, that the State of Pennsylvania 
 has so far maintained a very enviable reputation, and I 
 think every Pennsylvanian must be most ambitious to 
 maintain that position, and unless we do give our insti- 
 tutions State support, I do not believe it can be possible 
 to maintain the position which Pennsylvania has main- 
 tained in that regard. 
 
 Q. Your thought, as I understand, was that the State 
 Board of Charities should be the supreme arbiter of what 
 should be allowed ? 
 
 A. It has the authority, but give it machinery. 
 
 Q. What do you mean by machinery? 
 
 A. Create a State Board of Charities which will have 
 enough clerks or enough arms to reach out over this en- 
 tire Commonwealth and gather the information which is 
 necessary to base a judgment on. 
 
 By a Member of the Committee : 
 Q. Would you advocate a salaried board? 
 A. Yes, sir; I would, indeed. I think the most eco- 
 nomical thing this Commonwealth can do would be to 
 create a Department or Board of Charities which will 
 absolutely carry out the law and spend the money neces- 
 sary to do that. I think you can concede the whole question 
 to them. Make it a business proposition. Somebody re- 
 
306 
 
 f erred to the State Board of Charities this morning. The 
 State Board of Charities do a good work, but they have 
 not the employees and money to do things. You give us 
 in Pennsylvania a State Board of Charities or Depart- 
 ment of Charities, and equip it in such a way that it can 
 get the necessary information, and it will get it and you 
 have got the whole control. You have got plenty of 
 laws, and I am satisfied, as was said this morning, that 
 if the State Board of Charities were so equipped that it 
 could seek information authoritatively and give the facts 
 behind it to the Legislature, that the Legislature would 
 do what the State Board of Charities would suggest. 
 
 By Mr. McNichol : 
 
 Q. Why would you transfer it to the State Board of 
 Charities, why not put it in the Health Department of the 
 State? 
 
 A. That would be a most unfortunate mix-up. 
 
 Q. Why? 
 
 A. The Department of Health has enough to do as it 
 is. I think the Legislature has already made a very serious 
 mix-up. 
 
 Q. That is from your standpoint? 
 
 A. I believe they have from the standpoint of political 
 economy. In other words, matters of health and health 
 departments and health boards are of such recent origin 
 that none of us probably have yet got the right standard 
 or idea of what such a thing ought to be,, and if we take 
 the knowledge we can gleam from the world, so far as 
 that experiment has been made, we have to reach the con- 
 clusion that the Department of Health should be a ju- 
 dicial department, and should be as free as possible from 
 all sources of serious complications with the people with 
 whom it has to deal. I would like to tell you a little story 
 which I told at a meeting not long ago, which illustrates 
 my point. This may be all falsehood, and I am not wil- 
 ling to stand for the truth of the story, but it illustrates 
 5 
 
307 
 
 me very point I make. Up in the interior of our State, 
 iast summer, I happened to visit and was spoken to by 
 jj couple of medical men who were very much distressed 
 about the State Dispensary in their district, and felt that 
 jfchey were very seriously and unjustly dealt with. They 
 were so much agitated over it that one of the young men, 
 Who felt himself most particularly unfairly dealt with, 
 ?aid he would come down to the State -Medical Society and 
 but in his complaint and see whether the State Medical 
 pociety could not do something to give him relief, and I 
 really think he had a pretty good story, and I think he 
 ;iad pretty good ground for feeling aggrieved, but before 
 he left home he was called in by the man on whom he 
 depended for bread and butter, from whom he draws a 
 salary, who said to him, "Now, you go down to Philadel- 
 phia and keep your mouth shut. I have been pushed 
 jvery hard here for a bacteriological sewage plant here 
 j'ately, and I am the only one who has been pushed for 
 that in this community, and I have been talking about it, 
 and no one else wants it, and I don't want to have a 
 >ewage plant if nobody else does." That illustrates my 
 point. The Department of 'Health Dispenses charity, 
 ind gives free milk and ice, and runs hospitals and dis- 
 oensaries, and therefore apportions out certain good things 
 the people, and at the same time it is supposed to be 
 i judge and pass judgment at certain times upon what 
 shall be done. The two things do not fit together at all. 
 
 3y Mr. McNichol : 
 
 Q. It has all the clerks and stenographers necessary? 
 
 A. Those might as well be put in the Department of 
 Charities and the two things kept distinct and separate, 
 is they, are all the world over. Pennsylvania is the only 
 State where these are mixed up. 
 
 Q. I think with the capability of Dr. Dixon all would 
 be in safe hands? 
 A. I do not think the capabilities or honesty or good 
 
308 
 
 intentions of any man will suffice, when you put into his 
 jurisdiction two conflicting duties. 
 
 Q. One is really a supervision over expenditures, a sort 
 of clerical position? 
 
 A. It does not work out in practice and I do not believe 
 it ever will. Moreover, the Legislature has controvened 
 the laws of this Commonwealth, without any doubt, so 
 far as I am able to judge right along. 
 
 By Mr. Brown: 
 
 Q. You think there ought not to be any general ap- 
 propriation laws? 
 
 A. The Constitution says there should not, but leaving 
 out the question of the Constitution, the law on our statute 
 books certainly contemplated that public charity shall be 
 expended under the supervision and direction of the 
 State Board of Charities with the Legislature. The State 
 Board of Charities was not consulted about the appropria- 
 tion for the Department of Health for work which is sup- 
 posed to come under the work of the Department of 
 Charities, and I do not believe would have answered if 
 they had been consulted. Therefore, in the spirit of 
 the law it is against the laws of this Commonwealth that 
 that work should be put in the Department of Health. 
 
 By a Member of the Committee : 
 
 Q. As Chairman of the Appropriation Committee, I con- 
 sulted and was in consultation every day with the State 
 Board of Charities and their agent, and we consulted with 
 the Attorney-General and he said it was all right. 
 
 A. I consulted with the Attorney-General and he told 
 me that has been going for forty years and it was not 
 up to him to stop it. He did not say to me it was con- 
 stitutional. 
 
 By Mr. McNichol : 
 
 Q. It was not up to him to pass upon the constitution- 
 ality of it, was it ? 
 
 A. He did not think so. 
 
309 
 
 Q. What is the objection to the State Board of Health 
 doing this work; are they not doing good work? 
 
 A. I think they are doing good work, but the goodness 
 of a work is not always sufficient excuse for the method 
 of doing it. I think the method of doing the work in 
 the tuberculosis field is a very much more expensive 
 method than the method recommended by the State Board 
 of Charities years ago. Some people have said this is 
 a personal matter with me. It is not, absolutely not. I 
 withdrew White Haven from State appropriation because 
 I wanted to remove my own personality from the subject. 
 When I first started out in the work of fighting tuber- 
 j culosis I was in favor of a State hospital for tuberculosis, 
 and I worked very hard for that for some years. We 
 then found the State Board of Charities in its judgment, 
 and based upon its experience, was opposed to a State 
 hospital for the treatment of tuberculosis, and they said 
 to us we would get up private corporations throughout 
 the State, that the State would be glad to make appropria- 
 tions to those private corporations for the work, and that 
 is why the plan which was originally advocated by the 
 Pennsylvania Society for the Prevention of Tuberculosis 
 was changed and the State's private corporations in dif- 
 ferent parts of the State were established. Those private 
 corporations in different parts of the State were doing 
 excellent work and doing it in the most economical man- 
 ner possible. They were, moreover, educating the entire 
 State of Pennsylvania, and Pennsylvania is the best 
 educated State in the whole Union, on the subject of 
 tuberculosis. The change which was made in 1905 of 
 practically taking away from the private societies that 
 has been established throughout the State, the State sup- 
 port, and concentrating all that work in the Department 
 of Health, was, in my judgment, a serious blunder and 
 which will cost this Commonwealth many millions of dol- 
 lars. I may be mistaken, but I have studied the subject 
 of tuberculosis and its administration and that is my judg- 
 ment. 
 
310 
 
 Q. How is it done in other States? 
 
 A. In other States, some of the States have appointed 
 commissions to study the subject, and they have got up 
 such institutions as they recommend. 
 
 Q. What has been the result of the work of the com- 
 missions, have they distributed themselves throughout the 
 State as contemplated by you? 
 
 A. Yes, the best work done by any State is Massachu- 
 setts. She has proceeded along that plan and has created 
 State hospitals, and it is the only State in the Union so 
 far which has recommended at the present time a means 
 of not only caring for the early cases, but caring for the 
 advanced cases, and with the general recommendation 
 that the proper thing for the Commonwealth to do in the 
 grapple against tuberculosis is to provide beds for the ad- 
 vanced cases in order to stamp out the disease. It has 
 appropriated money for two hospitals for advanced cases, 
 and it is the only State in the Union which is approaching 
 that subject in the proper way. In Pennsylvania we 
 have no provision for the advanced cases, except that 
 made by the Phipps Institute and White Haven ; the much 
 maligned City of Philadelphia is doing the best work for 
 the prevention of tuberculosis of any city in the country, 
 because it has concentrated its efforts on the advanced 
 cases among the poor, and Philadelphia in consequence of 
 that one thing, I believe, will be the first city in the Union 
 to win out in stamping out the disease of tuberculosis. 
 
311 
 
 DR. 0. J. SNYDER, called. 
 
 The proposition under discussion is first whether the 
 State should make appropriations for the support of in- 
 stitutions and hospitals not under its control, and secondly, 
 ;if so, whether such hospitals should be connected or 
 [identified with schools or colleges of therapeutics or be 
 independent of them. This carries with it the acknow- 
 jledginent or recognition of the obligation that the State 
 jshould give support to institutions of that character, but 
 with the implication that when the State does render such 
 iassistance that it should have control of them. It would 
 be a change from the present policy of rendering support 
 under which the State has now no directing power over 
 the expenditure of moneys thus appropriated. In sub- 
 stance it reduces itself to a change not so much in 
 principle as in method of execution. While there may be 
 occasion for change of method in the directing of the 
 expenditure of moneys appropriated for such purposes, 
 yet we are of the conviction that such institutions should 
 not go wholly into the hands of municipal and State regu- 
 lation and management. 
 
 The one great incentive that fosters progress and stimu- 
 lates growth is rivalry or competition. There are several 
 schools or sects contending for supremacy in the thera- 
 peutic field, and this very condition of rivalry for public 
 endorsement and patronage is what has more than any- 
 thing else developed or has resulted in their present high 
 standing. To remove this element of rivalry would be 
 depressing the spirit that induces advancement. We, 
 therefore, urge that the State continue its appropriations 
 for institutions and hospitals that are not directly under its 
 complete domination. It may be advisable to devise a 
 new method of determining what amount should be ap- 
 propriated to the various institutions, based upon a basis 
 of merit. For instance, we might suggest in this con- 
 
312 
 
 fraction that the amount of appropriation be determined 
 by the number of inmates in the hospital or students at 
 the college, and also that the financial officer of such in- 
 stitutions be appointed by the State, and be amenable to 
 the State, and render to it correct and comprehensive 
 reports of the work that is being done, and that such 
 reports serve as the basis for further appropriations. 
 
 The further question as to whether hospitals should be 
 connected with or divorced from schools of therapeutics 
 is another serious and important proposition. It is very 
 difficult and expensive to equip schools of therapeutics 
 sufficiently and to an extent that will make it possible 
 to furnish the most advanced and best possible instruction 
 to the students. The character of the instruction of a 
 medical student is quite different from that presented to a 
 student qualifying for the practice of law, or for the 
 ministry. Instruction for those vocations does not re- 
 quire the laboratory equipment, nor the clinical experience 
 that is essential for the thorough instruction of the medical 
 student. For the technical instruction of the medical 
 student an extensive and expensive laboratory, in prac- 
 tically every department of his course of study, is, a 
 requisite, and as for clinical instruction, there must be 
 opportunity for him to do practical work in a hospital 
 under the supervision of clinical instructors. It would 
 be quite impossible for any medical school to provide all 
 of these extensive necessities without aid from other 
 sources than the mere tuition money obtained from the 
 students. If medical schools had to depend wholly upon 
 the tuition money of the students, the tuition charges 
 would have to be so high as to practically bar all but the 
 very wealthy from its doors, neither would it be wise or 
 safe to depend upon endowments or contributions from 
 private sources. 
 
 The matter of affording opportunity with the best pos- 
 sible and most competent instruction in the healing art 
 is a serious and important matter for the State. The 
 
313 
 
 health and life of its citizens depend in a large measure 
 upon the intelligence of the physicians of the State, who 
 direct the sanitary regulations and all matters relating 
 to the health and the very life of the citizens. The State 
 should, therefore, lend every possible aid towards the 
 establishment of the best possible schools of therapeutics. 
 As clinical experience and hospital instruction is so im- 
 perative to the best training it is but natural that ample 
 provision should be made for the support of a good hospital 
 in connection with every reputable and approved college 
 that provides training in the healing art. It is not neces- 
 sary to furnish statistics to show that those States that 
 do give support along these lines have the best medical 
 schools, and the best sanitary conditions, and it is 
 logical and consistent to contend that a hospital is quite 
 an indispensable part of a medical college equipment for 
 instruction. "We, therefore, contend that it is to the direct 
 interests of the State to encourage education in thera- 
 peutics, and, therefore, it should render all possible support 
 towards the establishment and maintenance of the 
 necessary requirements for such purposes. 
 
314 
 
 JOHN CADWALADER, President Pennsylvania Insti- 
 tution for the Instruction of the Blind, called. 
 
 Mr. Cadawalader : I do not know that I can volunteer 
 very much information. I am now speaking primarily 
 in the interest of an institution with which I have been 
 associated for four years, the Institution for the Instruc- 
 tion of the Blind in Pennsylvania. It is an institution 
 which has some notoriety. Its working and its position, 
 I think, is not much understood. In addition to the ques- 
 tions you gentlemen are now considering, I think it holds 
 a distinct position from institutions which are considered 
 under the light of charities. The work of the instruction 
 for the blind ought not to be classified among the charities 
 refusing State aid. In my judgment it comes distinctly 
 under that educational class. We offer practically the 
 only fully equipped school for educating blind persons, 
 and upon the principle of the right of education of every 
 citizen, we alone can furnish to that citizen what is the 
 essential to make himself sustaining in life. The work 
 was originated with a man of great philanthropic char- 
 acter, rather well-known in Philadelphia, Mr. Robert 
 Vaux, who was the father of the late Richard Vaux, who 
 took great interest in this subject, which was then being 
 started in Europe, who asked a gentleman who was going 
 abroad to make a study of the question so far as it had 
 been pursued there, and he brought back with him the 
 information and a gentleman, a German, from Berlin, came 
 out who had some education in the training of the blind. 
 The outgrowth of that was that the institution here was 
 the first that was conceived. The institution in Boston and 
 one in New York were all started within a very few 
 months. That work progressed practically without any 
 State assistance and there is no assistance in the sense of 
 State aid furnished to-day to the institutions. If any of 
 
315 
 
 you gentlemen have visited the present institution at Over- 
 brook, it is an institution I should like you very much to 
 see, because it is recognized as the most complete institu- 
 tion for the instruction of the blind in the world. We have 
 had endorsements from the best authorities in Europe and 
 also in this country. In the early stages of my connection 
 with the institution I followed the course of saving the 
 legacies, and the only State aid given to them is a fund 
 per capita for instructing the poor blind of the State. 
 The present appropriation for a great many years it 
 was $300 it was cut down and now it has reached $275 
 again. There never has been a year in which the cost 
 per capita of the pupils was under $400. The State has 
 never furnished the actual cost. 
 
 By a Member of The Committee : 
 
 Q. The State gets the advantage of the endowments, 
 just as to the other pupils? 
 
 A. The money has been carefully husbanded. Of course, 
 it stands as somewhat in the way. There is a large amount 
 of people who would perhaps seek private education there. 
 We have private pupils, but they are not inclined to send 
 their children, especially the younger ages, to an institu- 
 tion where they are so much mixed up, both races and 
 classes. I think that is where we gain enormous benefit 
 by the pupils being known. I think I ought to state for 
 the information of your committee, without taking too 
 much time, an instance which I think may appeal to you 
 as an extraordinary case. About ten years ago there was 
 a young Italian working in a quarry near Philadelphia. 
 A premature blast almost blew him to pieces, blew an arm 
 out, his eyes out, and he was wounded in a great many 
 other places, and he lingered for quite a while, nine or ten 
 months, in the hospital without an expectation of re- 
 covery. He did, however, recover, and the hospital sent 
 to our institution to know whether we could possibly do 
 anything for him. He could not speak English. We tried, 
 
316 
 
 at all events. In less than five years that young man com- 
 pleted his education there. He is one of the most thor- 
 oughly educated men, he is a good Latin scholar, and he 
 acquired a good knowledge of English. His efficiency has 
 made him extraordinarily useful. Under those conditions 
 he was of great use to blind persons. Under the census 
 of the United States the name and residence of every blind 
 person is given, and that man has visited, without any 
 escort, alone, every blind person in sixty counties of Penn- 
 sylvania. He gets out at a station and walks up a country 
 road and inquires whether "So and so" lives there. He 
 then instructs that man in what is possible. If he is not 
 hopeless of the future, or good results would follow from 
 education, he urges him to take it, and of course the in- 
 fluence of a man in his condition is simply remarkable. 
 He has brought into the institution a great many. He 
 knows the advantages they will gain. This was so re- 
 markable that the Governor of New Jersey requested that 
 we send him into that State. He has done the same work 
 there and been publicly thanked, and also in Philadelphia 
 he has done the same thing. That man was a most hopeless 
 case. He was a goat herder in the mountain districts be- 
 hind Naples, absolutely without any education or ad- 
 vantages of any sort. He is now a man of great ability. 
 That is one instance among others. 
 
 I think in these appropriations a distinction should be 
 drawn absolutely between the moneys^ appropriated for 
 educational purposes exclusively and those which are in 
 the most strict sensa charitable. Those pupils there would 
 be an attempt to send them into the public schools, some 
 of them do get a sort of preliminary training, but with 
 great difficulty. They interfere with the schools, they are 
 not able to advance to any great extent, but the great num- 
 ber of our graduates it is not a home, it is not an asylum, 
 but unfortunately people call it an asylum there is no 
 essential of an asylum about that they come there and 
 get their regular diplomas at the end of the school term, 
 
317 
 
 but that educational work should not be classified with 
 the charitable fund, it seems to me that it would be very 
 proper to charge it to the school receiving State appropria- 
 tion. The appropriation has never taken the form of 
 assistance to this institution in forty years that I have 
 been connected with it. 
 
 By a Member of The Committee : 
 
 Q. Is not an appropriation made, a per capita appro- 
 priation for the care and teaching of the blind? 
 
 Mr. Brown : Yes. 
 
 By a Member of The Committee : 
 
 Q. The various institutions doing that work? 
 
 A. There may be of some separate. I know of none 
 except the Pittsburgh Institution. There has been of 
 comparatively late years the Institution in Pittsburgh, 
 and that is the Western. It is only a specified appropria- 
 tion of so much per capita. Of course, if the students are 
 not there we do not get it, and we have to certify each 
 term the amount. 
 
 By Mr. Brown : 
 
 Q. Have you given any thought to the question of the 
 applicability of that system to the other hospitals, the per 
 capita system ; how would it work? I think it is the only 
 proper way for the purpose of estimating the proper 
 amount, and I should suppose that hospitals would be very 
 glad to have it? 
 
 Q. On the same basis? 
 A. On the same basis? 
 
 Q. Is your institution purely charitable? 
 A. No, we take pay patients. 
 
 Q. Yes, but all your money goes without any profit to 
 stockholders or anybody? 
 A. Absolutely. 
 Q. Your officers are all salaried? 
 
318 
 
 A. Yes, paid teachers. The directors have no interest 
 except as a public charity. It has been one of the most 
 successful, and the Board, I might state, have had a great 
 many things to contend with in the years of its existence. 
 For instance, it requires a great deal of medical treatment. 
 We have specialists on the throat and eye. Of course, the 
 great majority of blind persons are blind from congenital 
 causes and they have that difficulty to contend with, and 
 we have paid physicians in the institution. We have a 
 very excellent infirmary, and we have also a separate build- 
 ing for contagious diseases exclusively, and I was in- 
 terested in what Dr. Flick said in regard to that. Not- 
 withstanding we have entire isolation, both in construction 
 and treatment and everything, the State Health Depart- 
 ment last year, when there was an epidemic of scarlet 
 fever and diphtheria, they enforced us to have them 
 quarantined, and they carted them out to the Municipal 
 Hospital, and some of the attendants even got it in going 
 there. I think that was an error of judgment there, but we 
 take every precaution in that way and we have that as an 
 incident to our institution. 
 
 Q. As I recall, yours and the ward at the Philadelphia 
 Hospital and the ward at the Wills Eye Hospital are the 
 only ones for contagious diseases in Philadelphia, is that 
 correct? 
 
 A. Having separate buildings? 
 
 Q. Yes, buildings for contagious diseases? 
 
 A. We constructed that in our new buildings. We 
 felt it was important to keep pupils there if we could, and 
 so we constructed it with the greatest provision. I do not 
 think many institutions have it. 
 
 Q. Let me ask you as a man of affairs, assuming that 
 all these things requiring these vast millions are meritori- 
 ous, and the present revenues are not sufficient, what is 
 your thought about the right or the justice of the State 
 in levying dues for this purpose ? 
 
 A. My view on the subject is that the public moneys 
 
319 
 
 ought as far as possible to be applied strictly to public 
 uses. I rather regret any tendency to put at the disposal 
 of any body of men, legislative or any other, general funds 
 in which more or less the distribution is dependent upon 
 more or less interest or pressure. I think the distribution 
 should be, as clearly as possible, defined by law. I think 
 it would lead to economy and justice. 
 
 Q. Assuming that the custom or concensus of opinion is 
 that these moneys as distributed now are properly dis- 
 tributed, and they are not sufficient for the increased need, 
 do you think in your judgment that the State would be 
 justified in levying an additional tax, for instance, a strict 
 enforcement of the law relating to personal property 
 tax? 
 
 A. Assuming that the expenditure is right and meets 
 with the approval of the people, why, of course, I am like 
 any other good citizen, I approve of getting the money to 
 apply to it. 
 
 Q. Do you think the uses expressed here today are 
 such? 
 
 A. I think there is bound to be a great many of them. 
 We have the Pennsylvania Hospital for the Blind, which 
 has never sought aid of the State. It stands pre-eminent 
 at the head, and there are absolutely none superior to it 
 in the world, and it has never had a dollar of State ap- 
 propriation in a hundred years. 
 
 Q. The Episcopal Hospital has not either? 
 A. The Episcopal Hospital I do not think has ever 
 either. It is supported with relation to the church. 
 
 Q. The Presbyterian Hospital has not either, has it? 
 
 A. I thought it was showing that it was not absolutely 
 a necessity. I think I have known what has been done by 
 the State Board of Charities, and I am surprised to hear 
 such criticisms. I think the State Board has done what has 
 been wise to do. I never noticed them to fail. I think 
 they have succeeded. They send notices to you to come 
 
320 
 
 before them, and they have been a very intelligent body 
 of men, and they can receive the information upon which 
 to act much better than a great corps of specialists going 
 into the work. It does not appeal to me. I think you will 
 have to have in the State Board of Charities a man who 
 can see the things and the special way of dealing with 
 each institution. These boards are full of men who are 
 there by a variety of causes, and I do not believe if the 
 Legislature would go into the institutions in this City and 
 this State that they will find a more careful supervisor, 
 economical and everything else, anywhere. 
 
 Q. Or philanthropic ? 
 
 A. Almost exclusively philanthropic. There are pos- 
 sibly infirmities, but they are so general they do not enter 
 into the general subject. That is not the principle on 
 which our institutions have been running, and I think it, 
 is a very unfair way to look on our institutions, which 
 stand as high as any in the world. Anything that we can 
 do for the development of the blind we do. The son of 
 Mr. Campbell, late of the Royal Institution at London, 
 came out and made an address and spoke of the enormous 
 advances in which everything was administered. 
 
 By a Member of the Committee : 
 
 Q. As a business proposition what would you say as to 
 a central purchasing station for the supplies ? 
 
 A. I think that comes under the main difficulty. The 
 supplies are radically different under different conditions, 
 with different bodies. I do not think you will gain much in 
 that. I have had the experience of supplying an institu- 
 tion where we had to make purchases under the Govern- 
 ment of the United States, where everything was to be bid 
 for and contracted for. I think in four years I do not recall 
 a single instance in which the bids did not vary 100 per 
 cent. You gentlemen, of course, are familiar with that. 
 The Senator knows how impracticable it is for men to 
 look at the same thing in the same way. Take an institu- 
 
321 
 
 tion like ours ; the diet system is of very great importance. 
 We have got more or less invalids, our physicians suggest 
 many changes of diet, systems of diet, one of the greatest 
 things in maintaining the health, and that is not consistent 
 with the general purchasing of supplies. They tried it for 
 a month or two and changed it. 
 
 By Mr. McNichol : 
 
 Q. Did I understand you to say that the cost of educating 
 a pupil is $400 ? 
 
 A. Yes, sir, that is the actual cost. I mean to say that 
 is food, a proportionate amount of clothing, and (the 
 attendants. 
 
 Q. That is the full cost of educating and operating? 
 
 A. Yes. 
 
 Q. And the Stae is only paying at the rate of 
 
 A. Two hundred and seventy-five dollars, and that only 
 within the last two years. 
 
 Q. Was there any protest made to the Committee for 
 a higher amount? 
 
 A. Yes, the Board of Charities recommended $300 of 
 their own motion. 
 
 Q. Did the faculty of the institution make any protest? 
 
 A. No, we have never made any special claim, because it 
 is entirely a function for the State. If the State does not 
 feel that they are getting anything, it is not so very import- 
 ant to the institution. 
 
 Q. Are the pupils of the State getting the same atten- 
 tion as the private pupils ? 
 
 A. Every bit: There is no necessity of anyone sending 
 money. 
 
 By a Member of the Committee : 
 Q. How many pupils are there? 
 A. It is limited by the appropriation, 175. 
 Q. How many have you altogether? 
 A. Two hundred and ten, I think. It is not desirable to 
 17 
 
322 
 
 enlarge on that, and that is one of the reasons we aided 
 in the establishment of the western institution. It is not 
 desirable to have very large institutions. 
 
 Q. Then if it were not for the endowment fund of the 
 institution and careful husbanding of the bequests and 
 donations made the institution would not be able to take 
 care of these students at the price the State pays? 
 
 A. It never has been. Of course, there is a great deal 
 we could do if we had more money, because the field of 
 broadening blind pupils' activities is wonderful. 
 
 By Mr. Brown : 
 
 Q. I notice your per capita is $275 a year as against 
 $350 for the western institution at Pittsburgh. Have you 
 folks ever made a comparison? 
 
 A. No, the whole institution is out of the State. They 
 built their buildings, and I suppose they have not got other 
 private resources. I think it is run entirely on the State 
 funds. It has always been very much larger than ours. 
 
323 
 
 HON. E. L. TUSTIN, representing Hahnemann Hospital, 
 
 called. 
 
 Mr. Tustin: Mr. Chairman and Members of the Com- 
 mittee, Ladies and Gentlemen: In a large industrial State 
 like Pennsylvania, I do not think the right of the State to 
 the appropriation of moneys for charitable institutions will 
 ever be questioned. It seems to me the question is not so 
 much what we appropriate, but the care we take of it after it 
 is appropriated, and as a trustee and active manager of one 
 of the hospitals of Philadelphia, I have found out that 
 while the State Board of Charities may do a good work, 
 they have their limited powers, their powers are decidedly 
 limited, and outside of hearing you before a meeting of the 
 Legislature once in a while as to your wants, we see very 
 little of them during the intervening time. It seems to me 
 the Legislature of Pennsylvania that appropriates so much 
 money for charitable institutions ought to add to their 
 Appropriation Committee a provision for a standing com- 
 mittee to meet between the sessions of the Legislature, to 
 which all questions of complaint could be referred, and who 
 will have a supervisory oversight of the expendture of the 
 vast amount of money which they appropriate year after 
 year. I do not mean to say that they ought to take the 
 same position of the State Board of Charities. They repre- 
 sent the people of Pennsylvania in the appropriation of a 
 large amount of money and they ought not to appropriate 
 the money, in my opinion, and then simply forget all about 
 it. 
 
 By Mr. McNichol : 
 
 Q. Might that not be done by the Department of Health, 
 or under its supervision ? 
 
 A. I think it would be better to do it under the super- 
 vision of the Legislature, for the reason that we are all 
 human, and every institution would know that the Appro- 
 
324 
 
 priation Committee of the Legislature was keeping a super- 
 vision over that institution and would be more careful to 
 bring that institution up to the very highest standard, be- 
 cause they would know that the men over them who were 
 looking after the appropriation and the expenditure of the 
 money would probably be among the number who would 
 vote for the future maintenance of the hospital. The con- 
 sequence would be that the institutions who receive State 
 aid would be more apt to bring up the efficiency of their 
 institutions. I think there should be appointed a Com- 
 mittee who would meet once or .twice between the sessions 
 and have a detailed report from the agents or the State 
 Board of Charities should be re-organized, they should have 
 more power and a greater appropriation and have more 
 agents, or else the Committee from the Legislature should 
 take this out of their hands. I think the Committee from the 
 Legislature, even if the State Board of Charities were con- 
 tinued, would have a splendid effect upon the eleemosynary 
 and charitable institutions of the State. I think the mere 
 fact that after this money is given they think there is no 
 other Legislature to meet for two years now to look after 
 them, but the State Board of Charities, and the State Board 
 of Charities, as I said before, is limited in its machinery 
 and there should be an investigation and this report given 
 up to your Committee, and then future Legislatures will 
 know how much to appropriate. The Appropriation Com- 
 mittee at the present time meet and I do not think the 
 people of Pennsylvania have any idea of the work the 
 Appropriation Committee does at Harrisburg. They meet 
 by day and sometimes by night and hear this testimony, but 
 they can not get the same amount of testimony they could 
 if they had a permanent committee. I hope your Com- 
 mittee will take up that subject, as to whether it will be 
 wise to have such a committee appointed between the meet- 
 ings of the Legislature and have that supervision. 
 
 Q. You are an officer of the Hahnemann Hospital? 
 A. Yes, sir. 
 
326 
 
 Q. Is your thought the result of your experiences there 
 or with other institutions, that they ought to have this 
 supervision ? 
 
 A. Mr. Barney, Maule, Perkins and I have been active 
 there as managers between the meetings of the Board of 
 Trustees, and I have taken a considerable interest in it. 
 I have appeared once before the State Board of Charities, 
 and I have seen nothing but the auditor who comes once in 
 a while to audit our books. Our superintendent gets bids 
 for all the supplies that go in there every three months, 
 and I think the institution is managed as well as it could be 
 managed, yet I believe the supervision would be a good 
 thing. 
 
 Q. I can not understand why it is you suggest this addi- 
 tional supervision, why it should be necessary in view of the 
 fact that these are public moneys and appropriated purely 
 for charity. 
 
 A. That is just the reason, because they are public 
 moneys and appropriated for charity, it ought to be done. 
 
 Q. It seems to me if they do not consider the source it 
 comes from, they would consider how it was to be used. I 
 can not conceive 
 
 A. I think you are entirely right. 
 
 Q. You say on our Boards are prominent representative 
 business men, and I can not understand exactly the reason 
 for the suggestions that they should be so carefully 
 scrutinized. 
 
 A. It is not a question of scrutinizing the gentlemen who 
 are on the Boards of Managers of these institutions. You 
 know very well and I know very well that they take no 
 active part in the management of the affairs whatever. 
 
 Q. Should they not be men who will take an active inter- 
 est, not for the purpose of seeing their names in print, but 
 for doing the service for which they are appointed? 
 
 A. I think that is the ideal position. 
 
 Q. Is it not possible to scrutinize its management to see 
 that the moneys are properly used ? 
 
326 
 
 A. I think if they have men on the Board of Trustees 
 who will lay aside their private business and devote their 
 time to it, it will ; otherwise it would not. 
 
 Q. Would not the Legislative Committee have to be 
 provided with more authority than the State Board of 
 Charities? 
 
 A. It ought to be provided with more machinery than the 
 State Board of Charities, and I think they will do a better 
 work. 
 
 By a Member of the Committee : 
 
 Q. How many free beds are there in your institution 
 wherein the public get the benefit of all this appropriation ? 
 
 A. The public get the benefit of all the beds in our in- 
 stitution if there is a demand for it. 
 
 Q. By "demand" you mean if there is room for them? 
 
 A. I mean to say that if the public make a demand at 
 any time, and no case is ever refused that comes to the 
 hospital. 
 
 Q. Provided there is an empty bed? 
 
 A. Yes, sir. 
 
 Q. How often does it occur that those beds are not empty 
 in all institutions? 
 
 A. I do not know about all institutions. So far as our 
 institution is concerned, we are located in a neighborhood 
 where we have around us a great many working men who 
 work hard for a daily wage, who are just as good as any 
 other citizens in any other part of the country, but they 
 have not succeeded in saving up very much money. They 
 have sickness in their families and we have a great many 
 accident cases from the Reading Railroad, Baldwin's, etc. 
 
 Q. That is, they come in and go out continually ? 
 
 A. Yes, but if a man comes into our dispensary who 
 ought to be in the hospital, he is put in the hospital. 
 
 Q. How many private rooms have you in the hospital ? 
 
 A. I can not answer that question. Mr. Barney can 
 answer you. 
 
327 
 
 Mr. Barney : Free beds, 187 ; private rooms, 51. 
 
 Q. You are familiar with conditions in West Philadel- 
 phia? 
 
 A. I am. 
 
 Q. The Philadelphia Hospital. If the Commonwealth of 
 Pennsylvania perpetuated the hospital and gave it one-half 
 the support which it is giving private institutions through- 
 out the State, do you think you would be able to provide for 
 the poor of the City more efficiently than you are now ? 
 
 A. I don't think we could do as well as we do it now, 
 because the poor of the City would have to congregate in 
 one place. 
 
 Q. Isn't it practically where they are congregated, 90 
 per cent, of them? 
 
 A. You mean at the West Philadelphia Hospital ? 
 
 Q. In comparison with the population of your hospital, 
 as compared with the West Philadelphia Hospital? 
 
 A. No, because the objection is this, whether wisely or 
 unwisely, the idea of going to the West Philadelphia Hos- 
 pital or Almshouse is very repugnant to a great many 
 people, whereas going to a private hospital is not so repug- 
 nant and they are perfectly willing to go there. I do not 
 believe it would be wise to take our hospitals from the 
 different locations throughout the City, a large City like 
 this, and combine them in one place. 
 
 Q. I am not in favor of taking them from the several 
 locations; I believe in our paying a Ittle more attention 
 to our own institutions than what we have been paying in 
 the past. 
 
 A. I do not think anybody would object to that. 
 
 Q. That is where it would not hurt the private institu- 
 tions which are interested? 
 
 A. I think we all agree on that. 
 
328 
 
 DR. WILLIAM B. HACKENBURG, President Jewish 
 Hospital, called. 
 
 Dr. Hackenburg : I appear solely as a representative of a 
 hospital. My connection with the Jewish Hospital for 45 
 years, and 34 years as President of it, and I simply want to 
 address you upon the relative matter of appropriations for 
 hospitals, in its general sense. Hospitals and other public 
 institutions for the care of the sick and wounded, for the 
 homeless, for the aged and infirm, poor and orphan asylums 
 must be regarded as necessary and important objects for 
 the proper government of all communities, more especially 
 those of large cities and towns. I contend that it is a part 
 of the obligation due to the people that proper provision 
 for the care of these dependent classes must be made, either 
 by wholly supporting them from State or municipality 
 funds or by assisting such private institutions that are 
 organized for that purpose; if these private, or we may 
 call them semi-public institutions, did not exist it is very 
 certain that the different State governments as well as every 
 large city would be enormously taxed for the support and 
 care of these dependent people, therefore appropriations 
 from public funds to assist in their support are just and 
 right and thereby lessen the greater tax that would be 
 necessarily levied for such purposes. 
 
 It has been said that there is danger of these appro- 
 priations beng abused. Whle they may sometimes be dis- 
 proportionate, I will venture the assertion that rarely, if 
 ever, are they diverted from their proper use. 
 
 From a pamphlet recently published entitled "The Ap- 
 propriation of Public Funds for the Support of Voluntary 
 Hospitals/' by S. S. Goldwater, of New York, I find that 
 in 35 States and in the District of Columbia of this 
 country and in the provinces of Alberta, Manitoba, New 
 Brunswick, Quebec, Nova Scotia and Ontario, either State 
 
329 
 
 or municipal appropriations are made to private hospitals 
 for the partial maintenance of free beds and the care of 
 the indigent sick; they are allotted either in yearly gross 
 sums or by per diem payments or by yearly contracts for 
 each free patient and by irregular donations. 
 
 In this State our Legislature has thoughtfully and liber- 
 ally given yearly appropriations, and I can safely assert 
 that had it not been for this aid some of our City hospitals 
 as well as in other cities of this Commonwealth would either 
 have been compelled to close their doors entirely or largely 
 curtail the admission of free patients. I am also safe in 
 asserting that every large hospital in this City has for a 
 long time yearly shown a deficiency of income (some of 
 them with State aid) to meet their current expenses. It is a 
 well-known fact that in an up-to-date, well-managed hospital 
 proper requirements for its work never cease, but I feel 
 satisfied that they are as economically managed as these con- 
 stant necessities for the proper care and treatment of the 
 sick and wounded will permit. It must also not be over- 
 looked that these State appropriations to hospitals are of 
 much value to the public in aiding a large number of young 
 men and women in securing a scentific education for the 
 prevention and cure of disease. Many of our hospitals 
 maintain Nurses' Training Schools in which young women 
 are fitted to become professional nurses and are enabled 
 after a three or more years education to enter the corps of 
 assistants to the physician and surgeon in their work of 
 relief and cure of disease and injury, earning for them- 
 selves a good and remunerative return for their services. 
 
 Equally as great advantages are given to the medical 
 student by assisting him in his collegiate studies with the 
 opportunity of a practical medical and surgical knowledge 
 of diseases and study of their prevention and cure, by at- 
 tending at different hospital operating rooms the ward 
 study of medical cases and their open clinics. 
 
 Surely under all these conditions for the relief and care 
 of the indigent sick, the educational advantages to the two 
 
330 
 
 classes of men and women for a professional training it 
 cannot be charged that the funds of the Commonwealth are 
 misapplied, uselessly or recklessly spent in appropriating 
 money for the furtherance of this public work in the partial 
 support of hospitals and other cognate institutions. 
 
 It may be possible that the lump appropriation is not 
 always the best, some institutions at times may receive 
 more than they are justly entitled to, while others receive 
 less in proportion to the number of free patients treated 
 in the institution. 
 
 For instance, I have in mind a hospital in this City 
 receiving State aid in which about two thousand house 
 patients were treated; nearly 1,600 were free, being about 
 80 per cent, of the whole number, who received an 
 aggregate of 40,000 days support. This is only a fair 
 sample of the work of many large hospitals in Philadelphia, 
 and this institution was $15,000 short of enough income to 
 meet its ordinary expenses. 
 
 It seems to me that a more equitable plan might be 
 arranged for State help to our hospitals and other chari- 
 table institutions, that would be safe-guarded for the State 
 and fair for the recipient ; for instance, a per capita allow- 
 ance for each day 's support of indigent or worthy non-pay- 
 ing patients, or a diem amount for the total number of 
 days furnished to free patients to be paid monthly or 
 quarterly. A similar system controlled by proper rules 
 and conditions has been found to work well in New York, 
 Massachusetts, District of Columbia and other places. 
 
 An appropriation for a certain number of free beds I do 
 not think would be a good plan and would be liable to 
 serious abuse; while in some institutions those free beds 
 might be constantly filled, in others they might be fre- 
 quently without occupants. This would be unjust to the 
 crowded house and an imposition upon the State. 
 
 All institutions receiving State aid should at the end of 
 their fiscal year render a sworn itemized statement similar 
 to that rendered yearly to the State Board of Charities to 
 
331 
 
 the Auditor General of its financial affairs for the year, 
 number of free beds, how many were occupied, total num- 
 ber of days support to free patients, and such other inform- 
 ation to verify its claim for State aid already paid for the 
 year and that could be used as a basis for the following 
 prepared by a competent hospital authority in connection 
 with the Auditor General's office or the State Board of 
 Public Charities. 
 
 I can safely say that all appropriations by the State 
 for hospitals and cognate institutions I am perfectly 
 satisfied have been properly used. The institutions are all 
 economically managed. The Board of Trustees of every 
 similar institution, I believe, serves without any com- 
 pensation or expectation of fee or reward. 
 
 By a Member of the Committee : 
 
 Q. Is that generally true? 
 
 A. I think it is, with the exception of possibly the 
 Secretary. He is generally a paid officer with a small 
 salary. 
 
 Q. So far as your knowledge goes, no officer or Presi- 
 dent of any Board of Trustees of any hospital in this City 
 receives any salary? 
 
 A. So far as I know, no officer receives any compensa- 
 tion excepting the Secretary. I have yet to hear of the first 
 case of a paid officer. 
 
 If I may be pardoned for introducing a matter that 
 possibly may look like rather a private matter I do not 
 consider it a private matter a remark has been made here 
 with regard to the care of tubercular patients. I want to 
 say that the hospital over which I have the honor to pre- 
 side for many years, seven or eight or ten, has tubercular 
 patients in its general ward. Since 1890 it has had a 
 separate department, a separate building under the man- 
 agement of the Board with a separate corps of nurses and 
 staff to take care of it, and it has now 39 or 40 beds in it 
 occupied all the time, with from forty to fifty applications 
 
332 
 
 for admission. I only say this because the remark has 
 been made here to-day that there is no general hospital in 
 Philadelphia taking tubercular patients. 
 
 By Mr. Brown: 
 
 Q. Has there been any infection of patients in the other 
 wards ? 
 
 A. Not to my knowledge. 
 
 Q. Covering a period of how many years ? 
 
 A. We had in the general ward up to 1890, I suppose, 
 possibly more or less for twenty or twenty-five years. 
 
 Q. What about the question of supplies, do you think the 
 supplies could be furnished more cheaply by purchasing 
 them through a central bureau? 
 
 A. That is a very serious question. I have looked into 
 that question quite seriously. They have taken the mat- 
 ter up in the City of New York, and I will give you the 
 particulars of that in a few minutes, but it seems to me 
 that if a system of that kind was adopted it would be a 
 serious injury to the quality. I think the quality would be 
 seriously affected. In hospital supplies as a rule large 
 hospitals or fair-sized hospitals generally buy in large 
 quantities, and I am very well satisfied the system adopted 
 in other hospitals is very much as our own, and they buy 
 in such a quantity as to warrant the prices being put down 
 to the very lowest margin. We have a Supply Committee 
 which asks for bids and they buy generally in very large 
 quantities, quantities to last a year, and they get very 
 low prices, I am satisfied as to that. As to our marketing, 
 we have in connection with our hospital twenty acres of 
 ground and we raise much of our produce, a great sav- 
 ing to the institution, and I think that the other supplies 
 are bought at the very lowest market prices, and I doubt 
 very much that if a commission, which would necessarily 
 be a paid one the expert superintendent would be paid, 
 the buyers, who necessarily would be experts, would have 
 to be paid, and all the expenses of running the institution 
 
333 
 
 would have to be paid, and these supplies are different 
 from a railroad ; in the railroad the man who buys oil does 
 not buy railroad ties, and they have experts or supervisors 
 for those different departments. If you had a central 
 depot for the purchase of supplies it would be a very 
 expensive institution to run, if you had experts for all 
 the departments you had, like the purchase of instru- 
 ments, which are a very delicate instrument, they would 
 not want to go to anybody else than their own experts. 
 
 Q. They could be gotten on requisition? 
 
 A. Yes, but it would be a very difficult thing to get the 
 quantities they wanted. 
 
 Q. It would be cheaper to buy a car load than it would 
 be to buy in small quantities, would it not ? 
 
 A. Not in all cases. 
 
 Q. Not referring to surgical instruments ? 
 
 A. No. I think that during the year the car load would 
 not be any cheaper than possibly five or ten bolts of muslin 
 would be. Of course, a great deal of this whole business is 
 confidential. 
 
 By Mr. McNichol : 
 
 Q. Is there a teaching class connected with your institu- 
 tion? 
 
 A. Yes, sir, we have 52 nurses. 
 
 Q. I mean any class for the doctors? 
 
 A. The clinics, we have the surgeon who is operating 
 who explains his cases as he goes along with them. As a 
 rule we do not have large classes at all operations, as we 
 are a distance from the City, about five miles, but we 
 have at times a number of students and visitors there. 
 
 Q. People come there from different colleges? 
 
 A. Yes, sir. 
 
 Q. How about the nurses ? 
 
 A. The nurses have lectures every afternoon from the 
 chief nurse, and lectures three or four times a week from 
 the members of the staff, from the house and visiting staff. 
 
334 
 
 Q. Their tuition is free? 
 
 A. They are not paid. No member of the consulting 
 staff is paid. 
 
 Q. How long do they have to serve? 
 
 A. About a month at a time. For instance, the lecturer 
 on surgery will have two or three lectures a week for two 
 or three months. The different subjects will be taken up 
 at different times. 
 
 Q. Do you get any returns from those nurses that are 
 occupied in attending some of the patients there? 
 
 A. No, sir. We pay them a sufficient amount to pay for 
 their uniforms. 
 
 Q. Don't you have any private patients there that you 
 collect from? 
 
 A. Yes, sir. We have a private building with about 
 thirty-eight beds in it. 
 
 Q. Part of the bill of that patient is for nursing ? 
 
 A. We do not always have our own nurses, and not 
 always private nurses. We furnish about one nurse for 
 four patients, is our average. When they have outside 
 nurses they bring them in. 
 
 Q. When they furnish the nurses 
 
 A. We do not charge for them. 
 
 By Mr. Brown : 
 
 Q. Is there any money appropriated by the State used 
 for any other purpose than charity ? 
 
 A. Nothing under the sun. We had sixteen hundred 
 free patients last year out of 2,000 patients. 
 
335 
 
 HENRY W. CATTELL, Editor Medical Notes and 
 Queries, called. 
 
 Mr. Cattell : Mr. Chairman and Gentlemen of the Com- 
 mittee, Ladies and Gentlemen: The hospital was origin- 
 ally founded for the poor. It has become a refuge for the 
 rich, for this reason 
 
 Mr. McNichol : Will you enumerate as you go along those 
 hospitals which you place in that category? 
 
 Mr. Cattell: I think you could start with nearly every 
 hospital and put it in that category. I would not like, 
 without going into detail, but practically all the 
 hospitals 
 
 Mr. McNichol : All the hospitals of the type we have in 
 Philadelphia? 
 
 Mr. Cattell : Of the type of private hospital that is re- 
 ceiving State aid, those with which I am familiar, origin- 
 ally intended for the poor, have now very largely become 
 the refuge for the rich, and it is the great middle class, 
 to which I belong, that do not receive benefit from these 
 State appropriations. 
 
 Mr. Sproul: Is there any objection to the rich taking 
 this advantage of these things if they can take care of 
 the poor as well ? 
 
 Mr. Cattell: When Socialism . comes into power, then, 
 perhaps, the poor and the rich will be taken care of alike, 
 but as I understand there is not sufficient funds to do 
 things as they should be done in the State of Pennsylvania. 
 
 By Mr. Sproul : 
 
 Q. As I understand, the rich pay for what they get in 
 the institutions? 
 
 A. The rich do not pay for what they get, 
 
336 
 
 By Mr. McNichol : 
 
 Q. They are getting the benefit of these appropriations 
 we have been making to these institutions? 
 
 A. You must divide the appropriations into buildings, 
 construction, new equipment, and into maintenance. Now, 
 let us take without mentioning 
 
 Q. We want you to particularize, because we have an 
 opportunity to go after these particular places. If you 
 are going to speak in generalities, we might just as well 
 have your paper filed here and go over it ourselves. 
 
 A. I would not like to mention one hospital when there 
 are so many. 
 
 Q. Mention all the hospitals that you have. Just take 
 the curtain off and let us look into it? 
 
 A. Let us then take the appropriation for the erection of 
 the new clinical wing of the University of Pennsylvania. 
 I do not know the figures in regard to that. 
 
 Q. Mr. Brown can give you those figures possibly. 
 
 Mr. Brown: For new buildings for 1909- '10, $165,000. 
 For 1910-11, $165,000. University of Pennsylvania Hos- 
 pital Buildings. Is that the item you refer to? 
 
 Mr. Cattell: If that refers to that special new wing. 
 
 Mr. Brown : It does not say. 
 
 Mr. Cattell : The amount is indifferent. Let us say the 
 cost of that new wing is $100,000. 
 
 Mr. Brown: I will give it to you exactly. Is that the 
 item? 
 
 Mr. Cattell : No, it is the wing right next to the Pepper 
 Library. It was dedicated last fall. 
 
 Mr. Brown: No such appropriation apparently. 
 
 Mr. Cattell : It was State money used for that purpose. 
 
 Mr. Brown: There are only three items for which they 
 asked, maintenance, $150,000; buildings and gymnasium, 
 $125,000; nurses' home, $75,000. The State Board of 
 Charities approved $150,000 for maintenance; buildings, 
 
337 
 
 $50,000, and nurses' home, $50,000, and the appropriations 
 in 1910- '11 were $330,000. They overlap, $165,000 for 1910 
 and $165,000 for 1910-11. 
 
 Mr. Cattell : It is immaterial as to the amount. Let us 
 say the appropriation is given for construction, $100,000. 
 That first of all would be used for teaching purposes, a 
 large portion of it, and the second portion of it will be 
 used for clinical examination in diagnosing diseases. Now, 
 it is the rich that causes the demand for these diagnoses, 
 and not so much the poor. Therefore, the building is used 
 first for teaching, second, largely for the diagnosing of 
 the diseases of the sick rich and not for the poor and 
 this cost is not charged up properly. Now, to illustrate, 
 the way the account is sometimes kept, a bed is endowed 
 for $5,000; the income from that sum is supposed to be 
 sufficient to pay for the patient it is notj quite; that 
 patient pays seven dollars, that goes into that bed, and 
 another seven or eight dollars, or whatever the mainten- 
 ance may be, is collected from the State. In other words, 
 so far as the bookkeeping is concerned, at least so far 
 as I can make it out, the income from that bed, so far as 
 the hospital is concerned, is three-fold : first, from its 
 endowment; second, from the State, and, third from the 
 patient. 
 
 By Mr. McNichol: Does that condition exist in the 
 University of Pennsylvania ? 
 
 A. I asked to have access to the books of the University 
 with my private accountant and they have very politely 
 refused me. 
 
 Q. Was that equally true of the Jefferson? 
 
 A. I will make no specific charge in regard to that thing. 
 I know it is true with regard to some of the hospitals as 
 they exist in Philadelphia to-day. 
 
 Q. You made an attempt at several of the hospitals 
 
 A. I made an attempt at several of the hospitals to get 
 information and I have been very politely denied access 
 to the books with expert accountants to go over them. 
 
338 
 
 Q. And you make the statement that those hospitals 
 receive a revenue in three ways : from an endowment 
 
 A. Yes. 
 
 Q. That is by private subscription? 
 
 A. Yes, an endowment. Sometimes they pay as high as 
 five or seven dollars, and they can charge that up to the 
 State. 
 
 Q. That is the condition in Philadelphia ? 
 
 A. It is to-day. 
 
 Now, to continue this thought, I personally do not be- 
 lieve that the present method of distributing the State 
 funds in Philadelphia is conductive to the best interests of 
 the public. I believe the number of medical schools should 
 be reduced, and I have outlined personally a little scheme 
 to that effect. I believe the number of hospitals should be 
 reduced. I believe greater efficiency can be maintained by 
 the reduction of the number of hospitals, with larger cen- 
 tral hospitals, and smaller branches, so everybody can be 
 taken care of. 
 
 Q. What do you mean by "everybody taken care of"? 
 
 A. Both the rich and the poor that should be taken care 
 of. 
 
 Q. You mean the patients ? 
 
 A. Yes. For instance, what is the use of equipping 
 every hospital with an X-ray plant, when if there was a 
 good X-ray plant in one of these hospitals that would be 
 sufficient, and the money saved could be used in 
 strengthening other institutions ? I therefore believe that 
 any appropriation which can be made to these hospitals 
 should be greatly reduced until the year 1915, when only 
 two or three of the teaching institutions should have ap- 
 propriations, and I firmly believe that the question of the 
 appropriation should be used as a means for bringing the 
 hospitals together, if they would not} get together and 
 unite, as well as the medical schools. 
 
 Q. Have you ever tried to bring the medical men to- 
 igether ? 
 
339 
 
 A. Yes, sir, and there is a meeting tonight of one of the 
 medical schools to consider that very question. 
 Q. Of a medical school ? 
 A. Yes, sir. 
 
 Q. Have you been successful? 
 A. I would not like to say I have. 
 
 By a Member of the Committee : 
 
 Q. Are you on the staff of any medical school? 
 A. No, but I have been on the staff of one. 
 
 By Mr. McNichol: 
 
 Q. Which institution have you been connected with? 
 
 A. I have been connected with the LaFayette College, 
 which does not receive State aid, and I have been con- 
 nected with the Presbyterian, Blockley, Pennsylvania, 
 University, and various other hospitals, some eight or ten 
 more, I believe, and therefore, following out this line of 
 argument that if there be any money that the State can 
 appropriate to take care of the poor in Philadelphia, that 
 money should go to strengthening these institutions such 
 as Blockley and the Municipal Hospital, and that other 
 money should go toward establishing more institutions 
 throughout the State of Pennsylvania, which are sadly 
 needed, and that money should be used in some such man- 
 ner by the State, money which goes to the schools at the 
 present time. 
 
 By a Member of the Committee : 
 
 Q. Do you believe those institutions are accumulating 
 funds at the expense of the State, by fraud? 
 
 A. I would not like to call it by that name. It is done 
 more through carelessness than anything else. 
 
 By Mr. McNichol : 
 
 Q. Do you mean this method of collecting in three dif- 
 ferent ways for that endowment bed is done in an honor- 
 able way? 
 
340 
 
 A. The amount of the State appropriation depends upon 
 the number of patients that they can show they have 
 treated. If the patient costs twelve dollars and if the pa- 
 tient pays five dollars, there is a deficit of seven dollars. It 
 is a question of bookkeeping of what to do with that five 
 dollars. 
 
 Q. That fund has been provided for by this endowment. 
 You would not say a business -man would be justified in 
 charging up against an account that he has already been 
 paid for? 
 
 A. If you do not keep one set of books for your pay 
 patients and one for your free patients, I do not see how 
 any man can tell how much of that has been used for 
 the free and how much for the paid patients. When the 
 resident physician charges up his dinner and that is 
 charged up to the maintenance of the State, then you 
 must admit that they are not charging up to the State 
 the care of the poor. Take a hospital which has a resident 
 physician entirely devoted to the pay patients, is that food 
 which goes into that resident physician's mouth charged 
 up to the State or not? Those are things I believe should 
 be looked into by the State. 
 
 By Mr. Brown : 
 
 Q. Could not that be done by a per capita charge ? 
 
 A. Yes, that is a solution of the problem. There should 
 be a minimum and a maximum charge. 
 
 Q. Which could be agreed upon between the hospitals 
 at the beginning of the year? 
 
 A. Some of us are agitating at the present time that the 
 hospitals get together and promise not to ask for any more 
 money from the Legislature than the State Board of 
 Charities themselves suggest the hospital should have. In 
 other words, sometimes the State Board of Charities will 
 recommend, say, $30,000, and then the influence will be 
 such that a hospital will get $40,000 or $50,000 or $60,000. 
 
 Q. Is it your idea that these figures or accounts are 
 
341 
 
 juggled in such a way that the hospital shall get more from 
 the State for what purpose, to take care of the poor or give 
 additional comforts to the sick rich? 
 
 A. The hospitals are unfortunately at times run for the 
 medical staff as well as for other people. 
 
 Q. By the way, who does run the hospital, the boards of 
 trustees and managers, or the doctors? 
 
 A. Sometimes the doctors, and sometimes the others. 
 
 Q. Are not the doctors generally the overwhelming in- 
 fluence ? 
 
 A. No, I think the Boards of Managers of many of the 
 hospitals. 
 
 By a Member of the Committee: 
 
 Q. Are they salaried? The statement was made this 
 afternoon by a gentleman whose name I do not now recall, 
 that to his knowledge no one excepting the Secretary to a 
 Board of Directors received a salary? 
 
 A. Well, I have heard it whispered that when a certain 
 hospital became an educational institution one of the mem- 
 bers would then ask for a salary. 
 
 Q. There is no such case that you know of, is there, of 
 a Board of Trustees drawing salaries? 
 
 A. I do not know of any case. I know where they have 
 asked for it, but I do not know where they have gotten it. 
 
 By Mr. Brown : 
 
 Q. You do not mean to intimate that there are any im- 
 proper methods used in doing these things; it is the im- 
 proper way of keeping books and a lack of judgment, as I 
 infer ? 
 
 A. I would not like to accuse anybody specifically of any 
 illegal act or thing in these matters, unless I had the abso- 
 lute proof thereof. 
 
 By Mr. McNichol : 
 
 Q. If they are doing what you charge them with doing, 
 they are doing an illegal act. They are not using the 
 
342 
 
 money for the purposes for which the Legislature has ap- 
 propriated it, to wit, taking care of the poor; that is true, 
 is it not ? 
 
 A. Yes, that is true. 
 
 Q. That is your charge ? 
 
 A. That is the question for investigation by your Com- 
 mittee, or any other committee appointed by the Legisla- 
 ture. 
 
 Q. You say that exists in Philadelphia? 
 
 A. I say it exists in Philadelphia to-day, to the best of 
 my knowledge and belief. 
 
 By a Member of the Committee : 
 
 Q. Do you know that notwithstanding the amount of an 
 appropriation made for the purpose of maintenance to an 
 institution can not be drawn upon in excess of the actual 
 cost of maintaining that institution, and that no moneys 
 can be taken from the State Treasury until after the 
 Auditor General has audited the accounts for any certain 
 quarter, and that it would be impossible for an institution 
 to accumulate moneys that is, an institution that was 
 receiving State aid to accumulate any money beyond the 
 actual cost of keeping the patient? 
 
 A. That is true, indeed, and every hospital has other 
 sources of income from which it draws the interest, and you 
 can not differentiate between .what goes to the free and 
 what goes to the pay patient. Suppose the accounts are 
 presented, supposing there is $200,000 appropriated and 
 $125,000 is drawn from the State. The bills are made 
 out so as to show the $125,000 that was expended from the 
 State. These others are mere private citizens. 
 
 Q. You are casting a reflection upon the audit made by 
 the State? 
 
 A. It is a reflection on no one. It is a reflection on the 
 loose methods in vogue, because they are mxed up with 
 the pay patients and you can not differentiate. It is utterly 
 impossible. 
 
343 
 
 By Mr. McNichol : 
 
 Q. It is not the loose method of securing the appropria- 
 tion, it is the method of carrying out the provisions of the 
 appropriation ? 
 
 A. Of the law. 
 
 Q. Your idea is, boiled down, that the hospital should 
 keep a separate account of the State appropriation di- 
 vorced entirely from any private funds that may be given 
 to that hospital? 
 
 A. It is more radical than that the hospital not con- 
 trolled by the State should not receive anything from the 
 State. 
 
 Q. It practically excludes everything except 
 
 A. Everything except some two or three teaching hos- 
 pitals, which absolutely require the State's money, and 
 strengthening existing hospitals for the poor, which are 
 to be found in the City of Philadelphia and elsewhere. 
 
 Q. You would enumerate as the teaching hospitals which 
 ones ? 
 
 A. I would include the University, Medico-Chi., Jeffer- 
 son, Temple, the Samaritan, and the Women's Hospital. 
 
 Q. You would not help us very materially 
 
 A. I would reduce its medical schools to two or three; 
 
 I would have Jefferson and Medico-Chi unite, and go right 
 
 down the list. 
 
 By Mr. Brown: 
 
 Q. Is it not very strange that after all these years and 
 with all the efforts of physicians and ministers and those 
 especially interested in this work, that they have not de- 
 vised some way by which this could be absolutely and 
 fairly done ? 
 
 A. No more strange than that the Sugar Trust and the 
 Standard Oil Trust or any of those things have not yet de- 
 vised means whereby certain things could be prevented. 
 
 Q. You can not put doctors and ministers who are en- 
 
344 
 
 gaged in the distribution of sweet charity in the line of men 
 who are managing Standard Oil and the Sugar Trust. 
 
 A. I think human nature is the same. 
 
 Q. I can not understand it. These men and women do 
 care for the sick and the poor, and are engaged in the 
 noble work of saving lives and fighting disease, and are 
 giving up hours and hours of their time. 
 
 A. And they are getting their money out of the private 
 patients in the rooms. 
 
 Q. And the students get the benefit of their clinical 
 knowledge from that, and these people go all over the 
 universe to help the poor sick? 
 
 A. I firmly believe, as I stated before my view of the 
 teaching hospitals, but the number of teaching hospitals 
 should be reduced. 
 
 Q. What about the people who can not come to the 
 hospitals? You are going to reduce 129 square miles of 
 territory for miles around, where there is no hospital. 
 Where would you put your two hospitals to serve this vast 
 number of people? 
 
 A. I suggested there should be eight to twelve large hos- 
 pitals in the City of Philadelphia, and numerous small 
 hospitals as demanded. 
 
 Q. No State hospitals? 
 
 A. I believe they should be under State control. 
 
 Q. What do you mean by ' ' under State control, ' ' do you 
 mean under State management ? 
 
 A. Under State or City management. 
 
 Q. You think that can be done more economically than 
 it can be done under private management ? 
 
 A. Undoubtedly. 
 
 Q. Do you figure voluntary contributions an element in 
 this problem? 
 
 A. There will always be hospitals that will be under 
 endowment and private gift, such as the Presbyterian, 
 University of Pennsylvania, Episcopal, Pennsylvania and 
 
345 
 
 hospitals of that sort, which will take care of the people, 
 so that there will always be a number of pay hospitals 
 which will run 
 
 Q. You think under the adjustment there will be a 
 survival of the fittest? 
 
 A. There will be a reduction in the number of hospitals ; 
 say there are 52, down to 25 or 26 or 27, and the 
 efficiency of the 25 or 26 or 27 that remain will be very 
 largely increased over the efficiency of some of the hospitals 
 that now exist, in my opinion. 
 
 By Mr. McNichol: 
 
 Q. Your Committee are anxious to have your inform- 
 ation, if, it is possible to secure it, as to what channels you 
 consider these appropriations have been secured and 
 the graft that is supposed to be paid in securing those 
 appropriations. If you do not want to give it publicly, we 
 would be glad to have it privately. 
 
 A. That is a very large question and a question I have 
 given due consideration to, and a question I have certain 
 information upon that I should be glad to furnish the 
 Committee either publicly or in private. 
 
 Q. We would be glad to have it either way you consider 
 proper to give it. We would like to have it, if it is 
 possible to get it. 
 
 A. I will see that you are put in possession of certain 
 abuses that have crept into the State appropriation, and 
 what I mean by that is the legal evidence in regard to 
 the matter. I would consider this was not the proper 
 place to blast a reputation or make political capital or any- 
 thing of that sort out of any statements that might be 
 made. 
 
 By a Member of the Committee : 
 
 Q. It would be a very good place to do it, doctor, because 
 you have made your charges here. 
 
 Mr. McNichol : No, he made his charges elsewhere. 
 
346 
 
 A. Any statement I have made, we are all here for the 
 common interest of the State of Pennsylvania and the City 
 of Philadelphia, and whatever we may think differently in 
 regard to some things, we want to do the right thing for 
 the State of Pennsylvania. 
 
 By Mr. Brown : 
 
 Q. Suppose we put it in concrete form. You made an 
 address before the Medical Society? 
 A. Yes. 
 
 Q. Wherein after reading a paper this language among 
 other was used: "For the guidance of hospitals," etc., 
 "devote 10 to 20 per cent, of any appropriation which 
 you may receive to political purposes and charge the amount 
 so expended up to legal and miscellaneous expenses. Have 
 plenty of private rooms and permit 50 per cent, of these 
 to be occupied free of charge by politicians and their 
 friends, and allow the other half of the rooms to be taken 
 exclusively by the pay patients of the medical and surgical 
 staff of the hospital which receives the appropriation." 
 Now, that statement was made before a large body of medi- 
 cal men? 
 
 A. Yes. 
 
 Q. "Who certainly would be the leaven which would 
 spread it throughout the Commonwealth and the universe. 
 It seems to me if you have any evidence which will justify 
 that statement, which is certainly most comprehensive, that 
 this Committee should have the benefit of it. I do not 
 mean to say that if you knew that somebody said to John 
 Jones or to me, ' ' I will give you ten dollars to get an appro- 
 priation," that that means that, but if you know of any 
 system that is so pernicious as to justify the use of that 
 language, I think this Committee ought to have it. 
 
 A. I have already told you I would be glad to put the 
 Committee in the way of getting certain information. We 
 all understand the difficulty we have, when we have such 
 able lawyers as we have in the State of Pennsylvania, to 
 get the kind of knowledge 
 
347 
 
 By Mr. McNiehol : 
 
 Q. You say you will put us in the way of getting the 
 information ? 
 
 A. Yes. 
 
 Q. Aren't you possessed of that information? 
 
 A. I have some of it in my possession. 
 
 Q. Will you not furnish this Committee with that in- 
 formation ? 
 
 A. I will furnish the Committee with it. 
 
 Q. We want what you have. 
 
 A. I told you before I would be glad to furnish you that 
 information which I have in my possession. 
 
 Q. Will you furnish that to Mr. Brown? 
 
 A. I shall be glad to do so. 
 
 By a Member of the Committee : 
 
 Q. Have you any of it with you ? 
 
 A. I haven't the information in such shape that I would 
 be prepared to furnish it at the present time. 
 
 By Mr. McNiehol : 
 
 Q. With the names of the men and institutions involved ? 
 
 A. With the names of some. 
 
 Mr. McNiehol : We want to serve notice upon you that we 
 intend to furnish them with the information, which will 
 require you to substantiate your evidence. 
 
 By Mr. Brown : 
 
 Q. Are there no poor served in Pennsylvania, for all of 
 our millions? 
 
 A. There are many served. 
 
 By Mr. McNiehol: 
 
 Q. I would like to ask the doctor what type of politicians 
 he refers to, reformers or regulars ? 
 
 A. Permit me to simply read an extract from the report 
 of the Pennsylvania Hospital, and I think you will find 
 it there, whichever one is in power. 
 
348 
 
 Q. That is hard to discriminate. 
 
 A. This remark is taken from the report of the Pennsyl- 
 vania Hospital when they attempted to obtain their million 
 dollar endowment, and I hope the Committee will ask some 
 of these gentlemen also to give information as to where 
 they obtained their personal knowledge in order to make 
 such statements. 
 
 Q. How long ago has that been ? 
 
 A. This was in 1907, two years ago. ' ' Theoretically, the 
 idea of receiving State appropriation is beautiful, but 
 practically the institution is called upon to pay in one 
 way or another the consideration for which the State funds 
 are appropriated to it. Failure to do this, or political 
 heterodoxy, as viewed by the party which may for the time 
 being hold the reins of government, results either in the 
 curtailment of the appropriation or in its entire refusal, 
 whilst the assertion of political freedom and independence 
 of thought on the part even of a single member of the 
 managing body may result in the harshest criticism and 
 most unjust strictures on the part of those to whom is 
 intrusted the supervision of State appropriations by the 
 institutions to which they are given. " 
 
 By Mr. Brown : 
 
 Q. Who signed that, is there any name attached to that ? 
 
 A. I have the original in my possession, among my other 
 papers. 
 
 Q. And that was issued for the purpose of soliciting 
 private contributions? 
 
 A. That was issued for the purpose of soliciting private 
 contributions of a million dollars. 
 
 Q. The Pennsylvania Hospital, was it not ? 
 A. Yes. 
 
 Q. Was it upon that that you based this article or this 
 criticism ? 
 
 A. It is one of many. 
 
349 
 
 Q. That is the kind of a communication upon which you 
 based that declaration ; is that all ? 
 A. No, that is only one of many. 
 Q. Was the others similar to that? 
 A. Some of it was a great deal more specific. 
 
 By Mr. McNichol: 
 
 Q. Do you know that in the Pennsylvania Hospital that 
 the medical men are required to take a residence there, even 
 though they have wives and children residing in other sec- 
 tions of the town, for the purpose of registering and voting 
 in that particular locality ; do you know that that exists ? 
 
 A. No, I do not. 
 
 Q. You never made any effort to investigate that ? 
 
 A. I could not make an effort to investigate something 
 about which I knew nothing. 
 
 Q. You are familiar with Pennsylvania Hospital rules; 
 has that condition never been brought to your attention? 
 
 A. I know some of the rules of the Pennsylvania Hos- 
 pital. 
 
 Q. Do you know that there are twenty-five or thirty 
 votes in the Pennsylvania Hospital from all sections of 
 the town, men residing in the northeast and northwest, 
 that are you voting down at Pennsylvania? 
 
 A. I know more about the conditions down at Blockley. 
 
 Q. With the idea that the doctor will furnish Mr. Brown 
 with those facts 
 
 A. I shall be glad to furnish Mr. Brown with everything 
 I have. 
 
 Mr. Brown: I want to say you will have to bring some- 
 thing more than that if you want it considered. 
 
 Mr. Cattell: I would suggest that Mr. Brown be put in 
 possession of the names of the people who signed that, be- 
 sides my own. 
 
350 
 
 DR. ALICE M. SEABROOK, representing Women's Hos- 
 pital, Philadelphia, called. 
 
 Dr. Seabrook: I have been very much interested in all 
 that has been presented to you to-day, because it is right 
 in the same line with our own work. I have two or three 
 things I would like to present to you. A great deal has 
 been said about the different costs per capita of the pa- 
 tients, and I think when you want to get at that you want 
 to take into consideration the fact that there are just about 
 as many different ways of computing that cost per capita 
 as there are institutions. Some will include all the ex- 
 penses, repairs and help, heat and light, and everything 
 of that sort is included in it, and so if you want to get 
 at the thing definitely and accurately, in regard to the 
 per capita cost of patients, we would have to have a uni- 
 form system of accounting, in which every institution 
 would include the same things in the cost on which they 
 would base their charge. I am not recommending anything, 
 but I do know that in the American Hospital Association 
 that question has been discussed and threshed out a great 
 deal during the last few years, and a committee was ap- 
 pointed to draft a system of uniform accounting, and 
 that is in use in many of the larger hospitals in New 
 York City, and if any of you gentlemen want to inform 
 yourselves upon that, a note to the Superintendent of the 
 Presbyterian Hospital, Dr. C. Irvin Fisher, would give 
 you the result of a great deal of labor that was put upon 
 that. 
 
 Now, personally, from my experience in hospitals, I 
 think I should like to have the appropriations made on 
 the number of days that we treated patients. I think 
 we would like to stand by that and have the appropriation 
 made upon that basis. 
 
351 
 
 By a Member of the Committee : 
 
 Q. That is, the number of days? 
 
 A. On the number of days that we treat free patients or 
 part pay patients. 
 
 Q. At so much per patient? 
 
 A. At so much per patient, yes, sir. 
 
 By Mr. McNichol: 
 
 Q. How do you distinguish the partially paid patients? 
 
 A. In our hospital, we count those as part pay who 
 pay anything between fifty cents per week up to the cost 
 of their maintenance, which is about twelve dollars per 
 week, the actual cost of their maintenance. All those 
 who pay what it costs the hospital are put on the list of 
 full paid patients; those which are only paying part of 
 their cost are put on the list of part paid. I have been 
 told I do not know how true this is that in some hos- 
 pitals patients that only pay two or three dollars a week 
 are not counted as part paid patients, that they are counted 
 as free patients, and the amount, whatever they pay in, 
 is put down to the list of donations or contributions. 
 
 By a Member of the Committee : 
 
 Q. Do you know of any institution where that is done ? 
 
 A. I do not. I have been told that. I say, we always 
 count it as being credited up against the name of the 
 patient, so you may know exactly whether they have made 
 any return or not. The question of endowed beds coming 
 in, we have 260 in the hospital, and we have about 98 
 that are used as free beds often. We not only use all 
 these endowed beds for free patients, but w r e see to it that 
 all money that comes to us from the State and contribu- 
 tions for that purpose are used for the people who main- 
 tain them, but always the demand for help outruns the 
 amount we have. We are also teaching. We have public 
 clinics to which students may come, and we have a class 
 running from 54 to 60 nurses in the hospital, who are 
 taught, thoroughly trained and sent out. 
 
352 
 
 By Mr. Brown: 
 
 Q. From what part of the State do those nurses come ? 
 
 A. We have them from Canada to Florida, and from 
 Missouri to Massachusetts. 
 
 Q. Your students go where? 
 
 A. Medical students are from the "Women's Medical 
 College, usually, and they go out all over the country. 
 We have them from all foreign countries as well as 
 our own City here and from our own State. Of course, 
 there is always the one thing that is looked out for es- 
 pecially, and that is that free patients are not from out- 
 side of our own State. There is a good deal of stress 
 brought to bear upon us, sometimes, from our sister State 
 across the river. People over there often make strong 
 pleas to have free patients admitted, but unless they have 
 some one to come forward and bear their expenses we do 
 not admit them. 
 
 Q. Do you not take them in for clinical purposes some- 
 times ? 
 
 A. Not if they are free. They have to pay something 
 for their care. There is an exception, we have one or two 
 beds endowed by people outside the State, and it is defi- 
 nitely stated that they are for the benefit of people coming 
 from certain sections of the country, and, of course, those 
 people receive that. 
 
353 
 
 FRANCIS A. LEWIS, representing the Episcopal Hos- 
 pital, called. 
 
 Mr. Lewis: I have only a few words to say. The Epis- 
 copal Hospital does not receive State aid, never asked 
 for it and does not want it, but, on the other hand, if 
 we do not ask for appropriations from the State, we do 
 not think it is quite right that we should be asked to make 
 appropriations to the State, and what the Episcopal Hos- 
 pital wants, and I believe the Pennsylvania, although I 
 do not speak for it, is to endeavor to draw the attention 
 of the Committee to the advisability and propriety of 
 abolishing the collateral inheritance tax on bequests to in- 
 stitutions of purely public charity. You exempt their 
 real estate, their investments are exempted from the State 
 tax, and it seems hardly fair to us if we are left a legacy 
 of a couple of hundred thousand dollars, as we were last 
 year, and obliged to pay $10,000 to the State of Penn- 
 sylvania, which the State distributes to some other charity, 
 which the testator did not intend should be done. Now, 
 if that money were needed for paying the expenses of the 
 State government, I think it would be one thing, but I 
 do not think we ought to tax any institution of purely 
 public charity I mean the University libraries or any- 
 thing now exempt by law that we ought to tax the be- 
 quests which are made to us and take the money out of 
 one pocket and simply hand it over to another. That is 
 all I desire to call the attention of the Committee to. 
 
 By a Member of the Committee : 
 
 Q. Your policy, as I take it, would be to reduce the rev- 
 enue of the Commonwealth. What would you say if we 
 took it off of that and put it on coal? 
 
 A. You know we are always in favor of taking it off of 
 one and putting it on another. I have always been in favor 
 of a tax on coal. 
 18 
 
354 
 
 Q. What would you say to taxing manufacturing cor- 
 porations ? 
 
 A. Well, with all due respect to you, I am not a business 
 man. I was a lawyer once, but I am interested chiefly in 
 the charities of the City at the present time. 
 
 Q. Well, as a man of affairs? 
 
 A. I should think it was very doubtful policy, so far as 
 I have been able to look into the matter. 
 
 Q. The money you would lose by taking the tax off of 
 such as you have just mentioned, where would you ex- 
 pect to make up that deficiency or loss which the Common- 
 wealth would suffer thereby ? 
 
 A. Well, I tried to get some statistics as to what it 
 amounted to. I do not believe it is a very vast sum, and 
 I believe if you could not tax coal or anything else to 
 make it up, it would only be fair not to have quite so 
 much money to appropriate to those institutions, because 
 I think a testator ought to have an opportunity of giving 
 his money to whom he pleases, and, as I said before, if 
 the State does not need the money for its absolute ex- 
 penses, I do not think it ought, morally speaking, to take 
 money that is left to the Pennsylvania Hospital, and give it 
 to some other hospital which it was not intended. When 
 it comes to the question of gifts, I think the intention of 
 the donors ought to be preserved. 
 
 By Mr. Brown : 
 
 Q. Mr. Lewis, the fact that your hospital does not ask 
 for State appropriations, has that ever been the subject 
 of discussion by you and your officers ? 
 
 A. Yes, sir. 
 
 Q. Do you think these other institutions are benefited 
 by State aid, when you have been able to operate without 
 State aid and prosper ? 
 
 A. Well, in the first place, we have been in existence 
 for a very considerable length of time. The Episcopal 
 Hospital was founded in the early fifties, and a great deal 
 
355 
 
 of money has been given to it. The endowment fund now 
 reaches $100,000 a year, and the expenses of the institu- 
 tion about $160,000. We get something from the churches 
 by their Thanksgiving Day collection. We get something 
 from the Board of Missions, and while we have a deficit, 
 it always happens, taking five year periods, that we al- 
 ways have more money than we had five years before, so 
 we do not worry so. 
 
 Q. How about your free service? 
 
 A. The service is mostly free. I should think the income 
 from patients was less than $20,000 a year. 
 
 Q. When you speak of donations, are those voluntary ->r 
 gotten by individual effort? 
 
 A. You mean to build up that endowment fund? 
 
 Q. Yes. 
 
 A. A great deal was given, a great deal more was left. 
 It is an institution that always appealed a great deal 
 to people, because it is right up in the middle of the mill 
 district. We have more dispensary patients there than 
 any other hospital in the world, except Guy's Hospital, 
 in London. Of course, the accident cases are enormous. 
 Those young surgeons who graduate from the various hos- 
 pitals here would rather get into the Episcopal;, because 
 they get a chance, on account of its being right up in that 
 district, to see the accident cases. 
 
 Q. How are they able to get along without State aid, 
 and the other hospitals require it ? 
 
 A. I say, the Episcopal can do it very largely by reason 
 of its endowment. It is supported in a very great measure 
 by the wealthy. I think there are too many hospitals in 
 the City of Philadelphia, and I think if the State is going 
 to aid them, and I am not clear on the question of policy 
 at all, I think they ought not to aid any institution that 
 can not pay at least two-thirds of its expenses from other 
 sources. I do not care whether it is by endowment, or sub- 
 scription, or what it is. Hospitals are like churches 
 there are too many of them and small churches and small 
 
356 
 
 hospitals are no particular good. You had a great deal 
 better take the large hospitals in Philadelphia, and situated 
 in different parts of the City, and if people want to get 
 up a new hospital, then let them add a ward to that. 
 There are a great many people who want to give their 
 names to an institution, and when they give their name 
 they do not give anything else, except the building. We 
 have a large amount of territory up there, a large amount 
 of ground, and they expect us to exist in new buildings 
 where people do not provide sufficient money to run the 
 building. Somebody wants to put up a building and put 
 his name on it, and then the institution gets started 
 the best way it can. I do not think that is good policy. 
 I think the State, in making its appropriations, ought to 
 very closely draw the line as to what the institution does 
 for itself. 
 
 Q. Then you are assuming a correlative obligation on 
 the part of those interested in the hospital, an obligation 
 on the part of the State to take care of its poor or sick ? 
 
 A. Undoubtedly. I think it is the duty of the neigh- 
 borhood, of the City, to look after its poor, and I think 
 it is also possible I am not going into that question- 
 but I think it ought to be very carefully done, and I think 
 it ought to be done in some proportion with what the in- 
 stitution does for itself. I came chiefly to direct the affairs 
 of the Legislature to what I think is an injustice, that 
 those institutions that receive bequests which are purely of 
 a charitable character should be obliged to pay out some 
 of it to the Commonwealth. 
 
 By a Member of the Committee : 
 
 Q. Would you exempt savings funds from paying any 
 tax? 
 
 A. You exempted your savings funds from the State tax, 
 as I understand. 
 
 Q. Yes. 
 
 A. But we are exempt so far as all charitable insti- 
 
357 
 
 tutions do not have to pay the State tax. I have not given 
 that subject any very great thought, but I am very much 
 interested in the charities in Philadelphia, and I think 
 perhaps there are too many of them, but, at the same time, 
 I want to get this other thought in your minds, that where 
 people are at least kind and willing to give them money 
 in their wills, that they may have the benefit of it, no 
 matter what religion or denomination they belong to, or 
 whether they do not belong to any denomination, if people 
 are willing to leave money to build up charities and insti- 
 tutions of this City, I think the money ought to go where 
 they intended. 
 
 By Mr. McNichol : 
 
 Q. Will you not try and hand up some paper and file 
 it with us, giving us your ideas? 
 
 A. Yes. There was a bill introduced at the last Legis- 
 lature, at the instigation of the Pennsylvania Hospital, 
 which was not passed, but it was drawn, and we did all 
 we could to get is passed. I suppose if I were to send Mr. 
 Brown a copy of that 
 
 Q. That will give us an idea of what you want? 
 
 A. Yes, sir. 
 
358 
 
 DR. ROSENGARTEN, representing the House of Refuge, 
 called. 
 
 Dr. Rosengarten: Ours is rather an exceptional case. 
 There are practically but two institutions of the kind, one 
 in the West and one in the East. The one in the "West 
 was the outgrowth of this one of ours, which is eighty 
 years old. It is a public institution, and it is cared for 
 under that head. The question of whether institutions 
 ought to be State or semi-State institutions is pretty well 
 exemplified in the two cases. They have less ground than 
 we have down at the Mills, and their cost of maintenance 
 per capita is about 53 per cent, more than that of the 
 parent institution at Glen Mills. The difficulty is to draw 
 the line. The old House of Refuge was the first in the 
 State, began in 1826 or 1827, and then the City contributed 
 to its support, and then the State gave a per capita al- 
 lowance, and then there were changes made, and for a long 
 while they had one-half of the State and one-half of the 
 City, at a rough estimate, and then the City, only a few 
 years ago, had a careful estimate made, and the result was 
 that the Legislature made an agreement by which there 
 is a per capita for every child sent to the institution. 
 The State pays, roughly, one-half of the maintenance. 
 
 By a Member of the Committee: 
 
 Q. Does that make up the difference in cost? 
 
 A. Yes. 
 
 Q. As against the amount the county pays ? 
 
 A. Yes, practically. It has been suggested that the 
 per capita tax rule is the best for both State and counties, 
 for in that case there would be returned and charged for 
 exactly the number of beneficiaries. As it is now, it is 
 only up to the county. We send to each county, Philadel- 
 phia and all counties in the Eastern half of the State, 
 
359 
 
 we send a statement to the end of the year, showing the 
 per capita cost, either increased or reduced, based on the 
 cost for the year. If the State had a similar arrange- 
 ment, I think it would be much better, as they do at a 
 great many institutions. I think they are all paid a per 
 capita allowance, so that there is no asking for any sum 
 other than just what you are entitled to on that basis. 
 The question of appropriations for buildings is, of course, 
 a different one. The large advantage I think it is fair 
 to claim for the House of Refuge in the East, is that it 
 has been easily 75 per cent, of the buildings and ground 
 have been provided by private gift. When the House of 
 Refuge was removed from Twenty-second and Poplar, the 
 Boys' House, at Twenty-first, the property was sold and 
 that produced a considerable sum, and from the accretion 
 of years they had bought additional property, and finally 
 they got in all, I think, $250,000 for that property, and 
 then they got in subscriptions about $500,000, and that 
 has all been expended at Glen Mills, and there is now about 
 a population of 900 there, and we are still like Oliver 
 Twist asking for more. There is need for more build- 
 ings. Then the girls' house, which was in the City, has 
 now been removed to the country. Alfred C. Harrison 
 gave us a farm, roads, power plant, just as he gave on 
 the other side of the road, at Glen Mills, a gymnasium 
 and a number of other things that represent a very large 
 sum of money. Indeed, that is not the only thing, because 
 when he gave a gymn. he added to it a liberal endowment 
 the income of which maintains it, so that the gymn. and 
 swimming pools and all those luxuries do not cost the in- 
 stitution, or the county, or the State, a cent. The State 
 exacted from us, that if they gave us $125,000, that we 
 raise a like amount, and that, I think, has been more than 
 met. We are still needing, of course, very many more 
 buildings, and I suppose in time, just as at Glen Mills, 
 some will be the gift of priviate individuals, just as the 
 chapel, work house, shop and hospital and things of that 
 
360 
 
 kind, were really the gift of private individuals. That 
 is the advantage of having this semi-private management. 
 You can interest an individual in an institution that is run 
 by individual effort and management. I do not suppose 
 there is any case on record where a State institution is 
 receiving a benefaction from an individual. 
 
 The appeal we make to your gentlemen is that the 
 State shall be liberal in its gift for maintenance, and gen- 
 erous in its gift for buildings, and we will try as far 
 as we can to utilize those funds and do the best we can 
 with them. I think your own knowledge of Morganza 
 will show you that it is better for an institution of this 
 kind, so far as possible, to be managed by individuals, 
 rather than by a State commission. 
 
 By Mr. Brown: 
 
 Q. Such an institution would normally be under State 
 control; is that not so in other States? 
 
 A. I think there is no rule on the subject. 
 
 Q. I think it is, to a certain extent, a reformatory in- 
 stitution ? 
 
 A. It is that, and I think there should be a large measure 
 of State supervision. I welcome it. If the State would 
 take it out of private hands and make it public, I think 
 some of us would be relieved after a good many years' 
 service, and more or less gratefully. 
 
 By a Member of the Committee : 
 
 Q. Where did the suggestion come to you from that you 
 should raise a like amount ? 
 
 A. I think it was made in the Appropriation Committee. 
 We went there and asked boldly for $150,000 to begin work 
 at Darlington. 
 
 Q. Wasn't that embodied in your bill? 
 
 A. It was embodied and added to the bill, I think. It 
 was put in as a rider, and we submitted and went out and 
 did it. You see this work is a State work; the children 
 are sent to us by the judges. 
 
361 
 
 By Mr. Brown: 
 
 Q. You receive no pupils except those sent by the courts ? 
 A. That is all. 
 
 Q. You have heard these gentlemen express their 
 opinions about the great need of the institutions of the 
 State's appropriation to those institutions. Do you share 
 that feeling? 
 
 A. Yes, I do, very strongly. I may say first of all as 
 to State aid, it does seem to me a hardship that institu- 
 tions which are purely charitable should be obliged to 
 pay collateral inheritance tax. 
 
 Q. Assuming that these appropriations are proper, is it 
 your thought that the Legislature would be justified in in- 
 creasing the revenues of the Commonwealth by levying 
 additional taxes, or by a more stringent enforcement of 
 existing laws? 
 
 A. The purpose of taxation is the distribution of money 
 and charity, and part of the work of the State undoubtedly 
 is the care of the sick and poor and injured and de- 
 fective classes. 
 
 Q. I am asking you now because I know of your large 
 experience. Have you given any thought to the subject, 
 for instance, of our State roads. There was a bill passed at 
 the last Legislature at the request of the Governor for five 
 million dollars for State roads, which was vetoed because 
 there was not sufficient money to give to the institutions 
 and do that work, too. Is not such a demand as that a 
 reasonable one on the part of the people of the Common- 
 wealth, and ought they not to be considered in the dis- 
 tribution of the State 's money ? 
 
 A. Yes, but should they not be based upon the principle 
 that where the gift was so much the county and the in- 
 dividual should give so much in proportion? 
 
 Q. Assuming that there is not enough to give to these 
 hospitals ten million dollars were asked for at the last 
 session, and five million for the road do you think the 
 19 
 
302 
 
 Legislature should levy sufficient money to pay for these 
 things? 
 
 A. It is a very difficult question, because we have grown 
 up under a system of self-help. So many of our institutions 
 were based upon gifts and grants. The State has come to 
 their aid later and that is a very difficult question; they 
 have come only to supplement the individual grants and 
 gifts. Now, the rule abroad is that nearly all the in- 
 stitutions are absolutely State institutions, and in the 
 Western States nearly all the institutions are State in- 
 stitutions. 
 
 Q. You are a member of boards governing such institu- 
 tions. Is it your thought that the State could do any bet- 
 ter than you gentlemen are doing it? 
 
 A. I should doubt it, although I would be very glad to 
 see a representative of the State the State is represented 
 on our board by the fact that three of the representatives 
 are appointed by the Board of Judges, the City is supposed 
 to be represented by two appointed by the Mayor, so that 
 in that respect both the City and the State are represented 
 on the board, and the others are represented by the con- 
 tributors. 
 
363 
 
 MR. JAMES NOLAN, representing St. Joseph's Hospital, 
 Reading, Pa., called. 
 
 Mr. Nolan : There are one or two points which occurred 
 in this morning's testimony which I wish to refer to, and 
 one was that Mr. Brown had put the question to quite 
 a number of people here as to what economies could be 
 effected by the State buying the supplies instead of the 
 hospitals or their management contracting them. I can 
 not talk as a matter of course for the hospitals in general, 
 but of my own in particular I am satisfied they can and do 
 buy goods cheaper than the State can furnish them. The 
 reason is obvious. There is a sympathetic feeling in the 
 hearts of the store-keepers for the hospitals and other 
 charitable institutions, and as a matter of fact I believe 
 that in many cases they sell their goods to those institu- 
 tions at cost and below, and sometimes almost to the extent 
 of making them a donation. In that way I think a change 
 to the State furnishing these goods would work a hard- 
 ship, and I think it would be to the injury of the insti- 
 tutions themselves. 
 
 Now, in the matter of the need for more revenue, I am 
 satisfied that the enforcement of the four mill tax rate 
 in the proper way would bring a great deal more revenue 
 to the State. I am almost sure that there is a very heavy 
 percentage of that four mill tax that is not collected. 
 
 Q. How is that brought about? 
 
 A. It is brought about by people evading collection 
 largely. There are people who come under my observation 
 who buy bonds in other states and neglect to make a 
 return. 
 
 Q. You mean they deliberately perjure themselves? 
 
 A. Yes, sir. They do not perjure themselves because 
 they do not make any return. 
 
364 
 
 Q. That would be another way of whipping the Devil 
 around the stump? 
 
 A. That is about it. They will leave the assessor find 
 out what he can in the court house as to what money they 
 have and then he assesses the usual penalty and they escape 
 scotfree on a great deal of their investment. Often lots 
 of people the assessor does not reach and could not reach, 
 and they purposely do not make any return. They are 
 never called upon to do it. I think a strict enforcement 
 of the four mill tax would bring an increased revenue to 
 the State. 
 
366 
 
 MR. JOHN T. LEWIS, JR., representing the Pennsyl- 
 vania Hospital, called. 
 
 Mr. Lewis: I represent an institution that was 
 established in 1851, and as we have never called upon the 
 State for any moneys except at its foundation, two 
 thousand pounds, and a few years afterwards two 
 thousand pounds, that is all the money the Pennsylvania 
 Hospital has ever received from either the State or the 
 City, and all we are interested in is that when we are left 
 contributions or legacies from our friends, those legacies 
 are charged, of course, five per cent, collateral inheritance 
 tax, and the hospital would be very much relieved if that 
 could be taken off or the hospital relieved of paying that 
 money. 
 
 By Mr. McNichol: 
 
 Q. That is similar to the claim of the Episcopal Hospital ? 
 
 A. It is very much the same. In 1909 we received a 
 legacy of over $200,000. That made a payment of some 
 $10,000, and that is quite an onerous charge upon us. "We 
 have beds for nearly three hundred persons in the City 
 Hospital, and we take care of 450 insane in "West Philadel- 
 phia. The expenses of the hospital are something over 
 $400,000. I am sorry to say we do not always get through 
 at the end of the year with any sort of a balance. Last 
 year we were behind, and if anything can be done to 
 relieve them of the trouble of the collateral inheritance 
 tax, it would be very pleasant. 
 
 I should like to say another thing. A moment ago it 
 was said here that there were married doctors and others 
 in the hospital, under the ordinary term called coloniza- 
 tion. There are no doctors living in the hospital except 
 unmarried doctors, and they serve there for two years. 
 They are young men who have just graduated from the 
 
366 
 
 University or other medical colleges here, and they are re- 
 ceived for two years and receive no pay. They are boarded 
 and taken care of and they live there all the time. There 
 are eight of those. There is one what we call a chief resi- 
 dent physician who receives a salary. There are one or 
 two in the laboratory receive a salary, but other than 
 that they do not. Of course, the nurses and all those people 
 receive salaries. 
 
 Q. What is the length of time for which they serve ? 
 
 A. Two years. They are elected every three months in 
 turn and they eat there. 
 
 Q. They are all single men? 
 
 A. They are all single men. While it is not a condition 
 that they should be single, it is a condition that they 
 should live in the hospital, and the attending physicians, 
 of course, are physcians of longer standing and they live 
 at home and attend the hospital and the patients there, but 
 they only come at certain hours in the day, or when they 
 are sent for. There are some ten of those in the City 
 Hospital and over in West Philadelphia there are 
 
 Q. You have eight internes and how many 
 
 A. Eight internes and one chief resident. None of them 
 are married. 
 
 By Mr. Brown: 
 
 Q. You have never applied for State aid, have you ? 
 
 A. We have never applied for State aid. 
 
 Q. Dr. Cattell read a paper here today, which appears 
 to have been issued by your hospital. 
 
 A. I heard him read it. There was a paper issued some 
 three or four years ago, two or three years ago, and I 
 cannot say whether what he says is in it or not. I do not 
 remember. 
 
 Q. If you have never applied for State aid, you would 
 not know what was necessary for such an application, I 
 presume ? 
 
 A. No, we have never applied for State aid. 
 
367 
 
 By Mr. McNichol : 
 
 Q. Those post-graduates or students there, are they 
 residents of Pennsylvania? 
 
 A. There are no post-graduates ; it is entirely a hospital. 
 
 Q. Well, the internes, or those who are taking care of 
 the sick, are they residents of the State of Pennsylvania, 
 or from outside of the State? 
 
 A. The internes? 
 
 Q. Yes. 
 
 A. They may be either. Most of them they are nearly 
 Pennsylvanians ; very often the* majority of them are 
 Philadelphians. We have had them from outside of Penn- 
 sylvania. I think there is no one there now, though, I 
 am not certain. In running over the names I am not 
 certain. We have no post graduates. These men are all 
 graduates. 
 
 Q. That is an extraordinary condition to have twenty- 
 five or thirty men registered from a hospital? 
 
 A. No, they are orderlies who are there to assist the 
 female nurses. 
 
 Q. It does not exist in any other institution outside of 
 Bloekley, in Philadelphia? 
 
 A. I do not know how many orderly assistants they 
 have ; they are for certain things the female nurses cannot 
 attend to in a hospital. 
 
 Q. They certainly cannot attend to having their votes 
 registered? 
 
 A. No, I think you will find, and if you wish I will give 
 you 
 
 Q. It is immaterial. 
 
 A. I have heard it before, it is not the first time I have 
 heard it. 
 
 Q. It is something for you to look after? 
 
 A. No, I think I can say positively, I think I know 
 how it is managed : I have been there a good many years 
 myself. 
 
368 
 
 By Mr. Brown: 
 
 Q. Have you an endowment fund you have, of course ? 
 
 A. We have an endowment fund. 
 
 Q. And that is the reason why you have not applied for 
 State aid? 
 
 A. That is the reason why we have not applied for 
 State aid. 
 
 Q. And your hospital is practically free, too ? 
 
 A. It is entirely free. "We have some rooms where per- 
 sons who require certain conditions and medical attend- 
 ance can have it, but I*do not think they pay for what 
 they get, I may say. 
 
 Q. The difference between you and the other hospitals 
 asking for State aid is in the endowment? 
 
 A. I think it is on account of the endowment, yes. We 
 would like to have more money, but they have never done 
 it, and they do not want to do it. They would rather live 
 on their own fat, if there is any fat. 
 
 Q. Are you connected with any other hospital? 
 
 A. No, sir. 
 
 Q. How much experience have you had in hospitals, 
 how many years have you been connected with them? 
 
 A. About twenty-two years. 
 
 Q. Do you think the other hospitals could do as well as 
 you are 'doing without State aid? 
 
 A. I am not prepared to say that. I do not know the 
 conditions. 
 
 Q. It is a case of the individual after all? 
 
 A. That is all. 
 
 By Mr. McNichol : 
 
 Q. Will you have your secretary file with Mr. Brown 
 some information in regard to the collateral inheritance 
 tax? 
 
 A. Yes, sir. 
 
369 
 
 MRS. A. C. LACEY, representing Old Ladies' 
 Home, called. 
 
 Mrs. Lacey : I only have to say for our institution that 
 it is non-sectarian; we take in all denominations, or 
 whether they have any denomination or not; we draw 
 the line simply at color. We existed eleven years with- 
 out State aid, but it was very poor existence. In 1885 
 Governor Pattison gave us $2,5QO to pay off the second 
 mortgage, which I myself paid off, although I was at that 
 time secretary and am now treasurer of that institution, 
 and have been all the years since it has been in existence. 
 We have received about $62,000 from the State, and I 
 can safely guarantee that it has all been accounted for 
 in the maintenance of our home, and without State aid 
 we would be very materially crippled. Still, I suppose, 
 by hard work we could probably get along without it, 
 but it would be a back-bending expedition all the time. 
 We have been very kindly taken care of by many people 
 who have left us money. We have an endowment fund; 
 my books will show there probably $70,000 ; I do not know 
 exactly how muqli it is without looking it up, but we have 
 always bid the auditor welcome ; he has had access to our 
 books, and at any time the Legislature wants to send 
 anybody to my books, if they will come to my house they 
 are perfectly welcome to see how we dispose of the funds 
 they have given us. 
 
 By Mr. Brown: 
 
 Q. What ages do you take in? 
 
 A. They must be 65 when they come in, and we now 
 have one hundred and fifty-five under our care. With 
 them we have a corps of employes with a housekeeper 
 and night nurse and helpers, I think, amounting to about 
 twenty. There is no one paid who comes there to do any 
 
370 
 
 work, excepting the doctor; we pay him because he has 
 to be called very frequently to see old people who have 
 reached sixty-five ; they are not well, any of them, and he 
 comes at any time. Other than that there is no officer 
 paid, unless they would say that my pay of $10.00 a year 
 for my car expenses there to the home came under that 
 head. I have been treasurer since 1894. We do not owe 
 any money ; we have no mortgage. The second mortgage, 
 that money was gotten for, paid that off, and we have no 
 debts on the institution. We have a good property, well 
 taken care of, and we have this little endowment fund, 
 not very much, but at the same time we manage to get 
 along and our folks, I guess, are about as well taken care 
 of as any charitable institution in the City. We never 
 hear very many complaints. It is hard to bring together 
 old people and make them assimilate. Last year we had 
 $10,000 and this year $5,000, and I think if the Legislature 
 looked into the books they would find that was all used in 
 maintenance. 
 
 By Mr. McNichol : 
 
 Q. It did not cost you anything to secure that appro- 
 priation, did it? 
 
 A. Not one penny. I have always had the greatest 
 deference paid me. The account goes in not later than 
 the twelfth of the month. I wait because our institution 
 is a small one, and I have received my money returned 
 to me in thirty-six hours, and I have no complaint 
 whatever to make. Henry F. Walton once presented our 
 bill for us, and the gentleman who represents our district 
 from Wissinoming, and we had no trouble. Once I went 
 to the Committee and asked them and they gave us 
 $10,000 towards building an old building, not in the 
 regular way, and they gave us $10,000 and that we ac- 
 counted for in a separate way to the Legislature. We 
 would be very sadly crippled if we would lose the appro- 
 priation now. 
 
371 
 
 DR. J. M. BALDY, representing Gynecean 
 Hospital, called. 
 
 Dr. Baldy : It seems almost like carrying coals to New- 
 castle to say anything more on the subject, and it seems 
 to me, as a general proposition, that the information asked 
 by the Committee is on two points, first, as to the advisa- 
 bility of keeping up the appropriations to the State 
 charities, and, second, as to the best methods of doing it. 
 I concede in answering the first, that it is a great moral 
 question. There is no legal obligation on the State to 
 educate its citizens; there is no legal obligation that it 
 shall take care of its sick, but I cannot see the good of 
 a sick or dead educated man or woman. It seems to me 
 if it has a moral obligation to educate its citizens, that 
 the State has a moral obligation to look after its sick and 
 protect its well from infection from such as are sick. 
 
 There is a small coterie of men in the profession who 
 are opposed to the appropriation. The vast bulk are 
 almost a unit, the professional men and hospital managers 
 are in favor of the system of appropriation. It has been 
 said that hospital managers are not paying much atten- 
 tion to and are not managing the hospitals properly, and 
 I have noted that about three-fourths of the gentlemen 
 here are among the better class and busiest and most in- 
 fluential medical men in the city of Philadelphia, and that 
 has been my experience for some twenty odd years ; that 
 is the class of men who manage the institutions. There 
 can be no question whatever, that in the general statement 
 it is perfectly true, that there is a most careful handling 
 of State funds in all these institutions; there is a most 
 careful accounting to a responsible Board, and those 
 Boards do overlook maybe they do have a superin- 
 tendent who takes the details off their hands, but that 
 superintendent and every other responsible servant under 
 
372 
 
 them reports to them periodically and they know where 
 the money goes and what it is spent for, and they know 
 also that not a penny of it is spent in any way except 
 for what it has been appropriated. 
 
 By Mr. Brown : 
 
 Q. You differ from Dr. Cattell? 
 
 A. Absolutely; flat-footedly. I have heard these 
 rumors of graft and mismanagement for twenty years, 
 and I have never seen any foundation for it. I have gone 
 to Harrisburg for twenty years, and I have even had my 
 friends in the Legislature refuse to dine with me, and 
 I have yet to hear or know of a man among my friends 
 who were lobbying for hospital appropriations say any- 
 thing even approaching a hint, and I know most every 
 prominent medical man in town intimately. 
 
 Q. What is your association throughout the State, 
 Doctor? 
 
 A. Almost general. My practice takes me almost over 
 the State. 
 
 Q. What is the opinion of these men as you go from 
 place to place, in regard to appropriations? 
 
 A. Many of these institutions could not live and never 
 could have been brought to the perfection they are today 
 had it not been for the State's generosity. You have had 
 a speaker, the last one, in which State aid has been 
 absolutely necessary for the building of that institution 
 and keeping it on the foundations which it has. Further 
 than that, I venture to say and I will make the statement 
 well within the limits that the State aid, if it were 
 withdrawn today, from twenty-five to fifty per cent, of 
 your hospitals would instantly go out of existence for lack 
 of support. 
 
 Q. Are they all needed? 
 
 A. In the State itself generally, yes. There are some 
 exceptions. In the larger cities I think there are too 
 many hospitals. That is well indicated by the fact of the 
 
373 
 
 number of beds that are vacant. That is a problem that 
 has been tried to be dealt with by several gentlemen on 
 the floor, an idea it is almost impossible to deal with. 
 Amalgamation and association is very well theoretically, 
 but you, gentlemen, are faced with the fact that here are 
 a certain number of institutions, and these institutions 
 have been established for various sundry reasons and to 
 take care of different types and varieties of illness. ' Some 
 of them are large and have teaching appliances; some 
 of them are small and have no real teaching appliances, 
 but as a matter of fact the physicians teach in all the 
 hospitals so far as they are able to do it; they use very 
 largely of their material for clinical material. I do not 
 believe you can get medical men or get Boards of 
 Managers to wipe out of existencxe certain types of insti- 
 tutions. Take the "Wills Eye Hospital and Orthopedic 
 Hospital as special hospitals ; take the Gynecean Hospital 
 for gynecological cases. Take the Children's Hospital for 
 children's diseases, and I could go on and enumerate a 
 dozen others, all representing different types, and I doubt 
 very much whether you could get in any way, shape or 
 form the gentlemen who have devoted their lives to 
 building up these institutions, and by so doing educating 
 the profession, not only of Philadelphia, but of the 
 country and the world, in the advanced practices of their 
 specialties; I doubt if you could get them to consider 
 wiping out the work of a lifetime by consolidating with 
 some institution in which their individuality would be 
 wiped out. When they started there was a great necessity 
 for such work in the community in the teaching of the 
 profession, not only of this City, but of the country and 
 of the world. Many of these institutions, take the 
 Gynecean Hospital, for instance, when that hospital was 
 instituted there was no special hospital in this State for 
 special gynecean work and the mortality was from 30 
 to 50 per cent. The Gynecean Hospital was the first, 
 and was quickly followed by other hospitals of a like type. 
 
374 
 
 the specialists pushed their work and developed it, with 
 the result that with the aid of the State the mortality 
 is down to 2 or 3 per cent., and not only in that 
 institution but in almost all other institutions in the 
 State. In other words, they have been the means in 
 fifteen or twenty years of developing a branch of surgery 
 which is the most important of all the branches of 
 surgery, and have been the means of educating the 
 profession to a standard which was never dreamed of 
 as a possibility, and never could have been done without 
 State aid, and those institutions today largely are still 
 needed for the greater and advanced work. You have 
 heard Mr. Walton speak of the bad cases sent in to us 
 from the country, and these institutions are needed for 
 just that class of cases. The general practitioner can 
 handle the majority of cases, but they come to a class 
 of cases that they dare not touch, that they want to come 
 to the hands of men who are experts in institutions that 
 are devoted to that, and these institutions, all of them, 
 have their necessity and their use in those directions. 
 
 As a matter of fact, that brings me to another point, 
 that the education that the State aid has given by the 
 development of the different institutions throughout the 
 whole country. Fifteen or twenty years ago it was a 
 rare surgeon in the State of Pennsylvania who could even 
 do an average amount of modern surgery. Today there 
 is not a community that has not an expert, or two or 
 three experts, all due to the education furnished by in- 
 stitutions which were put on their feet and allowed to 
 develop their work, and largely, if not almost altogether, 
 by State aid, and it would have taken a hundred years 
 to have accomplished what was accomplished in fifteen 
 or twenty years had the State not stepped in with its 
 assistance. Many of these institutions will go out of 
 existence if the State aid is withdrawn, and I take it that 
 the community is warranted in taking care of its sick 
 by educating its physicians, as it is in its general educa- 
 tion. 
 
375 
 
 Here is a little squib I wish to read, because it brings 
 out four things the State has developed and done, and 
 each and every one of them is a warrant for the aid the 
 State has appropriated: 
 
 "By its appropriations to hospitals Pennsylvania has 
 aided materially in placing in all regions prompt medical 
 and surgical relief at the disposal of those requiring it. 
 Rare now is the spectacle of a crushed and dying man 
 being carried for miles in a jostling wagon or freight car, 
 in order to reach a place where an appropriate operation 
 could be performed or the merciful ease preceding the 
 longed-for and inevitable death obtained. Good nursing, 
 good physicians and surgeons and good hospital accommo- 
 dations are now found in nearly all centers of population 
 in Pennsylvania. The rich as well as the poor receive 
 benefit from this improvement in the local appliances 
 for meeting medical emergencies. The local practitioners 
 of medicine have, with greater opportunity for seeing 
 unusual cases, become more advanced thinkers and more 
 experienced operators and prescribers. Even laymen 
 realize the change and expect the local doctor to be 
 familiar w r ith the improvements and advances of modern 
 medical science. The charitably inclined have been in- 
 creased in numbers and greatly broadened in view by 
 association with hospital matters in their own towns." 
 
 By Mr. Brown: 
 
 Q. From your observation and experience, has there 
 been any improper use made of the hospital service? I 
 mean, that due to State aid, by the physicians themselves? 
 
 A. Never, that I know of. 
 
 Q. I mean, have they used those institutions for the 
 promotion of their own personal interests. 
 
 A. Never. 
 
 Q. Directly or indirectly? 
 
 A. I do not believe they have done it directly or in- 
 directly. I have known physicians to do this; take a 
 
376 
 
 town, for instance, where there is a quarrel. The doctors 
 go out and form another hospital; that, you might say, 
 was unnecessary, but as for using the money for improper 
 purposes after they have gotten it, I do not know of a 
 single instance of my own personal experience, nor have 
 I ever had it intimated to me. 
 
 Q. Do they take these things and use them for their 
 own personal use? 
 
 A. Almost every physician has a private room. That 
 is an aid to the State. Those patients get the benefit 
 of that advancement in that hospital and the skilled work 
 that can be given to them. They pay more in dollars 
 and cents than would doubly support them. They bring 
 money into the institution, and where those rooms have 
 been used in that way it gives the institution an addi- 
 tional income and helps to pay for the free wards. 
 
 Q. What is the reputation of the physicians for using 
 these free wards; do they use them to further their 
 own interests? 
 
 A. If any of them did and it was known to the Board, 
 the Board would report them. 
 
 Q. Has the medical profession ever considered it from 
 that point of view? 
 
 A. The medical profession would not countenance any 
 such man. 
 
 Q. Have any charges ever been made. 
 A. Whisperings have not been considered sufficient to 
 discuss. 
 
 Q. I mean these doctors prominently connected with 
 our hospitals; have they been charged with it? 
 
 A. None that I know of. I have heard whispers under 
 the breath in one or two cases over a course of twenty 
 years. It is absolutely absurd to say that because there 
 may be one case, or a dozen cases, that the general 
 proposition is one of rottenness. 
 
377 
 
 Q. So far as your experience has gone, the whole thing 
 is clean? 
 
 A. I should say the State money has been absolutely 
 and cleanly spent to a penny, that it goes back to the 
 very purpose for which it is appropriated. 
 
 ADJOURNED until Friday, February 4, 1910, at 11.00 
 A. M. 
 
378 
 
 Public meeting of the Committee held at Room 496, City 
 Hall, Philadelphia, Friday, February 4, 1910, at 11 o'clock 
 A. M. 
 
 Present: Hon. James P. McNichol, Chairman; Gabriel 
 H. Moyer, Vice Chairman and Secretary; Wm. C. Sproul; 
 William H. Keyser; James F. Woodward; David Hunter, 
 Jr., of the Committee; Francis Shunk Brown, Esq., 
 Counsel. 
 
 THEODORE M. ETTING, ESQ., Children's Aid Society, 
 
 called. 
 
 Mr. Etting: Mr. Chairman and Gentlemen: I would like 
 to say a few words as to the general purposes of the 
 Children's Aid Society, in order that the Committee may 
 be fully informed as to that subject. Our work is limited 
 to a class of children who but for our assistance would 
 become a direct charge upon the State, and would, we think, 
 almost invariably drift into the criminal classes. Our 
 assistance is rendered to foundlings, to dependent orphans, 
 children who, through the cruelty of parents are having 
 their chances in life blighted, or to children who were 
 abandoned by their parents, and in some instances through 
 our intervention to the help of juvenile delinquents, all of 
 whom are removed from the immediate surroundings with 
 which they are confronted to various homes scattered 
 through eastern Pennsylvania. We operate through 20 
 counties. The furthest county west at the present time 
 is Huntington, although I believe we have had and have at 
 the present time applications as far west as Blair. The 
 same work is in a general way done for Western Pennsyl- 
 vania by a society of the same kind having its headquarters 
 in Pittsburgh. We have been working since 1882 or 1883. 
 We have during that time expended about $875,000, and 
 
379 
 
 in the same time we have had about $175,000 from the State 
 of Pennsylvania. 
 
 Our system of operation is this, that we have homes 
 selected in the various counties through rigid investigation, 
 and the children as fast as they can without undue expense 
 be transported to those homes, are sent there and are treated 
 just as other children are in that locality. They are not al- 
 lowed to be worked in those homes to their own detriment. 
 That is to say, the person with whom they are boarded 
 (in some instances they are kept without board) cannot 
 utilize their services in any way so as to deprive them of 
 the advantages of a public school education. These children 
 are all compelled to go to the public schools, and we receive 
 constant reports from the superintendent of the schools 
 as to the progress they are making. They dress like other 
 children. They have no badge put upon them which pre- 
 vents them from having a fair chance in life, and their 
 environment is changed from that which they were for- 
 merly surrounded with to one that gives them as fair a 
 chance as any other boy in that locality. 
 
 The society is absolutely non-sectarian and the only 
 endeavor in that respect which is made is this, that the 
 child is placed in a home where the religious teaching is 
 that under which the child was born. We get in every in- 
 stance, at intervals of time, reports from the teacher, I 
 mean the religious teacher of the child, so that we are kept 
 in touch with both phases of the situation, the progress the 
 child is making in school and in religious development. 
 Then from time to time we visit the children through our 
 paid inspectors. In a general way that is the scope of the 
 work in which we are engaged. 
 
 Circumstances have within the last two or three years 
 singularly favored development, I am sorry to say, at am 
 expense which has compelled us to spend at least a certain 
 portion of money which we had laid by. The situation is 
 this. There is situated at 1506 Arch street an office which 
 is known to all of the poor of Philadelphia coming within 
 
380 
 
 the class of cases of which I am speaking, a woman who has 
 been deserted by her husband, a child left a charge upon the 
 community, or where anyone knows of cruelty that is 
 practiced upon a child, or various cases that fall within this 
 description. There is an office which is practically not 
 only our office but which is a clearing house for cases of 
 this kind. That is technically known as the Children's 
 Bureau. It is maintained at the cost of three societies. 
 One is the Estate of Henry Seibert, who left a considerable 
 sum of money, I think about $1,000,000 or more, which his 
 trustees are devoting to the establishment of a village in one 
 of the neighboring counties in which children of this class 
 are taught trades. That constitutes one factor in this 
 Bureau. Another factor is the Society for Prevention of 
 Cruelty to Children. The third is the Children's Aid 
 Society. Every case of this kind can be investigated at that 
 bureau. It is in touch with all hospitals, and with all of the 
 child saving work in eastern Pennsylvania. If the child, 
 after full investigation, is deemed to be a child that is 
 worthy of this assistance, then the next step is to determine 
 by some personal investigation of the child itself how we 
 can best utilize the advantages which are within the control 
 of these societies. We have, in order to make this effective, 
 a child's shelter which is situated on Fifteenth street near 
 Pine, in an office adjoining the building of the Society for 
 the Prevention of Cruelty to Children, which accommodates 
 a certain number of children. Then we have temporary 
 shelters in selected homes, and then we have The Seibert 
 Institution. In that way during a period of 30 or 60 days 
 we can get some notion of the child. We can get some 
 notion of its healthfulness and its possibilities, and we have 
 the child inspected by a doctor. If there is any trouble 
 about its teeth affecting its health, we have that corrected. 
 At the end of that time the child is either sent to the Chil- 
 dren 's Aid Society, and in that event is sent to one of these 
 homes scattered through the eastern part of the State, or if 
 it is not fit for that we send it to a hospital if that is re- 
 
381 
 
 quired, or if necessary, and if it is a juvenile delinquent of a 
 very extreme class we send it to an institution of that 
 nature, but in a general way our effort is to avoid as far as 
 possible in the case of small children, institutions. I say 
 this in no spirit of hostility to any existing institution for 
 the betterment of children, because we believe they have 
 their usefulness, but in a general Avay we believe that a 
 juvenile delinquent, or a child who, through misfortune, 
 and not through its own fault, has been brought into this 
 condition, ought to have just as fair a chance of moral 
 training as your child or mine, and we think it ought not to 
 be condemned and thrown amongst a class of children, 
 many of whom are worse than itself, and thus exposed to 
 that kind of influence. We think it ought to be given a 
 chance in another environment, and the children grow up, 
 as I say, in these homes. The success of the endeavor, which 
 has now been tested for some 30 odd years of experience or 
 thereabout, has been remarkable. 
 
 As an illustration (I am not at liberty to give names), 
 but such is the reputation which the society has made that 
 within the last eight or ten years we have had applications 
 of a nature that I will indicate. For example, a professor in 
 one of the leading universities in this country, a university 
 that has a world-wide reputation, lost a child. His home 
 was so saddened by the want of child life that he desired to 
 have some child, and preferred to take a child so as to 
 associate charity with it. He sent to us, and that child will 
 now grow up under circumstances and conditions that may 
 make any possibility in life open to it. That is only one 
 of many instances, which I think it would be in the power 
 of our society to furnish. 
 
 I would like to say something in connection with this 
 Children's Bureau which we have recently established here. 
 I am informed by persons who were present (I was not pres- 
 ent myself) at a meeting held in Washington, before the 
 end of Mr. Roosevelt's administration, of workers from all 
 parts of the country interested in child work, and which 
 
382 
 
 met at the White House, that the system that we have 
 established in Philadelphia of a clearing house which is 
 conducted, as I told you, at 1506 Arch street, was regarded 
 as the greatest advance in that kind of work that is in ex- 
 istence anywhere in the United States. 
 
 So much for the purposes and enlargement which has 
 marked the progress of this society. We have generally 
 1,500 to 1,800 children in our care. I want to say a word 
 on the general subject which is occupying your attention 
 and care, and which is most interesting, that is, the extent 
 to which aid should be given by the State to undertakings 
 of a private nature. With great respect to your opinion, 
 and with great deference in view of my own limited knowl- 
 edge of the subject, I want to give you a thought which is 
 present in my mind, because I have thought much about it, 
 and if it be worth anything it is at your service. My own 
 view is that the State of Pennsylvania has no right what- 
 ever to tax its corporations or private citizens for any 
 purpose other than one which the State ought to under- 
 take directly, but that if you bring any particular charity 
 within the line of cases which the State ought itself to take 
 care of, then you are far better off if you can utilize private 
 assistance and the endeavors of private people to supple- 
 ment the State work. By way of illustration I take our 
 own society, and I hope that in taking our own society as a 
 text I am not pleading for its benefit alone. Its work 
 the State of Pennsylvania ought to undertake without the 
 intervention of any society, were it not for the fact that I 
 think it can be readily demonstrated to your satisfaction 
 that if the State were directly to undertake this work, the 
 work would be conducted at much greater expense, and 
 probably not so well as it is when conducted through pri- 
 vate agencies. I mean to say that my own interest in this 
 work has largely grown out of the very noble administra- 
 tion of the work which I see conducted principally by 
 woman. It is essentially the kind of work that a woman is 
 much better fitted for than a man. Our board, which at 
 
383 
 
 present has about 18 members, is mainly composed of 
 women. We have four or five men on the board, who take 
 care of the business end of the administration, and who 
 are there to advise the ladies in connection with that work, 
 but it is a kind of work that particularly appeals to 
 feminine instinct, and if in connection with that you utilize 
 men in different departments ,then you do it much better 
 than if you confide the entire work to men. If this society 
 did not exist, these children, instead of going, I think 
 perhaps to the extent of 80 per cent., into the useful classes 
 and filling your work shops and your homes, would drift 
 into the criminal classes almost invariably. They come to us 
 with bad blood in their veins. They are illegitimate off- 
 spring, or come of unhappy marriages, desertion on the 
 part of the husband, generally accompanied by drink, or 
 else they come as chiudren who have committed petty 
 crimes. Those children would first be a charge upon their 
 respective communities, and in the second place by heredity, 
 if it were not for the change of environment, they would 
 almost certainly eventually fill your jails, so that, in as 
 much as the advance of thought has imposed upon the State 
 a duty of this nature, the State must of necessity take care 
 of them. It must take care of them either as youths and 
 give them the chance of their life-time, or it must take care 
 of them as criminals when they grow into manhood or 
 womanhood. Therefore I say that this class of cases pre- 
 sents a work which the State ought to take upon itself 
 directly, were it not for the fact that through the inter- 
 vention of individuals in all large communities you can 
 obtain very material assistance in money, very much better 
 assistance through private efforts than you could through 
 any system of government administration. When you 
 come to administer the State's assistance then my thought 
 is that you must first select not necessarily cases in which 
 the work is done directly by the State, because while I 
 have not the slightest intention of saying a word in dis- 
 paragement of the way in which State work is undertaken, 
 
384 
 
 it may easily be that there are classes of cases in which the 
 State has not directly interested itself which are quite as 
 meritorious and which ought quite as much to be a charge 
 upon the State as the cases in whose favor the State has 
 already intervened. 
 
 For example, take the case of these children as opposed 
 to the insane. If you could imagine a condition of things 
 under which it would be necessary for the State to so 
 husband its resources as to say that it would give to neither 
 class, that they must both go, or else that one or the other 
 must go, the economy of life, the protection of the State 
 from invasion, or the husbanding of its resources for work, 
 should all be in favor of the child. I do not wish you to 
 withhold your bounty from the old or from the insane, but 
 if you had to choose between the two, as a practical ques- 
 tion, as Judge Johnson said to me some time ago, the last 
 time I appeared before the State Board of Charities, when 
 I said, ' t The great advantage that this society has in coming 
 before you is its hopefulness, ' ' and he said, i ' Yes, it is the 
 only hopeful one. The rest is simply a question in my 
 judgment of amelioration, but here you have a chance of 
 absolute cure in the great majority of cases." Therefore 
 my thought is that you should not ignore existing institu- 
 tions, and the necessity of giving them aid, but if they come 
 within the class whose work the State ought to do directly, 
 of course, you ought to take care in giving them assistance 
 that the assistance which the State gives supplements pri- 
 vate efforts. You never ought to give them so much money 
 as 'to deter people from contributing, or allow them to sit 
 quietly by and trust to the State. You ought to compel the 
 people in all instances to help themselves. 
 
 By Mr. Brown : 
 
 Q. "What percentage of effort do you think private parties 
 should make in proportion to the contribution of the State? 
 
 A. To answer that would require someone who had 
 studied the whole subject better than I have. Mr. Carnegie, 
 
385 
 
 who has studied this subject very carefully. I think re- 
 quires half. The State ought to require much more than 
 half. I can only say that in our own case that it cost us 
 $100,000 in round numbers to maintain this work. 
 
 Q. You get $30,000 from the State? 
 
 A. We get $15,000 a year from the State, but I want to 
 be frank with you. That is not all that we get. We get 
 some assistance through the County Commissioners, the ex- 
 act amount of which I cannot tell you, but generally it is 
 about $1.50 a week for each child. I think in some cases 
 a little more and in some cases a little less, whereas I think 
 we calculate it costs us about $2.50 for each child. In other 
 words, we have no child that is not absolutely maintained 
 through the help of private effort. 
 
 Q. What is your limitation as to age? 
 
 A. We have no limitation as to age. 
 
 Q. You do not take them beyond 21 ? 
 
 A. No. I mean no limitation of age less than that of 
 majority. 
 
 Q. Do you take them as early as four years ? 
 
 A. Yes, sir. 
 
 Q. Is there any other institution in Philadelphia doing 
 similar work ? 
 
 A. No, sir, not that I know of. I think I am correct in 
 that. 
 
 Q. Do the societies in Pittsburgh, Meadville, Greensburg 
 and Chambersburg do work similar to this? 
 
 A. The society in Pittsburgh does. There are a number 
 of county societies that do, so far as their means and op- 
 portunities exist. 
 
 Q. You have spoken about supervision of these children 
 after they leave your care ? 
 
 A. While they are in our care. 
 
 Q. When you place these children out in homes you 
 have spoken of supervision. What has been your experi- 
 ence, if any, as to complaints of ill-treatment of the 
 20 
 
386 
 
 children, or anything that would be derogatory to their 
 welfare ? 
 
 A. I could not give you absolute figures. They are 
 very rare so rare that I doubt if we have ever tabulated 
 them. 
 
 Q. You applied to the State Board of Charities 
 for an appropriation of $40,000 for two years, $20,000 a 
 year? 
 
 A. Yes, sir. 
 
 Q. They cut that down to $35,000. What reason was 
 given you for that reduction, if any? Why did they cut 
 your annual appropriation from $20,000 to $17,500 ? 
 
 A. They said they had to endeavor to bring their recom- 
 mendation within the amount of money available. 
 
 Q. It was a case of money altogether, and not a case of 
 merit ? 
 
 A. Not at all. 
 
 By Mr. McNichol : 
 
 Q. How much salary do you pay out yearly to officers ? 
 
 A. We have a superintendent. 
 
 Q. What is the total amount you pay yearly in salaries? 
 
 A. This gentleman who is now our superintendent we 
 selected after going all over the county. We brought him 
 here from the West, and the society as a society has never 
 paid a penny of his salary. It has been paid by friends 
 of the society who guarantee his salary. 
 
 Q. I understand you have expended in 30 years 
 $875,000? 
 
 A. Yes. 
 
 Q. Of which the State gave you how much? 
 
 A. $139,000 is the correct figure. 
 
 Q. Then in point of fact the total amount received from 
 private sources was in the neighborhood of $740,000? 
 
 A. No, sir, it does not represent so much as that, because 
 we have received through the Poor Boards of these various 
 counties some money which could be worked out. 
 
387 
 
 Q. Could you give us approximately about how much ? 
 
 A. In no instance does the sum that we get from the 
 Poor Board pay. It is not enough to pay for the child. 
 
 Q. I want to get just what has been the real private 
 charity you have received during those years? 
 
 A. I will see that you have that. 
 
 Q. Is it less than $15,000 a year. I am talking about 
 private assistance you receive outside of the State and 
 the Poor Boards? 
 
 A. No, I think it would greatly exceed that. 
 
 Q. Say $500,000 in 30 years? 
 
 A. Yes, from private sources. I think so. 
 
 Q. That is rather a limited amount of charity in a great 
 city like this from the potential men we have around town, 
 do you not think? 
 
 A. It is so. I have no desire to say anything derogatory 
 to private charity, because I think there is a great deal of 
 it here, but if you will look over the list of persons who 
 give to private charities, apart from sectarian charity, you 
 will see the same names repeated over and over again. 
 
 Q. We do not want to say anything slightingly about 
 those people, but if there is such a deficiency in the giving 
 of this money for charitable purposes, do you not think 
 the Legislature should be given some assistance in devising 
 a plan by which they can be made to give what they 
 should give? 
 
 A. I think so, if you can devise such a plan. 
 
 Q. If we call on gentlemen like you, who are familiar 
 with these conditions, to give the information you desire, 
 we may be able at the next session of the Legislature to 
 devise some plan. 
 
 By Mr. Brown : 
 
 Q. That is, assuming there is an obligation on our peo- 
 ple to take care of their helpless poor, whether or not 
 if that is not voluntarily done it should not be done by 
 
388 
 
 the Legislature in the levying of a fair revenue to produce 
 the results? 
 
 A. I think it should. 
 
 By Mr. McNichol : 
 
 Q. In your experience of 30 years you do not hesitate 
 a moment to say the State should take care of her poor, 
 more especially children? 
 
 A. Not for a instant. I think there is necessarily room 
 for improvement, as will be found in the study of all con- 
 ditions. I think there is room for improvement in the 
 administration, as to selecting between something Mr. 
 Brown is interested in and something I am interested in, 
 but after considering this question of State aid very care- 
 fully I give my opinion for what it may be worth, that I 
 should be extremely sorry to see State aid withheld from 
 proper subjects for bounty. 
 
 Q. You are also extremely interested in seeing those 
 people who have been shirking their responsibilities in that 
 direction forced to contribute? 
 
 A. Undoubtedly. 
 
 By Mr. Brown : 
 
 Q. Has your society made any investigation as to the 
 preventive usefulness of this society? In other words, 
 by its activity to what extent it has relieved hospitals, 
 asylums and so forth, of boys and girls who would 
 naturally become charges if it had not been for the efforts 
 of your society ? 
 
 A. In almost every instance they would be. 
 
 Q. Your charges would ultimately be driven or would 
 drift into those institutions? 
 
 A. Undoubtedly. 
 
 Q. The State would have to take care of them in any 
 event ? 
 
 A. Undoubtedly. 
 
 Q. At an enlarged expense, besides losing their useful- 
 ness as good citizens ? 
 
389 
 
 A. Undoubtedly. We get> some instances to which I 
 might refer. Children come to us through the courts. We 
 get what are called support orders, but a support order is 
 rarely worth more than 25 to 50 per cent, of the order as 
 given, because the person upon whom the support order 
 is made loses his job, or is a worthless fellow generally, 
 and shirks it. 
 
 Q. Has your investigation shown to what extent these 
 boys and girls develop and get on as citizens? 
 
 A. Since I have been president of the society there has 
 been no table of that sort compiled. I do not know what 
 opportunity we would have of compiling it, but Mrs. James 
 Biddle, who was my predecessor as president of this so- 
 ciety, and who understood this work far better than I do 
 and far better, I think, than any person of my acquaint- 
 ance, gave me the average of 85 per cent. 
 
 Q. 85 per cent, developed to the good? 
 
 A. Yes, sir. 
 
 Q. And 15 to the bad? 
 
 A. Yes. 
 
 Q. Of the 15 to the bad have you any idea as to the very 
 bad, I mean those that ultimately go into the criminal 
 class ? 
 
 A. I have not. I do not know really where Mrs. James 
 Biddle got her figures from. 
 
 Q. It would be very interesting from a sociological 
 point to have those statistics. 
 
 A. Of course, it is very difficult to keep tabs. The 
 children are passing in and out of our care, and the period 
 when a woman goes to the bad is so hard to fix. We lose 
 sight of them. We have had numerous successes and have 
 sent some people to the Legislature. 
 
 Q. You have had considerable experience in these in- 
 stitutions. What is your thought as to the standard of 
 efficiency of these institutions as compared with those in 
 the conduct of ordinary human affairs, business matters? 
 
390 
 
 A. I do not know anything about institutions other than 
 this. I am very much more interested in questions of the 
 disposition of the money, I mean to say in the general 
 thought of what is best for the State, than I am about 
 these institutions. 
 
 By a Member of the Committee : 
 
 Q. The Commission would like to know just what the 
 salary list is of this society. Give it to us in total. 
 
 A. The total is $11,000.32 out of a total batch of $95^339. 
 
 Q. How is the batch made up ? 
 
 A. Board paid out for children, $51,000 ; clothing, 
 $13,000; traveling expenses and transportation of chil- 
 dren in placing them, $7,000. We have no building to 
 maintain. The other items are rent, light and heat. It 
 ought to be stated in regard to this salary, that the fact 
 that the society cares for 1,400 or 1,500 children on this 
 plan is only possible because we have a corps of 12 or 1-1 
 trained agents who travel through about 40 counties of 
 eastern Pennsylvania, finding these homes and selecting 
 them most carefully. Mr. Brown inquired as to complaints. 
 Our safeguard is that every home, before a child goes in It, 
 is seen by a trained agent who goes all over the situation 
 and makes out a report. That is filed in the office in 
 writing. This has previously been covered by an applica- 
 tion blank and four references from reputable citizens 
 of that county. The economy of- the plan is that we do 
 spend something for salaries. If an examination is made 
 by experts of the placing out work for children the test 
 of efficiency is, do they have a corps of trained agents 
 to make the plan efficient? There ought to be a law pro- 
 hibiting the placing of children in family homes except 
 by persons who are making a special study of it. In 
 other words, it should not be carelessly done. 
 
 Q. How many trained agents have you? 
 
 A. Fourteen. 
 
 Q. What compensation do they receive ? 
 
391 
 
 A. An average of $35 a month and traveling expenses, 
 up to $50. It is not enough, but all we are able to pay 
 at the present time. 
 
 By Mr. McNichol : 
 
 Q. What is the membership of your society? 
 
 A. There are about 1,200 contributors, and they give a 
 total of about $17,000 or $18,000 a year. 
 
 Q. Out of the 1,200 you get $17,000 a year? 
 
 A. Seventeen thousand dollars a year. Then we get 
 annually money from other sources. For example, we got 
 $7,000 last year from a fair that was held for our benefit. 
 Then, so far as our experience goes, we can count on about 
 $7,000 a year from legacies. We have never been able to 
 husband our legacies. We spend them as they come. It is 
 the only way we can live. We do not like to do it. 
 
 By Mr. Brown: 
 
 Q. Have you made any calculation as to how much 
 money would be required to allow this society to develop 
 into the greatest efficiency? 
 
 A. No. 
 
 Q. You get $35,000 from the State in two years, $17,500 
 a year. How much could you use a year ? 
 
 A. I think Mr. Brown has raised a very interesting 
 question. We have not yet covered all counties in Penn- 
 sylvania. We only organized in Lebanon a week or two 
 ago. Country counties are asking us to organize this work. 
 I think the Commission would be interested to know that 
 we have covered eight or nine new counties in the past 
 two years, and are trying to develop the principle of self- 
 support in every one of those counties. A gentleman in 
 Williamsport has contributed several hundred dollars to 
 get the work started there. They are raising $3,000 in 
 Williamsport to help to get the thing started there. We 
 feel very strongly that people who are able to contribute 
 ought to be compelled to first. State aid should be an 
 
392 
 
 encouragement and a supplement to private charity. I 
 think an analysis of our report, which we shall be very 
 glad to submit, will show interesting things on that score. 
 We collected last year $6,000 from parents in support of 
 their children. We try to be very careful on that point. 
 
 Q. You collected from parents of children? 
 
 A. From parents of children in our care. 
 
 Q. What kind of parents were they? 
 
 A. They are men who have in many instances lost their 
 wives by death, whose wages are $8 or $10 a week, who 
 cannot get a housekeeper and maintain a home, and who 
 have one or two children. They do not want to give up 
 the children. They come to us. They are not able to pay 
 for full support but pay $1.50 or $1.75, and sometimes only 
 $1 a week. It costs us about $2.50. 
 
 Q. They are children of what type of men? 
 
 A. Men who are working as day laborers. 
 
 Q. What did you say the wages of a day laborer were ? 
 
 A. It is not as much as that in some instances, $7, $8 
 and $9 a week. We study every case, go over it with the 
 man in a sympathetic manner, to see what he can do. I am 
 speaking of a well disposed man who really wants to keep 
 his children. We go over the case carefully and sympa- 
 thetically to see wha*t we can do, and we do not make the 
 children a partial charge on charity unless we are sure 
 that is the thing to do. In addition to that they have 
 court cases in which a judge makes an order against a 
 man who is able to contribute in the judgment of the court. 
 Those cases are committed under order of court. Those 
 orders are almost never paid in full, because when a man 
 is in court and an order is made he is not usually a very 
 hopeful subject. Our figures have been worked out. It 
 runs several thousand dollars every year short. Private 
 charity has to supplement that. An analysis of our figures 
 would show that we try to put the support on the parents 
 or relatives when there are any. The local Poor Boards 
 in cases of almshouses children pay $1.75 a week. The 
 
393 
 
 r $.75 comes out of our general fund, so this appropria- 
 tion is distributed over 25 or 30 counties. It is not a 
 Philadelphia matter. While I am on that point, I believe 
 -Fiat a reform in this direction would indicate that the 
 appropriation should cover a larger area. In other words, 
 the children's aid societies at Franklin County, West- 
 moreland County, and at Meadville, referring to what you 
 said a week ago about the possibility of consolidation, 
 should be asked to join the Pittsburgh headquarters, which 
 federates 25 counties out there. The counties at this end 
 should come in the eastern society of Pennsylvania, and 
 then the Legislature and the State Board of Charities will 
 know exactly whom they are to hold responsible for the 
 placing out work of children in this State. 
 
 Q. What would you say to putting the institution under 
 the supervision of the State Board of Charities with the 
 right to employ just such persons as you have? 
 
 A. That is done in Indiana. 
 
 Q. Would not that be a more business-like way of con- 
 ducting a matter of that kind ? 
 
 A. It is a matter well worthy of consideration. The 
 Chairman will recall this was up at the last session of the 
 Legislature, and I think it is a matter very well worthy 
 of consideration, how there might be more concentration 
 and placing of responsibility on a small number of agents 
 instead of creating a large number of new ones. 
 
 By a Member of the Committee : 
 
 Q. Do you think that would discourage private charity? 
 
 A. In Indiana private charities go on and do another 
 class of work, adapt themselves to changed conditions. 
 
 Q. In harmony with the State? 
 
 A. In harmony with the State. 
 
 Q. How many dependent children have you? 
 
 A. 1481 on the first day of February. 
 
 By Mr. McNichol : 
 Q. In eleven counties? 
 21 
 
394 
 
 A. In the eastern district. 
 Q. How many in Philadelphia? 
 
 A. I suppose about two thirds of the whole number. We 
 are organizing this work now in the other counties. 
 
 By a Member of the Committee : 
 
 Q. In how many counties is this work organized? 
 
 A. 21 or 22 at the present time is the number for whom 
 we actually have children. Blair County has recently 
 applied. The whole Juniata Valley district is now in- 
 cluded in our society. We are trying to spend the money 
 in an economical way by drawing on local resources. I 
 can only say I think I myself sent out 14,000 or 15,000 or 
 perhaps 20,000 appeals a year, which I sign with my own 
 name, after most careful selection of neighborhoods, to 
 get aid. It is pretty difficult to get any more money than 
 we receive. Several thousand letters were sent out to 
 business men of the city telling them what we had in the 
 way of State aid, putting the problem before them. We 
 wanted to get support. The State appropriation did not 
 cover it. We try to be very frank about that and educate 
 our contributors. 
 
 By Mr. McNichol: 
 
 Q. The trouble is that too many independent organiza- 
 tions are embarked in the same mission. 
 
 A. That is one reason we tried consolidation. 
 
 By Mr. Brown : 
 
 Q. Has any reason been given to you why the philan- 
 thropists of our district should not appreciate the import- 
 ance of an institution like this, for the purpose you have 
 indicated? 
 
 A. I do not know of any. We have been in successful 
 operation since 1883 and can show most hopeful results. 
 It would be a matter of great gratification if any of you 
 gentlemen went to 1506 Arch street and saw exactly what 
 the system is there, how carefully every child is cared for 
 and his or her case opened to inquiry. 
 
395 
 
 By Mr. McNichol : 
 
 Q. If we had fewer coming out parties and things of this 
 kind and more attention to charity, there would be much 
 more efficient results? 
 
 A. I quite agree with you. There is one thing I think 
 ought to be mentioned at this point. Our society and the 
 western society of the same nature would welcome a 
 movement on the part of the State Board of Charities or 
 the Legislature to fix a high standard, below which no 
 society that receives children is allowed to fall, to know 
 that there is stricter supervision and stricter accounting 
 on the part of every institution that places out children, 
 setting a standard below which State aid would not be 
 given. There is an opportunity for the State to improve 
 the efficiency of the agencies by making that condition, 
 saying to them, '" You must raise a certain amount from 
 private sources or we cannot give you this donation/* 
 That would put a spur to the local community. They 
 would see, as some philanthropists have done, in giving 
 large benefactions. I commend that thought to you for 
 what it is worth. 
 
 Q. Will you have that thought boiled down to a short 
 brief and give it to us? 
 
 A. Yes. 
 
396 
 
 SAMUEL M. CLEMENT, JR., Temple College, called. 
 
 Mr. Clement: I presume you gentlemen sitting here, 
 constituting the Legislative Commission, are after know- 
 ledge and light on the general subject of the State's 
 revenues, how they can be raised, and how applied after 
 they are raised, and in that connection I would like to 
 call your attention to an institution of Pennsylvania 
 which has never been recognized by the legislative powers. 
 There was established about 25 years ago in Philadelphia 
 a brain factory. A big, broad man, who was a humanitar- 
 ian in every sense of the word, conceived the idea that 
 the greatest asset that this Nation had or this Common- 
 wealth had, was the young men and young women who 
 were growing up into manhood and womanhood, and 
 his thought was that he could not do a better thing for 
 the Commonwealth than to start a series of educational 
 courses for the young women and young men of this 
 Commonwealth. As I say, he started 25 years ago with 
 seven men in his own study. He has worked from that 
 time to this, untli now he has 3,600 students. He has 252 
 instructors. He has grown from no asset to assets 
 amounting to almost $1,000,000 in property, and all this 
 has been the work of one big, broad man in Philadel- 
 phia, and not one dollar of aid has he ever received from 
 the Commonwealth of Pennsylvania. The young women 
 and young men that he undertakes to educate are the 
 young men and women who, by reason of their pecuniary 
 condition, have been unable to finish their courses in the 
 public schools or in the colleges, young men and young 
 women who are forced by the necessity of their families 
 to go out and earn a living for their old mothers and 
 fathers, for brothers and sisters. They get along to be 
 17, 18 or 19 years of age, and they realize that in this 
 age of competition their chances are not as good as those 
 
397 
 
 of young women and men who have been well educated, 
 so they come to Dr. Conwell and pay to him what they 
 can afford in order that they shall not be objects of 
 charity, and they are taught not only the elementary rudi- 
 ments of education, but they are taught the higher arts 
 and sciences. We have a medical school and a law school. 
 We have a dental school. We have a domestic science 
 school. In fact, we have every branch that can be con- 
 ceived for the betterment of the condition of the young 
 men and young women of this City. 
 
 It occurs to me that the great State of Pennsylvania 
 should realize that this is an asset that they can well afford 
 to invest in. There is not anything that will perpetuate 
 the great name of Pennsylvania better than to educate 
 young men and young women so they can go out and be 
 more useful to themselves and to their Commonwealth. 
 It seems to me that it would be very appropriate for this 
 Commission to go back and to report to the House of 
 Assembly that if we have not revenue enough to encourage 
 the education of the young men and young women in 
 Pennsylvania, then we should raise the revenue. If 
 necessary we should put a tax upon gas companies in 
 Pennsylvania. We should put a tax upon water power 
 companies in Pennsylvania. We should make corpora- 
 tions that receive special privileges pay for them, in order 
 that the State might have money enough to educate the 
 young men and women of this State. We might put a 
 few more mills on the brewers and a few more mills on 
 the distillers and so on. We could very well afford, all 
 of us, to contribute of our earnings for this very worthy 
 purpose. We might even make the lawyers pay a certain 
 percentage of their earnings to the State for the privilege 
 of practicing here, in order that they might help some poor 
 brother who has not money enough to be educated to be 
 a lawyer. 
 
 I call your attention to these facts because the man who 
 dropped the acorn 25 years ago from which has sprung 
 
398 
 
 this magnificent oak, is to-day on his sick-bed and has 
 been for many weeks. His time has almost worked out. 
 He has given his time and his money until he is almost 
 exhausted. The president of this university himself, con- 
 sidering the money that he has given and the interest on 
 that money in the last 25 years, has given to this university 
 himself $1,000,000. He has spent one-half his time in 
 the last 25 years on sleeping cars, going about in this great 
 .United States lecturing to raise money for this university. 
 It is hard to understand in these selfish days how a man 
 could be willing to give up everything in life for that 
 magnificent principle, but he has. I heard him say before 
 the Board of Directors not long ago, "Gentlemen, I want 
 to say sincerely that if I could lay down my life to-day, 
 and by laying down my life I should insure the perpetua- 
 tion of this magnificent work for the young men and 
 young women of this Commonwealth, I would be willing 
 to die to-day, ' ' and I believe every word of it. 
 
 By Mr. Brown: 
 
 Q. What is the difference between the position of Temple 
 University and the University of Pennsylvania, in your 
 mind, as respects an appropriation from the State? 
 
 A. With respect to an appropriation from the State, I 
 would say that the University of Pennsylvania has no 
 greater claim upon the revenues of the State of Pennsyl- 
 vania than has the Temple University. I want to say, with 
 great respect to the University of Pennsylvania, because 
 I graduated there myself in 1897, that they do good work, 
 but as regards the poor people of this Commonwealth 
 their usefulness is infinitesimal as compared with the great 
 work of Temple University, and the Temple University 
 is as much entitled to the taxpayers' money for their 
 wonderful work as is the University of Pennsylvania, or 
 the State College at Bellefontaine, or the Western Univers- 
 ity in Allegheny. 
 
 Q. What restrictions, if any, do you place upon admis- 
 sion to Temple University? 
 
399 
 
 JL. We place no restriction, excepting that the young man 
 OP young woman who applies there must be of good moral 
 character. 
 
 Q. Earnest and honest, I suppose 1 
 
 A. We want to encourage industry and thrift, and we 
 care not whether it is Jew or Gentile. We care not for 
 their creed or their race or their politics. We ask them 
 to go there and come within the influence of that mag- 
 nificent environment, and we are sure that they will go 
 out a credit to their university and to their State. Among 
 other things that they are taught there is a reverence for 
 their State, respect for the officials of their State. They 
 are taught that the great Commonwealth of Pennsylvania 
 is not a bad place, but it is a good Commonwealth. They 
 are taught that the City of Philadelphia is not a sunken 
 eity, but they are taught that Philadelphia is one of the 
 most magnificent municipalities in this great country, 
 and when the boys and girls leave Temple University, they 
 leave it with great respect and reverence for their City 
 and their State. 
 
 Q. What has been the outcome or result of the activity 
 of Temple University? 
 
 A. The result has been this: That in 25 years we have 
 graduated 60,000 young men and young women. 
 
 Q. In what different branches? 
 
 A. In all the branches, from an elementary education -ip 
 to doctors of philosophy, ministers of the. gospel, doctors 
 of medicine, dentists and lawyers. There is not any branch 
 you can think of that we have not, and I want to tell you 
 that of the young men who have graduated from Temple 
 University in medicine, but one man in the nine years 
 the medical school has been in operation, has failed to 
 pass the State Board examination, and I want to know 
 if there is another medical school in all these United States 
 that has a higher average than that. 
 
 Q. Why have you not had State aid? 
 
 A. We have not had State aid because Dr. Conwell is 
 
400 
 
 one of those men that would rather go on and work until 
 he died in the cause than go before the Legislature and 
 assert his rights. He is a modest man. He is a man that 
 is unwilling to force his claims, very much to the detriment 
 of the University. 
 
 Q. Laying aside the personality of the founder, do you 
 consider the institution would have been more useful if 
 it had during all these years received State aid? 
 . A. That is a question impossible to answer. I take it 
 upon the same theory that a man who has earned $1,000 
 and spent $500 for charity would have done better if he 
 had had an income of $10,000. Then, perhaps, he might 
 have spent $5,000 for charity. It all depends on con- 
 ditions. It is absolutely impossible to take a retrospec- 
 tive view and answer a question of that kind satisfactorily, 
 I think. 
 
 Q. Are there possibilities for usefulness of this instti- 
 tution beyond that which they have been abl to satisfy ? 
 
 A. Yes. We have to-day about 3,600 sudents. "We have 
 a magnificent property that we have bought from our 
 collections, at Broad and Brown, and we have applications 
 for the education for at least 10,000 young men and young 
 women a year. 
 
 Q. Why do they not go to other institutions? 
 A. Where are they? 
 
 Q. Are they of sufficient means to go to the University 
 of Pennsylvania? 
 
 A. They are not; because the young men and young 
 women who go to our university work during the day to 
 support their families, and we educate them at night. If 
 you know of any other university where they do like work 
 we would be glad to send them 3,000 students a year. 
 
 Q. How do results from your institution compare with 
 results from other institutions? 
 
 A. I would refer you to the State Board of Law Exam- 
 iners to find out our average there. It is as high as any 
 
401 
 
 law school in the country, and our medical school is higher 
 than any other medical school. 
 
 Q. Do your other departments keep apace? 
 
 A. Absolutely. We take young children when they 
 are hardly able to walk, in the kindergarten, from poor 
 families who cannot afford to educate and keep them at 
 home. When the mothers go out working all day, we keep 
 the little ones in there, care for them in the kindergarten 
 and nursery, and try to help their mothers in their edu- 
 cation and in a moral sense. 
 
 By a Member of the Committee : 
 
 Q. Coming back to the question of raising revenue, what 
 would you say as to taxing manufacturing corporations? 
 
 A. I would say this, that if it is necessary, and revenue 
 cannot be raised in any other way, I would say tax manu- 
 facturing industries.. First, I would exhaust all other 
 means of taxation, because the theory of not taxing manu- 
 facturing companies is because we want to encourage in- 
 dustries of this kind in this Commonwealth, but that was 
 the old theory, and I think now that the manufacturing 
 industries are developed the case is changed. It is some- 
 thing like the tariff. There was a time when it was neces- 
 sary for us to have a high protective tariff to build up 
 weak industries. Those weak industries have developed 
 into gigantic trusts. They do not need any more protec- 
 tion, and we should remove the tariff. The same prin- 
 ciple could be applied to manufacturing industries. No 
 doubt, when the framers of the Constitution said manu- 
 facturing corporations should not be taxed, it was to en- 
 courage those industries, but do they need that encourage- 
 ment now? Take the manufacturing industries of this 
 Commonwealth and you will find that they are wonder- 
 fully rich. Take, for instance, the steel corporations. Why 
 should not the Carnegie Steel Company, and why should 
 not the Cambria Steel Company and the Pennsylvania Steel 
 Company, and other manufacturing corporations, pay their 
 share of the taxes of this Commonwealth ? 
 
402 
 
 Q. What would you say as to taxing our natural re- 
 sources ? 
 
 A. When you say natural resources 
 
 Q. I refer to coal, for instance? 
 
 A. Coal, lumber and minerals of other kinds. Of course, 
 as I am told, lumber is becoming very scarce in Penn- 
 sylvania, it would hardly be fair to tax it unless it is upon 
 the theory of preservation, but it seems to me coal should 
 be taxed, because I believe that the coal in the earth in 
 the first instance belongs to the people of the country. 
 Someone has been given special rights and special privileges 
 for the mining of that coal. That is all right, and those 
 vested interests should not be disturbed; but those vested 
 interests, when they can afford it, should give of their 
 means to the State, in order that the State may extend its 
 arms of charity to the people in the Commonwealth who 
 are less fortunate. 
 
 By Mr. McNichol : 
 
 Q. What protection would you give to the consumer if 
 you taxed coal? 
 
 A. Natural competition is the only protection the con- 
 sumer has. We were told that after the tariff bill was 
 passed, of course, poor people would benefit, because the 
 price of the necessities of life wou^d be less, but we find 
 they go steadily 'up. 
 
 Q. Will you give us any data on that that will be 
 substantial, except newspaper reports? 
 
 A. If you will go to market for me next Friday night 
 
 Q. I pay a market bill every week. 
 
 A. The trouble is, you pay it without investigating the 
 cost of it. If you put a basket on your arm and went to 
 market as I do, and bought eggs and butter where you 
 could buy them cheapest, you would realize that every day 
 prices are going up. 
 
 Q. We are forming alliances now to abstain from eating 
 those high priced articles and get back to natural con- 
 ditions. 
 
403 
 
 A. We have to eat something, and I am tired of Mother 's 
 Oats. I do not want to take up any more of your time. 
 I have given you the best thought I had on this subject. 
 
 Q. Will you compile your thoughts into a brief and file 
 them with Mr. Brown for the information of the Com- 
 mittee ? 
 
 A. I will be very pleased to do that. It just occurred 
 to me you might be interested, especially the Chair- 
 man, in an editorial that appeared in the North American 
 011 January 29th. Sometimes the North American does 
 print good things. I do not know whether you gentlemen 
 read it or not. I believe your distinguished counsel has 
 at times read it, but if you will take the trouble to read 
 the editorial of the twenty-ninth of January in the North 
 American, which is entitled "Philadelphia's Best Factory," 
 you will have a great deal of light on the subject that I 
 have been discussing, very much better and very much more 
 accurate than I could give it to you, and after having read 
 that I am sure you would go back to the House of Assembly 
 fully convinced that this great institution, founded by Dr. 
 Conwell, is the best asset that Pennsylvania has, and you 
 will give to her bountifully from your treasury every 
 year. 
 
404 
 
 DR. W. P. WILSON, Philadelphia Museums, called. 
 
 Dr. Wilson: Mr. Chairman: I represent the Philadel- 
 phia Museums, an institution which is somewhat peculiar 
 in its character, not a private institution, as it has on its 
 Board the Governor, the Superintendent of Public In- 
 struction of the State, and the State Commissioner of For- 
 estry. At least, the Superintendent of Public Instruction 
 and the State Commissioner of Forestry were put on on 
 account of the educational work which the institution was 
 doing. It also has the Mayor of Philadelphia, the Presi- 
 dents of Select and Common Councils, the President of 
 the Public Board of Education, and the Superintendent of 
 public instruction, active on its board. I should say that 
 the President of the Board of Education and Superinten- 
 dent of Schools, also the Superintendent of Public Instruc- 
 tion and Commissioner of Forestry, are frequent atten- 
 dants on its Board. 
 
 It is a peculiar institution, in that it started out to aid 
 the manufacturers and commerce of the State, and to do 
 that it found a most effective way in lines of education, 
 and it began soon after its organization to plan out a 
 systematic work in the State to educate the children in 
 lines of commerce and the industries, and this is the only 
 State in the Union that is doing that sort of work. It 
 has been for a number of years circulating collections in 
 the State, in the schools, large collections in the higher 
 schools, to stimulate industry and stimulate knowledge of 
 geography and commerce in general. Large collections have 
 gone to over 1,500 schools in the State. At the present 
 time it is circulating smaller collections, with cabinets, 
 so that the schools are not compelled to provide cabinets. 
 It has already prepared 300 of these and sent them out 
 and is preparing 600 more. These are designed to reach 
 
405 
 
 the ungraded country schools in remote districts, and there 
 are about 18,400 of those ungraded schools. 
 
 By a Member of the Committee: 
 
 Q. How much State aid do you receive? 
 
 A. We have received on an average since the institution 
 began $20,000 a year. In some years we have received very 
 much more than that. 
 
 Q. How much from the City of Philadelphia? 
 
 A. On an average, we have received from the City since 
 our organization $75,000 a year. 
 
 Q. How long is that? 
 
 A. We have been organized about 13 or 14 years. We 
 have had from private individuals since we have been or- 
 ganized an average of $35,000 a year. That comes from 
 the manufacturers and others who vigorously use the in- 
 stitution. 
 
 Q. Your plea is that this aid should be continued? 
 
 A. It is that it is a very essential thing for the State. 
 
 Q. Do you receive any aid from the United States Gov- 
 ernment ? 
 
 A. At one time we received $350,000 for a special pur- 
 pose. 
 
 Q. How long ago was that? 
 
 A. That was in 1897. It was received for permanent 
 buildings for the museum. Three hundred thousand dol- 
 lars of it was asked at that time for that purpose, and 
 $50,000 for putting in objects which would be interesting 
 to commerce. 
 
 Q. The Commission has no disposition to have you dis- 
 continue your argument, but in as much as no special plea 
 is made for discontinuing the aid, the Commission feels 
 perfectly satisfied with what you have said and has no 
 fault to find with the work you are doing. 
 
 A. I ought to say one word, that the output of the manu- 
 facturing interests of this State is $2,000,000,000 annually 
 at the present time. It has doubled in the last few years. 
 
406 
 
 This line of education has its greatest importance in that 
 way, the manufacturing interest being four times what the 
 mining interest is or what the agricultural! interest is. I 
 want to say just one word further, that there are other 
 States agitating this method of procedure. Illinois, Ohio 
 and Wisconsin are all considering the question of doing 
 just what we are doing, and they send here to see how we 
 are doing it. Within the last fifteen days I have been 
 called to an educational conference in Massachusetts, in 
 which the Chamber of Commerce, which is now reorgan- 
 ized and has over 5,000 members, through one of its edu- 
 cational committees called 17 presidents of colleges and 
 universities together for conference with the business men. 
 The whole consideration was on the organization of an in- 
 stitution similar to the Philadelphia Museums, to do edu- 
 cational work in the State, industrial education. That 
 continued over the day and evening, and last Friday had 
 a second session. I was called again. That is the most 
 active work that is being done outside of the State of Penn- 
 sylvania. I should be pleased to give you gentlemen a 
 report, which I am sure you have no time for here. 
 Q. File it with Mr. Brown. 
 
 By Mr. McNichol : 
 
 Q. How far do you ascertain the condition of labor in 
 the respective countries as compared with the condition of 
 labor in the United States? 
 
 A. We have never specially taken up that question. We 
 have taken up several questions of investigation in foreign 
 countries, but not that. 
 
 Q. You have exhibits from all over the world ? 
 
 A. We have. 
 
 Q. Manufactures of all kinds? 
 
 A. Manufacturing exhibits and others. 
 
 Q. Do you go into the cost of those particular things in 
 those countries? 
 
 A. Wherever we get manufactures we get prices and 
 
407 
 
 conditions of production ; that is, the price it is sold at on 
 the market or that it is exported at. That we have to get. 
 
 Q. What is the cost paid to labor employed in putting 
 together that particular product? 
 
 A. That we have never gone into. 
 
 Q. Do you not think that is essential for the informa- 
 tion to the general public ? 
 
 A. It is a good thing for the general public. 
 
 Q. Comparison as to how much the profits of our manu- 
 facturers are as compared to those in other countries? 
 
 A. It would be a good thing. We have gone very exten- 
 sively into the question of prices which the Germans and 
 English and others get for their exported products, and 
 labor, of course, is an essential part of that, but we have 
 not gone into the labor detail itself. 
 
 By Mr. Brown : 
 
 Q. To what extent does the United States Government 
 do this work ? 
 
 A. Very little. 
 
 Q. Through its consular offices? 
 
 A. It is very limited for this reason; that if we take 
 such a country as Germany, a decree was published in 
 Germany, four years ago, to give our consuls no informa- 
 tion whatever where it could be kept from them. 
 
 Q. You think this service can be done better by an in- 
 stitution like yours than by the State directly? 
 
 A. If an institution like the Department of Commerce 
 and Labor wishes to write to anybody, except their con- 
 suls, to get information, they must do it through the Sec- 
 retary, and it becomes a very formal matter. I would 
 like to state that I have had an appeal within the last 
 three months from the Department of Standards, in Wash- 
 ington, to get them wools in four or five different coun- 
 tries that they might standardize them for the benefit of 
 wools coming into the country. They did not choose to go 
 out through the Secretary of Agriculture, because it would 
 
408 
 
 become a formal government matter, and we are in touch 
 with chambers of commerce all over the world, and could 
 simply write to Cape Town and get the specimens they 
 wanted from there, and to New Zealand and get them from 
 there, and from Australia, and from Argentina, the four 
 or five places where they wanted them, without any form- 
 ality whatever, because those countries have all sent us 
 large collections, Argentina 250 fleeces at a time, to ex- 
 hibit for the benefit of the wool trade, and in many ways 
 we can do that sort of work in a way that has no official 
 touch to it whatever, and get accurate information. We 
 can write to a chamber of commerce in Germany, and get 
 information which it would be perfectly impossible for the 
 Government to do without detectives. 
 
 By a Member of the Committee : 
 
 Q. You have had applications for those educational ex- 
 hibits from almost all counties in the State? 
 
 A. We had. 
 
 Q. Do you not spend quite a large part of your State 
 appropriation in sending out those educational exhibits? 
 
 A. We do. 
 
 By Mr. McNichol : 
 
 Q. Does the United States Government compensate you 
 for securing those samples they ask for ? 
 
 A. They pay all expenses. We charge nothing. We have 
 a large clientele all over the world of colonial houses, and 
 we do all services for nothing for those colonial houses, 
 because it leads them to come to us for all kinds of manu- 
 factures in this country, and we can tell them with whom 
 to make their connection, which is a great asset. 
 
 By a Member of the Committee: 
 
 (^. You give preference to Pennsylvania institutions? 
 A. Always. 
 
 By Mr. Brown: 
 
 Q. Have you any data as to the educational benefit from 
 the circulation of those exhibits ? 
 
409 
 
 A. I have probably 200 letters from educational people 
 in the State. 
 
 Q. Showing the work was a leaven for the benefit of the 
 institutions ? 
 
 A. I have letters saying that now they are working with 
 them they could not do without them in the schools. I 
 could present a great stack of letters of that kind. 
 
 By Mr. McNichol: 
 
 Q. What would be your thought of the consolidation of 
 that particular feature of your work with the University 
 of Pennsylvania, with you in charge? 
 
 A. That really is something I would not like to discuss. 
 
 Q. Have you had your mind made up as to what would 
 be the result, whether beneficial or detrimental? We do 
 not want you to say anything before this Committee except 
 merely for information. 
 
 By a member of the Committee : 
 Q. Eliminating your personality? 
 A. I have never thought of the possibility. 
 
 By Mr. Brown : 
 
 Q. You are satisfied with your present boarding house? 
 
 A. I am. I have never thought of the possibility of 
 the University taking up commercial work and that line 
 of education particularly. 
 
 By Mr. McNichol : 
 
 Q. In the next two or three months will you give it 
 some thought and let us have your views on it? 
 
 A. I will try to do so in the next few weeks if you 
 desire. 
 
 By a Member of the Committee: 
 
 Q. In that connection also let us have your thoughts 
 as to combining it with the Bureau of Industrial Statistics 
 in the office of the Secretary of Interal Affairs at Harris- 
 burg. 
 
410 
 
 A. Yes, sir. It is something, of course, I have not 
 thought of for a moment. 
 
 Mr. McNichol : Do not get out of your own town. Remain 
 in the confines of Philadelphia. 
 
 The Witness : I have had overtures recently to get out, 
 not only from the South, but from New York and Boston, 
 but I believe Pennsylvania is the foremost State in the 
 Union. It is the largest by all odds in manufacturing, 
 and I have had a feeling that we have helped it along a 
 great deal in the last few years. 
 
411 
 
 DR. GEO. W. MacLAUGHLIN, Penna. Seamens Friend 
 Society, called. 
 
 Dr. MacLaughlin : Mr. Chairman, we do not like to 
 monopolize your time, therefore I would like to be as brief 
 as possible, for your time must be exceedingly valuable, 
 I take it. I represent the Pennsylvania Seamen's Friend 
 Society, which was organized in 1843 and incorporated 
 by the Legislature that you gentlemen represent in 1846. 
 Some of the grandest men Philadelphia ever possessed 
 were its original incorporators. The purpose of the 
 organization was the preservation and elevation of the 
 men of the ocean. That involves millions of men who 
 have no similar characteristics in the world. The re- 
 markable thing is that greater attention has not been 
 aroused to protect the carriers of the cargoes as they 
 sail the circle of the globe. The revenues of your country 
 are gathered from these identical men, whose exposure, 
 both physical and moral, is unequalled by any other class 
 of men in the world. The society, therefore, started in 
 some time ago, and it has done its level best. Specifically 
 it organized a large home at 422 S. Front street, a very 
 fine building. Dr. Weir Mitchell was down to see us 
 some time ago, and I was amazed that so remarkable a 
 character would be interested, a Philadelphia man, a 
 man of high intelligence. He said he came to view our 
 home, which he did. That home will accommodate 40 to 
 50 men at one time. Dismiss from your minds the idea 
 of anything contracted or small or indifferent about it. 
 There is no such home in Philadelphia. There are 
 plenty of homes to accommodate sailors, and they 
 are accommodated in various ways, perhaps, as you may 
 readily imagine, in any direction that their fancies might 
 lead them. Our home is very select and very carefully 
 conducted. We have never had a bar connected with it in 
 66 years. We did not think that was at all wise. 
 
412 
 
 I wish you could be there and see those good fellows. 
 If a shipwrecked crew is brought to that home, as I have 
 met them many times, I do not profess to be much of a 
 woman, though a fellow is liable to shed a tear now and 
 then when he is not, to see eight or ten men come into your 
 office, broken all to pieces. "Boys, you look to me as 
 though you were wrecked yourself." Cowed, broken 
 in spirit. Oh, how touching. What do we do ? We have been 
 doing it all these years. I challenge any organization 
 in Philadelphia to surpass the proposition I make to you 
 now. We fit them out with warm underclothes, a full 
 suit of clothes, shoes and stockings. That is the kind of 
 charity that is wanting nowadays. Can we be at a loss 
 when we tell you that the home has accommodated 50,000 
 men? Think of that. They are men who have come and 
 gone like the waves of the sea. It is an institution which 
 contains the elements of a hospital. I have been listening 
 to this hospital story. It was a very worthy one. If a 
 seaman is taken sick in that home we have a visiting 
 physician. What does the public know about that? We 
 have not gone to the house top. A prescription is 
 furnished by that physician. We pay the bill and take 
 care of that physician. Can you think of anything more 
 complete than that. This has been done for 60 years. 
 How much do these gentlemen know about our Philadel- 
 phia work in that direction. I say to you in the most 
 positive and manly way that the overlooking of this 
 important class of men is a thing the English understand 
 infinitely better. They protect their sailors. You can go 
 over the globe and you will find that English organizations 
 are in the large ports of the world. New York has come 
 to it with an institution that has cost $450,000 or $500,000. 
 You are aware of that, perhaps. 
 
 By Mr. McNichol : 
 
 Q. Money appropriated by the State of New York? 
 A. No, sir. I am not sure but what some money has 
 
413 
 
 been given to it, but there was a very nice, handsome 
 woman, handsome in the sense of the gift, that handed 
 over several hundred thousand dollars, and they were 
 worthy of it, and if you believe me I have been in the 
 work 27 years. I have a passion and an ambition that 
 Philadelphia will have a handsome house for those splen- 
 did men who bring in the cargoes here out of which your 
 Government lives. It is the revenues that support the 
 American Government. You know that, Mr. President. 
 Mr. Sproul knows that. He belongs to that valuable port 
 of Chester. He ought to know a great deal about the 
 thing I am talking about and I am sure he does. 
 
 Along with that we have a large plot of ground at 
 Mt. Moriah Cemetery, beautifully enclosed with marble, 
 and all the requisites, so that when a poor fellow dies in 
 our home or in a hospital, far from his dear friends, it is 
 touching. I have looked into the coffins of those men, 
 and said, "Ah, your dear friends do not know anything 
 about this," and we have them carried and placed in that 
 large and valuable piece of ground conveyed by the 
 Cramps. They did the handsome thing for us, and I 
 secured it all. My dear Committee, this home of ours 
 has been doing a splendid piece of work that Philadelphia 
 does not know. I venture to say this Committee knows 
 very little about this class of work. I am sure of it, 
 because you must come in contact with it. You must 
 make yourself conversant with the facts. These men 
 come ashore. They are boys, and yet grand fellows. 
 They come ashore here and will be taken care of by men 
 and women without any embarrassment at all, for what 
 they are worth. We propose to help them with a nice 
 home, handsomely equipped with nice rooms. Any one 
 of this Committee might take a room there. We have 
 accommodated, as I told you, some 50,000 men. In the 
 past year, up to this time, I think it is 658, and some 
 hundred lodgers. It is something different from anything 
 in Philadelphia, entirely different. Along with this 
 
414 
 
 arrangement we have what is known as a system of 
 libraries. We send on shipboard, which originated about 
 the time of the breaking out of the Rebellion, and these 
 libraries, some 30 volumes in a case, placed on ships, 
 of which there were some 4,052, containing over 7,000 
 volumes. Have we not been spending money? We have 
 not come as mere beggars. Oh, no, we are standing up 
 magnificently for a class of men that the public seem 
 to know little about and care less. I organized, some 
 eight or nine years ago, a free school for instruction in 
 navigation which is at the home in one of the rooms, 
 under the care of one of the most careful teachers of 
 navigation that you could find here or anywhere else. 
 I went to Washington and consulted with two of the 
 Secretaries of the Navy. They were delighted with the 
 idea. It seemed to be something new. You may know 
 how much they were delighted when I got two of them 
 at two different times to come to Philadelphia and make 
 addresses at our anniversary. I am sure you will agree 
 that there must have been something in it to have brought 
 two such men from there. 
 
 By a Member of the Committee : 
 
 Q. What State appropriation do you get? 
 
 A. I am almost ashamed to tell you, it is so small 
 $4,000 for two years. 
 
 Q. What is your total revenue? 
 
 A. We have revenue coming from rentals and private 
 subscriptions and all that. This school has received 
 within eight years, I think it is, some 250 odd scholars. 
 Every one that has appeared before the Government 
 Inspector at Ninth and Chestnut streets has passed, and 
 that Government Inspector complimented me by saying, 
 "You must have a very valuable teacher. We have 
 passed them all, and to pass the examination for a 
 Government certificate a man has to understand his sub- 
 ject or he won't get the certificate." There has never 
 
415 
 
 been one turned down. Can I say anything more remark- 
 able in favor of one feature of our work T 
 
 I could wish, indeed, that we had a greater amount of 
 money, but we have been a little modest. One of your 
 legislators said to me, "Why don't you apply for more 
 money?" They might have thought I was a weak fellow, 
 but I think it was more modesty than weakness. It has 
 occurred to me that a little more openness of movement 
 in that direction might be beneficial for us. I want 
 everyone of you gentlemen to come and see us at 422 S. 
 Front Street, an elegant building, where we will treat 
 you handsomely indeed, and have you dine with us. 
 
 By a Member of the Committee: 
 
 Q. Do you take care of any others than sailors? 
 
 A. No, sir, it is absolutely and distinctly a sailor's 
 house. We could not afford to open the house for 
 promiscuous people. It would not be safe. I think you 
 will agree with me on that. Would you like to have our 
 reports? 
 
 Mr. Brown : Leave those with me. I will be very glad 
 to have them. 
 
 The Witness : I am so proud of my own State, in which 
 I was born, that I do not like anything mean about it. 
 I would like to have a sailors' house that is big. 
 
 Q. As good as anybody's else or better? 
 
 A. Yes, sir, just as big as you are and everybody 
 else connected with you. You may think I am very earnest 
 and intense. If you think so, pardon me. It is the inten- 
 sity that I have for my work. 
 
416 
 
 DR. N. F. MOSSELL, Frederick Douglass Memorial 
 Hospital, called. 
 
 Dr. Mossell: Mr. Chairman, I am very pleased to have 
 the opportunity of speaking with your permission. I 
 represent the Frederick Douglass Memorial Hospital. 
 We represent a hospital managed largely by our colored 
 citizens, the first hospital in Pennsylvania that our people 
 have assumed the responsibility of directing, and the 
 second one in the United States; in fact, the largest and 
 best equipped hospital now managed by colored people 
 anywhere in the world. We have always felt that when 
 our work was properly presented we would not have any 
 serious difficulty in having aid. Most of you know that 
 we, by reasons of race variety, have embarrassments. 
 Our nurses who wish to be trained, and we have a large 
 and increasing number of intelligent colored women who 
 make excellent nurses, find it practically impossible to 
 get in other hospitals a very unfortunate thing. The 
 same thing is true along other lines. 1 would draw m> 
 lines, either in race or religion. We would feel ashamed 
 to ask for State aid if anybody that came in there and 
 needed it was refused by reason of race We have an 
 institution that cost us $100,000 to erect. The State 
 Legislature has been good enough to give us, up to this 
 time, $8,000 on that building. The Legislature was kind 
 enough to vote us considerably more than that, but the 
 Governor in his judgment decided that the State revenues 
 would not permit it, and we were cut down. 
 
 In regard to the effect that aid has on people that give, 
 T. can say that already our people have been encouraged 
 to give by reason of the aid. Our people alone have 
 raised in the neighborhood of $40,000 for that institution 
 and it has taught them to give in lines that they never 
 
417 
 
 had been known to give before. It has taught them a 
 lesson of giving that they would not otherwise have had 
 the opportunity to learn. 
 
 We have, in connection with that institution and hope 
 to develop in connection with it in the next year a post- 
 graduate school. We have numbers of physicians here. 
 We have probably forty-five in the town here, and 
 numbers of them come here from the southern section of 
 the country, wishing to take post-graduate courses, and 
 cannot be admitted, and we hope to be able to give them 
 that institution we, in a private way, might have been 
 cause physicians are broad-minded gentlemen, and both 
 white and colored physicians are connected with .the 
 institution. 
 
 We are oppressed considerably by reason of debt, and 
 it has been a matter of 14 years' hard work to put the 
 institution where it is, a matter of a great deal of personal 
 sacrifice. With half the energy expended in building 
 that instruction. We are fortunate in that respect be- 
 a great deal better off, a great many of us who 
 are associated with the work. I do not wish at all to 
 make a long speech and take up your time, because most 
 of the points have been thoroughly covered. We have 
 been treated kindly by the State Board of Charities, as 
 a rule, and I have always felt that they ought to be 
 encouraged in their work, that is, the State Board of 
 Charities, because they give more time, and I am glad 
 to see this inclination on the part of the authorities of 
 the State to look into the matter so that they can give 
 to those institutions that deserve by reason of really 
 merited consideration. 
 By a Member of the Committee : 
 
 Q. Is there any distinctive institution in the country 
 for the education of colored men as physicians? 
 
 A. There are a number of them, one in Nashville, 
 Tenn., one in North Carolina, and there is the Howard 
 University at Washington. 
 22 
 
418 
 
 Q. That has a medical course. 
 
 A. They have medical departments. Numbers of those 
 men finish their courses and want post-graduate courses 
 and cannot get them. 
 
 Q. Do any colored men attend the medical schools here ? 
 A. Yes, sir. I think there is no medical school in town 
 that refuses them any course. 
 
 Q. They have' no embarrassment? 
 
 A. They only have embarrassment in post-graduate 
 work. There is an institution in the City that refuses 
 them admission in post-graduate, the only one here, unfor- 
 tunately. It is a very unfortunate thing. In regard to 
 the amount of aid given by the State to institutions I 
 think that the amount ought to be governed by the 
 ability of the people behind the institution to help it. 
 There could be no hard and fast rule that the institution 
 shall get so much if the people raise so much. I think 
 their capacity to raise ought to be considered. 
 
 By Mr. Brown : 
 
 Q. What would be your idea of the percentage of 
 relative contribution from the two sources. For instance, 
 you asked the last Legislature for $20,000 for maintenance 
 and $60,000 for building. Were your people in condition 
 to have raised a similar amount if that had been appropri- 
 ated to you? 
 
 A. We did raise about $35,000 of that building money, 
 but that was a special effort. We raised in the last two 
 years that much money. 
 
 Q. W'hat reason was given for disapproving your 
 application for maintenance, or reducing it from $20,000 
 to $5,000, and your building from $60,000 to $10,000? 
 
 A. I could not say that. Those things occur. I could 
 hardly say. 
 
 Q. Was the question of necessity an element in the 
 consideration ? 
 
419 
 
 A. I presume so. I did not go into that matter. I 
 noticed that, but I could not say exactly about that. I 
 presume they did not know we had the capacity of doing 
 the work we are doing. We were in a small building. 
 We just moved out of the small building about eight 
 months ago. They did not suppose in that building we 
 could use that much money. 
 
 Q. How has your debt been accumulated? 
 
 A. By reason of the large building we have just put 
 up, the $100,000 building. We are carrying those mort- 
 gages now. 
 
 Q. Have you pressing need for such a building? 
 
 A. Yes, sir. We have now a capacity of the institution 
 according to its equipment of about 60 beds, and about 
 40 of those are filled at this minute, and we have only 
 been in the new building a short time. 
 
 Q. How much of that money have you raised yourself? 
 A. Between $30,000 and $40,000. 
 
 Q. It was to pay off the balance of that you have asked 
 this aid from the State? 
 A. Yes, sir. 
 
 Q. Are you growing all the time? 
 
 A. All the time growing. 
 
 Q. How do your nurses get employment, readily? 
 
 A. They are employed. As a matter of fact, we have 
 graduated only a limited number in those 14 years. They 
 are in demand in different States, in charge of little 
 institution hospitals in the South and different places. 
 That robs us of the use of them here in town. They go to 
 take charge of institutional work. 
 
 Q. Are they employed among your own people and 
 others, too? 
 
 A. Others, too. 
 
 Q. In general use? 
 
 A. In general use. 
 
420 
 
 By a Member of the Committee : 
 
 Q. What is your view as to raising revenue from any 
 source if it becomes necessary? 
 
 A. I very thoroughly agree to take your time in going 
 over the matter with the gentleman who represented 
 Temple University, and who spoke about his ideas of 
 raising revenue. I concur exactly on the lines he went 
 over. 
 
 Q. A wholesale raise all along the line? 
 
 A. If there is a necessity for it. Due consideration 
 ought to be paid as to not giving money to people who 
 have large resources and could raise the money. I think 
 the whole idea is to help the poor. We use that system 
 in admitting people to the hospital. We do not take 
 anybody in there in a free bed if they can pay. A lot 
 of them can pay something. We let them pay from $2 
 a week up to the regular $7 a week, and we ask them 
 what they are able to pay. If they belong to a sick 
 benefit society that money was put there for that purpose. 
 We let them pay some of it. It costs us $2 and some odd 
 cents a day to maintain a patient. It has been costing 
 that. I do not know what we may be able to manage 
 the larger building for because we have not been a year 
 in the larger building. I think the same system we use 
 in the hospital ought to be used by the Legislature in 
 regard to giving out benefit to each institution. 
 
 By Mr. Brown: 
 
 Q. Are you familiar with the other institutions of 
 Philadelphia where your people are exclusively cared 
 for? Take the Old Folks' Home on Powelton avenue and 
 institutions of that character. Have you visited them? 
 
 A. I have been here 28 years. I graduated from the 
 University of Pennsylvania, and I know all the institutions 
 in the City. 
 
 Q. What is your opinion as to the use of the State's 
 money in those institutions? 
 
421 
 
 A. I do not think the Old Folks* Home has ever asked 
 for any. I have no knowledge of any institution that is 
 receiving State aid that is not applying it properly. 
 
 Q. Are you speaking for your people now as a repre- 
 sentative man? Have you any thought as to how your 
 people can be benefited in any way through these 
 institutions or similar institutions? 
 
 A. Just as I have described; they feel that their work 
 and service and the taxes that they pay entitle them to 
 some return. They feel that they are excluded from a 
 number of institutions which have appeared before you, 
 and still their moneys are used as if they pay taxes, and 
 those that pay rent pay taxes. 
 
 By a Member of the Committee: 
 
 Q. Do those institutions get State aid? 
 
 A. Sure. I do not speak with any feelings against any 
 other charity, but you must know how we feel on a matter 
 like that, that we feel keenly that we are constantly 
 suffering ? 
 
 By a Member of the Committee: 
 
 Q. You have referred to a particular institution that 
 refuses admission to colored men for post-graduate work. 
 What institution is that? 
 
 A. The Polyclinic Hospital. 
 
 By Mr. Brown: 
 
 Q. All the others do admit them? 
 
 A. All the medical schools. There is but one post- 
 graduate school in Pennsylvania. It is a matter of 
 hardship because the same thing is true of one in Chicago 
 and the one in New York. 
 
 Q. The Polyclinic is the only one here that has a post- 
 graduate ? 
 
 A. It is the only one here. There are only three such 
 schools that I recall in the United States, and all three 
 of them refuse them post-graduate instruction. 
 
422 
 
 Mr. Brown: Suppose you submit to me any further 
 thoughts you may have on this general subject. I will 
 be very glad to receive it, wherein you think anything 
 can or should be done for the benefit of the people whom 
 you specially represent here today. 
 
423 
 
 DR. M. G. LIPPBRT, Phoeuixville Hospital, called. 
 
 Dr. Lippert: Gentlemen of the Commission: You have 
 heard, so far, chiefly representatives from Philadelphia 
 institutions. I appear before you as the representative 
 of a modest country hospital, that of Phoenixville, about 
 28 miles up the Schuylkill River. 1 have a few thoughts 
 jotted down on paper, and I believe it would be best for 
 me to read those thoughts and will not consume very 
 much time. It will preserve the continuity of my ideas 
 better, as I am not a professional speaker. All parties 
 interested, either directly or in a general way, as citizens 
 seem to be agreed that a different method or system is 
 indicated in determining appropriations for State aid to 
 hospitals and other charitable institutions not directly 
 under State control. It has been suggested to base the 
 measure of this support on the amount of charity work 
 actually done by these institutions. This seems to me 
 the most equitable and just method of apportioning the 
 amount at the disposal of the State for charitable 
 institutions. Another suggestion made here last week 
 was to make the amount of State aid in some measure 
 commensurate to the amount of the donations received by 
 an institution during the biennial period on the ground 
 that such voluntary support may be taken as the measure 
 of confidence, popularity and appreciation which the 
 institution enjoys within the community. This sugges- 
 tion, I confess, does not altogether appeal to me, for the 
 reason that it -favors the institution located within a 
 wealthy constituency and discriminates against that in 
 a community not so blessed. In other words, it gives to 
 the rich and withholds from the poor. To illustrate: I 
 represent an institution located in a manufacturing com- 
 munity, where by far the great majority of people are 
 wage earners, in addition to which we draw from a 
 
424 
 
 farming population for miles around. Neither of these 
 classes is among the wealthy. In fact, we have only a 
 very small minority of well-to-do people among our con- 
 stituents, who, apparently from motives of selfishness, or 
 a lack of liberality and charitableness, fail to contribute 
 to the extent that they should. For this reason our 
 donations as shown in our maintenance reports may not 
 compare favorably with those of our more fortunately 
 haps as much appreciated as any of them and has the 
 situated sister institutions, although our hospital is per- 
 moral support at least of the entire community. 
 
 That our people appreciate their hospital is shown by 
 the fact that our Women's Auxiliary has, during the last 
 11 years, raised upwards of $24,000, which has been used 
 for improvements and extensions as well as furniture, etc., 
 but this strain on the resources of our people on the other 
 hand has told on the contributions for maintenance; 
 hence, I say, our reports for maintenance do not show 
 very large donations. I therefore, contend that the 
 amount of donations received by an institution is not 
 necessarily a criterion of the measure of its appreciation 
 by its constituents, and to base the measure of State aid 
 thereon might work great havoc and injustice to the same. 
 
 Alleged Graft. Certain charges were made at last 
 week's session relative to graft in connection with ap- 
 propriations to certain City hospitals. While I have no 
 knowledge as to any favors asked of and rendered by 
 City hospitals in return for appropriations made to 
 them, I will say that, until I see some tangible proof to 
 that effect I should be inclined to doubt said statements. 
 In our own case, that of a country hospital, during the 
 10 years that I have been connected with it as its financial 
 secretary, handling every dollar coming in and going out, 
 there has never been the slightest misapplication of a 
 penny even, nor has there ever been the slightest sugges- 
 tion from any source of any fee, political tribute, or other 
 graft in any way, shape or form. This statement I cannot 
 
425 
 
 make too emphatic. Nor do I flatter myself that our 
 institution forms an exceptional case in this respect, but 
 I believe that the great majority of institutions are 
 honestly managed and free from all taint of graft, the 
 managers or trustees as a rule being chosen from the very 
 best and most representative element in the communities. 
 If any criticism attach to the management of some of the 
 country hospitals at all, it may be due, sometimes, to their 
 mistaking their scope and, as was said by Dr. Flick, last 
 week, their wanting to do too much, or too many things, 
 and thus spending money unwisely, but there is even in 
 these cases no suspicion or intimation of dishonesty; at 
 the most it could be characterized only as an error of 
 judgment and mistaken zeal. In order to counteract such 
 a course it would, in my opinion, be wise to place all 
 hospitals receiving State aid under the c ontrol of a 
 supervising body, which by personal contact with and 
 inspection of the institutions and from comparison of 
 their work and expenditures as shown in their reports, 
 could readily see where one or the other of them goes 
 too far in one, or branches out in the wrong direction, 
 and at once call a halt. Advice and suggestions from 
 such a body, if properly qualified, would be invaluable 
 to these hospitals and should be hailed by all of them. 
 The proper body, in my opinion, to have this supervision 
 would be the State Board of Charities, consisting, as it 
 does, of men who have through long years of service 
 become experts, as it were, in this particular line of public 
 service, whereas, i. e., the members of the Legislature are 
 more or less handicapped by the diversified character of 
 their legislative duties and business. 
 
 It might be necessary to enlarge the powers and the 
 machinery of the Board of Charities in order to enable it 
 to perform these duties efficiently and intelligently. If 
 additional legislation be needed to that end it should by all 
 means be enacted. 
 
426 
 
 DR. ROBERT C. MOON, Penna. Home Teaching Society 
 for the Blind, called. 
 
 Dr. Moon: Mr. President and Gentlemen of the Com- 
 mission : I will not trespass long upon your time in making 
 a few remarks in reference to the institution which I have 
 the honor to represent, the Pennsylvania Home Teaching 
 Society for the Blind. On Friday last I had the pleasure 
 of listening to the address of Mr. John Cadwalader, in 
 which he gave a most interesting account of the history and 
 progress of the Pennsylvania Institution for the Blind, now 
 located at Overbrook. That institution and the State Insti- 
 tution for the Blind in Pittsburgh provide instruction for 
 about 450 young blind persons. No person is eligible for 
 admission to these schools if over 21 years of age. The work 
 of the Pennsylvania Home Teaching Society and Free Cir- 
 culating Library for the Blind, which I have the honor to 
 represent, is the complement of the work carried on in 
 those two institutions, as it deals principally with the adult 
 blind scattered throughout the State. 
 
 It will be well to mention that the blind population of 
 Pennsylvania is about 6,000 four-fifths of whom are over 
 21 years of age and consequently not eligible for admission 
 into these institutions. Those who become blind in adult 
 life have no means of receiving instruction in reading 
 excepting through the teachers provided by this ''Pennsyl- 
 vania Home Teaching Society for the Blind, ' ' and as a rule 
 they need a more easily felt type than the dotted types 
 taught to children in the schools. For the adult blind the 
 type invented by my father, Dr. William Moon, of Brigh- 
 ton, Eng., is the most simple and most easy of acquirement. 
 
 Upon losing his eyesight my father realized that the 
 adult blind needed such a type, and endeavored to provide 
 it for them, and afterwards lived for more than fifty years 
 
427 
 
 to see his invention in use in every quarter of the globe. 
 It was found to be as necessary for the adults as the Braille 
 for the children. 
 
 On visiting this country in 1882 my father introduced 
 into Philadelphia the plan of home teaching of the blind 
 which he had employed successfully for 27 years -in London, 
 for he had found that most of the blind in adult life 
 must be visited in their homes if they are to be taught to 
 read. 
 
 The plan thus introduced into Philadelphia of providing 
 teachers to search out the blind and teach them to read in 
 their homes proved from the outset very successful, and 
 the society then formed also provided a free library of 
 embossed books for the use of its readers. 
 
 For 16 years the work of home teaching and lending of 
 books was carried on by Mr. John P. Rhoads, treasurer of 
 the Bible Society in Philadelphia, but in 1898 the society 
 was reorganized and Judge William N. Ashman became its 
 president. In 1901 it was incorporated under the title of 
 Pennsylvania Home Teaching Society and Free Circu- 
 lating Library for the Blind. From the time of reorgani- 
 zation in 1898 it has enjoyed the cordial co-operation of the 
 Trustees of the Free Library of Philadelphia, where the 
 books of the Home Teaching Society for the Blind are 
 deposited, and from which the circulation is directed. The 
 Free Library bears the expenses connected with the cir- 
 culation of the books in the City of Philadelphia, and the 
 Pennsylvania Home Teaching Society for the Blind is re- 
 sponsible for the clerical and other expenses connected with 
 the circulation of the books throughout the State of Penn- 
 sylvania. 
 
 Four teachers are employed by the Pennsylvania Home 
 Teaching Society for the Blind, two of whom are totally 
 and one partially blind. Three of the teachers are located 
 in Philadelphia and one in Pittsburgh. During the past 28 
 years hundreds of the blind in Pennsylvania have been 
 taught to read, and thousands of volumes of books in 
 
428 
 
 raised types have been loaned to the blind of all ages, 
 many of whom have been very advanced in years. During 
 the last year 17,422 embossed books were circulated, and 
 157 new readers were enrolled. Blind persons in sixty-two 
 of the sixty-seven counties of Pennsylvania have at some 
 time or other received books on loan, but there is a great 
 need of more teachers and more books in the various types 
 for the blind. 
 
 The Legislature of Pennsylvania has cordially recognized 
 and approved the good work which is being done by this 
 society, and began five years ago to extend to it State aid, 
 which has been generously continued until the present time. 
 Without such aid from the State so much could not have 
 been accomplished, and it is to be hoped that the Legislature 
 may see fit still further to increase its support so that ere 
 long not a blind person in Pennsylvania may remain unvis- 
 ited and untaught if he be capable of receiving instruction. 
 One illustration from a letter may show you the appreci- 
 ation which the blind have of the work which is being done 
 for them. One man writes from Frankf ord, ' ' I want to ex- 
 press my gratitude to you for sending Mr. Moore to me as a 
 teacher. ' ' I may tell you Mr. Moore is a blind teacher too. 
 "I am blind and before he came I was very much dis- 
 couraged. After learning to read I came in touch with 
 the outside world again, and have thus been enabled to 
 spend many happy hours which would otherwise have been 
 gloomy.' 7 In another note he says, "Last Thursday even- 
 ing I read the Scriptures at the watch night services. I 
 read the first sixteen verses of the 5th chapter of Matthew. ' ' 
 
 By Mr. McNichol : 
 
 Q. Do you not think this work should be incorporated in 
 the school work of Pennsylvania ? 
 
 A. I certainly think it belongs to it. If it could be incor- 
 porated and carried on in the same direction that it has 
 been carried on, I think it would be an excellent thing. 
 
429 
 
 Q. It should be part of the educational field of the 
 State? 
 A. I have always thought so. 
 
 By Mr. Brown : 
 
 Q. Do you receive money from private contributions ? 
 
 A. We received altogether about $4,000 a year, of which 
 now the State is giving us $3,000. I may say since we 
 have received assistance from the State we have been more 
 cordially helped by the community generally, and I am 
 in the hope that the proportion given by the charitable 
 public will be greater and greater every year. It has been 
 undoubtedly a strength to us that we have received State 
 aid. 
 
 Q. Do you not think that the care of it as part of the 
 school system would be more effective, in that it would 
 be more thoroughly done because there would be no limita- 
 tion based practically upon the money which would be 
 used for that purpose ? 
 
 A. It is rather different in some respects from ordinary 
 school teaching, because the teachers must be sent to the 
 houses. Blind adults will not go into the schools. That 
 has been tried, and they will refuse to go out of their 
 houses. It has been tried for the last 50 years and it always 
 fails. The blind must be reached in their homes. 
 
 In conclusion I venture to say that there is no work 
 more economically conducted and none is yielding more 
 abundant fruit for so small an expenditure of money than 
 the Pennsylvania Home Teaching Society and free circu- 
 lating library for the blind, and I hope that the State will 
 more and more foster the work which it has helped to 
 care for during the past five years. 
 
430 
 
 H. FRANK ESCHELMAN, Lancaster, Pa., called. 
 
 Mr. Eschelman: Mr. Chairman and Gentlemen of the 
 Committee: On the question of the revenue laws, and on 
 how to make the revenue go as far as it can possibly be 
 made to reach, I was advised by counsel for the Committee 
 I would be heard, among other thing. One of the important 
 points, as it was developed in the county of Lancaster, and 
 which came under my notice as Controller of that county, 
 was how to make the money at interest pay its share of the 
 public revenues. We had no difficulty in taxing land, be- 
 cause there it is and it cannot get away, and a man can- 
 not lie about it, except to try to undervalue it, and the 
 assessor has his opinion as to its value, but when you come 
 to the question of money we experience a great deal of 
 difficulty concerning certain securities, and therefore the 
 Commissioners of Lancaster county took charge most largely 
 and turned their attention to the taxing of land and the 
 proper value at which land should be returned, and left 
 to the controller pretty largely to devise schemes and 
 methods by which the money at interest could be brought 
 forth and taxed. The chief weakness which we found there 
 was that those securities which were not of record were very 
 poorly returned or reported. Of course, as to judgments 
 -and mortgages of record our system of bookkeeping is 
 quite complete, and we keep very careful track of those. 
 One particular branch of money at interest which we 
 found great difficulty with was certificates of deposit, for 
 two reasons; first, that considerable doubt existed as to 
 their taxability ; secondly, that persons who carried them 
 returned to the assessors that they did not have them. 
 Therefore we devised means to try and get this branch of 
 money wealth as well as the others, because we took the 
 view that they are taxable. 
 
431 
 
 By Mr. McNichol : 
 
 Q. You refer to deposits? 
 
 A. Time deposits. 
 
 Q. That are not in any active use? 
 
 A. Yes, sir, time deposits deposits that pay interest. 
 Trust companies issue certificates stating that you will be 
 paid 4 per cent, interest on the money. 
 
 Q. Suppose a business man has an account in a trust 
 company and that is an active account on which he gets 2 
 per cent., would you incorporate that in the computation? 
 
 A. We have not been collecting taxes on that. These are 
 investments and they are a very large branch in Lancaster 
 county. The first thing we did was to compel the assessors 
 to return the affidavits which they took from the holders 
 of certificates of deposit, to return all affidavits they took 
 concerning moneys at interest. 
 
 Q. How are your assessors appointed? 
 
 A. They are elected. 
 
 Q. By the people? 
 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. When you say affidavits you mean the Auditor Gen- 
 eral ? s report ? 
 
 A. Yes, sir, what they denominate the lilac blanks, so 
 the Auditor General, with whom I have had considerable 
 correspondence, informs me. There seems to be no law 
 at present to require assessors to return those blanks, those 
 affidavits which the taxable is supposed to sign and affirm 
 to before the assessor. 
 
 By a Member of the Committee: 
 
 Q. You can go after them and collect them? 
 A. I do not mean that. I mean to say there is no law 
 to compel assessors, when they have collected them, to hand 
 them into the county, and the only way in which the Con- 
 troller could get at that was that under the Controller's 
 
432 
 
 Act of 1895 he is first given the powers that County Au- 
 ditors have. That gives them the power to issue subpoenas, 
 but he is given power in a certain section of that Con- 
 troller 's Act to require such testimony as he may desire 
 in auditing the bills, and therefore I found it wise to 
 isssue a circular to our assessors stating to them that I 
 would require, as part of the testimony and as part of 
 the evidence upon which I would approve their bills, the 
 production of their affidavits. 
 
 By Mr. McNichol : 
 
 Q. How many counties in the State have Controllers ? 
 
 A. Until the late Act, only those which had over 150,000 
 people. 
 
 Q. In those counties where there are no Controllers the 
 law would make no provision for the returns? 
 
 A. No. The only provision it would make would be such 
 power as County Auditors would have to compel the same 
 thing. There is now, of course, a county controller's Act 
 relating to counties havng 90,000 people. To go back 
 to this first point, it seems to me that the Legislature 
 ought to help out and pass a law that assessors shall 
 bring ir their affidavits. We have had some difficulty. 
 A few of the assessors declared they would not do it. They 
 carried out their declaration until it came to the point 
 of having me approve the warrant for their money, and then 
 they gracefully went home, got them, brought them back, 
 and I approved their bills. I think it would help out if 
 the law required them to hand them in. I do not suppose 
 in cities of the first class it would be necessary. We 
 found that a great benefit for this reason. The assessors 
 simply did not take them. They did not affirm the taxables 
 and largely made up their books from what was on the 
 former book, and until we pinned them down to the point 
 of disclosing to the Controller and the Commissioners the 
 affidavits they took we had difficulty in getting at this 
 money. 
 
433 
 
 By Mr. McNichol: 
 
 Q. What was the result from your investigation as to 
 increased return? 
 
 A. In a minute I will come to that. That is one neces- 
 sity we feel. It has produced a good result. 
 
 Q. Have you drafted or thought of any draft of a bill? 
 
 A. No, I have not. 
 
 Q. Will you kindly give us your ideas and file them with 
 as? 
 
 A. Yes, sir, I will. Now, the second point. What I 
 have been speaking of now refers to all taxable moneys, 
 but comng down to this question of certificates of deposit, 
 we have about eight million dollars worth of money on 
 certiorates of deposit in Lancaster county. It is a large 
 amount of our taxable money, but how to get at it is the 
 question. Trust companies, of course, say that they are 
 not taxable in the holders ' hands. They go so far as to say 
 they make a return direct to Harrisburg, and therefore 
 the assessor is not permitted to ask the holder of the 
 certificate to disclose it. I will try to show to the Com- 
 mittee a minute later that they are taxable, and what 
 we need is to know how the assessor shall get knowledge 
 of where these certificates are, because any wealth that you 
 can wrap up into a little wad and put down in your pocket, 
 and then are willing to tell an untruth about, the assessor 
 cannot get at. I suggest that there ought to be a law by 
 which trust companies would be required to keep a register, 
 this register to contain separate compartments or portions 
 for each township, and the name of the person to whom the 
 certificate is issued ought to go under its compartment, 
 under the proper township, and the assessor of that town- 
 ship should have the right to go in and look at that 
 register, and there he could see how many residents of his 
 township held such certificates. But we come upon a great 
 difficulty there, and that is this. The assessor would 
 necessarily be compelled to take an obligation against dis- 
 closing to any one but to the County Commissioners, or the 
 
434 
 
 proper officers, the certificates issued by those trust com- 
 panies. 
 
 By a Member of the Committee : 
 
 Q. Do you not think it would be a very much easier plan 
 to tax the banks two mills say upon their certificates of 
 deposit, and have them deduct that from the amount paid 
 in interest to depositors, and prevent having in Lancaster 
 say 75 assessors going into the bank and monkeying around 
 in there ? I should not think that would be very agreeable. 
 
 A. The only objection that I could find to that was, I 
 presume if the bank or trust company would make that 
 return, Harrisburg would get it all and the county would 
 never get any. 
 
 Q. Make it returnable the same as personal property? 
 
 A. If that were true it is a much better plan, but if 
 you follow up nearly all the laws which require the moneys 
 to be accounted for directly at Harrisburg, our counties 
 never get any of them, while the State graciously gives us 
 back a large part. 
 
 By Mr. McNichol : 
 
 Q. That four mill tax you would collect on certificates 
 of deposit, the State would get that, would it not? 
 
 A. The State gets it but returns to the township three- 
 quarters. 
 
 Q. I have the same thought that Senator Sproul had in 
 mind, that an account should be returned. 
 
 A. That would be much superior to what I am suggest- 
 ing, but I nrnch fear the county would not get it. I much 
 fear the law would not be passed that way, because nearly 
 every one of those laws in which there is an account direct 
 to Harrisburg, they keep it. 
 
 By Mr. Sproul : 
 
 Q. You are representing the county ? 
 
 A. I am representing the county first and foremost. So 
 long as I am Controller I think it is my duty. Another 
 
435 
 
 thing I found to be of value, and that was that I required 
 assessors also to make a short summary of their work. I 
 addressed to them a circular letter, the lower part detach- 
 able, upon which I asked them to return to me for pur- 
 poses of auditing (I had to put everything under that 
 guise, for that is the only power I had) the amount of cer- 
 tificates of deposit, the amount of judgments at interest and 
 mortgages at interest, foreign stocks, and all other moneys, 
 the total return from all sources, the total number of 
 persons who returned money at interest, the number of 
 voters in the district, and the number of affidavits or 
 blanks that they put out, and sign it, simply for the 
 purpose of classification and gathering statistics, and of 
 keeping them constantly under the impression that we are 
 watching and trying to do all we can on that line. I found 
 that produced very good results. They tear that off and 
 bring it in filled up, and tell us where the increase had 
 been, and so forth. One more thing along that line. We 
 are face to face with quite a serious difficulty. I have 
 just stated in Lancaster county, where we have about 
 $27,000,000 at interest now, $27,500,000 returned, levied 
 for the assessment of 1910, we have fully $9,000,000 of 
 certificates of deposit, but the Act of 1907 provides that if 
 the trust company shall pay a tax of five mills on the 
 capital stock, the surplus and the undivided profits added 
 together and divided by the shares of stock, that the shares, 
 the surplus, the deposits and the undivided profits bear no 
 other tax. There we have the word "deposits" in that Act 
 of 1907. Therefore it would seem that that large amount 
 of money is to go untaxed because the law provides that 
 the trust companies shall return only three items, capital 
 stock, surplus and undivided profits. I took that up with 
 the Auditor General, and he and I came to the conclusion 
 that that meant, that it shall not be taxed in the hands 
 of the trust company, but did not mean that the holder 
 of the certificates shall not pay a tax on that, the same as he 
 pays on a note or any other security that he holds. But 
 
436 
 
 there is considerable danger in that thing. Counsel for 
 some of our trust companies advise me that means that 
 neither the holder nor any one else shall pay tax on that. 
 Mr. Hensel, counsel for the Lancaster Trust Company, 
 advises his trust company it means the view we take of it. 
 I submit that Act ought to be amended so as to drop that 
 disturbing word out of it. 
 
 By a Member of the Committee : 
 
 Q. You say Mr. Hensel takes the view you take of that? 
 A. Mr. Hensel takes our view. 
 
 By Mr. Brown : 
 
 Q. It has never been legally determined that they were 
 not taxable ? 
 
 A. No, it has not. The only distinction is that which 
 the Auditor General draws. It means it shall not be paid 
 out of the trust company, but does not say the holder shall 
 not pay. I have looked over the reports of the Banking 
 Commissioner, and there a special deposit, or deposit bear- 
 ing interest are not separated from deposits generally, and 
 I have of our leading trust companies just these few 
 figures. The People's Trust Company have deposits subject 
 to check, $275,000, but deposits drawing 4 per cent, in- 
 terest, on which they have issued certificates, $2,209,000. 
 
 By a Member of the Committee : 
 
 Q. Time certificates? 
 
 A. Time certificates. 
 
 Q. Are they not specified in the trust company 's report ? 
 
 A. They are not. They are stated just as deposits. 
 Therefore it would look as if they were all deposits subject 
 to check, which of course is not the fact. 
 
 By Mr. Brown : 
 
 Q. They return generally so as to avoid the very thing 
 you think ought not to be avoided, payment of taxes an 
 interest bearing deposits? 
 
437 
 
 * 
 
 A. I presume so. We have several other trust com- 
 panies. The Lancaster Trust Company has a capital stock 
 paid in of $250,000, undivided profits $255,000, surplus 
 $750,000, making $1,055,000 on which tax is paid, but 
 $3,186,462 of these certificates on which no tax is paid. 
 The result is, summing up all our trust companies, that the 
 five leading trust companies of Lancaster county pay taxes 
 on $2,640,000 and do not pay taxes on $7,639,000. That 
 great sum of money lies there not taxed, and we have diffi- 
 culty in getting holders to return it. 
 Q. What proportion of that is returned? 
 
 A. I had an excellent opportunity of determining to 
 what extent holders of certificates returned the certificates 
 they held. Our City Saving Fund and Trust Company 
 failed some time ago, and when the question came of an 
 audit being held $450,000 worth of certificates of deposit 
 were handed in, on which the holders should get their 
 dividends. I went to a great deal of trouble. I took up 
 every one of those certificates and traced down the town- 
 ship in which the holder lived, and I found that $22,000 
 is all that had ever been returned by those certificate 
 holders out of $450,000, 5 per cent. 
 
 By Mr. McNichol: 
 
 Q. The rest of them were wilful perjurers ? 
 A. The rest they wrapped up in their pockets. 
 
 By a Member of the Committee : 
 
 Q. They had not been asked by the assessors 1 
 A. That is true. The fault is not altogether with the 
 people. The assessors were never required heretofore to 
 account for those affidavits. Now when we compel them to 
 bring them in and lay them down, and count them over 
 and show a fair proportion of taxables in the township have 
 signed affidavits that they did or did not have money, 
 it is really marvelous the result, which I shall show in a 
 minute. I also discovered that of about $8,000,000 of 
 certificates of deposit in money held among our peopl, we 
 
438 
 
 only got a few hundred thousand until I started this method 
 of trying to get all that we could. The result of this was 
 that we thought we were the richest county in the State, 
 but we had to yield to Montgomery as to money at inter- 
 est. Of course, Montgomery has a great many suburban 
 Philadelphians with large money. I think they have 
 $35,000,000 to $38,000,000. We have only got up to 
 $27,500,000. Lancaster county had at interest in 1907, 
 or on the returns f<$r 1907, $21,966,000. In 1908 it had only 
 grown a little, $22,400,000. Then I began this work. I 
 came in in 1908 and tried to find additional money for the 
 special purpose of saving real estate, and by putting in 
 partial operation the system I have now I raised it from 
 $22,400,000 to $25,200,000 for the year 1909, the assess- 
 ments taken in the fall of 1908. While the figures are not 
 entirely compiled for 1910, yet by those blanks which have 
 been returned I have been able to find out with substantial 
 accuracy that we will have $27,500,000 in 1910. 
 
 By a Member of the Committee: 
 
 Q. That represents certificates of deposit exclusively in 
 your county? 
 
 A. Largely so. It represents all mone}^ at interest, but 
 I find that as to judgments and mortgages there is not 
 very much increase, because Lancaster city has taken to 
 building a great deal and we spend $1,000,000 or so in 
 building every year. 
 
 Q. Can you give us a comparison on certificates of de- 
 posit as compared for three years? 
 
 A. I cannot exactly give that, but I can say in a general 
 way that three-quarters of this increase of $5,000,000 in 
 two years came from certificates of deposit. We have had 
 a very general return of them this last year. 
 
 By Mr. Brown: 
 
 Q. These people have all been represented by counsel in 
 your district? 
 
 A. A good many of them have and a good many have 
 
439 
 
 not. Those two ideas, the one of requiring them to set 
 forth, as the lilac blank does require them, and return to 
 me a summarized statement of certificates of deposit set 
 out specially, has brought them out. The other thing was 
 requiring the affidavits. It is remarkable how lax assessors 
 were as to having the man sign the affidavit that he did 
 or did not have money. Assessors have come to me and 
 told me, "Some of those conscientious people we have 
 there, who do not take an oath but take an affirmation, 
 come to them weeping and crying afterward. One as- 
 sessor came in and said that such a person had come to 
 him and told him, ' 1 1 thought of the story of Ananias and 
 Sapphira. I could not sleep. I thought I would come 
 back and tell you I had $3,000 more," and so it goes. The 
 result of this is I have in a corner of the Controller's 
 office a pile of those lilac blanks, all labeled and carefully 
 tied up. We have looked over a great many of them. I 
 am going to look over more. We have left them under the 
 impression that we are going through the whole business. 
 At the end of the year they may have them if they want 
 them. I have perhaps half a ton. The Auditor General 
 said he was sending me 20,000 specially this year because 
 he thought we would need more from what we were doing. 
 
 By Mr. Brown: 
 
 Q. Is there any reason known to you why any other 
 Controller, or any other County Auditor, or any other 
 official performing a similar function to that which you 
 perform, should not do the same thing you have done in 
 this direction? 
 
 A. No. I think, as I understand the duties of the office, 
 it is the duty of the County Controller to do every possible 
 thing. 
 
 Q. There has been no attempt by anybody to restrain 
 you by law? 
 
 A. No. They swear a good deal and threaten, but there 
 has never been a mandamus or anything else in fact. I 
 usually prepare myself. I usually am ready for it. 
 
440 
 
 By a Member of the Committee : 
 
 Q. That increase from $22,000,000 to $27,000,000, the 
 increase of about $5,000,000, was due, you think, to this 
 system of inquiry and making the assessors live up to the 
 letter of the law? 
 
 A. Yes, sir. 
 
 Q. That $5,000,000 has been principally gained from the 
 return of these certificates of deposit ? 
 
 A. Yes, sir, and any other unrecorded securities. That 
 is where it came from. 
 
 Q. How about bonds and stock certificates of corpora- 
 tions outside of Pennsylvania ? 
 
 A. We are doing considerable in that line. They are 
 being set forth. I think they are being pretty fairly re- 
 turned. Of course, there is not such a large number of 
 those. Lancaster county took a spasm of investing in 
 gold fields in the western part of the United States, and 
 they usually sign the form on the back of the lilac blank 
 now which says they are worthless. The Auditor General 
 and I have been taking up between ourselves the question 
 of what shall be done with stocks in which the corporation, 
 being a non-Pennsylvania corporation, does part of its 
 business in the State and part out of the State, has one 
 unit as they call it operating in the State and one unit 
 outside the State, whether it shall be accounted for at 
 Harrisburg or not, and we promise ourselves we shall try 
 to take up that question. 
 
 Q. You mean a corporation chartered under the laws of 
 this State? 
 
 A. No, the laws- of another State. If it is chartered 
 under the laws of this State we have no trouble, because 
 that is attended to at Harrisburg. There is another ques- 
 tion. I do not know whether it is desired I shall speak 
 upon it, touching the question of revenue. It is not a 
 question how to produce revenue, but a question of con- 
 servation of it when it is produced. I might say something 
 that could be done by the Legislature with relation to 
 
441 
 
 dismissed cases, discharged cases by magistrates. There 
 are certain things there by which considerable money is 
 wasted. I do not know whether I should take five or ten 
 minutes upon that or not. 
 
 By a Member of the Committee : 
 
 Q. That is a county matter? 
 
 A. Yes, sir, it is a county matter. I am very much con- 
 cerned about that Act of 1907, because of the word " de- 
 posits " in there. There is strong grounds for argument 
 that that means that the holder shall not pay a tax upon 
 his deposit, and that would knock a big hole in our 
 finances, because those certificates are nearly one-third of 
 our whole money at interest. 
 
 By Mr. McNichol: 
 
 Q. You think that act should be either amended or re- 
 pealed at the next session of the Legislature? 
 
 A. I think if the word " deposit" was amended out of 
 that it will be fine. 
 
 By Mr. Brown: 
 
 Q. Then would you not get into the question of deposits 
 which were used by the company in its own business, in 
 the way of discounts, or banking, or in loans where it goes 
 out again? 
 
 A. That might be specified, time deposits, deposits bear- 
 ing interest. 
 
 Q. In active accounts, where there is no right to draw 
 a check at sight? 
 
 A. Yes, sir. 
 
 By a Member of the Committee : 
 
 Q. You live in the interior of the State. What is the 
 sentiment, what have you heard and what are your views, 
 with reference to raising revenue, for instance, taxing 
 manufacturing corporations? 
 
 A. I think the sentiment, as I gather it, is that there 
 
-142 
 
 should not be much, if any, additional taxation on manu- 
 facturing plants. 
 
 By another Member of the Com m ill en: 
 Q. They pay nothing but local taxation? 
 A. No. 
 
 By a Member of the Committee : 
 
 Q. You think there should be no revenue raised by that 
 method for the use of the Commonwealth ? 
 
 A. The view of our people is, I think, that there are 
 sufficient laws now to raise revenue, so far as we are 
 concerned. 
 
 By Mr. Brown: 
 
 Q. Do you mean sufficient laws to raise revenue, or laws 
 to raise sufficient revenue? 
 
 A. Sufficient laws to raise sufficient revenue. It is a 
 question of carrying them out. "We are getting along with 
 a two and one-half mill tax very nicely, but I am bound 
 to say if we had not discovered $4,000,000 or $5,000,000 
 extra to tax we would have been compelled to go back to 
 three mills. There is one thing I very much hope the 
 Legislature can correct, and that is this. On the question 
 of the State building roads, we have this difficulty. There 
 were built in Lancaster county some $30,000 worth of 
 those roads, or our share of that, and two of the town- 
 ships refused to pay their share. The result was that 
 when we went to Harrisburg they took $10,000 out of our 
 money and kept it there. The law provides as to the State 
 building roads ; the State pays three-quarters, the county 
 one-eighth and the township one-eighth, but it provides 
 that if the township refuses to pay its one-eighth they 
 may take that one-eighth out of the county's money, any 
 county money it has in hand, and the county in its turn 
 must sue the township. There is no law specifying how 
 that shall be done. We presume it is on the principle of 
 subrogation, but our County Solicitor is wrestling with 
 
443 
 
 that question as to how to sue those two townships for 
 $10,000. If that were made clear that the county shall 
 then have recourse to the township to recover, it would be 
 a wise think and would help us out of some difficulty. 
 
 By Mr. Brown: 
 
 Q. You said there is no law compelled the assessor to 
 return the blank? 
 A. Yes, sir. 
 
 Q. Does not the Act of 1889 provide that upon failure 
 or refusal of a taxable to return, that it is the duty of the 
 assessor to make a return for him ? 
 
 A. I did not mean that. I meant to say there is no law 
 which requires the assessor to give up his blanks after he 
 has them and leave them in charge of the County Com- 
 missioners. 
 
 Q. If it is the duty of the taxable to make a return 
 which return must be made to the assessor, and it is the 
 duty of the assessor, upon failure of the taxable, to make 
 a return for him, both should go to the County Com- 
 missioners ? 
 
 A. But the law extends only so far, as I understand it. 
 After the assessor either takes the sworn return or makes 
 one himself for a person who refuses to make it, the 
 blanks are legally his own property. 
 
 Q. I think that is a distortion. Surely the law does 
 not enact a vain thing. There must be some use of that 
 blank or the law would not require it. After the County 
 Commissioners give the blank to the assessor and the as- 
 sessor gives it to the taxable, it is the duty of the assessor 
 to fill that up if the taxable does not answer in ten days. 
 It is his duty to make a return for him and add a penalty. 
 He returns them to the County Commissioners for inspec- 
 tion to see whether any improper return has been made? 
 
 A. He returns his book, but I do not know about the 
 affidavits. At least they have never, up to two years ago, 
 been handed in to the County Commissioners. 
 
444 
 
 Q. There has never been any legal proceeding to compel 
 them to do it? 
 A. I think not. 
 
 Q. I am satisfied they could be compelled. 
 A. We have them this year. 
 
 Q. "When County Commissioners turn over their guide 
 books to the assessors, those guide books contain lists of 
 judgments and mortgages which have been respectively 
 returned by the Prothonotary and Recorder of Deeds for 
 the respective counties? 
 
 A. Yes, sir. 
 
 Q. What is done to check that up? 
 
 A. Our clerks in the County Commissioner's office very 
 carefully make out the book which you have spoken of, 
 and I send one of my clerks to make a list of them also for 
 myself, and when the assessor comes back with his affidavit 
 I compare what he has returned with what stands in the 
 book, and ask him to explain why he did not get this 
 one. 
 
 Q. He is charged with what is on the book and credited 
 with what he produces ? 
 
 A. Yes, sir. 
 
 Q. Suppose he does not return according to your book, 
 what further investigation is made to ascertain whether 
 or not he has returned all taxables? 
 
 A. The only further investigation is that my steno- 
 grapher takes testimony in all these matters, and when an 
 assessor comes in and I find there is $3,000 of judgment 
 or mortgage on the book and he makes no return of it, 
 I put him on oath and ask him why he makes no return. 
 He states in his testimony that that has been satisfied, or 
 that half of it has been paid, or whatever explanation he 
 can give. I keep those minutes as notes for my annual 
 audit and report to the court. 
 
 Q. Are taxables ever required to produce any receipts 
 of acquittances for any part of judgments or mortgages 
 
445 
 
 appearing on the guide books, or do you simply take the 
 word of the taxable? 
 
 A. He takes the taxable 's oath. That is about all. 
 
 Q. That is all that satisfies the record against him of 
 the existence of a judgment or a mortgage? 
 
 A. Yes, sir. 
 
 Q. Do you think the law is sufficient in that respect to 
 protect the Commonwealth? 
 
 A. I think not. I think there might be something done 
 there, requiring those who hold such evidences of record to 
 put partial payments on record. That might help it out. 
 There is such a law, but there is no law to compel a 
 mortgagor, for instance, when a certain amount has been 
 paid, to put a note on the margin of the record. 
 
 Q. What efforts do you make to get at females? 
 
 A. The same efforts as to the males. 
 
 Q. The assessors' list would not show taxable females 
 in every case, would it? In collecting the personal prop- 
 erty tax how would you get the list? There are wealthy 
 women in your community. How are their names given 
 to the assessor? 
 
 A. As to mortgages and judgments, of course, they are 
 of record. As to the others they do the same as they do 
 with reference to men. They simply must go around with 
 the lilac blanks, and put them on oath as to each of the 
 items that are set forth against them. 
 
 Q. How is that list made up! How do you include 
 women with men? 
 
 A. There is no such list. We cannot} get at an un- 
 recorded list. There is nothing to show such a list. 
 
 Q. Is this, which appears to be a very active move- 
 ment on your part for collection of State revenue, in- 
 fluenced in any way by complaints of land owners ? 
 
 A. To a certain extent. It was prompted primarily by 
 the fact that prices have gone up very much, insanity is 
 growing very greatly, and we found we needed consider- 
 
446 
 
 ably more revenue. Then we cast around how to get it. 
 We knew very well if we added half a mill tax it would 
 mean our heads all off. 
 
 Q. You mean on land? 
 
 A. Land tax. We were not willing to raise the county 
 rates, so there was nothing to do but find money honestly 
 somewhere else. That is what prompted me to go into it, 
 and the County Commissioners approved it, and that is 
 what is at the base of it, aside from the desire to do our 
 duty. 
 
 Q. You compel the assessors to return all blanks? 
 
 A. Every one, yes. I do not approve their bills unless 
 they return about four-fifths as many blanks as there 
 are voters in the district. I have them set forth in this 
 blank the number of voters. They have a number of 
 blanks. The law perhaps might require every one to sign 
 one whether he has money or not, but the assessors come 
 in and say, "I have been assessor ten or fifteen years. I 
 know those fellows do not have any money. They have 
 not anything." So we make a little lee-way there, but I 
 leave them under the impression that everybody should 
 return. I will leave with the Commission if they desire it, 
 several copies of a circular letter of eight pages which 
 I circulated among the assessors, also of four pages of 
 instruction, 15,000 of which I sent around at my own 
 expense to instruct the tax-payers. 
 
 Q. Has there been any substantial attempt, either in 
 your own county or any other county, so far as you 
 know, to enforce the penalties which the law provides 
 for failure to return, improper returns, or collusion be- 
 tween the assessor and the taxable? 
 
 A. Not one. 
 
 Q. How do you account for that? 
 
 A. I have set it forth there in horrible terms in that 
 circular to the assessors. I have told the assessors, which 
 I mean to carry out, that if they will report any genuine 
 
447 
 
 case to me I will report it to the District Attorney very 
 quickly. I do not know how to account for it. 
 
 Q. You do your best to get all you can, and let the 
 others drop? 
 
 A. Yes, sir. You can create too much antagonism. 
 Here is a copy from the Auditor General. If you will 
 notice, under "miscellaneous" subhead C, that instruction 
 which used to read "certificates bearing interest," or 
 something of that sort, is changed to the specific state- 
 ment of "certificates of deposit in trust companies." He 
 wrote me he changed that on my suggestion. I am glad 
 he did, because the assessors always said that did not mean 
 certificates of deposit. 
 
 Q. What check do you have on corporations that do not 
 report to the Auditor General? Do you attempt to check 
 them up in any way? 
 
 A. Not particularly. I am devising ways to do that and 
 hope to spend time this year on that. 
 
 Q. What they do not report to the Auditor General they 
 ought to report to the county? 
 
 A. That is the law. It has been so decided. 
 
 Q. There is sufficient law for that? 
 
 A. Yes, sir, there is sufficient law for that. If they do 
 not report to Harrisburg, then the assessor goes for them. 
 
 Q. On general principles they must pay tax in some 
 place ? 
 
 A. Somewhere. I think they are catching them pretty 
 generally. I do not know any in our county that do not 
 report except our traction company. 
 
 Q. Are your people generally satisfied with the present 
 taxation against banks and saving institutions and trust 
 companies? 
 
 A. I think so. 
 
 Q. The method of collecting it and all? 
 
 A. I think there is no complaint as to that. I think 
 that is quite satisfactory all around. 
 
448 
 
 Q. Is there any interchange of mortgages between 
 counties, as required by the Act of 1889, where County 
 Commissioners are required to transmit a statement of 
 mortgages owned by non-residents to the Commissioners 
 of counties where the mortgagees are domiciled ? 
 
 A. I think that is pretty generally attended to. 
 
 Q. You receive those? 
 
 A. Yes, sir, we receive them from various counties. 
 
 Q. Have your trust companies ever claimed certificates 
 of deposit to be in the ''bonds, mortgages and certificates 
 of indebtedness " class? 
 
 A. No, they have not. They simply have said that they 
 pay the tax on everything and that is the statement they 
 used, which is not true. 
 
 Q. Without specifying items of everything? 
 
 A. Without specifying. They forget the time certifi- 
 cates. Our three leading trust companies, their stock is 
 about 500 per cent., and they are not old, either. 
 
 Q. What are they paying, par $100? 
 
 A. Yes, sir. 
 
 Q. And selling at 500? 
 
 A. Yes, sir. Stocks at 50 are selling at 250, and I 
 thing one 270. 
 
 Q. What dividends are they paying ? 
 
 A. I do not know that exactly. 
 
 Q. If they are 500 they must be paying 20 per cent, 
 dividends ? 
 
 A. They are paying fine dividends. I think you are 
 about right. Of course, it is to their interest to tell holders 
 of certificates that they need pay no tax out of their 
 interest, because the minute the holder knows he must 
 do that he has so much less interest, and he takes his 
 money out of the trust company and buys stocks. 
 
 By a Member of the Committee : 
 
 Q. A man who makes a misstatement would not be a 
 very loyal citizen of his State ? 
 
 A. Decidedly not. 
 
449 
 
 Q. They know that they are placing a wrong construc- 
 tion on the word " deposits "? 
 
 A. It is a very dangerous word in the Act of 1907. It 
 gives them sufficient to stand on, yet there is that large 
 sum of money bearing interest that is not taxed anywhere 
 if that construction is right, which amounts in Lancaster 
 county to a little over one-fourth of all our taxable per- 
 sonal property. 
 
 By Mr. Brown: 
 
 Q. In this Commonwealth there are a large number of 
 worthless obligations which are not taxable? 
 
 A. Yes, sir. 
 
 Q. Is anything done in your county to see whether they 
 are worthless or not ? 
 
 A. No, there is not up to this time. 
 
 Q. Have you anything to suggest in that line, as to 
 how that could be done? 
 
 A. I suppose the Controller's office could increase its 
 activity and look after that and ascertain the truth. 
 
 Q. Do you know what amount it would be in Lancaster 
 county, as compared with the general return? 
 
 A. We were stung pretty hard not so long ago in in- 
 vesting in gold mines and various things like that in the 
 western part of the United States. 
 
 Q. You think there was a fair return made of that? 
 
 A. Yes, sir, practically all worthless. They make affi- 
 davit on the back that they are worthless. That seems 
 to be as far as we can go just at present. The Con- 
 troller's office can be made an office of wonderful effici- 
 ency, which would need increased force. 
 
 Q. Have you anything to suggest to ascertain these 
 taxable securities, moneys at interest, promissory notes, 
 articles of agreement, and a hundred other things the 
 law covers, besides the machinery which it now furnishes? 
 
 A. No. 
 23 
 
450 
 
 Q. Some States have people out specially for that bus- 
 iness, going around from county to county, trying to dis- 
 cover these things? 
 
 A. Of course, our assessor is specially for that. He is 
 specially to quiz men and find out. 
 
 Q. He depends largely on what a man says. He does 
 not look at them except directly? 
 
 A. And what a man's neighbors tell him. 
 
 Q. Does he inquire among the neighbors? 
 
 A. Yes, sir, he inquires among the neighbors. In a 
 rural place that is pretty generally known. I can under- 
 stand in a big city that one man does not know another 
 man's business and it would be hard to get at. I think 
 that the thing which would work more good than am r - 
 thing else would be three or four genuine prosecutions. 
 That would bring the returns. 
 
 Q. To what do you attribute the fact that there have 
 not been any in this Commonwealth on that subject? 
 
 A. That must be attributed to the disclination of one 
 man to sue his neighbor, and I suppose the fear of action 
 for malicious prosecution if the case were not made out. 
 We have this condition in Lancaster county. There is an 
 absolute recklessness with regard to arresting a poor fel- 
 low in the gutter and our magistrates arrest hundreds of 
 them. We had in 1908, when I took office, 2,700 dis- 
 charged cases. 
 
 Q. What do you arrest them for? 
 
 A. They arrest them for anything. I cut that down to 
 about 1,900. I refused to pay costs in those cases. There- 
 fore magistrates became more careful as to taking them. 
 But when it comes to arresting a man of means, a man 
 who has money, that is the very class here. You would 
 have to arrest the man who has money and does not return 
 it. It is a very different proposition. One neighbor is 
 not going to do it to another. 
 
461 
 
 By a Member of the Committee : 
 
 Q. Probably on the principle that people who live in 
 glass houses should not throw stones? 
 
 A. Probably. 
 
 By Mr. Brown: 
 
 Q. You think we have machinery enough? 
 
 A. I think so. The fact is the Lancaster county plant 
 has too much machinery. 
 
 Q. What is the sentiment with respect to taxing land 
 and taxing mortgages on land ? 
 
 A. There is a great deal of opposition to that. They 
 cite it as the most virulent kind of double taxation, which 
 no doubt it is. We cannot get along without it. No 
 doubt that is odious, where a man has a $15,000 farm and 
 an $11,000 mortgage on it. 
 
 Q. I have received quite a number of letters and the 
 Committee have received quite a number of letters pro- 
 testing against taxing these deposits on the ground that 
 they are held by estates, poor people, and all that. What 
 character of people in your county hold certificates? 
 
 A. I made a list of people who pay taxes on money in 
 Lancaster county, and in 1908 $25,000,000 was all held 
 by 6,190 persons. It was an average of $4,000 each. 
 
 Q. It would not be the very poor? 
 
 A. No. They are large ones, certificates of $15,000 or 
 $20,000. We have just been making the assessors come 
 in and show me. They have got $40 and $50. It does 
 make you feel a little ashamed of yourself, but at the same 
 time I believe young fellows who have saved $100 or $200 
 like to see it in the book, to let people know they are be- 
 ginning to earn and save money up. There are others who 
 do not like to return $40 at interest, or $50 or $100. The 
 tax is proportionate and it sometimes looks hard but it is 
 the law. I was surprised that the whole $25,000,000 was 
 held by 6,000 people. 
 
452 
 
 Q. You have already spoken about the sentiment of 
 your county on taxing manufacturing corporations? 
 
 A. Yes, sir. Manufacturing corporations are received 
 with much favor, and we are willing to do everything 
 we can for them. 
 
 Q. Your land owners are entirely satisfied to have them 
 exempt ? 
 
 A. Our land owners are only dissatisfied with one 
 thing. That is, that in Lancaster City, perhaps three or 
 four squares from the main part of the city, they are only 
 taxed for about one-fourth the value, while real estate in 
 the country is taxed three-fourths. "We have gone up 
 about an average of $500,000 in each ward. 
 
 By a member of the Committee : 
 
 Q. That is generally true, is it not? 
 
 A. Very true. 
 
 Q. In nearly every county? 
 
 A. Yes, sir. For instance, one of our trust companies 
 had $29,000 in a property, and I spoke to the County 
 Solicitor. He forgot he was a County Solicitor and said, 
 "That property in the corner there we have $29,000 in, 
 and I was mortally afraid we were going to lose it. The 
 other day I was offered $82,000 for that property.'* That 
 is a fair sample. It is that way all over the heart of the 
 town. 
 
 By Mr. Brown: 
 
 Q. How are your people on the mercantile tax? 
 
 A. They are practically indifferent on that. I think 
 they are willing to pay mercantile tax. I do not find 
 much opposition to it. While there is every consideration 
 shown to manufacturing business concerns most of our 
 people believe the mercantile tax is right. 
 
 Q. Does the enforcement of the law have a tendency to 
 drive tax payers out of your county? 
 
 A. Yes, sir, it has had this tendency to make those who 
 
453 
 
 had large moneys on deposit buy Pennsylvania stock that 
 they did not need to reckon with us. 
 
 Q. Has it caused any of them to remove to other coun- 
 ties? 
 
 A. No, you could not get a Lancaster county man to 
 go. 
 
 Q. I have received letters. They say men of large 
 wealth have migrated from county to county for the 
 purpose of avoiding this? 
 
 A. We have the garden spot of the world and are going 
 to stay there. 
 
 Q. Suppose you had a lower rate than four mills, would 
 that have a tendency to increase the income, or do you 
 think four mills is fair? 
 
 A. No, four mills is low enough. We would not in- 
 crease the income by reducing it. I am sure of that. 
 
 Q. When a return is made to you (and when I say you 
 I mean a County Commissioner or any official in Pennsyl- 
 vania standing in the same position as you are in), 
 which you are satisfied is not a true return, what is done 
 with that? 
 
 A. I send him back. We had a case like that in which 
 a doctor of some prominence had been returning $33,000 
 or $34,000. I was very sure he had over $100,000 at 
 interest. When the assessor came in with that I sent the 
 assessor a special letter. I told him I wanted to find the 
 money. The doctor refused to make the affidavit and 
 told the assessor to make it out according to his best 
 judgment, as the law empowered him to do, and he came 
 in with $77,000. I told the man. The man never ap- 
 peared on the appeal day to object to it. There is $10,000 
 or $15,000 more there. 
 
 Q. Do you have many of those cases? 
 A. Quite a number. 
 
 Q. The presumption, you think, is in favor of an honest 
 return. 
 
454 
 
 A. Yes, sir. The people of our county that hold most 
 of this money are Mennonites and Dunkers and other 
 plain sects, because the other class of people have their 
 money in business. Most of our farmers belong to those 
 non-resistent churches, and I will take their oaths. If 
 they go on oath I feel positive it is about right. 
 
 Q. What is the sentiment, if any, in your county as to 
 the local taxation of corporations, whether or not I refer 
 now to public utility corporations? 
 
 A. Those that are not private, you mean? 
 
 Q. Not private? 
 
 A. We think they ought to be taxed. Our county has 
 suffered from that quite considerably. The York Haven 
 Power Company escaped local taxation and the township 
 in which the power company is located loses a great deal 
 of money for its road and other local purposes, and the 
 McCall Ferry Dam Company, which is about a $20,000 
 plant, or will be when completed, escapes, and our senti- 
 ment there is very strongly that they ought to contribute. 
 
 Q. What about the time of the return to the Common- 
 wealth? Is that complained of; that the time of the 
 return should be changed to the end of the year? 
 
 A. It ought not to be changed, I think, for this reason : 
 It will give the assessors an opportunity to bring in more 
 days. When I first took office I thought that assessors 
 were overpaid. I am since of an entirely different 
 opinion. 
 
 Q. I am referring to corporate returns? 
 A. I know of no complaint as to that. 
 
 Q. What becomes of the time money at interest? When 
 treasurers of corporations return now their money at 
 interest, what becomes of the money from the first 
 Monday of November until the 31st day of December? 
 
 A. Corporations that return to us locally? 
 
 Q. Yes. 
 
455 
 
 A. The treasurer of a corporation reports on 
 the first Monday of November debt of the corporation 
 owned by residents of the Commonwealth. The courts 
 have decided the settlement is made for a year. What 
 becomes of the difference between the first Monday of 
 November and the 31st day of December? 
 
 A. We do not find that that question arises, because all 
 corporations we have made their settlement at Harris- 
 burg. We never have anything to do with it. 
 
 Q. Railroad companies do not pay any local tax? 
 
 A. No. We get practically nothing from corporations 
 because they are nearly all Pennsylvania corporations 
 that are in operation. 
 
 Q. Do you make any investigation to determine 
 whether or not the property of corporations, take railroal 
 companies for instance, and the others, electric light and 
 trolleys and others in your county, are using properties 
 purely for their corporate purposes? 
 
 A. Yes, sir, some investigation. I think they are. 
 
 Q. You keep watch on them to see that they are, 
 because otherwise they would not be exempt? 
 
 A. No, we watch that too closely. There is only one. 
 It is our largest traction company, about a $12,000,000 or 
 $13,000,000 concern. That we want to take up this year. 
 It is our whole traction system, in fact. 
 
 Q. The same answer would apply to water companies 
 and all that sort of thing? 
 
 A. Yes, sir. 
 
456 
 
 WILLIAM A. MATTERN, Reading, called. 
 
 Mr. Matter: I am not here with any statistics, but am 
 ready to furnish any memoranda as desired. I did not 
 know I was to go until last evening about five o'clock 
 the Controller told me to make the trip to Philadelphia 
 this morning. Then I had to hurry up and come down 
 here, but our predicament is on the same line as Mr. 
 Eschelmann 's. 
 
 By a Member of the Committee: 
 
 Q. "Who is the Controller of Berks county? 
 
 A. A. L. Rhoads. 
 
 Q. You are clerk to the Commissioners? 
 
 A. I am clerk to the Commissioners and have been 
 working in that office for the last five years. In regard 
 to catching people that move from one district to the 
 other, since I am chief clerk of the office I have devised 
 a plan I think works all right. As long as they live in 
 the same district the assessors know them, but after they 
 move from one district to the other I tell the assessor 
 to report to me into what district they moved. Then I 
 take up that report and send the sheet to the assessor 
 in the district to which the party had removed. In regard 
 to checking up those lilac slips we check up every slip that 
 comes to our office. We require the stubs and require 
 the blanks and the others to be returned by the local 
 assessor to our office and check them up. We do that 
 before the assessor leaves the office. The only trouble we 
 have is we have some kick coming from those people that 
 deposit money in banks on books. That comes under 
 accounts and it is taxable. 
 
 By a member of the Committee: 
 Q. Subject to check? 
 A. Not subject to check. 
 
457 
 
 Q. You mean time certificates of deposit? 
 
 A. Time certificates of deposit. The banks advise them 
 not to return them. 
 
 Q. You have the same difficulty Mr. Esehelman com- 
 plained of? 
 
 A. Precisely. We cannot get the information from 
 the banks and trust companies that do it. They say they 
 protect their depositors; it would spoil their business if 
 they let us know. 
 
 By Mr. Brown : 
 
 Q. Do you know of any reason why they should not 
 return the amount of money so on deposit, pay the tax 
 themselves, and deduct it from the interest which they 
 pay the depositor, the same as is done in every other case ? 
 
 A. Not at all. That is the instruction, that any 
 individual that can tell them the bank in which he had 
 a deposit deducts the State tax from his interest, he 
 was exempt from it, otherwise he had to make a return 
 to the local assessor. 
 
 Q. None had it deducted? 
 
 A. None had it deducted. In most cases we have not 
 so much difficulty in country districts as we have in the 
 city where they are in close contact with banks and 
 lawyers. 
 
 Q. Is your experience similar to that of Mr. Esehelman 
 in all respects of which he spoke? 
 
 A. Yes, sir. 
 
 Q. Have you any other suggestion to make than he 
 has made, to try to remedy conditions or help out the 
 situation in the collection of these taxes ? 
 
 A. I know we had trouble. We had a woman there 
 that did not make any affidavit. Then we had to put 50 
 per cent. on. We did that the first year, and she would, 
 not make affidavit the next year. I told the assessor, 
 "You had better make your estimate higher. " Then it 
 ran up to $601,000 for one year. 
 24 
 
458 
 
 Q. What did it commence with? 
 
 A. He commenced with $100,000. 
 
 Q. And ran up to $600,000, and then the return was 
 made? 
 
 A. Yes, sir. The next year I told him he had better 
 make the estimate higher. Then he made it $400,000. 
 The next year she swore to $601,000. 
 
 Q. Have you many of those in your county who do 
 not make out a return ? 
 
 A. I have 50 in one ward. I have 50 papers that did 
 not make a return. I do not know what to do with them. 
 By a member of the Committee : 
 
 Q. Your city assessors are appointed in Bucks County? 
 
 A. No, sir, they are elected by the people. 
 
 Q. All assessors are elected? 
 
 A. Yes, sir. I had a controversy with one of them 
 that refused to go after secret societies. I gave instruc- 
 tions that orders of that class should make return the 
 same as individuals. He said he had a letter from the 
 Auditor General's department making is discretionary for 
 him to do it or not do it. I told him I could not see that 
 the State Department leave this for one man and make 
 all the others do it. 
 
459 
 
 H. FRANK ESCHELMAN, recalled. 
 
 By a Member of the Committee : 
 
 Q. Before you leave the room I should like to know 
 what success you met with in having moneys returned held 
 by secret organizations in your county? 
 
 A. We have not raised that question. They have been 
 returning them pretty generally. We have not had any 
 difficulty in that line. 
 
 By Mr. Brown: 
 
 Q. Is there any reason why these banks and trust 
 companies should not make returns of all these moneys 
 on certificates of deposit, and themselves deduct the State 
 tax from the interest which they pay the depositor? 
 
 A. I think not. 
 
 Q. And directly account to you? 
 
 A. I have just cited that their stock is away up at 500 
 per cent. I have suggested to them that that looks to me 
 as if they could pay 4J per cent, and then deduct it. 
 
 Q. Have you ever made such a suggestion. 
 
 A. Yes, sir, I have made the suggestion. 
 
 Q. Has there been any objection on account of the 
 exposure of depositors or interfering with business in any 
 way ? 
 
 A. Yes, sir, they are very jealous as far as that is 
 concerned. The plan suggested by Mr. Sproul is a good 
 one. The county needs it three-fourths. 
 
 Q. Suppose the treasurer of a trust company reports 
 on oath that there is so much money on certificates of 
 deposit of his company, why would not that be about as 
 near as you can get to it? That would not require 
 exposure of depositors? 
 
 A. No, and then settle direct. 
 
460 
 
 Q. Settle direct and deduct the tax from the interest? 
 
 A. It is the very best plan. I have always been very 
 fearful that the Legislature that the county would not 
 get back its three-fourths of this tax on stock, and all that 
 sort of thing. When it is sent to Harrisburg that is the 
 last of it. We only get three-fourths of what we collect. 
 
 Q. If it is of such advantage to the county, why not 
 have a provision that the county would collect it? Let 
 the treasurer of the corporation pay it to the county, 
 instead of the depositor doing that? 
 
 A. That would be very good. 
 
 Q. You are trying to get all the personal property you 
 can so as to lighten the land tax? 
 
 A. That is it exactly. That is what my circular states. 
 Land ought to be relieved, especially when there is a 
 mortgage on it and there is a tax on the mortgage and 
 the land both. 
 
461 
 
 WILLIAM A. MATTERN, recalled. 
 
 By Mr. Brown: 
 
 Q. What is your experience about the sentiment of your 
 people on the exemption from taxation of public utility 
 corporations? 
 
 A. We are getting some tax from railroad and other 
 corporations that do not use it for special purposes. We 
 had trouble with the traction company. They usually 
 hire it out to some employe and say they do not get any 
 rent. I do not know for what purpose it is, but that is 
 the case. 
 
 Q. Why do you not tax that? That is not exempt? 
 
 A. We had it taxed, and then they made an appeal. 
 Lawyers came and finally one property I allude to was 
 exonerated. We had it taxed and tried to hunt them 
 up all we possibly can. 
 
 By a Member of the Committee : 
 
 Q. Was the appeal made to Court ? 
 
 A. No, sir, only to the County Commissioners at the 
 time the Tax Collector wanted to make settlement. 
 
 Q. The County Commissioners exonerated the Com- 
 pany? 
 
 A. Yes, sir. 
 
 Q. Are they of the same political party? 
 
 A. No, sir, a different political party. I can say for 
 the County Commissioner's office of Berks county that 
 very little politics is played in it. It is fair and square. 
 The result of my stand with that assessor was that $80,000 
 were returned to me in the office in one day of secret 
 societies. After he had received a second instruction 
 from the Auditor General he said he was guilty and had 
 to go out, and I had $80,000 returned in one day. 
 
462 
 
 By Mr. Brown: 
 
 Q. Do you think the present laws are sufficient for 
 the collection of taxes? 
 
 A. If properly enforced, with the exception of some 
 words that would make it more plain. 
 
 Q. What do you mean by that? 
 
 A. The same way Mr. Eschelman said, in the Act of 
 1907, they are not quite as plain as they ought to be You 
 have a shield behind some of the words. 
 
 Q. What do you do to take up your guide books? 
 
 A. We take the lilac slips as they are returned by the 
 assessors and check them off in the transcript books. 
 After that we take the mortgage book and check them 
 up and make the assessor account for any difference 
 right in his presence. 
 
 Q. As to insolvent and worthless obligations? 
 
 A. They usually return them on the back, as Mr. 
 Eschelman said, make the statement on the back without 
 any further investigation. 
 
 Q. Do you think further investigation would develop 
 that they were not so? 
 
 A. In some instances it might; in other instances it 
 might not. 
 
 Q. How do land owners in your county feel on this 
 subject ? 
 
 A. In some districts they complain. My study of the 
 method of taxation is this: I believe our assessment is 
 not quite what it ought to be in regard to land. I base 
 it on local taxation. In some townships the tax rate 
 is high. With about the same expenditure at other places 
 it is low. Where there is a high valuation of land, the 
 tax rate is low. Where there is a low valuation it is high. 
 Therefore, I say in some parts the taxation is not what 
 it ought to be. 
 
463 
 
 By a Member of the Committee : 
 
 Q. How does the assessed valuation in country districts 
 on farms compare with city valuations? 
 
 A. I think on an average it is higher than city 
 property. The oath binds the assessors to assess them 
 at what they think it would sell for at a bona fide sale 
 with full public notice. Properties are sold away up. 
 
 By Mr. Brown : 
 
 Q. What, from your experience, are the usual methods 
 of avoiding a proper return for payment of tax? 
 
 A. I had an experience just the other day. A fellow 
 came in and said to me, "I have money on deposit. Must 
 I pay tax?" I told him, "If you get interest on it and 
 have it in on time you have to pay tax. If you have it 
 subject to check and draw a check sometimes you do not 
 pay tax on it." He said, "I will get my certificate of 
 deposit and deposit it subject to check." That is what 
 he told me. 
 
 Q. Deposit it subject to check and never use the check? 
 
 A. He never uses a check. He gets 2 or 3 per cent, 
 interest. When you come to those banks and ask them 
 they say they have to protect their depositors. 
 
464 
 
 H. FRANK ESCHELMAN, recalled. 
 
 By Mr. Brown : 
 
 Q. We have received a number of letters on the subject 
 of taxing inheritances. Has there been any discussion 
 in your county on that subject? I mean direct inheri- 
 tances. 
 
 A. That subject has not been raised in our county, 
 though I have heard some not inconsiderable sentiment in 
 favor of its being done. Our Orphans' Court business is 
 very large and it would amount to considerable money. 
 
 WM. A. MATTER, recalled. 
 
 By Mr. Brown : 
 
 Q. Have you any suggestion to this committee as to how 
 the law could be bettered in any respect, either as to the 
 class of subjects to be taxed or the class of subjects to be 
 exempt, or the method of collection or exemption? 
 
 A. The only thing, I think, perhaps, might be bettered, 
 of which I heard a good bit of talk in our neighborhood, 
 was those small depositors that simply put in their 
 savings. Limit that to a certain amount and exempt 
 that, and after they get up to a certain amount let them 
 pay tax on it. 
 
 Q. Have you anything else to suggest? 
 
 A. No, sir. 
 
 By a Member of the Committee : 
 
 Q. Your city is quite a manufacturing district? 
 A. Yes, sir. 
 
465 
 
 Q. What sentiment, if any, is there with regard to tax- 
 ing manufacturing corporations? 
 
 A. I think they are satisfied. People at large are satis- 
 fied with the tax they pay. 
 
 Q. Manufacturing corporations? 
 
 A. You hear some kick and some are complaining about 
 ills, but they are not ready to give a remedy to cure those 
 ills. 
 
 Q. What I meant was this. What would you say, as a 
 man of affairs in your county, taking into consideration 
 the fact now that we are endeavoring to raise more revenue 
 in the Commonwealth? What would you say as to taxing 
 manufacturing corporations as a method of raising addi- 
 tional revenue? 
 
 A. I have not given that any thought, and really do not 
 know what manufacturing concerns pay to the State. 
 
 Q. They pay tax for local purposes but pay nothing to 
 the Commonwealth? 
 
 A. They should be on an equal footing with an indi- 
 vidual to my estimation. 
 
 By Mr. Brown : 
 
 Q. Is there any agitation or any talk in your community 
 on that subject ? 
 
 A. About railroads you hear some. 
 
 Q. They want railroads taxed locally on property in the 
 district ? 
 
 A. Yes, sir. 
 
 Q. But not manufacturing corporations? 
 
 A. I do not hear much along that line. The only thing 
 you hear about railroads running through townships and 
 not paying local tax. 
 
 Q. How about the mercantile tax there? 
 
 A. I do not hear very much about that. 
 
 Q. There is no objection to that law? 
 
 A. No. 
 
466 
 
 By a Member of the Committee : 
 
 Q. The merchants are all prosperous and willing to pay 
 their share of taxes? 
 
 A. Some go out of business, then they do not come 
 around any more. 
 
 By Mr. Brown : 
 
 Q. Do you have any false returns of personal property? 
 
 A. Not that we find out. 
 
 Q. What do you do when you find a flagrant case? 
 
 A. We investigate and try to find out. We had some 
 cases. 
 
 Q. Suppose you found a case that you knew was not 
 true, what would you do? 
 
 A. We ought to prosecute. 
 
 Q. What do you do? 
 
 A. We have not done anything in that line. 
 
 Q. Do you not think one prosecution in five years would 
 work wonders? 
 
 A. Sure, it would bring the others to terms certainly. 
 
 Q. Suppose you prosecuted one man, what would be the 
 result of it? 
 
 A. I think it would bring the others to terms. 
 
 Q. You mean all . taxables ? It ought to be notice to 
 everybody and they would have to make return and get 
 some result? 
 
 A. Yes, sir. A letter I received from Harrisburg 
 worked wonders. I simply published my letter in the 
 paper. Not being personal, I took out names. I wrote to 
 Harrisburg, and put my answer that I got from the State 
 Department, and gave my suggestion, and that worked 
 wonders in the line of secret societies making their return. 
 
 Q. There is not much use of printing these dire threats 
 unless something is done? 
 
 A. Surely you have to act. 
 
 Q. It is fair to assume that in all the thousands of tax- 
 
487 
 
 ables in every community somebody does not make a true 
 return, but makes one which is palpably untrue? 
 A. Yes, sir. 
 
 Q. Yet so far. as you know none have been prosecuted? 
 A. Not in our county that I know of. I am connected 
 with the office there for five years. 
 
 By a Member of the Committee: 
 
 Q. Would this have any effect upon a prosecution? For 
 instance, if you had say 12 or 15 cases before you of that 
 character, and you were to arrive at the conclusion that 
 some one of those 15 should be prosecuted, to set an ex- 
 ample, would the fact that the party in question might be 
 of the same political party as the Commissioners have any 
 effect in bringing such a prosecution? 
 
 A. I do not think it should have. 
 
 Q. But would it have ? 
 A. Not in our county. 
 
 Q. You think not? 
 
 A. No, sir, not under the present Board of Commission- 
 ers. I can say that for them. I am there to abide by my 
 oath, and am a respecter of every one that comes in, no 
 matter what party he is. 
 
 Q. Under those conditions would it not be a good thing 
 to give it a trial? 
 
 A. Certainly it would. 
 
 Q. Supposing you try it? 
 A. I did not find such a case. 
 
 Q. Do you mean to say you have not such a case existing 
 in the county? 
 
 A. Not to our notice. 
 
 Q. Have you been active in trying to find out whether 
 there is such a case? 
 
 A. I think as active as any other county in this State. 
 
468 , 
 
 By Mr. Brown : 
 
 Q. Do you make any effort to find promissory notes, arti- 
 cles of agreement and other things not reported? 
 
 A. Yes, sir. 
 
 Q. How do you do that? 
 
 A. Articles of agreement and such things are reported 
 to us from the Prothonotary 's office. 
 
 Q. I mean unrecorded articles? 
 
 A. We have to go on the person's affidavit, otherwise we 
 cannot find them unless we get it from hearsay. We got 
 $7,000 for hearsay the other day. A woman bragged to a 
 neighbor she did not pay any tax on $7,000, and we just 
 notified the assessor and he went and hunted it up, and 
 we got a return of $7,000. 
 
 Q. Could similar information from other people be ob- 
 tained by any official employed for that purpose? 
 
 A. Undoubtedly. They could keep tabs on it and get 
 information sooner than others could if they would make it 
 a business. 
 
 By a Member of the Committee : 
 
 Q. The trouble is in country districts assessors are fear- 
 ful of being ousted from office at the close of their term 
 when they are candidates for re-election. That is the 
 reason they do not do their full duty. Is not that the 
 fact? 
 
 A. My experience is assessors will always try to take the 
 triennial assessment for fear at the next election, and in 
 nine cases out of ten it holds good, if they make a slight 
 mistake this will work against them. 
 
 By Mr. Brown: 
 
 Q. Do you think it would better collection if the State 
 appointed an official, some stranger, to go into the dis- 
 trict? 
 
 A. I believe it would. 
 
469 
 
 Q. He could get personal advice from the County Com- 
 missioners ? 
 
 A. From the County Commissioners' office, with the 
 papers and other credentials on file, and from personal 
 investigation. 
 
 By a Member of the Committee : 
 
 Q. What would you say as to the method of electing 
 assessors or having them serve? Do you think it would 
 change conditions if they would be appointed instead of 
 being elected? If the Judge were to appoint assessors in 
 your county would that change conditions, do you think? 
 
 A. Perhaps they would not be so fearful to avoid their 
 duties and come nearer to the standard. I know in some 
 townships of our county the woodland was not assessed up 
 to two years ago. They had the acres down but no valu- 
 ation to it, only two townships in the county. 
 
 Q. Are you as strict in your supervision of assessors as 
 Mr. Eschelman says he is? 
 
 A. I require every name the law requires me to get. I 
 wiU not accept their books and do not pay them in full 
 until I have it. We have two assessors now, in the Fifth 
 and First Wards. We tabbed up with the tax collector. 
 One of them had omitted 40 properties and some papers, 
 and we just sent the book back and have $137 of his money 
 until we get it correct. The other one omitted 120. 
 
470 
 
 WILLIAM M. HAGGINBOTHAM, Norristown, Pa., called. 
 
 By Mr. Brown : 
 
 Q. You heard Mr. Eschelman testify? 
 
 A. Part of it. 
 
 Q. Are your thoughts similar to his on the general sub- 
 ject? 
 
 A. On the general subject, yes. As far as Montgomery 
 county is concerned, it is perhaps a little different from 
 Lancaster county, as the Commissioners have the control, 
 and whatever the Treasurer does he does through the Com- 
 missioners. In other words, the Commissioners dump their 
 duplicates over on the Treasurer, charge them up to him, 
 and it is up to him to collect. We have no Controller in 
 Montgomery. Of course, we hear people say different 
 things at different times. 
 
 Q. What do they do in the way of filling up the guide 
 books ? 
 
 A. That question comes directly under the head of the 
 Commissioner's office. We do not bother much with that. 
 I hear a great deal of complaint from assessors. I hear a 
 great deal of complaint from common people, or what I 
 term the working classes, people who say they are paying 
 the bulk of the tax, and I believe they are. 
 
 Q. Do you know what is done in that county for the 
 collection of tax on money at interest ? 
 
 A. No, that is not under my charge at all. The Com- 
 missioners have all of that. The only thing I know about 
 it is what is charged to me. The Commissioners have ab- 
 solute control of that. 
 
 Q. How is the sentiment in your county, on the general 
 subject of taxation, as to additional articles which should 
 be taxed or those exempted? 
 
471 
 
 A. The sentiment so far as I can ascertain is this, that 
 the corporations should pay their pro rata share of tax. 
 
 Q. Do you mean manufacturers of all kinds? 
 
 A. All kinds of corporations. That has come to me in 
 the last few days, and I find that the sentiment is running 
 that way. To what extent I cannot say because I have not 
 got out far enough on the subject. 
 
 Q. You do not know the proportion of personal property 
 in your county as compared with realty? 
 
 A. No, I have not got that point. 
 
 By a Member of the Committee : 
 
 Q. What have you got to say regarding equalization of 
 taxation in your county? 
 
 A. It is not equal at all. 
 
 Q. What do you mean by that? 
 
 A.. I mean that the average workman who owns his prop- 
 erty, and perhaps has paid $1,600 to $1,800 for that 
 property, is assessed from $1,600 to $1,800 for that prop- 
 erty. We go down the road a little further and find a 
 property perhaps is classed at $100,000, and they are as- 
 sessed from $18,000 to $25,000. 
 
 Q. And cost how much to build? 
 
 A. Take the ground alone without any building and it 
 is worth all of $100,000. I can name several. 
 
 By Mr. Brown: 
 
 Q. Why have not the assessors returned that properly? 
 A. That is a question I am unable to answer. 
 
 By a Member of the Committee : 
 
 Q. Are your assessors appointed? 
 
 A. They are elected. 
 
 Q. What would you say if your assessors were appointed 
 by the courts of your county, would that make a change? 
 
 A. I am not able to answer that. I do not know. 
 
 Q. Is it not a fact that elective officers in many instances 
 fail to do their duty because of the fact that they are 
 
472 
 
 afraid that they will be removed from office and may not 
 be re-elected? 
 
 A. That is correct. Very often people in their own lo- 
 cality are not careful enough in the selection of their can- 
 didate. 
 
 By Mr. Brown: 
 
 Q. Why could not this service be done better by State 
 officials without any connection whatever with the locality? 
 They would not have local knowledge that local men would 
 have, but acting in concert with the County Commissioners, 
 why could not a State official do the work more effectively ? 
 
 A. I cannot agree with you on that. I do not believe 
 there is a locality in the State of Pennsylvania or the 
 county of Montgomery that has not good people, competent 
 to do it, provided the people will elect them. 
 
 Q. A man from outside the county could certainly see, 
 without any local knowledge, that a property worth 
 $100,000 was worth more than $18,000? 
 
 A. Yes, sir. 
 
 Q. It does not require any special skill for that, and if 
 money at interest was reported direct from trust com- 
 panies and banks there would not be any difficulty there? 
 
 A. I do not believe there would. 
 
 By a Member of the Committee : 
 
 Q. To whom are these assessors responsible? 
 
 A. To the County Commissioners only. 
 
 Q. Are they here? 
 
 A. Yes, sir. I would also say while here, as far as the 
 mercantile tax is concerned, we believe that is about as 
 equal a tax as we have, and there is very little complaint on 
 that, only by a small minority of poor shopkeepers. I do 
 not think there is anything to be improved on the mercan- 
 tile so far as our office is concerned. 
 
 By Mr. Brown : 
 
 Q. How about the property of public utility corpora- 
 tions, what is the sentiment of your county on that? 
 
 A. I cannot answer that. 
 
473 
 
 JAMES KREWSON, called. 
 
 By a Member of the Committee : 
 
 Q. What have you to say? You heard what Mr. Hag- 
 ginbotham said with reference to returns made by your 
 assessors of property owned by wealthy residents of your 
 county. 
 
 A. I live in one of the wealthiest districts of Montgomery 
 county, that is Cheltenham. We have properties or pal- 
 aces there. I suppose they cost considerably over half a 
 million dollars. You would naturally say a house that has 
 cost $500,000, and I know some of them cost a great deal 
 more than that, should be assessed at $300,000. Does that 
 strike you as being the right figure, Mr. Brown? 
 
 By Mr. Brown : 
 
 Q. You assess for three-fifths? 
 
 A. Something like that. 
 
 Q. Sixty per cent, to 75 per cent.? 
 
 A. Seventy-five per cent. When one of those wealthy gen- 
 tlemen comes from Philadelphia, as they do come out, in my 
 neighborhood they buy a farm that has had a nominal value 
 as a farm for a number of years. They spend an immense 
 amount of money on that place. If later on the head of 
 that family dies, or they lose a portion of their wealth, and 
 that estate is brought under the hammer, it does not bring 
 half and in some cases only 25 per cent, of what was orig- 
 inally expended on it. I could give you one instance half 
 a mile above me, where I was told a man had made an out- 
 lay of $400,000, and it was sold not a great while ago for 
 $100,000. That is an example. I contend that the wisest 
 man in every township should be assessor, or one of the 
 wisest men. Too often he is a political follower or hanger- 
 on. I think in my own township of Cheltenham we have 
 one of the most just assessors that there is in the whole 
 
474 
 
 State of Pennsylvania. I have done all I could in my weak 
 way at various times to have him reinstated, and yet he 
 increased the valuation of my little farm $150 an acre this 
 year. That does not look as if he were inclined to favor 
 those who boost him. There is one thing about assessors' 
 pay I think you gentlemen should take up Take our first- 
 class townships in the lower end of Montgomery, which 
 really is a suburb of Philadelphia. Those men are getting 
 $5 a day. All through the upper end of the county in the 
 poor districts they are getting $2 a day. 
 
 By Mr. Brown : 
 
 Q. The present law is $2.50 a day, is it not? 
 A. They were all elected under the old law. 
 
 Q. Is it not a fact that the last Legislature raised the 
 salary of assessors to $2.50 a day? 
 
 A. Yes, sir. Does it seem reasonable to you, gentlemen, 
 that for an important position like that you want a $2 man. 
 He has to take a horse or hire a horse and drive out through 
 these various townships. My idea of an assessor is that he 
 should receive just compensation. Near the City proper- 
 ties are constantly fluctuating in value. In our large and 
 wealthy township it takes good care to assess them prop- 
 erly. In the upper township where there is but little 
 change in land values the time of the assessing should be 
 limited. There should be a law not only to increase the 
 pay of those assessors in the outlying townships, but also 
 to limit them according to the mileage of the roads or ac- 
 cording to the value of those townships. It has been said 
 that the rural districts are assessed higher than those near 
 the cities. I think you all agree to that. My friend, Mr. 
 Saylor, comes from the upper end of the county. I believe 
 there are farms assessed there for more than they would 
 bring under the hammer. It is too often the case. 
 
 Q. Let us come down to the tax on personal property. 
 How many taxables are there in your county? 
 
 A. I could not tell you that. 
 
475 
 
 Q. About how many? 
 A. I have no statistics. 
 
 Q. How do you know how many blanks to get from the 
 Auditor General? 
 
 A. "We have a bookkeeper there. 
 
 Q. Your bookkeeper figures those? 
 A. Yes, sir. 
 
 Q. You are supposed to get a blank for every taxable 
 in the county? 
 A. Yes, sir. 
 
 Q. Including women? 
 
 A. Those who have property, yes, sir. 
 
 Q. Those blanks you get and you turn them over to 
 the assessor with a guide book showing the judgments 
 and mortgages? 
 
 A. They are issued from our office. 
 
 Q. Those are given to the assessors? 
 
 A. Yes, sir. 
 
 Q. What do you do to check up the assessors in the 
 performance of their duties? 
 
 A. You mean as to mortgages, bonds and so on? 
 
 Q. Mortgages and bonds and bringing back those blanks 
 sworn to? 
 
 A. That is a difficult matter. It may surprise you 
 gentlemen to know that I asked a question only this 
 week of a man who has been identified with our court 
 house for a number of years. I said, "What percentage 
 do you suppose we get of the actual moneys that should 
 be returned on bonds, mortgages and such things ? ' ' 
 He said, "I doubt if we get over 25 per cent." 
 
 Q. Why not? 
 
 A. How are you going to get at it? 
 
 Q. What do you do with the returns? Do you compel 
 each assessor to you give him a blank for every taxable ? 
 
 A. Yes, sir. 
 
476 
 
 Q. It is his duty either to return that blank or account 
 for it, is it not? 
 
 A. I believe in many cases they simply ignore it. 
 Q. He has to return that blank? 
 A. Yes, sir. 
 
 Q. If the taxable does not return it, it is his duty to 
 make a return for him, is it not? 
 
 A. That is his duty. 
 
 Q. "What do you do if he does not return them? 
 
 A. I will tell you what the assessor does in my district. 
 
 Q. Do not take your district particularly. Take your 
 practice as County Commissioner. What is the practice 
 in your county as to supervision of the County Commis- 
 sioners over your assessors? 
 
 A. I could only speak of our local affairs. 
 
 Q. Take your county? 
 
 A. I will take my township. 
 
 Q. Take the blanks that are given to each taxable in 
 Cheltenham Township? 
 
 A. If our assessor thinks a man has not given him a 
 just return, or makes no return, I have known him in 
 some cases to put down $100,000. If that man does not 
 make a kick next year he added $50,000 more on. 
 
 Q. If he puts $100,000 on a man in Cheltenham Town- 
 ship, whom you know from ordinary reputation is worth 
 $5,000,000, why does he not put him down for $5,000,000? 
 
 A. I cannot tell as to that. 
 
 Q. Suppose you have men in Cheltenham Township that 
 are worth millions, multi-millionaires. What is the use 
 of putting them down at $100,000 as a starting point? 
 Why not put a sum something near what you have every 
 reason to believe is their limit? 
 
 A. I will give you an instance. There is one wealthy 
 man living near Ogontz, who lives in one of our so-called 
 palaces. I doubt whether any of you gentlemen know 
 his name. Of course, I would not mention it. He claims 
 
477 
 
 a residence and all property interests in Philadelphia. He 
 claims he makes a return in Philadelphia, yet he lives there 
 summer and winter. 
 
 Q. Do you return him to our Board of Revision of 
 Taxes? 
 
 A. I want to know what to do in a case like that? 
 
 Q. The law says you must transfer them if you know 
 of mortgages and things like that. 
 
 A. How should we compel an investigation to be made in 
 Philadelphia ? 
 
 Q. The law does not compel you to do that. It does 
 as to mortgages and some few securities. You think the 
 law should be made so when a man tries to dodge you 
 in your county you should notify the county where he 
 claims a residence to look out for him? 
 
 A. I should think so. 
 
 Q. Do you go any further and investigate whether he 
 does return in this county? 
 A. I do not know as we have. 
 
 Q. Why do you not do that? 
 
 A. I want to know what the law is in that case? 
 
 By a Member of the Committee : 
 
 Q. Do you not think it is your duty, outside of the 
 law? 
 
 A. I should think it would be. This is a sample case. 
 I venture to say there are hundreds of them right around 
 the suburbs of Philadelphia. 
 
 Q. "Would it not pay Montgomery county to employ 
 someone to do just that sort of work? 
 
 A. There is no question about that. 
 
 By Mr. Brown: 
 
 Q. Where does this gentleman vote? 
 
 A. I believe he votes in Philadelphia to-day. He form- 
 erly voted in Ogontz. 
 
478 
 
 Q. He voted there until you got after him about taxes? 
 
 A. I guess that is it. 
 
 Q. Then he migrated? 
 
 A. I guess that is it. 
 
 Q. For tax purposes? 
 
 A. Very likely. 
 
 By a Member of the Committee : 
 
 Q. If he is reputed to be worth $5,000,000 he would 
 escape taxation entirely if he made no return in Philadel- 
 phia? So far as you know he has made no return *.n 
 Philadelphia? 
 
 A. That is very true, although I do not assume he is 
 worth $5,000,000. 
 
 Q. Assuming he is worth $500,000, he would escape 
 taxation simply because he Commissioners of Montgomery 
 county do not manifest enough interest to see whether 
 he was making a return in Philadelphia county? 
 
 A. I think that is right. 
 
 By Mr. Brown: 
 
 Q. In a case of that kind why do you not raise the issue 
 right in your own county, and let him furnish proof ne 
 is a resident of Philadelphia, in other words, put him on 
 the defensive ? That is what the law contemplates ? 
 
 A. I presume so. I am afraid the statutes are not well 
 defined. I do not want to hunt trouble. 
 
 Q. Is that just one swallow that does not make a 
 summer, or is that just the general condition there? 
 
 A. That is the condition. Then again, corporations who 
 pay State tax, a certain portion of that should be re- 
 covered or collected by the township or county in which 
 such franchise exists. We will take now, for instance, 
 the power house at Ogontz. I live near there. I have 
 been told it cost about half a million dollars. As town- 
 ship or county officials we do not derive one penny of 
 revenue. It goes to the State. Of course, we get 75 per 
 
479 
 
 cent, of the State money back that comes directly by 
 taxation, but not by the corporate tax. Someone men- 
 tioned the fact that it would be the proper thing for the 
 assessor to have a term of three or four years and not to 
 succeed himself. It is very true that our Treasurers in 
 former years would leave all the low men who pay nominal 
 tax go, because they needed their vote to reinstate them. 
 I think that rule would apply to assessors also. An as- 
 sessor's inclination is to be a little lax in making an 
 assessment. 
 
 Q. Is not the whole system lax? 
 
 A. I am afraid so. 
 
 Q. Its enforcement? 
 
 A. That is not up to county officials, that is up to the 
 State authorities. 
 
 Q. Do you make any attempt to get this money on 
 deposit by certificate? 
 
 A. No, sir. 
 
 Q. Have you any idea how much money in Montgomery 
 county is deposited in your trust companies and banks by 
 certificates ? 
 
 A. I have not the least idea. I would oppose any 
 measure that would tax a building and loan association, 
 or even a lodge, because that is a beneficial society. 
 
 Q. I am talking now of money at interest. You heard 
 Eschelman say what he had done in his county? 
 
 A. I only heard part of Mr. Eschelman 's talk. I did not 
 hear it all. Of course, our banking institutions pay their 
 corporate tax. 
 
 Q. What about money of depositors at interest? 
 
 A. It goes back on to the borrower's shoulders. 
 
 Q. I mean, suppose you deposited money in a trust com- 
 pany, and they give you for $10,000 a certificate of deposit, 
 in which they agree to pay 3J per cent. Do you mean 
 to say you ought not to pay tax on that money at in- 
 terest? 
 
 A. That is very frequently the poor man's saving. 
 
480 
 
 Q. Do you think that would be so in a rich county like 
 Montgomery ? 
 
 A. To a certain extent it is. I am director of a trust 
 company at Jenkintown which is a poor man's institution. 
 Out of 2,800 depositors, 2,100 of them are savings ac- 
 counts. That represents the poor man's savings. The 
 other is working capital of the middleman, farmers, and 
 so forth. 
 
 Q. So you think it would bear unusually heavy on that 
 class ? 
 A. I do. 
 
 By a Member of the Committee : 
 
 Q. Do you not think the trust company might pay that 
 tax? 
 
 A. You mean directly to the State as corporate tax? 
 
 Q. Yes, and have it returned on the three-quarter basis 
 as at present the law is ? 
 
 A. All those things are oppressive to the borrower 
 and the poor man. 
 
 Q. The trust company is a flourishing institution, is 
 it not? 
 
 A. Surely. 
 
 Q. You have had dividends ? 
 
 A. No, sir. Our institution is only six years old. "We 
 are making money, I heard one year, more than any other 
 institution outside of the two great cities of Philadelphia 
 and Pittsburgh, yet we have never declared a dividend. 
 We are adding it all to surplus. 
 
 Q. How much is your surplus? 
 
 A. In six years $115,000. 
 
 Q. You made more money than any other bank or 
 trust company outside of the large cities ? 
 
 A. Yes, sir. 
 
 Q. Why would it not be fair that you should pay tax 
 to the State of Pennsylvania, and not put it on the 
 shoulders of your certificate holders? 
 
 A. You mean on net revenues? 
 
481 
 
 Q. I mean to say, why would it not be a fair proposition 
 and a square deal to the State to have the trust company 
 pay a small tax on all certificates, and on all moneys held 
 in the form of certificates of deposit? 
 
 A. I thought you were alluding to net earnings each 
 year? 
 
 Q. No, I refer to this. Take a sayings fund account of 
 $50, drawing 3 per cent, interest for one year. Why 
 should not the trust company pay a tax, say of four mills, 
 on that $50 certificate of deposit, without putting it on the 
 shoulders of the holder of that certificate ? 
 
 A. Perhaps that would be just, but the bulk of your 
 taxation should come) from manufacturers and bond- 
 holders that are not hunted up as they should be. I am 
 well aware of the fact that the revenues that support the 
 State Government come from our great corporations, 
 something like $17,000,000 a year or $18,000,000 derived 
 from that source. That nearly runs the Government of 
 the State, does it not ? 
 
 By Mr. Brown: 
 
 Q. No, it does not. It may make the appropriations to 
 State institutions, but it does not provide for the charities 
 and one hundred and one other things. 
 
 A. There are so many of those things that come back 
 on the wage-earners 7 shoulders after all. If the assessor 
 increases the valuation of a man's house he immediately 
 raises the rent on his tenant. It is not a hardship to 
 the owner of the house. 
 
 By a Member of the Committee : 
 
 Q. How many wage-earners are stockholders in your 
 company? 
 
 A. I think a good many of them. We are all men in 
 very moderate means. I am a laboring man myself. 
 
 By Mr. Brown: 
 
 Q. What dividends could you have declared if you had 
 25 
 
482 
 
 not put this money to surplus or undivided profits ? What 
 were the dividends you passed? 
 
 A. I do not just care to declare that. We want to make 
 the institution absolutely safe. Every dollar up to this 
 time, never a directer picked up a dollar off the table 
 when we were in session. 
 
 Q. You would have done it if you had not put it 10 
 surplus ? 
 A. Yes, sir. 
 
 Q. Should not companies that earn more than 6 per 
 cent, pay this tax without the depositors paying it? 
 
 A. That is a fair proposition. If they earn over 6 per 
 cent, perhaps that is a fair proposition. 
 
 Q. You think under those circumstances that they 
 should pay a tax of four mills on moneys deposited there ? 
 
 A. A limited tax, ever bearing in mind it is the savings 
 of poor people. If the income tax bill had passed last year 
 you did not intend to impose any taxation on the building 
 and loan associations? I believe that was the wording of 
 it? 
 
 By a Member of the Committee : 
 
 Q. How would the taxing of direct inheritances affect 
 matters in your county ? 
 
 A. I do not know. 
 
 By Mr. Brown: 
 
 Q. It would drive out all these people? 
 
 A. It might and might not. I know some wealthy peo- 
 ple in this city who are living in my neighborhood. One 
 gentleman within a few hundred feet of this building 
 says, "I am warning my wealthy associates not to come 
 into Montgomery county, to keep away from Montgomery 
 county." 
 
 Q. Where does he say they ought to go? 
 
 A. I do not know. I do not think it would be in Phila- 
 delphia county. 
 
483 
 
 Q. You think if this was done by the State they could 
 not migrate from county to county. It would catch them 
 some place? 
 
 A. You mean the triennial assessment? 
 
 Q. I mean the assessment of money at interest. If it 
 was done by the State a man could not in one county 
 say he was assessed in another county, because he would 
 have but one place to respond to, and that would be the 
 State officials? 
 
 A. You want to enact some drastic measures by which 
 you can catch those people. Their money must be in 
 evidence somewhere. It may not be done within the limits 
 of Montgomery county, it may not be done in Philadel- 
 phia, but it must be done. You must make the assessment 
 in a general way. 
 
484 
 
 ADAMS F. SAYLOR, Norristown, Pa., called. 
 
 Mr. Saylor : I come from an upper township. 
 By Mr. Brown : 
 
 Q. Your people do not migrate? 
 
 A. They do migrate to Pottstown, but so far as the 
 assessors are concerned, I think that they should not be 
 returned. They should have, say a four years' term, and 
 after that there should be a law made that they could not 
 succeed themselves in office. I believe that would help 
 our assessments a great deal. 
 
 Q. How does the element of personal friendship enter 
 into this with assessors and taxables? 
 
 A. I do not know. I have not heard much of that. We 
 have four first-class townships in Montgomery county, 
 Lower Merion, Cheltenham, Abington and Springfield. 
 They are our first-class townships. Of course, the assessors 
 in those townships get $5 a day. That is a good job. 
 
 Q. Do you think they work any harder than the man 
 who gets $2? 
 
 A. Not as hard. 
 
 Q. Then it would be a mistake to pay them more? 
 
 A. I do not believe they work as hard, because I often 
 read in the paper where a man in Cheltenham or Lower 
 Merion buys a property for $150,000. I go and look him 
 up in the office and find he is assessed about $18,000, 
 $20,000 or $25,000. That is not right. 
 
 Q. Why do you not go after the assessor for making 
 a false return? He knows that is a false return. It is 
 highly penal. Such a man could be brought to book. Is 
 it not strange that in all this thing nobody prosecutes this 
 man? 
 
 A. I have not been long in office, only about a year. It 
 takes a little while to learn the ropes of this thing. We 
 
485 
 
 had an assessor appointed in one of the wards of Potts- 
 town, and he went and made an assessment last spring, 
 and of course, he asked a man how much money he had. 
 He said he had something like $2,000. "Is that all?" 
 "Yes." Said he, "Are you willing to swear that is all 
 you have?" "No, I have a couple of thousand more, but 
 the other assessor did not swear us." Out of that ward 
 we got $37,000 more. 
 
 Q. Would not that same result come generally from 
 the county if the Commissioners were careful to supervise 
 all this work? 
 
 A. I think it would. 
 
 Q. Why do not the County Commissioners do that? 
 What is the use of complaining about these things when 
 you have in your own hands the remedy for it? 
 
 A. We should. It takes a while to learn these things, 
 but we are getting on to that gradually. 
 
486 
 
 JOHN F. KENNY, Media, Pa., called. 
 
 Mr. Kenny: I think I have very little to say. I think 
 the argument of Mr. Eschelman, of Lancaster county, 
 covered the whole thing pretty much. In our county, 
 Delaware, there is a strong sentiment, I think, in favor 
 of the taxation of railroad property. As to the taxation 
 of manufactures, the sentiment is very much against it 
 because we are a manufacturing county and we see the 
 advantage of having factories in our county. In regard 
 to returns from personal property, this year the Com- 
 missioners have required the return to be made by every 
 person as near as it could possibly be done, but the 
 Ananiases are not all dead. The law, I think, is all right 
 as it stands. I do not see any objection to the law. The 
 difficulty is in enforcing it. It has been suggested here 
 that the Commissioners could oversee the returns from 
 the county, but they do not know the people of the county. 
 
 By Mr. Brown: 
 
 Q. They could know whether or not all the blanks sent 
 out they could get a blank for every taxable from the 
 Auditor General? 
 
 A. They do that, but how can they know whether the 
 returns are correct? 
 
 Q. They know whether all returns are made? 
 
 A. Certainly, they know the returns are made. 
 
 Q. Is it not fair to assume that the County Commission- 
 ers of your county would have some general knowledge of 
 the people in that county, and when they saw a man 
 return $10,000 money at interest and they knew he had 
 $100,000 or $500,000, that they would stop, look and 
 listen at such a proposition? 
 
 A. They could know a case of that kind. 
 
 Q. Do they examine these returns at all? 
 
487 
 
 A. Yes, sir, they examine the returns, but they do not 
 know anything about the personal property a man has. 
 The law is weak in one respect, I think, that is that it does 
 not fix a penalty on a man who does not make a return. 
 It fixes a penalty on the man who makes a false return. 
 
 Q. But the assessor can fix a penalty on him, because he 
 adds 50 per cent, and he can put in the amount? 
 
 A. There is no penalty in that. It does not amount to 
 anything because the assessor only guesses. 
 
 Q. But suppose I do not return, the assessor adds 50 
 per cent, to what he thinks I should return. Suppose it 
 is $100,000. You would very soon bring that man to 
 book? 
 
 A. The Commissioners add 50 per cent, to the assess- 
 ment of the assessor. 
 
 Q. The penalty is added? 
 
 A. The assessor has no means of knowing what he has. 
 Q. He makes a guess. You heard them say how they 
 added on $100,000 and then the person sent in and lie 
 paid on another $100,000? 
 
 A. I think there ought to be a penalty imposed on per- 
 sons who make no return. There ought to be some pro- 
 vision made that they can be sent for and sworn by the 
 Commissioners, or somebody else, put on their oath. There 
 is no doubt the county of Delaware, I do not believe, gets 
 half the personal tax we ought to get. I think we receive 
 about $44,000 personal tax. It ought to be two or three 
 times that. It is a little like the tax of $1 on dogs. No- 
 body owns a dog when the assessors go around, and there 
 are thousands of them the next day. I think Mr. Eschel- 
 man covered the whole ground entirely. I was going to 
 state, if he had not stated it, that I think the certificate 
 of deposit is money loaned the same as money loaned on 
 mortgages. 
 
 Q. What is the sentiment of your county as to whether 
 any other thing should be taxed? 
 
 A. No, except railroad property and certificates of de- 
 
488 
 
 posit. There is a general impression there that they 
 ought to be taxed. It would seem as fairly taxable prop- 
 erty as anything else. 
 
 Q. You think the laws are sufficient to raise sufficient 
 income providing they are properly enforced? 
 
 A. Providing they were properly enforced the income 
 would be three or four times what it is. 
 
 Q. Did you hear Mr. Eschelman tell the methods he 
 uses? 
 
 A. Yes, sir. 
 
 Q. Why would they not be good in your county? 
 
 A. I do not know. They might work in some cases. 
 There is no way of getting at the unrecorded loans that 
 I see. Records of real estate are all plain. Anybody can 
 get at those. As to those that are not of record it is 
 almost impossible and pure guess-work. We find some 
 that are omitted and put them on the list, generally with- 
 out any complaint. Then again parties will come, like 
 the gentlemen spoke of awhile ago, and say they live some- 
 where else. 
 
 Q. You do not notify the county where they say they 
 live of that? 
 
 A. We notify them and they notify us. There was one 
 party I believed had $500,000 one year and next year 
 he said his residence was in Maine, that he had a shooting 
 box up there. 
 
 Q. He resided in Maine but he lived here? 
 
 A. Yes, sir. 
 
 Adjourned until February 18, 1910, at 11 A. M. 
 
489 
 
 Philadelphia, Pa., February 18, 1910. 
 
 Public Meeting of the Committee held at Room 496, 
 City Hall, Philadelphia, Friday, February 18, 1910, at 11 
 
 'clock A. M. 
 
 Present: Gabriel H. Moyer, Vice Chairman and Secre- 
 tary, presiding; Wm. C. Sproul, William H. Keyser, 
 James F. Woodward, David Hunter, Jr., of the Com- 
 mittee ; Francis Shunk Brown, Esq., Counsel. 
 
 DR. GEORGE STRAWBRIDGE, called. 
 
 Mr. Chairman and Gentlemen of the Commission : I am 
 here on rather a sad sort of an errand. To be a little 
 personal, I have been in practice here in this City 
 for forty years. I started at twenty-five, and I am now 
 sixty-five, so you see I have been practicing forty years. 
 
 1 started at the Episcopal Hospital, and have since been 
 connected with the Presbyterian, University, Wills 
 Hospital and the Pennsylvania Eye and Ear Infirmary. 
 I am forty years practicing and still practicing. 
 
 I am here practically as a self-appointed representative 
 of the profession here in Philadelphia. This is my 
 position, self-appointed; I want that distinctly under- 
 stood. 
 
 The position of the profession here in town is getting 
 desperate. It is getting worse and worse year by year; 
 and unless some change is made I should say fully one- 
 half of the doctors will have to go into other businesses 
 fully one-half. The practice of the medical profession is 
 getting less and less year by year, and I see nothing ahead 
 of them but hard, hard times. 
 
 Now, naturally, the first thing that would come up 
 26 
 
490 
 
 would be to combine all of the institutions of the medical 
 profession in this City, for two reasons ; there are too 
 many practicing doctors I should say about four times 
 too many for the need of the community ; and there are too 
 many hospitals. So you have the profession hindered 
 both ways. There are too many people in the hospitals 
 in this City who should largely be in the hands of the 
 practitioner as they were in days gone by. These are 
 the conditions confronting us, and, as I say, the condition 
 gets worse every year. I don't suppose there is any 
 difference of opinion amongst the profession at all as to 
 the conditions. Most doctors simply say the case is hope- 
 less. There is no remedy, that is about the feeling 
 throughout the City. That is why I appear before you, 
 to present this aspect. As far as I know this aspect has 
 not been presented to you at all by anybody up to the 
 present time. Other aspects have been presented, as to 
 the needs of the hospitals, etc., but as to these conditions 
 as far as I know, not a word has been said up to this 
 moment. 
 
 Now, if what I state is correct (and I am very sorry 
 to say it is correct) we are naturally seeking about for a 
 remedy (which the medical profession should not be 
 compelled to do in this rich municipality) ; therefore, after 
 a thorough consideration of the situation, I beg to make 
 the following suggestions : 
 
 As I said before, there are at least four times too many 
 doctors for the needs of the community. There are five 
 medical schools in this City imagine, five medical schools 
 in a city of less than two million people why the whole 
 thing is absurd, simply ridiculous. Everybody says we 
 want the best here, the very largest college and university 
 and the best people, and they are seeking the very 
 opposite way to get the very best. 
 
 If you ask me what I consider to be the best university 
 in the entire world and the one admittedly the best, there 
 is only one answer, the University of Berlin. The Univer- 
 
491 
 
 sity of Berlin has nearly fifteen thousand students in it. 
 It has over three thousand foreign students and the 
 majority of these are Americans; then come the English 
 next, and then the Russians and the Turks. There are 
 nearly three thousand foreigners with a nearly fifteen 
 thousand clientele. That, gentlemen, is the very first 
 university in the whole world. The first in everything. 
 Why is it the very first? Because everything is done to 
 make it the first. There is only one there are not five. 
 Everything is consolidated. The Government is inter- 
 ested in it and all the people of Germany are interested 
 in it. There is the very first university in the whole 
 world. 
 
 Naturally, at my time of life, when I am rounding up 
 things and when I have the least interest in accumulating 
 any store, the thought comes up whether, here, in this 
 country, we are not good and old and big enough now 
 to plan first-class things ; and I think we are. There is no 
 doubt in our minds (I mean my own) that the medical 
 schools should enter into a consolidation. The five medical 
 can see that. We could bring all into a consolidation 
 under the head of the University of Pennsylvania and 
 make it one of the greatest universities in the country. 
 There is no reason why all five should not enter into the 
 consolidation. The Hahnemann institution could easily 
 be consolidated by having in the university a chair of 
 Homoeopathy. 
 
 By the Chairman : 
 
 Q. Do you think the Hahnemann and the rest of the 
 medical institutions could be so consolidated in the 
 manner you suggest? 
 
 A. Without the slightest trouble. The County Medical 
 Society recently passed a resolution to call in the homoeo- 
 paths into consultation, that is, for the allopaths to call 
 the homoeopaths. 
 
492 
 
 By Mr. Brown: 
 
 Q. Does that custom exist in the hospitals 
 
 A. I was just going to touch upon that subject in a 
 minute. Consolidation is unquestionably the remedy. 
 In that way, if everything was combined in one, if 
 everything was consolidated into one that way, the next 
 question would be which should be at the head of the 
 consolidation. It should be the University of Pennsyl- 
 vania. I don't think anybody would doubt but what 
 that was the proper head. It is the greatest source of 
 learning in this City, and in every way it has the 
 advantages with it; it has all the departments in it, and 
 it is the sort of a house it should be if immediately 
 required to consolidate with and absorb these other 
 schools. 
 
 By the Chairman: 
 
 Q. Provided, of course, the other schools would be 
 willing to consolidate? 
 
 A. I was going to touch on that in another minute. 
 I may say, for your information, that the feeling among 
 them now is most friendly. When I was a young man 
 it was different. I heard a gentleman talking about Dr. 
 Dever, who, perhaps, is one of the best surgeons in the 
 City 
 
 By Mr. Brown: 
 
 Q. My understanding is that your thought is that 
 whether they wanted to come together or not, that 
 probably the withholding from them of State appropria- 
 tions would induce them 
 
 A. I was going to touch upon that; if the State says, 
 we have no more such moneys for you 
 
 Q. Unless you get together? 
 
 A. Yes. I say give the university enough money to 
 make it first-class, which would not be quite as much as 
 that which has been given out to all the others, and in 
 
493 
 
 that way you would see what an enormous credit to this 
 part of the country this would be. Someone has asked 
 about the excess hospitals. Whenever a medical school 
 starts it has to have a hospital to provide patients for the 
 school attached. Every medical school must have a 
 hospital. If the consolidation were effected, you would 
 have the five hospitals in one. The hospitals for these 
 institutions would be cut down to one by the consolida- 
 tion. 
 
 Q. Does the location of the hospital have anything to 
 do with it? Could they use the one hospital just as 
 readily? 
 
 A. As far as hospital treatment is concerned. 
 
 Q. There is no advantage in having them scattered over 
 the City? 
 
 A. No. 
 
 Q. The five you speak of are what? 
 
 A. The University of Pennsylvania, Medico-Chirurgical, 
 Jefferson, Hahnemann and Women's. 
 
 Q. Why don't you ask the Polyclinic to come into the 
 consolidation. 
 
 A. The Polyclinic is not a medical school it has no 
 power to issue diplomas. I think the Polyclinic has been 
 rather anxious for some year or two for some sort of a 
 consolidation. 
 
 Q. That is a post-graduate hospital? 
 
 A. Yes. You would have five hospitals cut out. No 
 homoeopathic hospital is necessary, no women's hospital 
 or college is necessary. Women are admitted everywhere. 
 It is well known that this going to the hospital has been 
 a perfect fad for the last fifteen years. If we get any- 
 thing the matter with us we go to the hospital. That 
 is the place for us. I have been sick a number of times 
 and have had two or three operations performed upon 
 my person. Have I ever gone to the hospital? No. 
 Why? Because I have a home, which to me is superior 
 
494 
 
 to the hospital. If I am sick I want to be home. I don't 
 care to go to the hospital where a man must be subjected 
 to the sights and scenes of hospital life. You couldn't 
 get me there. You lie ill in your room and are com- 
 pelled to listen to the piercing screams of some poor 
 unfortunates recovering from the effects of ether. You 
 cannot get away from it. From my standpoint, the 
 hospital is only adapted to the people who have no home 
 no good home. If they live, say at a boarding house, 
 then the hospital is for them. I know where a person 
 has a good home, they would be better off in sickness 
 than in a hospital. If you ask the doctors on that point 
 there will be some little hesitation. You can easily 
 understand the advantage of a large, busy surgeon to 
 have about one hundred patients packed into one hospital 
 It concentrates his work and enables him to handle them. 
 
 Q. You think it is monopolistic ? 
 
 A. Absolutely. 
 
 Q. How is the State of Pennsylvania to destroy that? 
 
 A. Suppose you don't appropriate to these hospitals? 
 
 Q. Don't you think the money of the State is being 
 used properly? 
 
 A. No. A certain few particular doctors and specialists 
 reap the benefit of it. This practice makes it hard for 
 the practitioner to get along and brings about the condi- 
 tions I have spoken of. 
 
 Q. The strength of the few against the many? 
 
 A. Yes. 
 
 By the Chairman: 
 
 Q. Do you know of any concrete case? 
 
 A. I have one in my mind at this minute, but I don't 
 think it is fair to mention any names. These people are 
 all friends of mine. I know a very concrete case. 
 
 By Mr. Brown : 
 
 Q. In other words, if they did not have such unlimited 
 
495 
 
 facilities in the hospitals a patient would be treated at 
 home by his own physician? 
 
 A. Yes. 
 
 Q. Then the hospital service should be left for the poor 
 sick? 
 
 A. Yes, people who have no homes. 
 
 Q. And no other means by which they could get the 
 proper treatment? 
 
 A. That is it. These conditions would bring back an 
 enormous quantity of practice into the hands of the 
 practitioner. 
 
 Q. Is there any consensus of opinion among the physi- 
 cians of this City on this subject generally? 
 
 A. Yes, all of them say there is no practice and that is 
 on account of the hospitals. These gentlemen who are 
 in the hospitals would not be so positive in their declara- 
 tions. 
 
 Q. That has an effect upon the general practitioner 
 who is not within the hospital practice? 
 
 A. Undoubtedly so. He is out of work, has nothing to 
 do and is discouraged. 
 
 By the Chairman : 
 
 Q. You have heard, undoubtedly, of repeated efforts 
 to have a bill passed in the Legislature to establish one 
 Board? 
 
 A. No, I have not kept close touch upon these things. 
 
 Q. That would be in line with your argument that all 
 the boards should be eliminated and consolidated into one 
 medical board? 
 
 A. Yes, and if I may say so, if such a thing is done, the 
 University should be selected as the official head of the 
 consolidation and the State should be represented in the 
 Board of Trustees of the University. 
 
 By Mr. Brown : 
 
 Q. She has no connection now, that is, except in theory ? 
 
496 
 
 A. Yes, that is all she can do, and that means practically 
 very little. 
 
 Q. Your thought is that if we had such an institution 
 here, there would not be so many students of this country 
 go to Berlin? 
 
 A. Yes. I was three years abroad myself. I was over 
 to Berlin and Vienna and also Heidelberg and I know 
 all these places. What I am saying is not theory. I have 
 no axe to grind. I am still active in practice, and spend 
 the good money that I get out of it. 
 
 Q. Why is it that the medical profession cannot get 
 together in a body and recommend this consolidation such 
 as you have suggested? 
 
 A. The local jealousies have been getting greater. 
 There is better progress within the last year or two, 
 though. 
 
 Q. Do you think, as a medical man of the Common- 
 wealth, that the State of Pennsylvania could fairly with- 
 hold appropriations from these several institutions unless 
 they get together into one? 
 
 A. I think fair notice could be given to these institu- 
 tions with an unnatural growth and give them a fair idea 
 of things. 
 
 Q. You don't think the time is ripe now for it? 
 A. I would have a definite plan, and work upon this 
 plan. 
 
 By the Chairman : 
 
 Q. Do you think an institution like the Jefferson, if the 
 State appropriation were withdrawn (I have particular 
 reference to the Jefferson) that the Board of Trustees and 
 the management would refuse to enter into the consolida- 
 tion. Do you think it would practically put the Jefferson 
 out of commission? 
 
 A. I think it would. 
 
 Q. If they would not receive any State appropriation? 
 
497 
 
 A. Yes, unless they had an enormous support by citi- 
 zens. 
 
 By Mr. Brown : 
 
 Q. Have you gathered any information or data as to 
 whether or not these different State appropriations have 
 tended to minimize the providing of provisions of the 
 several institutions? 
 
 A. No, I don't think I can give any information on 
 that point. 
 
 Q. Have you anything else on your mind, Doctor, that 
 would probably be of use or benefit to the Committee? 
 
 A. No, I think this, in a general way, is all I have to say. 
 
 Mr. Brown: 
 
 Have the gentlemen of the Commission any further 
 questions to ask Dr. Strawbridge? 
 
 The Chairman: 
 I believe that is about all, Mr. Brown. 
 
498 
 
 Mr. Brown: 
 
 Mr. Chairman, the next gentleman from whom we shall 
 hear is Mr. Simon Gratz, President of the Board of 
 Revision of Taxes of the County of Philadelphia. (Mr. 
 Brown addresses Mr. Gratz : 
 
 Mr. Gratz, of course you are aware of the purpose of 
 the appointment of this Committee, which is to consider 
 a revision of the corporation and revenue laws of the 
 Commonwealth; that is, to determine, and gather such 
 information as they can as to whether or not every dollar 
 to which the Commonwealth is entitled she is receiving 
 and as to whether or not every dollar she is paying out 
 is being wisely expended. We have heard a good deal as 
 to...a large portion of that outgoing, and I think the Com- 
 mittee would like to hear from you as to whether or not 
 the Commonwealth is receiving all she is entitled to re- 
 ceive in the matter of the personal property tax that is 
 collected by the county of Philadelphia, of which the Com- 
 monwealth receives one-fourth and of which the county 
 receives three-fourths. If you have any suggestions to 
 offer as to defects in the present laws or amendments 
 thereof, we would be very glad to hear from you. 
 
 Mr. Simon Gratz: 
 
 Mr. Chairman and Gentlemen of the Commission : This 
 is a very troublesome subject, as you very well know. 
 If all men were truthful and honest, the law would be, 
 as it stands today in regard to the assessment of the per- 
 sonal tax, entirely satisfactory. But, unfortunately, there 
 is a failing in human nature with which we are all 
 familiar, and a great many people resort to any means, 
 reputable or otherwise, to evade the process of the law. 
 I think I can say that, in the main, the law is fairly and 
 fully enforced in Philadelphia. 
 
499 
 
 Every man or woman who presumably has anything 
 that is subject to taxation, judging from his or her mode 
 of living, is served with a blank form of return. If the 
 return is made to us, of course, it is accepted. If the 
 person in question fails to make a return, then there is 
 an estimate, and 50 per cent, is estimated. I do not 
 say that in every case or in an exceedingly large per- 
 centage of the cases in which the estimates are made that 
 the money is collected, because the assessors, like some 
 members of the Board of Revision of Taxes, are at times 
 bad guessers. But there is one portion of the law that 
 we do not attempt to enforce, because it would be almost 
 impossible to do so ; that is, the return of that portion of 
 money at interest which is comprehended in deposits at 
 banks, savings funds, trust companies, private bankers, 
 etc., on which interest is paid, but which we cannot trace, 
 and which, if we did trace, would be a most difficult 
 matter to collect. For instance, I suppose that a great 
 majority of house servants in Philadelphia have accounts 
 at some of the saving funds where they deposit their 
 earnings. It would be manifestly impossible for us to get 
 any returns from them if the tax should be collected. So 
 that on accounts bearing interest from 2 to 3J per cent., 
 or maybe 4, there is absolutely nothing collected. 
 
 By Mr. Brown : 
 
 Q. Mr. Gratz, have you ever made any estimate of the 
 amount of money so deposited? 
 
 A. No, but it would be a great amount. The only 
 instance I know of in which a man voluntarily made a 
 return of money deposited in any banking house in 
 Philadelphia was that of a man whose residence was out 
 of town and who spent a part of his time in Philadelphia. 
 He came into the office one day and said, "I want to make 
 a return of $200,000 deposited in a banking house upon 
 which I am getting 3 per cent. I think, under the law, 
 I ought to return it for taxation." I said, "Yes, under 
 
500 
 
 the strict letter of the law, you should unquestionably 
 return it." He said, "Well, I am ready to return it." 
 He then informed me that he had it there for years and 
 intended to allow it to remain there as he didn't want 
 to invest it. He said if he got 2.1 per cent, it was enough 
 for his needs. 
 
 I know of some cases in which 4 per cent, has been 
 allowed. Saving funds all allow 3.65 now. It is 
 a question whether it would be wise to enforce the 
 collection of the tax on these amounts of moneys at 
 interest. If that should be your conclusion, there is, in 
 my opinion, only one way to do it, and that would be to 
 require these corporations, or firms, or individuals to 
 deduct from the interest they allow the tax, whatever it 
 might be, and annually, at the proper time, make a return 
 to the Board of Revision of Taxes, in order that it might 
 be included in the returns of the Revision Board to the 
 State and that the City might ultimately get its three- 
 fourths of the amount. There is practically no other 
 way to reach it. 
 
 Mr. Brown: 
 
 Q. Is that an absolutely practical way? 
 
 A. Yes. I don't say anything as to the wisdom of 
 doing it. 
 
 Q. Assuming it was a law, then the way you suggest 
 would be a practical one? 
 
 A. Yes, I cannot think of any more practical way. 
 
 Q. Would you do that upon all moneys deposited upon 
 which they calculate interest? 
 
 A. I think it would have to be uniform. I think from 
 the amount of interest computed, or paid to any person, 
 by any corporation or firm in the banking business, 
 there should be deducted, at the close of the year (or 
 any time) 4 per cent, of the amount paid, and that 
 returned to the Board of Revision of Taxes. 
 
 Q. When you say 4 per cent, you mean four mills? 
 
501 
 
 A. Yes, four mills. I don't know whether all of you 
 know how very easy we are here in the imposition of 
 taxes. I have had a good many visits from taxing au- 
 thorities in different parts of the country. One of the 
 last was a man who is at the head of the Tax Board in 
 the State of Ohio. He said to me, "How much do you 
 tax mortgages here ? " I said, ' l Four mills.' ' He said, * ' You 
 mean 4 per cent, don't you?" I said, "No, four mills/' 
 He said, "In my place it is 4 per cent." I said, "Do 
 you mean to tell me you get 4 per cent.?" He said, "Yes, 
 we get 4 per cent." He said, "What a nice place Phila- 
 delphia is to live in. I would like to live in Philadelphia 
 if the taxes are so small. ' ' "Whether or not it would be a 
 hardship to enforce this tax, or the payment of this tax, 
 I do not say. 
 
 Q. Is there any reason in your mind, Mr. Gratz, why 
 one species of money at interest should not pay the same 
 tax as another species of money at interest? 
 
 A. No. Of course, it would be pretty hard on the man 
 whose money was deposited and only bringing him 2 
 per cent, to pay four mills, but you couldn't escape it. 
 
 Q. If he prefers to live on his money, as your client 
 
 from out of town 
 
 A. Delaware county. 
 
 Q. At 2.1 per cent, it is not fair? 
 
 A. Yes. 
 
 Q. Your thought would be as to the poor people who 
 make these deposits in order to get a return for their 
 money? You think it would be a hardship upon them? 
 
 A. Yes. 
 
 Q. Have you ever given the matter of the average of 
 deposits in Philadelphia any thought, Mr. Gratz? 
 
 A. I simply know they are enormous. 
 
 Q. I mean the average deposits? 
 
 A. No. I have not. 
 
 Q. Suppose the average was one thousand, two or 
 
602 
 
 four. That would not apply to the very poor, would it? 
 Because a person having, say four thousand dollars on 
 deposit at interest could probably 
 
 A. It would not surprise me at all if the average of 
 those of the servant folks is one thousand. 
 
 Q. Would you consider them the very poor people of the 
 community? 
 
 A. They get 3.65 interest. I was going to say that. 
 I have said at times to treasurers or trustees of 
 trust companies, "Can you use to your pecuniary ad- 
 vantage all the moneys- you have on deposit?" The 
 answer was, "Yes, indeed, we can; and get 4-J, 5 and 6 per 
 cent. 
 
 Q. You speak about giving a list to the assessors of 
 those who are presumably taxable. What do you do in 
 the way of checking those returns up ? 
 
 A. The assessors all have what we call personal blotters. 
 They go out on the street and go from house to house. Of 
 course, if they come to an alley that is inhabited, say 
 by Dagoes who earn, perhaps, a dollar a day out on the 
 street, they pass that by; but they would not pass your 
 house or mine, because we look as if we did have some- 
 thing. 
 
 Mr. Brown: They would probably stop at my house 
 under a false presumption. 
 
 Mr. Gratz (continuing) : They leave a blank at all 
 houses in which there is any reason to suppose the oc- 
 cupant is of sufficient means to have anything at all sub- 
 ject to taxation. 
 
 I want to call your attention to the lax enforcement 
 of the law in some other localities. We have, at times, 
 been informed (I mean the Board of Revision of Taxes) 
 by the Board of Revenue Commissioners and sometimes by 
 the Auditor General, that Philadelphia and Pittsburgh 
 were the only counties in which a fair enforcement of the 
 law was attempted. In a great many counties of the 
 State they don't attempt to enforce it. I know of one 
 
503 
 
 adjoining county, in which several of my friends live, who 
 are very rich men, and they have often told me that they 
 never received a blank and never were asked to make a 
 return, and, therefore, never did it. They have escapsd 
 the tax in the past years and expect to escape it in the 
 future. 
 
 What stirred me up to write a letter to the present 
 Auditor General was a piece of information which I re- 
 ceived from one of the assessors. A man residing in 
 Philadelphia, who had a country home in an adjoining 
 county, last fall was served with a blank. He had been 
 making his return in Philadelphia. He said to the as- 
 sessor, ' * I am not going to return anything more in Phila- 
 delphia; I am going to make my return in naming the 
 county." The assessor said, "Why do you do that?" he 
 said, "Because the clerk there allows me 5 per cent, 
 discount on my taxes, and you don't allow any discount 
 here.' ' The assessor said, "Has he a right to do that ? " He 
 said, "I don't know anything about that, but he does it." 
 After getting that piece of information I wrote a letter to 
 the Auditor General, of which letter this is a copy: 
 
 November 16, 1909. 
 Hon. Robert K. Young, 
 Auditor General, 
 
 Harrisburg, Penna. 
 Dear Sir : 
 
 We have recently learned certain facts in connection 
 with the assessment of the State tax on personal property 
 which we think of such importance as to warrant us in 
 communicating them to you. 
 
 A number of our most wealthy Philadelphians have 
 country residences in adjoining counties principally 
 Montgomery and Delaware and elect to vote there, in 
 order that they may make affidavit that they are non- 
 residents of this City and thus avoid returning their tax- 
 able personal property to our assessors. 
 
504 
 
 In a large number of these cases, when the individuals 
 have been asked why they did not make their returns 
 here, and thus aid the City treasury, the answer has been : 
 "We are not asked to make any returns in Montgomery 
 (or Delaware) county. No blank for returns is ever 
 served on us by the assessors." Or, in some cases, the 
 answer was: "I let the assessors estimate me, and their 
 estimate is greatly below what it would be in Philadel- 
 phia." 
 
 An additional reason for fixing their residence so that 
 they may make their returns outside of Philadelphia has 
 lately come to light. Two men who had, for years past, 
 been in the habit of making their returns to our assessors, 
 have, this year, made affidavit of non-residence here ; and 
 have given as their reason, that the collectors of the State 
 taxes assessed against them in the adjoining counties 
 always allow a deduction of 5 per cent, where the bills 
 are paid promptly. I do not know what authority they 
 have for doing this ; but I do know that all the facts above 
 stated unite to lessen, to a great extent, the total amount 
 of State tax to be returned to you by this office on July 
 31st of each year. 
 
 Very truly yours, 
 (Not signed) 
 
 (Written on the letter head of the Board of Ke vision 
 of Taxes, Philadelphia.) 
 
 Q. Have you any thought as to the amount of these 
 taxes that are evaded by these quondam citizens of Phila- 
 delphia ? 
 
 A. I have no knowledge at all. 
 
 Q. I assume the amount is of sufficient size to justify 
 the writing of that letter? 
 
 A. My personal belief is that the amount is pretty 
 large, but I have no absolute knowledge. 
 
 Q. What was Philadelphia's share last year of the per- 
 sonal property tax? As I recall it, the total returned 
 
505 
 
 to the Commission was a little over three million dollars. 
 Can you recall what Philadelphia's share was? 
 
 A. I think I have a memorandum (reads from paper). 
 The City got three-fourths of the tax on $568,786,796. 
 
 Q. That is about one and a half million dollars? 
 
 A. But that included fifty-one million assessed against 
 the Provident Trust Company, which you know about, 
 which has not been paid? 
 
 Q. Yes. 
 
 A. Take off fifty-one million and there is five hundred 
 and twenty million about, the City getting three-fourths. 
 
 Q. Let me ask you this : ' ' When these people that you 
 know go to another county, couldn't you inform the ad- 
 joining county? "Why should not the Auditor General be 
 notified that certain people claimed a residence in Mont- 
 gomery or Delaware county, so that the Auditor General 
 could keep some check on them and require the County 
 Commissioners to make the proper returns? 
 
 A. It would be possible for the Board of Revision of 
 Taxes here to notify the county assessors of Delaware or 
 Montgomery county or any other county, but while a man 
 says he is not a resident of Philadelphia, but resides in 
 Delaware county, we could not give his address. 
 
 Q. There is no law compelling you to-day to do it? 
 A. No. 
 
 Q. You were speaking of returns. Has there ever been 
 any attempt in this county to prosecute anybody for mak- 
 ing false returns? 
 
 A. Never. 
 
 Q. Why is that? I cannot find a case in the Common- 
 wealth. Why is that? 
 
 A. Well, I will tell you. I know of some cases that 
 came near to it not quite to the point of prosecution. I 
 have in mind three instances of men who were worth 
 over a million dollars and some three or four, who year 
 after year made a sworn return that they had no taxable 
 
506 
 
 property. They were reputable men believed to be so 
 and no one questioned the truth of their returns. The 
 first one who died, we will say, was Mr. A. "When the 
 inventory of his estate was filed it showed a million dol- 
 lars that was placed in mortgages, and five hundred thous- 
 and or so (maybe a million) in stocks and bonds of corpora- 
 tions outside of Pennsylvania. I was astounded, and I 
 thought it could scarcely be possible that a man of his repu- 
 tation would make false returns, and so notoriously false. I 
 could have found some means of explaining to myself the 
 false statement in regard to the taxable stocks and bonds. 
 I had the clerks bring me the returns that were made by 
 him during the last five years of his lifetime, and I sent 
 for his executor (who, by the way, happened to be a 
 member of his family). I spread out before him these 
 returns, and he held up his hands in horror. "What are 
 you going to do about it?" he said. I said, "I want you 
 to pay the taxes for all these years during the years this 
 was taxable. If you do that I will be satisfied. You are 
 not to blame." He said, "Of course you don't want to 
 pain the family by giving any public expose of this?" 
 I said, ' ' Not at all. ' ' He said, ' ' You don 't want to blacken 
 his memory." I said, "No." The full amount of the tax 
 was paid for all the years. 
 
 Another case : A man who was not only as welll known 
 as the first one I have mentioned, but was a pillar of 
 the church. The case was precisely the same. 
 
 Q. You don't say where the pillar was located, Mr. 
 Gratz? 
 
 A. No. This was even a worse case than the other. 
 His son-in-law was sent for. He said, ' * My, I will do any- 
 thing you want done." I said, "We want the whole 
 amount paid up." Of course, that was the thing to do 
 to get the money for the City. 
 
 Q. Why shouldn't there be some provision for the col- 
 lection of such tax as the collection of the collateral 
 inheritance tax? 
 
507 
 
 A. No reason in the world. 
 
 Q. And yet there is none for it at the present time ? 
 
 A. No. 
 
 Q. You have had no trouble in these cases? 
 
 A. No. 
 
 Q. Have you any idea as to the number of these. Have 
 your inquiries led you into any means of ascertaining 
 this? 
 
 A. I have kept a pretty close watch. No, there is no 
 trouble in collecting where a person during his life time 
 has made false returns. The personal representative 'jr 
 members of his family are always too glad to do anything 
 to save him from reproach. 
 
 By the Chairman : 
 
 Q. Do these cases frequently occur? 
 
 A. Very seldom. 
 
 Q. You spoke about making no returns. Did he make 
 any return of the mortgages? 
 
 A. No mortgages. 
 
 Q. Were the mortgages recorded? 
 
 A. That was before we got the records from the Re- 
 corder of Deeds. That could not happen now. The Re- 
 corder of Deeds sends us a transcript, but they evade 
 that. They don't give correct addresses. 
 
 Q. That is assuming that when the mortgagee records 
 his mortgage he gives his correct address. If he gives it 
 as Kalamazoo, Michigan, you couldn't help yourself? 
 
 A. No. 
 
 Q. Does Senator Vare's bill cover that? 
 
 A. Yes, to a certain extent. Human invention cannot 
 devise a law which will make all men honest. It is im- 
 possible. I should say this for your general information. 
 In the course of a year a vast number of people come 
 into the office of the Board of Revision of Taxes, and they 
 talk about taxation and other things. I have never heard 
 
508 
 
 anyone say that he was not entirely satisfied to pay a 
 tax on his personal property, or even pay a larger tax, if 
 all people who w r ere in the same position could be made to 
 do it; but they say and very justly "I don't want to 
 pay a tax on my personal property when my neighbor pays 
 nothing on his. ' ' 
 
 By Mr. Brown : 
 
 Q. Have you ever had any complaints from land owners 
 who seek to relieve the burden upon them by insisting 
 upon a more rigid enforcement of the collection of the per- 
 sonal property tax? 
 
 A. No. 
 
 Q. We have some letters upon the subject of local tax- 
 ation of public utility corporation property. Have you 
 given that subject any thought, Mr. Gratz? 
 
 A. Only as far as municipal taxation. 
 
 Q. Only as to the Commonwealth and City revenues. 
 I assumed that if all this property were local property of 
 the public utility corporations, it should be taxed locally, 
 or do you think that would be an attempt on the part of 
 the State to impose too heavy a burden? 
 
 A. You know, Mr. Brown, as well as I do, that not by 
 any statute law, but by a decision of the Supreme Court, 
 certain portions of the real estate of public utility cor- 
 porations have been exempted ; for instance power houses, 
 telephone exchanges not to mention, perhaps, some lesser 
 improvements in that connection. My own personal opinion 
 is that they should be taxed. 
 
 Q. You tax the Pennsylvania Railroad Company lo- 
 cally on what, in Philadelphia ? 
 
 A. Locally on its station. 
 
 Q. That is, Broad street, West Philadelphia all sta- 
 tions? 
 
 A. Yes, everything except road beds and water sta- 
 tions. 
 
 Q. Where is the distinction of law that taxes one cor- 
 
509 
 
 poration and exempts other public utility corporations from 
 paying a similar tax upon similar conditions ? 
 
 A. The Supreme Court saw fit to do it. 
 
 Q. Is there any reason why this, as far as you know, 
 should not be done ? 
 
 A. I see no reason whatever. 
 
 Q. I gather your thought that you think it should be 
 done. Have you been able to gather any sentiment as to 
 taxing other subjects than- those now taxable ? 
 
 A. Do you mean for State purposes? 
 
 Q. Yes. 
 
 A. There is a great diversity of opinion. 
 
 Q. You are a sort of a clearing house. I thought you 
 probably had gathered some sentiment as to this? That 
 is, manufacturing corporations and others? 
 
 A. All the manufacturers would protest against any 
 taxation of the State of their capital. They would insist 
 that they could not live and thrive if such a tax were im- 
 posed. I feel very kindly to the manufacturers, but I 
 confess I see no reason why they should be favored to too 
 great an extreme. They are favored in the matter of local 
 taxation always have been and are still in this respect: 
 That their machinery absolutely escapes taxation (I am 
 speaking of machinery as a fixture, and that is the most 
 valuable part of a plant). It has been the case here, from 
 time immemorial, not to include that, and we follow the 
 custom down to date. 
 
 Q. What about taxing inheritances ? Have you gathered 
 any thought on that direct inheritances? 
 
 A. I am not going beyond the provision of the present 
 laws. 
 
 Q. I am speaking now of the taxing of direct inheri- 
 tances ? 
 
 A. No, I haven't thought of that. 
 
 Q. Are you able to give any thought upon the subject 
 of taxing other subjects not now taxed? 
 
 A. You mean for State purposes? 
 
510 
 
 Q. Yes. 
 
 A. I confess it has never occurred to me to give any 
 general thought to the whole subject, so far as State tax 
 goes. I have had in mind, more frequently, the subject 
 of municipal taxation, because the City of Philadelphia 
 needs a larger revenue than it gets, and I have often thought 
 that if some method of raising the revenue by taxation 
 could be devised, it would be a fine thing. 
 
 Q. It is your thought that the burden upon real estate in 
 this City has about reached the limit ? 
 
 A. Yes. The burden that is placed upon real estate is 
 exceedingly heavy. 
 
 Q. Where is the City to obtain her additional revenue 
 unless it is derived from these other taxes? 
 
 A. Undoubtedly, in a great many places, goods in the 
 process of manufacture are taxed for municipal purposes. 
 Goods for sale and in stock are taxed. Just take these 
 two articles alone ; consider what an immense amount would 
 be subject to taxation if all the goods that are on sale 
 in the stores were subject to taxation. 
 
 Q. Someone has suggested that automobiles and other 
 luxuries should be taxed heavily some suggest as high as 
 fifty to one hundred dollars a year. 
 
 A. You tax carriages for hire, and why should not au- 
 tomobiles for hire be equally taxable? There is no reason 
 for the discrimination. Councils have a right, I think, 
 under the general law, to make automobiles taxable if they 
 wanted to. It was suggested here the other day. 
 
 Q. A rigid enforcement of the law in one county would 
 drive taxpayers, or tax dodgers, to other counties to evade 
 it? 
 
 A. No, I hardly think it would. If a very rich man has 
 a town house along the main line, and he happens to be 
 fortunate enough to escape the tax in the county, and is 
 a voter in the adjoining county, I don't think he would pull 
 up stakes and^go into some other county. 
 
511 
 
 Q. Could the State collect those taxes more efficiently 
 through collectors, who were independent of the local color 
 men who had no local associations? It has been sug- 
 gested that the assessor is a little tender because he is fol- 
 lowing the lines of his next election ? 
 
 A. You are speaking now of other counties than Phila- 
 delphia ? 
 
 Q. Yes. 
 
 A. I think the assessor should be appointed, not elected. 
 
 Q. By whom? The Auditor-General? 
 
 A. Where there is a Board of Revision, the Board would 
 be the proper body to appoint them. If there is no Board 
 of Revision, then some other authority. 
 
 Q. You don't think the Auditor-General could come into 
 this county and appoint collectors. 
 
 A. No. 
 
 By the Chairman: 
 
 Q. What would you say if the Court were to appoint 
 the assessors for the various townships in the several coun- 
 ties of the Commonwealth, excepting the counties of Phila- 
 delphia and Allegheny, for instance? 
 
 A. You would probably get a pretty good set of men that 
 way. 
 
 Q. In your judgment, would that be an improvement 
 over the present method? 
 
 A. I think almost any method would be an improvement 
 over the one which prevails in making them elective. Just 
 as long as that system is operative, the men who are candi- 
 dates for re-election are going to favor voters. 
 
 Q. The present length of the term of assessors is three 
 years, and the compensation is fixed by an Act of Assembly 
 passed at the last session of the Legislature at two dollars 
 and a half per day. What would you say if this com- 
 pensation was increased to five dollars per day ? 
 
 A. Well, I don't think two and a half dollars per day is 
 sufficient. 
 
512 
 
 Q. Do you think five dollars a day would be sufficiently 
 attractive for a man to accept the job? 
 
 A. Five dollars a day in the country would be equivalent 
 to ten dollars a day here. 
 
 Q. Suppose the term was four years instead of three and 
 he should not be permitted to succeed himself, what would 
 you say? 
 
 A. That would be an improvement. 
 
 By Mr. Brown : 
 
 Q. Have you any other thought on the subject? 
 ' A. Not that I know of. 
 
 Q. How is the examination made to determine whether 
 or not the assessor accounts for all of these blanks that are 
 given to him? 
 
 A. They don't account for any particular number of 
 blanks. 
 
 Q. I mean, suppose an assessor has in his district ten 
 thousand presumable taxables and sends these blanks to 
 the people, what check is there when he gets them back? 
 Does he account for every one of them ? 
 
 A. Yes, when he serves the blank he marks on his blot- 
 ter "Blank served/' such and such a date. The blank 
 has a printed notice on it that unless the return is made 
 within ten or fifteen days (that is January 10) from the 
 day of service of the blank, that the person to whom it 
 is served will be estimated, and the penalty will be attached. 
 
 Q. And they do estimate? 
 
 A. Yes. 
 
 Q. In a case where you get a false return, where you 
 know it is false, why shouldn't the officials of the several 
 counties know of such a case? Why shouldn't you follow 
 that up to make an example of somebody? Wouldn't one 
 example do more good than all the laws you could pass ? 
 
 A. Yes, it would prevent them, probably, from doing 
 the same thing. 
 
 Q. In other words, it is generally assumed that the rules 
 
513 
 
 governing taxing are different from any other class in the 
 community. A man who dodges taxes does not think he 
 is doing wrong, and a prosecution of a flagrant case would 
 bring about a correction and prevent a great many cases 
 of tax dodging ? 
 
 A. The law does not provide enough. 
 
 Q. What, for making false returns? 
 
 A. Yes, it does not send a man to prison. 
 
 Q. It provides a fine of five hundred dollars and seven 
 years in prison, under the Act of '79, as I recall. Where 
 the assessor fails to make a return, five hundred dollars 
 and five years. Neglect of it in any respect, five hundred 
 dollars fine and one year in prison. It seems to me these 
 laws are drastic enough. 
 
 A. They are very drastic. But the trouble would be to 
 get the evidence which would enable you to say the re- 
 turn was false. 
 
 Q. I say, only a flagrant case, where there is no question 
 about it. 
 
 A. For instance, I have heard of a man, who happened 
 to be a friend of mine, who owned a couple of million 
 dollars of mining stock and didn't return any. I went to 
 him and said, "You can't afford to do this; you should 
 make a return of that mining stock." He said, "Why, 
 is that taxable?" I said, "Of course, it is." It was the 
 stock of a company organized in one of the far Western 
 States. He said "I never thought of that. I will return 
 it next year." They like to forget if they can in re- 
 gard to their taxable property. 
 
 Q. I refer to the failure of those who boast about it ? 
 
 A. I don't think they boast about it. A man may boast 
 that he has never been served with a blank that he is 
 fortunate in that respect. A man who makes a false return 
 is never going to brag about that. 
 By the Chairman : 
 
 Q. If the Board of Revision of Taxes has reason to be- 
 lieve that a false return has been made, the blank is placed 
 in the hands of the assessor, returned to him and asked to 
 27 
 
514 
 
 pass upon it again and make a better return. That is the 
 method under the law ? 
 
 A. Yes, they are often sent back, and the man who owns 
 one thousand dollars of taxables puts down fifty dollars, 
 and we have no means of knowing the truth. 
 
 Q. For instance, who estimates under the law? 
 
 A. The assessor. 
 
 Q. He makes the estimate and has the power to add 50 
 per cent? 
 
 A. The Board of Revision is required by law, in the City 
 of Philadelphia, to add fifty per cent. We had an illustra- 
 tion of that in the case of a man leaving an estate of 
 twenty millions. That was about fifteen or eighteen years 
 ago. The assessor had been estimating him at fifty thou- 
 sand dollars taxable personal property. I sent for the 
 assessor, after the death of the man and the filing of his 
 inventory, and said to him, "How in the world did you 
 come to do a thing like this?" He said, "He told me he 
 didn't know how much he had and couldn't make a sworn 
 return, as he really didn't know how much he had that 
 was taxable, but was sure it was not in excess of fifty 
 thousand dollars." "We had it placed on our books and 
 made an estimate of three to four millions to cover during 
 the current year, and after the man's death his executor 
 disputed it and went to Court and we lost it. The Court 
 said that the action of the Board of Revision in estimating 
 him at fifty thousand was conclusive. 
 
 Q. Why don't they take higher sums? 
 
 A. If the Board of Revenue would give the people credit 
 for taxes they are imposing that are not collectible, there 
 would be no trouble. The State charges the City of Phila- 
 delphia with every penny standing on its books on the 
 thirty-first of July, and I think they should at -least give 
 you credit if you notified afterwards that one million dol- 
 lars of the tax proved uncollectible. So, in the case of 
 the State, we have to be careful not make the estimates too 
 great. 
 
 Q. That benefits the taxpayers who dodge taxes ? 
 
515 
 
 A. I will tell you how it is done. A man declines to 
 make a return, and if the assessor isn't a pretty good 
 guessor, he will go to me and say, "How much should I 
 estimate?" Well, we will start it at a comparatively small 
 figure, adding the penalty. If that is paid, there will be 
 a very great increase the next succeeding year; but we 
 have had a considerable number of cases, pretty large es- 
 timates, and in no one of them, for a series of years, has 
 the City collected one penny of the money. You cannot 
 get any money from the State, and, therefore, in the case 
 of the State, we have to be reasonably careful in making 
 these estimates. You can see what it would be. 
 
 By the Chairman: 
 
 Q. If tax dodging is as prevalent in Philadelphia county 
 as we have just heard, how would a prosecution brought 
 ever get past the grand jury or past the petit jury. Would 
 it be all right to have them brought before the grand jury ? 
 
 A. I suppose the presumption is that probably they might 
 be. I didn 't say tax dodging was so very prevalent in Phila- 
 delphia. 
 
 Q. I presume it is prevalent? 
 
 A. It is the world over. 
 
 Q. It seems to be contagious? 
 
 A. Yes. The law is pretty fairly enforced in Philadel- 
 phia. The trouble is in the adjoining counties, where they 
 have been too lax. I happened to say to one of the Com- 
 missioners of Montgomery County, and after the session 
 was adjourned I said to him, "Why can't you notify the 
 Board of Revision of people who have country places in 
 your county who claim residence in Philadelphia?" He 
 said, "We have lots of them." I said, "The same people 
 tell our assessors they are residents of your county and 
 not residents of Philadelphia." He promised to send me a 
 list, but I have not received it as yet. 
 
 Mr. Brown : He is probably thinking it over. 
 
 Mr. Brown: Mr. Chairman, Mr. Albright, of the Penn- 
 sylvania Tax Reform Association, has something to say. 
 
516 
 
 Haines D. Albright, Tax Reform Association of Penn- 
 sylvania: Mr. Chairman and Gentlemen of the Com- 
 mission: What I have to say is somewhat technical, 
 and I have therefore reduced it to writing for your con- 
 venience and for mine. I am, however, willing to answer 
 any questions concerning what I have written here. 
 
 The Tax Reform Association of Pennsylvania consists 
 of a number of Pennsylvania real estate owners and busi- 
 ness men whose property interests are large and import- 
 ant and who are convinced that general business pros- 
 perity is more effectively helped or hindered by the man- 
 ner in which the tax burden is adjusted than by its size. 
 While we cannot fail to appreciate the need for more 
 public revenue, we know that the most important part 
 of the work of this Commission is not so much to devise 
 a way to get more money as it is to discover how to get 
 sufficient public revenue in ways which will not check 
 business prosperity. 
 
 The Tax Reform Association of Pennsylvania desires to 
 assist in promoting the evolution of a system of State and 
 local taxation which will not hamper productive business 
 activity. It therefore respectfully suggests and recom- 
 mends : 
 
 First : That no additional taxes be imposed upon manu- 
 facturing companies. 
 
 Second: That the State taxes upon mortgage debts, 
 stocks, bonds, money at interest and other forms of mov- 
 able personal property be abolished. 
 
 Third: That cities, counties and boroughs be given a 
 degree of local option as to the manner and subjects of 
 taxation for local revenues. 
 
 Fourth: That certain technical devices for promoting 
 equality of real estate assessments, the value of which 
 
517 
 
 have been amply demonstrated, be made compulsory 
 throughout the Commonwealth. 
 
 PROPOSED SUPER TAX ON MANUFACTURING 
 COMPANIES. 
 
 The income producing utility of land is almost entirely 
 dependent on the presence of an active, prosperous popula- 
 tion. Real estate owners are therefore most substantially, 
 though indirectly, interested in having the tax burden so 
 adjusted as to attract rather than repel manufacturing 
 enterprises which furnish a profitable, nearby market for 
 most of their farm produce, rent paying tenants for many 
 of their dwelling houses, and the most liberal purchasers 
 of the merchandise of retail storekeepers. The presence 
 of the property and activities of Pennsylvania manufactur- 
 ing companies in this way contributes hundreds of 
 millions of dollars to the source of the incomes of the 
 owners of neighboring Pennsylvania real estate; and for 
 farmers and other thus benefited real estate owners to 
 seek to subject Pennsylvania manufacturing companies 
 to even a small handicap would be as unwise and self- 
 injurious as killing geese which lay golden eggs. 
 
 Manufacturing companies pay the same direct taxes 
 upon the value of the real estate which they hold and the 
 personal property which they own as is paid by other 
 citizens. They are all exposed to close competition ; even 
 in their own immediate neighborhood they must sell in 
 competition with goods manufactured elsewhere. They 
 almost always sell in a State-wide market; generally in 
 a Nation-wide market ; often in a world-wide market. Any 
 tax which they must pay in excess of those levied upon 
 their competitors, is, to that extent, a business handicap, 
 and eren a small special or super tax upon them will 
 bear so heavily upon some of them as to either destroy 
 or drive them, together with the benefits which they in- 
 cidentally confer upon neighboring real estate, into 
 another taxing district, which, though it may raise a 
 
518 
 
 larger amount of taxes, does so in a manner which doos 
 not hamper production of the wealth out of which ail 
 taxes and all incomes are paid. 
 
 THE TAXATION OF CONCEALABLE PERSONAL 
 PROPERTY. 
 
 We suggest the abolition of the taxes upon mortgage 
 debts, stocks, bonds, money at interest and other forms 
 of movable personal property. 
 
 First: Because the burden of such taxation is usually 
 shifted from those intended to be taxed, to wit, the own- 
 ers of the property taxed, to other persons who have al- 
 ready paid their just share of taxes. This is the case 
 with the tax on loans secured by mortgages of Penn- 
 sylvania real estate. This mortgage tax is added to the 
 rate of interest paid by the borrowing real estate owner 
 to the money-lender 5.4 per cent, is the prevailing 
 rate, the four-tenths being the "tax). If the money- 
 lender is a resident of this State and gives his cor- 
 rect address to the Recorder of Deeds at the time the 
 mortgage is recorded, the information isj communicated 
 to the tax assessors of the district in which the money- 
 lender lives, and he is compelled to pay the tax which 
 he has collected from the borrower over into the public 
 treasury, but as some money-lenders give incorrect ad- 
 dresses, and many actually live outside the State, this 
 tax, which is shifted to real estate owners and, ultimately, 
 paid by them, costs them much more than it profits the 
 public treasury. 
 
 A second reason for abolishing these taxes is that they 
 never can be collected with anything like practical 
 equality. A large proportion of those liable can always 
 succeed in evading payment, and the burden is therefore 
 most unequally and unjustly distributed. Such property 
 does not lie out of doors, in full view of all men, as 
 land does. Its ownership and its very existence can there- 
 fore be concealed and, most frequently, is not generally 
 
519 
 
 known. Mr. Eshelman, the Controller of Lancaster 
 county, who testified two weeks ago, told how he had 
 investigated the ownership of the certificates of deposit 
 presented to the receivers of an insolvent local trust 
 company and found that only 5 per cent, of them had been 
 assessed for taxation. This testimony is in harmony with 
 the facts disclosed by many other investigations in widely 
 dissimilar places, and, indeed, with the universal experi- 
 ence of mankind. In every country and in all ages taxes 
 upon property which could be concealed have been paid 
 only by the trustees of widows and orphans and by com- 
 paratively few conscientious persons. 
 
 A third reason for favoring the abolition of taxes 
 upon concealable property is that they operate as a strong 
 inducement to the commission of perjury, and make false 
 swearing so common as to appear innocent, thus weaken- 
 ing respect for law and for the sanctity of an oath. The 
 great mass of men know that such tax laws are not uni- 
 formly applied; that evasions are numerous and com- 
 mon, and that the administrative factors are unable to 
 circumvent evasions. They, therefore, omit from their 
 tax returns all reference to their not generally known 
 possessions and swear to the returns with consciences 
 which are not visibly troubled. One of the speakers of 
 the Louisville Session of the International Tax Conference, 
 speaking of this well-known fact, said that it "by no 
 means implied an inherent dishonesty in the average 
 citizen. The average man believes in fair play and *s 
 usually willing to perform his part, where fair play is 
 the established order of the day, but where his confidence 
 is shaken, he meets kind with kind, unfairness with un- 
 fairness. If frankness with the authorities as to his 
 actual possessions means injustice to himself he will pro- 
 tect himself by silence, evasion, and even perjury." The 
 tax upon concealed property is really a tax upon con- 
 science. A strong and frequently effective temptation to 
 suppress that instinct for morality which should be the 
 most precious possession of a Commonwealth. 
 
520 
 
 A fourth reason for favoring the abolition of taxes 
 upon movable personal property is because the economic 
 effect of drastic efforts to collect taxes upon this kind of 
 property is to induce citizens of the State to send their 
 money into other States. 
 
 When George Vanderbilt acquired the great Biltmore 
 estate in North Carolina, it is said that 'he forbade trap- 
 ping and shooting, and that in a short time the birds and 
 deer came to know that Biltmore was a safe place for 
 them to be, and they came there in great flocks. Monied 
 capital, which is the life blood of business and the 
 necessary tool of modern industry, is quite as responsive 
 to such inducements. In these days of close competition 
 and convenient facilities for the transmission of intelli- 
 gence and the transportation of persons and property, 
 monied capital flows from place to place with great facilty, 
 and if Pennsylvania will altogether cease trying to ferret 
 out and tax it, it will flow into this State even as the 
 birds of the South flock to Biltmore. 
 
 In 1871 Thomas Cochran, Esq., who was then Presi- 
 dent of the Board of Revision of Taxes of Philadelphia 
 county, in a paper which he read before the Social Science 
 Association, pointed out that " There is nothing that will 
 so silently, yet certainly, dry up the sources of prosperity 
 of a community as taxation injudiciously imposed. " He 
 illustrated the proposition by relating how a tax on 
 auctioneers, 1 per cent, higher than New York levied 
 on East India goods, had transferred from Philadelphia 
 to New York an auction business, which in the first 
 quarter of the nineteenth century was the most important 
 in the country. Mr. Cochran said it was no wonder that 
 goods were consigned to New York instead of to Phila- 
 delphia, though for many years much of the foreign 
 shipping that sailed into New York was owned in Phila- 
 delphia and that this law remained long enough (30 
 years to permanently injure us. 
 
 In New York the assessors are required to ferret out 
 
521 
 
 and assess the machinery, credits, materials on hand and 
 stock in trade of manufacturers. Many of the towns of 
 New Jersey have advertised the fact that they make ex- 
 ceedingly low assessments of the personal property and 
 plants of manufacturers, and have in this way induced 
 many of the larger New York factories to move into New 
 Jersey so that there are now few large plants in New 
 York City except those which need water terminal facil- 
 ities or have other special reasons for remaining. The 
 greatest amount of manufacturing in New York City 
 now is in the clothing and allied trades where the ma- 
 chainery is in rented buildings and not assessable as 
 real estate and when assessed as personal property, 
 usually escapes taxation because of the offsetting of 
 debts. 
 
 Concerning this exodus of manufacturing plants from 
 New York City to New Jersey, Hon. Michael Coleman, 
 for twenty years Deputy and Commissioner of Taxes in 
 the City of New York, testified as follows before the Joint 
 Commission of the Senate and Assembly in 1893: 
 
 "Tn 1869, along the easterly and western shores there 
 were large factories employing at one time one hundred 
 thousand skilled workmen. The first case that came up 
 was the Singer Sewing Machine Company. For three 
 years they conferred with the Department as to what 
 their taxes would be. Finally they moved to New Jersey 
 and from that time up to the present they have been going 
 almost every year, and today there is only' one large 
 establishment that was here at that time, and that is Hoe ' s 
 establishment. ' ' 
 
 LOCAL OPTION AS TO THE MANNER AND 
 SUBJECTS OF LOCAL OPTION. 
 
 The science of local taxation is now in process of de- 
 velopment, and, in order that its growth may be facili- 
 tated and the effects of various policies demonstrated by 
 actual experience, it is desirable that local taxing districts 
 
522 
 
 shall have a degree of freedom to make proper classifica- 
 tions of subjects of taxation, and authority to choose for 
 themselves, for purposes of their own local taxation, the 
 class or classes of subjects which to them shall seem 
 wisest. They would, of course, be required to obey the 
 constitutional requirements, that "all taxes shall be uni- 
 form upon the same class of subjects within the territorial 
 limits of the authority levying the tax and shall be levied 
 and collected under general laws." And they shall be 
 restricted in their choice of subjects to those not ex- 
 clusively reserved for State taxation. Cities, counties 
 and boroughs ought, however, to be expressly authorized 
 to classify the various items which constitute real estate, 
 as, for example, mineral rights, surface site value, 
 dwelling houses, factory structures, trees and fences ; and 
 should be expressly authorized to determine, by popular 
 vote which class or classes should be taxed for local pur- 
 poses. 
 
 A good illustration of the practical educational value of 
 local experiments is the impetus which Pennsylvania 's 
 liberal policy towards manufacturing has given to move- 
 ments for the improvement of the tax laws of other States. 
 Students of taxation are almost everywhere exhibiting 
 an interest in the growth of our manufactures, which 
 growth they attribute to our wise policy of not imposing 
 super taxes on them, and are contrasting the folly of their 
 own States which tax the stock in trade, materials on 
 hand, and machinery of manufacturers ; with the wisdom 
 which Pennsylvania has shown in raising the bulk of her 
 local city and county revenue by direct taxation on real 
 estate. 
 
 The result of the experiment, made possible by the 
 local option which is possessed by the several States of 
 the Union, will be to eventually perfect the tax laws of 
 all the States; by the well known evolutionary process 
 of the survival of the fittest, and in the same general way, 
 successful city and county experiments will enlighten 
 
523 
 
 and inform other nearby cities and counties of this Com- 
 monwealth and thus enable us to continue to keep our 
 light shining a little in front of the next. 
 
 DEVICES FOR SECURING EQUALITY IN THE 
 
 ASSESSMENT OF REAL ESTATE. 
 
 Real estate is not only the chief subject of local, City 
 and county taxation in this State, but it is also the foun- 
 dation to which the burden of indirect taxation gravitates 
 and is eventually shifted. In order that the directly im- 
 posed portion of this burden shall not be so distributed 
 as to oppress the weak and discourage honest enterprises, 
 it is essential that real estate assessments be equal, that 
 is, that each property be assessed at the same percentage 
 of its actual value as is other property. To accomplish 
 this the assessors must not only be competent and dis- 
 interested; they must also record their work in forms 
 which will disclose inequalities; and these itemized rec- 
 ords ought to be printed and published in convenient sized 
 pamphlets so that the assessors, and officials who super- 
 vize the assessors' work, may have the benefit of the in- 
 telligent criticism of the largest possible number of in- 
 terested citizens. 
 
 In the tax assessment records of the Pennsylvania cities 
 of Pittsburgh, Easton and Chester, are set down not only 
 the assessors' opinions of the lumped value of each parcel 
 of real estate, but also their separate estimates of the site 
 value of each parcel of land. In Schuylkill County the 
 value of the mineral rights, of the artificial improvements, 
 and the site value of the surface area, are all separately 
 set forth. This method of bookkeeping is no hardship to 
 a competent assessor. The only additional work it re- 
 quires of him is the manual labor of writing down a figure 
 which he already has in mind, for when he decides upon 
 his valuation of a parcel of real estate, he necessarily 
 considers the advantages of the location and decides on 
 the site value of the land, as well as the cost and 
 
624 
 
 character of the artificial improvements, and the extent 
 to which their presence increases the value of the prop- 
 erty as a whole. If any assessor fails to make these cal- 
 culations he is neglecting his duty, and if any assessor 
 is unable to make them he is not a competent man for 
 the position. 
 
 A separate statement of the site value of land is now 
 required in all the cities and boroughs of New Jersey, 
 Massachusetts, Minnesota, Indiana and North Dakota; in 
 several of the Canadian provinces and in all the largest 
 ten cities of the United States, except Philadelphia. The 
 tax lists are printed and published in Ohio, New York 
 City, Chicago and a number of New Jersey cities and 
 towTis. The Department of Taxes and Assessments of 
 New York City has also published an atlas containing 
 land value maps of every parcel of land in the city limits. 
 These maps contained the estimated value per foot front of 
 a normal sized lot in the centre of every block and from 
 these estimates the valuation of particular parcels of land 
 is calculated by means of various formulas which have 
 been worked out by real estate experts. 
 
 In order to ascertain the opinions of tax assessment 
 officials who have practical first hand knowledge of the 
 utility of keeping records of the value of the land as well 
 as the lumped value of the properties as a whole, the Tax 
 Reform Association of Pennsylvania addressed a circular 
 letter requesting information and opinions from the chiefs 
 of real estate tax assessment departments of every im- 
 portant city where we knew the plan to be in operation. 
 We received replies from Thomas G. McMahon of the 
 Board of Assessors of Pittsburgh; James C. Forman, 
 Assessment Commissioner of Toronto, Canada ; G. L. Fort, 
 City Assessor of Minneapolis, Minn. ; S. J. Hill, City 
 Assessor of Fargo, N. D. ; Frank S. Crane, Chairman 
 of the Board of Assessors of Springfield, Mass. ; Robert 
 L. Volk, Clerk of the Commissioners of the Assessment 
 of Taxes in the City of Trenton, N. J. ; Wm. P. Richards, 
 
525 
 
 the Assessor of the District of Columbia; Henry W. 
 Buxton, Clerk of the Board of Equalization of Taxes of 
 New Jersey; J. P. McLeod, Assessment Commissioner of 
 Hamilton, Canada; Martin J. Ryan, Assessor of Buffalo, 
 N. Y. ; Frank B. Schutz, Tax Commissioner of Milwaukee, 
 Wis. ; Walter H. Nevills, Chairman of the Board of Assess- 
 ors of Yonkers, N. Y. ; William J. Reardon, Clerk of the 
 Board of Assessors of the City of Lowell, Mass. ; Washing- 
 ton Dodge, Assessor of San Francisco, Cal. ; Stephen 
 Grant, Assessment Commissioner of London, Ontario ; 
 Oscar Leser, President of the Appeal Tax Court of the 
 City of Baltimore, and Lawson Purdy, Esq., President of 
 the Department of Taxes and Assessments of New York 
 City. 
 
 These letters are now in the possession of the Finance 
 Committee of the Councils of Philadelphia. We have 
 printed extracts from them in a pamphlet, copies of whicr 
 will be furnished to the members of the Committee 
 These officials, all of whom have had opportunities to 
 observe the effects of the separate valuation of land in 
 actual practice, are unanimous in recommending it. They 
 say that it conduces to equality ; makes the assessors more 
 careful, and simplifies the work of correcting errors and 
 of revision generally. Mr. Purdy, the Chief of the New 
 York Department, whose letter is a typical one, says : 
 
 "The separate statement of the value of land in the 
 assessment of real estate was ordered by an amendment 
 to the Charter enacted in 1903. It has met with universal 
 approval. I have yet to hear any criticism. It conduces 
 to accuracy on the part of the assessors, and it greatly 
 aids our Board in considering applications for the reduc- 
 tion of assessments. We always ask the applicant whether 
 he objects to the value placed on the land or the value 
 placed on the buildings. The answer to this question 
 raises the proper issues. In the event that the building is 
 assessed higher than others of like class, it is easy to grant 
 redress. If we find that the entire class to which the 
 
520 
 
 building belongs is over assessed, relief is given in the 
 particular case and corrections are made wherever prac- 
 ticable, and appropriate instructions are issued for the 
 assessment for the following year. 
 
 "I have not the slightest doubt that the separate state- 
 ments of the value of land is absolutely essential to the 
 proper conduct of an assessing department and that the 
 widest possible publicity is of great value. 
 
 "I have been frequently informed by real estate men 
 and lawyers that the work of the Department grows in 
 public favor and esteem every year. At one time it was 
 common to hear the remark that assessors merely guessed 
 at values. Today it is very generally understood that 
 assessments are the result of a careful system and the 
 public is proportionately generally better satisfied/ 7 
 
 The reason the plan conduces to equality is because it 
 makes comparisons easy and instructive. Land valua- 
 tions when they are separately set down can be compared 
 with the valuations of neighboring land, because the price 
 for a lot of land as sold is a good indication of the value 
 of neighboring land, although it furnishes no clue to the 
 value of a neighboring building. Buildings can be 
 compared with similar buildings in other neighborhoods. 
 Where the valuations of land and buildings are lumped 
 together intelligent comparisons becomes impossible. 
 
 There is today a growing, world-wide appreciation of 
 the fact that the laws which most intimately affect 
 business prosperity for good or evil are those laws which 
 you are now engaged in studying and improving the 
 laws which designate the manner in which the State and 
 local public revenues are obtained. We believe, there- 
 fore, that the work of this Commission is the most im- 
 portant public work now being performed in this Com- 
 monwealth. 
 
 If we bear in mind the extent of our area, population 
 and accumulated wealth, the $115,000,000 which we 
 annually raise by State and local taxation does not 
 
527 
 
 appear to be such a very great sum, but this sum could 
 be so injudiciously imposed as to repel and drive away 
 the valuable business enterprises and thus dry up the 
 sources of our prosperity, or, on the other hand, the 
 General Assembly may adjust it in a sensible, business- 
 like way, so that the burden will not impede the triumph- 
 ant progress of our "Ship of State' 7 any more than does 
 the ballast which is always carried by vessels that are 
 built to win great races. Misplace your ballast and you 
 will wreck the ship. Place it judiciously and she will 
 stand up against a gale. 
 
 Q. Didn't you get yourself down almost to the single tax 
 idea? 
 
 A. I don 't think so. 
 
 Q. Don't you limit yourself practically to the tax on 
 land, because you exempt manufacturing interests and the 
 money at interest and mortgages, and by a process of elimi- 
 nation you exempt practically everything except land. 
 
 A. The single tax idea is that the unimproved land should 
 bear the whole burden of taxation. My theory and the 
 theory of Benjamin Franklin is that it does bear the whole 
 burden of taxation, but my proposition is that we should 
 distribute it in such equal manner as the law now requires. 
 Equality of assessments are now required by law, but the 
 trouble is the machinery for bringing it about is imperfect. 
 
 Q. Before we get away from the question of real estate, 
 let us get down to the subject as to what other subjects 
 should be taxed according to the ideas of your association 
 besides real estate 
 
 A. Our idea is that the State should derive its revenue 
 from sources independent of those which are used to raise 
 local revenue entirely independent. 
 
 Q. Such as what? 
 
 A. Such as taxes on mineral land, railroads and public 
 service corporations telephone and telegraph lines. Ac- 
 curate assessments of mineral lands are impossible by the 
 
528 
 
 assessors chosen in the present manner. Such properties 
 should be assessed by experts who are paid salaries high 
 enough to command the services of men with the requisite 
 technical knowledge and skill, and they should be employed, 
 not for a few weeks at the triannual assessment, but con- 
 tinuously, to put a value upon the mineral properties of the 
 State, and the State's own treasury ought to profit by that 
 taxation, independent of the local government. The min- 
 eral rights that lie beneath the surface I think taxation 
 of that sort of property ought to go into the State treasury. 
 
 Q. Take a county like Schuylkill, where it is largely a 
 mining section, how would the county itself be supported 
 if it gave to the State all the income from this source? 
 
 A. The fact that there are minerals beneath the surface 
 does not detract anything from the usefulness of the sur- 
 face. I think the counties should be permitted to derive 
 their support from whatever source they pleased. 
 
 Q. Would you let them tax manufacturers and money at 
 interest ? 
 
 A. I would let them do anything they wanted to. I 
 know they would learn by experience that it would be an 
 unwise thing to do. 
 
 Q. You don't mean to argue that these subjects should be 
 exempt from all tax, and that it should be limited to real 
 estate ? 
 
 A. I think the local government should be free to raise 
 their local revenue in any -way that seemed wisest to them, 
 but I think there should be a general law providing an up- 
 to-date method of valuing real estate, as is done in New 
 Jersey; that is, requiring tax bills to be itemized, and re- 
 quiring the valuation of the land to be set forth separately, 
 so that we can compare them when we fail to see inequali- 
 ties. 
 
 Q. How would you value the property of public utility 
 corporations which extend from one county to another. 
 What standard would there be for valuing that property? 
 
529 
 
 A. The property of public utility companies ought to be 
 taxed as a going concern, and not by the local tax districts 
 through which they extend. It is proper that the State 
 should derive the revenue, and that they should be a subject 
 of State taxation. What you want to get at is what that 
 property is worth as a whole going concern. Some indica- 
 tion of what it is worth is what it sells for; the parts into 
 which it is divided, or what the stock sells for. The value of 
 the stock and securities is evidence of what the property is 
 worth. 
 
 Q. You have given this subject considerable thought; 
 what is the consensus of opinion to-day that the tax 
 should be based upon ability to pay? 
 
 A. In a sense that is true. 
 
 Q. I am asking as the result of your reading and your 
 observation; that it should be based upon ability to pay 
 independent of any particular class of property? 
 
 A. A just rule would be that the people should pay taxes 
 in proportion to the benefits which they derive from the 
 treasury into which they pay taxes. 
 
 Q. Then the personal property tax would be elementally 
 an honest and just one? 
 
 A. If it were paid by the owner of the property, but it 
 is not. When you tax a man who owns a million dollars 
 worth of mortgages you are not taxing him, you are taxing 
 the real estate owners. 
 
 By the Chairman : 
 
 Q. That isn't generally true throughout the Common- 
 wealth, is it ? 
 
 A. I think so. 
 
 By Mr. Brown : 
 
 Q. I think it is largely true in the City of Philadelphia 
 more than in the counties. My experience has been in the 
 counties that the lender is the man who pays the tax. 
 
 A. It affects the money market, which is determined by 
 
530 
 
 competition. A tax on mortgages affects the amount of 
 money available to the borrower. Money is fluid, and will 
 flow from those places where the lender has to pay to 
 places where he can make the borrower pay the tax. 
 
 By the Chairman : 
 
 Q. In Lebanon county the tax isn't taken into consider- 
 ation in making a loan. The man who desires to invest his 
 money in mortgages simply does so because he is attracted 
 by the higher rate of interest, and while there may be 
 several isolated cases, I think it is pretty generally true 
 throughout the Commonwealth that the man who invests 
 his money that is to say, the mortgagee pays the tax, and 
 not the mortgagor. 
 
 A. It is this way: The amount of interest which I 
 charge is as much as I can get, and the amount which I 
 pay is as little as I can. The effect of the tax is on the 
 money market. A tax of four mills will diminish the 
 amount that is offered, and will thus affect the rate of in- 
 terest paid by the borrower, and the result is that the peo- 
 ple who borrow money pay about five mills more than they 
 would otherwise have to pay. 
 
 By Mr. Brown : 
 
 Q. It was argued here that you don't get a fair return of 
 personal property. I call your attention to the fact that 
 in Pennsylvania last year there was more than a billion of 
 dollars of personal property returned and money at in- 
 terest and six hundred thousand dollars of corporate bonds, 
 etc., and that the taxable real estate of the Commonwealth 
 was a little over two billions. Would that in any way alter 
 your opinion that one-half of the value of the real estate 
 had been returned for taxation ? 
 
 A. There is no doubt but what you can raise money from 
 personal property, but the point is it is not equally raised. 
 When you get at the actual facts, as Mr. Eschleman did in 
 the case of the defunct trust company, you find that only 
 5 per cent, is returned for taxation. Mr. Eschleman is 
 
531 
 
 evidently an efficient and energetic public official, but if he 
 succeeds in doing in Lancaster what he is trying to do, he 
 will be accomplishing a very great injury to Lancaster 
 county. He will drive all the moneyed capital out of that 
 county. Lancaster county can easily transfer its money 
 to New York banks. The reason that more money is not 
 driven out of the State is the fact that the law is not en- 
 forced. 
 
 Q. I understand the money he is after is the inactive 
 money, not the money that is put into enterprises, but the 
 money that is deposited and liable to lie there, drawing 
 2 or 3 per cent. 
 
 A. The money that is drawing two or three per cent, is 
 not lying there idle. That money is being used to further 
 the interests of the trust company. It is in circulation. 
 It is not lying in idleness. 
 
 Q. Suppose that same money is being used by a par- 
 ticular trust company, promoting the business of the com- 
 pany, and that trust company is able to pay 30 per cent, 
 per year dividend on that money. Do you consider it fair 
 that it should get 30 per cent, on the money that is de- 
 posited ? 
 
 A. The reason why trust companies and banks are able 
 to earn 30 per cent, is because the taxation of such in- 
 stitutions makes it unprofitable for the little ones that 
 would be the most useful in the country districts, and en- 
 ables the larger ones to monopolize the business. If you 
 remove all taxes from monied capital, institutions ot 
 that sort will spring up all over the State. They will be as 
 numerous as they are in Scotland, Canada and other coun- 
 tries where they are not taxed. They will be a great con- 
 venience to these people, and will facilitate business and help 
 the general prosperity of the country. 
 
 Q. How are you going to reach these institutions. Cer- 
 tainly these companies that are able to earn 30 per cent. 
 a trust company that handles other people's money that 
 is able to earn 30 per cent, is not like a manufacturing 
 
532 
 
 corporation. Is it your thought that that company should 
 pay the same tax as other people pay? 
 
 A. That company should pay tax on the same basis as 
 other citizens pay on the real estate they own, and on the 
 personal property they own. You cannot pick out the 
 ones that earn 30 per cent, and subject them to a differ- 
 ent tax from what you impose on those which earn the 
 ordinary rates of profit. The tax must be uniform. The 
 fact that some institutions do make these extraordinary 
 profits simply proves that they are exceptionally well man- 
 aged, and it is a proper recompense which they should have 
 for a great service rendered to the general community, be- 
 cause the function of a bank is to loan money to people in 
 the community at times when they need it; put it in the 
 hands of those who have use for it. That is a very impor- 
 tant function, and it is a very desirable thing to have 
 institutions of that sort. I know of a case right here in the 
 City of Philadelphia, in the southern section, where a small 
 trust company was opened, and the business men of the 
 neighborhood had a celebration and called out the band. 
 It was such a good thing for them, even in the City of 
 Philadelphia. There are many, many country districts 
 that would be immensely benefited by the establishment of 
 such institutions, that cannot possibly carry on business 
 because on account of the tax, no matter how slight it is, 
 it is the difference between profit and loss. 
 
 By the Chairman : 
 
 Q. Wouldn't you be charged with having a great many 
 wildcat institutions under those conditions? 
 A. No, I don't think so. 
 
 Q. Under your theory, if you had a dozen springing up 
 aB. around that one place/ wouldn't there be a tendency 
 toward demoralizing the financial interests of that com- 
 munity ? 
 
 A. I don't think so; not where such institutions spring 
 up in response to a demand for their services. Where you 
 
533 
 
 give them an artificial stimulus it might have that effect, 
 but where they are the natural outcome of a local demand 
 for their services, their growth would be normal and 
 healthy. They ought to be permitted to do business wher- 
 ever they find business profitable, and I think you ought 
 to permit sound and substantial institutions to have 
 branches. 
 
 By Mr. Brown : 
 
 Q. Your folks appreciate that the demand for land the 
 constantly increasing demand for land increases its value. 
 The supply and demand governs this as well as everything 
 else. That creates in a way a land monopoly. You tax 
 that. That is a natural condition, or a social condition. 
 What is the difference between that and the manufacture 
 of oil ? Of course, the demand regulates the price, but it all 
 tends to a monopoly in oil. Why shouldn't the manufac- 
 turer of the oil pay just as much for his artificial monopoly 
 in proportion as the man who owns his land pays for his 
 natural monopoly? 
 
 A. We are not asking you to tax monopolies. 
 
 Q. I don't mean to tax monopolies, but the increase in 
 values. What is the difference in your mind between a 
 natural increase of the land and an artificial increase of 
 the manufactured article? 
 
 A. The value of anything is determined by supply and 
 demand the desire of the buyer to get a thing, and the 
 difficulty in getting it elsewhere, and by the desire of the 
 seller to get what he gets in exchange. That is what de- 
 termines the value of everything. The law of this State 
 says that people shall pay taxes in proportion to the value 
 of their real estate, and I am proposing a way to enforce 
 the law. For example, suppose I own a lot in Philadel- 
 phia and it has one hundred thousand dollars added to its 
 value by public improvements, paid for out of the public 
 treasury. Why shouldn't my assessments be increased one 
 hundred thousand dollars? If the general improvement of 
 
534 
 
 the community makes my property more valuable, my point 
 is that the law requires that I should pay tax on my prop- 
 erty in proportion to its value. If by reason of a boulevard 
 or a parkway or a subway or any public improvement my 
 property is increased in value, the assessor should take 
 notice of this increase, and should assess my property at 
 the same percentage of its value as they assess the dwell- 
 ing houses occupied by poor people. The point is that here 
 is a way in which you can do that better than the way we 
 are now doing a way in which these inequalities will be 
 immediately disclosed. We do not contend that these in- 
 equalities are due to fraud or crookedness. It is simply that 
 the method of doing business is not up-to-date. 
 
 Q. Your thought is by adopting these systems that have 
 been in use in other cities and States, that you will thereby 
 lessen the need for additional revenues from productive 
 enterprises ? 
 
 A. Exactly. 
 
 Q. I am satisfied we are coming to just what you say. 
 Is there any other thought in your mind now? 
 
 A. I have here a copy of the tax law of Ohio, which 
 requires that these tax lists should be published, the same 
 as it is published in New York, New Jersey, Chicago, etc. 
 This is the form that is used in "Woodbury and Passaie, 
 New Jersey; this is what they use in New York City, 
 and this is the form which we have proposed for use here 
 in Philadelphia (producing forms). 
 
 Q. Is there any city where this local option method 
 has been adopted as a means of levying taxes ? 
 A. No city of the United States that I know of. 
 
 Q. I mean in this country? 
 
 A. In the extreme northwestern Canadian provinces of 
 Alberta and Saskatchewan they have a great degree of 
 local option, but it is the general practice throughout 
 Canada to separately value the land and improvements. 
 Up in some of those northwestern Canadian provinces the 
 
635 
 
 rate of tax on the improvements differs from the rate of 
 tax on the land. Up in Easton, Pennsylvania, a local or- 
 dinance provides that to the value of the land should 
 be added, in the case of factory buildings, not less than 
 one-half the value of the structure, and in the case of 
 dwellings not less than three-fourths. I do not know 
 what their authority is for doing that, but I have the 
 ordinance on my desk and that is what it provides. 
 
 Q. There is no system in existence in this country, I 
 mean locally, where any county has been authorized to 
 say what taxes shall or shall not be levied? 
 
 A. Not that I know of. 
 
 Q. That is the thought of your association? 
 
 A. Yes, sir. "We offer it as a suggestion, which the 
 Committee may take for what it is worth. I might state 
 that Mr. Shearman says : " If anything in human exper- 
 ience as applied to methods of taxation is settled, it cer- 
 tainly is the fact that taxation upon personal property 
 never can be made a success." 
 
 Q. Isn't it the general opinion of experts on this subject 
 that Pennsylvania has a better system of taxation than 
 any other State? 
 
 A. Pennsylvania is in the forefront of the United 
 States. The tax system in Pennsylvania is better than 
 any other State in this Union. Out in Ohio the Constitu- 
 tion requires all property to be taxed at the same rate. 
 If you pay 4 per cent, on real estate, you must pay it 
 on mortgages. The consequence is that almost everybody 
 out there lies to the assessor as to the amount of their 
 personal property, and nobody pays a tax except the 
 trustees of widows and orphans, on personal property, 
 and a few inexperienced or extremely conscientious peo- 
 ple. A tax like that would be unbearable, and if it were 
 enforced people would migrate immediately. How would 
 you lend money at 4 per cent, if you had to pay <ill 
 the income you got in taxes? In Pennsylvania a larger 
 portion of taxes are actually raised from real estate than 
 
536 
 
 in any other place. Here we do favor manufacturing 
 enterprises. Our tax laws in this State are unquestion- 
 ably better than those in any other State, but other States 
 are coming up. They are profiting by our example, and 
 are changing their laws to make them like ours. Now, 
 we have got to move on and make our laws a little better 
 yet. That is the reason why we are ahead because we 
 do raise a large proportion of our taxes from real 
 estate; because we don't attempt to tax much personal 
 property other than mortgages and judgment debts, the 
 ownership of which can be traced by means of the records 
 of the Prothonotary and of the Recorder of Deeds. 
 
 Q. Isn't the percentage of taxable personal property 
 in Pennsylvania so far ahead of other States as to enable 
 these tax experts to come to the conclusion that Penn- 
 sylvania has shown that you can practically tax wealth 
 in its untangible form? 
 
 A. Pennsylvania has shown that by the exceedingly low 
 rate we have here as compared with other States you 
 can get more money by a low rate than by a high rate. 
 The reason why we do reach so much of it is because our 
 rate is much lower than other States impose, and because 
 the personal property which we attempt to tax is the 
 kind whose ownership is a matter of public record. For 
 example, take the enterprises which you reach through 
 the corporation itself, and the mortgages and judgment 
 debts, etc., which you reach through the public records. 
 Our taxes on concealable personal property are com- 
 paratively harmless, because no serious attempt is made 
 to enforce them. I think Mr. Gratz said here today that 
 he only knew of one man in all his experience who volun- 
 tarily came in and returned for taxation the stock of 
 foreign corporations only one man here in Philadel- 
 phia. That law is a dead letter. 
 
 Q. That is no reason why it should not be done if it is 
 inherently right? 
 
 A. That is no reason why it should not be done, if it is 
 
637 
 
 inherently right, but human nature is as it is, and you 
 should take into consideration the limitations of human 
 nature and try and build up your institutions according 
 to the material out of which they must be constructed. 
 An engineer in planning a building takes into considera- 
 tion the amount of stress and strain which the materials 
 available will bear. Institutions which would be adequate 
 for a society consisting of angels would not do for mere 
 mortal men who are not always actuated by altruistic 
 motives. 
 
 By the Chairman: 
 
 Q. Why would it be impossible to tax personal property ? 
 
 A. For the reason - Just let Mr. Shearman answer 
 that question. I will read what he says. He says : ' i If any- 
 thing in human experience as applied to methods of taxa- 
 tion is settled, it certainly is the fact that taxation upon 
 personal property never can be made a success. Taxes 
 can be raised from personal properties, no doubt, for 
 large amounts are thus raised; but that they cannot be 
 levied with any reasonable approach to accuracy or 
 equality is demonstrated not only by conclusive reasoning, 
 but by the more conclusive fact that they never have been 
 thus levied. It is not for want of earnest and long 
 sustained effort that the failure of this system of taxation 
 has come to pass. For centuries the effort has been made, 
 and for at least six centuries it was backed by all the 
 power of a Government which commanded the whole 
 civilized world, and which armed its tax gatherers, not 
 with the paltry weapons of oaths and penalties, but with 
 the more substantial powers of indiscriminate search, the 
 lash, the rack, the thumbscrew, the gridiron, and the 
 cross. The Roman Empire fell to pieces under the pressure 
 of this vain effort to reach personal property by taxation. 
 The same thing was attempted at a later period in dealing 
 with the Jews. It failed with them. They could be robbed 
 and murdered, but they could not be regularly taxed. 
 "That which all the tremendous power of Rome in its 
 
538 
 
 grandest days failed to accomplish, that which the infernal 
 tortures of Spain could not accomplish, when it beheaded 
 hundreds, burned thousands, and massacred tens of 
 thousands, letting loose a brutal soldiery in a vain struggle 
 to tax the Netherlands, American farmers are still ap- 
 parently convinced that they can accomplish by dis- 
 tributing blank forms, and administering long oaths, and 
 threatening penalties of 50 per cent. How far they 
 have succeeded, Governors, assessors and Tax Commissions 
 in New York, Ohio, Maryland, West Virginia and many 
 other States have set forth again and again, lamenting 
 the utter failure of the system. 
 
 1 'Gibbon mentions, quite as a matter of course, that 
 fathers murdered their children, on a large scale, princi- 
 pally as a result of fear of the tax gatherers, that racks 
 and scourges were freely used, that the approach of 
 the tax gatherers 'was announced by the tears and terrors 
 of the citizens, ' and that false returns were punished with 
 horrid deaths, as being both 'treason and sacrilege/ 
 Savigny shows that the decurions, who governed the cities 
 and were held responsible for the taxes, often sold them- 
 selves into slavery to escape the dreadful burden, but 
 Were dragged back to scourge their fellow subjects. Even 
 a Massachusetts farmer could ask no greater efficiency 
 than this." 
 
 This is simply an example of the fact that you cannot 
 do it, and where you must rely only on the oath of the 
 man who owns the property, where he is the only person 
 who knows what it is and where it is, if he can escape the 
 tax by concealing it, he will conceal it, particularly if 
 he knows that other people are doing the same thing. 
 
 By Mr. Brown : 
 
 Q. "We have experienced in Pennsylvania that there is 
 one-half as much personal property returned as there is 
 real estate, showing there must be some honest people. 
 Of course, you are looking backward. I think we ought 
 
539 
 
 to look forward. Mr. Shearman is taking the dark side 
 of the picture instead of the bright. Our people in Penn- 
 sylvania seem willing to pay the tax, and you experts 
 are trying to find out why it is that our people seem will- 
 ing to pay these large sums in tax on personal property. 
 Of course, some do not pay it. 
 
 A. Mr. Gratz said there was only one man who volun- 
 tarily returned his foreign stocks. The taxes which you 
 do collect are taxes on property the ownership of which 
 can be traced, like mortgages, judgment debts and taxes 
 on stocks collected by the corporation itself. 
 
 Q. Isn't the keynote to the whole situation, that when 
 the people are satisfied that every man is contributing his 
 share, they will all do it? 
 
 A. "When they are satisfied that every other man is 
 paying it, they will all pay it, but they will never be 
 satisfied. 
 
 Q. Don't you in stating your position in regard to 
 contributing towards the support of the State, think that 
 men generally are honorable, because it seems to me if 
 men are honorable they will pay their share providing 
 the other fellow pays his? 
 
 A. Where men feel that they are asked to pay taxes 
 which the majority are evading they feel that they are 
 unjustly treated, and to protect themselves from the in- 
 justice they will meet kind with kind, and they will often 
 go so far as to commit perjury. They feel like the man 
 when asked by a highwayman to show his money, he 
 will lie to the highwayman if by so doing he can get 
 out of giving it up. 
 
 Q. Every man ought to contribute his share towards 
 the support of the State, that is correct, isn't it? and 
 wholesale exemptions are vicious? 
 
 A. Yes, but there is no legal or moral obligation, on 
 manufacturers, for example, to assume a super tax, a tax 
 which they pay in addition to the tax paid in common with 
 other people. 
 
540 
 
 Q. I am assuming the tax must be equal? 
 
 A. There are some subjects you cannot possibly tax with 
 any degree of equality, and the wise thing to do is to tax 
 those subjects which can be reached, that is to say, of 
 which a very large proportion can be reached, and not 
 to tax the kind that can be moved away. 
 
 Q. Let me give you a concrete illustration. You re- 
 member, probably, that this matter was all considered by 
 Voltaire. Voltaire had a little farm, and his annual in- 
 come was forty crowns, and they came to him and said, 
 ' ' Here, we have got you ; we will tax you twenty crowns. 
 Alongside of him lived a wealthy fellow whose income was 
 a thousand crowns a year, and he paid no tax. When 
 the man complained to him, he said, "Of course, I don't 
 pay any tax ; I am not a land owner ; you are. You own 
 the land, and you are in a different class from me." Sup- 
 pose this man with his thousand crowns got his income 
 from money deposited in a trust company, inactive money, 
 not invested in manufacturing, but deposited in a trust 
 company. Why should he be exempt, and the little 
 farmer, his next door neighbor, be made to pay his tax? 
 
 A. He is not exempt. I do not propose that he should 
 be. My proposition is that the man with the large in- 
 come what does he do with his income? 
 
 Q. He drives around in Voltaire's story with eighteen 
 horses attached to a gilded coach. 
 
 A. Everything he consumes and uses in the process of 
 spending his money comes out of the land, and the price 
 that he pays for it includes the taxes that are paid on 
 the land. 
 
 Q. Look at the personal benefit he gets out of the inde- 
 pendent of that which he distributes around the neighbor- 
 hood? 
 
 A. The system of taxation ought to reach that man, and 
 my contention is that your system does not reach him. 
 The taxes which are imposed upon his money are collected 
 by him from the people to whom he lends his money. That 
 
641 
 
 is, these taxes enable him to get a higher rate of interest. 
 These taxes which he collects he does not always pay over 
 to the public treasury. If his voting residence is in New 
 Jersey, he puts the money in his pocket, and the effect of 
 your tax on his money is to enable him to tax borrowers 
 for his own private benefit. 
 
542 
 
 WILMER W. CORNELL, County Treasurer of Bucks 
 
 County, called. 
 By Mr. Brown : 
 
 Q. Have you any suggestions to make, Mr. Cornell? 
 
 A. I haven't any suggestions to make. I came to hear. 
 
 Q. What is your experience there as to the collection 
 of personal property tax, moneys and interest, etc.? 
 
 A. There is a great deal that we do not get. It is not 
 assessed. 
 
 Q. Why is that? 
 
 A. I think that is the fault of the assessors. 
 
 Q. What do you do to check them up? 
 
 A. Well, I really do not know. I have not been in the 
 office long enough to know much about it. 
 
 Q. You have not got worked in yet? 
 
 A. No. 
 
 Q. Who is there here from your county who is familiar 
 with it? 
 
 A. The Clerk of the Commissioners. He has been in 
 office four or five years. 
 
 Q. Mr. Cadawallader ? 
 
 A. Yes. 
 
 Mr. Brown: Suppose we ask Mr. Cadwallader some 
 questions ? 
 
543 
 
 W. CADWALLADER, Clerk of the County Commissions 
 of Bucks County, called. 
 
 By Mr. Brown : 
 
 Q. Have you any suggestions to make to us as to any 
 amendments to the present laws as to the collection of 
 State revenue? 
 
 A. Nothing new at all. I am very much impressed with 
 some ideas that have been suggested here that I have 
 listened to, among them the appointment of the assessors 
 by some authority other than having them elected. I 
 think that is a great wrong to the assessment of the taxes, 
 particularly. 
 
 Q. You think better results would be obtained from 
 some other method of selecting assessors, so as to divorce 
 them from their relations to the people? 
 
 A. Very much so. I think it is a very strong sample of 
 favoritism. 
 
 Q. What do you do to check up the assessors after you 
 give them their guide books? 
 
 A. That is when their returns come in? 
 
 Q. Yes? 
 
 A. "We have them return all blanks, all their slips that 
 are given them, and affidavits from all the taxpayers. 
 
 Q. Suppose the taxpayer does not make the affidavit; 
 what do you do then ? Do you follow them up ? 
 
 A. Well, in some cases where they won't make any 
 affidavit they make an estimate. They either make an 
 affidavit to having no property, or they make an affidavit 
 as to what they have. If they refuse to make an affidavit 
 to any amount and won 't make an affidavit to having none, 
 they make an estimate. 
 
 Q. Do you suppose if these men were paid more you 
 would get better results from the assessors? 
 
 A. Not if we had to take the same men. 
 
544 
 
 By a Member of the Committee : 
 
 Q. If they were appointed by the Court and their com- 
 pensation doubled and the appointment for four years, 
 what do you think would be the effect? 
 
 A. I think the effect would be to get better men in 
 many instances and much better results. 
 
 By Mr. Brown : 
 
 Q. Do you know of any case where they claim residence 
 in other counties? 
 
 A. We have, yes. That matter was spoken about by 
 Mr. Gratz, I think. I have in mind just one particular 
 instance. He spoke of the taxpayers wanting to be as- 
 sessed in the county in which they had their summer home. 
 We have quite a good many people in our county who have 
 summer residences there, and live in the winter time in the 
 City here, and I have in mind one of our assessors who 
 is rather more diligent than some others we have. He 
 made an effort to follow some of those fellows, and they 
 made no return to him and would not make any return 
 to him, saying they claimed residence in the City, and in 
 fact they never voted in our county. He followed them 
 to the City and made inquiry and could not find they were 
 assessed or paid any State taxes here. It seemed to me 
 they were evading it at both ends. 
 
 Q. You never report any of those things to the Auditor 
 General, I find, none of the counties? 
 
 A. No. 
 
 Q. Why ought that not to be done? 
 
 A. I don 't know any reason why it should not. 
 
 Q. Do you think it would be more effective to have these 
 collections made through the Auditor General's office, to 
 have State collectors go around from county to county 
 and do it? 
 
 A. The collection of the taxes, I think, is I cannot say 
 where there is any great advantage to be derived from 
 changing 
 
545 
 
 Q. I mean the assessing? 
 
 A. That is where the main trouble lies, it seems to me. 
 I do not know that the assessment of property could be 
 done better by people outside of the community than it 
 could by people living in the community. 
 
 Q. Providing they did their duty? 
 
 A. Providing they were the class of men who would do 
 their duty and were fearless of being put out of office ; 
 and then the people in many districts seem to not make 
 any effort good people in the district make no effort to 
 elect a first-class man to the office of assessor. If they 
 can get a fellow who will assess their property of all kinds 
 just exactly as they want it, it don't make any difference 
 if he is the lowest bum there is in town, he will suit them 
 first rate, and they will elect him, one right after the 
 other. 
 
 Q. The method of selection is not proper in such case? 
 
 A. No. 
 
 By a Member of the Committee : 
 
 Q. Have you ever attempted to prosecute anybody for 
 making a false return? 
 
 A. Not to my knowledge. 
 
 Q. Not in the history of Bucks county? 
 
 A. I won't say that. 
 
 Q. To your knowledge? 
 
 A. Not to my knowledge. 
 
 By Mr. Brown : 
 
 Q. Have you any suggestions to make to the Committee 
 as to any improvements that could be made? How long 
 have you been in this position? 
 
 A. About four years. 
 
 By a Member of the Committee : 
 
 Q. "Would not such a prosecution have a very salutary 
 effect? 
 
 A. I haven't much doubt of that. 
 28 
 
546 
 
 By Mr. Brown : 
 
 Q. What is your personal property return from Bucks 
 County? 
 
 A. About $46,000, the State tax is, I think. 
 
 Q. That is as to the receipts? 
 
 A. That is the receipts. 
 
 Mr. Cornell: Between eleven and twelve millions? 
 
 Mr. Cad wall ader : Something like that. 
 
 By a Member of the Committee : 
 
 Q. What is the sentiment, if any, regarding the taxing 
 of manufacturing corporations in your county ? 
 
 A. Well, we haven 't many of those that is, to any great 
 extent, and we do not hear much. I haven't much know- 
 ledge on the subject, and I do not hear much. The tax 
 on automobiles is very much discussed. 
 
 Q. They favor taxing automobiles? 
 
 A. Very much so. 
 
 By Mr. Brown : 
 
 Q. You do tax some of them up there on general prin- 
 ciples ? 
 
 A. Well, that has been done, and very probably over- 
 done, in that line. I am not sure about that. I do not 
 know whether that is very generally approved in the way 
 it has been done at all times. 
 
 Q. Have you ever gathered the sentiment in your 
 county as to things that should not be taxed and other 
 things that should? I mean in your general talk. You 
 people come and go and they must talk that over with 
 you about these subjects? 
 
 A. Well, you mean for State purposes? 
 
 Q. State purposes? 
 
 A. The taxation of anything that is not being taxed 
 at present, you mean? 
 
 Q. Yes? 
 
 A. I have never heard of any 
 
547 
 
 Q. Or that things now taxed should be exempt? 
 
 A. No, I don't think people I have heard no 
 sentiment or no complaint on that score. The inequality 
 of the assessment of properties, people come in constantly 
 and complain, "Now, here I have got to pay State tax on 
 so much money, and Mr. So-and-So "doesn't." He has 
 sworn in an affidavit that he has none. 
 
 Q. When a man comes in and informs you that he knows 
 some person has more money than he returns, he makes 
 his return, does he, so as to give you no chance to increase 
 your estimate? 
 
 A. Yes. I have known instances where they made no 
 return at all, and sworn in an affidavit that they had 
 nothing. People come in and say they have no mortgages, 
 or judgments, or bonds, or something of that kind, and 
 they often swear to holding mortgages or securities of 
 some kind that are valueless. A great many of them make 
 that item quite large. 
 
 Q. Insolvent debtors? 
 
 A. Yes, sir. 
 
 Q. You have no way of finding out? 
 
 A. I cannot get at that. I do not know how, at least, 
 
 By a Member of the Committee : 
 
 Q. Would it not be well for the State to maintain a 
 corps of officers to look after that? 
 
 A. According to that, I think it would. 
 
 Q. Some central head where all reports could be looked 
 into and inspectors sent into each district? 
 
 A. That, I think, would be a good thing. I have no 
 doubt at times there is a great deal of wrong done there. 
 
 Q. You were talking a moment ago about the inequality 
 of taxes. Has this thought ever been expressed to you in 
 talking to people over in Bucks county, the taxing of a 
 mortgage on a piece of land and the taxing of the land 
 also? 
 
 A. Yes, that has also been spoken of. 
 
548 
 
 Q. How would you avoid that? 
 
 A. I never heard any good theory advanced to avoid 
 it. It is generally objected to by the land owner paying 
 taxes on the full valuation of his property, when he only 
 has a very small interest financially in it. He probably 
 has made a very 'small payment on a property of very 
 considerable value. 
 
 Q. I suppose his argument would be that he should be 
 exempt from paying taxes on that portion of the 
 mortgage ? 
 
 A. That is his argument, and he is the complainer. 
 
 By Mr. Brown : 
 
 Q. He is not supposed under the law to pay the tax. 
 The tax is supposed to be paid by the man who owns the 
 property and gets the interest? 
 
 A. He owns the property. 
 
 Q. Then the tax on the property, that he pays also, and 
 he pays a tax on the mortgage that the mortgagee should 
 pay? 
 
 A. That is what he claims to pay. He does not object 
 to paying the State tax on the mortgage ; that rate is not 
 high and he doesn't object to that, but it is to paying 
 taxes on the entire value of his property at the present 
 rates. 
 
549 
 
 GEORGE ALLEN, County Commissioner Delaware 
 
 County, called. 
 By Mr. Brown: 
 
 Q. You are County Commissioner of Delaware county? 
 
 A. Yes, sir. 
 
 Q. You have heard the talk on these several subjects; 
 have you any suggestions to make to the Committee ? 
 
 A. I have been down there for five years, and I have 
 had mostly charge of it from the office. I have been there 
 every day and haven't missed a day for five years and I 
 have taken this up very carefully, and the only thing that 
 I see to make the people pay is to give the power to the 
 Commissioners to arrest every man that don't make a 
 return, to make it compulsory, because if a man down 
 in one of our wards, we don't know him, he might have 
 a small house and he might have ten or fifteen thousand 
 dollars, and it is up to the Commissioners to put 50 per 
 cent, on him, and he might not think he has a cent, or he 
 returned nothing. There is ten or fifteen thousand dollars 
 gained there. The assessor ought to sit in certain places 
 and make the people come to him and make a return right 
 there to him. If I understand the Act right there are no 
 provisions for the assessor to return the blanks to the 
 Commissioners. 
 
 Q. What are they supposed to do with them? 
 
 A. I don't know. 
 
 Q. Mr. Eschner said the other day there are blanks 
 printed and given out 
 
 A. Supposing the assessor said, "I got the blanks and 
 the law don't require me to fetch them to you," and he 
 wouldn't fetch them to you, we have to send a man for 
 them. 
 
550 
 
 By a Member of the Committee : 
 
 Q. Have you ever come across a case like that? 
 
 A. No. 
 
 Q. They all return the blank sheet? 
 
 A. They all return it, but if it would be compulsory on 
 the Board of Revision of Taxes, which we always get 
 sworn down in Delaware county; we always take under 
 the Act of 1888 and get sworn in as the Board of Revision 
 of Taxes, and if they were compelled to arrest every man 
 or woman that had any money out at interest and did 
 not make a return, I think you would get a great deal 
 more money in the county of Delaware or any other 
 county ; I know we would. 
 
 By Mr. Brown : 
 
 Q. There is the trouble. You would have to know 
 something about people before you could take such 
 drastic action against them. 
 
 A. The only thing, that they did not make that return. 
 
 Q. Failure to make the return? 
 
 A. Failure to make the return and make an affidavit. 
 
 Q. How would a law which gave the County Commis- 
 sioners the right to have these taxables come before them 
 and be put under oath and cross-examine them be received 
 in your county? 
 
 A. If that were given to the Board of Revision of Taxes, 
 let the Board of Revision of Taxes sit at certain places, 
 and let the assessors sit at certain places* and make the 
 people come there. 
 
 Q. How would such a law be received in your county ; 
 do you think your people would acquiesce in such an Act? 
 
 A. I should think so. I do not see why one man that 
 comes to the assessor and gives a return willingly, who 
 takes an oath to the amount of money he has, and others 
 who may have money escape. If it is compulsory to 
 arrest a man for not making a return you surely would 
 have a return from every man in the county. 
 
551 
 
 Q. Have you many men in your county who claim 
 residence elsewhere? 
 
 A. Some of them are going to do this; going to claim 
 they make a return and then before the appeal draw their 
 money out of bank and then claim they have no money, 
 but we are rid of those fellows. 
 
 Q. The payment by the bank of the average deposit of 
 such a man would reach that, would it not? 
 
 A. Yes, that would, but if every man would be com- 
 pelled to make that return, I think we would get a great 
 deal more revenue. 
 
 Q. Are there any other weak spots in the law that you 
 think might be strengthened a little? 
 
 A. I don't see anything the matter with the law, if you 
 make the people make their returns. If everybody would 
 make a return it would be compulsory upon them. 
 
 Q. You have never had any prosecutions in your county 
 for failure to make proper returns, or anything of that 
 kind? 
 
 A. It would be hard to get at it. I don't see how we 
 could get at it. 
 
 Q. Do you have any means of getting any information 
 by which you could help the assessors to locate the people, 
 the taxables. Do you make any independent inquiries 
 yourself? 
 
 A. Yes, we go around. In the Recorder of Deeds office 
 a whole lot of those mortgages are indexed in there and 
 returned and they are only for five or ten days. 
 
 Q. Your returned judgments and like that you get; I 
 do not mean that. You are a man of affairs in your 
 county, and you have general information about the 
 people in your county. Do you give any suggestions to 
 your assessors as to the liability in your opinion of 
 certain people who pay taxes? 
 
 A. Yes, everyone we possibly can, but there are a whole 
 lot of them you think wouldn't have any money that have 
 
552 
 
 money, and there are a lot of people that haven't any 
 money that you think have money out at interest and 
 don't make any return at all. If the assessor makes the 
 return he makes a return of nothing, thinking they have 
 nothing. 
 
 By a Member of the Committee : 
 
 Q. What is your idea about the selection of assessors? 
 
 A. I should think the assessors should be appointed by 
 the Board of Commissioners, for this reason: they have 
 charge of the taxes and I think they would pick out 
 people capable of doing that; they have the handling of 
 all the taxes and they would know the people and use 
 good judgment in that. If the Court appointed them, 
 they might appoint some very intelligent men, but not 
 capable of estimating on real estate, and one thing or 
 another, like that, and not have a man to assess in his own 
 district. 
 
 Q. They might be, in a measure, influenced by an ap- 
 peal from one of their appointees? 
 
 A. I think it would be a good idea. Two or three times 
 we have taken it out of the assessor's hands and went 
 around and done it ourselves. 
 
 Q. Was there any difference substantially in the result? 
 
 A. We raised about eleven million dollars in assessment 
 over their heads. We are doing it now today. I left the 
 Board down at Leiperville today to come p here. 
 
 ADJOURNED until Friday, February, 25, 1910, at 
 eleven o'clock A. M. 
 
553 
 
 Public meeting of the Committee, held at Room No. 496, 
 City Hall, Philadelphia, Pa., February 25, 1910 ; at 11 
 o 'clock A. M. 
 
 Present: Gabriel H. Moyer, Esq., Chairman pro tern., 
 William H. Keyser, Esq., William C. Sproul, Esq., James 
 F. Woodward, Esq., David Hunter, Esq., of the Committee, 
 Francis Shunk Brown, Esq., Counsel. 
 
 Mr. Brown : It is hardly necessary to state the purposes 
 of the meeting, as we are all familiar with them, and we 
 might just as well proceed to hear those who are here to 
 help us. Mr. Frank H. Caven, President of the Real 
 Estate Brokers' Association, of this City, is present, and 
 we would be glad to hear from him. 
 
 Mr. Caven: We thank you very much for being ac- 
 corded the privilege of coming before you. We come as 
 representatives of the Philadelphia Real Estate Brokers' 
 Association. Our members in turn represent the owners 
 of about 100,000 properties in this City, and by reason of 
 said ownership we are taxpayers. Our Legislative Com- 
 mittee, Mr. Dallam acting as Chairman thereof, has pre- 
 pared certain thoughts upon the question of taxation, and 
 with your permission Mr. Dallam will now present th 
 same. It has been approved by our Association. 
 
 Mr. David E. Dallam: I would rather speak extempo- 
 raneously, but rather than take up the time of the Com- 
 mittee I have put this in writing. 
 
 At a special meeting of the Philadelphia Real Estate 
 Brokers' Association, held on February 23, 1910, the fol- 
 lowing preamble and resolutions were adopted : 
 
 ' ' Whereas, The Association is gratified at the receipt of 
 an invitation for its officers to appear before the Joint 
 Committee of the Senate and House of Representatives of 
 29 
 
554 
 
 the Commonwealth of Pennsylvania on Revenue, etc., and 
 are pleased to accept the same; and 
 
 ' ' Whereas, the laws concerning the revenue of the State 
 and the counties are so allied that whatever effects the rev- 
 enues of the State may affect the revenues of the county; 
 and 
 
 "Whereas, The existing laws now 'limit the authority 
 of a county to raise money practically only by taxes upon 
 real estate, it is the opinion of this Association that the 
 taxes upon real estate in the County of Philadelphia have 
 reached such a limit that any increase of the same would 
 be most unfair and unjust until all other species of prop- 
 erty are equally taxed ; therefore, be it 
 
 11 Resolved, That the officers of the Association and the 
 Committee on Legislation be, and are hereby instructed ID 
 appear before the said Joint Committee on February 25, 
 1910, or any subsequent date, and to urge upon the same 
 the adoption of the following suggestions as to the changes 
 in the tax laws of the Commonwealth : 
 
 "First. State taxation to be limited strictly to the tax- 
 ation of foreign and domestic corporations. Counties to 
 have no right to tax corporations as such, but to have 
 the authority to tax the physical property of such corpora- 
 tions situate in their respective counties. All other tax- 
 ation now made and collected by the State, including collat- 
 eral inheritance tax, is hereafter to be made and collected 
 by and for the benefit of the counties wherein the same may 
 be collected. If the taxation of corporations is insuffi- 
 cient to meet the necessities of the State, then the State 
 to make direct taxation upon each county, to be a certain 
 percentage of the amount of taxes collected by said county 
 under the foregoing authority. 
 
 "Second. All property, real and personal, shall be 
 taxable by the counties in which the property is situated 
 and located. Real estate exemptions shall be limited to 
 burial lots in w 7 hich interments have actually been made, 
 
555 
 
 and to religious, charitable and educational institutions, 
 in proportion as they are free. All personal property to 
 be taxed, except merchandise in process of manufacture 
 or held for sale by licensed manufacturers or dealers. 
 Furniture, pictures, horses, carriages, automobiles, books 
 and furnishings to be assessed against the person in pos- 
 session of the same, but each individual taxpayer might be 
 allowed an exemption of, say, $1,000. Where the personal 
 property consists of stocks or bonds of a corporation which 
 pays taxes direct on the same to the State, such stocks or 
 bonds shall be exempt from county taxation, as also mort- 
 gages on real estate where such real estate is taxed at its 
 full value by the county in which it is situated. 
 
 "Third. Each and every individual, firm, limited part- 
 nership and corporation engaged in a legitimate busi- 
 ness or profession, having an office or place of business 
 for the transaction of same, shall pay a license to the 
 county in which said office is located." 
 
 My associates and myself appear before you as a Com- 
 mittee from the Philadelphia Real Estate Brokers' As- 
 sociation, of which Mr. Frank Caven is President, and I 
 am Chairman of the Legislative Committee. The present 
 Association is only of about two years' standing, but we 
 have to-day about 160 members, each of whose first re- 
 quirement is that he shall be a licensed real estate broker. 
 We claim we represent the payers of at least 100,000 tax 
 bills for the year 1909, and more than that number for 
 the year 1910. We acknowledge primarily that we are 
 more interested in taxation in the City of Philadelphia 
 than in the State, but in the resolutions which I present, 
 we show that we do not wish to deprive the State of its 
 right to collect taxes, but we wish to increase the sources 
 from which the county may be able to raise money for its 
 own purposes. Following out this idea, our Association 
 passed the following- resolutions, which I will now read: 
 
566 
 
 Taking up the first resolution, I would say that in our 
 Association of 160 members, we have, of course, various 
 ideas as to how our views can be put into effect. Per- 
 sonally, I have my own views, and the other members of 
 the Committee may have their views, but we don't desire 
 to take the time of your Committee in expressing our 
 individual opinions unless you shall request it, but the 
 resolution as offered covers the whole ground. We don't 
 wish to deprive the State of its revenues, but personally I 
 feel confident that if the taxes on corporations, foreign 
 and domestic, are made uniform, equitable and fair, that 
 there will be enough money raised by the State direct from 
 them for all State purposes. The duty of a State is simply 
 to protect life, liberty and property, and although we 
 have gone beyond that and have assumed a series of what 
 I call "State Socialism," that is, public education, State 
 supervision of health and the care of the indigent and de- 
 fective classes, being very generous in appropriations to 
 that end, yet, I still think, that under a proper law, the 
 State will have money enough from its corporation tax 
 to pay all its expenses. If it has not, then it can make 
 its direct tax upon each county, each county paying its 
 proper share, being a certain percentage of what each col- 
 lects for its own purposes. Personally, I am a firm be- 
 liever in the home rule and ability of each county to de- 
 termine what are the best subjects within its borders from 
 which to raise revenue. As a Philadelphian, I don't 
 think I know enough about the minerals in Carbon or 
 Schuylkill counties, or the oil in Venango county, as to 
 the best means of raising taxes on the same, but I prefer 
 to lease that to the citizens of those counties, and all our 
 Association asks you is that Philadelphia may be allowed 
 to tax property within its borders in an equitable and 
 just way, as it may see fit, and we stand ready, if the 
 State revenues are deficient, to make good such deficits in 
 a just proportion. 
 
 Now, as to the second suggestion we make. Give us the 
 
557 
 
 right to tax personal property, and in that way we will 
 have more than enough money for our purposes, so that 
 we will even be able to reduce our taxation on real estate. 
 
 Our third resolution, which we propose, increases the 
 number of licenses. I see at once the means of raising for 
 the County of Philadelphia at least two million dollars 
 additional income. At present, licenses are only required 
 from tavern keepers, brokers and storekeepers. No pro- 
 fessional man pays a license ; no manufacturer pays a 
 license. Personally, I cannot recognize why a real estate 
 broker should pay $100 per annum, whereas a lawyer, who 
 has four times the income, pays nothing. Neither can I 
 recognize why a manufacturer who, in the general opinion 
 of the public, makes more money than the dealer, is exempt 
 from a tax, whereas the dealer, who only sells the goods, 
 is compelled to pay one. I disagree with Mr. Albright, 
 who spoke here last week, that a tax on manufacturers 
 would drive manufacturers away, and quoted the example 
 of New York City. In answer to that, I say, that in- 
 stead of the manufacturers in New York City decreasing, 
 they have increased, and to-day that city, in spite of its 
 large taxes, is the largest manufacturing city in the country. 
 I don't propose an extravagant license tax, but a mini- 
 mum one, and the greater number of taxpayers the less 
 in proportion each would bear. There is nothing in this 
 idea that taxing manufacturers drives them away. When 
 a manufacturer locates in a place, there are three ques- 
 tions to be considered. The importance of these questions 
 varies with each man's particular business. They are 
 labor, transportation facilities, and rent. A large manu- 
 facturer, located in the Philadelphia district, told me that 
 they brought in seven tons of crude material to one of fin- 
 ished material that they put out, and therefore transpor- 
 tation with them was of first importance. With another 
 manufacturer, labor would be of first importance. A 
 certain manufacturer, who left this City because he could 
 get cheaper rent in a neighboring town, says he has never 
 
558 
 
 regretted anything so much in his life as his moving, be- 
 cause he has one continual trouble with his labor. The 
 question of taxes on a manufacturing plant is not one- 
 tenth of the rent, and is the last thing they consider. To- 
 day Pennsylvania is the best labor market in America. 
 Along the Delaware we have the cheapest land along the 
 Atlantic seaboard. Courtauld & Co., the English crepe 
 manufacturers, after having examined every town from 
 Fall River along the coast as far south as Savannah, have 
 located at Chester, where, I think, they paid for land 
 $600 per acre and have any quantity of unskilled labor 
 at their command. There is no reason, therefore, why 
 manufacturers should be exempt from a tax if it is a 
 minimum one, as I propose it should be. 
 
 In the second resolution, in which I except from taxes, 
 as personal property, merchandise in process of manufac- 
 ture and in stores, which property was suggested to be 
 taxed by Mr. Gratz, I do so because if a merchandise 
 dealer or manufacturer pays a fair license, which license, 
 of course, can be computed on the amount of his sales 
 or the amount of capital invested, that license tax would 
 represent the property in his possession, so, therefore, there 
 should not be a double tax. In the same way I exempt 
 mortgages upon property which has paid a full tax to 
 the county, for the simple reason that that is double tax- 
 ation. 
 
 Now, the experience of the tax office and trust companies, 
 who have more experience with estates than the ordinary 
 broker, is that of invested capital in the City of Phila- 
 delphia, about one-fifth is in real estate ; four-fifths in per- 
 sonal property, and of that four-fifths in personal prop- 
 erty, fully 80 per cent, is in stocks and bonds of Penn- 
 sylvania corporations. This would leave only about one- 
 fifth of invested capital in the State of Pennsylvania in- 
 vested in outside corporations. 
 
 The rates of interest on good securities in other States 
 have so declined that a man can invest his money now in 
 
559 
 
 Pennsylvania and obtain for it the equal income that he 
 could in any other place except in speculative securities 
 in the mining States. Therefore, in taxing personal prop- 
 erty, instead of having four pages of questions to answer, 
 we could simply put one question to the taxpayer and 
 ask him to swear to the same, the same as we now ask 
 him to swear to four pages; this one question would be, 
 What was your income for the last year from all prop- 
 erty you had outside of Pennsylvania? Except in the 
 case of a very rich man, this amount would be found to 
 be comparatively small, and a man, with a point blank 
 question put to him under oath, is not apt to perjure him- 
 self for the small amount of money which the truthful 
 answer to such a question would compel him to pay. The 
 great objection to personal returns is the publicity it gives 
 to one's private business. Personally, T am optimistic, 
 and believe that 95 per cent, of the world are honest 
 and truthful, but everyone hates to disclose his pri- 
 vate affairs, but if the State properly taxed all State 
 corporations and those were exempted from taxation in 
 the counties, the one question I have put above I think 
 will be nearly always answered truthfully by the tax- 
 payer. 
 
 I would like to go beyond the authority vested in me 
 by the resolution, and suggest personally to your Committee, 
 if possible, to formulate one uniform method of assessment 
 and collection of taxes throughout the State. You, gen- 
 tlemen on the Committee, from what I call the * ' rural coun- 
 ties," know the difficulty which we, as residents in Phila- 
 delphia have, being unacquainted with local laws which 
 are so different throughout the various counties, that it 
 is impossible for us, by correspondence, with one officer 
 of the county, to obtain a tax bill on a country property 
 which covers all the taxes therein levied. We have to 
 write to the county collector, the township collector, the 
 borough collector, and the school tax collector, and pos- 
 sibly others. I ask that you in your report to the State you 
 
560 
 
 urge a suggestion that some plan be proposed by which 
 all taxes payable in a county shall be payable through one 
 collector, and that one person, presumably the County 
 Treasurer, be the only party to have the authority to lien 
 for the non-payment of taxes or commence proceedings 
 for the collection of the same. 
 
 By Mr. Brown : 
 
 Q. "When you refer to the local real estate corpora- 
 tions, what have you in mind that is not taxable, the local 
 real estate? You request that all local real estate or 
 corporations should be taxed locally ? 
 
 A. Yes, we tax them for you, we tax physical property, 
 as they are doing now. We do not tax anything but the 
 real estate. 
 
 Q. What is there not taxed that you would tax, now ? 
 
 A. I do not see that there is what I am looking at 
 primarily is the State should tax every corporation. Now, 
 in the first place, we set forth that the charter charges 
 of manufacturing corporations eliminated 
 
 Q. Yes, but not its local real estate? 
 
 A. No, not its local real estate. 
 
 Q. Now, direct your mind to the tax of local real estate 
 of corporations ? 
 
 A. Yes, very good. We tax that now. In the first place 
 we want to raise money for the State. That is the first 
 question. 
 
 Q. Now, with railroad companies, they pay tax on all 
 their local real estate in Philadelphia except their water 
 tanks and their roadway? 
 
 A. Yes, I suppose they pay on the terminal. They do 
 not pay on the ground. 
 
 Q. They pay on everything but the roadway and the 
 water tanks. 
 
 A. Does the tax on terminal cover that? 
 
 Q. Yes. 
 
 A. That is all right. We do not complain of that. 
 
561 
 
 Q. The telegraph companies are not exempted, and the 
 trolley companies pay on everything but their power plant 
 and roadway. Would you tax them? 
 
 A. No, I would not tax that. I can not follow your 
 thought. Primarily, you want to get State taxes. Now, 
 tax them. In the first place, that opens a discussion on 
 the question of what is a corporation. What is the ob- 
 ject of incorporating? There are only two objects that 
 I know, that is insuring lives and public utilities that 
 the individual cannot do. You tax them for that incor- 
 porating. You give them_more than you give me. I am 
 talking about State tax. You get your money from the 
 State tax and give us the right to tax personal property 
 here, and we will get our income. 
 
 Q. I am not talking about personal income. I am ask- 
 ing you what real estate corporation that is not now taxed, 
 you would tax locally? 
 
 A. If they do not tax them now, it is their error. I 
 understand that with the exception of one or two, we al- 
 ready tax the real estate corporations. 
 
 Q. Then there is now nothing 
 
 A. Certainly not ; I am not complaining of that. 
 
 By a Member of the Committee : 
 
 Q. What do you understand the State returns are from 
 the counties now? 
 
 A. Three-fourths of what you get. You get $4,000,000 
 and return $3,000,000. 
 
 Q. That would not make a very great difference, then, 
 in your receipts. Where would you get the two millions of 
 dollars out of the license tax? 
 
 A. Out of the license tax we would get $2,000,000 at 
 once. 
 
 By Mr. Brown: 
 
 Q. Just one other thought on taxation of personal prop- 
 erty. You speak of taxing that locally ? 
 
 A. Yes, sir. 
 
562 
 
 Q. Then you say in another section there that you would 
 not tax locally what the State already taxes? 
 
 A. Of course, we ought not to do that. 
 
 Q. What personal property is there you would tax lo- 
 cally that the State does not tax ? 
 
 A. In the first place, give us our license tax 
 
 Q. Do not wander from my question. I am talking about 
 the personal property? 
 
 A. I am talking about personal property in storehouses 
 and warehouses. I am opposed to what Mr. Gratz says. 
 
 Q. Then the personal property that the State does not 
 tax, that you would have taxed, would be the goods in 
 the stores? 
 
 A. No, I except that. The personal property we would 
 have taxed is the furniture, pictures, paintings, and so on 
 and put back the Act of '88. That would accumulate at 
 an enormous extent. We have houses in which there are 
 $200,000 worth of personal property ; the State gives them 
 protection. 
 
 Q. Another subject would be automobiles? 
 
 A. Of course, we only tax now carriages for hire. 
 
 Q. What other personal property have you in mind ? 
 
 A. That covers it. Then we tax personal property held 
 by corporations, here, for instance, taking your banks, you 
 tax them for their life, we tax them for the physical prop- 
 erty. 
 
 Q. You tax them anyhow? 
 
 A. No, we do not. We do not tax their investments. 
 
 Q. You are going to tax their security and investment? 
 
 A. Undoubtedly. 
 
 Q. I understood you to-day you would not tax locally 
 what the State taxes generally ? 
 
 A. No, the State won't do it, if you give it to the State. 
 
 Q. You tax them on their charter privileges? 
 
 A. We can not tax them as a corporation ; we tax them on 
 their property. 
 
563 
 
 By a Member of the Committee : 
 
 Q. But in order to get all of the personal property tax 
 instead of three-fourths ? 
 
 A. To delegate to the county, and let us tax in the 
 county what we think proper. 
 
 Q. Have that right reserved unto each county? 
 
 A. Of itself. If you can not get enough out of the 
 direct taxation of corporations, then you appeal to us. You 
 say, "We Avant 5 per cent, of the tax you collected last 
 year. ' ' 
 
 Q. Instead of the revenue flowing directly into the State 
 Treasury, you would have it flow indirectly from the 
 county tax? 
 
 A. Yes. There is only one system of taxation here. 
 
 Q. How would the State derive its revenue. 
 
 A. From equal taxation in all corporations. 
 
 Q. It would not appeal to the counties at all ? 
 
 A. No, not until you are short. 
 
 Q. Until the State is short? 
 
 By Mr. Brown : 
 
 Q. In other words, the Board of Revenue Commissioners 
 would not have to act until there was a State deficit; 
 then they would make requisition on the counties, instead 
 of doing as they do now ? 
 
 A. It gives us one set of collectors. 
 
 Q. Any other personal property? 
 
 A. Anything we could find. That is for the county to 
 determine. 
 
 Q. Your idea is to tax everything in sight? 
 
 A. Everything we want to tax. If Venango county 
 wants a half a cent tax that is their business. 
 
 Q. Any other thought, Mr. Dallam? 
 
 A. Not unless there is something that requires an ex- 
 planation. 
 
564 
 
 SAMUEL G. DIEHL, Philadelphia, Pa., called. 
 
 Mr. Diehl: I am not a member of the Real Estate 
 Brokers' Association, although I am a broker. In the early 
 part of last year I was Chairman of the Pension Committee 
 for the purpose of paying pensions to Emergency Men. I 
 had an interview with the Governor, and he said he was in 
 favor of the bill which I proposed to the Legislature, but 
 he said: "Where are you going to get the money to pay 
 the pensions ? " So I commenced to look around, and I hit 
 upon a plan, and my plan is, I might say, revolutionary in 
 regard to the past collection of taxes for State purposes. 
 In my investigations I found from the Census Report of 
 the United States, published in 1907, that the assessed 
 value of real estate in the State of Pennsylvania in 1904 
 amounted to $3,476,000,000. Now, my idea was to place a 
 State tax upon that assessed value of real estate, a small 
 amount, say one and one-half mills. One and a half mills 
 on that amount of money would produce $5,214,089. Then 
 I propose to do away with the mortgage tax, four-tenth of 
 1 per cent. The tax received by the Treasurer of the 
 State of Pennsylvania in 1908 amounted to $4,209,000. I 
 could not find how much of that money belonged to the tax 
 on mortgages. There was no way to find out. The Board 
 of Revision kept no account, but they said they thought 
 about seven-eighths of it came from the tax on mortgages. 
 That would be $3,806,204, leaving an increase in the State 
 Treasury of $1,531,835. Now, out of that $4,209,000 
 collected by the Treasurer he returned to the counties 
 $3,392,128. Now, taking three-fourths of the $5,214,000 
 which would be raised by the tax on the assessed value, you 
 return to the counties $3,910,566, or an increase of $618,438 
 is returned to the counties. Now, there are a number of 
 people who own property in the State of Pennsylvania who 
 do not pay a cent towards the revenues of the State. For 
 
565 
 
 instance, there was one of our citizens who died recently, 
 leaving about $40,000,000, and most of that property was 
 in real estate clear of incumbrance ; about $10,000,000 of 
 it, I think, is in the City of Philadelphia. That does not 
 pay one cent to the State of Pennsylvania, not a penny. 
 Now, then, other gentlemen, or one other gentleman, if you 
 take for example, owns ten million dollars' worth of prop- 
 erty and he is not able to keep that clear of incumbrance, 
 and he is compelled to mortgage it for 60 per cent, of 
 its value, and he pays four-tenths of 1 per cent, upon 
 that six millions of dollars, which amounts to $24,000 a 
 year. Of course, the State says that the owner of property 
 or the man who borrows the money is not to pay the tax, 
 but the man who loans it, but we real estate brokers know 
 in the majority of cases the man who borrows the money 
 pays the State tax. 
 
 By Mr. Moyer : 
 
 Q. That is pretty generally true in the City, is it not ? 
 
 A. Yes, sir. Now, my idea was to tax that ten million 
 dollars' worth of property value one and one-half mills, 
 which would produce $15,000, that is the clear ten millions, 
 and tax the other the same, which would produce $15,000 ; 
 the State would get $30,000, and the man who paid his 
 four-tenths on the six millions would save $9,000. He 
 would pay $15,000 instead of $24,000. Therefore, every 
 man who had his property mortgaged for 60 per cent, 
 of its value would save money. A great deal of the prop- 
 erty is mortgaged for more than 60 per cent, of its value. 
 I know some that is mortgaged for 80 per cent, of its 
 value, and of course the man who has property mortgaged 
 for a larger proportion of its assessed value saves more 
 money. 
 
 Now, in regard to the City, if a man's property is as- 
 sessed for 60 per cent, of its value at the present rate of 
 tax, if it is mortgaged for two-thirds of its value with the 
 City tax at $1.50, a man would have to pay $1,766.67. 
 
566 
 
 Now, under my plan of taxing the assessed value and 
 making the City rate $1.60, which is ten cents more than 
 it is to-day, the man would save $16.67, because under the 
 old way he would pay $1,766.67, and under the new 
 way he would pay $1,750, and if he was taxed 60 per 
 cent, he would pay under the old way $740 and under the 
 new way $750, or ten dollars; if it is mortgaged for 70 
 per cent, of its value, he now pays $1,780, and under the 
 new way he would pay $1,750. He would save money. 
 
 Now, the assessed value of Philadelphia for 1909 is 
 $1,356,869,000 odd dollars. At $1.50 it would produce 
 $20,353,000 odd dollars. Under the $1.60 it would produce 
 $21,709,915, an increase of $1,456,000. Now, taxing the 
 real estate, you can always get your money. In taxing 
 personal property you do not always get it, because a great 
 many who ought to pay four-tenths do not pay it. There 
 seems to be no way by which you can make everybody pay 
 a tax, but in taxing real estate you can make everybody 
 pay. 
 
 Q. What is your authority for that statement ?. 
 
 A. Well, my authority is that if you take we know 
 I don't know that it is an authority, but we know that 
 we feel sure that there are a lot of people in the State of 
 Pennsylvania who do not pay that four-tenths of 1 per 
 cent. tax. 
 
 Q. Is there no way of enforcing the payment? 
 
 A. I do not know of any law to enforce it. You cannot 
 put a man in prison for debt. Many years ago when I was 
 a young man I was Internal Revenue Collector in the 
 Second District, and we had an. income tax. We felt that 
 80 per cent, of those returns were perjuries. We felt 
 certain that the people did not make the lawful returns. 
 The assessor, when he knew and had the facilities to know, 
 he could add what he thought the man had failed to do, 
 and sometimes we did add 50 per cent., and it was paid 
 without a question. 
 
567 
 
 By Mr. Brown : 
 
 Q. Why didn't you add 50 per cent, more? 
 
 A. We could not do that without we had positive assur- 
 ance. One prominent man made a return and the assessor 
 knew it was wrong, and he added 50 per cent., and it was 
 paid without any question. 
 
 Q. Have you talked this over with your associates? 
 
 A, I have submitted this to a number of men, real estate 
 men and others, and they all thought it was a good idea. 
 
 Q. Did they own real estate? 
 
 A. Yes, they own real estate. I myself own real estate 
 and it is clear of incumbrance. I would pay more under 
 this plan than I do pay now. I do say a man who is worth ten 
 millions of dollars and does not pay a cent to the State 
 ought to pay something, and the State would be the gainer 
 in every instance. I do not know any reason why the 
 State should not tax real estate, and as I showed you, the 
 tax if it was done in that way, the tax in Philadelphia on 
 men whose properties are mortgaged, the only man whose 
 tax would be increased would be the rich, and they are the 
 men you want to pay the tax. 
 
 By Mr. Moyer : 
 
 Q. Is it your thought that real estate should be taxed 
 both for State and local purposes! 
 
 A. Yes. 
 
 Q. A double system of taxation? 
 
 A. Yes, and do away with the mortgage tax, and by 
 doing that the taxpayer does not pay any more money. 
 In fact, I think sixty times out of a hundred he would not 
 pay as much, taking the tax at $1.60. 
 
 By Mr. Brown : 
 
 Q. Your contention is that the land owner should pay the 
 tax to the State and county. That is your thought? 
 
 A. Yes. You see in this way we would raise over a 
 million dollars for the City annually, a. million and a half 
 
568 
 
 nearly, and also for the State. My contention on account 
 of the pension was that I could see where I could collect 
 three million dollars for the State and without increasing 
 the tax on the necessaries of life. It has been proposed 
 here by some that a tax should be put on corporations who 
 manufacture gas and water, and a bonus on coal. We all 
 know that if we put a tax oh coal for five, cents, the con- 
 sumer would pay twenty-five cents more a ton, and if we 
 tax water or gas companies, they are going to raise the rates 
 and the consumer will pay it. In this case the rich man 
 who owns the property will pay the tax. 
 
 Q. The poor man also ? 
 
 A. To-day the poor man pays more. 
 
 Q. Tax both the rich and the poor alike? 
 
 A. Here is a man owns a house assessed for $2,000. He 
 is paying to-day to the City $30 taxes, and he has got his 
 mortgage for 80 per cent, of its value, and he is paying 
 the State $6.40 tax. He is paying $36.40. Now, under my 
 plan, if the City tax would be ten cents more, or $1.50, he 
 would pay $32.00 to the City and he would pay $3.00 to the 
 State, or $35 instead of $36.40, and the man who owned 
 the $2,000 house would be saved $1 .40 a year, and the State 
 of Pennsylvania and Philadelphia would be getting a 
 million and a half more money. On the personal property, 
 such as bonds and stocks, etc., I would raise the tax on 
 those, I think, because if you raise the tax on those there 
 would be more money for mortgages and you get the mort- 
 gages at a lower rate. 
 
 By a Member of the Committee : 
 
 Q. What would the citizens of the State of Pennsylvania 
 do if you raised the rate on the bonds? 
 
 A. He would sell their bonds and stocks and put them 
 on his mortgages, where it would be less. They would not 
 have to pay any tax on mortgages. You know the man who 
 pays on his bonds is the rich man, and he is the man who 
 ought to pay the most tax. 
 
569 
 
 Q. Wouldn't your plan have a tendency to block the 
 State's progress and the upbuilding of any credit by hav- 
 ing a system of taxation such as you suggest on real es- 
 tate? 
 
 A. I don't think so. 
 
 Q. You think it would not? 
 
 A. I don't think so. 
 
 Q. That men would still be as apt to invest in real estate 
 as they are under the present system of taxation? 
 
 A. I think they would. I don't see any reason why they 
 would not. Another thought and that is this, if a man 
 makes an improvement that is a benefit to the City or in- 
 creases the value of the surrounding property, he should 
 not be taxed for that at once; he should have some credit. 
 In other words, for the addition he put on there he need 
 not pay taxes for five years. 
 
 Q. That is a single tax idea? 
 
 A. Not at all. What I mean by that is this: I have a 
 property and spend $50,000 on it and make it a credit to 
 the City of Philadelphia His Honor wants to make the 
 City beautiful I should have some credit, more than the 
 man who lives next door to me and does not do anything. 
 
 Q. Doesn 't it increase the value of your property 1 
 
 A. Yes, because I put value on it. 
 
 Q. Thereby increasing the value of your property, should 
 you not pay an additional tax because your property is 
 worth more than it was before you made the improvement ? 
 
 A. T don't know that it is worth any more it might not 
 be worth any more than the amount of the improvement I 
 put on it, but I am taxed for that amount of improvement. 
 It keeps people from improving their property. 
 
 Q. The present system of taxation? 
 
 A. Yes, because they have to pay for that improvement. 
 Now, I want to say something about appropriations to hos- 
 pitals. I am a trustee of a hospital in the City of Phila- 
 delphia, and I believe in hospitals, but I agree also with 
 what \Mr. Strawbridge stated the other day that hospitals 
 
570 
 
 ought to be concentrated, that there are too many. I know 
 some institutions where the Board of Directors could not 
 get together, and they do not agree, one part goes off and 
 starts another hospital, and they haven't any money, and 
 they ask the State to give them money to help them run it. 
 If there were four or five general hospitals like the Penn- 
 sylvania or the Jefferson, the University of Pennsylvania, 
 the Hahnemann, and if they want branch hospitals, we 
 could have branches of the Hahnemann or the Pennsylva- 
 nia, and under one management. But now we have a 
 whole lot of hospitals gotten up by different people, all 
 doing some good. I hare one in mind now that has bought 
 a property in one of our best streets in the City of Phila- 
 delphia ; it asked for a contribution to a building fund last 
 year which was stricken out by the Governor ; instead of 
 going where they could buy property cheap they buy it 
 on the principal street in Philadelphia; they paid $40,000 
 odd dollars for the land ; they have got $5,000 in the treas- 
 ury; they haven't got a building on the property. They 
 placed upon their Advisory Board one of the leading mem- 
 bers of the Senate of Pennsylvania, with the .hopes of get- 
 ting the means to build, I suppose. I think the State of 
 Pennsylvania should not furnish money for building hos- 
 pitals, because if the people cannot supply the buildings, 
 the State should not do it. They ought to furnish so much 
 per capita for people in those hospitals treated there. 
 
 By a Member of the Committee : 
 
 Q. Unless the State would get title to the property? 
 
 A. Unless the State would get title to the property, yes. 
 
 Q. Under those conditions you would not think so much 
 of it? 
 
 A. I do not think there ought to be so many hospitals. 
 We have got five or six on Broad street, some of them very 
 close together. 
 
 Q. You are in favor of consolidation? 
 
 A. I am in favor of consolidation. I think they would 
 do better work under one management. 
 
571 
 
 MR. L. G. FOUSE, President of the Fidelity Mutual Life 
 
 Insurance Company and representing the Association 
 
 of Life Insurance Presidents, called. 
 
 Mr. Fouse : In this dual capacity I am trying to take a 
 broad view of the subject, and I desire to be understood 
 at the outset that we are not here to ask immunity from 
 taxation, but we are here to ask a redistribution, and more 
 on the line of fairness and equity. If any business is 
 entitled to exemption, I think we might claim that the 
 business which reduces taxation for the maintenance of a 
 population and which encourages thrift to uplift, is, of 
 course, the business that ought to be exempt, but in 
 view of the fact that the State has to be supported and 
 something has to be done, we are perfectly willing to 
 concede that the life insurance companies should make 
 their fair and proper contribution to the support of the 
 State, but when enterprises are considered by the State 
 as a proper subject of exemption, such as a building and 
 loan and such as savings banks, which is all right we 
 have no quarrel with it, if the State can do it, but we do 
 say this, that if the individual who deposits his money and 
 can withdraw it at will for his own benefit can be exempt 
 from taxation, that the man who conies forward frankly 
 and absolutely agrees to put aside a sum of money merely 
 in order that his wife and his children, when the lamp 
 of life goes out, shall not become a charge upon the public, 
 we say that those people are just as much entitled to 
 consideration as the man who makes a deposit for selfish 
 purposes and motives. I will not take up your time, but 
 it. might be of some interest just merely to refer to it, to 
 history in this connection. About the year 1500 it was con- 
 sidered a high crime to be a pauper ears cropped, im- 
 prisonment and eventually death ensued. That resulted in 
 England in the investigation on the line of encouraging 
 
572 
 
 self-dependence and thrift, so as to do away with pauper- 
 ism as much as possible, but they happened to strike the 
 wrong lead. They started the poor rate proposition, so 
 that parishes were taxed for the maintenance of the poor. 
 This became such a burdensome thing that finally 
 Parliament took it up in the early part of the Nineteenth 
 Century and made an investigation covering several 
 years, when expert testimony was produced, and the con- 
 clusion reached Sec. 821 that life insurance, friendly 
 societies and kindred organizations operated to reduce the 
 poor rate, a burden upon the public, to the extent of 
 millions and millions per annum. What was done as a 
 result of that? They simply turned around and enacted 
 laws to encourage such organizations, ti> help them to 
 exist, and the income tax which prevails in Britain had 
 this modification made : that if a man takes one-sixth of 
 his income and invests it in life insurance, that that one- 
 sixth shall be exempt from the income tax. That was 
 done because of the uplift, of the help that it was to the 
 Nation in doing away with pauperism and dependence, 
 because it made it, therefore, to some extent, an indepen- 
 dent people. There was a time, as we are told, in history 
 when the windows were taxed because of admitting light 
 and air. That belonged to the dark ages, and if there 
 is anything that belongs to the dark ages it is taxing that 
 which helps people to become thrifty ana independent, 
 and that is what life insurance is assumed to do, and that 
 is what it expects to do. The insurance reform of recent 
 years has awakened public conscience to a very great 
 extent. I think that people are now beginning to know 
 that they pay the tax, that the companies are not some- 
 thing entirely independent of the people, that there could 
 be no life insurance at all unless the people paid 
 premiums, and the tax comes out of the premiums, and 
 therefore they have got to pay it. That is primarily a very 
 important consideration for everybody to give due and 
 proper thought to that subject, to appreciate the fact that 
 
573 
 
 the individual policy holder has to pay the tax, and those 
 who do not invest their money in that line are exempt 
 from taxation, because they have no interest in it. 
 
 Now, in that connection, Pennsylvania has a population 
 of over seven millions. The tax imposed on life insurance 
 companies exceeds one million dollars a year. It is the 
 amount of money that goes into the State Treasury, from 
 whom? From the whole people? Oh, no. Only from 
 those who carry policies of life insurance in a certain 
 class of companies ; less than a half million of people pay 
 three-fourths of the one million tax, and the other is paid 
 by a class known as the industrials, who pay the other 
 quarter, or $250,000, making an aggregate of over a 
 million. 
 
 Now, in addition to that fact, which shows that only 
 a very small proportion of the population pays that life 
 insurance tax, comes a further discrimination which is 
 most unfortunate and does not help the situation at all. 
 One thing is a discrimination against mutual companies, 
 A mutual company is required to pay a tax of four mills 
 on its investment. If it is a stock company it simply pays 
 a tax of five mills on the value of its capital stock, and 
 the capital stock may be anywhere from a hundred 
 thousand dollars to three hundred or five hundred thou- 
 sand dollars, but it is the market value of a stock that is 
 taxed. Now, the result is : take a company like the Penn 
 Mutual; they have returned for taxation personal prop- 
 erty to the amount of $60,069,475, or, in round figures, 
 $240,000. Now, suppose it was a stock company instead 
 of a mutual company, what would they pay? Five mills 
 on the thousand dollars of stock, and it would be a mere 
 picayune, instead of the $240,000. That is a discrimina- 
 tion that is most unfair and should be corrected, if that 
 system is to be continued, the four mills tax, by taking the 
 mutual companies less the reserve liability accumulation, 
 so that they would be taxed more nearly akin to the 
 capital of stock companies. That is a mere suggestion, 
 
574 
 
 but I should like to see that entire portion of the tax 
 wiped out and another matter substituted, as I will tell 
 you later. 
 
 Now, another feature that is a discrimination is that a 
 large proportion of those doing the business of life insur- 
 ance under various titles are exempt from any tax. That 
 does not seem right to me. I do say that if it is proper 
 to tax one class of companies it ought to be proper to tax 
 another class of companies doing practically the same 
 business. Perhaps not in the same way, but meeting with 
 the same result in the end. 
 
 Now, there is another discrimination, which is, to my 
 mind, inexcusable, and, according to the decision of the 
 Supreme Court of the United States a few days ago, it 
 is a question whether it is legal and proper, and that is 
 the discrimination between the domestic or home com- 
 panies and the companies of other States. In the case of 
 Alabama it has been held that the discrimination was not 
 only unfair but unconstitutional. We tax Pennsylvania 
 companies eight mills. That is what Pennsylvania com- 
 panies are supposed to pay. 
 
 By a Member of the Committee: 
 Q. On the gross receipts? 
 A. Eight mills on the premium. 
 
 By Mr. Brown: 
 
 Q. And if they have capital stock? 
 
 A. That is an additional tax, that is a personal property 
 tax, the capital stock proposition, but I am now addressing 
 myself to another classification of tax, premium tax. Get 
 that separate in your minds. Now, Pennsylvania imposes 
 eight mills, but if a company is domiciled in some other 
 S 1 ate and comes in here to do business, there is 2 per 
 cent, placed on them, so that the companies of other States 
 are discriminated against to that extent. 
 
575 
 
 By Mr. Moyer: 
 
 Q. That is done, I presume, to protect home companies? 
 
 A. Well, it don't protect them, as I will show you later. 
 Now, because of the retaliatory provisions, and this is not 
 the age in which a retaliatory spirit should be encouraged 
 at all, under the retaliatory provisions of the States the 
 result is that a Pennsylvania company which leaves the 
 border of its own State has got to pay to all other States 
 just the kind of tax that we impose in Pennsylvania on the 
 companies of those States, so that we are. individually 
 paying a great deal more tax to the other States than we 
 are paying to Pennsylvania. As the number of companies 
 in Pennsylvania is increasing all the while, it is a matter 
 of considerable importance, aside from the constitutional 
 question involved, as to whether it is right and proper 
 to have such a discrimination between the home companies 
 and the companies emanating from other States. My 
 own opinion is that that is not good business and it is not 
 justice, and I say that as a Pennsylvaiiian interested in 
 my home State more than I am anywhere else, but as I 
 stated before, I am here in a dual capacity, not only 
 representing the company with which I am connected, 
 but also representing the other life insurance companies 
 in the Life Insurance Presidents' Association. 
 
 By Mr. Brown: 
 
 Q. What State has, in your opinion, the best law on this 
 subject? 
 
 A. Well, we have in our discussions sort of agreed that 
 New York, since the amendments have been made and 
 changes made, comes as near right, because there it is 
 1 per cent., and it is 1 per cent, to all. They are all 
 treated alike, no matter where you are from, it is 1 per 
 cent., a premium tax of 1 per cent. 
 
 Q. What was the cause of this change in our law; who 
 is responsible for that ? 
 
 A. I do not know. 
 
576 
 
 Q. Is it not you insurance people? 
 
 A. Oh, no ; insurance people have had very little to do 
 with the revenue acts, and in former times it kept them 
 busy to know when the revenue laws were being consid- 
 ered, and so far as I am concerned in fact, I did not 
 know it until after it had become a fact and it has been 
 this way for years, goes back some twenty years or more, 
 and there has been no change. New York formerly did 
 not have any tax at all on premiums. They had other 
 devices for taxing insurance companies in a moderate 
 way, but in recent years they have changed that and have 
 adopted the 1 per cent, premium tax in lieu of all other 
 forms of tax, and it is agreed between the members of our 
 Association that that is a fair, equitable basis of taxation, 
 because the State is burdened, of course, with the expense 
 of supervision, which is highly proper and it is highly 
 proper that the contribution should be made towards it, 
 but supervision will represent perhaps less than a hundred 
 thousand dollars, while in Pennsylvania the companies 
 pay over a million dollars, so that there is a profit there 
 to the State of over $900,000, and it is converting life 
 insurance, which is supposed to promote independence, 
 into a revenue agency for the support of the State, and 
 I do not believe that was ever intended to be, and it 
 certainly is not good public policy. 
 
 By Mr. Moyer: 
 
 Q. What, in your judgment, would be the loss of 
 revenue to the Commonwealth were a law enacted reduc- 
 ing the percentage? 
 
 A. I do not believe that it would reduce the revenue, 
 if you take all classes of companies and apply that 1 
 per cent, to all, which I do not think would be seriously 
 objected to, because the large number of companies that 
 now pay nothing would be required to pay the one per 
 cent., and it would be applied to all fraternal organiza- 
 tions just the same, apply it to all. I do not think it 
 
577 
 
 would reduce the revenue to the State but very little, if 
 at all. There is no way of exactly computing that, but 
 that is my best judgment. 
 
 Q. But you made a statement a moment ago that the 
 State was exacting from the insurance companies revenue 
 approximating $900,000 that was a revenue unjustly 
 raised, as you seemed to think? 
 
 A. Yes, as I view it, of course 
 
 Q. What would become of that amount of money if a 
 new law were to go into effect ? 
 A. It would go into the State Treasury, as it does now. 
 
 Q. As you say under the present law we are exacting 
 from the policy holders a sum aggregating, for ex- 
 ample 
 
 A. Over a million dollars. 
 
 Q. And the State turning this law into a revenue raiser, 
 
 as you term it 
 
 A. Yes. 
 
 Q. I say if a new law, such as you propose, on the 1 
 per cent, basis were to go into effect, would the revenue 
 be approximately the same as at present? 
 
 A. I have stated that it would be, if you make it apply 
 to all companies. 
 
 Q. Fraternal organizations as well? 
 
 A. Everything; not discriminate between them. 
 
 Q. Do you think that could be easily accomplished? 
 
 A. That is another question. That is up to you gentle- 
 men. 
 
 Q. Do you recall a fraternal organization measure that 
 was before the Senate and House at the last session? 
 
 A. I believe they will oppose any legislation that 
 imposes a burden upon them. So far as that is concerned, 
 I think that goes without saying, but when you consider 
 a nominal premium tax and the method of doing business 
 that they pursue, it will be so small comparatively that 
 30 
 
578 
 
 th^y will not look upon it as they would the 2 per 
 cent, which now obtains and which has to be paid by 
 all companies of other States in Pennsylvania, and we 
 have to pay outside of Pennsylvania because Pennsylvania 
 imposes that upon the other companies. 
 
 By Mr. Brown: 
 
 Q. Is this State tax the highest rate? 
 
 A. There are a few States that exact two and a half. 
 
 Q. On foreign or domestic companies? 
 
 A. All alike. This discrimination as between the foreign 
 and homes companies is a very rare proposition. I cannot 
 just at this minute tell you what Sates they are, but I 
 do not think there are more than three in the entire forty- 
 six States. 
 
 By Mr. Moyer: 
 
 Q. There was an attempt in the last Legislature to 
 remedy this, was there not? 
 
 A. I think the last Legislature had a bill before it, 
 \\ hie]) was supposed to correct very much of the crude 
 legislation in Pennsylvania, but it failed, out whether it 
 touched the revenue, which is a different law in the State 
 and not a part of the insurance law, is a matter I am 
 not prepared to answer. 
 
 Q I think it did have reference, among the other things, 
 to the legislative clause you speak of here, and that met 
 with a great deal of opposition in the House. 
 
 A. It did. 
 
 Q. You are familiar with, the vote on the bill, are you 
 not? 
 
 A. Yes. 
 
 Q. And the principal ground of opposition seemed to 
 be that it would embody, as you state, fraternal organi- 
 zations who pay a sick benefit. Now, the life insurance 
 companies do not presume to pay any sick benefits, and 
 fraternal organizations do, which would affect quite a 
 few families throughout the State. 
 
679 
 
 A. They do not all do it. 
 
 Q. Embracing them all as one class of organizations. 
 
 A. I think I should discriminate between the life insur- 
 ance, fraternal orders and the sick benefit societies myself. 
 
 Q. For instance, the Eoyal Arcanum and Modern 
 Woodmen, do they have a sick benefit feature in their 
 policies? 
 
 A. They have it in the lodges. For instance, a lodge 
 can give sick benefits, but it is not a part of the policy 
 contract, I do not think. 
 
 Q. They have a death benefit feature, have they not? 
 A. Yes, sir. 
 
 Q. That is their strong asset? 
 
 A. That is their principal business, but the lodge can 
 include or exclude the sick benefits, just as they like. It 
 is not an essential part of the functions of the order. 
 
 Q. But if they have such a feature embodied in their 
 policy, Mr. Fouse, how could you reach them for the 
 purpose of taxation as you have just stated a moment 
 ago? 
 
 A WelJ, in an off-hand manner, I would say this, 
 that a 1 per cent, of the premiums that they collect is 
 almost infinitesimal, it is so small that I do not believe it 
 would be necessary to discriminate, but if I did discrim- 
 inate I would make a provision exempting the sick benefit 
 feature of any order from the taxation, because it is only 
 an agency that can be used or not as they see fit, but 
 sick benefits is in itself a thing that ought not to be taxed, 
 I agree. 
 
 Q. I bring this out at this time because of the very 
 serious opposition that this proposed piece of legislation 
 met with in both the Senate and House, and simply, I 
 take it, on account of the fact that it would apply to 
 many fraternal organizations who now have embodied in 
 their policies a sick benefit feature. 
 
 A. Yes. 
 
580 
 
 Q. Now, according- to your argument, for instance, the 
 Modern Woodmen and Heptasophs and Eoyal Arcanum, 
 if they have a sick benefit feature in their policies, it 
 would be exempt from taxation and, of course, the State 
 of Pennsylvania would lose revenue through the proposi- 
 tion. 
 
 A. I would only exempt that one branch of it, the sick 
 benefit branch. 
 
 Q. Then they have separate policies? 
 
 A. Yes, I know the Royal Arcanum have, because I 
 have been a member of that for some time. I know they 
 have it as a matter belonging to the lodge itself. That 
 is, you can take it or not, as you like. 
 
 Q. That is optional? 
 
 A. Yes, and because of its being optional it could be 
 set aside, and only the death benefit part of it be subject 
 to the insurance tax on 1 per cent. With those 
 features that I have given, which I will just hurriedly 
 run over again, a discrimination between mutual and 
 stock companies, it does not strike me as proper and 
 right and that that should be corrected ; that a discrimina- 
 tion between organized companies of other States is not 
 right, and that should be corrected; that the discrimina- 
 tion in favor of the various fraternal insurance orders, that 
 is not right, and that by taking them all and placing 
 them on a proper basis and doing equity and justice it 
 would not be necessary to make it so burdensome on a 
 few, because it is a distribution among many. Of course, 
 it is not an easy problem. 
 
 By Mr. Brown: 
 
 Q. If it is not too much trouble or would necessitate too 
 much labor, could you have some memoranda made, 
 showing what the experience of other States has been? 
 
 A. Yes. 
 
 Q. And submit it to the Committee? 
 
 A. I can and would be glad to do it. 
 
581 
 
 MR. WILSON H. BROWN, representing the Manu- 
 facturers ' Club of Philadelphia, called. 
 
 Mr. Brown : Mr. Chairman and Gentlemen : I want to 
 begin by saying that the manufacturers, as represented 
 by the Manufacturers' Club, are satisfied with the taxes 
 that are imposed upon them at the present time. I see 
 that that occasions a little ripple of laughter from my 
 friend, David Dallam. We are satisfied, because we feel 
 that we are entitled to some credit for having made the 
 business of Mr. Dallam and the business of the City of 
 Philadelphia and development of the City of Philadelphia 
 what it is. I know it has been an old story that without 
 the manufacturers the City of Philadelphia would not be 
 as great as she is. That has been told and told so often 
 that some people begin to look upon it as a joke, but if 
 you gentlemen will go back into the history of Philadelphia 
 and pick that out and compare the development of the City 
 and the development of the manufacturers, you will find 
 they run right on a parallel. The State of Pennsylvania 
 has within her limits to-day manufacturing corporations 
 with a total capitalization of $1,955,000,000. That capital- 
 ization has represented in increase of 35 per cent, 
 in the past five years, a greater increase as shown by the 
 census of 1900 than any other State in the Union. Why 
 is this? Years ago the State of Pennsylvania realized 
 the necessity of developing her natural resources, realized 
 that she had natural resources which manufacturing 
 alone could develop and which would eventually make the 
 State great, and she passed laws exempting manufactu- 
 rers from taxation. The only tax that was imposed upon a 
 manufacturing corporation is a tax upon its capital stock. 
 Following our example you will find throughout the coun- 
 try, if you travel this great country as I have, along 
 the railroads you will find the communities advertising 
 
582 
 
 free factory sites. Why ? Simply to get the manufacturers 
 there to develop their country, and it is that policy that 
 has caused the great progress of this country. The manu- 
 facturers of the State produce annually about twice as 
 much as the total agricultural product and the products 
 of our mines. In round figures the census of 1905 says 
 that in the State of Pennsylvania the value of the products 
 of manufacturing was $1,955,000,000. For the same period 
 the total product of farms was $431,000,000, and the total 
 mineral product was $657,000,000. I realize that the State 
 of Pennsylvania either through^ insufficient taxation or 
 unwise expenditure of the public funds has to meet the 
 question of a probable deficiency, and yet I say to you 
 gentlemen that the manufacturers, as represented by the 
 Manufacturers' Club, are willing to stand any just share 
 of their burden of taxation that may be determined. They 
 feel to-day that they are in a position, facing, as they do, 
 the Federal corporation tax, that they would be at a 
 disadvantage if the tax upon manufacturing corporations 
 was increased. Some of you gentlemen know that the 
 bills introduced in the State Legislature last year were 
 opposed by the manufacturing interests of the State very 
 largely, and reasons were then given before the Judiciary 
 Committee as to why they should not be increased. I 
 emphatically say to you gentlemen that the manufacturers 
 feel that any increase of taxation on manufacturers or 
 any taxation placed upon manufacturing in the State 
 would be placing the State of Pennsylvania in a point 
 of retroaction; that the Manufacturers' Club feel that 
 if you commence to tax your manufacturers you will take 
 the first step towards stopping the development of the 
 State. You will be driving manufacturers to other States 
 in the vicinity where they can have better conditions and 
 be freer of taxation. The Manufacturers' Club of Phila- 
 delphia, whom I represent, have had no formal meeting 
 to consider this subject, but a number of the gentlemen 
 who represent the Club on its Legislative Committee have 
 
583 
 
 met and requested that I place before you as the opinion 
 of the Manufacturers' Club just what I have stated here. 
 
 In the course of conversation, as to meeting the condi- 
 tion which you gentlemen have to meet, raising taxation, 
 and the various opinions expressed, I recall very distinctly 
 that one gentleman said, "Why don't you tax automobiles? 
 Why don't they tax automobiles, they don't seem to pay 
 any tax?" I said, "I don't believe the Manufacturers 7 
 Club should go there and express themselves as favoring 
 the taxing of any specific thing." "Well," he says, "I 
 own three of them and I will pay and I think it would 
 be only right to pay one dollar per horse power per year 
 for owning those automobiles." That is only the personal 
 opinion of one member, and I am not authorized here to 
 say or to suggest to you any method of raising the revenue 
 of the State. 
 
 By Mr. Brown : 
 
 Q. Assuming that the other taxables are being suffici- 
 ently taxed to-day and there is need for more revenue 
 for the purpose of our State institutions, erecting State 
 institutions for the insane and criminals and helpless poor 
 and all that, or for State highways and other public pur- 
 poses, what is your thought on that? Do you think these 
 other taxables should have their burdens increased, or 
 that the manufacturers should aid in that? Now, I am 
 simply asking this because this Committee is in receipt of 
 dozens and dozens of letters suggesting the taxing of 
 manufacturing corporations and giving the reasons of the 
 writers why it should be done. Have your folks given 
 that any thought? 
 
 A. We have simply dealt with the question generally. 
 There is not one of them that is in favor of any tax being 
 placed upon manufacturers. 
 
 Q. And there is not one of them that would shirk his 
 obligation to his State for the support of her institutions ? 
 A. No. 
 
584 
 
 i 
 
 Q. Now, do you not think there ought to be some thought 
 given to the general subject, because every one on whom 
 the tax is levied is objecting to it? 
 
 A. Surely. 
 
 Q. Do you not think there should be some thought given 
 as to how a general plan can be worked out, just some 
 general plan by which general conditions can be improved ? 
 Because as I understand you, you represent a very large 
 portion of the life of the Commonwealth? 
 
 A. I am speaking for the Manufacturers' Club, which 
 does not include all the manufacturing interests of the 
 City. 
 
 Q. You represent two billions of property to-day ? 
 
 A. Yes. Remember that the manufacturers have large 
 investments upon which they are paying local tax, their 
 factories, they are paying the local tax on that. 
 
 Q. We have exempted their machines and everything 
 except the shell of the building? 
 
 A. The building and the ground is the only thing that 
 is taxed. 
 
 Q. Have you looked into it in other States, what otner 
 States are doing in this direction? I have. There are very 
 few States in the United States that are exempting manu- 
 facturing corporations? 
 
 A. Very few of them. In New York they have a one 
 and one-half mill tax on their product, I believe. There 
 are other States that have only the capital tax. New Jer- 
 sey, one-tenth of 1 per cent., New York one-fifth. 
 
 Q. Is it not a fact that Pennsylvania is the only State 
 in the Union to-day that practically exempts them? 
 
 A. I believe she is. The solution of that question you 
 put to me, I think, would be better solved, rather than 
 placing upon the manufacturers a tax such as was con- 
 templated last year, which was what you may call a mixed 
 tax made up of a tax upon all their liabilities that is, a 
 tax on all moneys they owed, including mortgages, an 
 
585 
 
 ; 
 
 annual tax on that, and I think a fair tax would be a 
 yearly capital tax. That would be the fairest way. 
 
 By Mr. Moyer: 
 Q. Capital stock tax? 
 A. Capital stock tax. 
 
 By a Member of the Committee : 
 
 Q. Do you think a tax of one mill would drive the manu- 
 facturers to other States? 
 
 A. I do not. In speaking for the Manufacturers' Club, 
 I do not know as we could carry the endorsement of that 
 unanimously, but I think we would have a larger number 
 of our manufacturers, if that was decided to be their share 
 of the burden, who would not oppose it. 
 
 Q. That would make it according to that approximately 
 nineteen million dollars? 
 
 A. Yes. The tax bill last year, you may recall, involved 
 practically about 10 per cent, tax upon the capital stock 
 per annum. 
 
 By Mr. Brown : 
 
 Q. The same as you tax a distilling company ten mills? 
 
 A. I am not mixed on it. You had three or four items 
 taxed. You duplicated the tax. It was duplicated three 
 or four times over. 
 
 Q. There were a number of bills presented to the Legis- 
 lature ? 
 
 A. You had one bill there. 
 
 By Mr. Moyer: 
 
 Q. "Whose bill was that, do you recall? 
 
 A. I do not recall it. I have it over at my office. 
 
 By Mr. Brown : 
 
 Q. Have your folks made any effort to gather the senti- 
 ments of the State on the subject, outside of your own in- 
 dividual efforts? 
 
 A. No, we have not. 
 31 
 
586 
 
 By Mr. Moyer: 
 
 Q. What, in your judgment, should be the basis of cor- 
 porate existence? For instance, in granting charters to 
 manufacturing corporations for profit? I want to make 
 myself clear. Of all the letters that have been sent out 
 by this Commission, there has one come to me recently 
 that contained this thought, that the basis of corporate 
 existence should be cheapness of output when delivered to 
 the consumer. What do you think of that? 
 
 A. That would be the basis of their corporate exist- 
 ence? 
 
 Q. Qualification to incorporate by the State of Penn- 
 sylvania ? 
 
 A. Well, that is such an extreme idea that I have not 
 given it any thought. I would not endorse it at the be- 
 ginning. How would you determine it? Who would de- 
 termine it? 
 
 Q. I merely wanted to throw it out for what it was 
 worth. 
 
 A. I never heard of it before. 
 
 Q. And then he goes on to say that the cost if the 
 corporation management shall increase ever so little the 
 cost to the consumer, & receiver should be appointed and 
 the corporation dissolved, and in that way you would solve 
 the question of high living? 
 
 A. Well, I can say frankly I don't believe that idea 
 would be endorsed by the Manufacturers' Club. 
 
 Q. As their representative, I wanted you to express an 
 opinion on that. 
 
 Mr. Dallam : May I ask Mr. Brown a question ? 
 
 Mr. Moyer: Certainly. 
 
 Mr. Dallam: Prof. Thompson asked me last night why 
 New York, with all its tax on manufacturers, was now the 
 largest manufacturing city in the country, and it far out- 
 stripped us. 
 
 Mr. Brown : Do you ask me that question? 
 
587 
 
 Mr. Dallam: Yes. 
 
 Mr. Brown : In answer to that, according to the statistics 
 what makes her the largest manufacturing city, simply 
 a duplication of manufacturers from Philadelphia and 
 other parts of the country. 
 
 Mr. Dallam : They claim not. 
 
 Mr. Brown : And they take credit for the whole of that 
 which is largely manufactured here, or in fact, in some 
 other part of the country and sent there, because she is 
 a great distributing center. 
 
 Mr. Dallam : That was the accusation before the census 
 of 1910. 
 
 Mr. Brown: That is a correct statement, as I gather it 
 You take New York City, we will send goods over there 
 worth $1.50 from Philadelphia. Some little fellow has 
 a shop where he runs thirty or forty small sewing ma- 
 chines. They manufacture that cloth up and he adds to 
 that cloth probably in his labor value to the amount of 
 fifteen or twenty cents, per yard, and he puts that out 
 as his product. That is a duplication. That is what makes 
 New York a great manufacturing State. She does not 
 compare with Pennsylvania in any particular in the basic 
 manufacture where the true value is put into the goods. 
 There is where it comes from, Pennsylvania. 
 
 By Mr. Brown : 
 
 Q. I assume the subject has been considered from the 
 viewpoint of what is beneficial to Pennsylvania ? 
 
 A. Yes, sir. 
 
 Q. Entirely independent of the one of selfishness ? 
 
 A. That is the viewpoint we take. 
 
 Q. The concensus of opinion of manufacturers, as I 
 understand you, is that the subject should be let alone 
 insofar as it applies to manufacturers? 
 
 A. Yes, sir, because it is a broad, deep subject, and when 
 you go back to the bottom of the thing you will find 
 out the manufacturing industries are the bone and sinew 
 
588 
 
 and backbone of all your income in the State of Pennsyl- 
 vania. 
 
 Q. What is your distinction between a store like Lits' 
 and a manufacturer across the street that employes the 
 same number of men ? 
 
 A. Distinction in what way? 
 
 Q. Why should one pay tax and another not, from your 
 standpoint ? 
 
 A. They are not producers. A manufacturer is a pro- 
 ducer and produces your raw material. That place does 
 not produce anything. It is simply a market place where 
 you employ people to stand and sell the wares that are 
 produced. We produce the raw material. 
 
589 
 
 MR. CHARLES S. PRIZER, representing Federal 
 Furnace League, called. 
 
 Mr. Prizer: I come here this morning representing a 
 large manufacturing industry in Philadelphia; also an 
 organization of the manufacturers of warm air furnaces, 
 known as the Federal Furnace League. I am also a mem- 
 ber of the Manufacturers' Club, and speaking for myself 
 personally, I cannot agree with Mr. Brown that I consider 
 that it would be a good or acceptable thing to tax the 
 capital stock of manufacturing corporations one mill or 
 any other rate. I was very much impressed by the re- 
 mark made by counsel during the session this morning 
 to the effect that in considering the subject of taxation 
 for the State of Pennsylvania the whole matter should be 
 considered from the broadest business standpoint, the 
 intimation being, as I understood it, to get down to the 
 fundamental principles which underlie the subject of tax- 
 ation and merely that part of the subject of taxation 
 known as the incidents of taxation. Now, we are opposed 
 to the taxing of manufacturing corporations by the State, 
 because we think that while that tax in itself might be 
 small, in principle it is a wrong thing to do. As has been 
 shown in your meetings previous to this, Pennsylvania 
 has made a greater progress in manufacturing during re- 
 cent years than any other State in the United States. 
 Pennsylvania has the distinction of being one of the few 
 States in the United States which exempts manufacturing 
 corporations from State tax practically. Those two facts, 
 it. seems to me, go together. Personally I am acquainted 
 with several corporations whose offices are in New York 
 and whose plants are in Pennsylvania, and I think in a 
 number of those cases the plants are located in Pennsyl- 
 vania because Pennsylvania is a better place to have a 
 manufacturing plant than some other States. 
 
590 
 
 Now, while a tax on the capital stock, or upon the 
 revenues, or upon the goods of manufacturing corpora- 
 tions, or upon their incomes, would undoubtedly be un- 
 welcome to manufacturers of this State on the principle 
 that every man who is about to be taxed does not wish 
 to be taxed, yet a little thought makes it perfectly plain 
 to us that taxes of that kind are not actually paid by the 
 manufacturers themselves. In computing cost of manu- 
 facturing our goods we count in as one of the primary 
 costs the tax we pay, just as much a part of the cost of the 
 goods as what we pay out for labor. That cost goes to 
 determine the selling price we make upon our goods, and 
 you may be certain that if you tax manufacturing cor- 
 porations in Pennsylvania at higher rates than they are 
 now taxed, or put additional burdens upon them, those 
 taxes will be borne eventually by the consumers of the 
 goods. In fact, I suppose that your investigations thus 
 far have carried you along in the subject of taxation far 
 enough for you to realize that there are a large number 
 of taxes which are not paid by the nominal taxpayer, but 
 are paid by somebody else? 
 
 Now, the vice of taxation upon the manufacturing com- 
 panies is that they cost the community too much. If you 
 levy a tax upon us for five thousand dollars, w T e put it into 
 the primary cost of our goods, and we must have a return 
 upon that investment just the same as we have a return 
 upon every other investment, and we must add to 
 that tax cost our profit, and that tax goes on down to 
 the jobber and the retailer and the consumer, and this tax 
 which has netted to the State $5,000, less its cost of col- 
 lection, costs the citizens of this Commonwealth, who pay 
 it probably seven or eight thousand dollars, and that is 
 the vice of your taxing manufacturing processes or mer- 
 cantile processes. 
 
 By Mr. Moyer: 
 
 Q. How about a tax on the earnings? 
 
 A. A tax on the earnings will be treated in exactly the 
 
591 
 
 same way. If our earnings are taxed, we will put our 
 taxes as of 1909, into our costs accounts for 1910. "We will 
 put our taxes of 1910 into our costs for 1911. 
 
 By Mr. Brown : 
 
 Q. What becomes of the tax on your part that is not 
 strictly pertinent or incidental to the manufacturing busi- 
 ness? Do you keep a separate account of that? 
 
 A. We charge all taxes into our manufacturing ac- 
 counts, or into our commercial accounts. We keep costs 
 in two divisions. 
 
 Q. Suppose, for instance, a corporation owns stocks, 
 bonds, mortgages, and other things that are taxable. Do 
 you mean to say the tax they pay the Commonwealth on 
 those is put into the costs of the sales? 
 
 A. It certainly is. That is, any corporation must charge 
 all those into its costs, including interest. 
 
 Q. That is an incidental on your investment ; you have 
 already made that and set it aside ? 
 
 A. If we own an investment, I withdraw that. Manu- 
 facturing corporations, as a rule, make few investments 
 of that kind. We make none. We own lots of property 
 that we are compelled to take for certain reasons, but 
 get rid of it as soon as possible. We do not own bonds, 
 stocks or securities for the purpose of investment. 
 
 Q. To what do you attribute the location of manufac- 
 turing industries in Pennsylvania not exclusively to the 
 exemption from taxation; there must be other favorable 
 conditions here? 
 
 A. I consider the exemption from taxation a favorable 
 condition towards the tendency to increase the manufac- 
 turing resources of this State. The great resources of this 
 State, of course, are the primary reason for the location 
 of the manufacturing interests in this State. One of the 
 speakers adduced low wages as a reason for locating in 
 this State. My own observation is to the contrary. I do 
 not think manufacturing is most profitably conducted, 
 
592 
 
 taking the United States as a whole, in those sections 
 where wages are lowest, but quite the contrary; and as 
 to your question, I believe the greatest reason for our manu- 
 facturing prosperity, relatively speaking, in Pennsylvania, 
 is the resources of the State in coal and in iron. 
 
 By a Member of the Committee : 
 
 Q. Proximity to raw materials? 
 
 A. Proximity to raw materials is one powerful factor, 
 of course. 
 
 By Mr. Moyer: 
 
 Q. Do you think the exemption from taxation would not 
 weigh in the mind of a man who was seeking to establish 
 a business in Pennsylvania or any other State? 
 
 A. It certainly does, and many small towns that do 
 not give formal exemptions have understandings with 
 manufacturers that they shall treat them generously in 
 the matter of taxation. I know that to be the case in a 
 number of cases where there is no formal provision for 
 exemption; it is a tacit understanding. 
 
 Q. And exemption from the Commonwealth would also 
 add to the sum total of the investment, would it not? 
 
 A. Yes. Now, anything that tends to make manufac- 
 turing more prosperous, or brings more of it into the 
 State, creates a value which you can get in a very much 
 better way for the purposes of taxation than you can by 
 imposing taxes of the kind that have been considered, 
 viz. : tax upon the capital stock of corporations. You in- 
 crease the manufacturing in Pennsylvania and you in- 
 crease the land values of Pennsylvania, real estate values, 
 and create a fund there that is the best in the world to 
 go to for purposes of revenue, in my judgment. 
 
 By Mr. Brown: 
 
 Q. You mean you can more easily lay your hands on it ? 
 
 A. You can more easily lay your hands on it. Not only 
 that, the daily occupations of a people in the State, their 
 
593 
 
 general prosperity, their working and producing together 
 and co-operating, are elements in the value of real estate. 
 When you attempt to tax personal property, you do a 
 thing which is an insult, always, to the underlying common 
 sense of all men. There has been advocated here this morn- 
 ing the taxation of pictures, etc., and all personal prop- 
 erty. Just as though that had not been tried in this world 
 millions of times and always with failure attending it. Up 
 to the present time. I venture to state that attempts to 
 tax people according to their wealth has never yet suc- 
 ceeded. 
 
 Q. By wealth what do you mean ? 
 
 A. According to the individual wealth of the subject 
 of taxation. 
 
 Q. That means money at interest, mortgages and like 
 security a man may have. 
 
 A. If a man is worth $50,000, and you try to get at him 
 to tax that, because he is worth that, I do not care what 
 general form it is in, but the attempt to tax personal prop- 
 erty has always been a failure. 
 
 Q. Suppose I told you that in Pennsylvania one-half of 
 the personal property tax reached is equivalent to one-half 
 the value of real estate in the State, wouldn't you think 
 that a pretty fair result ? 
 
 A. Yes, but I consider it a failure. I consider that it 
 is a fight upon veracity, and it is a bad method of taxing 
 and it is a failure at that. I will lead you to many good 
 citizens in Philadelphia who do not pay upon their 
 personal property fairly, and never will 
 
 By Mr. Mover: 
 
 Q. Who perjure themselves? 
 
 A. You can have it as you will, but that has always 
 been the state of affairs that has followed attempts of that 
 kind. A man buys a piece of furniture or a picture, and 
 feels that the State has no right to go and take part of 
 that value from him, and I agree that that is not the thing 
 for it to do. 
 
694 
 
 Q. But there was, in a part of the gentleman's argu- 
 ment, a clause referring to the taxation of furniture, 
 there was an exemption feature? 
 
 A. Well, what of it? 
 
 Q. Well, I speak of it as 
 
 A. As exempting the man of small means? 
 
 Q. Yes. 
 
 By Mr. Brown : 
 
 Q. Mr. Prizer, as I understand you, you drift back prac- 
 tically to a land tax ? 
 
 A. Well, I don't consider 
 
 Q. I mean exclusive land tax? 
 
 A. A purely land tax I do not consider is a peculiar issue 
 with this Committee or this State at present. I am speak- 
 ing of taxes on real estate. 
 
 Q. We are exempting manufacturing corporations, 
 moneys at interest, personal property; there is nothing 
 left; by the process of elimination you are down to the 
 real estate ? 
 
 A. I consider that the fairest possible tax, and I con- 
 sider that if we raise every dollar of our local county and 
 State revenues from a tax upon real estate, we would tax 
 the people of Pennsylvania more justly and fairly than 
 we tax them under the present system or under the varia- 
 tions that have been proposed here to-day. We would 
 reach them more fairly, because a tax upon real estate 
 would be distributed. Nobody lives without using some loca- 
 tion, and every man pays and contributes his part to 
 a real estate tax, and I think when you work it out with a 
 fairness that is absent from attempts to tax people upon 
 all kinds of property the current idea among many people 
 is that every man should pay according to what he is 
 worth; this has never been accomplished and it is not 
 fair ; if it could be accomplished, and men who by industry 
 and thrift accumulate a little fortune ought not to be 
 fined by the State for doing that, but the real estate tax 
 is an entirely different proposition. 
 
595 
 
 Q. Supposing a farmer, by industry and thrift, takes a 
 farm worth ten dollars an acre and makes it worth $150 
 an acre. You think he ought to be taxed for his industry 
 and thrift? 
 
 A. Well, if you come down to that, I don't think he ought 
 to be taxed. 
 
 Q. If you are going to tax him on the original value, 
 how do you distinguish between the natural value of real 
 estate and what might be called social value, that is, value 
 that has been contributed by the community and with 
 which the OAvner has had nothing to do ? 
 
 A. That question answers itself. You have stated the 
 two kinds of value, one of social value and the other an 
 improvement value, contributed by the owner or occupier. 
 
 Q. You would not tax him for that? 
 
 A. Well, if I personally had my own way, I would not tax 
 him on the things he has placed there by his industry and 
 thrift; but to answer your question directly, it is simply 
 a matter of assessment. The City of New York assesses 
 the social value of land, as you have termed it, separately 
 from the value of improvements, and it may be interesting 
 I do not know whether it has been stated here before 
 for you to know that the value of their land inside of 
 Greater New York, the assessed valuation is greater than 
 the assessed value of the whole of the real estate of Penn- 
 sylvania. Some gentleman referred to the alleged fact 
 that New York City was a much greater manufacturing 
 city than Philadelphia, but it is not, in proportion to 
 population. Even taking the explanation given by Mr. 
 Brown, in proportion to population Philadelphia is a much 
 greater manufacturing city than New York City is, but 
 there is no difficulty in distinguishing between those values. 
 Of course, these are fundamental matters. No manufac- 
 turer or no citizen of Pennsylvania, who has given any 
 thought to the subject of taxation, expects this Committee 
 to map out some ideal system of taxation and follow it; 
 but it does seem to me that the Committee should con- 
 
596 
 
 sider the general principles that underlie taxation and 
 should bend their efforts in the direction of those methods 
 rather than the other way, and these discussions which 
 have arisen can, I think, be useful, and it is very gratifying 
 to see that this Committee is disposed to study the fun- 
 damental principles of taxation. 
 
597 
 
 C. STUART PATTERSON, ESQ., President, Western 
 Savings Fund Society, called : 
 
 Mr. Patterson: I desire to say I am not appearing 
 here on my own notion. I am here because I received a 
 very courteous letter from the Vice- Chairman, asking me 
 to come, and therefore I at once responded, and I am 
 ready to answer any questions that may be asked me. 
 
 By Mr. Brown : 
 
 Q. Mr. Patterson, I presume your Board has given some 
 serious thought to the general law of Pennsylvania regu- 
 lating yours and similar institutions? 
 
 A. Yes, sir. 
 
 Q. Have you any suggestions to make as to the amend- 
 ment of those laws? I am referring to the formation and 
 regulation, independent of the question of revenue? 
 
 A. No. I think that we have emple legislation in this State 
 on the subject of savings funds. The older savings funds 
 are organized under charters which carefully define the 
 powers of the Board, and then there is, as you know, a 
 later savings fund statute providing for the general or- 
 ganization under that statute, with carefully guarded pro- 
 visions with regard to the limits of investment. I do not 
 think I have any suggestion to make on that subject. 
 
 Q. Coming down to the question of revenue, it has been 
 suggested in one of our earlier meetings that the State 
 was not receiving proper revenue from money deposited 
 with your institutions; in other words, that thousands 
 evade the tax. I refer now to deposits that are represented 
 especially by certificates of deposit ? 
 
 A. Well, we issue no certificates of deposit, and the 
 same thing applies with regard to all the other savings 
 funds not having capital stock, and we also limit the amount 
 of deposits that may be made during a given time. Our 
 
698 
 
 general rule is that more than a thousand dollars can not 
 be deposited by one depositor in the course of a year, 
 and that rule is pretty rigidly adhered to. There are 
 cases, of course, of widows, and people who do not know 
 how they ought to invest their money, who are occasionally 
 allowed to put in sums a little in excess of that. We have 
 in the "Western Savings Fund 54,822 depositors, with 
 $25,894,000 on depositors, and the a^ erage credit to the de- 
 positor is $460.50, and 23,442 depositors have less than 
 $100 to their credit; and the same thing is very nearly 
 true of the other savings funds. There are in Pennsyl- 
 vania nine savings funds without capital stock. All the 
 assets are held in trust for the depositors, and the direc- 
 tors receive no compensation for their services, and they 
 give a great deal of time to it. 
 
 Q. Have you made any return of the average amount 
 of deposits to-day, say a thousand, how many would be in 
 that class? 
 
 A. "We report to every session of the Legislature detailed 
 statements on that subject, and I would be very glad to 
 furnish to the Committee a copy of our last report. In 
 fact, we not only make it to every session of the Legis- 
 lature, but we forward it annually to Harrisburg, and I 
 will take pleasure in sending that to the Committee. 
 
 Q. "What is the opinion of your Board as to the wisdom 
 of taxing those depositors a four mills tax ? 
 
 A. I think it would be a very great mistake. The ob- 
 ject of the whole savings fund system is to encourage 
 thrift, to induce wage-earners to put aside something for 
 the rainy day, and thereby to acquire a stake in the com- 
 munity, and to make themselves better citizens. I will 
 undertake to say that in the crowds that have been roam- 
 ing the streets, more especially in the northern part of 
 the City, the last few days, assaulting property and firing 
 upon the police, you could not find one savings fund de- 
 positor. 
 
 Q. Is your opinion the same for those who have large 
 
599 
 
 sums on deposit? I do not mean as to the last remark, 
 but I mean as to exemption from taxation? 
 
 A. Well, of course 
 
 Q. Say the one who has $10,000? 
 
 A. Wherever a man is using the savings fund as a means 
 for investment it would be very desirable that they should 
 be reached for taxation, but I do not see how you are 
 going to make a discrimination of that sort, and the cases 
 are so rare and the amounts are so small, generally speak- 
 ing, that I think the effect of taxing as money at interest 
 sums on deposit in the savings funds would be very bad. 
 In the first place, you have got to deal with an enormous 
 number of individuals if you are going to do that thing. 
 In Pennsylvania, to-day, there are nine savings funds 
 without any capital stock, and their depositors numbered 
 on the first of January 450,521. 
 
 Q. And their aggregate deposits were how much? 
 
 A. The aggregate deposit in all the savings funds was 
 $170,000,000. 
 
 Q. That practically pays no tax, unless the individual 
 depositor chooses to return it? 
 
 A. Remember, that the savings funds pay now under the 
 existing law 3 per cent, on their net income. 
 
 Q. I do not mean them, I mean the depositors? 
 
 A. The depositor himself pays no tax upon that at all. 
 
 By a Member of the Committee : 
 
 Q. Their money invested in securities and bonds and 
 things of that kind pays the tax ? 
 
 A. Of course, the institution pays the tax. 
 
 By Mr. Moyer : 
 
 Q. Provided they make a return thereof? 
 
 A. The individual depositors pay no tax at all. The 
 institution pays. 
 
 By Mr. Brown: 
 
 Q. The law contemplates they should pay a tax on 
 
600 
 
 their deposits. The law contemplates, I assume, all money 
 at interest should pay a tax ? 
 
 A. I never have believed the existing law contemplates 
 it. I do not think that money on deposit at a bank, evi- 
 denced solely by a credit on the books of the bank and by 
 a credit upon the depositor's pass book, is within the 
 contemplation of the statute money at interest. 
 
 Q. Notwithstanding it does bear interest at a fixed 
 sum? 
 
 A. Notwithstanding it does bear interest at a fixed 
 sum, a sum that may be changed from year to year. 
 
 Q. Do you think that because they have the return of 
 the savings fund 
 
 A. I think the tax which the savings fund pays and 
 which a National or State bank pays upon its deposits 
 covers that. 
 
 Q. Have you given any thought to the Act of May 1, 
 1909? 
 
 A. Yes, I have given a great deal of thought to it. I 
 had the honor of appearing in support of that bill be- 
 fore the Committee of the House of Representatives when 
 the bill was under consideration, and I also had the 
 honor of appearing before the Governor in support of :t. 
 I gave a great deal of thought to it, and the argument 
 in support of it, and which convinced the Governor and 
 the Committee, and also convinced the Senate, was this 
 that deposits in savings funds without capital stock ought 
 to be encouraged by the State. Anything which induces 
 a wage earner to save money is of benefit, not only to him, 
 but of benefit also to the State. It makes him a better and 
 more useful citizen. Then I drew the attention of the 
 Committee and the Governor to the fact that under the 
 then existing law trust companies and savings funds with 
 capital stock paid very much less pro rata tax than savings 
 funds without capital stock. Savings funds without 
 capital stock then paid a tax of four mills on their in- 
 vestment and other investments in the bonds of com- 
 
601 
 
 panics paying a capital share tax to the State, and they 
 also paid the 3 per cent, earnings tax, and I gathered 
 a discrimination from the last report of the banking 
 department. There is a savings bank with a relatively 
 small capital stock, upon which dividends aggregating 
 100 per cent, for the year 1907 were paid to the share- 
 holders. Under the then legislation that corporation could 
 have elected and it could now elect to pay in lieu of all 
 other taxes ten mills on its capital stock amounting to 
 $102. Assuming that any other savings bank having no 
 capital stock had exactly the same line of deposits and 
 the same line of investments, the savings banks without 
 capital stock would pay $4,574.31 for the four-mill tax, 
 and in addition thereto a tax of 3 per cent, upon its net 
 earnings, whatever those net earnings might amount to. 
 There was a concrete instance of injustice. Then atten- 
 tion was also called to the fact that the savings de- 
 positors ought to be put upon exactly the same plane as 
 building and loan investors. They are investments of the 
 wage-earning classes in the same way and looked at in the 
 same way, and then we will have taxation on savings 
 banks. Those were the considerations which induced the 
 Legislature to pass that Act of 1909, and which induced 
 the Governor to sign it. 
 
 Q. Supposing the Beading Eailroad were to issue 
 twenty-five millions of bonds and say nothing in the bonds, 
 or in the resolution authorizing the issue of the bonds, 
 about the tax, and they would be bought by your savings 
 fund ; who would pay any tax ? 
 
 A. Well, under the law of 1909 we would not pay any 
 four-mill tax on that. 
 
 Q. And the railroad would not, either ; who would pay 
 the tax? 
 
 A. I wasn't looking at it from the point of the rail- 
 road. 
 
 Q. I draw your attention especially to this Act? 
 
 A. I think you will find, Mr. Brown, a provision that 
 was put in to meet that very question. 
 
602 
 
 Q. There was a provision put in, but it was put in 
 against my judgment at the time and I have never seen 
 any reason to change it. That is the reason I am calling 
 your attention especially to it. As I understood the Act 
 in this specific instance, unless the Company agrees to 
 issue them clear and free, or agrees to pay it, there is no 
 liability on anybody. The word ''amendment" is used 
 in the Act. If they simply issue the bonds and say 
 nothing about the tax, then nobody pays it? 
 
 A. I have a very distinct recollection that that was put 
 in in that way at the express request of the Auditor Gen- 
 eral of the Commonwealth. 
 
 Q. The Attorney General ? 
 
 A. The Auditor General, I think. I know they for- 
 mulated it. They spoke to me about it and I said I 
 thought it ought to be put in so the State would get its 
 tax out of somebody. 
 
 Q. Your thought is in such an instance as I have given 
 that the company or the fund should pay the tax? 
 
 A. I think they should. I think that is fair. I do not 
 think the savings fund ought to pay it. 
 
 Q. It ought to be paid to the State? 
 
 A. Yes. 
 
 By a Member of the Committee : 
 
 Q. You are interested in a great many different lines 
 of large enterprises giving attention to the matter of 
 revenues and things of that kind, and I would like to 
 know, and I think the Commission would like to hear 
 from you, some expression regarding the tendency of the 
 Federal Government to get more close direct taxation, to 
 a certain extent invading the prerogatives of the State. 
 I would like to hear your views on that matter? 
 
 A. I am very willing to talk frankly on that subject. 
 I believe firmly that the Government of the United States 
 is exactly that which the Supreme Court characterized it, 
 it is an indestructible union of indestructible States, and 
 
603 
 
 I believe the States are just as important as the Union of 
 the States. I think nothing could be more dangerous than 
 to break down the State Governments, and I believe firmly 
 that if Federal aggrandizement goes on as it has been 
 going on of late years, our danger will be that of cen- 
 tralization. I think the framers of the Constitution clearly 
 intended that the General Government should have re- 
 course to indirect taxation, and that the States should 
 have the field of direct taxation, only to be invaded in 
 cases of absolute necessity. I think every lawyer will 
 agree on that proposition. Now, the income tax amend- 
 ment in its present shape is certainly open to the objec- 
 tion that was so forcibly put by the Governor of New 
 York. If that amendment is adopted as it has been sent 
 to the States it necessarily will empower Congress to tax 
 incomes derived from bonds issued by States, and bonds 
 issued by sub-divisions of States, and I think the effect 
 of that would be very bad. Now, the income tax of itself 
 and exactly the same remark is applicable to the four-mill 
 tax in this State, the personal property tax the income 
 tax in itself is an unequal and unjust tax, and any tax 
 is unequal and unjust which depends upon a return to be 
 made by the individual taxpayer. Every man in this 
 room knows that all men are not equal in honesty and 
 in truthfulness, and it is certainly a fact that under every 
 income tax and every personal property tax wherever 
 imposed there is a necessary inequality of burden-bearing 
 against the man who makes an honest and truthful return, 
 and I think that a much better practical result will be 
 obtained by imposing a tax otherwise. I have always be- 
 lieved that the policy of Pennsylvania in taxing profit- 
 earning corporations was a very sound policy. I think 
 that when men combine together under a corporate or- 
 ganization they get certain practical results therefrom 
 which are of great value to them. They get, in the first 
 place, a security in the shape of shares which are readily 
 transferable, very much more transferable than an >n- 
 
604 
 
 terest in a partnership; they get exemptions from in- 
 dividual and personal liability, and they get, in the third 
 place, the privilege at death of passing under their will 
 something which can be readily transferred without that 
 necessity which exists in the case of partnership accounts. 
 I think, therefore, that every corporation ought to pay 
 to the State for those privileges. 
 
 By Mr. Moyer: 
 
 Q. Including manufacturing corporations? 
 
 A. Yes, I think I don't think manufacturing 
 
 corporations ought to be absolutely exempt. They get 
 those valuable privileges. 
 
 By Mr. Brown : 
 
 Q. In arriving at the value of a corporation's stock to- 
 day we are supposed to include all assets. What is your 
 thought upon the subject of taxing or levying a tax on 
 all the assets of a corporation? 
 
 A. I think the ideal way of doing that would be this 
 way, and it is a plan which has received the approval 
 of the Supreme Court of the United States, I think, in two, 
 and I think in three different cases. If you take the 
 total value of the capital stock, you add to that the par 
 value of the Company's bonds and other liabilities; you 
 then get at that which represents all the property of the 
 corporation, and then in order to guard against double 
 taxation, you deduct investments in the shares of other cor- 
 porations paying a tax to the State, and if you deduct 
 investments in patent rights, which under the law you 
 cannot touch, I think you would then get at the fair value 
 of the corporate property in the easiest possible way. 
 
 Q. And you would in doing that exempt local property, 
 local real estate, from State taxation, and let the counties 
 collect that? 
 
 A. Well, you have got to keep a revenue for the 
 counties, and that is another deduction that ought to be 
 made. You are perfectly right. That deduction ought to 
 
605 
 
 be made, because the real estate under a well-settled policy 
 of the State pays a tax to the county. 
 
 Q. You were speaking about your objection to the per- 
 sonal property tax on account of the failure of the taxable 
 to return it ? 
 
 A. Yes, sir. 
 
 Q. Suppose, for instance, we take certificates of de- 
 deposit returned by the corporation itself; we would re- 
 lieve the taxable from that? 
 
 A. The tax is not open to the objection that I have stated 
 wherever you can tax it at its source, but the objection 
 I have is to taxation based upon a return to be made 
 by the individual. 
 
 Q. Not an objection to the taxing of the thing, but 
 the way it is taxed? 
 
 A. No, the way in which it is done. 
 
 Q. While we have you here, we do not want to impose 
 upon you, but we would like to have your thought on the 
 subject of the appropriation of the State's money for 
 institutions ; have you given that much thought ? 
 
 A. Yes, I have given a good deal of thought to that, a 
 great many years ago, and my views are pretty radical 
 upon that subject. I have always been of the opinion 
 that the State of Pennsylvania ought not to appropriate 
 one dollar to any institution that is not absolutely and 
 entirely controlled by the State. I do not think the 
 State has any right to take the money of the taxpayers 
 and give it to institutions, however meritorious, which 
 are not public institutions. 
 
 Q. Are you prompted to that opinion simply from a 
 legal standpoint or from your experience? 
 A. Oh, no, not from a legal standpoint in any way. 
 
 Q. The State, of course, you assume has the right to do 
 it? 
 
 A. The State has unquestionably a legal right to do it. 
 You know in the Constitutional Convention of 73 the 
 
606 
 
 subject was under consideration and there was a very 
 earnest effort made there to take the power away from the 
 Legislature, and the argument which prevailed was that 
 these institutions are relieving the State by performing a 
 duty which otherwise the State itself would have to per- 
 form. 
 
 Q. The Committee has had several letters from differ- 
 ent sections of the State advocating the issuing of State 
 bonds. Of course, it would require an amendment to the 
 Constitution, for the building of highways and other State 
 improvements, rather than collecting it by current revenue 
 control. What is your thought on that? 
 
 A. I should be very sorry, indeed, to see the State issue 
 those bonds. I do not believe in incurring a capital 
 liability on the part of the State, wherever it is possible 
 to do it by the sub-divisions of the State that are more 
 immediately and directly benefited. 
 
 Q. Even though it may be for a permanent improve- 
 ment? 
 
 A. Even though it may be for a permanent improve- 
 ment. 
 
 Recess until 2.30 P. M. 
 
607 
 
 Philada., Ta., Feb. 25, 1910. 
 The session was re-convened at 2.30 P. M. 
 
 ME. J. M. WILCOX, representing the Philadelphia 
 Saving Fund Society, was called. 
 
 Mr. Wilcox : Mr. Chairman and Gentlemen of the Com- 
 mission : I am here in much the same position as was Mr. 
 Patterson, at the invitation of the Commission. I will be 
 very glad to answer any questions you wish to propound. 
 
 Mr. Brown : Mr. "Wilcox, you heard what Mr. Patterson 
 said before the Commission this morning about the taxing 
 of deposits. Have your folks given any thought to the 
 taxing of the deposits of your depositors ? 
 
 Mr. Wilcox : Well, yes ; but it has never been discussed 
 by the Board. Personally, I have always been under the 
 impression that saving fund deposits were subject to 
 taxation. 
 
 Mr. Brown : Do you know whether or not your depositors 
 have returned these deposits for taxation? 
 
 A. That I don't know. Some may have been returned 
 to us; but I imagine a vast number of depositors have 
 not returned them, because that is probably all they have. 
 
 Q. What would be the objection of the saving fund itself 
 returning these say, taking the average for the year, 
 and then paying in a lump sum to the State the four mills 
 tax on your deposits drawing interest? 
 
 A. Well, there would be the objection on the part of 
 a general policy to not disclose anything about our business 
 or the business of our depositors ; and the same argument 
 would apply to that as has applied to the exemption of 
 the four mills tax; it would so hinder us that we would 
 be very much confined in our investing. That was the 
 main reason on which the four mills exemption was 
 
608 
 
 granted, apart from the consideration that the class of 
 people who use a saving fund are the people that you need 
 to increase thrift, and a great amount of them have their 
 all in the saving fund. 
 
 Q. What is the amount of your deposits? 
 A. Something over ninety-five millions now. 
 
 Q. Do you carry a surplus? 
 A. Yes, about nine millions. 
 
 Q. What is the object of the surplus ? 
 
 A. Simply to fortify the institution in case of trouble. 
 
 By a Member of the Commission : 
 
 Q. Against loss in investments? 
 A. Yes. 
 
 By Mr. Brown : 
 
 Q. What is the average of your annual deposits? 
 A. The average of our deposits at the beginning of this 
 year was $358.70. 
 
 Q. That is the average annually? 
 
 A. Yes, sir; distributed among over two hundred and 
 sixty-five thousand accounts. 
 
 Q. Have you any suggestions to make as to any in- 
 adequacy in the present laws? 
 
 A. No. We think when the last Legislature exempted 
 us from the payment of the four mills tax, it did all we 
 could ask. 
 
 Q. What does this exemption of the four mills tax save 
 you annually? 
 
 A. The last tax we paid amounted to between sixty and 
 seventy thousand a year. 
 
 By the Chairman : 
 
 Q. What had you paid prior to that? 
 A. It varied from sixty to seventy thousand. It all 
 depended on the character of investments. 
 
609 
 
 By Mr. Brown : 
 
 Q. That exemption has gone to the benefit of whom, Mr. 
 Wilcox? 
 
 A. To the benefit of the depositors, because we were 
 enabled to put up the rate of interest payable to depositors. 
 Within the last four years we put the rate up from 3 to 
 3.65 per cent. 
 
 Q. Did you make any increase after the exemption of 
 this tax? 
 
 A. We made an increase, January 1, 1909, from three 
 fifty to three sixty-five. 
 
 Q. You heard Mr. Patterson's remarks relative to the 
 Act of May, 1909. Do you place the same construction 
 upon that Act as he does? 
 
 A. I am not sure I understand Mr. Patterson's construc- 
 tion of the Act. My understanding is that under the Act 
 of 1885 it was made the duty of the treasurers of private 
 corporations to deduct the tax in cases where interest is 
 paid to residents. Of course, they never have done it in 
 cases of non-residents. The Act of 1909 applies to us in 
 the same clause not as non-residents, but simply on 
 the broad ground of general policy, as residents but we 
 do not have to pay the tax. It seems it is a matter of 
 personal opinion whether the Act of 1885 applies to cor- 
 porations like a railroad company whether they should 
 compute the interest and deduct the tax. Of course, I 
 really don't see the object of putting that clause in the 
 Act of 1909, unless it was meant by implication to exempt 
 them 
 
 Q. Your society has not taken the position that they 
 can invest in bonds irrespective of the tax? 
 A. We do not consider the tax, no. 
 
 Q. You don't see any advantage in buying taxless 
 bonds? 
 
 A. No. It was not in order that we would be enabled 
 to buy some of the various bonds issued by municipalities 
 32 
 
610 
 
 of this Commonwealth which were not taxables that it 
 was necessary to get the exemption, but that we were prac- 
 tically precluded from buying these bonds. All that Mr. 
 Patterson has said about the property or advisability of 
 the exemption of saving fund deposits from the four mill 
 tax I think we would heartily endorse on general prin- 
 ciple; not because we wish to avoid the tax, but it is 
 just a question as to whether it is not advisable to en- 
 courage thrift. 
 
 Q. Who are your largest depositors, Mr. Wilcox? 
 
 A. Our deposits run this way: According to a state- 
 ment given out the first of January, 1908 but I have 
 some data here (reads) : We had two hundred and sixty 
 five thousand accounts. Those of one thousand dollars 
 and over amounted to 14,987 at the end of 1909; two 
 thousand dollars and over, 3,752; three thousand dollars 
 and over, 1,467; four thousand, 601; five thousand, 316; 
 six thousand, 146 ; seven thousand, 81 ; eight thousand, 45 ; 
 nine thousand, 41 ; ten thousand, 27 ; ten thousand is the 
 limit of deposit that anyone can make in the in- 
 stitution. That is by a resolution of the Board. Under 
 our charter we are not allowed to take more than five 
 hundred dollars from any one individual in any one year ; 
 so that, to accumulate a fund of ten thousand dollars 
 would take somewhere between nineteen and twenty years, 
 owing to the accumulation of interest. 
 
 Q. Do these accounts over two thousand dollars repre- 
 sent what might be termed the poorer class ? 
 
 A. There are 3,752 of two thousand and over. 
 
 Q. Whom do they represent? 
 
 A. It would be hard to say. I think many of them 
 belong to the housekeeping class some who take in 
 boarders. Many are women depositors and a number are 
 well-to-do people. The latter would come in the higher 
 classes, say seven, eight, nine and ten thousand dollars. 
 Most people when they get a deposit amount to five hun- 
 dred dollars or over draw it out to get better investments. 
 That is always our advice to them. 
 
611 
 
 Q. Your object is the promotion of thrift? 
 A. Yes. We would rather confine our business to the 
 poor people who need a saving fund. 
 
 Q. What amount has your society received in the way 
 of unclaimed deposits? 
 
 A. Since the formation of our ' society we have paid 
 over to the State somewhere between thirty and forty 
 thousand dollars in unclaimed deposits, although there is 
 a general impression that we have a vast accumulated 
 fund there. 
 
 Q. Yes, I remember the litigation you had. 
 
 A. Under the law, we pay over to the State every year 
 all deposits unclaimed for the preceding thirty years. Of 
 course, we are getting in a larger class of depositors all 
 the time. As soon as ten years elapse we begin a system- 
 atic search in order to locate our depositors. 
 
 Q. As I understand it, you advertise for the depositors? 
 A. Not only that, but we employ counsel to make 
 searches and hunt up clues to locate our depositors. 
 
 Q. Is that observed by other similar institutions ? 
 A. I think so, but I do not think it is to the extent that 
 we do. 
 
 By the Chairman: 
 
 Q. Of the sixty or seventy thousand dollars saved an- 
 nually by the exemption of the four mills tax, what per 
 cent, reverts to the benefit of the depositors ? 
 
 A. You might say all of it. It was not so much to us 
 at one time as it is now, when it is of value to us for in- 
 vestment, or when it was, when, in very exceptional cases, 
 we could go out of the City and buy outside securities. In 
 looking ahead, we saw that in ten or eleven years a great 
 many very high rate securities would be paid for; they 
 would mature, and we would either have to take a new 
 bonus at a very much higher rate or take the money and 
 reinvest it. It was a great deal easier when we were 
 exempted by the Legislature, because we could give our 
 
612 
 
 depositors 3.65; and we don't see why we cannot be 
 exempted indefinitely. 
 
 By Mr. Brown: 
 
 Q. Has the Commission any more questions? 
 
 The Chairman: 
 A. No, sir. 
 
613 
 
 GEORGE STEVENSON, of the Private Bankers' Associa- 
 tion, spoke as follows: 
 
 Mr. Chairman and Gentlemen of the Commission: As 
 was stated this morning by one of the gentlemen who 
 spoke, I am not here to ask for any exemption on account 
 of the private bankers and brokers, but simply to ask 
 that they be treated exactly as all other business men are 
 treated. While I represent in my authority simply the 
 Private Bankers' and Brokers' Association of Philadel- 
 phia, having no delegated authority from anybody else 
 outside of the City, I have been on this question for our 
 people here so long that I am sure our interests are all 
 one. 
 
 The bankers and brokers have for years been singled 
 out by legislative enactments for special taxation, to 
 which any of our unincorporated private brokerages have 
 been subjected. 
 
 At one time there were on the statue books five differ- 
 ent acts of the Legislature which made us liable to pay 
 about 12 per cent, income tax after we had taken out our 
 licenses. 
 
 The Act of 1841 classified a license tax of $100 on us 
 as bankers and as exchange brokers. As you know, the 
 business of a broker and the business of a private banker 
 can hardly be separated. We then had to pay a 3 per 
 cent, tax at the beginning of the year in the matter of 
 licenses under the Act of 1850. The assessors, in order 
 to get at it, would figure on the amount we made the 
 year before ; and every year we would have to go to them 
 and tell them that, if they would guarantee us that we 
 would make the same money in the present year that 
 we did in the last year, we would not hesitate to pay it, 
 but that we did not think it was right for us to be com- 
 pelled to pay the 3 per cent, for the coming year, because 
 
614 
 
 we might die; but they enforced that, although they did 
 not enforce it to the fullest extent. 
 
 Then there were the Acts of 1861, 1868 and 1879, all 
 of which required us to make a sworn statement to the 
 Auditor General and pay 3 per cent, of our net income. 
 The first acts existing were either repealed or changed. 
 The Act of 1868 added something to the list of those who 
 were taxable and the Act of '89 added some more. 
 
 We had these questions up several years ago before a 
 committee in the House of Representatives, and also at 
 another time when it met in the Senate chamber, and 
 also again before a Tax Commission that was formed here 
 and of which Mr. Patterson was one of the members. In 
 all these cases, both before the Committee of the House 
 and the Tax Commission, this was cited as an injustice; 
 and in all these cases they incorporated in their report 
 a paragraph which was intended to relieve us of these. 
 The Tax Commission passed an Act suggesting that, so far 
 as we were concerned, we should pay a tax for license at 
 the commencement of the year, and that we should pay 
 no other tax. That passed the House of Representatives 
 and it finally passed the Senate. Eventually, after 
 working a number of years, we secured the repeal of the 
 license tax of four mills, but we now pay, under the 
 Act of 1907, a graded license tax of five, ten, fifteen, 
 twenty up to one hundred dollars. Now, we have to 
 pay this income tax, which nobody else pays in the State 
 except ourselves, but they did make it 1 per cent, upon 
 our gross. Now, today, we are paying a license tax the 
 same as everybody else, but we are also compelled to pay 
 a tax of 1 per cent, on our gross receipts. I think it is 
 very unjust that we should have to do it when nobody 
 else does. No sooner is the return made than it is spread 
 out in the newspapers, which, you can understand, is a 
 very serious thing for the business, more especially if each 
 year is better than the year before. Then, in addition to 
 that, within the last four or five years we have had to 
 
615 
 
 make a return of our personal property. So, if the per- 
 sonal property tax, the four mills tax on money at 
 interest, and the others are enforced, there is no question 
 but what we would have to close up shop, simply because, 
 as you are aware, the four mills tax is from 8 to 10 per 
 cent, income tax on our money coming in, while the rate 
 for money is from 4 to 5 per cent. In our business our 
 earnings are largely from money at interest, and it comes 
 from money at interest largely which is not our own. It 
 would be impossible for us to resume the return. It 
 might at some time of the year catch us with a large 
 amount of securities passing through our hands on which 
 we may not have had interest for more than twenty-four 
 years. Now, if that was the time we had to make the 
 return, we would have to pay the four mills tax. 
 
 I had these questions up before and I propounded them 
 to persons whom I thought might assist me, but they 
 all said they could not answer the questions. 
 
 Take a case like this : Take a man with $100,000 capital 
 in his business. If he borrows $300,000 from someone to 
 loan to somebody, he has to pay the four mills tax on 
 the $300,000, when he only owns but $100,000. The 
 comparison could be made much wider than that. There 
 are a great many questions I could propound to you. The 
 nature of our business is such that all, or a very large 
 amount, of our profits come from money which we loan, 
 and if we have to pay the four mill tax that is more than 
 the profit on the whole thing. With these taxes, the rates 
 for money and the rates for loans being low, after we take 
 out our expenses there is nothing left. 
 
 It seems to me that the Legislature should class us the 
 same as everybody else, making us pay a license tax, but 
 not compel us to pay taxes that nobody else is required 
 to pay. This is the burden of our argument. 
 
 By Mr. Brown: 
 
 Q. What has been the cause of the addition of this tax 
 upon your class? 
 
616 
 
 A. The first tax? 
 
 Q. All of them. 
 
 A. The first tax was passed away back about forty 
 years ago, I think. I can see no reason tor it. I have 
 heard reasons suggested, but I cannot say. There was a 
 suit brought about forty years ago before the Supreme 
 Court to have it set aside, but I believe the decision was 
 against us and we have had to pay it ever since. The 
 reason for the enforcement of the four mills tax against 
 us in the last year arose out of a decision of the Supreme 
 Court in a very peculiar case; but, of course, it would 
 be very unwise for me to question the decision of the 
 Supreme Court. There was a case where a banker had 
 a ten thousand dollar mortgage at 5 per cent, and sought 
 to be excused from payment of the four mills tax because 
 he paid a 3 per cent, income tax. The Court made the 
 argument that the four mills tax was forty dollars, while 
 the 3 per cent, income tax would amount to one dollar and 
 fifty cents. I believe they had the privilege of carrying 
 it to the Supreme Court, and it was argued that where 
 a man had a mortgage of ten thousand dollars and re- 
 ceived five hundred dollars, he should pay forty dollars. 
 What he objected to was that he paid not only 3 per cent, 
 on that, but 3 per cent, on every cent he made. That 
 was the reason it was enforced. 
 
617 
 
 MR. J. HAMPTON BARNES spoke as follows, under 
 interrogatory of Mr. Brown: 
 
 Q. Do you think the tax on trust companies today 
 is as heavy as it should be, Mr. Barnes? 
 
 A. Yes, sir. 
 
 Q. What about the trust companies that are earning 
 3 per cent, dividends. Do you think the State would be 
 justified in levying additional tax upon trust companies, 
 assuming that they could or are able to earn dividends 
 of that size? 
 
 A. As I understand it, the basis of the taxation is the 
 property owner, and that is the business on which the 
 trust companies are now taxed. 
 
 Q. What is your thought on the return by the com- 
 panies of the deposits for which certificates have been 
 issued so as to secure the payment of the tax? 
 
 A. There are practically no certificates issued now. 
 The deposits of a trust company are payable on demand 
 and not on time. They have the same relation to the 
 depositor that his bank book has merely a form showing 
 that he has placed money in the hands of others who 
 are accountable to him. 
 
 Q. That is an evidence of money bearing interest? 
 
 A. No more than a bank book is. 
 
 Q. Why should not such money at interest be taxed 
 just the same as money that is invested in a mortgage? 
 
 A. That is a question I cannot discuss. The usual 
 answer is that it is current money and not money invested. 
 One's bank account is subject to draft, and it may belong 
 to you or it may belong to the depositor, or it may be 
 money for which he is accountable to others, and he could 
 not be said to own any property in the sense that it should 
 be taxed. 
 33 
 
618 
 
 Q. There seems to be a general complaint in the City 
 that on money at interest some want two weeks time when 
 they ought to pay it right away. That is what we are 
 trying to ascertain whether or not that could be effec- 
 tively and fairly done? 
 
 A. Your rate advances and creates principal nearly 
 always, and until the balance is found you could not say 
 what represented the property of the hundreds of per- 
 sons. 
 
 Q. Why couldn't the company return the average de- 
 posit to him and then deduct the tax before paying him 
 the interest? 
 
 A. It might be so with an individual who kept up 
 his personal account and did not carry on a business. If 
 he made collections and deposits from time to time, it 
 would only be the difference between his tranactions, or, 
 in other words, his profits, which would represent some- 
 thing that should be taxed. 
 
 Q. Is there any difference in saving fund deposits and 
 those of a trust company? 
 
 A. I am not very familiar with saving fund organiza- 
 tions. 
 
 Q. We would be very glad to hear any thought you 
 may have on the subject. 
 
 A. I have none that I think would be of value to you. 
 
 By the Chairman: 
 
 Q. Mr. Barnes, I understand you are a lawyer? 
 A. Yes, sir. 
 
 Q. You are called upon in your capacity to make up 
 the reports for the tax year? 
 A. Yes, sir. 
 
 Q. Would you find it more advantageous to have that 
 report made up at the close of the year and have it close 
 the 31st of December, instead of the beginning of No- 
 vember? 
 
619 
 
 A. Yes, it would be more advantageous to have the 
 fiscal year end with the tax year. 
 
 Q. So that the treasurers of corporations would be 
 better able to ascertain the profits for the year, when 
 closing December 31, than they could otherwise, because 
 many corporations have their business close on the 31st 
 on December? 
 
 A. That is true. 
 
 Q. Then you think that would be a commendable 
 change in the law? 
 
 A. 1 think so. 
 
620 
 
 MR. HENRY B. BARTOW, of the Farmers' and 
 Merchants' Bank, called. 
 
 By Mr. Brown: 
 
 Q. Is there any thought you have as to any changes 
 in the laws. 
 
 A. I don't think it would be practical to tax certificates 
 of deposit. They are in and out and bearing interest 
 at the same time and the depositor can come in and take 
 the money out and invest it, and that money should not 
 be taxable. 
 
 Q. Are there many of these deposits in your bank? 
 
 A. "We have fourteen to fifteen million deposits and 
 only fifteen thousand certificates of deposit. 
 
 Q. Is the average about the same as other banks? 
 
 A. "Well, averaging the Philadelphia National Banks, 
 their certificates of deposits won't amount to twelve 
 thousand. 
 
 Q. They are infinitesimal? 
 
 A. Yes. 
 
 Q. Is there any other feature of the State laws relating 
 to National banks that you think should be gone into? 
 
 A. I think not. 
 
 Q. You think this is the consensus of opinion among 
 the National banks? 
 
 A. We pay four mills, which I think is a fair return. 
 
 Q. And that is what they all think? 
 
 A. I cannot speak for others; I am only speaking for 
 our institution. 
 
 Q. Our object is to get the thought of those who are 
 interested. I thought the opinion of your folks would be 
 a fair criterion. 
 
 A. I have never heard, but I would be glad to get the 
 Secretary of the Clearing House, Mr. Boyd, to write you 
 on the subject. 
 
621 
 
 Mr. Moyer, Chairman : 
 
 On the question of certificates of deposits, I assume 
 that in the City of Philadelphia there is not a great deal 
 of that done with the banks and trust companies; that 
 is done principally through the saving fund societies. 
 
 Mr. Brown : 
 
 I think you will find this done in the trust companies. 
 
 Q. Take the Girard Trust Company, for an illustration ? 
 
 A. The amount of certificates of deposit is six thousand 
 in round figures. Then there are others, of course, that 
 are higher. 
 
 By the Chairman : 
 
 Q. Do you mean six thousand certificates? 
 
 A. Six thousand dollars. 
 
 Q. It is not done with money on two weeks' notice? 
 
 A. No. 
 
 Q. Do the State officials ever make any special effort 
 to ascertain if the returns made by the banks are true ? 
 
 A. We are examined by the National Bank Commission. 
 
 Q. I know, but do the State officials ever make any 
 efforts to prove the correctness of the reports made? 
 
 A. They take our return as we file it they accept it. 
 
 Q. That is the way with all the banks? 
 
 A. Yes, sir. 
 
 Mr. Brown : 
 
 Have any of the gentlemen of the Commission any 
 questions to ask Mr. Bartow? 
 
 Mr. Moyer, the Chairman: 
 
 No. 
 
 ADJOURNED 3.30 P. M. Next meeting to be held in 
 Pittsburgh, Penna., on March 24, 1910. 
 
622 
 
 Public meeting held at the Chamber of Commerce, 
 Keenan Building, Pittsburgh, Pa., Morning, March 24, 
 1910. 
 
 Meeting called to order by Vice Chairman Gabriel H. 
 Moyer, at 11.15 A. M., March 24, 1910. 
 
 Vice Chairman Moyer: Gentlemen: This Committee 
 was created by the last Legislature for the purpose of hold- 
 ing hearings and making certain recommendations to the 
 next Legislature as the result of those hearings, to see what 
 could be done to revise the present taxation laws wherein 
 they are defective. We have selected as our counsel Francis 
 Shunk Brown, of the Philadelphia Bar, who will outline 
 the work of this Commission more fully. 
 
 Mr. Brown: Mr. Chairman and Gentlemen: As you 
 have stated, this Committee has been appointed for the pur- 
 pose of considering the regulation of corporations, and also 
 the collection, taxation and appropriation of State moneys. 
 The Committee organized shortly after the adjournment 
 of the last Legislature in June last, and it was deemed 
 expedient at that time to commence active work for the 
 reason that the Government had been passing Federal laws 
 covering the same subject as was in the purview of this 
 resolution. Nothing was done until in January or Decem- 
 ber, when the Secretary promulgated laws, and regulations 
 for the collection of the taxes. It was then considered wise 
 to proceed with our hearings so that the sentiment of the 
 people who testify could be had on this subject. I think, if 
 I mistake not, that this is the first, probably not com- 
 mittee of the Legislature which has gone about from place 
 to place for the purpose of gathering information, which 
 would be of benefit in framing any new laws which would 
 be proposed to the General Assembly. 
 
623 
 
 We have met in Philadelphia and had several meetings 
 there, and we have had before us practically all the in- 
 terests concerned. We first called the charitable institu- 
 tions and hospitals to ascertain from them whether or not 
 it is wise for the State of Pennsylvania to appropriate 
 money to take care of institutions not under her control. 
 
 We also called before us the manufacturing interests, 
 banks, trust companies, practically every activity that there 
 was in that City. We are here to-day and to-morrow and 
 as long as may be necessary to gather from the people here 
 their thoughts and views upon these subjects. There seems 
 to be an impression that this Committee was appointed for 
 the purpose of increasing the revenues of the State, in 
 other words, to increase the funds of the State. It was 
 simply to consider the present laws as to the formation and 
 regulation of corporations, whether our laws were suffi- 
 ciently liberal, or whether they should be corrected as to 
 the formation, regulation and taxation, and not for the 
 purpose of finding more subjects upon which taxes should 
 be levied. Now, as I say, we are here in your midst for the 
 purpose of asking your assistance and co-operation, so that 
 this Committee may give to the next Legislature your views 
 on the subject. You gentlemen are fully aware that these 
 subjects are being considered all over the world to-day for 
 the purpose of treating with these matters, and Pennsyl- 
 vania is simpl^y in line with the progressive movement that 
 is being made in this direction. 
 
 We will be very glad to hear from those who are especi- 
 ally qualified and interested to speak upon the subjects 
 involved in this resolution. 
 
 Mr. Chairman, I have no list except ten or twelve who 
 have written to me expressing a desire to be heard, and I 
 presume until we get formally going, we will have to do the 
 best we can. Mr. Frank Stephens, who represents the 
 Single Tax Society of Pennsylvania, is here and desires to 
 be heard, and I suggest we hear Mr. Stevens first, and take 
 up the others later. 
 
624 
 
 Frank Stephens, representing the Single Tax Society of 
 Pennsylvania: Mr. Chairman and Gentlemen of the Com- 
 mission : The Commission has to do with the consideration 
 and reporting upon the corporation laws of this State and 
 its taxes, and will not have gone very far in its great work 
 without hearing the complaint that the present taxation 
 laws are unduly burdening real estate owners. I wish to 
 ask the privilege of speaking to you about that, and then 
 briefly about those taxes that are proposed to relieve real 
 estate owners. 
 
 I desire then, gentlemen, to take so much of your time 
 as may be necessary to speak of this complaint, that real 
 estate is already overburdened, to speak upon the sub- 
 ject of property taxation, and what has been considered in 
 that regard and suggested by the Single Tax Society of 
 Pennsylvania. 
 
 The Auditor General in his last report has called atten- 
 tion to two things relating to overburdened real estate at 
 the present time, under the present law, and many pro- 
 posals have been made to lessen that to the last General 
 Assembly in its last session. There were many propositions 
 offered to effect a change in this regard. The Pennsylva- 
 nia State Grange called for the equitable taxation of per- 
 sonal and corporate property, and the complaint was made 
 that under the present system of real estate owners are 
 annually robbed of about $35,000,000, and that this policy 
 of the State has driven from the State over one hundred 
 thousand farmers, from twenty-two counties. If that is 
 so, it is a very serious matter. We are not here to con- 
 tend that the farmer is not handicapped. But we think 
 there are other elements entering into it. 
 
 The Grange brings for the illustration of the hardship 
 of the present law. We may suppose naturally that this 
 illustration is as strong as any the Committee can show. 
 
 Take two citizens of the Commonwealth. A buys a home 
 for $1,000, and is required to pay a tax from $20 to $30 
 for the support of the schools, roads, poor, etc. B invests 
 
625 
 
 his $1.000 in personal property, bonds and mortgages, and 
 is taxed $4 for the support of the State, and nothing for 
 the home government, the benefit of which he enjoys 
 equally with the other. 
 
 Presumably these citizens are each worth one thousand 
 dollars, and live substantially on the same plane. B, the 
 $1,000 bondholder, it may be assumed, rents from X a 
 house worth $1,000 in which to live; for this house the 
 landlord, X, charges rent, which rent includes interest on 
 the investment, prospective repairs and taxes, $20 to $30. 
 A and B, therefore, pay equal sums in support of the home 
 government. We might contend that B in paying to the 
 government at Harrisburg the four mills tax, is paying 
 that much more than A pays, but this is not true. B does 
 not actually pay the $4, although he appears to do so. He 
 lent his $1,000 on mortgage to a widow, on a little house 
 assessed at $1.000. B would be satisfied with 5 per cent, net, 
 but as the State penalizes him four mills for helping the 
 widow, he adds that charge to the interest rate. The 
 widow therefore pays him 5.4 per cent., and he pays the 
 State four-tenths. Finally, the burdens are thus adjusted : 
 A pays $30, B pays $30, and the widow pays $34. 
 
 Thus the State of Pennsylvania, indirectly, unintention- 
 ally, but surely, mulcts the widow of an extra $4 yearly. 
 Why? Not because the State has done her a service, but 
 because B has done so. Four dollars will buy sixty-five 
 pounds of sugar, which is the widow's forced contribution 
 in excess of that made by A and B. Let us see what be- 
 comes of the $4. It goes to Harrisburg, but in due time the 
 State Treasury returns $3 to the county, according to the 
 Act of June, 1891, for the equalization of taxation and the 
 relief of local taxation in real estate. Actually, therefore, 
 the widow pays $1 to support the State Government, while 
 A, B and X pay nothing. Furthermore, the widow's $3 
 return to relieve the unincumbered dwelling owned by A 
 and X. So the State tax on mortgage is a tax upon her 
 poverty to relieve their prosperity. 
 
626 
 
 Consider further, X, the landlord of B, himself lives in 
 his own house assessed for $5,000, though he owns several 
 houses whose total assessment is $20,000. It might be 
 thought that he would pay $600 in taxes, yet he actually 
 pays only $150 on the house which he occupies. The bal- 
 ance, $450, of his tax bill of $600 is paid by his various 
 tenants, concealed in their several monthly rents. Each 
 tenant contributes taxes to the county in proportion to the 
 value of the real estate actually occupied. 
 
 Consider further : one of the X properties is occupied by 
 Mrs. Blank, who takes boarders. The boarders are charged 
 alike for food, but the charges for lodging vary. A $1,000 
 clerk pays high for the second floor front, but a seamstress 
 pays low for an attic room. X, the owner, does not actually 
 pay the tax upon that house, nor does the landlady, Mrs. 
 Blank, pay it ; it is paid by the various tenants in propor- 
 tion to the value of the real estate occupied by each. As 
 with merchandise, so with real estate, the consumer, tenant, 
 pays all charges, including interest, profit and taxes. It 
 follows therefore that if all local taxes were drawn from 
 real estate each citizen, owner, tenant or sub-tenant would 
 contribute in proportion to the value of the real estate 
 actually occupied by him or her, whether that real estate 
 were a house or only a room in a house. Every person uses 
 real estate, must use it, and, unless he is a criminal or a 
 pauper, must pay the taxes upon it. Furthermore, people 
 in general live on a plane befitting their means; it follows, 
 therefore, that an equitable real estate tax for all purposes 
 would approximate with reasonable closeness to that plaus- 
 able formula of taxation laid down by Louis Blanc, viz. : 
 "From each according to his ability." Nevertheless, our 
 school of thought improves upon that formula. The great 
 law of Nature is, "Service for service," and the State is 
 not absolved from natural law. The most modern justifica- 
 tion for taxation is by the benefit received theory. Purdy 
 explains it concisely thus: "There is no reason why differ- 
 ent principles should be advanced to justify payments to 
 
627 
 
 the State from those which justify business dealings between 
 man and man. All ordinary business dealings are based 
 on the exchange of equivalents. The storekeeper does not 
 grade his prices according to the income of the purchaser, 
 but exacts the payment in proportion to the value of the 
 article sold. This is the natural principle to be applied in 
 the affairs of State, and each taxpayer should be called on 
 for the equivalent of the pecuniary benefits he receives 
 from the State no more or less." 
 
 Concerning this pecuniary benefit I shall speak later. 
 
 The study of the incidence of taxation and its effect is 
 limitless. I can touch only a few subjects, first asking 
 attention to recent proposals for increasing State revenues. 
 As a means towards such increase, and the relief of real 
 estate locally, it was proposed to increase taxes upon mort- 
 gages, money at interest, banks and savings funds having 
 capital stock, and upon ordinary business corporations; 
 also upon manufacturing corporations whose capital stock 
 is now exempt except as regards its real estate locally. Let 
 us consider whether such proposals are politic ; afterwards, 
 if they are possible. 
 
 A mortgage is practically a partial title paper to real 
 estate. The real estate itself being taxed, it would appear 
 to be unjust to tax also the paper title. It is unquestionable 
 that the tax is almost invariably shifted to the borrower. 
 It imposes, therefore, double taxation ; and incumbered 
 property pays more than a free one. The impropriety of 
 taxing mortgages annually has been acknowledged by New 
 York State, which in 1906 abolished the annual tax, sub- 
 stituting a recording tax of five mills, paid once for all. Nor 
 are mortgages taxed in Baltimore. 
 
 Defining the word "capital" as wealth used in business 
 for profit, it is an axiom of political economy that taxes 
 upon capital are shifted, will not stay put, and are finally 
 borne by consumers. Note the advertisements of mortgages 
 at 5.4 per cent. The report on taxation, 1871, to Philadel- 
 phia City Councils, refers to mortgage agreements, that the 
 
628 
 
 borrower shall pay all taxes levied upon the principal, in- 
 terest and rents. The Act of June 1, 1889, made it un- 
 lawful to require borrowers to pay the tax. Therefore, 
 since that date no law-abiding citizen has required the 
 borrower to pay the tax; he has simply raised the rate of 
 interest enough to cover the tax, and then has himself paid 
 the tax to the State. The Assembly of 1889 might just as 
 effectively have passed a bill requiring the Susquehanna 
 River to run northwest instead of southeast. 
 
 A bill to increase the tax upon mortgages and money at 
 interest might justly be entitled "A bill to decrease the 
 supply of capital/' The Wells report to the New York 
 Legislature, referring to the days when mortgages in some 
 counties of Pennsylvania were exempted from taxation, 
 said : ' ' The influence of the exemption has been most bene- 
 ficial to the districts affected by it, so much so, to use the 
 words of one conversant with the question, 'that if it were 
 possible to take in, as from an eminence, a view of the whole 
 State, the counties in which mortgages were exempt from 
 taxation would be as readily distinguished from the others 
 as would be a field of luxuriant wheat or corn from a field 
 of scrub oak or brush wood. ' ' ' 
 
 Vice Chairman Moyer : 
 
 Q. Mr. Stephens, you refer in your argument you state 
 that the State returns $3 out of $4 to the several counties 
 in this Commonwealth. Do you think that under the law 
 that that really works a hardship on the several commu- 
 nities affected? 
 
 A. In what regard? 
 
 Q. By referring to the several counties, taxes raised 
 
 A. It can't refund any more than it gets from the sev- 
 eral counties. As I understand, the State collects and re- 
 funds about nine millions of dollars. I mean collects about 
 that and refunds about seventeen millions to the different 
 counties. 
 
 Q. What would you say as to a man having all his 
 
629 
 
 money invested in real estate, and his neighbor having all 
 invested in personal property what obligation his neigh- 
 bor who has no money invested in real estate what obli- 
 gation is he under to the State ? 
 
 A. His money is invested either in business or in real 
 estate values; that is where these investments go. If you 
 tax these real estate values, then these investments of his 
 are paying revenues to the Government of the State di- 
 rectly and not indirectly. 
 
 Q. Suppose he has $100,000 invested in a business hav- 
 ing no form of taxation, is it fair that a man should be 
 relieved from paying any tax? 
 
 A. It is absolutely fair from our point of view, because 
 believing that these things that are right are the only 
 things that pay in the community, and we believe that the 
 only tax levied upon real estate is a tax that is levied 
 upon a certain privilege which the Government gives 
 and takes which he can pay with no loss to himself. We 
 believe it is no function of the Government to find out 
 how much a man has, or say a man shall not have any 
 more than this or that, and that we will take this much 
 from him, and it seems to us wholly misleading in this 
 connection. 
 
 A bank is a labor saving invention, a blessing to any 
 community, a clearing house to a neighborhood, and, as 
 most of the transactions of banks are accomplished by 
 credits and debits, a bank is the bookkeeper for a 
 neighborhood. Why tax a blessing? Why not invite it? 
 If banks make money, they do it by giving service. The 
 present four mill tax does not sound big, but if my bank, 
 with $100,000 capital, has earned 6 per cent., it is an in- 
 come tax of 6 2-3 per cent. 
 
 Mr. Brown: 
 
 Q. Mr. Stephens, taxation should be based on the pro- 
 duction that a man has? 
 
 A. Yes, sir. 
 
680 
 
 Q. What is the difference in production of a man who 
 owns a house and his next door neighbor who does not 
 own any property, but has the same value in securities? 
 
 A. He must live somewhere, and where he lives there 
 he is paying. 
 
 Q. He is living in this house next door that is taxed, 
 provided he is a boarder, and is paying probably $4 or 
 $5 a week 
 
 A. Because he is already paying for the production in 
 the rent he pays, and where he pays for board, he is 
 charged for what the owner of the house is paying. 
 
 Q. Do you say tax should be on the land? 
 
 A. All of it. 
 
 Q, How do you value land for taxation putting it to 
 natural value or social value? 
 
 A. It would have its worth in the market, let the mar- 
 ket determine that. Such a valuation is made today by 
 every assessor. He says this land is worth so much, in 
 other words, it will be commensurate with its rental value. 
 This land will rent for so much and that rent is at the 
 present rate of interest. 
 
 Q. Do you know that in Pennsylvania today there is 
 a billion and a half of intangible assets taxed? 
 
 A. Yes, sir, I have heard that. 
 
 Q. The total value of real estate in Pennsylvania today 
 is about three millions of dollars? 
 
 A. Yes, sir. 
 
 Q. Now, isn't it a fact that those who think like you 
 have about come to the conclusion that in view of the 
 experience of Pennsylvania, there is no reason why they 
 should not tax the intangible as well as the tangible 
 property of Pennsylvania, because she has reached one- 
 half of them and the percentage is increasing far away 
 ahead of real estate? 
 
 A. Is it so that she has reached one-half of them ? 
 
 Q. One-half of it. 
 
631 
 
 A. Your assumption is: if these figures are correct, or 
 that says you have a return for personal property to the 
 extent of one-half the real estate value, but that does 
 not prove that it is to the extent of one-half the true per- 
 sonal valuation. Our claim is that no power in the world 
 can say what the true value is. 
 
 Q. Pennsylvania has certainly surprised all other Com- 
 monwealths; isn't that a fact? 
 
 A. I can't give you any information from other States. 
 
 Q. Let me ask you how would you tax this lot with a 
 house off it? 
 
 A. I would tax it at exactly the same amount whether 
 the owner used it or kept it. 
 
 Q. What amount would you tax it at, in comparison 
 with the lot next door with a twenty-story building on it ? 
 
 A. How? 
 
 Q. Would you tax it the same? 
 
 A. Yes, sir. A real estate man in estimating these 
 values, estimates the value of the improvement so much 
 according to the value of the land, as distinct from the 
 land. 
 
 Q. How can he estimate the improvement without any 
 improvement on it? 
 
 A. Then he doesn't have to estimate it. He always 
 estimates the value of the land as a separate item. 
 Vice Chairman Moyer: 
 
 Q. What do you think of the present liberal policy of 
 the State appropriating about fifteen millions of dollars 
 for the support of the public schools of the Commonwealth 
 bi-annually, about seven millions of dollars for charitable 
 institutions and several millions for the purpose of main- 
 taining better road systems? Do you believe that that 
 liberal policy could be maintained by taxing real estate 
 alone in the Commonwealth? 
 
 A. I believe it would far exceed I believe that the 
 maintenance of these roads is a State function I mean 
 
632 
 
 a Government function. I don't believe it is the function 
 of the State to give to private institutions. 
 
 Q. You mean charitable institutions? 
 
 A. Yes, sir. But there is no question in my mind if 
 such an assessment were made on the system that is in 
 use in so many places now, as Massachusetts, New York, 
 New Jersey, Ohio, and the principal cities of this 
 country, it would bring up the revenues in this State. 
 
 Q. Your argument is that the present system is faulty 
 because of its inequity? 
 
 A. Yes, and that that is the essential part of it. 
 
 Mr. Hunter: "We would be very glad to take you into 
 our consideration if you would submit a brief. Is that 
 your thought, Mr. Brown? 
 
 Mr. Brown: Yes. 
 
 Mr. Stephens: While it appears to us that taxes upon 
 personal property are in their nature unwise and inequit- 
 able, let us consider the possibility of collecting them 
 equitably. It is, of course, possible to collect from a per- 
 son property which is a matter of public record, such 
 as the capital stock of corporations, mortgages, judg- 
 ments, etc. Pennsylvania collects large sums from such 
 evidences of property, yet our methods are so clumsy 
 and puerile that evasions are coming. They will increase 
 ii* the temptation be increased. Of course, a bank cannot 
 escape an increase upon capital stock, but if the burden 
 becomes discouraging there will be fewer banks. It 
 would require a large clerical force to audit the taxes 
 upon mortgages and money at interest, but if the work 
 could be done successfully, then either the rate of interest 
 would be permanently stiffened, or else such capital would 
 flow to neighboring States, where it would be free from 
 espionage. 
 
 Mr. Brown: 
 
 Q. Has your society endeavored to secure the consensus 
 of opinion of the land owners on this subject? 
 
 A. No, sir. 
 
633 
 
 Q. Do you think you voice fairly the consensus of 
 opinion of the land owners of this Commonwealth? 
 
 A. Not for one moment. 
 
 Q. They are practically unanimous against it? 
 
 A. I never saw a body of people who were not practi- 
 cally unanimous against putting tax on them the privi- 
 lege they receive from the State. They try to shift the 
 burden upon somebody else. 
 
 When Benjamin Franklin was examined before the 
 British House of Commons relative to taxation, he was 
 asked, "Do not they as much as possible shift the tax 
 off from the land to ease that, and lay the burden heavier 
 on trade?" He answered, "I have never understood it 
 so. I never heard such a thing suggested. And, indeed, 
 an attempt of that kind could answer no purpose. The 
 merchant or trader is always skilled in figures and ready 
 with his pen and ink. If unequal burdens are laid on 
 his trade, he puts an additional price on his goods, and 
 the consumers, who are chiefly land owners, finally p^y 
 the greatest part, if not the whole." 
 
 From the dawn of time men have evaded the tax upon 
 personalty. What is the remedy? There is none. Ten 
 thousand Governments have attempted the impossible ; 
 none have succeeded. When English tax collectors, to 
 induce correct returns, courteously pulled the teeth of the 
 Jews, did they succeed? A previous witness has quoted 
 Gibbon, who tells of the rack and the scourge and horrid 
 deaths, those persuasive but fruitless methods of the 
 Roman tax gatherer. Josephus tells us of a tax gatherer 
 who, to induce correct returns, beheaded 20 leading citi- 
 zens. Have any such Governments succeeded? F^om the 
 horrible terms of Lancaster county to the horrid deaths 
 of Rome, every device has failed. Everything and every- 
 where. You tell us this is ancient history. I call modern 
 witnesses. The present Mayor of New York City a few 
 weeks ago characterized the operation of the general 
 property tax law as grotesque, calling for the abolition 
 
684 
 
 of the law. The State of New York is financially pros- 
 perous only because its outrageous laws taxing personal 
 property are systematically despised and evaded, except, 
 alas, by the widow and orphan, whose legacies are taxed 
 in the Orphans' Court. Upon them, says Purdy, "The 
 cruelty is sometimes heartbreaking." 
 
 I don't want to claim everything for single tax. I 
 would call your attention to these quotations from certain 
 authorities; for instance, William Penn; he says in a 
 certain discussion of his that: "If all men were so far 
 tenants to the public that the superfluities of gain and 
 expense were applied to the exigencies thereof, it would 
 put an end to taxes, leave never a beggar, and make the 
 greatest bank for National trade in Europe." 
 
 Public attention has recently been called to Franklin's 
 letter in 1768 to Dupont, whose name is borne by the 
 powder works in Delaware, where Dupont died. Ben- 
 jamin Franklin was an able speaker and a single taxer. 
 In this letter Franklin declared his adherence to the new 
 French doctrine known as the "impot unique," the one 
 tax, afterward developed and preached by Henry George 
 under the name of Single Tax. Franklin, as I have al- 
 ready said, was a single taxer. At the settled age of 62, 
 Franklin claimed that he was perfectly charmed with it, 
 because it was such a mixture of goodness and wisdom, 
 and that he hoped it would increase and grow until it 
 should govern the whole race. 
 
 In conclusion, this matter will either be a tax of labor 
 or what labor does, or of privilege and the many privi- 
 leges that the State gives to any individual, the privilege 
 of certain land that in reality was not made by any man 
 and .that no man has any title to it. 
 
 I thank you very much. 
 
635 
 
 DR. SAMUEL B. McCORMICK, Chancellor of the 
 University of Pittsburgh. 
 
 Mr. Chairman: As I understand Mr. Brown and the 
 Committee, the purpose is two or three fold of this Com- 
 mittee. From your statement one is with reference to 
 the classes of institutions which are the recipients of this 
 tax, which is levied upon various interests of the State. 
 
 I represent, speaking entirely upon that point I repre- 
 sent the University of Pittsburgh. It is well known that 
 in the State of Pennsylvania there are the two Universities : 
 one in the City of Philadelphia and the other in the City 
 of Pittsburgh these two apart from the State School at 
 State College, and that these institutions have been re- 
 ceiving some support from the State on the ground of 
 public utility by service to the State ; and the justification 
 for this lies both in the fact that these institutions are 
 doing charitable work, and that they are doing an educa- 
 tional work, which can be done alone by institutions of 
 this kind and under the support of the State. It is well 
 known that in many of the States of the East, all States 
 in the South and West, very large appropriations are 
 made to what is called the State University, sometimes in- 
 cluding all educational interests, and sometimes stand- 
 ing by itself, with the State 's School mechanical and agri- 
 cultural, as well as the larger department of education in 
 the normal schools; sometimes these are all together .In 
 one, sometimes separated in three. In the State of Penn- 
 sylvania, it has come about in the process of time that 
 two universities were found to be necessary, and these 
 were established in a great distance one from the other 
 in Philadelphia, I think, about 1740, and the University 
 in 1787. This is because of the fact that the natural fea- 
 tures of the State practically demand that there shall 
 be two institutions instead of one. And it is to be re- 
 
636 
 
 membered that the appropriations are to be made to these 
 institutions, excepting the State School, which stands by 
 itself, because of the fact that they do serve the State. 
 They are not colleges, nor in either case is any of the 
 money appropriated used for the college of this University, 
 it is used properly with reference to that part of the in- 
 stitutions that serve the State. 
 
 Now I wish to call attention, in the very briefest form, 
 to the work which the University of Pittsburgh and 
 it is exactly the same as in the Eastern part of the State 
 which the University of Pittsburgh is doing. In the 
 first place, I wish to mention the local charitable work 
 that has been done. I want to call attention to three of 
 these things, and these really are matters of information, 
 not only to your Committee or Commission, but to the com- 
 munity itself, because so much of this work is done with- 
 out the general public knowing it. First of all I want 
 to refer to the dental school, and there are very few 
 people who realize how essential the dental school is to 
 the health and well-being of the community. With refer- 
 ence to the infirmary at the dental school the clinic, 
 we call it there were three thousand patients, charity 
 patients, treated last year. At the present time the 
 charitable institution, or say the dental school, is doing 
 work for the children of the Industrial Home for Cripples, 
 the Home of the Good Shepherd, Pittsburgh Free Dis- 
 pensary, as well as the public schools in the poorer dis- 
 tricts of the city. And in these institutions free atten- 
 tion is given to the teeth and instruction in regard to them. 
 In one institution a room has been fitted up for this class 
 of patients, and a chair has been installed in another. 
 Now, the faculty, in addition to all this, is arranging to 
 extend the work to all public schools who are not able 
 to pay for it. Now, not only that, but all over Western 
 Pennsylvania there are difficult cases, and often-times 
 charitable cases, where the patients are unable to pay and 
 the school of dentistry receives these people from all over 
 
637 
 
 the county from points 150 miles from the city, and many 
 interesting cases which I have in mind have been it- 
 attended to absolutely free of charge. And this work 
 will go right on so as to cover all parts of this work, which 
 must be done on a charity basis. I speak rapidly, and I 
 speak with reference to this thing which is least thought 
 of. I suppose there are no two men who know anything 
 about the tremendous important work that has been done 
 and is being done by the University of Pittsburgh. I am 
 sure the University of Philadelphia is doing for the pub- 
 lic along this line. Now, in the next place, we have 
 the Kaufmann Clinic in connection with another depart- 
 ment of the University. Many things have been added 
 during this year that have increased the usefulness of that 
 department. A resident physician has been employed 
 and a large number of daily prescriptions are given, and 
 650 patients are treated monthly absolutely without a 
 penny of expense on their part, mostly people who are 
 unable to entirely take care of themselves along this 
 line. 
 
 Then, with reference to the maternity hospital : a build- 
 ing has been erected, and many, many things have been 
 done, and a resident physician has been employed, and 
 the fourth year students in the medical department are 
 put in there on duty in the hospital, and I do not need 
 to describe that all these patients are charity patients. 
 I do not think there are more than 2 per cent, that are 
 anything else but charity patients, and when we stop to 
 think, gentlemen, there are five thousand children, babies, 
 in the City of Pittsburgh, delivered without a physician 
 at all, with no service, or simply the services of a mid- 
 wife, and think of the facilities that we have at our 
 disposal for doing this work, only able to do a little part 
 for these unfortunate persons, just a few hundredths of 
 all that five thousand, we can see how essential is this 
 maternity hospital, and the kind of work that it is doing. 
 And now something must be done for the City of Pitts- 
 
638 
 
 burgh to bring up a number that are to be cared for 
 properly. A great work must be done, and it can only 
 be done through the service of the State. Now, those are 
 some of the features of the work, done on a charitable 
 basis, of the Infirmaries of the State. It is a fundamental 
 charity work, a work that is limited only by the amount 
 of money that is at our disposal for this purpose. 
 Vice Chairman Moyer: 
 
 Q. Have you an endowment? 
 
 A. It is practically nothing. It is so inadequate it is 
 a mere trifle, comes from friends' gifts. 
 
 Now, with reference to the work indicated which is 
 done in the I have no doubt at all the same thing is 
 true of the University of Pennsylvania. The work done 
 in the University is for the entire community, which is 
 not a local work. None of the appropriation ever goes 
 to our college. It goes to aid the several lines of pro- 
 fessional education which the University supplies in the 
 matter of law, medicine, pharmacy, dentistry, engineering. 
 I refer now to that part of the work of instruction for 
 teachers which is not done by normal schools. In all 
 these, as well as economics, it is done for the entire Western 
 part of the State, having no reference at all to any local 
 duty. 
 
 I will refer to one or two things. The University has 
 been organized completely in separate schools, eleven in 
 all; the college proper one, and our observatory as two, 
 which is entirely scientific; there are only four studies 
 there; omitting those two, we have the graduate school 
 for the entire State, we have the engineering school which 
 is for the entire "Western part of the State, school of mines, 
 school of education, school of economics, medicine, law, 
 pharmacy and dentistry, making nine in all, nine de- 
 partments of the University, but are serving not only 
 local interests but interests of the State, and rendering 
 that service to the State which is the basis upon which 
 appropriations are made by the Legislature for educa- 
 tional purposes. 
 
639 
 
 In our economic school we have developed a system, 
 which is designed to meet the needs of young men who 
 cannot spare the time during the day, and Philadelphia has 
 passed us in that, for they have been at it longer than we, 
 by rendering a service to the State in this way in the 
 evening work, and this is true also in the department of 
 education, which is of infinite value. The practical value 
 of that work among young men cannot be over-estimated. 
 In the development of the University along these several 
 lines we have brought students from every part of the 
 Western part of the State of Pennsylvania. Some twelve 
 or fourteen hundred's I don't remember exactly whether 
 it was twelve or fourtten hundred of students will be 
 or have been enrolled in the University this year; all, 
 with the exception of about one hundred and fifty, cover- 
 ing these departments which belong to the entire 
 State the departments which are of public benefit. 
 
 Now, it is for this reason, and for the additional reason 
 that such universities, expensive as they are, cannot pos- 
 sibly be maintained by private beneficence, such as 
 Chicago and Leland Standford, which have some one per- 
 son who is able to furnish the enormous sum of money 
 required. It is because of the absolute necessity of these 
 institutions and the community that the University o? 
 Pennsylvania the two of them have heretofore asked 
 and have very generously received the aid of the State. 
 It would be a public calamity, when we come to think of 
 what poorly educated physicians mean to a community, 
 poor dentists, poor men along all these lines, poor en- 
 gineers to do our work, poor teachers in our high schools, 
 and when we consider what poorly educated men in these 
 things mean in the community, we can see how absolutely 
 necessary these two institutions are to the State. The 
 other one I do not speak for, because it rests on a different 
 basis. 
 
 I call your attention to a final thought that is, these 
 institutions are necessary in large cities because it is 
 
640 
 
 only in large cities that they can have the surroundings 
 to do their work. In our medical department it is the big 
 clinic that makes it so valuable to the students. The 
 economic conditions around the engineer we are familiar 
 with the fact that Pittsburgh is the greatest center of en- 
 gineering in the world, such conditions furnish tremendous 
 liberality for that kind of work. These two institutions 
 have been established in Pittsburgh and Philadelphia not 
 because they were the first two large communities in his- 
 tory, but because they furnish the environment for such 
 institutions. That is the general scheme. I have covered 
 it rapidly, so that I may not unduly take your time. That 
 is, in general, the organization, and the work that we are 
 doing : first, fundamentally, charitable ; and, secondly, 
 educational for the whole community, not part, this is 
 essentially fundamental to the well-being of the State. 
 
 I will be very glad to answer questions. 
 
 Mr. Brown : You have spoken of the benefit resulting to 
 the whole community what do you mean? What is the 
 extent of the community? 
 
 A. From the mountains west, that is the community in 
 general. 
 
 Q. I ask you if your graduates come from all over the 
 State? 
 
 A. I can say they do. I do not mean to say that we 
 represent a dozen States for that matter, and students come 
 from every part of the State of Pennsylvania and from 
 other States also. Of course, when you get those who come 
 from other States out, you still have the major portion of 
 them. The students mostly come from the western end 
 of Pennsylvania, but in addition to that, some come from 
 all over the State of Pennsylvania. 
 
 Q. What is your thought as to what extent the State of 
 Pennsylvania should appropriate money to support your 
 University ? 
 
 A. If to the furthest possible limit to enable the Uni- 
 versity to do its work. 
 
641 
 
 Q. Well, has the receipt of State appropriations tended 
 to diminish the private contribution to your University? 
 
 A. On the contrary, just the opposite of that. It is true, 
 besides, that the larger appropriation of the State of Penn- 
 sylvania increases the amount of private gifts. That not 
 only has been so, but is bound inevitably to be so, but 
 the State and private are both essential to keep pace with 
 the work. 
 
 Q. What portion do the private bear to the State ap- 
 propriations ? 
 
 A. Pretty fair pace. They go a little differently but 
 pretty nearly equal in the last four years. Last year, for 
 instance, we raised between $250,000 and $300,000 for the 
 University, and the appropriation for the two years was 
 $325,000. That will give you a good idea. This year 
 we are trying to raise an equal amount of $250,000 ; that, 
 of course, would mean that the private would be much 
 in excess of the State appropriation. 
 
 Q. Do you feel you have attained your limit on private 
 appropriations ? 
 
 A. We hope to increase that very much, and we shall 
 get it very much larger after awhile. Sometime we may 
 get to a place where the people will become particularly 
 generous, and we could lessen the amount, but not with- 
 out decreasing the efficiency of the kind of service ren- 
 dered by this University. The time will never come, I 
 think, when the State should not make its appropria- 
 tion to this work. It is the work for the State so directly 
 that the health of the State is involved in it. All these 
 things are so essentially important to the health of the 
 State that the State should support the work of the Uni- 
 versity. I am not speaking for the main college, that is 
 a matter for private individuals. But those things that 
 involve professional education, wherein a man practices 
 on the people, wherein the public welfare depends on the 
 knowledge and skill of the practitioner, this is our thought ; 
 that the State should make its contribution, and I think 
 34 
 
642 
 
 that is so, gentlemen, and I trust it will never be lost sight 
 of for the University of Pennsylvania and Pittsburgh, 
 and the necessity of having the State's direct interest in 
 the institution. 
 
 Vice-Chairman Moyer: 
 
 Q. Does the State hold title to this property? 
 
 A. No, except in both cases the State appropriated tho 
 charter; in 1787 the State chartered the Pittsburgh Acad- 
 emy. In 1819 the State chartered the University of Pitts- 
 burgh, University of Western Pennsylvania, and gave in 
 that act, or supplemental act, the ground upon which it 
 should be built, which, as it happened, was the park in 
 Allegheny, which at that time the rights of the lot holders 
 were such that they were not willing to surrender up the 
 ground, and the State commuted the original grant to 
 money. And it will be seen that the State of Pennsylvania 
 not only chartered but established the University of Pitts- 
 burgh. 
 
 Q. What would be your thought of the consolidation 
 of these universities? 
 
 A. That cannot be an account of the natural features 
 of Pennsylvania. 
 
 Q. What kind of an obligation do you think rests upon 
 the State? 
 
 A. That is an obligation, I would say, as the corpora- 
 tion is in both cases a direct charter of the State, it is 
 not under a general law, it does not hold title to these 
 buildings, but the State is back of the organization, I 
 understand. 
 
 Q. Only so far as it appropriates money for its main- 
 tenance ? 
 
 A. I mean, in the matter of creating it, and, therefore, 
 being back of it, it is purely, not directly, under some 
 general law, it is under the direct act of the Legislature 
 itself. These universities have been brought into exist- 
 ence, but that is merely managing for the State, no indi- 
 
643 
 
 vidual can ever claim title in these institutions. The 
 State is managing these institutions through the Board of 
 Trustees, which it has created. The obligation is just what 
 I referred to, the obligation to the public health. These 
 institutions were created directly by the State of Penn- 
 sylvania. The State has its own institution, managed by 
 Boards of Trustees, which are under the direction of the 
 charter, and the State, by its own men, controls them, 
 and the work that they are doing is purely for the well- 
 being of the community, and it is on that ground, I think, 
 it is necessary for the State to appropriate money for 
 these institutions. 
 
 Q. There is a great deal of discussion favorable to with- 
 drawing State appropriations to our institutions? 
 
 A. I should think that would be very unfortunate if 
 that should be done. These hospitals are created not for 
 any private interests I refer to the real hospitals I don 't 
 refer to private hospitals, but I refer to hospitals that 
 are managed by a Board of Trustees, who have no private 
 interest in them, and the experience of the past has shown 
 that the poor and unfortunate are cared for only through 
 public aid. If you were to throw it over upon private 
 beneficence, it would be done, there is something in the 
 nature of man which responds to any demand made 
 upon him, but it would not be done as it is being done 
 to-day. It would be one of the most unfortunate things 
 that would ver happen anywhere if that help should be 
 withdrawn from those hospitals which are properly char- 
 tered and have no personal or private interest in them. 
 The argument is still more profound, because these insti- 
 tutions are serving their community. Their whole reason 
 is for the service they can render to increase the knowl- 
 edge, not only educationally, but turning out skilled men 
 and women in these several departments, and without them 
 the community would just go down, down, down, down. 
 The State has a direct obligation. It cannot discharge 
 that obligation without distributing its money equitably. 
 It is your place to make it as equitable as possible. 
 
644 
 
 By Mr. Brown : 
 
 Q. Is there any reason why there should not be a con- 
 solidation of these hospitals? Could better results be ob- 
 tained by having fewer and each better qualified? 
 
 A. I have never given thought to that. Hospitals should 
 be in different parts of the city. 
 
 Q. That is included. 
 
 A. Yes, for the reason there is also, in a city located 
 like this, centers of population that require hospitals, and 
 I would imagine that our relation to these hospitals is 
 very close, you understand, because of the essential be- 
 tween the two. 
 
 Q. Does your university use these hospitals for clinic 
 purposes ? 
 
 A. Yes, sir, practically all of them, that is one thing 
 that makes the special department of our university al- 
 most of priceless value to the vicinity, because of the fa- 
 cilities it has for teaching these young men, the very 
 best that can be gotten in the State of Pennsylvania. 
 
 Q. I ask you this question because I have received a 
 number of letters saying that there are too many of these 
 hospitals. 
 
 A. You will have to get some person better posted on 
 that. That may be true for the moment, and not for the 
 future. There may be at any particular moment an in- 
 crease, but a community like this will soon catch up to 
 the overflow. 
 
 Q. Do these institutions, so far as you know, give prefer- 
 ence to any class of physicians? 
 
 A. Not that I know of. 
 
 Q. Complaint was made in Philadelphia that prefer- 
 ence was shown to some physicians ? 
 
 A. I do not think that that is true in this community. 
 It has never come to my ears. 
 
 Q. How do you keep tab on the State money ? 
 
 A. Every dollar of it, in all institutions in our insti- 
 tution ? 
 
645 
 
 Q. Yes. 
 
 A. Every dollar of it. The auditor comes there four 
 times a year and goes over the accounts. 
 
 Q. How about the present method of payment, are you 
 handicapped ? 
 
 A. No, sir. 
 
 Q. I have letters suggesting that there should be a 
 State Board, which should purchase all supplies in bulk 
 and then furnish these supplies upon requisition, the idea 
 being that the State <?ould buy them more cheaply than 
 institutions ? 
 
 A. That might be. That would be a matter of experi- 
 ence. Let each individual institution get under the di- 
 rection of the State and take its place and get the lowest 
 price. The things are not there is not very much profit 
 in them. 
 
 Q. Get a dollar's worth for every dollar expended? 
 
 A. Yes, sir. 
 
 Q. Under the present system assuming the merits 01 
 distribution of charity in the way you are putting it 
 assuming that certain State institutions which should be 
 built, ought the State to first finish these before she dis- 
 tributes this money to private institutions? 
 
 A. My theory is better go right on doing part and grad- 
 ually working up. 
 
 Q. Do you think the greatest good and the greatest worK 
 could be accomplished under the present system? 
 
 A. Yes, sir. 
 
 Q. You do not use ahead? 
 
 A. Oh, no. 
 
 Vice-Chairman Moyer: 
 Q. Isn't it necessary? 
 
 Mr. "Woodward: 
 
 Q. The auditor comes generally each quarter T 
 A. That is true about that. I think that is true. 
 
646 
 
 Mr. Brown : 
 
 Q. Knowing the character of these institutions, is there 
 any reason why they shouldn't have the money paid just 
 as well in advance as in the end? 
 
 A. So far as I know, there is no reason at all. 
 
 Q. Do these men serve without pay? 
 
 A. Absolutely so, and that is one of the marvels ren- 
 dering service without absolutely a penny of pay not a 
 penny, directly or indirectly, which is one of the greatest 
 things in the world. 
 
 Q. Have you folks made any effort to ascertain the differ- 
 ence in price paid for your supplies as compared with the 
 price paid by others ? 
 
 A. We watch it very carefully in our hospitals. 
 
 Q. By equitable proportions to each institution? 
 A. Yes, sir. It is like doing all the work at home before 
 you do work in a foreign county. 
 
 Q. Suppose I say that in thirty-four States in the Union 
 not a dollar is contributed, and in ten, one of which is 
 New York, no money is appropriated for private institu- 
 tions, and Pennsylvania is practically exclusive in that, 
 what conclusion would you draw from that? 
 
 A. One conclusion would be, that it is about time that 
 Pennsylvania began to toot her own horn. 
 
 Q. That it is about time the other States are getting in? 
 
 A. Yes ; they are beginning to see the necessity for doing 
 these things, and even old New England is waking up. I 
 have been in the Middle West and West, part of my life 
 Colorado and Missouri and I am not very old yet ; there 
 is a good deal of reflection on Pennsylvania along certain 
 lines. I want to tell you that there is a whole lot of things 
 in which Pennsylvania is so far ahead of the others that 
 it is about time people were making them known, and that 
 is one of them, Mr. Brown. It would be almost impossible to 
 have all these things universally established. That would 
 not be reasonable, you could not expect that. But the 
 
647 
 
 tremendous work that Pennsylvania is doing along cer- 
 tain lines, is, in my opinion, it is about time the rest of 
 the country was thinking about getting in the same band 
 wagon. 
 
 Q. You think that the money appropriated for charity is 
 fairly expended? 
 
 A. Yes ; that is just what I mean. 
 
 By Vice-Chairman Moyer: 
 
 Q. So far as you know? 
 
 A. Yes, sir; so far as I know that is true. It certainly 
 would be possible, with the large amounts of money ap- 
 propriated it would be possible it would be impossible 
 that some would not be misappropriated and misspent, 
 you cannot get perfection anywhere, but I think most of 
 the institutions are managed in the best manner, and Pitts- 
 burgh here demonstrates these features, and for the most 
 part, I should say they are wisely and economically handled. 
 
 Q. Assuming that these monies are all wisely expended, 
 and that the State is in need of more funds, do you think 
 that these people, the representative business men of this 
 City, that they would be willing to have the taxables in- 
 creased ? 
 
 A. I do not know. I never asked them that question. 
 
 Q. If the State performs these services, do you think 
 more revenues should be raised for these purposes? 
 
 A. I presume that would be true. I think it is 
 fundamentally necessary. I do not know any more im- 
 portant matter before us than the matter of taxation 
 than the matter of proper, wise, just and equitable admin- 
 istering of the laws of taxation. But, on the other hand, 
 the causes for which this money is given are so eminently 
 necessary and good, that I feel that good men everywhere 
 would be ready to respond to proper taxation to support 
 it. That would be my idea in that matter. I have never 
 been a single taxer, and am not up on it, I want to ask 
 Mr. Stephens this question: If this lot here is compared 
 
648 
 
 with a corresponding lot about twenty miles from Pitts- 
 burgh on a farm, what is it that gives this lot its larger social 
 value if he disregards the buildings altogether ? 
 
 By Mr. Stephens : 
 
 A. That which gives it land value is not anything which 
 the owner of that land has done. It is not the building on 
 that particular plot that gives it value. If the building 
 were entirely torn down, the value of the land would re- 
 main. Therefore, the value of that lot, which makes it 
 more valuable than the one twenty miles hence, is the social 
 value. 
 
 By Dr. McCormick: 
 
 Q. But, Mr. Stephens, that social value is made by the 
 very thing that you disregard. 
 
 Mr. Brown : In other words, he is taxing the social value ; 
 his idea is, that if we took that off there would be no oc- 
 casion to tax anything else. 
 
 Here recess was taken until 2 o 'clock. 
 
649 
 
 Public meeting, Pittsburgh, Pa., afternoon, March 24, 
 1910. 
 
 And now, the hour of 2 P. M. having arrived, the Com- 
 mission met pursuant to adjournment. 
 
 A. M. IMBRIE, representing the Allegheny County Bar 
 Association, spoke as follows : 
 
 The Bar Association received a communication from your 
 Committee, which was sent to several other people. This 
 communication was referred to the Legislative Committee, 
 of which I have the honor to be Chairman. The Committee 
 is composed of Mr. Hall, Mr. Dalzell, Mr. Miller and Mr. 
 Acheson. We took the matter up and came to the con- 
 clusion that in view of the great subject, the question of 
 taxation would be discussed by other people. We dropped 
 that and didn't consider it. We were more concerned 
 about matters relating to corporations, which we took up 
 not many of them but what we have are simply some sug- 
 gestions to the Committee for the correction of some errors 
 and troubles which naturally arise; and in order that you 
 may have it in full, these are the subjects that were as- 
 signed to the different members : To W. S. Miller, Esq., the 
 subject of requiring the production to the Auditor General 
 of proper evidence of valuable assets representing the stock 
 and bonds of a foreign corporation, before allowing it to 
 do business within the State ; to M. W. Acheson, Esq., was 
 referred the question of the proper recording of the 
 charters of foreign corporations; to William S. Dalzell, 
 Esq., was referred the subject of having something in the 
 name used by a foreign corporation within the State of 
 Pennsylvania to indicate the state of its incorporation, also 
 the subject of service upon joint stock companies, limited 
 or joint partnerships organized under the laws of certain 
 35 
 
650 
 
 States ; to William M. Hall, Esq., was referred the question 
 of amendments to the laws of taxation of corporations. 
 
 The subject assigned to Mr. Miller was discussed by him, 
 using as a basis the Act of 1901, which is an Act that re- 
 quires the payment by foreign corporations of certain large 
 bonuses, and further prescribes the terms in which foreign 
 corporations make application at Harrisburg. That being 
 prescribed by the terms of the statute, of course the Auditor 
 General has nothing at all to do with it. Now the fifth 
 paragraph of that act is described as follows : 
 
 1 'The amount of its bonded indebtedness," 
 
 which only calls for the statement that the bonded indebted- 
 ness is a certain amount. That amount may mean some- 
 thing, and it may mean nothing, but it goes there on the 
 record. I will give you a practical suggestion of the case 
 when I have finished. This letter of Mr. Miller's suggests 
 that that should be amended as follows : 
 
 "The amount of its bonded indebtedness and how 
 said indebtedness was incurred and created, and 
 whether for money, labor or services or property, and 
 if for labor, services or property, a full description of 
 such property, labor or services," 
 
 the idea being to place on record actually what this in- 
 debtedness represents, which is not required at the present 
 time. 
 
 The seventh clause is as follows: 
 
 "The amount of capital paid in." 
 
 That may mean something or may mean nothing. Mr. 
 Miller suggests that this be amended as follows: 
 
 "The amount of capital paid in, and how such pay- 
 ment was made, and whether such payment was made 
 in money or property actually received or services 
 rendered, stating the amount of money so paid, if any ; 
 the character and description of the property used in 
 making such payment, if any; and the value thereof 
 
651 
 
 and the labor and services rendered for such payment, 
 if any; and the price thereof." 
 
 If a corporation makes a return to the Auditor General, 
 representing its capital as five hundred thousand dollars, 
 if the Auditor General finds out that such is not the case, 
 and finds out exactly what that amount is, it would be a 
 very great protection to every citizen in the Commonwealth 
 who had business dealings with that corporation. Then in 
 addition to that, this would follow : 
 
 "The amount of capital stock issued and whether 
 such stock was issued for money, property, labor or 
 services, and the description, character and value of 
 such money, property, labor and services. " 
 
 Then there should be added to the ninth clause a section 
 that would provide that the Auditor General should have 
 the authority to make an examination of the condition of 
 the corporation with reference to its stock and bonded in- 
 debtedness, and if after such examination he was con- 
 vinced that it did not represent a true valuation, he would 
 thereupon refuse to allow it to do business in the State of 
 Pennsylvania. The clause reads as follows: 
 
 "That if upon investigation of such report to the 
 Auditor General, it shall appear to him that the in- 
 debtedness of such foreign corporation has not been 
 incurred or created in good faith, or for value received, 
 or that the capital claimed by it to be paid in has not 
 been fully paid in good faith, or that the capital stock 
 issued has not been issued in good faith and for money, 
 property, labor or services of the value represented 
 by such stock, the A.uditor General shall refuse to issue 
 to said foreign corporation a certificate that it has com- 
 plied with the laws of this Commonwealth, and such 
 foreign corporation shall not be entitled to engage in, 
 or carry on, business within this Commonwealth until 
 it has complied with all the requirements and pro- 
 visions of this act, ' ' 
 
652 
 
 The second subject arises from the effect that a failure 
 to record the certificate of incorporation or the permit to 
 a foreign corporation granted by the State, in the county 
 in which its business is carried on, shall not forfeit the right 
 of such corporation to maintain suits. That is done under 
 the present law, and a foreign corporation is prohibited 
 from doing business in the State of Pennsylvania. Ex- 
 actly what that term means is a matter of very great dis- 
 cussion and of many decisions in our Courts. A corpora- 
 tion will come in and make a contract to erect a building. 
 After it his finished its work often some dispute arises, and 
 the party who gets the benefit of that work and I will 
 give you a practical illustration shortly availing itself of 
 this condition, says, "You are not authorized to do busi- 
 ness in the State of Pennsylvania/' The corporation 
 comes into Court, and the Court decides against it, and it 
 loses that whole contract. 
 
 On this question of authorizing a corporation to do busi- 
 ness in the State of Pennsylvania, without any investiga- 
 tion being made of its bonded indebtedness, stock and cap- 
 ital some years ago there was a corporation organized 
 under the laws of the State of New Jersey. First it went 
 into a neighboring State and bought real estate, for which 
 it paid less than fifteen thousand dollars. It gave a pur- 
 chase money mortgage for some ten or twelve or fifteen 
 thousand dollars, and then went to New York and gave a 
 mortgage for five hundred thousand dollars, which repre- 
 sented its capital stock of five hundred thousand dollars. It 
 was placed on record, all the property which they had, and 
 which cost between ten and fifteen thousand dollars. Bonds 
 were issued and placed in the market, and quoted in the 
 stock market, and these bonds were run up to a hundred 
 and five or a hundred and ten. A financial institution, 
 supposing that it was all right that these were the true 
 values, loaned a large amount of money. After these peo- 
 ple got the bonds disposed of the bank had the bonds and 
 the other people had the money. Now if such an arrange- 
 
653 
 
 ment was made, and the Auditor General had the authority 
 to investigate these corporations, he would have found the 
 conditions that existed, and then not allowed them to do 
 business in the State, and such a thing would not have 
 happened, which cost somewhere between fifty and a hun- 
 dred thousand dollars. 
 
 Now, as an illustration of the other point: I think it 
 was a Delaware corporation, erected a plant for a party 
 here in Allegheny county. It spent large sums of money, 
 and after the thing was completed there was still a balance 
 due of twenty-five or thirty thousand dollars. A dispute 
 arose about the payment. Suit was brought in the United 
 States Court. The defence was set up that it was doing 
 business in the State of Pennsylvania without having been 
 properly registered. It had been advised by its own coun- 
 sel that it was not doing business under that statute. The 
 Court decided that it was, and while they had gotten a 
 verdict of between twenty-five and thirty thousand dollars 
 for the amount still due the Court directed that the 
 verdict be entered for the defendant. Now it has been sug- 
 gested that that works a very great hardship to a corpora- 
 tion that of necessity comes into the State of Pennsylva- 
 nia in a single transaction, and through a failure to 
 properly register loses the amount of the contract that is 
 justly due it. And we have suggested that that may be 
 remedied by the imposition of a penalty, heavy if you want, 
 to take it out of the hands of someone to take advantage of 
 and actually pilfer from those who have done the work. 
 
 By Mr. Cox: 
 
 Q. What purpose would the foreign corporation have in 
 not complying with the law? 
 
 A. They are here only for a single contract in Pennsyl- 
 vania, and do not see the necessity of registering, and a 
 great many do not know or suspect that there is such a 
 statute here. 
 
 Q. You refer to the Michigan cases? 
 
654 
 
 A. No, I think the case came from Buffalo, and was tried 
 in the United States Court, where twenty-six thousand dol- 
 lars was actually cut out. 
 
 Q. There was a case from Michigan tried? 
 
 A. Yes, sir. I had a concrete example of my own. A 
 client of mine came from a sister State and had a claim of 
 some twenty-five thousand dollars, and there was a little 
 dispute, and I advised a settlement at a loss rather than 
 risk the Courts. 
 
 By Mr. Brown: 
 
 Q. Don't you think in the first case it was the careless- 
 ness of the trust company in not making an investigation? 
 
 A. You can put it that way if you want. It is true, but 
 here is a case if the Auditor General had the authority and 
 had taken the trouble to make an examination, he would 
 have found a five hundred thousand dollar mortgage on a 
 piece of property that cost less than fifteen thousand dol- 
 lars, and would have thereby protected the citizens. 
 
 By Mr. Moyer : 
 
 Q. Do you know any good reason why a foreign cor- 
 poration should not be permitted to hold property in the 
 State? 
 
 A. No, sir. 
 
 Mr. Brown : I think the trouble is that there are some 
 difficulties about the present law on the subject. The sev- 
 eral Acts of 1881, 1887, 1891 and 1893 prohibited the 
 manufacture of certain things and withheld certain rights 
 from them, and one of the reasons why the Governor did 
 not sign the latest bill drafted on the subject was because 
 it did not clear things up. 
 
 Mr. Imbrie : A client of mine in Youngstown came over 
 into Lawrence county, and bought a large amount of 
 limestone property. After they were in possession 
 never supposing that there was anything else than that 
 they had a perfect right to hold the property after 
 
655 
 
 taking title he heard about this statute and sent his at- 
 torney to Pittsburgh to see me, and make an examination 
 to see what could be done. As long as the thing was 
 in that shape he could not get the stone out. There was a 
 way the only possible way would be to make a convey- 
 ance to some one that could hold it in this State. We 
 should have passed an Act which would allow foreign 
 corporations to hold real estate in this State. 
 
 Mr. Brown : I think it would be highly helpful if your 
 association would do something in this matter. 
 
 Mr. Imbrie : I can see no reason why a foreign corpora- 
 tion once registered should not be a citizen, and prevent 
 the necessity of a foreign attachment against them, 
 considering them as non-residents. I see no reason why 
 they should not be. The Auditor General could find out 
 whether they were the real thing or not. If such an 
 examination as suggested were to be made, you could 
 depend on your records. 
 
 Mr. Brown : 
 
 Q. Your idea is to place them on the same standing 
 as a domestic corporation 1 
 
 A. Yes, sir. 
 
 Mr. Brown: I think that would give them a power 
 which they ought not to have. 
 
 Mr. Mover: 
 
 Q. This proposed legislation would cure it? 
 A. Yes, sir. 
 
 Mr. Brown : My idea is this : if those specially qualified 
 in this matter would give their ideas in some concrete 
 form and if we got it from several sources, then we will 
 be able to get the best out of it. 
 
 Mr. Imbrie : That is what we tried to give you on this 
 particular subject. 
 
 Mr. Brown: You are going to draft the act? 
 
656 
 
 Mr. Imbrie: I am not certain about that. It would 
 be a good deal of work. However, I will refer it to the 
 Committee. 
 
 Mr. Cox : It would not be difficult to embody the sug- 
 gestions in an Act. 
 
 Mr. Mover: If your Committee holds stock in these 
 foreign corporations, I venture to say that we will have 
 some semblance of an act. 
 
 Mr. Imbrie : Our association has instructed the Legis- 
 lative Committee to render any possible assistance we 
 can. 
 
 The next question with reference to foreign corpora- 
 tions is that of the ^registering or the recording of the 
 charter. A domestic corporation, desiring to do business 
 in Allegheny county, is required to record its charter 
 here. This is not required of foreign corporations. They 
 register at Harrisburg. 
 
 If a domestic corporation does business in the City of 
 Pittsburgh, and a man wishes to know anything about 
 that corporation, he can, in a half an hour, go to the 
 Recorder's Office and find out the condition of that com- 
 pany, and what it is authorized to do. It seems there 
 ought to be no distinction between a foreign and a domes- 
 tic corporation with reference to the recording of the char- 
 ter, and Mr. Acheson's letter suggests an Act requiring 
 foreign corporations doing business or owning property in 
 Pennsylvania to record their charters in every county 
 where the corporation owns land or has an office; if in 
 Pittsburgh, it should be recorded here. Wherever its 
 principal office or place of business is, it ought to have its 
 charter recorded in that county. 
 
 The next point which came up for discussion is this : a 
 foreign corporation may execute an agreement or enter 
 into a contract, and yet there is nothing in this, or any- 
 thing that the paper may contain, to indicate the State 
 under which its acts under whose laws. Now, that can 
 
667 
 
 be cured at the time of the registering of the company 
 by stating this: "The State of New York," if it was 
 organized there, or the "State of New Jersey, " if organ- 
 ized there. So that every contract which it makes will 
 show exactly from which State it comes. To give an 
 example of that : Not very long ago a client of mine was 
 very anxious to find out about the organization of a cer- 
 tain company. It was with the very greatest difficulty 
 that I ascertained in what State it was organized. It took 
 about three weeks. I finally did get the information that 
 it was organized in the State of Iowa. If that company 
 had been required to add to its signature that it was 
 organized under the laws of the State of Iowa, or organ- 
 ized in the State of Iowa, that difficulty would have been 
 done away with. 
 
 Mr. Cox: 
 
 Q. Doesn't the certificate at Harrisburg disclose that, 
 if you write there ? 
 
 A. But this company was not even registered in Har- 
 risburg, although it had made a contract here. I take 
 it that if our own State would require this, it would only 
 be a short time until the other States adopted it, and 
 every contract made would indicate the State from which 
 the company comes. 
 
 There is one other point. There are certain partner- 
 ships and joint stock associations, etc., doing business in 
 this State, and who obstruct the administration by tech- 
 nical objections. I refer to certain express companies 
 the Adams Express Company and, I believe, the United 
 States Company, which are simply partnerships. In one 
 instance, I think, three suits were brought against the 
 Adams Express Company before one was finally gotten 
 that would hold. 
 
 If there was a law requiring partnerships that were 
 organized under a special law of the State of New York 
 or the State of Colorado, to register the same here in our 
 
658 
 
 own State, that would protect the citizens from this 
 difficulty in obtaining service, or in bringing suit, and 
 not being able to get service at all. In Mr. Dalzell's 
 letter on that point he has suggested some method by 
 which that can be remedied. He suggests that there 
 ought to be a provision of law with regard to them, to 
 the effect that no foreign joint stock company, limited or 
 joint partnership, or other unincorporated society or 
 association, shall do any business with this Common- 
 wealth until it shall have established an office or offices 
 and appointed an agent or agents for the transaction of 
 business. And, further, that it shall not be lawful for 
 any such joint stock association, etc., to do any business 
 within this Commonwealth until it shall have filed in the 
 office of the Secretary of the Commonwealth a statement 
 showing the title under which it does business, the char- 
 acter of its organization, the location of its office or 
 offices, and the name or names of the authorized agent or 
 agents within the State of Pennsylvania upon whom ser- 
 vice can be had. And, further, that when said joint 
 stock association, partnership, etc., shall have so desig- 
 nated its title, or the name under which it is to do business, 
 it shall be sufficient for the purpose of maintaining litiga- 
 tion against it to name it as defendant under its registered 
 name ; and no reference shall be necessary o any individ- 
 uals who may be partners in such association, whether 
 such partners be residents of Pennsylvania or elsewhere. 
 
 Since our report was prepared, there was a communica- 
 tion sent to the Committee with reference to public service 
 corporations. I have simply attached that here. We 
 have not discussed it, nor do I propose doing so. It is a 
 very large subject, into which I don't care to go. I will 
 leave it with your Secretary. 
 
 By Mr. Brown : 
 
 Q. Have you any information, or any views, as to the 
 length of time elapsing between the application and the 
 
659 
 
 granting of the charter? Other States do it practically 
 all at once, and we take several weeks. 
 
 A. I do not see how any particular advantage accrues 
 by all this delay. I can give you an example of that. 
 Some clients of mine desired to enter into a contract. 
 They did not want to do it individually, or as individuals. 
 They wanted a corporation organized at once. I left 
 here that night and went to Jersey City, arriving there 
 the next morning, and that evening I left Jersey City 
 with a charter in my pocket. I came home here, and the 
 next day the transaction was closed. 
 
 Q. You could just as easily have domesticated that 
 corporation in another week? 
 
 A. Yes, sir. I can see no advantage coming from this 
 publication, or of this delay after the application is pre- 
 sented. I don't know that any corporation was ever 
 knocked out by any person appearing against them after 
 the fact was advertised that "A" & "B" so-and-so were 
 going to Harrisburg to make an application there for a 
 charter. 
 
 Mr. Cox : Some of our street railway companies were. 
 
 Mr. Imbrie : I am speaking of joint business corpora- 
 tions. In regard to public service corporations, I think 
 the law is very good. Of course, it prevents the incorpora- 
 tion of passenger railways and street car companies, 
 without regard to the needs of the public. 
 
660 
 
 B. Z. SMITH, Esq., representing the Board for Assess- 
 ment and Revision of Taxes, Pittsburgh, Pa., spoke 
 as follows : 
 
 I represent here the Board for the Assessment and 
 Revision of Taxes of Allegheny county. My special ca- 
 pacity is Chairman of the Board, and I speak for it. I 
 do not desire to present myself here as an expert in the 
 matter of taxation, as my experience only extends to the 
 time that I accepted the appointment three years ago 
 yet in three years we have had opportunity to observe 
 some of the phases of the assessment of taxation under the 
 present laws of Pennsylvania, and one or two phases of 
 that subject I would like to present here. As to the taxa- 
 tion of real estate, the present system in Pennsylvania is a 
 good one, and it has been proved by many, many years 
 of experience that it is a good one. I believe that real 
 estate in Pennsylvania, under the present system, is fairly 
 equitably taxed. 
 
 I listened with a great deal of interest to Mr. Stevens, 
 the President of the Single Tax Society of Pennsylvania. 
 I don't confess any allegiance to that doctrine, which is 
 only so far a doctrine. But there were some things he 
 said to which we will all agree, and one was that the main 
 object in taxation was equality and certainty. A 
 little investigation will show what interest the people take 
 in the equality of taxation. They do not always know 
 what the taxes are for. They do not know whether they 
 are too great or too little for the object intended, but 
 they are quite willing to pay their shares, provided they 
 are not more than their neighbors; so we have in our 
 office, in which we do a very large business, we have con- 
 tinually the experience of a man coming in to examine 
 his real estate assessment in the office, and their investi- 
 gation goes this far: "What is my neighbor assessed on 
 
661 
 
 this side of me, and on that side of me, and across the 
 street, and around the corner? Is it the same as mine? 
 If so, I am satisfied. " And he is, and he goes away satis- 
 fied that he is assessed equably with his neighbor. He 
 is not a real estate expert, and could not compare his 
 property with a city lot, nor a city lot with a rural lot, but 
 he knows what he paid for it, and if he believes he is 
 treated with equality, he goes away satisfied. And, as I 
 said before, generally speaking, the taxation of real estate 
 in the State of Pennsylvania is fairly equable and equably 
 administered. It now comes to the very question that he 
 raised here the other subject that I wish to speak about 
 to you, and discuss with you and that is the matter of 
 the taxation of personal property. This is a much more 
 difficult matter. The question is how we can obtain 
 equality, and how can we obtain certainty. 
 
 We cannot obtain equality unless every man who owns 
 taxable securities and mortgages, bonds, or stock, or 
 moneys at interest in savings banks unless every man is 
 taxed. And you and I know that every man is not taxed. 
 I have had this matter frequently under discussion with 
 the head clerk or what we call our State Department. 
 Our board is a State Board, or at least the Supreme Court 
 has so decided. I don't know whether you know the law 
 that constituted us. The Board was constituted by the 
 Legislature to assess for county taxation, and also per- 
 sonal property for State taxation, under the four mill 
 revenue act. The act provided that the Board should be 
 appointed by the Common Pleas judges of the county, and 
 it was a question whether or not the act was constitu- 
 tional. I believe the Bar was practically unanimous that 
 it was not, and the Supreme Court was just as unanimous 
 that it was, and as they had the last say, it so happened, 
 and that is the reason this present Board exists. 
 
 But, as I began to say before my explanation of the Act 
 governing us, in conversation with the chief clerk of our 
 department and he has been in that office for many 
 
662 
 
 years, and long before we took hold I asked him as to 
 his opinion of the amount of personal property that es- 
 caped taxation under the present Act, and he said about 
 one-third. That, as you understand, is merely a matter 
 of guesswork. There is no such machinery at the dispo- 
 sition of the assessor to enable him to ascertain just the 
 amount of personal property in this county. In the first 
 place, we know we do not get a return from all owners 
 of personal property, and in the second place the returns 
 are not always correct or honest. More than once, when 
 one of the men who had been returning for some time a 
 certain amount of money passed to the Great Beyond, and 
 when we come to have a return from the executor of the 
 estate, we find that it far exceeded the amount ever re- 
 turned by the decedent. Again, we know there are a 
 number of people who are not assessed, because, plainly 
 speaking, they cannot be caught under the present ma- 
 chinery. If methods can be devised by which every man 
 who is subjec to taxation, as to this class of property, 
 can be assessed, then it becomes an equitable law in its 
 action, and a certain law in its action so far. I must 
 confess when it comes to that point I cannot offer you 
 many suggestions. We have under the system here a 
 great many assessors. We have the best men we can get 
 at three dollars a day to do the work. As to this par- 
 ticular act of personal taxation, we try to make this im- 
 pression on our assessors, each of them individually, be- 
 fore they got out, that there is a great deal of personal 
 property in the county that is neither returned nor taxed, 
 and that we look to them to see that this is corrected. In 
 our preliminary journal, in which we take the occupation 
 tax and some others, we say in that preliminary journal, 
 "You are not called upon to make assessment on real 
 property. Not only are you to collect the names for the oc- 
 cupation tax, but you are to find out in every way you 
 can the names of the people who have, or you have reason 
 to think, have personal property, and you are to serve 
 
663 
 
 these people at the proper time with notices from this 
 office, and you are to find out and see if they make re- 
 turns ; and if they do not make returns, you are to report 
 it to this office, and we will make the assessment author- 
 ized by law, ' ' and so it is followed out. This is what we do 
 and we do it with all the vigor we are capable of, and yet 
 we knoAv a very large amount of personal property owned 
 in Allegheny county, taxable under the revenue act, is not 
 assessed, and no tax is paid. How much there is of it is 
 a matter of great conjecture. I asked the head clerk 
 what his opinion was, and he said that he believed at least 
 one-third of the property that was taxable escaped taxa- 
 tion. And he is a man familiar with the work, and most 
 faithful and competent as Mr. Cox, who knows him per- 
 sonally, w r ill testify. 
 
 By Mr. Hunter : 
 
 Q. Is an individual, say holding ten thousand dollars 
 worth, or any amount of corporation bonds or securities 
 is he required to make a return to you or to your Board of 
 those holdings, provided he knows that the corporation is- 
 suing those securities pays the tax ? 
 
 A. He is not obliged to return them for taxation, unless 
 they are stocks or bonds of a foreign corporation that 
 come under the Taxation Act. Under the Act authorizing 
 a four-mill revenue tax every man is supposed to make a 
 return. , ;j 
 
 Q. Provided he knows the company paid the tax on 
 them? 
 
 A. No, he is not obliged to return them. Every citizen 
 may make a return, because it is the duty of the assessor 
 to serve them with notices to make returns. Of course, 
 laws are sometimes so stringent that they cannot be carried 
 out. It is plain that it is impossible to get a return from 
 every citizen. 
 
 Q. He is obliged to make that return? 
 
 A. He is obliged to make a return. He is not obliged 
 
664 
 
 to return anything not taxable. He would have to fulfill 
 under the law, and if he had no other taxable property he 
 would not have to. 
 
 Q. You say that a certain party had, during his life- 
 time, made certain returns, and after his death you dis- 
 covered you he was the possessor of a larger amount. 
 Don't you think it was probable he was doing all he 
 thought was right and required at the time, due to the 
 fact that the securities which he didn't return were taxed 
 and the taxes paid by the corporation that issued them? 
 
 A. Any man might be mistaken? 
 
 By Mr. Cox: 
 
 Q. Is he allowed to inquire into the fact of whether 
 they are so taxed by the State, the stock of a corporation? 
 What I want to get at is whether he has a right to con- 
 sider the question of double taxation, the man making the 
 return? If I have ten thousand dollars' worth of bonds, 
 have I a right to inquire whether they are taxed by the 
 State, in addition to the tax by the county? 
 
 A. Undoubtedly. He is the judge of that. 
 
 Q. He is the judge of that? 
 
 A. Yes, sir. 
 
 By Mr. Moyer : 
 
 Q. Isn't he generally a poor judge? 
 
 A. Generally. 
 
 Q. And he doesn't pursue the inquiry further? 
 
 A. No, sir. I merely stated that as a fact. It has de- 
 veloped in that way, where personal taxes are levied after 
 a man has died, and his estate is found to hold more per- 
 sonal property than he returned. I merely stated that as 
 one instance. 
 
 By Mr. Cox : 
 
 Q. You have no remedy ? 
 
 A. As to what should be done, I must confess to be at a 
 
665 
 
 By Mr. Brown : 
 
 Q. Mr. Smith, you say the taxable is obliged to make 
 a return. You don't mean that there is a legal application 
 which is enforced? He is not obliged to do it? 
 
 A. He is obliged by law. 
 
 Q. You cannot force him? 
 A. No, sir. 
 
 By Mr. Cox : 
 
 Q. You add 50 per cent, for that? 
 
 A. The law provides that. It is a double duty one of 
 the assessors and one of the assessed. It is a duty laid on 
 him to make a return, and it is the duty of the assessor 
 to make him make a return. 
 
 By Mr. Brown : 
 
 Q. How do you start with the returns, how do you know 
 the number ? I mean, how do you know the number that 
 goes to each one? 
 
 A. That is a matter that is governed largely by the 
 experience we have gained of the number of people in 
 every district. 
 
 Q. You get so many blanks sent to you? 
 
 A. Yes, sir. 
 
 Q. Then those are given to the assessors? 
 
 A. Yes, sir. 
 
 Q. What check do you keep on the assessor to see that he 
 either brings back the return of the taxable, or accounts 
 for it? 
 
 A. We don't check. 
 
 Q. Why don't you? 
 
 A. For this reason: we know that there are a certain 
 number of taxables of this class. 
 
 Q. Suppose he doesn't bring them back? You issue so 
 many blanks? 
 
 A. Yes, sir. 
 
666 
 
 Q. He brings back a portion of them. Why shouldn't 
 he account for the balance? 
 
 A. Well, in this county take, for instance, ?m 
 assessor in a district in which there are ten or fifteen 
 thousand citizens, nine-tenths of whom own no property 
 at all, would be served with notices and cannot be made to 
 make returns. The law provides it is required that 
 every man shall be served, but if nineteen out of 
 twenty have no property at all, the assessor would be doing 
 nothing at all but chasing men who had no property at 
 all, to get them to make returns. 
 
 Q. You say that one-third are escaping; taxables to 
 the extent of one-third are not paying taxes? 
 
 A. Yes, sir. 
 
 Q. What check is made of the returns of the assessors 
 to see just who these people are ? 
 
 A. We have the names of every property owner, about 
 every property holder, and owner of personal property 
 every man with real estate. Outside of this we have no 
 check, because a great many of them have no permanent 
 residence. And a great many are not known to the as- 
 sessor except by name or reputation, and just the instruc- 
 tions which we give to them, to get in everybody they 
 can, or have reason to think are the holders of property. 
 The alternative is to absolutely serve everybody with a 
 notice, and to take a return from everybody. I mean to 
 serve everyone in the county with a blank, and have every 
 man make a return, whether or not he owns any taxable 
 property. 
 
 By Mr. Moyer : 
 
 Q. As I understand it, there is no penalty? 
 A. Nothing, except the assessor can go ahead and make 
 an assessment, and add 50 per cent, to it. 
 Q. How are your assessors chosen? 
 A. By our Board. 
 Q. They are pretty faithful? 
 
667 
 
 A. In a large degree, yes, sir. We have attempted, and 
 I think succeeded, in organizing a thorough body of dis- 
 trict assessors. There are weak spots, but the personnel of 
 the Board has improved. 
 
 Q. What are they paid ? 
 
 A. Three dollars a day. 
 
 Q. Do you consider that enough for a good man? 
 
 A. In some places, yes, and in some, no. It is not enough 
 in a city, but in the country districts it is. You can get 
 a good man to give his time in the country for that amount, 
 but not in the city. 
 
 Q. Are you aware of the fact that in rural districts 
 assessors are elected? 
 
 A. Yes, sir. 
 
 Q. Do you think that the assessors should be appointed 
 by the Courts in the county in which they serve and paid 
 five dollars a day, their term to be four years, and only 
 permitted to serve one term? Do you think that would 
 remedy it? 
 
 A. It would undoubtedly remedy the general adminis- 
 tration of the taxation system to have more permanence 
 of the assessor in his office. 
 
 Q. This is what I have in mind, that a few of the as- 
 sessors frequently make no returns because of the fact that 
 it might handicap their re-election. I mean in the rural 
 communities? 
 
 A. I wouldn't like to give an opinion on that. In our 
 county we have rural, suburban and city communities, 
 and deal with all classes, and as I said, I think we get 
 fairly good assessors in the rural communities for three 
 dollars a day. It is difficult to get the right kind in large 
 boroughs and cities for three dollars, men competent to 
 assess very large property holdings. For instance, in a 
 ward in the city where there is property of the value of 
 thirty or forty or fifty millions of dollars, it would be 
 evident to you you can't get a man for three dollars a 
 day to assess that, and it requires a great deal of work 
 
668 
 
 on our part, not so much in the country or rural districts 
 as in the large boroughs and cities. 
 
 By Mr. Cox : 
 
 Q. Do you think that to increase the Board would help 
 matters ? 
 A. No, sir. 
 
 By Mr. Hunter : 
 
 Q. Under your present system you appoint assessors 
 for temporary service only? 
 
 A. We appoint assessors during good behavior. 
 
 Q. What length of time? 
 
 A. Well, lasts to the end of our term. 
 
 Q. Do I understand that he is constantly employed? 
 
 A. Only when necessary. 
 
 Q. How long is that? 
 
 A. During the triennial assessment, from the middle of 
 June about six months' work. 
 
 Q. In what length of time ? 
 
 A. Six months every year in a large district, and in some 
 places not more than two. 
 
 Q. It is of a temporary character? 
 
 A. Yes, sir. 
 
 Q. That would mean that the personnel of the office 
 of the assessors would be changed almost every year? 
 
 A. No, sir. 
 
 Q. Isn't that the case? 
 
 A. No, sir. I said we appointed the assessors practically 
 during good behavior, as long as our term would last. We 
 say to them, ' ' if you are satisfactory to us, you will con- 
 tinue to be our assessor on that district as long as we hold 
 office. If not, we will get another." These assessors are 
 chosen from all classes, and work as long as necessary. 
 Most of them have other employment. Some have other 
 occupations, and some don 't have to work, and some don 't 
 work, and so forth. 
 
669 
 
 Q. Would that indicate that the assessors, as appointed 
 by you, are what you might term two dollar men? 
 
 A. Not at all. We have a class of men that I think are 
 better than the average. 
 
 Q. Do you mean those in the boroughs and cities? 
 
 A. In the country districts you can get a farmer for 
 three dollars a day to do the work, and get a good man, 
 but when you come to the boroughs and cities, where the 
 rents and cost of living are higher, it is harder work, and 
 you cannot get a good man. 
 
 By Mr. Moyer : 
 
 Q. At one of the hearings held in Philadelphia we had 
 Simon Gratz, the president of the Board in Philadelphia, 
 with us, and he made the statement that millions of dollars 
 were not being returned for taxation, property owned by 
 suburban residents living in New Jersey, or Delaware or 
 adjacent counties, and that there was no way of telling 
 why this was not returned ? Does that prevail here ? 
 
 A. Not to any appreciable extent, for the reason that 
 local conditions are different here than they are in Phila- 
 delphia. There are possibly a few persons whose residence 
 is not fixed. We have some here who made or inherited 
 their pile, and will want a residence in Pittsburgh 
 do not live here, but live in Florida, or New York, or 
 Colorado. A great many of those, in order to preserve 
 their residence, make their returns here. 
 
 By Mr. Brown : 
 
 Q. Tax dodging is not prevalent? 
 A. No, sir. 
 
 By Mr. Cox : 
 
 Q. W^hat per cent, is actually lost? 
 
 A. That is a mere matter of conjecture. I gave you 
 our chief clerk's opinion on that. 
 
 Q. What would that amount to in dollars and cents! 
 
 A. The amount of property returned for taxation here 
 
670 
 
 is about a hundred and eighty millions of dollars. It has 
 been about that. It has been increasing slightly each year, 
 except in the last year, and I would be inclined to agree 
 with the chief clerk that we don't get more than one-half 
 of the amount. 
 
 Q. It ought to be about two hundred and sixty millions ? 
 
 A. Yes, sir. If we got two hundred and fifty millions 
 we would get very nearly all we would be entitled to. 
 
 Q. What would the loss be in dollars and cents? 
 
 A. Take the $180,000,000 at four mills, and that would 
 be $720,000. I believe the delinquent tax office shows only 
 a loss of 2 per cent., and that is a very significant fact 
 when you consider that the machinery for the collection is 
 deficient. There is no law, and they have no legal remedy 
 if the man refuses to pay his taxes. This is about the size 
 of it. The total tax is about $720,000, and that is sent to 
 the State. They keep $180,000, and the rest is sent back 
 to Allegheny county. 
 
 Q. About a loss of about half a million 1 ? 
 
 A. Say about $200,000. That is mere conjecture, be- 
 cause there is no way of determining how many are not re- 
 turned and how many make a false return. 
 
 By Mr. Moyer: 
 
 Q. During your three years have you ever had a case of 
 a man whom you had every reason to believe was falsifying 
 his returns? 
 
 A. Yes, sir. 
 
 Q. What efforts have you made to prosecute him? 
 
 A. We don't prosecute him, because we can't be sure 
 about it, but if we have any good reason to think that that 
 is the case, we revise his return and put it at the place 
 where we think it ought to be. 
 
 Q. Do you think an arrest or two might have a whole- 
 some effect? 
 
 A. It might. The law is indefinite, and the remedies are 
 not strong. When there is doubt in the office of the De- 
 
671 
 
 linquent Tax Collector to enforce the payment of taxes, we 
 are not going to arrest a man for making a false return. 
 We believe that if a man does not make the proper return, 
 and we do make what we consider the proper return, and 
 add to that 50 per cent., that it brings him to time. 
 
 Q. The Commission has had a goob deal of testimony 
 along this line, and nowhere has there been an example 
 made of a man who falsifies his return. 
 
 A. It places the assessors in a peculiar position, but I 
 don't think the Board would hesitate on that account if 
 they thought they had the power. 
 
 By Mr. Brown : 
 
 Q. Are interest bearing deposits assessed here? 
 
 A. Yes, sir, those bearing interest in savings accounts. 
 
 Q. In trust companies and banks? 
 
 A. As far as we can. 
 
 Q. What measure of success have you had in that direc- 
 tion ? 
 
 A. Well, we get a good deal. A great many make re- 
 turns and a great many do not. 
 
 Q. How would it be to amend the law and compel the 
 trust company to pay the taxes and deduct it from the 
 interest? 
 
 A. I don't know how it would be exactly. It has come 
 to our knowledge time and time again, and I have called 
 bank officials to account for it that they and their 
 cashiers have influenced depositors not to make a return of 
 the deposits in savings accounts, saying that if they didn't 
 make a return they wouldn't be taxed. If that is the case, 
 I believe the remedy you proposed would be a good one. 
 
 Q. Do you think there would be anything unfair 
 about it? 
 
 A. No, sir. The objection of the banks is as to giving 
 information as to the private deposits. I myself think it 
 would be a good remedy, and would go far toward reliev- 
 ing the situation. 
 
672 
 
 Q. Have you any information as to the character of these 
 people who have these accounts, whether they are the richer 
 or poorer people? 
 
 A. All classes, Mr. Brown, I do not think that you could 
 classify them. I think it is a matter of individual con- 
 science, or knowledge or ignorance of the law. There are 
 the three classes. 
 
 Q. Have you, in the performance of your duty, obtained 
 any information as to the taxation of corporations? 
 
 A. I think the sentiment would be against it. 
 
 Q. Have you made the same inquiry with regard to an 
 inheritance tax? 
 
 A. I think there would be no objection not to a just 
 one. 
 
 Q. What would you say as to the taxation of other 
 articles besides those already taxed say, for instance, au- 
 tomobiles? Some people think there ought to be a tax on 
 them to be used for the development of the State's high- 
 ways. One man said he would pay a hundred dollars a 
 year, and that others ought to do the same thing. 
 
 A. I could not answer that. 
 
 Q. What is the sentiment of this community as to the 
 mercantile taxes? 
 
 A. I think there is a strong sentiment against it. 
 
 Q. What is the reason? 
 
 A. Well, the average merchant is taxed very well on 
 other classes of property, and there is no reason why he 
 should be taxed on his business when others are not, and 
 the tax does not fall equably. 
 
 Q. Does the method used by your Board tend to drive 
 taxables from this county to residences elsewhere ? 
 
 A. I do not know of any such case. 
 
 Q. Do you think a lower rate would produce more in- 
 come? 
 
 A. I doubt it. 
 
 Q. The rate is not too high? 
 
 A. No, sir. 
 
673 
 
 Q. What would you say as to the taxing of public 
 service corporations? Did you look into that? 
 
 A. It is the custom of our assessors to examine every 
 piece of property owned by the public service corporations, 
 whether it is needed for their actual operations, and if not 
 we put it on the tax rolls. We make as strict an investi- 
 gation as we can, and we always get an application for the 
 exemption of this, that and the other property. 
 
 By Mr. Hunter : 
 
 Q. I want to ask a question about the appointing of the 
 assessors. I was wondering what you would think about 
 the question of using a smaller number of assessors, and 
 giving them permanent employment, whether they would 
 become more efficient than if employed only temporarily? 
 
 A. In answering that I would say that anything in that 
 direction would be for the betterment of the service. As 
 you know, in Philadelphia the assessor is a permanent in- 
 stitution ; the assessors, I believe, are appointed by the Board 
 there. They are permanent officers, are salaried officers, 
 and go on assessing all the time. I think that is the proper 
 way. I think the assessors should be more permanent. 
 The difficulty in Allegheny county and the other counties 
 is the triennial assessment of all the real estate, and the 
 third year is a very strenuous year for the assessor and 
 for everybody connected with the assessor's office, and if 
 that is the case we could have larger districts and have per- 
 manent assessors, and could get much better men. 
 
 By Mr. Brown: 
 
 Q. Are they influenced by local associations? What 
 would you say about taking a man from one district and 
 working him in another where he is not so well known? 
 What would you say about changing them around ? 
 
 A. We always take a man from the district in which he 
 lives to work in that district, on account of his knowledge 
 of values there. 
 
 Q. It has been suggested that these assessors should be 
 36 
 
674 
 
 State appointments, and sent as strangers into a locality, 
 so as not to be influenced by local influences. 
 
 A. I do not think that would do, because there you have 
 the old case of the revenue collectors. The men that live 
 in the districts have a knowledge that no stranger can have, 
 especially in the rural districts which no stranger could 
 get. As I said before, the triennial assessment could be 
 done away with, and the continual assessment would be 
 the proper thing. I think the triennial assessment is an 
 obsolete institution. It throws all the work into six months 
 of each three years, and throws such an amount of work 
 upon the Board and the assessors that the work cannot be 
 done with care and in the careful manner in which it 
 should be done. Our Board has been working since the 
 twentieth of December, since we took up this matter, and 
 has worked every day since then, practically, until a week 
 ago. To do it right is a difficult matter. 
 
 By Mr. Moyer: 
 
 Q. You have the entire county of Allegheny county? 
 A. Yes, sir. 
 
 Q. What is the assessed valuation of the realty? 
 
 A. A little over one billion. 
 
 Q. What is the valuation of the personal ? 
 
 A. One hundred and eighty million last year. 
 
 Q. That, in your judgment, is a fair valuation of the 
 worth of Allegheny county? 
 
 A. Not as to the personal property. 
 
 Q. How much personal property do you think is es- 
 caping taxation? 
 
 A. As I say, Mr. Moyer, I said our chief clerk gave it 
 as his opinion that one-third is not taxed is escaping tax- 
 ation. 
 
 By Mr. Cox : 
 
 Q. If you knew where it was you would go after it? 
 A. Yes, sir. Guessing at it, I would say that we don 't get 
 
675 
 
 at least 25 per cent., perhaps more. Supposing we get ninety 
 thousand or one hundred thousand of these blanks from 
 the Auditor General, and we distribute ninety thousand 
 to our assessors, to be used under our direction; we get 
 thirty thousand returns out of these; twenty thousand re- 
 turn property for assessment, and ten thousand return 
 nothing. Of the twenty thousand returned, we get about 
 a hundred and eighty-six million dollars worth of property 
 for assessment. Two-thirds of this one hundred and eighty- 
 six millions of dollars worth of property returned for tax- 
 ation in Allegheny county consists of mortgages. You will 
 see that we get practically all of the mortgages, because 
 they are a matter of record, and the Recorder is bound to 
 certify to them, and we can watch them closely. The other 
 one-third is composed of such elements as the law includes 
 money at interest, and I do not think we get anything like 
 all of that. That is money held on notes by private indi- 
 viduals, and moneys in savings banks bearing interest, 
 articles of agreement for the sale of land, and that all de- 
 pends upon the conscience of the owner and the presistence 
 of the assessors, the amount of that we get. 
 
 But returning to the question of the taxation of mort- 
 gages, I was interested this morning by the argument of 
 the man who thought that the taxation should be levied 
 upon the real estate alone. I believe that everybody should 
 be taxed upon everything that they own, and equably 
 taxed, and it is the effort of our Board to see that they are. 
 But I do not believe that under our present system that we 
 are getting equality in this matter of taxation that at 
 least one-third of the taxable property is not taxed. There 
 you have a case of where two-thirds are paying taxes, will- 
 ingly or unwillingly, upon personal property, and one- 
 third are not. You can see if that case were applied to 
 the ownership of real property there would be no equality 
 if two-thirds were taxed and one-third were not. But I 
 think so far as the taxation of real property is concerned 
 the tax is equable, and the reason that is not the case in 
 
676 
 
 regard to personal property is because of the vagueness of 
 the laws and that people don't pay those taxes. It is very 
 evident that that law doesn't work entire equality if a 
 number who own personal property are taxed, and only a 
 portion owning property are not taxed. The question has 
 been raised very often and discussed; that is, the question 
 of the taxing of invested capital, and in some of the items 
 that are taxed I do not believe it reaches the party in- 
 tended. I don 't believe, and I think I express the sentiment 
 of the majority of thinking people in Pennsylvania that 
 are concerned in this matter, I do not believe that the man 
 who lends money on a mortgage is paying the four mills 
 tax, even after he write the check. I have said to people 
 who complain of this personal tax, and wanted a reason 
 for it, I gave them the argument that Mr. Brown stated 
 here this morning that everything that is taxed is rated so 
 that those who have only personal property should bear 
 the burden with those who own real estate. There are a 
 great many men who have money loaned on mortgages who 
 do not pay a cent towards the sustaining of the burdens 
 of government. I believe that the expression and the 
 opinion of almost every man who knows about the bor- 
 rowing and lending of money will sustain that opinion. 
 We know how many mortgages there are with 5.4 per cent 
 interest. It does not mean that the rate of interest is 5.4, but 
 it means that the rate of interest is 5 per cent., and that 
 that four mills is added on there to pay the taxes. So the 
 borrower pays that in his interest. If that is the case, what 
 is the result ? The man that borrows the money is not only 
 paying the taxes on the property, but upon the very mort- 
 gage he had to put upon it in order to allow him some years 
 to pay his debt. I want you to consider it, because it is 
 a very grave question of equality between man and man. 
 I met a man from New York, Lawson Curdy, President 
 of the Board of New York, who had the whole state of Ne\a 
 York and the assessment for New York under his control. 
 We discussed this very matter. He said just about what 
 
677 
 
 I have been saying to you, and I was taking the opposite 
 side, because I expressed the opinion you expressed this 
 morning 
 
 Mr. Brown : That does not express my personal opinion. 
 I just tried to draw an opinion from the speaker. 
 
 Mr. Smith : I expressed that opinion so frequently that 
 I almost believed it myself, yet I believe that the man who 
 borrows money is paying taxes levied upon the man who 
 lends the money, and this is a double taxation, which ought 
 not to be. 
 
 By Mr. Brown: 
 
 Q. Why shouldn't the State of Pennsylvania tax the un- 
 encumbered as well as the encumbered real estate? You 
 say that the encumbered man pays double taxes, one on the 
 land and a tax to the State. "Why shouldn't the man who 
 is unencumbered pay taxes on his land? Why shouldn't 
 the man who is unencumbered pay a tax to the State ? 
 
 A. I don't see why he shouldn't. 
 
 Q. The encumbered man does? 
 
 A. Yes, sir. 
 
 Q. If the mortgagor does not actually pay the tax, and 
 is paid on his real estate and on the other first assume 
 that he is. 
 
 A. Yes, sir, we will assume that he does not pay the 
 tax, and the law intends that the tax should be paid by 
 the lender and not the borrower, not only upon the prop- 
 erty, but upon everything else. 
 
 By Mr. Cox : 
 
 Q. What portion goes to the State ? 
 
 A. One mill. Four mills go to the State and three mills 
 are returned. The amount of money that comes to Alle- 
 gheny county is about a half a million of dollars, about 
 three-fourths of seven hundred and twenty thousand dol- 
 lars, and it relieves the taxes of Allegheny county to that 
 extent, but at whose expense ? So that the people who are 
 
678 
 
 paying that tax, if the borrower pays it, a certain portion 
 is paying it to the State and paying it to the county. 
 
 Q. How does the three-fourths compare with the 
 amount levied on real estate ? What is the amount levied ? 
 
 A. I could not tell you that exactly; about $4,000,000. 
 We get about a half a million from the tax on personal 
 property. 
 
 Q. Half a million? 
 
 A. Yes, sir, half a million. 
 
 Q. So you get about one-eighth of the tax on real estate 
 in Allegheny county from personal taxes? 
 
 A. Yes, sir. If what has been stated is true, that tax 
 is paid by a few that five hundred thousand dollars is 
 paid by the borrower to relieve the many, those who do 
 not borrow. 
 
 By Mr. Moyer : 
 
 Q. Isn't it a fact that the Act states that all money at 
 intrest bearing 5 per cent? You could not separate 
 a mortgage from a certificate of deposit, or a judgment of 
 record? 
 
 A. I think it applies to all. If the fact is so, that the 
 borrower pays the tax, I believe he does it in all cases. 
 I believe he pays it on notes and every loan, because the 
 rate of interest will justify that, the supply and demand 
 of money, and I think the rate now is the normal rate plus 
 four mills. 
 
 Q. Provided it is under 6 per cent. ? 
 A. Yes, of course. 
 
 By Mr. Cox : 
 
 Q. Then there is no crime committed if you do not 
 collect the entire amount of the tax? 
 
 A. No, no crime, because the taxation Act does not make 
 it a crime. 
 
 Q. Do you mean that that one-third is one-third of the 
 
679 
 
 entire personal property in Allegheny county, or that you 
 lose one-third of what is returned? 
 
 A. I mean one-third of the personal property we don't 
 assess. 
 
 Q. That would be one-half as much more than you 
 really have returned? 
 
 A. That would depend on which way you figured. We 
 probably have about $250,000,000 of personal property in 
 this county. It is a mere conjecture, but a large amount 
 escapes taxation. 
 
 Q. You lose about one-half? 
 
 A. No, I wouldn't say that. I say we ought to have 
 about one-third more than we have. It is a mere matter 
 ot conjecture. 
 
680 
 
 DR. MOYER, representing the Mercy Hospital, of 
 Pittsburgh, Pennsylvania, spoke as follows : 
 
 I have here a statement relative to the Mercy Hospital, 
 which I wish to file with your Commission. 
 
 By Mr. Brown: 
 
 Q. Do you get State aid? 
 
 A. Yes, sir. 
 
 Q. How much? 
 
 A. Ninety- seven thousand dollars the last time. 
 
 By Mr. Moyer : 
 
 Q What do you think about the State withholding ap- 
 propriations from private charities not controlled by the 
 Commonwealth? 
 
 A. 1 think the State ought to have control. 
 
 Q That the title of the property should be vested in 
 the State? 
 
 A. I think they ought to have the control of it. 
 
 Q. How could the State have absolute control of a prop- 
 erty in which it had no title or interest? How could it 
 ever acquire that property? 
 
 A. I don't know that the control I have not given that 
 very much consideration. There ought to be someone 
 held accountable for the use of the -money, the way it is 
 used. 
 
 Q. The traveling Auditor General calls at your hos- 
 pital? 
 
 A. Yes, sir. 
 
 Q. And audits the aeeounts? 
 
 A. Yes, sir. 
 
 Q. Do you keep a list of all the distributions of State 
 money ? 
 
 A. Yes, sir. 
 
681 
 
 Q. Is the management obliged to borrow money until 
 the voucher comes from the State? 
 A. Usually; not always. 
 
 Q. How do you manage to pay your bills? Have you a 
 sufficient fund to do that? 
 A. Yes, sir. 
 
 Q. Have you an endowment fund? 
 
 A. No, sir. I have a copy of the report to the Board 
 of Charities here. We were established in 1848 ; value of 
 the real estate one million dollars ; amount of indebted- 
 ness, fixed, $63,000, current, $24,465.66 ; a corporation ; no 
 endowment; officers, M. N. McMullian, president; J. D. 
 Gallery, secretary ; F. H. Skelding, treasurer ; services all 
 gratuitous ; number of buildings 5 ; number of beds for em- 
 ployes, 250 ; number of beds for patients, 350, for medical 
 cases not limited, for maternity cases only emergency 
 cases admitted ; number of cases treated during the year : 
 in patients, 4,594 ; dispensary or out patients, 2,167 ; num- 
 ber treated free, 1,621 ; number partly free, 477 ; number 
 full pay, 2,496; number of days hospital treatment (in 
 patients only), 123,005; number of days free treatment, 
 43,058 ; per cent, of free treatment, over 33 1-3 per cent. ; 
 average number of beds occupied by patients during the 
 year, 339 ; average cost of patients per day, $1.19. Owing 
 to the advanced cost of living the average cost per patient 
 per day was $1.71 during the last quarter. 
 
 By Mr. Cox : 
 
 Q. How many actual free beds have you set apart in 
 your hospital? 
 
 A. None set apart as free beds ; the estimate here is that 
 one-third of the patients treated during the year were 
 free patients. There are no separate wards. 
 
 Q. No preference given as between the paid and the 
 other patients? 
 
 A. Not in the wards. Private room patients are ex- 
 pected to pay for their additional comforts. 
 
682 
 
 Q. Do you charge anything for the ward patients? 
 A. Yes, sir; if they are able to pay, they pay a dollar 
 a day. 
 
 By Mr. Moyer : 
 
 Q. How do you ascertain whether they are able to pay? 
 
 A. We find out where they come from, and their 
 business. 
 
 Q. Do you have many patients in your hospital from 
 adjoining States? 
 
 A. Not a great many; some from West Virginia and 
 Ohio. 
 
 By Mr. Cox: 
 
 Q. Usually surgery cases? 
 A. Yes, sir. 
 
 By Mr. Woodward: 
 
 Q. Did you ever refuse any case brought to you? 
 
 A. Never on account of non-payment, except infectious 
 diseases. We are not allowed to receive them. 
 
 Q. You would not refuse a case on account of their 
 inability to pay? 
 
 A. No, sir. 
 
 By Mr. Brown: 
 
 Q. What have been your private contributions as com- 
 pared with the State ? 
 
 A. I don 't know how much. 
 
 Q. Proportionately? 
 
 A. I do not think they amount to very much. 
 
 Q. You mean the private contribution doesn't amount 
 to very much? 
 
 A. It does not amount to anything like that of the State. 
 
 Q. You get more from the State? 
 
 A. Yes, sir. 
 
 Q. Hasn't the State appropriation a tendency to dimin- 
 ish these private donations? 
 
 A. No, sir. 
 
683 
 
 Q. Does your management make any special effort to 
 obtain private contributions? 
 
 A. They endeavor to get contributions whenever they 
 can. 
 
 Q. How much did they get the last year? 
 
 A. I don't know. 
 
 Q. You are getting thirty thousand dollars from the 
 State for two years, 1909 and 1910? 
 
 A. Ninety-seven thousand dollars was the last amount 
 we had appropriated. 
 
 Q. What have you raised during that time by private 
 contributions ? 
 
 A. I don't know, but I don't think it is very much. I 
 cannot give you the figures. 
 
 Q. In other hospitals in the city they can perform the 
 same services? 
 
 A. I think our daily expense is lower than any other in 
 the city. 
 
 Q. Could not the public be better served by combining 
 the hospitals? 
 
 A. I do not think they would. I don't think the man- 
 agement can be any better. 
 
 Q. You are non-sectarian? 
 
 A. Yes, sir. 
 
 Q. You have a school for nurses? 
 
 A. Yes, sir. 
 
 Q. How many do you graduate in a year? 
 
 A. A training school for nurses, and the number ad- 
 mitted is 71. A common school education is required ; the 
 term is three years, and there were graduated in the last 
 year eight. 
 
 Q. You say eight in the last year? 
 
 A. Yes, sir. 
 
 Q. Is that better than the average? 
 
 A. It is a little more than that number, about eight or 
 ten or twelve. 
 
684 
 
 Q. And this money appropriated by the State is used 
 in the manner in which it should be used? 
 
 A. Yes, sir. 
 
 Q. And the officers of the institution are not paid for 
 their services? 
 
 A. No, sir. 
 
 By Mr. Hunter: 
 
 Q. Don't you think that probably owing to the appro- 
 priation received from the State, there might be some 
 laxity in getting it from those able to pay? 
 
 A. No, we are careful about that; we are careful all 
 the time to get money to pay the bills. Very few get 
 away without paying that are able to pay. 
 
685 
 
 OLIVER McCLINTOCK, ESQ., Pittsburgh, Pa., spoke as 
 
 follows : 
 
 I did not intend to talk when I came here, but I was 
 interested in the meeting. All that I have to say is as to 
 the merchant. Merchants as a class, retail merchants, are 
 very heavily burdened with taxes and something ought 
 to be done to relieve it. We seem to be fair game for 
 every tax that comes along. 
 
 By Mr. Moyer: 
 
 Q. If the merchants were relieved from that tax, what 
 would you say, for instance, to placing a tax of one mill 
 on manufacturing corporations? 
 
 A. I would not be able to say positively on that, because 
 I realize it is a complicated problem. The thing to be 
 striven for is equality of taxation. As to the taxes on 
 mortgages being paid by the man in debt and in trouble, 
 that is true. 
 
 Q. How could you cure that unless you relieved all 
 forms of personal property from taxation? 
 
 A. It is because I realize how complicated it is that I 
 think that any man that speaks upon the question should 
 have made a study of it. I didn't come here for that 
 purpose, and would not like to give an opinion. 
 
 By Mr. Brown: 
 
 Q. Have you any associations in this city a merchants ' 
 association ? 
 
 A. I belong to the Chamber of Commerce. 
 
 Q. Any others? 
 
 A. Yes, sir, several. I understand the Pittsburgh 
 Board of Trade is to be represented here. 
 
 Q. If there is any association of that kind that yon 
 think we ought to hear, we would like to hear it. 
 
 A. I think probably they will be represented here. 
 
686 
 
 D. J. STEWART, representing the Homeopathic Hospital, 
 of Pittsburgh, spoke as follows : 
 
 I see a couple of friendly faces, and make bold to come 
 here. They have seen me in Harrisburg hunting for ap- 
 propriations. I can say to you that I am .intensely inter- 
 ested in that institution worked for it by day and 
 dreamed of it by night. I do not come here to make any 
 plea for cash at this time, but we had an invitation to 
 come before you, and as our dear president died in De- 
 cember, this duty fell to me. I want to feel that I have 
 done my duty towards the institution, and I wanted to 
 meet you gentlemen, for perhaps you may see me later 
 in Harrisburg when I come to solicit for money. I think I 
 have, been successful in that line among friends, and 
 reasonably so with the gentlemen of the Appropriation 
 Committee. 
 
 By Mr. Moyer: 
 
 Q. Then you wouldn't favor withholding appropria- 
 tions from private institutions not under State control? 
 
 A. No, I would not, because it would drive some of 
 them out of existence. 
 
 Q. Wouldn't it be better if it would? 
 
 A. I would not be unkind enough to reflect on any 
 other charitable institution. 
 
 Q. Taking the State as a whole, has it ever oeen brought 
 to your notice that there are certain institutions posing 
 as charitable institutions, organized simply for the pur- 
 pose of getting money from the State? 
 
 A. Not to my personal knowledge. 
 
 Q. The auditor sent out by the State examines the ac- 
 counts of all hospitals, and we propose to account for 
 every cent they receive from the State, and Mr. Brown 
 
687 
 
 has asked all representatives of hospitals whether they 
 received much assistance from outside contributions. 
 
 A. I have nothing to conceal ; we do. My efforts have 
 been so consistent that my friends have avoided me. I 
 tell them my years are getting fewer, and that I want 
 them to contribute before I die. 
 
 By Mr. Hunter : 
 
 Q. What is the value of your new property? 
 
 A. We paid $135,000. I don't know exactly what we 
 have expended on that building, but it would be over 
 $300,000 dollars. 
 
 Q. Is it paid for? 
 
 A. So far as we have gone. We had an old institution 
 in the city here, and to secure funds to build the new 
 one we mortgaged the old one, to erect this new building. 
 We didn't get the appropriation we had hoped for, and 
 the buildings were not fully carried out. The front 
 building we had to introduce into that all the mechani- 
 cal part of the institution, which we had expected to put 
 in another wing. The mechanical department of that 
 hospital, the heating and ice plants, and other machinery, 
 is costing us in the neighborhood of one hundred and ten 
 thousand dollars. Practically all the money that build- 
 ing represents has been contributed. Then we get from 
 the State I don't recall just how much we get from 
 the State. We did at one time get seventy thousand 
 dollars, and at another ninety or a hundred thousand 
 dollars. 
 
 Q. Then you raised about one-half of what it cost? 
 
 A. Yes, sir, and we are getting it all the time. We are 
 not permitted to pay any back bills fo? expenses with 
 the money we get from the State. During the last period 
 of two years previous to this we fell behind $23,000 and 
 of that amount we got in debt for groceries and supplies 
 during the panic. We have succeeded in begging enough* 
 of that amount so that today we are in debt only $6,000 
 
688 
 
 of that amount. We raised about $16,000 or $17,000, and 
 every day we are getting rid of that. 
 
 By Mr. Moyer : 
 
 Q. As a solution, if the State should withhold its ap- 
 propriations from private charities, what would you say 
 as to this : to have set apart moneys based upon the num- 
 ber of inhabitants of each county, and divide it up, say 
 about a million dollars in Allegheny county, and let all 
 appropriations be fixed by an Act of Assembly; what do 
 you think about that? 
 
 A. There is, among a certain class of people, a great 
 fascination in hospital work. Men and their families be- 
 come interested in it. They secure contributions that if 
 they were not interested in the management of the hos- 
 pital actively I do not believe would be tendered to the 
 hospital. We have people there is a certain pride 
 among them to see who can secure the largest contribu- 
 tions towards the institution. We would lose that if it 
 were entirely a State institution. 
 
 Q. You said you did not feel like making any unkind 
 remarks or casting any reflections upon other institutions. 
 What are your views about the consolidation of the hos- 
 pitals reducing the number? 
 
 A. There are a great many, and it is a great tax, not 
 only on the State, but also on the people; but they are 
 helping on all sides, and I think our citizens here are 
 openhanded enough to give regardless of the institution. 
 If the hospitals were consolidated, the patients that were 
 injured on the South Side or the East End or in other 
 places would have to be taken too far for treatment, but 
 I presume that you mean there would be branch institu- 
 tions under a central head. 
 
 Q. Yes. 
 
 A. I am afraid the public at large would lose interest 
 in it under those conditions. 
 
689 
 
 By Mr. Woodward : 
 
 Q. Instead of a number of the board of managers in- 
 teresting their families and friends, there would be a 
 fewer number interested? It would reduce the numbers 
 that were intrested? 
 
 A. That is what I think. 
 
 By Mr. Moyer: 
 
 Q. Are the board and president in your institution 
 paid for their services? 
 
 A. The president in our institution pays money out 
 of his own pocket. 
 
 Q. None receives a salary? 
 
 A. Oh, no. I have been connected with the hospital 
 for twenty years and I have never got a cent of salary. 
 It has cost me five hundred dollars since the first of 
 January and there are others that have done the same. 
 
 Q. My line of examination was just following out the 
 idea that the presidents were paid? 
 
 A. I don't know of any. I never heard of one in any 
 institution that was paid. We pay the superintendent 
 and the working force and the nurses. I presume the 
 nurses get the same in other institutions as in ours. They 
 get eight dollars the first year, ten the second and twelve 
 the third. 
 
 Mr. Moyer : We are not sitting as a Board of Charities 
 or Appropriations. We are trying to remedy some of 
 the conditions. 
 
 Mr. Stewart : I am interested in the Children's Hospital, 
 too. It is getting along finely. They have a small en- 
 dowment. The Homoeopathic Hospital has a fair endow- 
 ment. If I could live long enough I would like to see 
 the day that hospital would be supported on the interest 
 of the endowment. This may sound like a plea for cash, 
 but I didn't come here with that intention. 
 
 Q. You are familiar with a number of the other hos- 
 pitals in this city? 
 
690 
 
 A. Reasonably so. 
 
 Q. In your judgment are they wisely and economically 
 managed ? 
 A. Yes, sir. 
 
 Q. And that no unwise expenditure of the State money 
 is being made. 
 
 A. Not that I know of; not wilfully. 
 
 By Mr. Hunter : 
 
 Q. You have a pretty vigorous system of collection; 
 do you vigorously collect the money. 
 
 A. We get what we can from the patients. We had 
 yesterday in the down-town hospital fifty-six patients. 
 We are moving out to the new one, and we are trying 
 to make this one an emergency hospital. Of the fifty-six 
 patients forty were altogether charity. 
 
 Q. Do you follow closely and vigorously and work hard 
 to make collections from those you care for and treat? 
 
 A. Yes, sir. 
 
691 
 
 G. C. UEQUHART, Esq., representing the Pennsylvania 
 Lines West of Pittsburgh, spoke as follows: 
 
 The General Counsel for the Pennsylvania Lines handed 
 me the circular the Commission sent out, and in response 
 to that invitation he requested that I come before the Board 
 and give them the benefit of any ideas that I might have 
 in regard to the revision of taxes in the State. I have 
 nothing to say about the method or system, but rather 
 prefer to leave that to others. But there is one thing in 
 regard to the system of taxation in Pennsylvania that I 
 have not heard touched on in any of the discussions, and 
 that is the manner of collection, and the system of account- 
 ing and the keeping of the records in Pennsylvania. You 
 know we have a different collector in nearly every borough 
 and township. As a fair example of that, the Pennsyl- 
 vania Lines West of Pittsburgh, which has a large amount 
 of mileage within the State, in seven different counties, 
 is obliged every year to pay out three hundred and twenty- 
 five different bills, whereas if we had the Ohio and Indiana 
 system in Pennsylvania, we could pay the money direct to 
 the county to the County Treasurer. 
 
 By Mr. Moyer : 
 
 Q. Do you mean on the depots and so forth ? 
 
 A. Property and rights of way. 
 
 Q. Any realty used in the operation of the railroad is 
 exempt from taxes? 
 
 A. Yes, sir. It takes three hundred and twenty-five 
 bills to pay our taxes in Pennsylvania, whereas in the 
 States of Ohio and Indiana about nine vouchers would pay 
 that. 
 
 Q. How is that done? 
 
 A. In the States of Ohio and Indiana I think it would 
 be a great help to you gentlemen if you would slip out 
 
692 
 
 there and have a little talk with the State Auditor in 
 Ohio and Indiana and you Would get some valuable in- 
 formation. In Ohio all the taxes are collected by the 
 County Treasurer, and the County Auditor keeps the books 
 of all the collections and all levies, and the funds are 
 carried in accounts and credited to the different officials. 
 
 Q. We have no County Auditor? 
 
 A. No, but I thought that you probably might want to 
 consider some question of that sort. 
 
 Q. Your proposition would be to create the office of 
 County Auditor? 
 
 A. The name would not make any difference. It would 
 be very convenient for a large corporation. In the State 
 of Ohio we are in fifty-seven of the fifty-eight counties. 
 
 By Mr. Woodward: 
 
 Q. How are the bills sent? 
 
 A. Very seldom sent; we have to go after them. It 
 seems to be quite a habit for the tax collector to wait until 
 the 5 per cent, has been added. 
 
 By Mr. Moyer: 
 
 Q. That is only human ? 
 
 A. Yes, sir. In the State of Ohio they have a very 
 complete system of preparing tax bills. After that work is 
 done in the office of the Treasurer, prior to the time of 
 the collecting of taxes, and the amounts are sent out to 
 the owners, and the property owner goes to the office and 
 all his bills are handed to him, and he pays his bills, and 
 the coupons are torn from the receipts and put in the 
 drawer and used for the purpose of checking. In Alle- 
 gheny county, when you go to the window and want to 
 find out about your property, if it is in one ward you go 
 to one window, or if it is in a borough you go to another 
 window, and so on. 
 
 By Mr. Woodward : 
 
 Q. If there is a line you have to wait your turn? 
 A. Yes, sir. 
 
693 
 
 By Mr. Moyer: 
 
 Q. What is this taxable property ? 
 
 A. Real estate and things not used in the operation of 
 the road. 
 
 Q. How is the value determined? 
 
 A. By the local assessors, the same as any other prop- 
 erty owner. 
 
 Q. Have you anything to do with the filling out of these 
 blanks, as required by the Anditor-General ? 
 
 A. No, sir. 
 
 Q. Have you heard any complaint, or any expression that 
 it would be more handy if the returns were made at the 
 close of the year instead of the first Monday of November ? 
 
 A. I believe I have heard the Accounting Department 
 speak of that, to have to concur in time with the report 
 of June 30, as required by the Interstate Commission. 
 
 Q. June 30th or December 31st? 
 
 A. Yes, sir. 
 
 Q. That would be the capital stock tax year? 
 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. How would it do for the different tax collecting offi- 
 cials to certify a tax to the County Commissioners, or 
 to the Auditor-General, and have the Auditor-General send 
 you a bill ? 
 
 A. That is practically the method in West Virginia. Rail- 
 road property is assessed by a Board of Public Works. The 
 Board of Public Works receives reports from the different 
 counties, and when the reports are all in the taxes are 
 compiled and a complete bill made against the corpora- 
 tion railroads I am referring to and those bills paid 
 direct by the corporation for all its property in the State 
 to the State Treasurer, and the State Treasurer certifies 
 certain money back to each taxing district in the county. 
 
 Q. How would you get a revision in case you wanted 
 an appeal. You would have to go back to the original tax 
 levying official? 
 
694 
 
 A. Yes, sir. So far as corporations are concerned, the 
 matter is handled by a State Board. For instance, in 
 West Virginia, a railroad is valued on its tangible prop- 
 erty. The very instance I speak of, if there is any appeal 
 as to the valuation it has to be done then and there, before 
 they certify their official values. 
 
 By Mr. Hunter : 
 
 . Q. What is your opinion as to the present method of 
 assessing valuations ? 
 
 A. I have no complaint to make about that. 
 
 Q. You find them fair, do you? 
 
 A. Usually so; usually, a little personal talk with the 
 local official and resorting to maps and other things will 
 shoAv him his mistake. 
 
 Q. Where do you find that trouble, generally ? 
 
 A. Mostly in the assessor, in determining to his satis- 
 faction the portion of the ground owned by the company, 
 used for railroad purposes, that would come under the 
 general corporation tax. We have no complaint on that 
 ground. We have had very good results. 
 
 By Mr. Moyer; 
 
 Q. Are you obliged to pay any tax other than the cap- 
 ital stock tax in the States of Ohio and Indiana? 
 
 A. In the State of Ohio we pay a tax of fifteen thou- 
 sand dollars a year, which is fixed, and divided among the 
 railroads of the State, in proportion to their property 
 there. 
 
 Q. Fifteen thousand dollars is your tax f 
 
 A. No, that is the total. We pay a tax in the State of 
 Ohio a direct tax a tax on real and personal property. 
 Indiana is the same way, only two taxes, a tax on real 
 and a tax on personal property. 
 
 Q. A tax on real and a tax on personal property ? 
 A. Yes, sir. We have no capital stock tax in Ohio and 
 Indiana. 
 
695 
 
 Q. Instead, they assess the tangible assets ? 
 
 A. Yes. sir. In the States of Ohio and Indiana all stock 
 is subject to a tax for State purposes. In Pennsylvania 
 we don't pay a State levy. 
 
 By Mr. Brown : 
 
 Q. As I understand it, the railroads in Pennsylvania 
 are fairly well satisfied with the present tax law ? 
 
 A. I believe they are. 
 
 Q. As I understand it, it is only the annoyance in 
 making the payments ? 
 
 A. Yes, sir. 
 
 Q. You will find that is going to be a very difficult 
 thing to correct. The local authorities are very jealous of 
 their prerogatives. 
 
 A. I realize it would be a hard matter to correct. I 
 felt that I would like to call the attention of the Commission 
 to it, and I have never seen or heard it discussed. 
 
 Here the Commission adjourned to meet Friday, March 
 25, 1910, at 10 o'clock A. M. 
 
696 
 
 Public meeting, Pittsburgh, Pa., morning March 25, 
 1910. 
 
 And now, Friday, March 25, 1910, the hour of 10 o'clock 
 A. M. having arrived, the Commission met, pursuant to 
 adjournment. 
 
 JAMBS A. BEAVER, ESQ., representing the Pennsylvania 
 State College, spoke as follows: 
 
 If your solicitor will indicate what you would like to 
 hear I will give you any information in my power. So 
 far as I know, I appear here by the direction of the Presi- 
 dent of the Pennsylvania State College, the college having 
 been summoned, or an intimation made, that the Com- 
 mittee would be glad to hear from its representatives as 
 to the relation which it bears to the State. If you wish 
 information on that subject, I will be glad to give you 
 what I know. It is peculiar, absolutely unique. It has 
 a relation to the State that no other institution in the 
 United States has, educational, charitable, or any other 
 sort. I do not think that this has ever been quite under- 
 stood by our legislative authorities. In the constractual 
 relations, and those of the State to the United States, and 
 the State and the college, it is absolutely unique. Then 
 I might have a suggestion or two to make as to its main- 
 tenance, growing out of the contract which the State made 
 with the United States and with the college. If Mr. Brown 
 will interrogate me and guide me in what you want to hear, 
 I will be glad to give you any information that I have. 
 
 By Mr. Brown : 
 
 Q. I assume from what you say that it is proper for the 
 State to appropriate money for the support of such insti- 
 tutions ? 
 
697 
 
 A. It is not only proper, but an absolute contract that 
 it will do it. 
 
 Q. Where is the State benefited by the maintenance of 
 such an institution ? 
 
 A. From the same point of view that the State is bene- 
 fited by the maintenance of a system of education. The 
 Constitution, you know, provides for the maintenance of 
 a thorough system of education, under the Act of 1854, re- 
 lating to what we call high schools. The question has been 
 raised as to whether there was a high school until 1885, 
 until the law of that year was passed. Under the law of 
 1854, which authorized the establishing of schools in the 
 different counties, we have had high schools in Pennsyl- 
 vania, but it was the United States Government that really 
 started the idea of the education of the industrial classes 
 for the pursuits and professions of life. 
 
 In 1853 Governor Bigham called the attention of the 
 Legislature to the condition of our agriculture, and sug- 
 gested that we have a State Chemist appointed to make 
 some analysis of the agricultural conditions, and an an- 
 alysis of the soils. Judge Watts and Robert A. Walker, 
 and men of that class, took that idea up, and in 1853 had 
 a charter granted by the Legislature for the Farmers' High 
 School of Pennsylvania. Inside of a year, in 1855, a new 
 charter was granted, under which the Farmers' High School 
 of Pennsylvania was organized. General Irwin, of Center 
 county, gave two hundred acres of land to the college, and 
 the people of Center county gave twenty-five thousand 
 dollars, on the condition that the institution would be lo- 
 cated in Center county. Probably a dozen other people 
 made offers of farms, and the people of Blair county 
 and other counties made offers of ground on condition that 
 it would be located in their several counties. Governor 
 Pollock, then Governor of Pennsylvania, and several of the 
 trustees of the Farmers' High School were appointed a 
 Commission to go over the State and determine where the 
 institution should be located. After visiting the State, 
 
698 
 
 thirteen different locations were considered, but they fi- 
 nally determined on Center county, and they finally de- 
 cided to accept the two hundred acres of land donated by 
 General Irwin and the twenty-five thousand dollars given 
 by the citizens of Center county to be used towards the 
 erection of the buildings. In the original act of incor- 
 poration, the Commonwealth authorized the Agricultural 
 Society of Pennsylvania to donate as much as ten thousand 
 dollars to this institution, which it did. Elliott Cresson, 
 of Philadelphia, was the first private contributor outside 
 of Center county, and he gave five thousand dollars. Sub- 
 sequently, the Legislature appropriated fifty thousand dol- 
 lars towards the erection of the buildings. The State gave 
 in the neighborhood of one hundred thousand dollars for 
 the erection of the buildings, and the people throughout 
 the State gave about a like sum. That ushered in the 
 Farmers' High School of Pennsylvania. 
 
 In 1862, under the leadership of Governor Morrell, then 
 in the lower house of Congress, and with the co-operation 
 of James T. Hale, a member of Congress and also a trus- 
 tee of the Farmers' High School, what was called the 
 Morrel Land Grant Act was passed, and it was signed by 
 Lincoln on the second day of July, 1862. The object of 
 the institutions organized under that Act is fully set out in 
 the Act itself. That Act appropriated and set apart thirty 
 thousand acres of land for each Member of Congress and 
 Senator in Congress. Pennsylvania, by that Act, secured 
 seven hundred and eighty thousand acres of land. And 
 the Legislature of Pennsylvania, which was in session in 
 April, 1863, had before it that Land Grant Act, and an 
 offer of the United States of seven hundred and eighty 
 thousand acres of land on condition that it would erect 
 and maintain at least one institution whose principal ob- 
 ject should be, without excluding the other studies, to 
 teach such branches as related to agriculture and the me- 
 chanical arts, in such a way as to provide the industrial 
 classes with the pursuits and professions of life. If you 
 
699 
 
 have ever seen a better scheme of education, I would like 
 to see it. The industrial classes, mark you not a high 
 school education but an education that would fit the in- 
 dustrial classes for the various pursuits and professions 
 of life. A profession in that day was understood to be 
 either theology, law or medicine. That was about the 
 run of professional education. Now, instead of dealing 
 with the professions that deal with the degenerative side 
 of humanity, our professions are looking to the construc- 
 tive side of humanity, and the engineer is the great man 
 of to-day. We don't deal with the degenerative man, but 
 the engineer deals with the building up of things, and 
 it is under this act of Morrell's, and the educational side 
 of our whole make up that has been established under 
 that Act, that the engineer has become the great man of 
 to-day, and has made our industrial life and our ordinary 
 life what it is. Take that light, for instance, that comes 
 from this bill, and comes from the education of the indus- 
 trial classes that arises out of this Land Grant Act. Now, 
 the United States said to the State of Pennsylvania, we 
 will give you seven hundred and eighty thousand acres 
 of land on condition that you erect, maintain and support 
 an institution of this kind, and the Legislature, on the 
 first of April, 1863, in an Act of Assembly, which I will 
 read here, says: "We will do that." Seven hundred 
 and eighty thousand acres of land would be worth at least 
 nine hundred and seventy-five thousand dollars. Here 
 was practically a million dollars thrown into the lap of 
 Pennsylvania on condition that it should maintain an in- 
 stitution. Then the Legislature turned around and said 
 to the Trustees of the Farmers' High School that this 
 college was along the very lines of what Morrell said in 
 this Act that they were to do, this Act that was passed 
 on the second day of July, 1862. It said to them, "You 
 are already teaching agriculture, you simply have to 
 enlarge along the mechanical arts side, and this college, 
 for which the State of Pennsylvania contributed a him 
 
700 
 
 dred thousand dollars and the people of the State a like 
 amount, why not just take that institution and meet the 
 requirements of this Land Grant Act?" and the Trustees 
 said, "Certainly, you take it, and give us the benefit of 
 the grant. ' ' In 1863 the Legislature passed this act : 
 
 ' ' Whereas, By an act of Congress, passed the second 
 day of July, one thousand eight hundred and sixty, 
 two, a grant of land was made to the several States 
 and Territories which may provide colleges for the 
 benefit of agriculture and the mechanical arts, equal 
 to thirty thousand acres for each Senator and Rep- 
 resentative in Congress to which the States are respect- 
 ively entitled by the apportionment under the census 
 of 1860, which Act of Congress requires that the sev- 
 eral States, in order to entitle them to the benefit 
 of the said grant, should, within two years from the 
 date of said act, express their acceptance of the same ; 
 and 
 
 "Whereas, the Legislature of Pennsylvania has al- 
 ready shown its high regard for the agricultural in- 
 terests of the State by the establishment of the Agri- 
 cultural College of Pennsylvania, by making liberal 
 appropriations thereto; therefore, 
 
 "Be it enacted by the Senate and House of Eepre- 
 sentatives of the Commonwealth of Pennsylvania in 
 joint assembly met, and it is hereby enacted by the 
 authority of the same. That the Act of Congress of 
 the United States, passed the second day of July, one 
 thousand eight hundred and sixty-two, entitled "An 
 Act donating lands to the several States and Territories 
 which may provide colleges for the benefit of agricul- 
 ture and the mechanical arts, ' be and the same is hereby 
 accepted by the State of Pennsylvania with all its 
 provisions and conditions, and the faith of the State 
 is hereby pledged to carry the same into effect." 
 Accepts the Act of Congress with all its conditions and 
 provisions, and pledges the faith of the State to carry it 
 
701 
 
 into effect. If you can find any other such enactment by 
 v,he State of Pennsylvania in regard to any other institu- 
 ion in the State of Pennsylvania, I have never seen it. 
 ind I would be willing to leave it to any lawyer if that 
 was not a contract between the State of Pennsylvania and 
 the United States Government. And the Legislature in this 
 Act said further: ''We can meet the requirements of this 
 Act by taking this college and by the addition of the 
 instruction in the mechanical arts, we can meet the re- 
 quirements of this Act, and we will pledge the faith of the 
 State to carry out all of its conditions and provisions." 
 Now the Act of Congress requires that no part of the income 
 o.v this land grant shall ever be used directly or indirectly, 
 in any manner whatever, in the erection, maintenance or 
 repair of any building or buildings. What then? Why, 
 of course, the State having pledged its faith to carry out 
 the provisions of the Act of Congress, is bound to maintain 
 the buildings. Now what follows? I said we had seven 
 hundred and eighty thousand acres of land, sixty thousand 
 less than New York. New York had two more repre- 
 sentatives than we had. We have twenty-four Represen- 
 atives and two Senators and they had twenty-six Repre- 
 sentatives and two Senators. Under the provisions of 
 the Land Grant Act no State was allowed to locate this land 
 outside of itself. Of course, Pennsylvania having no land 
 within its borders, it could not locate anywhere, So it 
 was with all the States outside of the Southern States, 
 which were in rebellion. Thirty thousand acres of land 
 was granted to each tate ior each Representative and 
 Senator in Congress. This act also provided for a Commis- 
 sion to consist of the Governor, Surveyor General and the 
 Auditor General, who should attend to the disposition of 
 this land grant. Our Commission consisted of Governor 
 Curtin, Campbell, and I have forgotten the name of the 
 Auditor General. They put the land on the market and 
 sold it for an average of fifty-three cents an acre, less than 
 one-half of what the United States was getting for their 
 
702 
 
 land which they were selling in quarter sections. It really 
 should have amounted to about nine hundred and seventy- 
 five thousand dollars, and it actually yielded about three 
 hundred and ninety thousand and some hundred dollar?. 
 Campbell made a report after the thing was closed up. I 
 knew him very intimately. He was humiliated at the way 
 things turned out. He made a report to the Legislature. 
 He said that this thing was a sacrifice. He said we have in 
 the neighborhood of three hundred and ninety thousand 
 dollars, and he suggested that we put it into United States 
 bonds. He also suggested that the Legislature authorize 
 the Commission to sell the bonds, and turn the money over 
 to the Treasurer of the State of Pennsylvania, and that 
 the State should give to the Agricultural College of Penn- 
 sylvania its bond for five hundred thousand dollars, and in 
 that the Land Grant Act requires each State to maintain 
 the fund which it receives from the Land Grant Act at at 
 least 5 per cent, interest, I suggest that the State makes its 
 bond bearing 6 per cent, interest for fifty years, the in- 
 terest in the meantime to be paid to the Agricultural Col- 
 lege of Pennsylvania. There is the foundation of the 
 endowment of the Pennsylvania State College, to which 
 the United States contributed in the neighborhood of four 
 hundred and six thousand dollars, and the remaining nine- 
 ty-three thousand and some hundred dollars was simply 
 a gratuity on the part of the State of Pennsylvania in 
 keeping their contract made with the United States. In- 
 stead of giving their bond for the amount received from 
 the Land Grant Act, and at 5 per cent., the State gave its 
 bond for five hundred thousand dollars at 6 per cent., 
 and the State College receives every year from that thirty 
 thousand dollars, fifteen thousand dollars semi-annually 
 on that bond for its maintenance. From 1887 the State 
 gave irregularly to the college at different times. One 
 time, shortly after it took the college, it provided for the 
 payment of a mortgage of eighty thousand dollars, which 
 was necessitated by the erection of the old main hall. Two 
 
703 
 
 sets of contractors broke up in the construction of that 
 building. One end of the building was erected, and 
 students were received in 1859. War came along, and 
 building material advanced, and the building, instead of 
 costing ninety thousand dollars, cost nearly two hundred 
 thousand dollars. It required a mortgage of eighty thou- 
 sand dollars, bearing 7 per cent, interest, and it cost 
 fifty-six hundred dollars every year to keep that mortgage 
 alive. Finally it was paid by the State. Since that time 
 there have been a half a dozen acts passed by Congress, 
 one called the Hatch Act, which gave fifteen thousand 
 dollars a year for the purpose of making experiments in 
 agriculture, and in order to meet the requirements of this 
 bill, the trustees of the college conveyed to themselves, 
 and to the institution one hundred acres of land, to be 
 set apart under this trust, that it should be held inviola- 
 bly sacred, for all times, for the purpose of the Hatch 
 Act, under which the State, and through the State the 
 college was to receive fifteen thousand dollars a year for 
 experiments, and that makes the experiment station of 
 Pennsylvania, and the State College holds that one hun- 
 dred acres in trust, inviolably in trust, for meeting the 
 requirements of the Hatch Act, and it has so held it, and is 
 bound to for all time. They could not sell it, it is held 
 in trust for that purpose, and as a result of that the Legis- 
 lature said that the income of this Act was to go to the 
 Agricultural College of Pennsylvania. In the meantime 
 the section in the Morrell Land Grant Act, which com- 
 pelled the land grant colleges to give instruction in the 
 mechanical arts and agriculture, compelled the college to 
 enlarge its sphere, and instead of being the Agricultural 
 College of Pennsylvania, confining its time and attention 
 to agriculture, it took up mechanical arts, and has 
 grown into one of the greatest schools in the United 
 States. It is third in its number of students in the United 
 State, and there are more State College men within ;i 
 radius of a hundred miles of Pittsburgh, giving their time 
 
704 
 
 and attention to the mechanical arts,, and building up 
 your industries, than from any other institution in the 
 United States. I can summon two hundred by telephone 
 that are located in this vicinity, New Castle, Youngstown, 
 Cleveland, etc., and some of the best engineers you have 
 in the various departments of your industrials come from 
 State College. We had a man a few years ago who had a 
 great reputation at the college for flunking. He came to 
 be known as ' l Flunky so-and-so. ' ' He could not get along 
 in his studies, and he finally hit on metallurgy. He found 
 his notch. He could control the college students and get 
 anything from them he wanted. He was not much of a 
 success there at school until he took up metallurgy. When 
 he graduated, and he did graduate in that branch without 
 any trouble, he came here and became assistant superin- 
 tendent of one of your largest furnaces. He worked as 
 assistant superintendent for a number of years. The 
 superintendent there died, and the thing ran along under 
 "Blank's" management. He could control the men, a?id 
 he was a master in connection with the workings of the 
 furnace, and he made a record on that furnace that broke 
 the record of the world. He was wearing himself down, 
 and had all the responsibility, and he asked the concern 
 to appoint a superintendent, and they appointed him, and 
 he has been there ever since, and making good. I could 
 tell you of others, and could name them. It is just such 
 work as that that resulted from the extensions of the 
 colleges as required by the Land Grant Act, because it re- 
 quired that all these colleges not only should give in- 
 structions in agriculture, but also in the mechanical arts. 
 The Morrell Acts says that they shall fit the industrial 
 classes for the various pursuits and professions of life. 
 You must keep that in mind all the time. Now, the Legis- 
 lature of Pennsylvania, of course, in order to meet the 
 requirements of the Act of Congress, had to have a col- 
 lege, because that is the fundamental question in the 
 Morrell Act, and they said to the trustees of the Agricul- 
 
705 
 
 tural College of Pennsylvania, "Here is this college we 
 have helped you to build, let us take it/' and the trustees 
 said, "Certainly," and in the Act of 1863, they said, "We 
 pledge the faith of the State to maintain this college under 
 the Act of 1862. That meant exactly what was in the 
 minds of the trustees of the college, and they said, "When 
 we have the State of Pennsylvania pledging its faith to 
 maintain this institution, it has got to be maintained if 
 there is anything in the faith of the State. That constituted 
 the contract between the United States and the State of 
 Pennsylvania, and the State of Pennsylvania and the col- 
 lege. Now, it is true that this was never considered as a 
 contract in the ordinary sense. It was not considered a 
 contract under which the college could sue the State, but 
 the Legislature, in carrying out the pledge of faith of the 
 State of Pennsylvania, must determine just how far it 
 is to be carried out. The trustees of the college come 
 regularly before the Legislature with the budget, some- 
 times running as high as three million of dollars, sometimes 
 less, and they generally get about one-tenth of what they 
 ask for. We have a great number of students there now, 
 and the board is considering the question of limiting the 
 freshman class of the coming year to five hundred. Last 
 year it was four hundred and thirty-five. 
 
 Mr. Brown: The Legislature of Pennsylvania in the 
 session of 1909 appropriated a certain amount for two 
 years for the maintenance of the Department of Engineer- 
 ing, and also an amount to make good certain payments. 
 The Governor cut both these appropriations, and gave cis 
 his reason the insufficiency of State revenue, the lack of 
 sufficient funds being caused by appropriations to institu- 
 tions not under State control. In your opinion, should that 
 college, the State College, be taken care of before any 
 money was appropriated to institutions not under State 
 control ? 
 
 A. Yes, sir, I think it should because of the contract. 
 
 Q. Entirely independent of the contract, do you think 
 it should? 
 37 
 
706 
 
 A. Yes, sir. 
 
 Q. Entirely independent of the legal obligation take 
 the moral obligation? 
 
 A. Yes, sir. I got a notice the other day from a little 
 fellow named A. Solomon Silverstein, informing me that I 
 was elected an honorary member of the Cosmopolitan Club 
 of the State College, composed of men from nearly every 
 country, graduates from State College. Here were boys 
 from Cuba, Porto Rico, and from all over the world, and 
 they got up a little club. It was signed by A. Solomon 
 Silverstein, secretary. A few years ago, before Dr. Sparks 
 came to the college, having been president of the Board of 
 Trustees, I was asked to occupy the president's chair. I 
 spent most of my time there during my vacation. Miss 
 Smitsky, the president's secretary, told me of a young fel- 
 low from Philadelphia, who prepared at the Brown Train- 
 ing School, who was there with only three dollars in his 
 pocket to get an education. I sent for the boy and looked 
 him over, and made up my mind he was going to make 
 good. I said to her, "You tell this boy to go to McAllister 
 Hall and board three weeks at my expense." She told 
 him the next day, and he would not go. He said, "I have 
 a job now." He never took the three weeks' boarding. 
 He had a job in the dairy building, giving so many hours 
 a day there. He is now in his third year a bright young 
 fellow. He worked in the day and is studying at night, 
 and he is going to be one of the educated men of this State. 
 I was sitting in the office one day when a fellow came in. 
 He said, "I have a suit of clothes and twenty dollars, and 
 of course that isn't going to pay for my books, boarding 
 and so forth. "What am I going to do?" I said, "Over 
 there at McAllister Hall the people will give you a table to 
 serve if you can bring twelve people there, and you will get 
 your board." He said, "I am a stranger, I don't know a 
 soul here." Dr. Welsh became interested in the case, and 
 said he would see what he could do. He sat back and 
 said, "Will you pare potatoes?" The boy said, "I will do 
 
707 
 
 anything that is decent and honorable to get an education. ' ' 
 Dr. Welsh said, "You pare potatoes two hours a day and 
 you will get your board. ' ' And he did that, and now he is 
 away up in his class. I know three fellows that have two 
 rooms together, and every evening at eight o'clock they 
 shut up shop and press trousers at ten cents apiece, and 
 are going through college in that way. 
 
 By Mr. Brown: 
 
 Q. I assume that it is your opinion, if there is not suffi- 
 cient revenue, that this institution should be favored? 
 
 A. Yes, sir. 
 
 Q. All of its immediate needs should be satisfied? 
 A. Yes, sir, and as a matter of fact the contract comes 
 first. 
 
 Q. Assuming the revenue was not sufficient, do you think 
 the State would be justified in increasing her list of tax- 
 ables ? 
 
 A. Yes, sir. 
 
 Q. You think a State should increase the taxables in 
 order to take care of these institutions? 
 
 A. I have had that in mind for a number of years, and 
 a great many of the States are setting the example. In 
 one State they laid a tax of one mill for the support of 
 their land grant college. Probably ten or twelve States 
 have levied a tax of one-tenth of a mill for the support of 
 the land grant colleges, in accordance with the contract 
 which they had made with the United States to support at 
 least one college, whose principal object shall be to give 
 instruction in the sciences that relate to agriculture and the 
 mechanical arts. 
 
 Q. Your idea is that in such institutions those who take 
 a course in those branches should be cared for, and the 
 State should provide sufficient money ? 
 
 A. No, I don't think that the State should say, ''You go 
 there and we will board you." The college endeavors to 
 
708 
 
 provide for them. I know of two hundred fellows that are 
 going through college on two hundred dollars a year. 
 
 Q. Where is the State limited in its obligation under the 
 contract of the grant? 
 
 A. It is not limited. 
 
 Q. It should take care of this institution? 
 
 A. Yes, sir. 
 
 Q. And that should be done even to the withholding of 
 their support for institutions not under State control? 
 
 A. Yes, sir. I never went that far in my personal re- 
 lation to this thing. When I was in the executive office I 
 had the same trouble. I was confronted with so many 
 millions of appropriations and so many millions less of 
 revenue, and it had to go around. I worked it out this way, 
 that no charitable institution should lack funds to carry 
 out its work. There is a hospital here, the West Penn Hos- 
 pital. They had so much to pay a mortgage, so much for 
 maintenance and so much for improvements. I told James 
 B. Scott, who came to see me with reference to this appro- 
 priation, that they were not to turn a patient away from 
 the institution. I told him how much they would be 
 allowed, and when we had talked it over he said it was 
 reasonable, and they would have to be satisfied. We have 
 built a stone-like structure out of concrete, and we have 
 one of the best chemistry lecture rooms in the United 
 States. A few years ago our mining department became 
 so pushed for room that something had to be done. We 
 could not wait until the Legislature met. We solicited 
 funds. We came to Pittsburgh and a half a dozen people 
 gave a thousand dollars. One man gave twenty-five hun- 
 dred dollars. We put up a hemlock building, and whilst it 
 is a miserable affair, yet it serves the purpose, and will until 
 we can get something better. 
 
 By Mr. Brown : 
 
 Q. Do these men stay mostly in the State of Pennsyl- 
 vania ? 
 
709 
 
 A. They go wherever the inducement is greatest. A 
 man interested in mining will go to Nevada or Colorado, 
 or sometimes to Mexico. There is a great demand for in- 
 structors in this branch, and we are every year sending 
 men all over the country to fill these places. One man is 
 at the head of the experimental station in Oklahoma, and 
 a man by the name of Fields has been connected with the 
 Agricultural Department for some time. As I said before, 
 I could summon two hundred men by telephone within fifty 
 miles of Pittsburgh, and that will give you some idea of the 
 influence that the men of this institution are exerting upon 
 the industries and institutions of this Commonwealth. 
 
 By Mr. Moyer : 
 
 Q. I understood you to say that you have students from 
 almost every section of the world? 
 
 A. A few. 
 
 Q. Do they pay the State College a tuition fee? 
 
 A. Not now. "We used to charge one hundred dollars for 
 people outside of Pennsylvania, but that led to a good many 
 complications, and we stopped that. 
 
 Q. Based upon the fact that the State of Pennsylvania 
 maintains this institution, don't you think that the students 
 there should be confined to citizens of the Commonwealth? 
 
 A. The college has never encouraged students from out- 
 side of the State to become enrolled there. The college is 
 so well known, and particularly in agriculture the standing 
 of the college is such that it draws students from every 
 State. To have such a rule would result in people coming 
 into the State and locating somewhere, and making their 
 declaration of citizenship, and say I am a citizen of such 
 and such a place, or town or borough, and then become a 
 student at the college. He would have a right to become 
 a citizen, and then would have the right to become a 
 student. I have a list here of the students from the several 
 counties in Pennsylvania. Allegheny leads with 95, Phil- 
 adelphia next with 87, and Center county next with 70. 
 
710 
 
 And so it is all down the list, and every county is repre- 
 sented but Pike county. That will give you some idea of 
 the representation throughout the State. 
 
 By Mr. Hunter : 
 
 Q. Assuming that the State would appropriate all the 
 funds that you would ask for, would the number of students 
 at your college increase with greater rapidity than it has 
 in the past? 
 
 A. I don't know that it would. I don't think we could 
 keep up with the increase. The town is endeavoring to take 
 care of the students so far as lodging is concerned. We 
 don 't have college dormitory buildings. If we did we would 
 get fifty dollars for every room, and that would be an in- 
 come. That would be one way to provide for this institu- 
 tion, and one of the best ways. If we had dormitory build- 
 ings to accommodate a thousand men we would derive a 
 nice income from them, and the State could not put the 
 money anywhere to better advantage. 
 
 By Mr. Moyer: 
 
 Q. I am not quite clear as to what your test of citizen- 
 ship is. You said that if a boy declares himself a citizen of 
 the State of Pennsylvania, he can be enrolled as a student 
 at State College. Is that test a mere declaration ? 
 
 A. Citizenship depends upon the intention. If a man 
 declares his intention to become a citizen, he becomes a 
 voter, because it requires citizenship to become a voter, and 
 so in a certain time he becomes a charge upon the district 
 into which he comes, and that district is bound to support 
 him, and so it is all the way through in regard to the rec- 
 ognition of citizenship. 
 
 Q. You would think it would be all right then, inasmuch 
 as the State appropriates money for the maintenance of 
 this institution, and this established contract entered into 
 with the United States Government, that the student body 
 should be confined to the State. 
 
 A. If you look at it from that point of view I think it 
 
711 
 
 would be all right. At other institutions, such as Cornell, 
 students from Pennsylvania pay a fee to go there. 
 
 Q. They pay a tuition fee? 
 A. Yes, sir. 
 
 Q. You refer not to the Cornell University, but to the 
 agricultural school. 
 
 A. It is a part of the Cornell University, and also a 
 State institution. I wish we had had a Cornell in Penn- 
 sylvania. We would have had a million dollars out of the 
 land grant. Cornell bought the land from the State, and 
 located it himself, because the State couldn't locate it. He 
 held the land and sold it at a good price. He never sold an 
 acre for less than ten dollars, and some of it as high as 
 twenty-five. The college was to pay Cornell for what he 
 had put into it, with interest at 6 per cent., and the pro- 
 ceeds of the sale of the land were to go to the Agricultural 
 College and Cornell University. If we had had someone 
 here to take this seven hundred and eighty thousand acres 
 of land and locate it in the timber lands of Wisconsin and 
 some of the other States, and held it for us to be disposed 
 of in the same way, we would have gotten enough out of it 
 so that we wouldn't have to bother the State. 
 
 Q. It seems to me, inasmuch as you made this state- 
 ment here that the board of trustees was thinking of limit- 
 ing the freshman class to five hundred on account of there 
 being so many enrolled, that there should be no difficulty in 
 coming to the conclusion that State College should confine 
 its students to those who are citizens of the Commonwealth. 
 
 A. We would have to go further. Say we limit the 
 number of students coming to our college to five hundred 
 per year. We would have to go further and say they will 
 be admitted from the counties of Pennsylvania in propor- 
 tion to their population, if they claim the right to them. 
 That would be necessary, and indeed originally that was the 
 case. If Center county would say we want more than our 
 proportion, the trustees would say, "No, you can only have 
 
712 
 
 your proportion, according to the population, of the num- 
 ber enrolled. 
 
 Q. What in your judgment should the State do with 
 charitable institutions over which it has no control, and the 
 title to his property is not vested in the State in its rela- 
 tions to these institutions? Should it continue appropri- 
 ating to such institutions ? 
 
 A. That is a very broad question. Of course, Pennsyl- 
 vania does more of that than any other State. At least 
 it did when I made a study of it, and I never could quite 
 make up my mind that the State of Pennsylvania could 
 shut up its bowels of compassion. 
 
 Q. At the time you were Governor did it ever strike you 
 that there were too many hospitals ? 
 
 A. Yes, sir. 
 
 Q. What would you say as to a consolidation of hospitals ? 
 
 A. I suppose I made as many enemies as anyone pos- 
 sibly could by vetoing bills for hospitals. I have gone 
 through hospitals that had a hundred vacant rooms, and 
 again into others that had not only every bed occupied, but 
 the operating tables. They had a patient sleeping on the 
 operating table because there was no bed. The hospitals 
 for the insane and our miners' hospitals are such institu- 
 tions. The State has paid for them and has the title to 
 them, and is under obligation to maintain them. A great 
 many of these private hospitals are coming in and saying, 
 ' ' We will build a hospital and help maintain it, but we want 
 help from the State." Why shouldn't we give the help to 
 the hospital rather than build it and own it? It can't be 
 used for any other purpose. The State rather gains by it 
 rather than loses. I remember during my term in the 
 executive office that the Legislature appropriated a certain 
 amount for three miners' hospitals. I appointed three of 
 the keenest men I knew of in Pennsylvania to build them. 
 After they reported to me what they could do with the ap- 
 propriation, and had located the three places for the 
 buildings, I said it wouldn't do, that there would have to 
 
713 
 
 be four, and they would have to build them out of this ap- 
 propriation. I told them if they could not do that they 
 would have to go to the several communities in which they 
 are located and say that they must help finish them. They 
 had assurances from the different communities that such 
 would be the case, and they did build the four hospitals, 
 one at Mercer, one in Philadelphia, one in Center county 
 
 and one in - , four regions in which hospitals 
 
 were needed. We cannot hustle these men injured in mines 
 all over the State. There must be some place near where 
 the injured can be taken, and you know that question of 
 taking care of the diseased and injured is just as important 
 as the question of education. Where you can get a com- 
 munity to help build an institution and help the State pay 
 for it, it looks like a good proposition. 
 
 Q. And the title is vested in the State? 
 
 A. Yes, sir. 
 
 Q. And the State should take care of its own? 
 
 A. Yes, sir. 
 
 Q. Did you ever come across a concrete example where 
 money appropriated for maintaining a hospital was ever 
 misused? Was that ever brought to your attention? 
 
 A. Oh, yes, all sorts of questions of that sort. I never 
 found a well authenticated case in which the accusation 
 was made absolute. I think in the main our hospitals are 
 thoroughly well managed, but, of course, I haven't very 
 much knowledge on that subject. 
 
 By Mr. Brown : 
 
 Q. Assuming there is a great necessity for insane 
 asylums, do you think it is proper for the State and wise, 
 to delay in the erection of those institutions, because she 
 has not money to do it and appropriate to institutions not 
 under State control ? Shouldn't she build her own institu- 
 tions first ? 
 
 A. I was on the commission for building the hospital for 
 the insane at Warren. There were only three of us, and 
 
714 
 
 you can get along with a commission of three. I said, 
 "Gentlemen, we are building for a thousand years. A 
 State does the most economical thing when it builds the 
 most reliable buildings, buildings of stone, iron and con- 
 crete, and we will put the best that can be put into this 
 building." I believe we did it. "We ran along for about 
 ten years building it, but when it was built it was there 
 for all time. "We had the best builders we could get in 
 Pennsylvania. 
 
 Q. Was it not possible to erect it in less time? 
 
 A. It could not have been erected properly in less than 
 five. 
 
 Q. So that for five of those ten years that institution 
 could have been used? 
 
 A. Yes, sir. 
 
 Q. Before you finished the institution you were paying 
 for repairs and up-keep? 
 
 A. No, I don't think so. 
 
 Q. Did you have that brought to your attention as to 
 other buildings ? 
 
 A. Yes, sir. The one at Norristown was built about the 
 same time, and before they had finished it, they had to 
 go over it. If you visit the two institutions you will see 
 the difference. I do not believe there is any economy hi 
 building for the State in a cheap way. 
 
 Q. "We have had several letters complaining that the 
 State institutions should be finished first. 
 
 A. If you put it on the ordinary business proposition 
 that a man should take care of his own first, then I think 
 it would be the thing to do. But humanity demands some- 
 times that we sacrifice self and help the other man. 
 
 Q. Do you think that would apply to the case where the 
 insane are concerned ? Why should the insane be allowed 
 to roam at large for want of proper quarters, while these 
 moneys are being distributed to these institutions? 
 
 A. That is true, and where the insane patient can be 
 
715 
 
 taken care of in the first instance and probably restored, 
 you cannot spend too much. 
 
 Q. Would the same apply to the feeble minded? 
 
 A. Not so much in that case when their ailment is 
 permanent, but when a man can be restored it is the only 
 proper thing to do. We have erred in the direction of 
 spending more money on our so-called insane patients ; 
 not strictly so in the ordinary sense, they have got beyond 
 that. They have got to the point where nothing can be 
 done for them, and they cannot be restored. But the 
 others, and the chances are that seven in ten can be re- 
 stored, should be taken care of. I became interested hi 
 the question of the larger counties maintaining their own 
 hospitals for the insane, and a great many of them are 
 doing it and doing it well, some of them perhaps not so 
 well. Just before I give way to Dr. Sparks, who can 
 tell you of the relations of Pennsylvania to the other States, 
 there are two ways that the State College can be main- 
 tained without trespassing upon any other educational 
 institution. I believe in the largest possible appropria- 
 tions to our educational institutions. I do not believe 
 that Pennsylvania can expend too much in that direction. 
 I would rather spend money in developing minds that 
 will have a tendency towards benefiting the Common- 
 wealth, than upon minds that can never do anything. 
 Q. But each man, of course, must be taken care of? 
 A. Yes, sir, just the same as you provide for your 
 paupers and your children that go to school. When you 
 look to the welfare of the State, the thing is to take care 
 of the coming man, not the man gone, although you must 
 take care of him, because the dictates of humanity compel 
 it. Dr. Atherton was a wonderfully far-sighted man in 
 his day. He had a bill introduced to lay a special tax 
 of one-tenth of a mill, or one-half or one-fourth, or what- 
 ever it may be, to be set aside for meeting this distinct 
 engagement with the United States of America and the 
 Pennsylvania State College, that is to meet the pledged 
 
716 
 
 faith of the State of Pennsylvania, which has never been 
 given to any other institution, and which has been given 
 in pursuance of the contract which the State made with 
 the United States. It said, "Here we have a college. We 
 pledge you that, and pledge to maintain it in order to meet 
 the requirements of the Morrell Act. ' ' That is one of the 
 most remarkable things in the history of this country. 
 Abraham Lincoln when McClellan was on the banks of 
 the James, when there never was a darker day in the his- 
 tory of the United States, signed this Land Grant Act, and 
 I believe that in time to come that Act will be as much 
 spoken of to the credit of Lincoln as the Emancipation Pro- 
 clamation. The Emancipation Proclamation only released 
 a race of slaves, while this bill paved the way for the de- 
 velopment of the industrial classes in the United States, on 
 whom the welfare and the perpetuity of the United States 
 depends. I don't know whether it is within the province of 
 this Committee, but there are one or two ways through 
 which this institution can be provided for. About twenty 
 other States have provided a special tax. Probably one- 
 tenth of a mill would be sufficient. It takes about a half 
 a million dollars. It takes about four hundred and seven- 
 ty-five thousand or five hundred thousand dollars a 
 year to meet the requirements. Nearly a hundred thou- 
 sand comes from the United States, thirty thousand we 
 get from the Land Grant Act, and fifteen thousand from 
 the Hatch Act. And Morrell, after this Land Grant Act 
 went into effect, and after the Southern States that had 
 been in rebellion came back into the Union, because they 
 were shut out by the Act of 1862, and yet needed it as badly 
 as we did, had a second Act passed to cover their cases, by 
 which the United States gave twenty-five thousand. It be- 
 gan with ten thousand, and afterwards went to twenty-five 
 thousand, to all of the States for the education of the 
 industrial classes along this line, and the State of Penn- 
 sylvania directed that should go to State College. Now 
 we need upwards of four or five hundred thousand dol- 
 
717 
 
 lars for maintenance, without any question of building. 
 The Governor of Pennsylvania was at Pennsylvania Day, 
 and when he had made a little address, I had an arrange- 
 ment with him, by which we would slip out, and I 
 got a carriage and drove him around the school. We went 
 through the agricultural building and the dairy building, 
 and when he came out, he stood on the steps of the agri- 
 cultural building, looking towards the Nittany Mountains, 
 and said, "I will tell you what you need here. You need 
 twenty million dollars, and I am afraid you will get it." 
 I said we didn't want it this year but would before we 
 got through with this institution if it is to compete with 
 other institutions, and so we will. "We have an offer of a 
 million to go into an engineering building. The gentle- 
 man has stated that he wants to do that more than I want 
 it, but he has got to make his million first. These great 
 industries that are building up in Pennsylvania, and build- 
 ing up Pennsylvania, must be provided for. Here is this 
 question of mining, and providing for the safety of the 
 men. It is being shown now to the people how mining can 
 be done in safety, and how safety is to be brought about, 
 and the loss of life reduced, and it is so in the other de- 
 partments. We have a class in agriculture in Greenville 
 in which the farmers of that locality are being instructed 
 as to farming. In Altoona the Pennsylvania Railroad is 
 building a building for the instruction of the employes, 
 and we send a professor there every week. We have a 
 class in Williamsport and one in Altoona in which in- 
 struction in the mechanical arts is being given, and if we 
 had the amount necessary, we could cover the State with 
 institutions of this kind, where we could be training the 
 men for the work they have to do. 
 
 In addition to this fraction of a mill tax, there is an- 
 other way. This institution is really the head of the 
 school system. We are endeavoring to have the super- 
 intendents of instruction bring their high schools to the 
 point where their graduates can be admitted to the State 
 
718 
 
 College. Suppose you appropriate seventeen millions of 
 dollars to common schools. A simple way would be to 
 provide that one-tenth should go to the maintenance of 
 the State College, and that would remedy the whole diffi- 
 culty, and would not make a particle of difference, except 
 on paper, to the State of Pennsylvania. The schools of 
 Pennsylvania would not know the difference when their 
 warrants came to be paid to them, if one-half of a million 
 were put into this out of their appropriation. Of course, 
 I know what that means to the Legislature. The average 
 Legislature gets its orders, but just a little provision of 
 that kind would not make a particle of difference so far 
 as the people are concerned. To my mind that is the 
 simplest and easiest way, and in the next two years, when 
 you come to appropriate twenty millions of dollars to 
 common schools, just say that one-twentieth of that shall 
 be for the maintenance of this institution. I believe that 
 tither one of these two things will make it easy to pro- 
 vide for this institution, if we are to do what every other 
 State is doing for their land grant colleges. 
 
719 
 
 DR. SPARKS, representing State College, spoke as 
 follows : 
 
 Governor Beaver has been connected with the college for 
 over twenty years, and he has covered the ground very 
 fully. There is something connected with the administra- 
 tion of the college which he has covered, especially the 
 point which I hoped he would, that the taxes as collected 
 from the people of the State should be invested in the 
 college, and the returns go to the State at large in the 
 way of these experiment training classes. We are starting 
 weekly schools in Greenville, in which seven or eight 
 counties are represented. Our mining work is especially 
 extensive, and all that work we think belongs to a tax- 
 supported institution. The great difficulty we have ex- 
 perienced is in getting the results of our experiments to 
 the people. We tried the pamphlet form with the farmers, 
 but you and I know that the farmer is a busy man, and 
 you cannot picture him in the evening reading a pamphlet 
 he wants to go to bed. In the winter he is engaged, and 
 all during the summer the farmer has no time to read them. 
 It is the same way in the shops. This summer we intend 
 having a session for teachers, of six weeks' duration. It is 
 to be supported out of the general funds, and we intend 
 giving instruction in agriculture, horticulture, and the 
 domestic sciences such work as has not been done in any 
 other institution, and in that way give the country dis- 
 tricts the same training as in the cities. The trouble here- 
 tofore has been that the teachers were not fully capable 
 of teaching the practical side. We propose first to instruct 
 the teachers in this practical education. For five years w? 
 are not expecting any results. Then at the end of that 
 time you will be able to see what we have done. 
 
 By Mr. Hunter : 
 
 Q. There seems to be some doubt in the minds of many 
 people as to State College being a State institution. 
 
720 
 
 A. I see that State College is classified among private 
 institutions receiving State help. I cannot understand 
 now that L, D'*t that has been the classification. As to 
 whether or not it is a State institution would depend upon 
 the title in which the property is vested, and also the 
 method in appointing trustees. There is a wide difference 
 in the appointing of the trustees and the holding of the 
 title. It is vested in the Board of Trustees in this Stat' 1 
 In some of the Western States it is vested in the State. 
 The Auditor General of the State is made the holder of 
 the title. Our trustees are appointed partly by the college 
 and partly by the sessions of the college. That same thing 
 holds good in many States. In the "Western States the 
 Board of Trustees is appointed by the Governor. In some 
 States, New York and Maryland, I think, the board itself 
 appoints its members. In this State we are as nearly ideal 
 in that respect as in any other State. We have a certain 
 number appointed by the Governor. It is a question 
 whether he appoints a sufficient number. 
 
 By Mr. Moyer : 
 
 Q. What proportion does he appoint? 
 
 A. Eight out of thirty-one. 
 
 Q. If he were to appoint seventeen out of that thirty-one 
 wouldn't that settle the question? 
 
 A. That would give the political parties control of the 
 board. That is just what happened in Oklahoma. The 
 Democratic party, when it gained control, removed the 
 Board of Trustees and the whole faculty. That might be 
 a drawback, but I cannot see that it would make any dif- 
 ference in the efficiency of the board. 
 
 Q. Could not these appointments be permanent ? 
 
 A. There should be some course like that. Oklahoma 
 is practically an experiment station for the United States 
 at the present time. 
 
 By Mr. Hunter : 
 
 Q. What are your methods of purchasing supplies? 
 
721 
 
 A. We prepare a schedule the same as the State of 
 Pennsylvania. Bids are taken on that the same as is done 
 in the State. The schedule will be ready very soon for 
 supplies from the first of July, for one school year. Bids 
 shall be asked for, and the contract for furnishing them 
 let to the lowest bidder. That is for the common supplies. 
 We have to buy large quantities of chemicals, and supplies 
 of that nature, and on them we cannot take bids until we 
 come to the specific purchase. We have a book that shows 
 at the end of each month the supplies used. That system 
 has been used for a number of years. 
 
 Q. You still use that system? 
 
 A. Yes, sir. 
 
722 
 
 W. S. MILLER, representing the Pittsburgh Board of 
 Trade, spoke as follows : 
 
 I will only take a few minutes of your time. Mr. Chal- 
 fant, our legal representative, is here and he will take up 
 the subject of the mercantile tax. If you will permit, 
 I will tell you about the Pittsburgh Board of Trade. It 
 is an organization in the East End, has its own location, 
 and has over twelve hundred members. It has done a 
 great deal of good work. It has improved and widened 
 some of the streets in the East End, and it was through 
 its work that the Pennsylvania Railroad Company got 
 rid of the old station and built a new one at East Liberty, 
 and the organization is working hard to get a new freight 
 station. The influence of the Board of Trade is extend- 
 ing all over the city and even through the State. It 
 is located in the center of the dwelling population of the 
 City of Pittsburgh. It is not a limited body, as you see. 
 It is a business concern, but has a legislative committee. 
 We have followed its suggestions as to the means of having 
 a foreign corporation make a report to the Anditor-Geii- 
 eral as to the stock which it claims to have paid up, and 
 if it was paid in good faith, as well as the bonds, 
 whether or not they are fictitious. We want you to have 
 an Act passed that will put these foreign corporations on 
 a plane with the home corporations. We have found here 
 in Pittsburgh agents selling stock to our people. They 
 go around to our dwellings and get the women to sub- 
 scribe for stock in fake concerns, in which they claim 
 the stock has been paid for. We have tried to break this 
 up and check it all we can. One man reported that 
 
 Mrs. was going into the oil business. An agent 
 
 had sold her some stock. We made an investigation of the 
 corporation, and found that the three millions of capi- 
 tal stock claimed to have been paid in was issued under 
 the Arizona Corporation Act, and the paid in stock was 
 
723 
 
 simply that. They had contracts for oil and gas, and the 
 consideration which they agreed to pay was to come out 
 of the proceeds of the oil when it was obtained. The fact 
 of the matter is, that the paid up capital stock was simply 
 nothing, merely a fake concern, and the investigation of 
 our board in the Tast End, of course, showed that up. I 
 found business men in the City of Pittsburgh, who had 
 taken stock in that company, and they thought they had 
 a wonderful company on account of the capital stock paid 
 up. Now, we have another suggestion, which I think is 
 proper and ought to be attended to. I am going to 
 leave this paper with you. I will read it to you : 
 
 "That a failure to record the articles and certi- 
 ficate of incorporation in the county in which its 
 business is carried on shall not forfeit the rights of 
 said corporations to maintain suit or suits, but that 
 suitable penalties shall be provided for such failures, 
 with a further provision that a suit cannot be main- 
 tained until the corporation has recorded its articles 
 and certificate of incorporation in the county in which 
 its principal place of business is located. ' ' 
 
 Just an illustrationof that. After you take out your 
 charter, and pay the bonus, and have everything all right, 
 but you fail to record your charter in this county, if the 
 place of business is in Allegheny county, you forfeit all the 
 right of your company to maintain a suit. A short time 
 ago an action was brought here in Pittsburgh for over 
 three hundred thousand dollars by a contracting company. 
 When the case came to trial they were unable to say that 
 the charter had ever been recorded. They had neglected 
 that. They had influence enough to go to Harrisburg 
 last winter and have a bill passed validating all acts done 
 under that charter. But, then, a company of men, or a 
 small company that is not able to secure such an Act would 
 lose this money. We think it is too great a penalty. We 
 suggest a penalty sufficient to cover the circumstances 
 whatever the Legislature may think right. 
 
724 
 
 By Mr. Brown: 
 
 Q. What do you think right? 
 
 A. I think a fine of one thousand dollars would be about 
 right. 
 
 Q. What are to become of the people who do not know 
 that they are not incorporated until they have recorded 
 the charter? 
 
 A. They must present that to the Secretary of the 
 Commonwealth ; and another act is that it irfust be recorded 
 in the county where its place of business is, so that the 
 people may have knowledge of who the corporation is. 
 They know it is a corporation, but do not know where or 
 under what laws it was incorporated. We make this sug- 
 gestion to you, and there should be some kind of a penalty 
 for a corporation that makes this mistake. We allow for- 
 eign corporations to come in and do as they please. They 
 should have to do the same thing as domestic corporations. 
 
 Q. You would allow the foreign corporation to own real 
 estate in Pennsylvania? 
 
 A. Yes, sir. We ought to allow them to do that after 
 the corporation has honestly shown it is an honest cor- 
 poration, that the stock is paid up, and what property it 
 has. They should be permitted to hold real estate. In 
 fact, nearly all of these manufacturing concerns that have 
 come in from other States have tried to have acts passed 
 permitting them to hold real estate. While Governor 
 Penny packer was in the chair, one company succeded in 
 having ,an Act passed permitting it to hold real estate 
 but the Governor vetoed the bill, and they have to hold 
 that property in the name of an individual. It ought to 
 be held in the name of the foreign corporation. Then 
 you could reach it. You could tax it, and you could get 
 service. As it is now I don 't see how you could do it. The 
 Board of Trade is more interested in the question of the 
 mercantile tax than in the question tc which I have re- 
 ferred, and passed this resolution : 
 
725 
 
 "Whereas, The direct State tax now levied on the 
 business of wholesale and retail merchants^ commonly 
 known as the Mercantile License Tax, has been found 
 to be unjust and inequitable, and the cost of adver- 
 tising and maintenance of the office necessary to en- 
 force the collection thereof is excessive and burden- 
 some to the people ; be it 
 
 "Resolved, That we recommend the repeal of all 
 Acts of Assembly relating to said mercantile license 
 tax in so far as the same apply to wholesale and retail 
 vendors of, and dealers in, ordinary goods, wares and 
 merchandise. ' ' 
 
 By Mr. Moyer : 
 
 Q. Of course, you understand this mercantile tax ques- 
 tion. I want to ask you a question relative to it. You 
 are at the head of this Board of Trade, and act for it, 
 and a man of experience. If you abolish the mercantile 
 license tax, what would you say as to taxing manufacturing 
 corporations ? 
 
 A. This tax question I don't know anything about. Mr. 
 Chalfant has had occasion to study it. 
 
 Q. You certainly have an opinion. What would you 
 say as to taxing manufacturing corporations? Don't you 
 think they ought? 
 
 A. I think they ought to be taxed. 
 
 Q. You think they are better able to pay a tax? 
 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. I wish to ask you why shouldn't they pay something 
 towards the State expenses? 
 
 A. I see no reason. There is another matter, and that 
 is the taxing of churches. I do not see why churches should 
 not be taxed. Why shouldn't a church in the South Side 
 and in the East End pay taxes when they own valuable 
 property, and when only probably one-tenth or one-twen- 
 tieth of the people go to church? 
 
726 
 
 Q. You think the people that don 't go to church ought to 
 be taxed? 
 
 A. You do tax the people that don't go to church. Why 
 should we protect a special lot of rich people, who have 
 more than one or two million dollars in church property 
 in the East End, and tax the poor people ? 
 
 Q. The theory is we are all expected to go to church, 
 and the burden is equal upon all of us. 
 
 A. I do not think that more than one-tenth of the popu- 
 lation, or one-twentieth of them are church members. 
 
 Q. That undoubtedly applies to Pittsburgh. It does not 
 apply to Philadelphia. 
 
727 
 
 ATTORNEY CHALFANT, representing the Pittsburgh 
 Board of Trade, spoke as follows: 
 
 I do not intend to make a speech nor to enter into a 
 lengthy discussion of this subject. I presume we will have 
 to do away with the subject of levying taxes on church 
 property for some time. There is only one question which 
 I desire to present. You have heard the resolutions. It 
 is a very simple matter to have a resolution passed that 
 way. You have probably found out in this investigation 
 that you have been making, that the only popular tax is 
 the tax the other fellow has to pay. "While I do not say 
 that is true throughout the State, it certainly is true 
 here. I have not been able to find a single business man 
 in favor of the mercantile license tax. There may be 
 some, but I have not found a single man in favor of it. 
 There are several reasons. The cost of the collections is 
 excessive, and the maintenance of this office force, known 
 as the Mercantile Appraiser's Office. I think you are 
 all familiar with this species of taxation. There are dif- 
 ferent Acts that apply to different parts of the Common- 
 wealth. I can only speak for Allegheny county. I will 
 simply present the views as presented to me. We have 
 here our Mercantile Appraiser's Office, whose duty it is 
 to levy and collect the taxes. The costs of that, as I under- 
 stand the Audit or- General's report, is about 11 or 12 per 
 cent, of the gross collections, the cost of collection. I got 
 those figures from his report. But when we go back of 
 that we find this, that the figures do not tell the truth. 
 I do not mean that the Auditor-General's report is not 
 correct. If we go back of that report we find very often 
 that the wholesale or retail merchant has paid fifty 
 cents for having his business assessed. So he is paying that 
 and the expense of maintaining that business, and the ex- 
 pense of collection. We have a system in this county of 
 
728 
 
 advertising. What I am saying will not meet with the ap- 
 proval of the press. We advertise in this City. Do you 
 advertise in Philadelphia? 
 
 Mr. Brown : Yes, we do. 
 
 Mr. Chalfant: The appraiser goes to every store and 
 makes a personal investigation of just what his business 
 is and everything connected with the store. After all this 
 is done, and the merchant knows his assessment and tax, 
 we take all the moneys collected and pay for advertising 
 in five or six different papers in several publications of 
 the papers, and we have to pay for the privilege of tell- 
 ing man what he already knows, and for the rest of us 
 not concerned in it, we buy the papers, and when we are 
 going home in the cars we take out the news section of 
 the paper and throw the rest away. It adds to the worry 
 of the street car conductors and the street cleaners. It 
 might be right to do this advertising, but I believe that 
 it is just so much of the people's money thrown away. 
 Then there is the expense of the legal department, to 
 which the State appropriates five thousand dollars, to be 
 applied for counsel. It would hardly be right to say any- 
 thing about that office. It may be that five thousand dol- 
 lars is not too much to apply for the furnishing of legal 
 advice for that office. That is one of the points sug- 
 gested by the business men. Another point is the manner 
 of taxing. Why should we find this circumstance, and it 
 is the point suggested by the chairman of the Pittsburgh 
 Board of Trade, that the taxes are not equitably assessed. 
 We find a man selling a certain class of goods. He is 
 taxed a mercantile license. Next door to him is a manufac- 
 turer, manufacturing the same class of goods and selling 
 them, without paying any mercantile license. I see no 
 reason why the manufacturer should not be taxed. If we 
 are going to levy a tax on the wholesale or retail vendor 
 of merchandise, it seems to me that the manufacturer 
 should be taxed likewise. As it stands now, this tax is 
 unjust to the merchants. After such taxing as the State does. 
 
729 
 
 they are turned over to the tender mercies of the Mercan- 
 tile Appraiser to exact from them, together with the tax 
 already paid, an additional tax. That is the experience 
 here. After they have paid a tax, they pay another tax 
 for the privilege of doing something for which they have 
 already paid. I believe, however, that a species of taxa- 
 tion, a level tax, will meet with the approval of the people 
 of Pennsylvania. As it stands now, I do not think it is 
 either equitable or just. 
 
730 
 
 H. S. KEIL, representing Jones & Laughlin, spoke as fol- 
 lows: 
 
 I want to express my appreciation of the manner in 
 which this Committee has listened to the addresses that 
 have been made. I just want -a minute of your time. Mr. 
 Oliver is present with us this morning, and I have the 
 report of the Jones & Laughlin Steel Company, which I 
 represent. This report suggests a continuance of the ex- 
 cluding of firms engaged strictly in manufacturing from 
 taxation. Mr. Oliver's brother, I understand, was instru- 
 mental, in 1885, in having manufacturing corporations ex- 
 cluded from taxation for State purposes. We have had 
 a number of prominent manufacturers in Pennsylvania, 
 that you all know, but I do not think that any one of 
 them has done what H. W. Oliver has done, in this one 
 act of having the manufacturing corporations exempted 
 from taxation for State purposes, for that helped to make 
 them what they are to-day. I do not think that any little 
 amount of taxes that the State of Pennsylvania could 
 get would make up for the loss of pre-eminence of Penn- 
 sylvania in a manufacturing way. The Jones & Laughlin 
 Steel Company is willing to pay a large amount of freight 
 to bring its ore twelve hundred miles to manufacture here 
 in Pennsylvania. I think it would be a mistake to put a 
 tax on the stock of manufacturing corporations, in view 
 of the history of the advantage it has been to the State. 
 I dislike exceedingly to pit one concern against another. 
 We have paid a mercantile tax for a good many years. A 
 merchant takes his money and invests it in a stock of 
 goods, and puts it in a store, and you put no local tax 
 on that stock. Mr. Oliver takes his money and puts it 
 into a manufacturing concern, and his machinery is taxed 
 for local purposes and the other is not. We do pay on 
 what is not employed strictly for manufacturing purposes. 
 We have a large number of other companies in which 
 
731 
 
 we have stock. We pay a tax on that for local pur- 
 poses, so that the State tax is not the end of it by a good 
 deal, and hardly the beginning. A railroad company pays 
 taxes on its capital stock, and claims exemption from local 
 taxes on its right-of-way and all of its property used for 
 railroad purposes. When we pay our State tax, it is not 
 a beginning of what we have to pay to the State, county, 
 townships and other municipalities. There is another point 
 that I wish to speak about, and that is double taxation. 
 Sometime ago we were compelled to incorporate a coal 
 company, owning about twenty-five thousand acres of coal. 
 We could not locate in Pennsylvania because we could 
 not hold real estate. We were compelled to pay a tax in 
 Maryland and in Pennsylvania because we built a road to 
 carry the coal mined in New York on the north and Mary- 
 land on the south, and it would be in Pennsylvania. Man- 
 ufacturers could locate here, and could just as easy locate 
 elsewhere, but they prefer to locate here on account of the 
 liberal terms offered. We are compelled to pay a tax on 
 that because the capital of the Jones & Laughlin Company 
 invested in that is not employed in manufacturing. The 
 Pennsylvania corporation pays the capital stock tax. It 
 is not capital employed in manufacturing, and we are liable 
 to the State of Pennsylvania because it is a foreign cor- 
 poration : 
 
 By Mr. Brown: 
 
 Q. You assume that the State of Pennsylvania holds the 
 pre-eminent position of manufacturing because of the ex- 
 emption from taxation? 
 
 A. Yes, sir. We not only extend this establishment here, 
 but other corporations come in and locate within the boun- 
 daries of our State. 
 
 Q. My understanding is that nearly every other State 
 except Pennsylvania taxes corporations? 
 
 A. Yes, sir. Taxes are a burden, as stated in my written 
 report, and boroughs and other municipalities have offered 
 
732 
 
 to let corporations locate within their borders and be ex- 
 empt from taxes for a number of years. 
 
 By Mr. Hunter: 
 
 Q. The question of natural resources does not apply to 
 Pennsylvania as it used to ? 
 
 A. No, sir; and a manufacturing corporation could lo- 
 cate outside of Pennsylvania if it wanted to. In years 
 gone by it wes generally understood that Pennsylvania had 
 all the natural resources necessary for manufacturing 
 purposes. Now, the developments in later years have prac- 
 tically deprived them of that the developments in other 
 States. 
 
 Q. The other States are in as good condition as Penn- 
 sylvania for manufacturing purposes ? 
 
 A. Yes, sir. But we would rather haul our ore here and 
 manufacture than haul our coal to some other State. 
 
 Q. Isn't it true that some of the large mill interests are 
 building closer to the ore? 
 
 A. I don't know whether their locating in other States 
 is on account of the ore interests. But, of course, that 
 would have something to do with it. The State of Penn- 
 sylvania could well afford to pay the taxes to get them to 
 locate in the State of Pennsylvania. 
 
 Q. Assume that the State of Pennsylvania required more 
 revenue for the support of her institutions for the insane 
 and other legitimate outlays. Assuming that the other 
 taxablees were earring the whole burden, don't you think 
 these manufacturing interests should help? 
 
 A. No, I think not. Manufacturers then will be driven 
 to the inconvenience of moving their plants to States where 
 they won't be taxed. We do help. My impression is that 
 we have reached about the limit. 
 
 Q. That the manufacturer is paying as much as he ought 
 to pay to have his business continue in its present healthy 
 condition ? 
 
 A. Yes, sir. 
 
733 
 
 JOHN J. JACKSON, representing the Westinghouse in- 
 terests, Pittsburgh, Pa., spoke as follows : 
 
 On account of it being near the time for adjournment. 
 I will read my report here to save time. 
 
 (Report read and filed.) 
 
 By Mr. Moyer: 
 
 Q. Isn't it a fact that a charter from the State of Penn- 
 sylvania or New York is accounted as worth as much as 
 ten charters from other States? 
 
 A. I don't know. 
 
 Q. Would you, as a manufacturer, incorporate under the 
 laws of Arizona, or Nevada, or Delaware, or North or 
 South Dakota, or any of these States? 
 
 A. Perhaps not. 
 
 Q. Don't you think that a charter from the State of 
 Pennsylvania, with its safe and sane policy, that that is 
 recognized by a manufacturer to be of considerable value? 
 
 A. Yes, sir. But I would not like to make the state- 
 ment that a charter, in my mind, would be worth as much 
 as ten or twelve from other States. 
 
 Q. Don't you think that the fact of the charter being so 
 valuable to the manufacturing concerns they should help 
 bear the burden of the State expense? 
 
 A. T think that any other policy than that in use at 
 present might, perhaps, drive us into such States as New 
 York and West Virgania. 
 
 By Mr. Brown : 
 
 Q. Do you think that your views fairly represent the 
 views of the manufacturing interests of this City? 
 
 A. Yes, sir. 
 
 Q. Assuming that the burdens of the present taxables 
 are sufficient, and there is a need of more revenue, is it 
 
734 
 
 your view that manufacturing corporations should not be 
 taxed? 
 
 A. I think the manufacturers in Pennsylvania are un- 
 der all the taxation they can bear. If you put another 
 tax on them, I think it will react, and will come back 
 upon the very good people of Pennsylvania and other 
 citizens, and it is a matter that should not be allowed to 
 be done, to put another tax on manufacturers. 
 
 Q. We have received many letters from all manner of 
 interests in Pennsylvania, asking why manufacturers are 
 not taxed. That is the reason I am directing the attention 
 of manufacturers to that point. Mr. Wilson H. Brown, 
 of Philadelphia, said that they had come to the conclusion 
 that no such tax of one mill would have to be levied on 
 manufacturing interests, and that they thought it might 
 be an entering wedge that might be used for the purpose 
 of making the tax larger ; but if they thought it would be 
 stopped at one mill, it would be satisfactory. 
 
 A. If we were to pay more taxes in Pennsylvania you 
 are going to put us in a position where we cannot com- 
 pete with the competitors in any other (State. 
 
 Q. I said that I thought that should be considered by 
 the Legislature, that the case should be presented in such 
 a way that they could take whatever action they thought 
 best. 
 
 A. I think we are paying as much if not more taxes 
 than we should. 
 
 Mr. Moyer: As Mr. Brown said, this matter has been 
 widely discussed, and, of course, the function of this 
 Committee is merely a matter of hearing what the views 
 of this Commonwealth are, and boiling that down to a 
 fine point. 
 
735 
 
 H. F. HECKERT, representing the St. Francis Hospital, 
 made the following statement: 
 
 A legislation should be enacted regulating a charge for 
 all employes of corporations. Governor should accept 
 appropriation bills as passed, or make personal investi- 
 gation by hearing or visit before modifying same. Theory 
 of appropriation through Charity Board approved. 
 
 Here the Commission took a recess until 2 o'clock. 
 
736 
 
 Public Meeting, Pittsburgh, Pa., afternoon March 25, 
 1910. 
 
 SAMUEL W. BLACK, representing Real Estate Dealers, 
 Pittsburgh, Pa. : 
 
 In order to save your time and mine, I have prepared 
 a paper, and I would like to suggest or ask your Secretary 
 to read it. (Paper read as follows) : 
 
 The assessment made for the county is used also for 
 the boroughs and townships in levying their local taxes. 
 The City has assessors of its own, appointed by the Mayor. 
 
 I ask that the law regarding the Board of the Assess- 
 ment and Revision of Taxes for State and county pur- 
 poses for counties of 300,000 to 1,000,000 population, which 
 is now in force only in Allegheny county, be changed, 
 giving the County Commissioners, Controller and Treas- 
 urer the appointing power, and thus taking away from 
 the Judges of the Common Pleas Court. 
 
 This law was created four or five years ago, taking 
 away from the County Commissioners the work of re- 
 vising and adjusting the tax assessments, because the 
 County Commissioners were burdened with too much 
 work. 
 
 Having a Board of Assessment and Revision of Taxes 
 with the power that they now have of selecting and ap- 
 pointing assessors all over the county, is a good one, for 
 there is no reason why an equitable assessment should not 
 made if the Board of Assessment, etc., is careful and uses 
 good judgment in selecting the assessors to do the work, 
 and as the Board can revise the tax assessments any and 
 every year at their discretion, they have ample time to 
 travel all over the county and see for themselves any 
 properties that may be wrongly assessed; also they have 
 ample time to go into the different districts and consult 
 
737 
 
 with the citizens regarding the capability of the assessors 
 they may have in that district. 
 
 I think $4.00 or $5.00 per day for the assessors would 
 be better than their present compensation, $3.00 per day. 
 
 In taking away the power of appointing this Board 
 from the Judges of the Common Pleas Court, I would give 
 as a very good reason the judgment that has been 
 shown by them in having on the present Board one mem- 
 ber who is over 80 years old, another member who is 75 
 years old. This, in my humble opinion, is ridiculous on 
 the face of it. It is hardly to be expected that men of 
 that age can travel around and over this large county 
 and see for themselves why their assessors are making 
 this or that assessment, and qualify themselves to give 
 better judgment when appeals are made by property 
 owners, and see for themselves whether the assessors are 
 making assessments too low, for it is my experience in 32 
 years of active real estate work in this City and county, 
 Mi at there are more errors and greater ones in the as- 
 sessments being too low than being too high. I agree 
 heartily with the President of the Board of Assessment 
 and Revision of Taxes, Mr. E. Z. Smith, that it is the 
 unequal assessment that property owners object to, that is 
 to say ; they do not relish paying on a high valuation of 
 their property when their neighbor across the street may 
 be assessed a low valuation. 
 
 The County Commissioners always have at least one 
 of their three members representing the minority party 
 on their Board, and as the County Controller and Treas- 
 urer, as well as the Commissioners, are elected by the 
 people every three years, it behooves them to be careful 
 in appointing the tax revision board, which, to my mind, 
 is the most important to the people of the county. 
 
 The Judges are elected for a ten year term, and in this 
 county are too numerous to form an effective appointing 
 power, there being 12 of them. 
 
 I had the pleasure and honor of originating and pre- 
 paring this law, creating the Board of Assessment, etc. 
 38 
 
738 
 
 By Mr. Brown : 
 
 Q. Mr. Black, does that express the sentiment of the 
 real estate brokers and agents of this city? 
 
 A. 1 think so. 
 
 Q You think it would. Have you talked around 
 among them to ascertain the consensus of opinion upon 
 this subject, or is it your own individual opinion, based 
 upon personal experience? 
 
 A. No, it is common talk all over this county that 
 the Judges have made a very poor selection in appointing 
 these two old men. I have great respect for old age, but 
 I don't want it in public offices so important to the people 
 as that office is. 
 
 Q. Have you a real estate brokers' or agents' associa- 
 tion in this city? 
 
 A. No, I am sorry we have not. 
 
 Q. Has there been any concerted effort on the part of 
 the brokers and agents to reform this present Board? 
 
 A. No, there is not. 
 
 Q. As I understand you, your only objection is that 
 there happen to be on this Board two men you think 
 have gone beyond the years of successful effort? 
 
 A. Yes, and the fact that the Judges appointed them 
 when the law was created, and then reappointed them 
 after three years' experience with them. 
 
 Q. You don't mean that you object because they reap- 
 pointed them because they have had experience? 
 
 A. I object to them appointing them after three years 
 added to that great age. 
 Mr. Brown: Are there any other questions? 
 
 Mr. Hunter: Mr. Black, don't you think it would be 
 impossible for these three or four men to adjust all these 
 troubles, and investigate the properties in question all 
 over the county? 
 
 A. No, as I have stated in that paper, the Board has 
 three years to make the assessment, and make changes 
 
739 
 
 any time during that three years, and they have ample 
 time to go around all over the county and see for them- 
 selves not only the properties in question, but the 
 assessors who have gone before them, and they must see 
 that some of them are incompetent. 
 
 Q. Don't you think that incompetency arises from the 
 fact that their services are of a temporary character 
 rather than continued? 
 
 A. I put the blame on the Board in having incompe- 
 tent men the Board has absolute power to select a man 
 in any district. They are not elected by the people, these 
 assessors, these district assessors. They are appointed by 
 this Board. 
 
 Q. Their wages and length of service are fixed by law? 
 
 A. There are always men willing to serve. 
 
 Q. Their wages are fixed by law? 
 
 A. Yes, sir. 
 
 Q. And their length of service is fixed by law? 
 
 A. I think, as I stated in that paper, that $4.00 or $5.00 
 a day would be better than $3.00 a day, and when I pre- 
 pared this law I took that into consideration, and added 
 50 per cent, to what they were getting, the old assessors. 
 
 Q. In other words you think the work is of such char- 
 acter and importance that it would require $5.00 men 
 rather than $3.00 men? 
 
 A. Yes, sir. 
 
 Vice Chairman Moyer : I understand that Mayor Magee 
 is here, and desires to be heard with reference to certain 
 legislation or Acts of Assembly with reference to the State 
 Railroad Commission. 
 
 Mayor William A. Magee : Mr. Brown, one of the City 
 Solicitors, is here, and he will address you upon that sub- 
 ject. He will speak for the city administration. There 
 are one or two things that I would like to bring before 
 the Commission in relation to local taxation. I wish 
 to recommend that all classification of real estate be 
 
740 
 
 avoided. That is to say, I favor but one kind of assess- 
 ment, to assess every piece of real estate in full without 
 regard to its character or its location. We find in mak- 
 ing tri-annual assessment in the City of Pittsburgh this 
 year that there was great difficulty in doing justice to 
 people in all parts of the city. In this City we find a 
 very great inequality in classifications. The Act of As- 
 sembly in relation to second class cities provides and 
 designates three classes : One is called built-up, one rural, 
 and one agricultural. I suppose the reasons for these 
 classifications on certain kinds of property receive more 
 or less of the municipal expenditures in the neighborhoods 
 in which they are located, and, therefore, there should be 
 an unequal contribution from the various pieces of prop- 
 erty to the city expenditures. Now, I believe economically, 
 every piece of property will find its own level, that is 
 to say, a piece of property on Herron Hill should pay 
 on its full value, just the same as a piece of property on 
 Fifth avenue or Smithfield street, because that value is 
 fixed not only because it is an inconvenient place to get 
 to, or it is an undesirable place to live, and the purposes 
 which it would be used for, but by reason of these very 
 facts there must necessarily be less money expended on 
 it than on other places more highly favored, and there- 
 fore, I think the subject will adjust itself. Then I believe 
 that if it can be done lawfully and constitutionally, that 
 there ought to be but one Board of Assessors in a large 
 city and county. We have in this county a great num- 
 ber of assessors. We have in this county the Board of 
 Revision of Taxes, composed of three Commissioners who 
 are appointed by the Courts. They in turn select local 
 assessors who are appointed for a few months in the year 
 to make assessments. Now, the City of Pittsburgh has 
 its own Board of Assessors, composed of nine persons. 
 We ought to have, in my opinion, one Board of Assessors 
 first for the county, and then for the city, boroughs, 
 townships and all various governmental jurisdictions, 
 
741 
 
 that would, no doubt, produce a just assessment upon all 
 properties. The Board of Assessors in Pittsburgh and the 
 Board of Revision of Taxes in the county do not operate 
 in the same way. In the county the assessors are ap- 
 pointed by the Board of Revision making original assess- 
 ments, and the Board of Revision is just what its name im- 
 plies, it is a supervisory and an appellate body ; they only 
 sit upon the work passed upon by the general assessors; 
 whereas, in the City of Pittsburgh, nine assessors make 
 original assessments, so that they are both original assess- 
 ors and revisionary or appellate body. Now that system 
 works all right in Pittsburgh, I mean the plan of it; but 
 I believe the other system is the better one, and the other 
 system, I believe, is generally followed in most communi- 
 ties in the United States. Now, the county system, which 
 is a general one, I say is open to this objection : that the 
 assessors appointed by the Board of Revision, I believe, 
 in many cases are not competent to do this work. I be- 
 lieve there are men who look upon this employment as 
 merely for the emolument that is in it, and I believe they 
 are men of considerable age, men who are not engaged 
 generally in regular occupation, and perhaps have no other 
 experience in this matter than what they have obtained 
 in this work. 
 
 The ideal system, to my mind, would be, if possible, 
 to have men who would know something about real es- 
 tate. That is, men who have been angeged for some time 
 in real estate business. That may not be possible in all 
 cases. I want to say too, for the benefit of these local 
 assessors, many of these assessors in the course of time 
 will acquire such a knowledge of property in their local- 
 ity that they do make very good assessors and assessments. 
 I believe the proper way to make assessments is to have 
 the original assessments made, and then allow the Board 
 of Revision to come in and consider the subjects on ap- 
 peal. 
 
 Now, another matter in relation to local taxation: I 
 
742 
 
 have found since I have been in office I am of the 
 opinion that public utility corporations of all kinds, taxa- 
 tion to that extent, calls for a remedy. I believe that 
 they ought to pay their fair share of the burden of taxa- 
 tion. In the City of Pittsburgh, that is to say the old 
 City of Pittsburgh, which consists of about three-fourths 
 of the Greater City, by reason, I think, of special Act of 
 Assembly, the city can assess the property of railroad cor- 
 porations and all public utility corporations, except the 
 right-of-way of railroad companies, street railway com- 
 panies, and on the wire, conduits, etc., pipes, mains, of 
 other kinds of public utilities. 
 
 Now, over on the North Side, which was the old City 
 of Allegheny, we are not authorized to assess any 
 property belonging to and used by corporations unless 
 it may be property that is not actually used in the conduct 
 of the business of the corporation. A piece of vacant 
 ground for instance, or a piece temporarily unused, I think 
 we can assess that, but the stations and depots and shops 
 and rolling stock of the railroad company, and street rail- 
 way companies on the North Side, we cannot assess them, 
 the Supreme Court has told us that; as to rights-of-way 
 on the North Side and in the old City of Pittsburgh, we 
 can assess them. I think there is ten millions worth of 
 property probably, of corporations, in the City of Pitts- 
 burgh that is unassessable, upon the theory that these 
 corporations today pay tax to the State. The theory 
 upon which they pay taxes to the State I am speaking 
 of transportation companies is that we cannot assess 
 any of their business, except business that is entirely car- 
 ried on in the State of Pennsylvania. Interstate com- 
 merce cannot be taxed. The result of it is that the State 
 of Pennsylvania gets a very small tax comparatively upon 
 business corporations of that kind. The City of Alle- 
 gheny gets nothing; the City of Pittsburgh only gets a 
 part, probably about only half, in my opinion, of what 
 it ought to be, so that in trying to distribute the burden 
 
743 
 
 of taxation of these corporations to the State and to the 
 counties and to the cities, it seems to me that by reason 
 of legislative construction, a corporation of this kind 
 ought to pay what I claim is its fair share of taxation. 
 
 I am sorry to say, gentlemen, I intended to get some 
 data on this subject; I would have liked to submit some 
 figures to you, and to have quoted some Acts of Assem- 
 bly on the points I desire to make. 
 
 By Mr. Brown: 
 
 Q. Mr. Mayor, isn't it a fact that all the railroad prop- 
 erties are taxable except the rights-of-way? 
 
 A. I make the distinction on the North Side nothing 
 is taxable ; in the City of Pittsburgh all property is tax- 
 able except the rights-of-way. 
 
 Q. You think the property on that side should be put 
 on the same footing as Pittsburgh? 
 
 A. And I think all property and rights-of-way should 
 pay a local tax. 
 
 Q. All utility corporations? 
 
 A. Yes, sir. 
 
 Q. You have no heat and power companies? 
 
 A. We have some heat and power companies. 
 
 Q. Telephone and telegraph and everything? 
 
 A. Yes, gas companies and water companies. 
 
 Q. In Philadelphia our real estate assessments are paid 
 by the year. Do you think that system here would be a 
 benefit? 
 
 A. I am not acquainted thoroughly with it. I think that 
 would be the one I would recommend. I think there is 
 in fact more need of that in Allegheny county than in 
 Philadelphia county. The Board of Assessors in the City 
 of Pittsburgh do their work very satisfactorily. Mr. 
 Purdy, the head of the Tax Commission in New York, who 
 is one of the leading authorities upon the tax subject, 
 said that we had the cheapest form of assessment and 
 one of the most efficient in the United States, in Pittsburgh, 
 
744 
 
 so I would not ask that the Board of Tax Assessors of 
 Pittsburgh should be revised alone ; I only say they ought 
 to get a more comprehensive plan to assess all kinds of real 
 estate for governmental purposes. If I would discuss the 
 City of Pittsburgh, I would say, leave it as it is, but the 
 system of Philadelphia seems to me to be the logical one, 
 but not necessarily the best one, maybe our system in this 
 city is just as good as the Philadelphia system. I believe 
 there ought to be a clear distinction drawn between the 
 boroughs and townships of the county and the City of 
 Pittsburgh, but I prefer a comprehensive assessment 
 whereby everybody in the county, every piece of property 
 in the county, will be passed upon by the same board. 
 
 Q. That would apply to the assessment of personal 
 property as well as realty ? 
 A. Yes, sir. 
 
 Q. Mayor, you have evidently been giving some thought 
 to this subject, upon the idea of getting all that the Com- 
 monwealth and city is entitled to in the way of taxation. 
 What is the sentiment of this city, as far as you have 
 been able to learn it, as to the increasing of the list of 
 taxable subjects. Is it the thought here that everything 
 here that is being taxed ought to be taxed? 
 
 A. My own opinion is that automobiles should pay a 
 tax. The license tax is practically nothing, and the method 
 of collection of that tax, I think, is a gross injustice to 
 the man who is honest enough to pay it. We have an 
 Act of Assembly that prohibits municipalities from levying 
 any tax on automobiles. The State is paid a license fee 
 of from six to ten dollars, or eight dollars something 
 like that, according to the size of the machine upon 
 automobiles, but it does not provide any method for the 
 collection of it. Now, of course, that tax is levied not for 
 revenue purposes, it is merely a registration tax for 
 identification, and it is totally inadequate to begin with, 
 but the machinery provided for the collection of it is 
 practically nothing, and therefore, I say, it cannot be 
 
745 
 
 enforced, in my opinion. "We have an Act of Assembly 
 covering cities of the second class that has been re- 
 pealed by this Act of Assembly. "We have an ordinance 
 that has been repealed that allowed us to collect this tax. 
 The amount was only $13,000 a year that much last year 
 a comparatively small part, I believe, of what property 
 of that kind ought to pay, I think we collected from 
 automobiles last year. Our police held up automobiles 
 that did not have licenses on, and ran down cases in 
 which licenses were not attached, and we compelled the 
 payment of that tax. This year we got nothing. The 
 State Highway Commissioner tells me that we at least 
 ought to collect that tax for the State ; no doubt, theoret- 
 ically speaking, he may be absolutely correct. There would 
 be comparatively little interest in the office on this subject, 
 because the revenue does not come to the City of Pitts- 
 burgh, his employer, but would go to the State. And 
 officers of the law are men like anyone else, they are going 
 to work for their employer, and I am of the opinion that 
 there is being comparatively little of that tax paid under 
 compulsion. The force is not behind the power to do the 
 work. 
 
 Q. Is it the thought of the people of this city that 
 moneys at interest should be taxed? 
 
 A. I have not heard much discussion of that, Mr. Brown, 
 but my opinion is that most money at interest pays tax on 
 it. 
 
 Q. You speak about taxing these public utility corpora- 
 tions. Have you in mind to what extent the taxes should 
 be? 
 
 A. I think rights-of-way should be appraised and as- 
 sessed the same as any real estate. I believe rolling stock 
 of railways should be taxed the same as real estate, and 
 everything else. I believe that they receive the benefit 
 of the expenditure of public moneys. 
 
 Q. Would you have that done locally, or take a railroad 
 like the Pennsylvania Bailroad would that be done 
 locally? 
 
746 
 
 A. Each county should be paid it. 
 
 Q. I suppose it would be certified by the County Com- 
 missioners to Harrisburg, and collected for the whole 
 county? 
 
 A. No, no, sir the County Treasurer I think that 
 might be done. Let it be distributed to the various muni- 
 cipalities. 
 
 Q. The thought was expressed by railroad officials here 
 that there were too many to account to, that it involved 
 a separate department for paying taxes. 
 
 A. I believe it would work to their benefit. I forgot 
 to mention that I found out that the burden of school 
 taxes in certain localities is much more than those 
 localities can bear, especially in Allegheny county. We 
 have about five or six boroughs in the City of Pittsburgh 
 that have been annexed, after becoming insolvent. The 
 Borough of Sheridan last year had a tax assessment of 
 thirty-nine mills, which was 3 9.10 per cent, of the value 
 of the property. A very small part of that went 10 
 pay expenses of the City of Pittsburgh. About thirteen 
 mills went to pay interest on the sinking fund and 
 obligations of the old borough indebtedness, while thir- 
 teen mills of that went to pay school tax, and eight mills 
 went to the expenses of the City of Pittsburgh. This is 
 about I am not sure exactly of my figures, but I know 
 the total was thirty-nine mills. Now, Esplen, Montooth, 
 Elliott, West Liberty those four boroughs all came in 
 in about the same shape as Sheridan. The difficulty in 
 these places is that the taxable property and real estate 
 runs from about $600,000 in the lowest case, to $3,000,000 
 in the highest case. Now the school tax upon these places 
 is so enormous by reason of extravagant or improper man- 
 agement of their affairs, that they are so burdened now 
 that the growth of these communities is absolutely stopped, 
 and I think will be until these old debts of the old 
 boroughs are wiped out; Mr. Morrow and I devised a 
 plan to reduce the old floating indebtedness, and we made 
 
747 
 
 a material reduction in their taxation. None of the 
 boroughs will pay as much as thirty mills, we have reduced 
 them from 20 to 30 per cent, each by cutting down the 
 old borough obligations; the tax levy has been cut down 
 for these purposes one-half to two-thirds, making a reduc- 
 tion of 20, 25 or 30 per cent, in all these cases. I say 
 there ought to be a general school tax for all these pur- 
 poses. Property down town here pays one-fourth, one-half 
 and three-quarters of a mill, that is to say, five cents on 
 a hundred dollars. There are comparatively few children 
 in these localities, and the burdens of school tax do not 
 fall upon that class of property. The burdens of educa- 
 tion in the State should be put upon all property generally. 
 
 Q. That is in one county, for instance? 
 A. I would say in certain jurisdictions yes, a whole 
 county or a whole community. There is another thing 
 
 Q. Mayor, that is what the school code in the last 
 Legislature attempted to accomplish. 
 
 A. Now, Pennsylvania is strictly a manufacturing State. 
 The City of Pittsburgh is peculiarly situated. With all 
 our natural resources here, we do not have the amount of 
 manufactures that we really ought to have and should 
 have. It is partly due because, manufacturers tell me, 
 certain class of workmen do not want to live in the 
 locality of Pittsburgh. There are some other reasons too, 
 but the objection I hear more than anything else is our 
 taxes. Competitive communities which are near Pitts- 
 burgh, such as West Virginia, Ohio, and Indiana, appeal 
 more strongly to new manufacturing enterprises, because 
 of their methods of taxation. Out in Indiana about twenty 
 years ago owners of land out there started a policy of 
 giving free taxation of land, free fuel in some cases, to 
 induce manufacturers to locate there. We haven't any- 
 thing of that kind here. It would have some effect upon 
 manufacturing enterprises. Down in Ohio there is a large 
 number of thriving cities which were no size at all 
 a few years ago, that have been getting all the small 
 
748 
 
 new manufacturing plants. There is very little develop- 
 ment for a number of reasons, one reason is that of our 
 taxes. I have no recommendations to make upon the 
 subject, but there ought to be no classification at all. I 
 believe -the State ought to favor manufacturing corpora- 
 tions. I will make that one exception to what I said be- 
 fore. I think there is one kind of property that ought to 
 be given encouragement not only to locate here but remain 
 here. It is a very serious problem to Pittsburgh how it 
 can maintain its supremacy in manufacturing. 
 
 Q. Then you would do that not as against but in com- 
 parison with public utility corporations, which you have 
 spoken of? 
 
 A. I don't believe they need encouragement. 
 
 Vice Chairman Moyer : I would suggest that the Mayor 
 file a brief, because that would be of valuable service. 
 
 By Mr. Brown : 
 
 Q. Do you think other classes of real estate represented 
 in the City of Pittsburgh would be willing to have this 
 preference, which you say should be shown? 
 
 A. I believe the enlightened people would strongly 
 support that. 
 
 Q. In Philadelphia we are compelled to tax all real 
 estate and property, except that which is exempt from 
 real estate taxation. 
 
 A. At least during the past year, we have strictly fol- 
 lowed the duties of assessors as laid down in the Act so 
 plain, and we undoubtedly have made mistakes about 
 things. We have not attempted to do this here, which we 
 think ought to be done by law. 
 
 Q. We have received numerous letters from all over the 
 Commonwealth, suggesting that manufacturing corpora- 
 tions ought to pay additional tax in other words, that the 
 Act of 1885 should be removed? 
 
 A. That would ruin us. 
 
 Q. I was asking some manufacturers about that this 
 
749 
 
 morning. I think the manufacturers of this city, this city 
 being distinctly a manufacturing city, that the manufac- 
 turers here ought to bestir themselves and present their 
 views to this Commission, so that the matter may be thor- 
 oughly exhausted. 
 
 A. I think it ought to be done in the interest of the 
 people and in the interest of the manufacturing corpora- 
 tions. 
 
 Samuel W. Black : After hearing the Mayor I heartily 
 agree with him, but I think a Board of Assessors would 
 be better for the city and county one board and I 
 would like to make just one suggestion, that instead of 
 the Treasurer of the county being on that board, to 
 appoint the Board of Assessors, that the Mayor be sub- 
 stituted in place of the Treasurer the Mayor of the city 
 be substituted in place of the County Treasurer. 
 
 By Mr. Brown : 
 
 Q. Who appoints your local Board of City Assessors? 
 
 Mr. Hunter: The Mayor appoints the City Board, the 
 Court appoints the County Board. 
 
 Mr. Black: Now, there is no reason, in my mind, why 
 one Board of Assessors should not make the assessment for 
 the city as well as the county. 
 
 Mr. Moyer : That is the way we do in Philadelphia. We 
 have one board there. 
 
 Mr. Black: I would like to add that to my paper. 
 
 Mr. Moyer: That will be made part of the record. 
 
750 
 
 DR. MAITLAND ALEXANDER, representing the 
 Allegheny General Hospital: 
 
 Mr. Chairman, I do not know that I have anything very 
 definite to suggest. I was asked by the Board to appear 
 and present the Board's views concerning the present 
 system that State money is turned over to semi-charitable 
 institutions, like the Allegheny General, and I think we 
 find from our experience that there ought to be only three 
 questions which would be involved in the granting of 
 that money by the State : first, the amount of work, char- 
 itable work done; and secondly, the way in which the 
 fund is administered to get the greatest amount of effici- 
 ency from it; and thirdly, the locality in which the 
 hospital stands, in relation to the cost of its maintenance. 
 I think that would sum it up. I think this lies at the very 
 basis of the whole thing. 
 
 By Mr. Brown : 
 
 Q. Doctor, you have ten or twelve hospitals in the City 
 of Pittsburgh? 
 A. Yes, sir. 
 
 Q. Do you think that the public welfare would be as 
 well served by the consolidation of some of these hospitals ? 
 
 A. I think, Mr. Brown, that hospitals ought to be placed 
 according to geographical need. 
 
 Q. Well, in these days of automobile ambulances and 
 such facilities for the quick movement of patients, don't 
 you think there could be a less number and still the effi- 
 ciency not be seriously crippled? 
 
 A. Are you talking about this city? 
 
 Q. Yes. 
 
 A. No, sir, I don't think so in this city. 
 
761 
 
 Q. How many vacant beds have you in the hospitals of 
 this city? 
 
 A. I don't know. 
 
 Q. Suppose I would tell you that there were five thou- 
 sand vacant beds in the hospitals of this State, would that 
 lead you to believe that there might be some consolida- 
 tion? 
 
 A. Yes, sir, I believe so. 
 
 Q. All of you operate practically on the same plan non- 
 sectarian those that receive State money? 
 
 A. I don't know all that, Mr. Brown, whether they are 
 or not. I cannot say. 
 
 Q. Do you think money ought to be appropriated by 
 the State constructive work? 
 
 A. I would say it depended very largely upon the 
 situation of the hospital and the resources behind it. 
 
 Q. Take a city like Pittsburgh? 
 
 A. In some cases, yes, I do. 
 
 Q. Do you think the public welfare cannot be as well 
 served ? 
 
 A. You are talking about new hospitals now? 
 
 Q. Yes, constructive work, now hospitals? 
 
 A. If you are speaking about new hospitals, I would 
 say yes, I think we have enough ; if you are speaking about 
 improvements, I would say we ought to have some State aid 
 for it. 
 
 By Vice- Chairman Moyer : 
 
 Q. Do you believe, doctor do you believe that the 
 present system of appropriating our State money is an 
 efficient one? 
 
 A. About as efficient as can be gotten. 
 
 By Mr. Brown : 
 
 Q. What proportion of money have you collected from 
 private sources as compared with money received from the 
 State in the last five years say the last two years? 
 
752 
 
 A. In the fiscal year just closed we received $82,236 ; we 
 raised for our maintenance the same amount within just a 
 very few dollars, and raised outside that something like 
 $36,000 for new work? 
 
 Q. Suppose you had not recived this $82,000, what 
 would have been the result ? 
 
 A. Shut down on the charity patients. 
 
 Q. Do you make any distinction between charity and 
 paid patients? 
 
 A. No, sir. 
 
 Q. What is your endowment fund, doctor? 
 
 A. Twenty thousand dollars. 
 
 Colonel Albert J. Logan, representing the West Penn 
 Hospital : Mr. Brown, what is it you want from me ? 
 
 Mr. Brown : Colonel Logan, you heard the questions 
 asked of Dr. Alexander. 
 
 Col. Logan : I would like you to repeat them. 
 
 By Mr. Brown: 
 
 Q. Of course, you have no doubt the State of Pennsylva- 
 nia should appropriate money to institutions under her 
 control ? 
 
 A. I believe that the State should appropriate money to 
 such institutions as the West Penn and other hospitals, 
 which assists in taking care of the unfortunate wards of the 
 State. I believe the State could get very good results by 
 doing so. I believe the best system in my opinion, the 
 best results could be obtained by the maintenance of an 
 appropriation based on the number of charity patients that 
 has been taken by the hospitals during a period per 
 capita basis. 
 
 Q. Has the receipt of State money tended to diminish 
 your private contributions? 
 
 A. No, sir, I don't think so I don't think it has in our 
 hospital. The West Penn Hospital has been receiving about 
 $5,000 a month or $60,000 a year for the past three, or 
 
753 
 
 four, of five years, and I believe our expenses run along 
 about $12,000. The difference is made up by the receipt 
 from our endowment, or from the paid patients and con- 
 tributions. 
 
 Q. How many vacant beds does your hospital average 
 during the year? 
 
 A. Well, I can't tell you on an average. We probably 
 now have very few, probably in the neighborhood of twenty 
 a day. 
 
 Q. Does that condition exist so far as you know in other 
 hospitals in this city ? 
 
 A. I cannot answer that. The use of beds' in the hospital 
 varies much according to the condition of health in the 
 community. A few years ago when the typhoid fever was 
 so bad here we were overcrowded. Sometimes running 
 down, probably not over 60 per ecnt. of the beds being oc- 
 cupied 65 per cent, along in there and then, of course, 
 it changes in course of time. You made some reference, I 
 believe, to Dr. Alexander about the consolidation of hos- 
 pitals. 
 
 Q. That is the sentiment of Philadelphia. A good many 
 hospitals are there, and it was thought some could be con- 
 solidated without detracting from the public welfare. 
 
 A. I believe my opinion is to a limited extent that 
 might be done. 
 
 By Mr. Woodward: 
 
 Q. Would not joint administration lessen the cost of 
 maintaining these patients in these institutions? 
 
 A. It depends upon the size of the hospital. I think you 
 can get a hospital too big for management, and it cannot 
 be properly taken care of. After you reach a certain size it 
 goes beyond the power of a man, and after awhile it comes 
 down to where a man who is on the ground all the time 
 cannot take care of these institutions, and it goes beyond 
 his reach if it is too large. I believe there is a large num- 
 ber of small hospitals throughout the State, that it costs too 
 
764 
 
 much to maintain the number of patients they have. I be- 
 lieve the doctor's suggestion that the cost of maintenance 
 can be reduced in that way, and I believe a fair-sized hos- 
 pital is most economical to run. We have the West Penn 
 'Hospital, and our cost of maintenance is about $1.80 per 
 day per head, although this present month we have struck 
 our lowest mark, $1.57, the lowest we have had since my 
 connection with the hospital. I wish to say, Mr. Brown, 
 that if the system can be established by which a proper 
 check can be made by putting on all these institutions a 
 check on the patients they are taking care of, that the fair 
 way for all is to pay on a per capita basis. I am not much 
 in favor of the State furnishing the buildings and fur- 
 nishing the maintenance and having private individuals 
 run it, so when we get away from that basis, and that plan 
 will work out, I believe we would get better results of 
 either one have either one or the other furnish the build- 
 ing, and in my plan the State would pay the board of the 
 patients that are sent in there that needs to be paid for, 
 and it would remove the much-talked-of and I don't be- 
 lieve much in the idea that so many are turned away from 
 the hospitals in the city worthy cases but it would cer- 
 tainly this would be an incentive to take that case it 
 would have an assurance that it would be more likely to 
 take care of the case. 
 
 By Vice- Chairman Moyer : 
 
 Q. Do you believe the State should appropriate money 
 to private institutions for permanent improvements and 
 buildings ? 
 
 A. No, sir. I think that that system has been in vogue 
 and has done some good, but it seems to me that the State 
 should have an equity for whatever the State puts up money 
 for. Now, whether that equity can be brought together in 
 a satisfactory way to the State is a question in my mind. 
 That is why I suggest the idea that private institutions 
 furnish their own equipment and buildings, there would 
 be better results arrived at. 
 
755 
 
 Q. Then your views are that the State should not ap- 
 propriate money to private institutions over which it has 
 no control for permanent improvements? 
 
 A. Yes, sir. 
 
 Q. But the State should appropriate such money for 
 maintenance only and on a per capita basis? 
 
 A. Yes. I want to say, however, that since the State has 
 established this system of building up hospitals and ap- 
 propriating money for equipment, that it would be very 
 unjust and injurious to the institutions now in existence 
 if the State would suddenly chop off that system. If my 
 plan is adopted it ought to be arrived at at some gradual 
 basis, and not have the result of closing up some of the 
 well-established institutions. 
 
 By Mr. Brown: 
 
 Q. Suppose that the State cannot appropriate to the City 
 of Pittsburgh all the money needed by your several insti- 
 tutions, don't you suppose you could get together and 
 decide to drop out some of them without detracting from 
 the public welfare. There are 12 hospitals in the City of 
 Pittsburgh, each receiving State aid. Now, assuming it is 
 impracticable for the State to appropriate moneys which 
 you all have asked, and which it is presumed you need, but 
 is able to contribute toward six or seven, being a less sum 
 in the aggregate than that demanded by 10 or 12, do you 
 think it is possible for your hospitals to get together and 
 lessen your number, say to six? 
 
 A. I don't believe it is. I don't see how you could do 
 that very well. The hospitals are located throughout the 
 city, and I think wisely so, to have them located geograph- 
 ically in Pittsburgh. Now we have certain hospitals in the 
 lower part of the North Side, the Allegheny General in the 
 center, and then out this district the West Penn, in the 
 Penn avenue district the St. Francis, and on out further 
 the Pittsburgh Hospital, on the other side the Mercy, and 
 on the other side of the river the South Side Hospital. It 
 
766 
 
 is hard to get about here, so that I believe that that would 
 hardly apply in Pittsburgh. Furthermore, I don't think 
 that so far as hospitals are actually concerned that we are 
 very much overbuilt in regard to numbers in the City of 
 Pittsburgh. The capacity in our hospital 1 think we have 
 quite a sufficiency for the time, but there are no new hos- 
 pitals that I know of projected now to begin, and with our 
 growing community I do not think there will be much op- 
 portunity to consolidate the places in Pittsburgh. Now, 
 if the per capita basis were used it would enable you to know 
 about the time each hospital would get its share of what 
 the State would appropriate, and then, of course, it would 
 be time to take care of the deficiency on that account. 
 
767 
 
 MR. GEORGE B. LOGAN, representing the Presbyterian 
 Hospital, North Side, Pittsburgh. 
 
 By Mr. Brown : 
 
 Q. You think, of course, that the State should appro- 
 priate money to such hospitals as yours ? 
 
 A. Yes, sir, for both building purposes and maintenance. 
 The State has given us money to finish about one-third, 
 possibly more than that, but we shall need more money than 
 can be raised among the citizens here. 
 
 Q. Why is it that these moneys cannot be raised in a 
 community like this. These hospitals that take care of the 
 helpless sick, why is it in a city like this more money can- 
 not be raised from the people? 
 
 A. The people of Pittsburgh are called on for all kinds 
 oi charity, and people seem to flock to Pittsburgh when- 
 ever they want any money, and I think they find the people 
 here as liberal as anywhere. 
 
 Q. You say you can't what effort is made? 
 
 A. Go among the people and solicit it. 
 
 Q. What answer do they give? 
 
 A. That they give to this, and give to that, and haven't 
 anything left. 
 
 Q. Do you think equally good results could be obtained 
 by consolidation? 
 
 A. No, I do not. 
 
 Q. What is the nearest hospital to yours? 
 
 A. The Allegheny General is about a quarter of a mile. 
 
 Q. About three squares here? 
 
 A. Four. 
 
 Q. Is there any reason why your hospital or the other 
 could not fulfill all needs in that locality ? 
 
 A. It could if made large enough. 
 
758 
 
 Q. A larger hospital would be better able to take care 
 of the sick? 
 
 A. Yes, sir. 
 
 Q. Do any of your hospitals here have tubercular wards 1 
 
 A. No, sir. 
 
 Q. Why not? 
 
 A. I don't know. 
 
 Q. They have made no effort to take care of tubercu- 
 losis ? 
 
 A. I can't answer for all the hospitals. 
 
 Q. Is there any reason so far as you know? 
 
 A. There is a special hospital here. I listened yesterday 
 to one of the men here you have got to pay money out 
 before you get money from the State to pay your debts. 
 It is a great inconvenience to the trustees who have to go 
 into a bank and give their own personal endorsement before 
 they can get money to pay their bills. 
 
 By Mr. Woodward: 
 
 Q. It is an expensive proposition, too? 
 
 A. Yes, and I don't see why the Auditor could not pay 
 some of it. 
 
 By Mr. Brown : 
 
 Q. Mr. Logan, from communications we have received, 
 there seems to be a general sentiment that there is too much 
 money given by the State to these institutions. 
 
 A. I agree with what Colonel Logan said about the per 
 capita basis. 
 
 Q. Have you ever considered the amount of money that 
 should be appropriated to treat tubercular patients? 
 
 A. We have no facilities for such, we have no room in 
 our institution. 
 
 By Mr. Hunter : 
 
 Q. Very few of them have. 
 
 A. Very few. In Pittsburgh there is an institution espe- 
 cially for it. 
 
759 
 
 By Mr. Brown : 
 
 Q. Dr. Flick testified that there was no reason why all 
 hospitals should not have special wards to treat tubercular 
 patients, or did not see any reason for it. 
 
 By Mr. Moyer : 
 
 Q. Mr. Logan, you spoke a moment ago about having 
 some unfinished buildings. Do you believe it is the State's 
 duty to give you some money to finish them, or do you 
 think it is the State's first duty to take care of its own 
 unfinished insane asylums and other buildings, for the care 
 of the wards, generally called the unfortunate wards of 
 the Commonwealth. Don't you think it is the first duty 
 of the Commonwealth to take care of its own ? 
 
 A. Do you mean a purely State institution? 
 
 Q. Yes, one under State control exclusively. 
 
 A. I think in regard to our institution, the State having 
 begun to help us, and having only half of the institution 
 finished, it would be bad faith if they did not help us 
 finish it. 
 
 Q. What obligation rests upon the State, only good will? 
 
 A. Just the fact that they have led us to believe that we 
 could get State aid. For instance, last year the Legislature 
 appropriated for building purposes $60,000, and the Gov- 
 ernor had to cut down all appropriations, and he cut it in 
 half, and we only got $30,000 instead of $60,000. 
 
 By Mr. Hunter: 
 
 Q. Mr. Logan, I believe you are a trustee of the Associ- 
 ated Charities here ? 
 
 A. Yes, sir. 
 
 Q. I am of the opinion that we should hear a few words 
 on that subject, and tell us the plan of your work and the 
 purpose of it. 
 
 A. The Associated Charities is a sort of clearing house 
 through which the charities come together and try to do 
 their work to the best advantage. 
 
760 
 
 By Mr. Woodward : 
 
 Q. The object is to see that these places are not abusing 
 their privileges? 
 
 A. Each institution and each association work in connec- 
 tion with each other, and their work lies in one direction, 
 rather than cross purposes. I think it is an excellent thing 
 when we get it going here. 
 
761 
 
 MR. FRANCIS J. TORRENCE, representing the State 
 Board of Charities : 
 
 I came here to listen rather than to make any speech 
 on the subject. But to begin with, on the ques- 
 tion of State appropriations for maintenance, we have 
 very pronounced views, as set forth in our report to the 
 Legislature. I will read an extract from that report, as 
 follows : 
 
 "Under the item 'Homes' our recommendations show 
 a decrease from that of the previous session of the Legis- 
 lature. While the appropriation of public funds to private 
 and semi-private charities is an interesting question, it 
 should be borne in mind that these institutions relieve 
 suffering humanity and that they represent the true spirit 
 of charity, and further, that they directly or indirectly 
 relieve the State's institutions. The questions of the 
 State's contributions to homes and hospitals (other than 
 State institutions) for the treatment of patients or in- 
 mates is an important one, and one to which this Board 
 has given earnest consideration. We have endeavored 
 to formulate some plan by which such cases might be 
 treated in private institutions on a per capita basis for 
 free patients or inmates cared for, or for a free bed 
 capacity, but, so far, we have been unable to find any 
 arbitrary or fixed rule that would work fairly and equit- 
 ably in all cases. The ideal condition, or plan, would be 
 something similar to that by which the insane, deaf and 
 dumb, or the blind are now being considered, but, as the 
 circumstances and conditions of each institution are so 
 different, we have taken up each one separately, and 
 made the recommendations accordingly, taking into con- 
 sideration all the conditions entering into a proper ex- 
 amination of each institution." 
 
 Now, that is my view as expressed and approved by the 
 
762 
 
 Board of Public Charities in their message sent to the 
 Legislature two years ago, and on which, as far as we 
 know, we have not changed our views. The grave question 
 of that is the abuse of State moneys in these institutions as 
 well as in other institutions, and the tendency to abu^e 
 the use of State moneys. On the question of State ap- 
 propriations to these institutions, Mr. Brown, that is a 
 grave proposition. It has become a custom because it was 
 begun in that way, particularly in late years we have 
 recommended in making our recommendations to the 
 Legislature that the State's appropriation would be safe- 
 guarded in that a reversionary provision should be made 
 to care for money given out of the State Treasury for these 
 private institutions, in which title is vested in a Board of 
 Trustees. 
 
 Now as to a question which you asked this morning, in 
 which I was very much interested, Mr. Brown, we have 
 very pronounced views as to taking care of the insane 
 patients, as parents should take care of children; and we 
 have set that forth in our annual message to each session 
 of the Legislature, requesting or rather suggesting as fol- 
 lows: "Institutions owned and controlled by the State, 
 and Dixmont Hospital." We make this provision for Dix- 
 mont in that the property there is not vested in the State, 
 but is regarded as a State boarding house, used by us in 
 taking care of insane wards. Our second consideration is 
 for "institutions for dependent and delinquent classes, rec- 
 ognized as wards of the State, but owned and conducted 
 by private corporations." Third, "private charities of all 
 other kinds." 
 
 Now, my views on the subject generally are those that I 
 have expressed in my messages and letters to the Legis- 
 lature and to the Governor. I would be very glad to 
 answer any questions. 
 
 By Vice-Chairman Moyer: 
 
 Q. Mr. Torrance, what do you think of appropriating 
 
763 
 
 money to private institutions for permanent improve- 
 ments ? 
 
 A. Where it can be safeguarded or reversionary that 
 would be in the shape of a benefit. 
 
 By Mr. Woodward: 
 
 Q. There is such a provision in all of the Acts passed at 
 the 1909 session ? 
 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. Mr. Torrance, what supervision does your Board make 
 as to the use of the moneys the State appropriates? How 
 do you know whether they are expended properly or not? 
 
 A. Well, in such Acts as provide for supervision, such as 
 special Acts which provide for supervision by the Board 
 of Charities, or its secretary, the only knowledge we have 
 is that which we may obtain under the Fifth Section of 
 the Act of 1869, which gives the Board power to investi- 
 gate the conduct of the institution. 
 
 Q. I am familiar with the legislation upon that subject, 
 but I want to know what you really do ? 
 
 A. We have a general agent and commissioners. 
 
 Q. What has been your experience as to the expenditure 
 of public money ; in other words, do you think money has 
 been used to special advantage by public institutions? 
 
 A. My own experience has been, I find very little misuse 
 of it, I would say none, but some will be through the lack 
 of proper knowledge on the part of the trustees or super- 
 intendents of institutions where money might have been 
 saved by the use of other materials or different methods in 
 construction. 
 
 Q. Does your Board make any comparison of prices paid 
 by these different institutions? Do you ascertain from 
 these institutions in the different localities how much they 
 pay for a barrel of flour? 
 
 A. Yes, we have. These institutions come before us with 
 
764 
 
 reference to money required and we can compare their ex- 
 penditures per capita, for the service rendered with other 
 institutions under similar conditions; that is, in the same 
 neighborhood. When it shows that the per capita of main- 
 tenance of one institution is greater, we begin to analyze 
 the cause of that, putting, as it were, the superintendent 
 or representative on the witness stand, to make good their 
 statements as to the cost of maintenance. Then we depend 
 pretty largely on the Auditor General's office or the Trav- 
 eling Auditor for the information which we obtain from 
 time to time. 
 
 Q. Have you made any investigation as to the cost of 
 i'aple articles used by certain institutions ? 
 
 A. No, not in a general way; but in a specific way, 
 wherever the question arose as to the cost of mainten- 
 ance. 
 
 Q. Do you think it would be advisable for the State 
 to have a central purchasing body-^do you think with 
 reference to that, that a central purchasing body could 
 or could not purchase supplies more cheaply and then 
 distribute them by requisition to the different hospitals 
 of the Commonwealth? 
 
 A. That might apply that is quite possible as to cloth- 
 ing and bed linen, table linen and articles of that kind. 
 
 Q. Flour, sugar, salt? 
 
 A. I would say as to food products and articles of that 
 kind for general consumption, that question has been 
 before our Board and the question then arose as to pos- 
 sible loss by shrinkage and things of that kind, which led 
 us to drop all recommendations of that kind. But as to 
 the other, there is a possibility there. There is also in 
 this question the local interests as against it. Where 
 it is possible to have the provisions supplied in the com- 
 munity in which the institution is located, we believe it 
 is best on the theory that they get more or less local help 
 by this practice. 
 
766 
 
 Q. That is, private contributions? 
 
 A. Yes. That money as far as possible, all things being 
 equal, should again return to the people who have con- 
 tributed it. 
 
 By Mr. Hunter : 
 
 Q. Do you find that there is any loss to institutions re- 
 ceiving State aid in the matter of collections? 
 
 A. Mr. Hunter, we have that in nearly all occasions. 
 We are in a mill district, a man comes in with the intention 
 of staying a couple of weeks and he pays ten, twelve, or 
 fourteen dollars, and he stays three, four, five or possibly 
 six weeks. Now, we have that man's account on our books, 
 and we are doing the best we can to collect it, that is 
 about as good an answer as I can give. 
 
 Q. In consequence of the aid rendered by the State, in 
 providing better hospital conditions throughout the State, 
 and many of which are incomplete, do you consider the 
 State under any moral obligation to these institutions ? 
 
 A. No, I don't, Mr. Hunter, I think that theory has been 
 rather abused, and with reference to the question which 
 Mr. Brown put to one of the previous representatives as 
 to whether we had too many hospitals in most every com- 
 munity, with reference to the City of Pittsburgh as the 
 city now exists we have 2,200 beds. We have about 1,200 
 of these in the hospitals occupied, that would be 55 to 60 
 per cent. Since that report was made to me and tabulated 
 there has been a number of institutions finished, and there 
 is a number on the way. Now, we all agree that when you 
 are running an institution of any kind to its fullest capa- 
 city and under the supervision of proper management, 
 you are running it most economically. We all know that 
 an institution built and provided to take care of, say three 
 hundred patients, is going to lose money when it is using 
 only half of its capacity. Now, if a hospital is erected 
 in a community where there is an institution provided 
 with three hundred beds, and prepared to take care of 
 
766 
 
 three hundred people, it is just the same as any other oc- 
 cupation, creating competition, and the Board of Charities 
 has endeavored to prevent that duplication of institutions. 
 
 By Mr. Woodward : 
 
 Q. Don't you find that a number of the new hospitals, 
 especially in the smaller communities, are organized and 
 brought about through quarrels among physicians? 
 
 A. No doubt about that. 
 
 Q. Then the State is asked to assist them in maintaining 
 two institutions where one would suffice ? 
 
 A. Yes, sir. 
 
 By Mr. Brown : 
 
 Q. Then why don't your Board say so and stop that? 
 
 A. I can show you a number of applications that this 
 Board turned down, and yet they got the money. 
 
 Q. You say they got it? 
 
 A. Yes, we disapproved of their application because we 
 didn't believe that the institution was necessary in that 
 community, or that the hospital was not needed at all, and 
 could be taken care of otherwise. 
 
 Q. Is there any reason, in your opinion, why certain 
 hospitals could not be consolidated? 
 
 A. I don't know that there should be any reason why 
 they should not do it. 
 
 Q. If it withheld appropriations under your report, they 
 would probably consolidate, anyhow? 
 
 A. I think they would. "We have endeavored to en- 
 able institutions to do this. Now, the same condition exists 
 in the homes, while on the subject. We have in this 
 neighborhood not just in the immediate city, but in this 
 district five, I think, institutions for the care of un- 
 fortunate girls and women, and I believe that they could 
 be properly cared for in three institutions. Now, in that 
 work I tried to get, myself, the institutions in this 
 neighborhood to unite or consolidate. I would not say 
 
767 
 
 I would put them all in one, but I think two or three at 
 the outside would be able to do the work. 
 
 By Mr. Moyer: 
 
 Q. Mr. Torrence, what would you say as to recommend- 
 ing to the Legislature something like that have a paid 
 Board of Charities of sufficient compensation to devote 
 their time entirely to this proposition, increasing their 
 powers so as to supervise these institutions, inasmuch as 
 the State has been spending money for their maintenance 
 and the upkeep of their buildings ? 
 
 A. That would be a very delicate question for me. 
 
 Q. Assuming that the present body would be wiped out 
 of existence ? 
 
 A. Well, then, it would be a department of the State, 
 the same as any other department of the Commonwealth 
 Government. The question would then arise as to the 
 cost of it as compared with the present method. As it is 
 now, the administration of charity, under the law of '69, 
 is comparatively inexpensive. It would, I think 
 
 Q. And comparatively ineffective also? 
 A. Yes, ineffective in this way, that we haven't the 
 mandatory or compulsory powers to enforce. 
 
 Q. You are shorn of your power? 
 
 A. Yes. Going back a few years, sixty years for that 
 matter, in 1850, when the Board of Charities was or- 
 ganized, there were some institutions having expenditures 
 of $134,000. In the last biennial period there were 256 
 institutions receiving State aid under the jurisdiction of 
 the Board of Charities. They received in the two years, 
 from time to time, $722,000. Aside from that there were 
 about 200 institutions, such as orphan asylums and homes 
 for girls, which receive no appropriation, but still come 
 under the same supervision. It is only two years since the 
 Legislature gave the two assistants which I asked for in 
 previous years, and they have done a great deal 
 
768 
 
 Q. How many institutions are there receiving State 
 aid? 
 A. Two hundred and fifty-six. 
 
 Q. Two hundred and fifty-six, that is allowing a couple 
 of days to each one? 
 A. Yes, sir. 
 
 By Mr. Hunter : 
 
 Q. How many not receiving State aid? 
 A. Possibly 200. 
 
 By Mr. "Woodward : 
 
 Q. Would you think more agents would better the 
 service ? 
 
 A. There is no doubt of that. 
 
 By Mr. Brown: 
 
 Q. What direct influence have these assistants had? 
 
 A. Very largely in the manner in which the books were 
 kept. We have had a great deal of trouble of getting re- 
 ports from the smaller institutions. 
 
 Q. Has it resulted in any economy at all ? 
 
 A. I think it has. It has pointed out dangerous con- 
 ditions in smaller institutions, county homes, etc., where 
 there was not proper protection against fire, and where 
 there was not proper protection against elevator accidents, 
 and things of that kind. 
 
 By Mr. Moyer: 
 
 Q. Notwithstanding the fact, Mr. Torrance, of your 
 recommendations, the Legislature would do just exactly 
 as it pleases regarding the matter. Your body can only 
 recommend? . 
 
 A. Yes, sir, that they have done. Now, while on the 
 subject, there is, I think, another recommendation to 
 the Legislature, being two bills I had introduced, one 
 for the removal of the penitentiary, and another for the 
 removal of the Western Penitentiary, of its reconstruction, 
 
769 
 
 which would be of economical character, but worthy of 
 this Commission's consideration. I also entered another 
 bill, and that was for the establishment of workhouses 
 through the counties similar to the one we have here. It 
 is a sort of a boarding house for the criminal class of 
 several counties under a specific Act. Instead of sending 
 the offenders to the local jail or penitentiary, they have 
 been sent here, and the institution, to a certain extent, is 
 self-sustaining. Now, my recommendation was that the 
 counties might have an institution similar to that of the 
 Allegheny county workhouse, and let the counties, I 
 think, if not able to contribute to the building at all, let 
 them agree by proper legislation to pay so much for the 
 board of their prisoners. 
 
 By Mr. Woodward : 
 
 Q. That is for short-term prisoners? 
 
 A. Yes, and in that way it would relieve the State of 
 what I think will be quite necessary within the next de- 
 cade, and that is building one additional penitentiary, or 
 building an addition to the present penitentiaries. 
 By Mr. Hunter : 
 
 Q. Do you think our present Western Penitentiary is 
 well located? 
 
 A. Every high river we have we get in there, necessitat- 
 ing the removal of the machinery from the lower story 
 of the building. Another thing that is a recommendation 
 for this plan is the very satisfactory result we have had 
 in Allegheny county. The same allowance is made for the 
 board of their insane, and have a proviso that they would 
 have an equipment and treatment equal to that in the 
 State institutions at Dixmont, Harrisburg, Norristown, 
 and Warren, and that has induced the counties to put up 
 a better class of county homes, and that has resulted also 
 in taking care of a very considerable percentage of our 
 insane. Our insane population of the State is about fifteen 
 thousand at the present time, and we have not sufficient 
 capacity for them. j 
 
 39 
 
770 
 
 By Mr. Brown: 
 
 Q. How many are we caring for? 
 
 A. We have an insane population in the institutions of 
 fifteen thousand. 
 
 Q. How many outside the State institutions are being 
 cared for? 
 
 A. From what I can gather, Mr. Brown, there is pos- 
 sibly 20 or 25 per cent, outside. Mr. Boyle thinks the 
 population is not so large, possibly not more than 10 per 
 cent, not being cared for. But that does not alter the 
 fact, that they are supposed to be cared for. Dixmont 
 was to take care of five hundred patients and already 
 has a population of six hundred. They had at the last 
 time I was there about nine hundred, now if you crowd 
 nine hundred people to where five hundred were intended 
 you are doing a detriment to the people who are in that 
 institution. 
 
 Q. You believe that the State should finish State institu- 
 tions before appropriating to private institutions? 
 
 A. Yes, sir. We have $13,000 invested at Allentown, 
 and it isn't of any use to us until it is finished. Now 
 what I say to you of Dixmont is true almost to the same 
 extent of the other five hospitals, that is, Norristown, 
 Warren, Harrisburg, Danville and Wernersville. 
 
 By Mr. Woodward : 
 
 Q. While you are speaking of Dixmont institution, 
 a couple of years ago I was on the Commission investigat- 
 ing the insane, and we suggested to that institution that 
 they ask for money to relieve their crowded condition 
 there, and they informed the Commission that they did 
 not want any more State patients; that they intended to 
 cut loose from the State, and have Dixmont become a 
 private institution, and since then, I understand, they have 
 decided not to do that. 
 
 A. Since that time, Mr. Woodward, Dixmont has sepa- 
 rated from the West Penn Hospital, and has its own charter 
 and is a corporation. 
 
771 
 
 Q. Do you know if they are willing to build up yet? 
 A. Yes, sir, I think they are. 
 
 By Mr. Brown: 
 
 Q. Mr. Torrence, have you folks made any calculation 
 as to what it would cost to finish the institutions now 
 under construction about how much? 
 
 A. Well, I would hardly attempt to say. There is Allen- 
 town, Spring City and Fairview (?). I suppose it would 
 take a million and a half or two millions. 
 
 Q. For the present institutions? 
 
 A. Yes, sir. 
 
 Q. How much would it cost to build institutions to 
 properly care for the insane that are uncared for by these 
 institutions ? 
 
 A. That would only be a guess on my part. We are 
 sadly in need of more institutions. I have brought here 
 with me Mr. Boyle, who is familiar with these lunacy 
 questions. On the whole I think the State will rank with 
 any of the other Commonwealths in the care of its 
 charities. 
 
 Q. Is the Board of Charities prepared to recommend 
 that the State shall not give any more money to those 
 institutions which are not under her control? 
 
 A. That is the policy of the Board. 
 
 Q. What would become of all these private institu- 
 tions ? 
 
 A. That would be a very sad thing for them, and for 
 the community if they are essential. 
 
 Q. Do you think from your experience that they would 
 be able to provide for them locally? 
 
 A. Some of them would. 
 
 Q. How about the general welfare of the community T 
 
 A. I think it would be bad. 
 
 Q. Which would be the worst now, to allow those peo- 
 ple to go uncared for, or to go on and appropriate money 
 to these institutions and have it used that way? 
 
772 
 
 A. There is not only the economical question to be con- 
 sidered there, but the question of the welfare of the State 
 that arises, and it would be pretty hard for anyone to 
 say. 
 
 Q. "Which would result in the greatest good to the great- 
 est number? 
 
 A. Here is a class of people, some are and some are not 
 citizens, there are criminals, and the insane wards and 
 other people being cared for, sick, crippled, injured, etc. 
 Now, we believe in the doctrine of the submerged tenth, 
 we had better take care of our own people. That is a 
 pretty hard question to answer. 
 
 Q. Well, I suppose those in prison would rather be 
 abandoned? 
 
 A. I suppose they would. If you would go into an in- 
 stitution such as we have in this State, and find them at 
 night sleeping on the floors, and you will be almost unable 
 to walk through the corridors for fear of tramping on 
 them, you will realize what necessity there is for the care 
 of them. 
 
 Q. Well, it certainly has gotten to be a critical situa- 
 tion from my point of view, and that is the reason we 
 are trying to see if there is not some way to help them? 
 
 A. Of course, there is this, that the institutions are fur- 
 ther advanced than they were three or four years ago, and 
 it won't be so hard in the future, in my mind, if the Board 
 of Charities should not be continued, and there is not this 
 duplication of which we in our judgment and experience 
 believe to be impossible in these private charities. Then 
 if this is adopted, there will be plenty of revenue without 
 any burden on the taxpayer for these institutions. 
 
773 
 
 PATRICK C. BOYLE, of the Board of Charities: 
 
 Mr. Torrance has told you that we have made the en- 
 dorsement which would require that there be built 
 another institution for the care of the insane. Mr. Tor- 
 rance has just spoken to you that Allentown has been in 
 process of construction for almost ten years seven or 
 eight years. That they have very few people there, and 
 it will be some years before they can take care of the 
 number cared for in either of the other five institutions. 
 At the other five institutions there is an overcrowding 
 fully exceeding 50 per cent, of their capacity. That 
 means that we need at the present time two whole institu- 
 tions to take care of the overflow. 
 
 By Mr. Brown: 
 
 Q. And Allentown could have been finished in two years, 
 or four years at the outside? 
 
 A. If sufficient money had been appropriated. 
 
 By Mr. Woodward: 
 
 Q. Do you find that patients are as well taken care of 
 in the county institutions as they are in State institu- 
 tions ? 
 
 A. In most of the counties they are better taken care 
 of. Woodville stands at the top, and is in excellent con- 
 dition. And if the chronic insane were taken out of the 
 State institutions and put in the county homes there would 
 be an instant relief from the pressure. The State would 
 pay $2.00 per week to the counties for the care and main- 
 tenance of the chronic insane. 
 
 Q. The people whom you think should be placed in 
 the county home, and not in insane asylums, they are help- 
 less but not violent ? 
 
 A. Yes, sir, absolutely so. Take the case of the insane 
 asylums and the State hospitals, those that we have now 
 
774 
 
 would be sufficient for many years to come if the counties 
 would do their share of the work, but, unfortunately, many 
 of them are not able. 
 
 Q. The theory being that the counties should take care 
 of their own ? 
 A. Yes. 
 
 By Mr. Hunter : 
 
 Q. Mr. Boyle, wouldn't it be a good idea for the counties 
 to club together for the purpose of this kind, as stated by 
 Mr. Torrance? 
 
 A. Oh, yes, it would be a grand thing, and for the ad- 
 joining counties. 
 
 Q. That is, to properly care for them? 
 
 A. Oh, yes. Now Hollidaysburg, Blair county, is in 
 position to do that. They have a proposition, I think, from 
 one or two counties. Clearfield wanted to send their 
 chronic insane over there to the insane department of that 
 county. That is one instance where it might be done. 
 They are doing that in some of the Western States. 
 
 By Mr. Moyer : 
 
 Q. They are doing that in New York also. In recent 
 years in the State Legislature there has been considerable 
 effort put forward to have the public school system sup- 
 ported entirely by the Commonwealth. The chief objec- 
 tion to that is that it takes away responsibility from the 
 counties, and that the school would not be as satisfactory 
 as it is to-day ? 
 
 A. It might not be as satisfactory. 
 
 Mr. Woodward: Mr. Torrance, as a result of these 
 charities, what would you think of an Act that would 
 provide against any institution receiving State aid unless 
 they were organized specially by the State? 
 
 Mr. Torrance : I would think very well of it. 
 
 Mr. Woodward : Provide for the incorporation of such 
 institutions by special Act? 
 
775 
 
 Mr. Torrance: Yes? 
 
 Mr. Woodward: You couldn't incorporate them very 
 well by special Act? 
 
 Mr. Torrance: It would be for State and educational 
 I urposes. 
 
 Mr. Boyle : I will submit a brief to the Commission. 
 
776 
 
 EUSTACE S. MORROW, Controller of the City of 
 Pittsburgh : 
 
 I say that I can only endorse what the Mayor has said, 
 with some emphasis. I don't believe in wiping out entirely 
 all classifications, because I think an evil would be worked, 
 but I believe in a modified classification of real estate in a 
 city like Pittsburgh, and possibly Philadelphia. I want 
 to say, too, that an injury has been done by the passage 
 of the Automobile Act. We license vehicles. There is 
 quite a complaint that automobiles go free when they have 
 to pay a tax. 
 
 By Mr. Brown: 
 
 Q. Why don't your city authorities tax them? You 
 have under your police power the right to put a tax on 
 them, and it does not interfere with the State authorities 
 at all? 
 
 A. We had an ordinance, but the Attorney General held 
 that the ordinance of 1909 wiped out the right of the city 
 to levy any license. 
 
 Q. On automobiles ? 
 
 A. Yes. There is one more thing I would like to say, 
 I mean in relation to State tax. I think it is wrong for 
 the State to tax municipal bonds. A municipality is the 
 child of the State, and I think the State might leave the 
 municipality go free. 
 
 Q. You don't have any trouble in floating your bonds? 
 
 A. Oh, no, our credit is good, but still we have com- 
 plaint when making taxation. 
 
 Q. Your bonds are all issued tax free? 
 
 A. No. Oh, no, no, no. We find a ready market in the 
 East for our bonds. I want to say I fully endorse what 
 Mayor Magee has said regarding manufacturing interests. 
 You take manufacturing interests out of the city 
 
777 
 
 Q. Why do they go out of Pittsburgh ? 
 
 A. Our expenses are very heavy, and our tax rate may 
 be very heavy. If the State would give us the power to 
 modify the tax on manufacturing corporations take Jones 
 & Laughlin's interests on both sides of the river great, 
 large mills why, they would have to get out of town if 
 we taxed them to the full value of the ground. 
 
 Q. That is the disadvantage of being in a city? 
 
 A. There is no disadvantage to being in the city. 
 
 Q. Does not that condition exist all over the county? 
 
 A. That is true, but still we want to keep the manufac- 
 turing interests. 
 
 Q. Are there any other features of our present laws 
 that you can think of that ought to be amended? 
 
 A. I can't think of anything now. 
 
 Q. Your city gets three-fourths of the personal property 
 tax? 
 
 A. Oh, no, the county does I don't know anything 
 about the county. I don't know how much they get. We 
 have no personal tax, but business tax. 
 
778 
 
 PETER WITT, of Cleveland, Ohio. 
 
 I came to deliver a lecture here last night, and my 
 friend, George, asked me if I wouldn't come over here and 
 give you my views of the Ohio laws that you may steer 
 away from the mistakes made in the State of Ohio. Of 
 course, the question of taxation has never been reduced 
 to a scientific basis and, of course, we do not have the ideal 
 one, either. When you talk of personal property taxa- 
 tion here, it means something entirely different to me from 
 what we have in the State of Ohio, and I very much fear 
 that I might get into trouble if I would give you the benefit 
 of a few thoughts on the subject. Of course, on the general 
 subject of taxation I presume Ohio is the most backward 
 of any State in the United States. From 1836 from that 
 day to this very few changes have been made. In 1851, 
 when the present Constitution of Ohio was adopted, it 
 was provided that all property, both real and personal, 
 should be taxed at its full and true value, and that 
 lands and buildings should be taxed once in ten years, 
 except railroad property. It is provided that all persons 
 shall make a return of all personal property owned by 
 them. There is an exemption of one hundred dollars on 
 household effects. 
 
 In the City of Cleveland we have over two hundred mil- 
 lion dollars on deposit, yet the tax return says there is only 
 a million there. We have our assessors, and of course, 
 they are very good assessors in most instances. We send 
 them out to make an equitable return when the owner 
 refuses to make it. While the average assessor can readily 
 distinguish the difference between a fifty cent chair and 
 furniture like this (meaning furniture in Chamber of Com- 
 merce room), he would hardly be able to make a fair 
 valuation on furniture he would see in this room. 
 
779 
 
 W. D. George : I might say I am in the real estate busi- 
 ness here in Pittsburgh, and after hearing for two days 
 what has been said on the subject of taxation, 1 feel like 
 saying something myself. This question of classification 
 to which Mayor Magee has spoken of to-day, is the first 
 time his Honor has publicly expressed his opinion on the 
 subject. We have been watching with a great deal of in- 
 terest that law. We have three classifications: there 
 is agricultural, rural, and full valuation, and the result of 
 it as it has been administered here in Pittsburgh is that we 
 find the finest homes in Pittsburgh, on Fifth avenue, More- 
 wood avenue, and those high-priced residence districts, all 
 in the district, all assessed at the rural classification two- 
 thirds taxes on them and yet we come into Lawrenceville 
 and lower Allegheny and the South Side, and in the very 
 nature of things, the whole location is utilized for build- 
 ing purposes and under the laws it comes in for the full 
 classification. 
 
 By Mr. Brown : 
 
 Q. Do these rural districts have the same facilities for 
 schools? 
 
 A. Yes, sir, ordinarily. Not only that, but we go out 
 further and we find a district out there where a chap is 
 going on, holding on to the property as against the growth 
 of the community and it is either taxed as agricultural, 
 which is one-half, or at the most rural, which is two-thirds, 
 holding back for development, which the city should try 
 to discourage; but when a builder or some other person 
 goes out there and builds a house on it, immediately the 
 tax goes up, and as a result of that condition of affairs 
 here in Pittsburgh, so much of our community is engaged 
 in speculating in land instead of using it. Manufactures 
 come here! You see manufacturers won't come to Pitts- 
 burgh. Why don't they come? Because the land values 
 are so high that they can't come, owing to speculation, 
 and if they do come, they can't get their men in. Rents 
 
780 
 
 are so high. And they can go out in Ohio or some place else 
 and can locate there to better advantage manufacturing 
 is cheaper and living is cheaper. 
 
 Now, that law allowing the classification of real estate 
 should unquestionably be done away with. That is work- 
 ing a great inequity in all communities, and is working 
 into the hands of the people who are holding the land out 
 of use. Of course, I, as a single taxer, would go fur- 
 ther and the man who has some legitimate use, would 
 have something for the community, and I would think he 
 is a good cithizen ; he is the man we want to attract here. 
 
 By Mr. Brown : 
 
 Q. Is there enough land in Pittsburgh to supply the de- 
 mands of manufacturing corporations ? 
 
 A. Right up along the railroad there you see the num- 
 ber of people who are absolutely sitting there just waiting 
 until the interest or the necessity of the railroad will re- 
 quire that property for legitimate use. Over on the South 
 Side, when the Wabash attempted to force an entrance 
 into town, $1.00 a square foot was the price for that land, 
 and manufacturers couldn 't afford to utilize that land very 
 well, but the people held on to it until it developed and 
 the Wabash paid $6.00 a square foot for the same land 
 within a year after it had been sold for $1.00 per foot. 
 
 Q. How can you distinguish between a monopoly of 
 land and something else? 
 
 A. There are two values to land, you will find, and 
 that is the use value that is, the value which any person 
 can pay for it and legitimately use it and then there is 
 the other value, which is the speculative value, the value 
 which a man gets on a piece of property when he says, 
 "Within ten years somebody will have to have this land 
 for some purpose, and I will sit on it a while until he has 
 to have it and have to pay me enough to give me a profit 
 on it. ' ' I would tax it and make him use it, and it would 
 do away with unequal assessments. I challenge any man 
 
781 
 
 to go out under present conditions and value real estate. 
 People are coming in and asking me to set a value on real 
 estate. The value has been inflated to such an extent 
 because of speculations that it is away beyond the price 
 that anybody can legitimately use it for. 
 
 Q. Are the assessors assessing it at the inflated values? 
 
 A. Yes, sir, they are. They overlook the question that 
 so much of our value of real estate is speculative value. 
 Over on the North Side, they are selling real estate for 
 less than its assessed value, and if any plot of real estate 
 had to be sold in Pittsburgh at public sale, in the down- 
 town sections, you could not get the assessed value for it. 
 You are speaking of personal property tax. Mr. Smith 
 said that they actually collected two-thirds of all the per- 
 sonal property which is subject to taxation. You go up to 
 his office and ask his chief man what proportion of the 
 property which they get for taxation they get from the 
 records of the county and what proportion is handed in 
 on these personal returns. The chief clerk tells me, 
 and he is the man who knows he tells me that at least 
 two-thirds of it is property which is handed in from the 
 records. That is the mortgage tax. Now, a big proportion 
 of that tax is the mortgage tax. There is no question about 
 that, and that is the tax on the poor, unfortunate people 
 who have to pay because they are in debt. I own a piece 
 of property, and I own it clear. My neighbor owns a piece 
 of property and it is mortgaged and he pays the same tax, 
 and the mortgage tax on top of it; but the money at in- 
 terest in these trust companies here 
 
 Q. You mean moneys at interest? 
 
 A. I am speaking about the personal property tax which 
 the State collects. Allegheny county collects $800,000. 
 That is a fair reversion of taxable property, even if two- 
 thirds of it is collected. 
 
782 
 
 WILLIAM N. McNAIR, Attorney at Law. 
 
 With the permission of the Committee it will take only 
 a few words to explain some data prepared by Mr. Hardy. 
 Mr. Hardy will explain the data which he has prepared. 
 
 Mr. Hardy: I separated the real estate from the im- 
 provements in 1909. The real estate amounted to $696,200. 
 In the year 1909, I did the same thing. The value of the 
 real estate amounted to $1,422,880. That was in the Second 
 Ward of the Borough of Carnegie. The Second Ward has 
 a population of 4,500. What I would think we should 
 recommend especially would be the abolition of classifica- 
 tion. A piece of ground laid out should not be assessed 
 any more than a piece of ground not laid out. It should all 
 be assessed at the same basis. 
 
 The fundamental maxim laid down by authorities on 
 taxation, that the subjects of every State ought to con- 
 tribute to the support of the Government as nearly as 
 possible in proportion to the revenue which they respect- 
 ively enjoy under its protection. The persons who enjoy 
 the greatest revenue by reason of the protection of the 
 State, its industries and progress are those who own land. 
 Especially in the large centers of population in this State, 
 lands are increasing in value and the owners thereof are 
 receiving constantly increasing revenue and they ought 
 to be made to contribute to the support of the State in 
 proportion to this increase. 
 
 Ernest Selfer : My borough is right on the edge of the 
 City of Pittsburgh. Every man in that borough is sup- 
 posed to pay an occupation tax of so much a head. Now 
 those men are compelled to pay this tax. They look across 
 to the city where there is no tax and some of them move 
 into the city to escape that tax. As a citizen of the State 
 I think that this is inequitable. I think that the city should 
 
783 
 
 be compelled to collect that tax, or else the tax should be 
 taken off altogether. 
 
 By Mr. Moyer : 
 
 Q. Is it poll tax? 
 
 A. Occupation tax. The trouble now is that every man 
 in the borough pays borough tax, as well as the school and 
 poor tax. If he gets a heavy bill of taxes, he thinks he can 
 move across the line and not pay it. If there is any re- 
 vision of the tax laws, I think that should be taken up. 
 
 Q. Doesn't that show laxity on the part of the city offi- 
 cials? 
 
 A. I don't know that. 
 
 Q. If the city does not collect the tax and it is the law, 
 where does the responsibility lie ? 
 
 A. If that is the law, the city should be forced to collect 
 it. 
 
 By Mr. Brown : 
 
 Q. Do you think anybody moves from your borough to 
 the city to escape that tax ? 
 
 A. I think some of them go. If you go on the other side 
 you don't have to pay it, and if you stay in the borough 
 you have to pay that tax. 
 
 Adjourned at 5.30 P. M. to meet at 10.00 A. M. Saturday 
 morning. 
 
784 
 
 PUBLIC MEETING, PITTSBURGH, PA., 
 
 MORNING MARCH 26, 1910. 
 
 C. E. Bown, Assistant City Solicitor of the City of 
 Pittsburgh: Gentlemen, as the law officer of the city, 
 having charge of street railway matters, my attention has 
 been called somewhat closely for the past months to that 
 question in particular, and in relation to the public service 
 corporations of the municipality in general. 
 
 With your permission I would like to give a brief sketch 
 of our department, or our system here, so that you will 
 understand how I have arrived at the conclusions I come 
 to. 
 
 First, the street railway company was chartered in 
 1859. They were, of course, horse car companies. The 
 ordinances at that time contained conditions which were 
 then thought to be applicable to corporations of that kind, 
 particularly requirements as to keeping the streets clean 
 and in repair. There were some 17 companies chartered 
 by the Legislature between the years 1859 and 1874. Eight 
 of those companies never built lines, but were abandoned. 
 Two of them were subsequently merged or sold to other 
 companies. Seven of these charters are in existence today 
 and the present company claims right under them. 
 
 From 1874 to 1887 there were possibly some eight or ten 
 companies chartered under the Act of 1879, which author- 
 ized the formation of railway companies in cities of the 
 second and third class. The Act was subsequently declared 
 unconstitutional, but practically all of these companies 
 availed themselves of the Act of 1859 and are in existence 
 to-day. 
 
 Eighteen hundred and eighty-seven marked the trans- 
 ition from the old horse line to the cable system. A num- 
 ber of traction companies were organized under the 
 Traction Motor Power Act, passed that year. The theory 
 
785 
 
 of the Act was that companies organized under it were 
 organized merely for the manufacture and supply power to 
 the street railway companies. In other words, it did not 
 grant any subsequent franchises to companies organized 
 under it. There had to be in existence a company or- 
 ganized under some other law which made the contract 
 with the traction companies organized under the Act of 
 1887. The method was for the old company to lease the 
 lines to the traction company. That also marked the first 
 outburst of modern ideas on capitalization. The old com- 
 panies did not have more than $100,000, while most com- 
 panies were organized at approximately $1,000,000 and 
 in some instances, of course, more than that, and bonded 
 in some cases for an equal sum. The capital stock repre- 
 sented, of course, the good will and franchises, and was 
 exchanged for the stock of the old company for the fran- 
 chises. From 1887 for a few years the street railways 
 operated principally by cable power, and in 1889 the first 
 General Act was passed in this Commonwealth authoriz- 
 ing the formation of street railway companies. That 
 marked the beginning of electric street railways and also 
 marked a further increase in the method of capitalization. 
 Under the latter Act, the Act of '89, a large number of 
 companies were organized, possibly there had been as 
 high as 200 in this county organized under that Act. 
 Naturally competition arose, and after competition, con- 
 solidation, and the companies here were gathered under 
 two large companies, the Consolidated Traction Company 
 and the United Traction Company. Between them they 
 controlled about 130 subsidiary companies, including in 
 these the old companies that have the Legislative charters. 
 Of course, every leaf or every turning over was made a 
 further occasion of the increase of the capital, each one 
 representing generally a number of different profits, 
 brokers' profits, constructors' or contractors' profits, and 
 so on. You are probably familiar with that to some extent. 
 The ordinances of the city that were granted to each 
 company from 1887 on were of different character from 
 
786 
 
 what had been granted to the early companies. They 
 were either in every case practically in perpetuity or for 
 the terms of the company's charter, which was usually 
 for 999 years. They were without compensation to the 
 city and without condition as to operation. The resul tof 
 this matter of operation would not be hard to foresee. It 
 did result in the gathering together of all these properties 
 ultimately under one company, the Pittsburgh Railways 
 Company, which is a company what we call an omnibus 
 charter, a charter of 1881, giving the company practically 
 every known power to transact business. This Pittsburgh 
 Railways Company, on the other hand, is merely a hold- 
 ing or operating company and its stock is held by the 
 Philadelphia Company, which is also a company having 
 one of these omnibus charters ; and that company owns 
 or controls the heating or lighting utilities of this neighbor- 
 hood, practically all of them. There are one or two other 
 small lighting companies, but the Philadelphia Company 
 does most of the natural and lighting business. The result 
 has been that the Pittsburgh Railways Company has not 
 had sufficient new capital to keep its equipment up-to-date, 
 having, and it has now, arrived at the point where it finds 
 what it should have for use as available working capital 
 tied up in these stocks and securities that have been 
 issued from time to time in the past. And another thing 
 most of the people have agreed generally that is the key- 
 note in the present situation, that if the Company had an 
 opportunity of increasing its capital stock we should nor 
 be facing the present situation. I need, I suppose, not 
 enlarge on the details of that situation, and I do not think 
 this is the time or the place to make an harangue as to 
 the wrongs the community has suffered at the hands of 
 this corporation. You all know that the service is not 
 what it ought to be ; the company's officers even admit 
 that. That naturally brings up the questions of remedy, 
 if one can be provided. As I have mentioned, the city 
 is practically without remedy. The only franchises which 
 
787 
 
 contain conditions of any kind are those to the earlier 
 companies, having legislative charters. Those conditions 
 were inserted with a view to conditions widely different 
 to what they are now. Consequently we must turn to the 
 State if we are to secure any remedy for present conditions, 
 and when we do that we, of course, come to the Railroad 
 Commission Act of 1907. 
 
 Now, in discussing this Act, I do not wish to be con- 
 sidered as offericsr criticisms upon the Commission or 
 even upon the attitude of the Pittsburgh Railways Com- 
 pany toward that Commission. The City of Pittsburgh has 
 an action pending before the Commission, and it would 
 be ungracious for me to say that the proceeding would 
 not result in helping the city, but I do want to call your 
 attention to things that I consider defects in the Act, and 
 some powers which I think require to be amended or sup- 
 plemented. In the first place, the Act applies only to 
 common carriers, telephone and telegraph companies. I 
 think it ought to be made to include all public utility 
 corporations. You can see that the question of heating 
 and lighting is very closely associated with the street 
 railway matter. We suppose, and I think it is a matter 
 of fact, that the Philadelphia Company relies very largely 
 upon the profits of its lighting and heating companies to 
 offset the loss arising from the operation of the street 
 railway company. The consequence of that, these rates 
 are put up to the highest possible point, and now we hear 
 threats of the rate of gas going higher. I have heard that 
 they are to be raised on the first of May. Consequently, 
 I say that this ought also to be a subject of State regula- 
 tion. 
 
 Now, gentlemen, in arriving at my knowledge of the 
 facts which I have presented to you, I was put to a great 
 deal of difficulty, for various reasons. One was this State 
 Street Railway Act of 1889, by which corporations are 
 not required to register their charters in the county in 
 which they do business. Consequently, I had to go to 
 
788 
 
 Harrisburg whenever I wanted any information as to their 
 charters. Then th^re are a number of other matters that 
 are infinitely connected with the organization and opera- 
 tion of these corporations that are not matters of public 
 record, and that ought to be. This brings me to another 
 recommendation, and that is, that these corporations 
 should be required to file with some officer of the county 
 or municipality wl'.ere they do business certified copies of 
 their charter, ordinances, extensions, leases, and agree- 
 ments and instruments generally of all kinds on which they 
 rely for the exercise of any right within that district. 
 In that way it would be possible for the officers of the 
 city to be informed of the various privileges relative to 
 the right and liabilities of the party, and we would not 
 be in the position where we are now where it has taken 
 us practically a year to get at the facts of the situation. 
 It seems to me, to refer to the Act of 1907, that the vital 
 defect in the Act is that the decrees of the Commission 
 are not made mandatory. In other words, the Commission 
 is merely a body to inquire and recommend. It is pro- 
 vided in the Act that if the corporation shall not obey 
 the recommendations of the Commission, that then they 
 shall certify the statement of the facts to the Secretary 
 of Internal Affairs or the Attorney General. Now, these 
 officers have full power to act in case the corporation is 
 violating the law, and the evasion or disobedience of the 
 Commission's decree is not necessarily a violation of the 
 law of course, it may be, or may not. If it is a violation 
 of the law, we have already a remedy. If it is not, the city 
 or Commonwealth are without remedy. I think in this 
 matter that we mi^ht copy after the Massachusetts law. 
 In stating this question I have referred principally to the 
 laws of Massachusetts, for the reason that they are the 
 outgrowth of forty years' experimenting upon this sub- 
 ject. They have had a Railroad Commission for over forty 
 years. They are the result of that period. And in Massa- 
 chusetts the decrees of the Commission in certain cases are 
 
789 
 
 made mandatory through, the imposition of penalty. I 
 refer particularly to the provision in their code by which 
 they can impose a penalty upon any corporation failing 
 to provide additional rolling stock when ordered by the 
 Commission. I think a penalty would be a very proper 
 and very wise means of arriving at the result of compelling 
 the corporations to obeyance. I might also say that in 
 New York they have a penalty and the results have been 
 that the company have not sought to delay or avoid or 
 disobey the decrees of this Commission. There are a 
 number of other features, which I think might be incor- 
 porated in our laws relating to this matter the matter 
 of real estate valuation and also the valuation of fran- 
 chises is important. For instance, in this city, while the 
 company issue some transfers, it by no means will provide 
 an adequate system, or the system which it ought to pro- 
 vide. If we had H means of putting a regulation in the 
 franchises it would enable us to meet their plea that they 
 could not issue transfers because they cannot make money 
 or profit. The question of transfers is also another one 
 of course, the Commission has power to deal with that 
 as with other matters. Whether or not the City ought 
 not to be empowered to deal with some of these questions 
 is a matter of great deal of doubt. Personally, I think 
 they ought to be left to the Commission, if the powers of 
 the Commission are enlarged. In my conversations with 
 other men, they seem to be in favor of municipal rule of 
 transportation, which would have power to make certain 
 regulations. That is a matter of detail which should be 
 considered in dealing with this question. 
 
 I think in my communications with this body I referred 
 to some other matters. Yes, the matter of the issuance 
 of securities is one that should be under the jurisdiction 
 of the Commission. At present our Commission has power 
 to inquire into the issuance of securities if they deem it 
 advisable. In Massachusetts all new securities must be 
 authorized by the Commission, and there is a provision 
 
790 
 
 that they shall not be issued unless the Commission finds 
 it to be necessary You can readily see if we here had 
 some such provision at present what it would have saved 
 us now and what such a provision will probably save us 
 in the future. 
 
 In connection with tha+ the Massachusetts laws also 
 provides that the Commission must give its consent to all 
 leases and agreements by any and all corporations. I 
 might give you one or two instances to show you how that 
 has been abused in the past. First, the Pittsburgh & 
 Birmingham Passenger Railroad Company, going over the 
 river to the South Side on the Smithfield street bridge 
 the original lease ^f the Passenger Railroad to the Trac- 
 tion Company in 1887 provided for a rental of $12,000 a 
 year. The lease of the traction company United Traction 
 Company made some five or six years later was at a 
 rental of over $150,000 per year. That, of course, was 
 partly justified by tlif changes in the system of operation, 
 but not by any means to that extent. That went on in 
 the case of all these corporations. -And these rentals which 
 are being paid to d?iy are one very large source of trouble 
 to the companies to-day. 
 
 The grade crossing is another matter that has given the 
 city a great deal of trouble. The Pittsburgh Railways 
 Company interposes the plea that the number of crossings 
 at grades of the steam railroads interferes with the opera- 
 tion of its cars. The city has practically no power to 
 deal with these questions except by agreement between 
 the railroad and the city, and the street railway. The Act 
 of 1901 is not applied to a city of the second class, and the 
 Act of 1871 does not apply to crossings of steam railroads. 
 Our trouble has been to get the Pittsburgh Railways Com- 
 pany to stand its proper share of expense to abolish these 
 crossings. In the State of Massachusetts that has been 
 worked out satisfactory, the law specifies the portion of 
 expense which shall be borne by the various corporations 
 and the municipal districts. Some such system as that 
 
791 
 
 would speedily do away with these crossings which are 
 present to-day. 
 
 The matter of an uniform system of accounting is one 
 which the Commission should be compelled to require of 
 all such corporations. Without this it is really impossible 
 to tell what these corporations are doing and in many cases 
 what would be fair or unfair regulation. That is, of course, 
 connected with the valuation of physical properties and 
 franchises and I think is in accordance with the most 
 modern thought on this subject. In Massachusetts also 
 they have provided for a periodical inspection of equip- 
 ments, rights-of-w r ay, bridges, and so forth of such cor- 
 porations by some officer of the Commission. Personally, 
 I am inclined to t-iink that is not so important as the 
 other matters, although I might say that at least in 
 one respect that is, if we had that provision here we 
 would have probably done away with the inadequate me- 
 thods which the company use here, which is really a 
 disgrace. 
 
 These complete T ny suggestions, gentlemen, for the 
 present. The subject ir> a large one, and I have not yet 
 had the time to go into it as thoroughly as I wish to, but it 
 seems to me that some provision along the lines that I 
 have indicated should be adopted. They have been 
 adopted in other places, notably, as I have stated, in Mas- 
 sachusetts and also New York, Wisconsin, Illinois, Ohio, 
 and I think possibly in Michigan, of course, in a number 
 of Western States. Other States are considering them. 
 I see that the State of Maryland is at present holding hear- 
 ings before some Commission similar to your body on 
 this subject. The State of California, I believe, is con- 
 templating taking such steps. Now, in many other places 
 they have a means of dealing with these corporations which 
 we have not. I doubt if there is any place in the country 
 where the grants of the municipality to these corporations 
 were of the same kind as those made in this city during 
 the years 1887 to 1897. They deprived the city practically 
 
792 
 
 of any power to protect itself at all. Now, if they need 
 this method of State regulation in other places where the 
 municipalities have reserved some right of protection, 
 much more do we need it here. As I have said, this is 
 not the place or the time to indulge in the recital of the 
 wrongs which this community has suffered at the hands 
 of the public service companies, and the Pittsburgh Rail- 
 ways Company, but we do feel that we have suffered and 
 are suffering to-day a great and grievous wrong ; that this 
 is not a question entirely of policy, but there is a moral 
 aspect to it and that we come to you asking you to ex- 
 ercise the State's power, which the State has, of super- 
 vising these corporations and compelling them to do their 
 duty. 
 
 By Mr. Brown : 
 
 Q. You tax in the City of Pittsburgh what of these 
 corporations ? 
 
 A. I want to speak about that. We tax the real estate 
 of these corporations in the old city. 
 
 Q. What do you tax in the new city? 
 
 A. We do not tax them in the Greater City. The Su- 
 preme Court has recently decided that we are not entitled 
 to tax their real estate on the North Side. 
 
 Q. The Supreme Court reversed your lower Court? 
 
 A. Yes, sir. 
 
 Q. Your local Court decided for you and the Supreme 
 Court reversed it? 
 
 A. Yes, sir. 
 
 Q. What other tax do you levy upon them? 
 
 A. Practically nothing. In 1893 the City passed an 
 ordinance levying a license tax which netted it in the 
 neighborhood of $20,000 a year. In 1896 that was amended 
 by raising the amount, and the company contested the 
 validity of the new ordinance and the Court held that it 
 was invalid in that it was an attempt to impose a property 
 tax and not a license tax. We received some $20,000 from 
 
793 
 
 the North Side company. Aside from the real estate tax 
 which the City receives and the amount which I cannot 
 give you, that $20,000 per year is all that we are receiving 
 to-day. 
 
 Q. Under the Constitution the City has the right to 
 levy a license tax upon these corporations before they al- 
 low them to operate within their limits ? 
 
 A. Yes, sir. 
 
 Q. Then your criticism is one of the City of Pittsburgh 
 and not the corporation? 
 
 A. It is attributable to the officers of the City of Pitts- 
 burgh who at that time had the power with these fran- 
 chises. However, that was brought about, though, we are 
 confronted, as I say, with a condition, and not a theory, 
 and if it is possible to remedy that condition we do 
 not think we should be made to suffer for the acts of 
 the Trustees of the city at that time. 
 
 Q. And as a lawyer you will appreciate that that be- 
 came part of the contract between the city and the cor- 
 porations ? 
 
 A. There is enough proper things to bring about that 
 abrogation. 
 
 Q. Do you think Pennsylvania has the right to set 
 aside or abrogate this contract between the corporations 
 and the City of Pittsburgh? 
 
 A. I think that Pennsylvania has the right to pass a 
 law along the lines I have indicated in my address, looking 
 to the regulation of these corporations in these matters. 
 That has been very largely thrashed out. 
 
 Q. How about the underlying securities, now? 
 
 A. That is one that I have not given much attention to. 
 Some of the persons that I have talked with about that 
 feature think that a plan can be devised for handling 
 these securities, that is, the provision of a fund from 
 the surplus earning, if there should be any, looking toward 
 the gradual and ultimate retirement of the water in the 
 securities. 
 
794 
 
 Q. Now, are the earnings of those corporations suffi- 
 cient for the creation of such a fund? 
 
 A. They are said not to be, but that is a matter on which 
 we lack at the present time sufficient information, and 
 that merely emphasises a point that 1 want to make, and 
 that is, that municipalities and the State in dealing with 
 these questions are handicapped by lack of sufficient know- 
 ledge of conditions. If these companies were compelled 
 to adopt a uniform system of accounting, and make full 
 and complete report, we could then tell whether they were 
 telling the truth or not about their profits, and have some 
 idea of what they are working on. 
 
 Q. Do you think they have the right to increase the 
 price of gas and other public utilities for the reason 
 that the railways company is being run at a loss? 
 
 A. I think that is the present situation. 
 
 Q. That they are at present running the railways at a 
 loss? 
 
 A. At a loss in this way: take, for instance, one of 
 the underlying companies, the Citizens' Passenger Rail- 
 way Company. That company was leased first to the 
 Citizens' Traction Company, then the Citizens' Traction 
 and its companies leased to the Fort Pitt Traction Com- 
 pany, and that in turn was leased to the Consolidated Trac- 
 tion Company, and the Consolidated Traction Company 
 was leased to the Pittsburgh Railways Company. The 
 stock of the Pittsburgh Railways Company is held by the 
 Philadelphia Company, and that in turn is held by a San 
 Francisco Company. The point I make is this : The Con- 
 solidated Traction Company and the United Traction 
 Company own a great portion of the stock of these under- 
 lying companies which receive these dividends and rentals, 
 and in that way it would easily be possible for the com- 
 pany to make a showing that it was being operated at a 
 loss, if the full details of all these transactions were not 
 given, by which it would be possible to analyze the thing, 
 and find out just where the money was going. 
 
795 
 
 Q. Are you familiar with the Philadelphia agreement 
 between the City of Philadelphia and its transit company? 
 
 A. No, I am not. I have heard of that agreement. 
 
 Q. How could the State of Pennsylvania, under the 
 present Constitution, give the Commission mandatory 
 powers ? 
 
 A. That is a question which I am not just prepared 
 to answer. I intend to take that up and to follow your 
 suggestion of submitting a brief as to proposing a bill 
 along these lines, but I might say this : that in my view 
 of the case the Commission would not be a Court having 
 the present powers of the Courts of the Commonwealth. 
 
 Q. But if it has any one power it would come within 
 the prohibition? 
 
 A. I should think not. 
 
 Q. What would be the mandatory power in your mind 
 that should be given to the State Commission? 
 
 A. The power to compel corporations to supply ad- 
 ditional rolling stock, and to issue transfers. Suppose, 
 instead of making it mandatory, you should agree that 
 way accomplish that end by imposing a penalty for 
 violation ? 
 
 Q. How are you going to enforce a penalty without 
 going into Court? 
 
 A. You, of course, have to go into Court to enforce the 
 penalty as you do in any other case. 
 
 Q. You would give the Commission that power and the 
 Court would have power to enforce it? 
 
 A. That was my notion. Other things have arrived at 
 this. It is a serious and complicated matter and one on 
 which I am not prepared to speak with any degree of 
 assurance yet. T believe there is a way of accomplishing 
 it in this State. 
 
 Q. How does your local company feel as to the subject 
 of a municipal bureau? 
 
 A. I don 't know, Mr. Brown, how they feel Tabout that. 
 
796 
 
 A municipal bureau such as I have had in mind, whose 
 powers would be limited to gathering and compiling 
 statistics and information and keeping track of the rail- 
 road companies in the city. I think that the company 
 would not oppose it. They might feel that we ought not 
 to have a municipal commission or board with any powers 
 of regulation. 
 
 Q. How would they feel about the State having a board 
 with the powers you suggest? 
 
 A. I suppose they would be against it. 
 
 (Mr. Brown will submit a brief.) 
 
797 
 
 A. C. CANFIELD, representing Allegheny County 
 Laundrymen 's Exchange. 
 
 To the Joint Committee of the Senate and House of Repre- 
 sentatives of the Commonwealth of Pennsylvania: 
 Gentlemen : In answer to your invitation of March 11, to 
 meet your Committee in Pittsburgh to give you our ideas 
 and data on any tax that we may be interested in, would 
 say, we come as representatives of the Allegheny County 
 Laundrymen 's Exchange in regard to the capital stock tax 
 of five mills on corporations, as passed under the Act of 
 1885 and supplements thereto. "We are not objecting to the 
 tax, as we believe that any concern incorporated should be 
 willing to pay the Commonwealth for the privilege that 
 they receive, but we do think that all corporations should 
 be taxed alike, and that there should be no exemption 
 whatever under the tax. We believe that if all corpora- 
 tions were taxed under the Act, that the tax, being 
 five mills, would be reduced a very large per cent. We 
 see no reason that manufacturers should be exempt from 
 this corporate tax and laundries covered by it. Are 
 not our modes of operation the same. In fact, at least 
 50 per cent, of our output is paid for in labor, and the 
 laundries of Allegheny county spend more than a million 
 dollars every year in labor. Our work is carried on by 
 machinery the same as manufacturers and our city and 
 county tax us the same as manufacturers on this ma- 
 chinery. If we are not manufacturers, why should we 
 be taxed for this machinery? In our business in Allegheny 
 county in normal times we employ between three thousand 
 and thirty-five hundred skilled employees. We use during 
 the year several hundred carloads of coal, or its equivalent 
 in gas, in our power plants. The work of the laundries in 
 Allegheny county is a performance of part of the labor 
 of the households of the communities in which they are 
 
798 
 
 located, and any tax on this labor is one that tends to 
 make the cost of home greater and increase the living ex- 
 penses of the people of the community, as to-day the work 
 of a laundry is absolutely necessary and its work cannot 
 be performed in the individual homes of the people of 
 the communities. 
 
 When you consider these facts, gentlemen, we appeal to 
 you and ask that we either be put on the same basis as 
 manufacturers or that the manufacturers bear their share 
 of the tax and therefore reduce it very largely from what 
 it is now. 
 
 By Mr. Brown : 
 
 Q. Your contention is that the various manufacturing 
 companies should be your protest is because the other 
 corporations are not in the same position as you? They 
 produce something for the general wealth of the com- 
 munity ? 
 
 A. Are we not doing that, too? They buy coal and use 
 coal, but in addition to that we do something. It seems 
 to me that the question is on the tax. They receive certain 
 privileges and certain benefits by this corporate tax. They 
 should be as able to pay it as we are. I see no reason 
 why one concern should pay that tax and some others 
 not. It seems to me that when a tax is levied and it is a 
 corporate tax, it should apply to all corporations. 
 
 Q. What is the sentiment in this community on this 
 subject? 
 
 A. I have never taken up the subject, for the reason 
 that this is a manufacturing community and naturally they 
 will not take up anything that will interfere with them. 
 In Ohio the corporate there is one-half of one mill instead 
 of five mills. For instance, last year we paid the Com- 
 monwealth about $750, and yet with all the millions in- 
 vested in this county, in manufacturing, on the same tax, 
 they paid nothing on their capital stock. 
 
 Q. Does this tax bear heavily upon your interests? 
 
799 
 
 A. As I say, last year we paid $750, which I believe 
 was a very heavy tax. 
 
 Q. You think that is out of proportion, do you? 
 A. Yes, sir. 
 
 Q. What do you think would be a fair tax? 
 A. I wouldn't object to one mill. 
 
 Q. You wouldn't object to paying the same tax if the 
 others pay the tax the same as you ? 
 
 A. No, we do not. 1 remember some years ago the Park 
 Steel Company had 12 million dollars worth of property, 
 and they did not pay a cent of capital stock tax. They 
 were only three squares from us, and we paid $350. We 
 were employing at that time more hands than they were in 
 proportion to the capital invested. I understand their 
 labor was only perhaps 10 per cent, of their entire output. 
 We use machinery the same as manufacturers. 
 
 Q. You don't think that the same factory with the same 
 machinery and the same people making shirts would be in 
 any different position than you laundrying shirts? 
 
 A. I don't see a great deal. 
 
 Q. Considering the general welfare of the community? 
 A. I do not. 
 
 Q. You would impose a similar tax on all corporations? 
 
 A. Well, what I think is right is that a tax be imposed 
 on all corporations, and if we couldn't have it that way 
 we would like to be put in the* same class as manufactur- 
 ing corporations. 
 
 Q. You are satisfied with the present rate? 
 A. No, if you put up the tax on manufacturing corpora- 
 tions, it would be reduced very much. 
 
 Q. Can you give us the sentiment of your people re- 
 garding the appropriations of money to hospitals and 
 private institutions ? 
 
 A. As far as I know there is no objection to it. 
 
 Q. Do you think the State money is wisely used? 
 
800 
 
 A. So far as the matter has been discussed they all think 
 that way. 
 
 By Mr. Moyer: 
 
 Q. Do you think there are too many hospitals in this 
 city? 
 
 A. I think not. I do not think there are enough. 
 
 Q. It has been said that there are 1,000 unoccupied beds 
 in the hospitals what would you say as to such con- 
 ditions ? 
 
 A. I don't believe that condition exists all the year 
 around, but I have been informed by physicians that there 
 were times when they could not properly take care of poor 
 people that sought entrance to the hospitals. Of course, 
 when the weather is mild, there is not as much demand 
 for hospitals as there is during the winter months. I do 
 not think Pittsburgh has any too many hospitals. 
 
 By Mr. Brown : 
 
 Q. Do the factories, as a rule, contribute to the hospitals ? 
 A. That I couldn't t*ll you. 
 
801 
 
 LEE S. SMITH, President of the Chamber of Commerce 
 of Pittsburgh. 
 
 Gentlemen: So far as the Chamber of Commerce 
 is concerned, it has not said much on this subject, 
 it is a subject which will require a great deal of 
 deliberation. We realize that it is most important and 
 we hope at an early date to have a meeting and give a 
 report to the Commission. We asked the Commission to 
 come here and learn as much as you could. 
 
 By Mr. Brown : 
 
 Q. Mr. Smith, does the Chamber of Commerce repre- 
 sent all the manufacturing interests of the City of Pitts- 
 burgh ? 
 
 A. I think so. 
 
 Q. What other interests? 
 
 A. Manufacturing, mercantile, professional, we have no 
 limitations, lawyers, ministers and merchants and every- 
 body else. 
 
 Q. Is it your thought that your association will take 
 some definite action on the subject? 
 
 A. I think, yes. I would say, Mr. Brown, that the 
 Chamber of Commerce of Pittsburgh devotes its time to 
 civic and public affairs instead of commercial. It is not 
 a trade organization as most organizations of the same 
 name are. We try to help the City Government. 
 
 Q. We have received a number of letters from all over 
 the State, other than manufacturing interests, stating that 
 manufacturing corporations ought to be taxed. In other 
 words, that the exemption under the Act of 1885 ought 
 to be removed. 
 
 A. Yes. 
 
 Q. Now, I had hoped when we came here that there 
 would be some definite position taken by the manufactu- 
 40 
 
802 
 
 rers here so as to give the Commission some information 
 and data which they could take into consideration 
 with the other sentiment that has been sent from all over 
 the State. 
 
 Meeting adjourned at 12.30 P. M. Hearings closed at 
 Pittsburgh. 
 
803 
 
 Public meeting of the Committee held in the Government 
 Building, Common Pleas Court Room, Williamsport, 
 Penna., on Friday morning, April 8, 1910, at 10 A. M. 
 
 Present : 
 
 GABRIEL H. MOYER, 
 
 Vice Chairman, Sec'ty, Presiding. 
 WILLIAM H. KEYSER, 
 JAMES F. WOODWARD, 
 
 of the Committee; 
 FRANCIS SHUNK BROWN, ESQ., 
 
 Counsel. 
 
 The session was given up to the State Grange. The 
 State Grange was represented in the session by State 
 Master W. T. Creasy, Leonard Rhone, of Centre Hall ; W. 
 F. Hill, of Huntingdon ; E. B. Dorset, of Mansfield ; J. T. 
 Ailman, of Thompsontown ; A. W. Dennison, A. Kely, and 
 George Moscrip, of Towanda; John A. McSparran, of 
 Furniss, Lancaster county, and A. Nevin Detrich, of 
 Chambersburg. 
 
 The Chairman : 
 
 The general purposes of this Committee for which it was 
 created have been fully set forth in the circular letter sent 
 out by the Committee and which many of you have re- 
 ceived. We hardly think it necessary that anything more 
 may be said in this connection. We will proceed to hear 
 the State Grange of Pennsylvania. We understand they 
 are quite numerously represented to-day. 
 
 By Mr. Creasy : 
 
 Mr. Chairman, and gentlemen of the Commission: 
 
 I take great pleasure in introducing to you the Hon. 
 
 Leonard Rhone, of Centre Hill. 
 
804 
 
 Mr. Leonard Rhone : 
 
 Mr. Chairman, and gentlemen of the Committee of the 
 Senate and House of Representatives of Pennsylvania: 
 We appear before you as a Committee of the Pennsyl- 
 vania State Grange, to represent and set forth certain 
 conditions that confront the farmers and real estate own- 
 ers of the State of Pennsylvania, which are brought 
 about by revenue laws enacted by the Commonwealth, from 
 time to time, as the conditions of the Commonwealth re- 
 quire. In the progress of development, legislation is 
 likened unto most any business conditions that suited 
 thirty years ago do not apply now. Consequently, the 
 Commonwealth must remodel its laws so as to comply 
 with the needs and necessities of the Commonwealth. 
 
 That I may not take up too much of your time this morn- 
 ing in presenting our side of the case, we have prepared a 
 statement in writing of the conditions as we find them, 
 taken from State reports ; and I would ask Mr. James 
 McSparran, of Lancaster county, to read that report be- 
 fore we proceed to make our argument. 
 
 Mr. James McSparran (reading) : 
 
 We, farmers and citizens of Pennsylvania, appointed a 
 committee by the Pennsylvania State Grange, Patrons of 
 Husbandry, authorized to address your honorable Com- 
 mittee, herewith set forth certain discriminations and 
 hardships imposed upon real estate, farm, and home owners 
 by the unequal and unjust tax laws of Pennsylvania which 
 exact from real estate appraised for taxation at 
 $4,209,076,056 a tax of $77,568,406 annually, or an average 
 of 18 mills on the dollar, while under the authority of the 
 same laws only $22,184,129 are collected from per- 
 sonal and corporate property which is appraised at 
 $7,109,086,575, or an average tax of only 3J mills on the 
 dollar. 
 
 In addition to the foregoing discrimination against real 
 estate, cited, the counties are required to pay direct to the 
 State $9,539,311 (Report of Auditor General, page 2). 
 
805 
 
 It may be contended by some that real estate is under- 
 valued for taxation. So is personal and corporate property 
 to a much larger extent, as indicated by the statistical re- 
 ports of the Commonwealth. 
 
 This subject was fully investigated by the Pennsylvania 
 Tax Conference a few years ago. A complete record was 
 made from the books of the County Commissioners of the 
 assessed value of real estate for taxation and what lands 
 actually sold for in the market which clearly indicated 
 that real estate was assessed for fully 75 per cent, of its 
 selling price in the several counties of the State, while 
 personal and corporate property, according to the statis- 
 tical reports of the State and taxes collected, are not as- 
 sessed at more than 50 per cent, of their market value. 
 
 Take, as an example, the appraised market value of 
 manufacturing plants in Pennsylvania, which is stated at 
 $1,126,406,543 (Report of Secretary of Internal Affairs, 
 1908 (part 3, page 301), while its estimated appraised 
 value for taxation is only $155,088,250, and taxes paid 
 $948,351 (Report Auditor General, 1908, page 214) ; so 
 that if there is any under-valuation of property for taxa- 
 tion it applies more forcibly to personal and corporate 
 property than it does to real estate. 
 
 When the Legislature enacted laws changing the finan- 
 cial policy of the State, it exempted personal and cor- 
 porate property from local taxation and made it taxable 
 wholly for the support of the Department of State, and 
 then in return made real estate taxable wholly for county, 
 city and local governments. 
 
 When this policy was inaugurated by the State, the 
 wisest statesmen did not foresee the enormous growth of 
 the value of personal and corporate property, which now 
 has reached the prodigious sum of over $7,109,086,575. 
 
 In the race of development, personal and corporate prop- 
 erty has outstripped real estate by over $2,900,000,000. 
 
 During the same period the taxes on real estate have 
 increased to $77,568,406, while on personal and corporate 
 
806 
 
 property the taxes have fallen behind real estate more 
 than $55,000,000. 
 
 We might cite numerous cases of how the discrimination 
 affects the home owner, but we will give only a few illus- 
 trations of the situation. 
 
 Take two citizens of the Commonwealth; one buys a 
 home for $1,000 and is required to pay a tax from $20 to 
 $30 for the support of schools, roads, poor, etc. The other 
 invests his $1,000 in personal property bonds and 
 mortgages and is taxed $4 for the support of the State 
 and nothing for the home government, the benefit of which 
 he enjoys equally with the other. 
 
 This unjust discrimination is authorized by the laws of 
 Pennsylvania, a republic that counsels its people, "To love 
 mercy and do justice." "We, therefore, appeal to your 
 honorable Committee of our State Government to carefully 
 investigate this complaint of the farmers, home-owners 
 and tenants of Pennsylvania. 
 
 RECAPITULATION. 
 
 HOW THE TAX ACCOUNT STANDS IN 
 PENNSYLVANIA. 
 
 The aggregate appraised value of real estate in Penn- 
 sylvania is $4,209,076,056. 
 
 The taxes paid by real estate is $77,568,406. 
 
 Average rate of taxation on real estate, 18 mills. 
 
 Appraised value of personal and corporate property, 
 $7,109,086,575. 
 
 Taxes paid on personal and corporate property, after 
 deducting commissions, licenses and other miscellaneous 
 sources of income, amounting to $9,539,311.49, leaves a 
 tax on personal and corporate property of only $16,313,237. 
 
 Average rate of taxation on personal and corporate prop- 
 erty, 3J mills. 
 
 If personal and corporate property were taxed at the 
 same average mill rate as real estate would be taxed under 
 an equitable arrangement, crediting licenses, fees, com- 
 
807 
 
 missions, etc., to personal property amounting to 
 $9,539,311.49, personal property would be required to 
 pay $68,461,641 instead of $16,313,237, so that an average 
 rate of 10 mills would provide all the revenues necessary 
 to administer all the divisions of the State Government. 
 
 Crediting to personal and corporate property commis- 
 sions, licenses, and other miscellaneous sources of income, 
 amounting to $9,539,311.49, would make a total of 
 $78,000,952 as the share of personal property. 
 
 If taxes were collected equitably real estate would be 
 required to pay only $46,092,836, instead of $77,568,406, 
 or a saving to the real estate owners annually of 
 $31,475,570. 
 
 The real estate owners are, annually, grossly robbed of 
 $31,475,570. Fourteen millions of this amount is directly 
 extorted from the farmers and seventeen millions from 
 residents in cities and towns, whether they be owners or 
 tenants. It is this policy of the State that has driven away 
 from the farms and rural communities, according to the 
 last census report, over one hundred thousand people from 
 twenty-two counties of the State. 
 
 To correct these discriminations against the farm and 
 home owners of Pennsylvania, we respectfully insist that 
 the State either assume a larger proportion of the cost of 
 the local governments or give the local governments au- 
 thority to tax personal and corporate property in each 
 unit of government. 
 
 The State could, without any detriment to its own 
 finances, remit to the counties the $9,539,311 now collected 
 by the State from the counties. And in all justice, the 
 State should pay the minimum wages of public school 
 teachers, for the minimum term, which would assist the 
 local governments upwards of $14,000,000. And could 
 further relieve the local governments by appropriating 
 a minimum sum per mile to the counties and townships 
 for road purposes equal to 100 per cent, of the road taxes 
 paid in each township, limiting the amount to twenty-five 
 
808 
 
 (25.00) dollars per mile; and relieve the counties and 
 townships of the partnership business in constructing 
 State roads. Let the State assume, with the aid of the 
 National Government, the entire construction of inter- 
 State and inter-county roads. 
 
 If there are not sufficient revenues for the State Govern- 
 ment, an additional tax of one mill could be placed on all 
 personal and corporate property (without any hardship), 
 with a small tax on the gross productions of mines, oil and 
 gas wells, and similar enterprises. 
 
 Besides, there are numerous other sources from which 
 revenues might be derived, such as manufacturing com- 
 panies. 
 
 If the State treated the agricultural class with justice 
 and equity, the farmers would be contented in their vo- 
 cation, and Pennsylvania would have more prosperous and 
 happy agricultural communities, which are the main-stay 
 of the prosperity of our Commonwealth. 
 
 In proof of the correctness of the foregoing statements, 
 we herewith sumbit a tabular statement drawn from the 
 official reports of the State Government. 
 Respectfully submitted, 
 
 WILLIAM T. CREASY, 
 
 LEONARD RHONE, 
 
 W. F. HILL, 
 
 S. S. BLYHOLDER, 
 
 A. M. CORNELL, 
 
 JOHN A. McSPARRAN, 
 
 THOS. SHARPLESS, 
 
 H. G. TEAGARDEN. 
 
 A tabulated statement of the appraised value of real 
 estate, corporate and personal property for purposes of 
 taxation; amount of taxes paid and average mill rate of 
 each subject, with a statement of the actual cost of State, 
 city, county, borough and township governments of Penn- 
 sylvania for 1908, latest reports available. Compiled under 
 
809 
 
 the direction of the Legislative Committee of the Penn- 
 sylvania State Grange from the official State reports of the 
 Auditor General, State Treasurer, Secretary of Internal 
 Affairs, Commissioner of Banking and Insurance Commis- 
 sioner, citing the volume and pages from which the facts 
 are drawn. By Leonard .Rhone, Past Master of the Penn- 
 sylvania State Grange. This tabulated statement will 
 be used in our argument. 
 
 Mr. Leonard Rhone, addressing the Committee : 
 
 Mr. Chairman : The appraised value of the capital stock 
 of corporations, banks and personal property has been 
 taken from the Report of the Auditor General of the Com- 
 monwealth, and there should be no question as to the cor- 
 rectness of the statement along that line, because, being 
 computed by the Auditor General, the accounting officer of 
 the State, they should be undoubtedly correct. We have 
 taken the amount of tax paid as reported by the Auditor 
 General, and computed the mill rate. This is not the 
 method of the State in collecting the tax, because, taken in 
 the case of the corporation, the tax is five mills upon the ap- 
 praised value of the capital stock and four mills upon the 
 assessed, so that the mill rate, as computed here, is simply 
 taking the amount of capital stock and the tax paid. We 
 do this so as to be able to make an intelligent comparison 
 with the methods by which real estate is appraised and as- 
 sessed. Some of this property, such as railroads and other 
 great corporations, we have taken the statement from the 
 report of the Secretary of Internal Affairs, as to capital 
 stock represented in these great industries that are re- 
 ported by volume 4 of the report of the Secretary of In- 
 ternal Affairs. Therefore, they are presumed to be correct. 
 The taxes, as I have said, were taken from the report of the 
 Auditor General, and the mill rate computed. As to the 
 capital stock of national banks, we have taken the state- 
 ment from the report of the Comptroller of the Currency. 
 As to the amount of tax paid in the State of Pennsylvania, 
 
810 
 
 we have taken the statement from the report of the 
 Auditor General and computed the mill rate ; the same with 
 saving funds, State banks and other private institutions. 
 As to insurance companies, we have taken the capital stock 
 from the report of the Insurance Commissioner, and the 
 amount of tax paid from the Auditor General's report, 
 and computed the mill rate; so, in our statement, these 
 are not mere assertions, but they are confirmed by these 
 reports. 
 
 The value of the personal and corporate property, as 
 you will observe from the report, as read, aggregates over 
 seven billions of dollars. This was not the condition in 
 seventy-four, at the time of the adoption of the new Consti- 
 tution. Prior to that time all real estate was assessable 
 for State purposes, and the laws then were changed so 
 as to exempt real estate from taxation for the State and 
 exempting personal property from taxation for local gov- 
 ernment, and at that time the conditions were nearly equal, 
 and there was no hardship. This is where the argument 
 comes in; what suited thirty or forty years ago does not 
 apply to-day no more than changes apply in manufactur- 
 ing or any other industries. Therefore, the policy of the 
 State is hardship after hardship to the real estate owners. 
 Where is there any reason if a man has a thousand dol- 
 lars invested in a house, that he should pay twenty, or 
 thirty, or forty dollars tax ; and another man in the same 
 town who has his thousand dollars invested in bonds and 
 mortgages and only has to pay a tax of four dollars ? The 
 person who invests his money in a home, helps to build 
 up the town, making it habitable, supports the schools, 
 the streets and the poor, is more important to that com- 
 munity than the man who loans his money. I know of 
 persons who draw salaries of five thousand dollars a year 
 who are assessed at five hundred by the County Commis- 
 sioners put in that class. Attorneys who possibly have 
 an earning of from five to ten thousand a year are assessed 
 in the class of two hundred and fifty dollars. Then, other 
 
811 
 
 attorneys who are just starting in business, they are as- 
 sessed in the same way. There is no justice in that con- 
 dition. It is a discrimination in favor of the strong against 
 the weak. And at all events, it is the business of the Com- 
 monwealth to see that justice is done between its citizens 
 and its industries. It is as important to the prosperity of 
 our State that we should have prosperous farms, pros- 
 perous manufacturing plants and prosperous enterprises 
 of other kinds, as it is to have these great moneyed institu- 
 tions that are making an average of 7 per cent, on their 
 capital, when the farmer cannot earn on an average, down 
 on his farm, more than 3 per cent. This is the condition 
 that confronts them. It occurs to us to urge the govern- 
 ment to so change these conditions as to enable us to keep 
 our people on the farms. 
 
 What is the condition to-day at the death of the head 
 of a family because of these harships? The estate is sold 
 to strangers, and the widows and orphans are driven 
 out to become clerks in your City, and to seek positions of 
 that kind, because they cannot hold the homestead and 
 they have not sufficient earnings ahead to engage in busi- 
 ness themselves. This side of the question should be looked 
 into as well as the other side, and we hope that your Hon- 
 orable Committee will inquire into this statement, provided 
 to us by the State Reports and showing that we have 
 made no misrepresentations. 
 
 We are here as business men, not as reformers. We do 
 not claim the world is all wrong. We are here simply as 
 business men to ask you to correct what is wrong and 
 make it possible for these homesteads of Pennsylvania to 
 continue to their descendants from generation to genera- 
 tion, and we will have the most prosperous and happy 
 Commonwealth of any State of this great Union. 
 
 Take the State of New York take the railroads of 
 Pennsylvania that run from Pennsylvania into New York 
 State when they cross the line they are assessed at 
 $15,000 per mile and three tax levies upon the same roads 
 
812 
 
 that don't pay anything to the local Government. They 
 are taxed for the support of the State and the county and 
 for the townships and the boroughs. If these large con- 
 cerns of capital, who are running the transportation busi- 
 ness of our country, can do this in New York they cer- 
 tainly should be able to do it here in Pennsylvania. Take 
 people who live on the line between Pennsylvania and New 
 York. I have been told that the tax on Pennsylvania farms 
 is fully 50 per cent, greater than in New York. If you 
 cross to the State of Ohio the same condition prevails. 
 
 Then, again, as to manufacturing plants. Where is 
 the constitutionality of exempting the capital stock of a 
 manufacturing company when the Constitution of the Com- 
 monwealth clearly states that the tax shall be uniform upon 
 the same class of subjects? And yet, under the laws of 
 Pennsylvania, they exempt one of the most prosperous en- 
 terprises and one of the largest and greatest enterprises 
 that we have in our State from taxation on its capital 
 stock. If they can pay this tax in New York if manu- 
 facturing companies can pay this tax in New York, why 
 are they so prosperous in New York? It is true we have 
 not any of the small manufactories that they have in 
 New York of agricultural implements, but the great iron 
 and steel industries are all nearly centralized in Penn- 
 sylvania, and we feel proud that we have such prosperous 
 business conditions along that line. But where is the 
 necessity of men accumulating their millions and then giv- 
 ing them away for libraries or building auditoriums for 
 great institutions? They are simply appropriating our 
 money; they have failed to pay that which they should 
 to the State from which they derive their authority. It 
 is the business of the Commonwealth to see that these 
 wrongs are corrected. 
 
 "When we buy a reaping machine that might cost sixty 
 dollars, until it reaches the consumer, the farmer, we 
 must pay one hundred and twenty dollars ; so it takes 1 00 
 per cent, of the amount to put this machine into the 
 
813 
 
 market. This is altogether unnecessary, because the man- 
 ufacturers could adopt a more liberal, more business-like 
 method of reaching their consumer; and this applies to 
 the whole matter throughout. It is these wrongs that we 
 ask you to correct. There is a great deal we could add to 
 the subject, but 1 stand here as a farmer to insist upon a 
 correction of these outrageous impositions upon the agri- 
 cultural people for the last thirty years. I have never 
 engaged in any other enterprise, and I would not be here 
 to-day if it was not to plead the case of these people. 
 If they are not accomplished students in the art of public? 
 speaking and public reading, they are good citizens and 
 useful citizens necessary to the Commonwealth. Weed out 
 the farmer and what would the great State of Pennsyl- 
 vania be? Consequently, we ask you to look carefully into 
 the welfare of these people and try to retain them on their 
 farms. People of the rural districts, it is said, are gen- 
 erally driven to the city because of the higher salaries 
 they get there; but the one great cause is, as I have said, 
 that the parents of these young men and young women 
 have not been able to earn enough to start them up in 
 business; and when the head of the family dies, the home- 
 stead goes into the hands of strangers, and thus good citi- 
 zens these useful people to the several communities, are 
 driven out. Who takes their places? Capitalists buy 
 these farms at 50 per cent, of their worth and they put 
 on these farms mostly people from Germany or from 
 Holland, and those industrious and enterprising people who 
 come from foreign countries. A very few have Irish and 
 Italians on their farms, but Germans invariably Penn- 
 sylvania is made up of German stock. It becomes us as a 
 State to see that these people are protected in their rights, 
 If there is any slavery more detestable than the Southern 
 slavery that is to say, to the negroes in the South, it is 
 this slavery to the Pennsylvania farmer. Consequently, 
 we ask you to stop this condition of things. 
 
 I thank you for the opportunity of appearing before you. 
 There are others in the Committee who wish to be heard. 
 
814 
 
 By Mr. Brown: 
 
 Q. Mr. Rhone, we have been informed that the appraised 
 value of the manufacturing plants in Pennsylvania aggre- 
 gates about three billions. You fix the figures at 
 $1,126,000,000. That would give you a little higher figure 
 to start with. Is the trouble with the present laws the fail- 
 ure to enforce the law? Take, for instance, the collection 
 of the personal property tax? 
 
 A. That is one of the laws we try to enforce. I don't 
 believe in talking of our public servants as being rascals. 
 I think, as a rule, that our public officers try honestly to 
 enforce the laws as they find them. 
 
 Q. Take the personal property tax. Is it the failure to 
 collect more or the failure of the people to report more? 
 A. That might be. 
 
 Q. Isn't the present law sufficient? We have a law tax- 
 ing personal property. You think the State should appro- 
 priate more money to the counties? 
 
 A. Yes. 
 
 Q. If the present laws for taxing personal property were 
 enforced (I assume they are all thoroughly enforcable) 
 there would be more income received ? 
 
 A. There is the corporations. 
 
 Q. Let us take the personal property tax. Have you 
 anything to suggest as to a better method of compelling our 
 people to report the moneys they have at interest? Have 
 you anything to suggest as to how we could increase the 
 present property return? 
 
 A. I don't question it at all. I have shown you in the 
 case of manufacturing companies, the appraised value 
 as given by the report of the Secretary of Internal Affairs, 
 and the value upon which the counties are 
 
 Q. How can you enforce the present laws more effectively 
 so as to obtain a fairly average return of personal prop- 
 erty? 
 
 A. Require the stamp of the assessor upon papers to 
 
815 
 
 make the interest collectable, and it will bring forth every 
 dollars. 
 
 Q. Have you gentlemen given any thought as to the 
 method of appointing or electing assessors in the several 
 districts whether they should be elected by the people or 
 subject to local interests, or appointed by the State? 
 
 A. We, as American citizens, prefer to select our own 
 people. 
 
 Q. Some of the County Commissioners who appeared 
 before us objected to that. They say these men are 
 subject to local influence, and in order to secure their next 
 election, would make trifling returns. We heard them from 
 Delaware, Montgomery, etc. 
 
 A. I believe the people locally can select people among 
 them that are just as honest as anyone, and just as cap- 
 able of making honest returns and assessments. If you 
 require the stamp of the assessor on the paper they will 
 bring forth every dollar. It is always the small fellow that 
 we want to extort more from. When the railroad com- 
 panies are rated at four hundred millions of dollars, why 
 don't you get after them and compel them to make a 
 proper return of their capital? We are not after the 
 little fellow. We think the people who have their mill- 
 ions of capital shoud pay as much on the dollar as those 
 who have a few thousands. 
 
 Q. You tax trackage, and water tanks, and everything, 
 according to your idea ? 
 
 A. No, not necessarily. You can simply increase the 
 rate of tax upon the capital stock and the rate of tax upon 
 their gross receipts within the Commonwealth, or, if you can 
 increase it on all bonds, without any change of laws. 
 
 Q. The present law does take into consideration 
 all these different elements in fixing the appraised value ? 
 
 A. The capital stock of a corporation is no measure of 
 the value of the property. Many of these corporations 
 are down for as much as their original capital is worth. 
 
816 
 
 Q. Your thought is to tax their property, independent of 
 everything ? 
 
 A. Yes, just the same as you tax the farmer. 
 
 Q. Are you folks favorable to taxing mortgages ? 
 
 A. We feel that all classes of this kind should be taxed 
 equally all the way through. When the owner buys a 
 farm and mortgages it, the part the owner has bought and 
 paid for should be taxed to the owner, and the other to 
 the mortgagee. 
 
 Q. The theory is that it is taxed to the mortgagee. We 
 were told in Philadelphia that if we taxed the manufac- 
 turer they would simply add the tax on the article and 
 the farmer and everyone else would have to suffer it. Take 
 your harvesting machine, for instance, for which you pay 
 one hundred and twenty dollars, when it costs sixty. 
 Don 't you suppose the manufacturer added his tax on that V 
 
 A. That is taken for granted that when you ask this 
 tax the burden is shifted to somebody else. 
 
 Q. Your thought is that if a tax is put upon the manu- 
 facturing plants the farmer is willing to take his chances 
 as to the ultimate result ? 
 
 A. Surely. We are not afraid to meet these people and 
 fight it out if you will give us the opportunity. Tax manu- 
 facturing plants as you tax other corporations and per- 
 sonal property. Place sufficient additional tax upon per- 
 sonal and corporate property to bring it upon an equality 
 with the mill rate on real estate, and we are satisfied. 
 
 Q. What about taxing other articles that you have not 
 mentioned here that are not already taxed ? 
 
 A. There are some thirty thousand business enterprises 
 making returns to the Commonwealth. We cannot go 
 behind the records of the Commonwealth, because if we 
 do we are simply guessing at it. 
 
 Q. What is your thought as to appropriations of money 
 to institutions not under control of the State ? There is a 
 very large outlay in this connection ? 
 
817 
 
 A. It is a large outlay and it is a source from which 
 cities absorb a surplus from the State Treasury. The 
 people in the country have no hospitals, scarcely, to draw 
 money from the State for that purpose. It is true that 
 certain hospitals will need certain assistance locally, and 
 we think as a rule it is no more than charitable to take 
 care of the unfortunate. But here is the condition that is 
 not just. Take the great railroads and manufacturing 
 plants; they furnish more people for the hospital than all 
 the other people in the Commonwealth put together; and 
 they should especially pay for the people they main and 
 put in hospitals. 
 
 Q. "We have listened to very eloquent addresses of gen- 
 tlemen who say land is the only thing that should be 
 taxed ? 
 
 A. Yes. 
 
 By Mr. Moyer: 
 
 Q. What is your thought regarding the tax on other 
 natural resources? For instance, take coal? 
 
 A. That question has just been decided by the Supreme 
 Court of the United States in Texas gas. They put a 
 gross income tax on their oil wells. It was carried into 
 the Supreme Court, and the Supreme Court permitted the 
 Commonwealth of Texas to levy a gross income tax on oil 
 wells and gas wells. You could do the same with mining 
 companies. 
 
 Q. Is the Grange in favor of placing a tax upon coal ? 
 
 A. Yes; a gross income tax. 
 
 By Mr. Brown : 
 
 Q. About taxing inheritances, Mr. Rhone direct inheri- 
 tances what is your thought upon that subject ? 
 
 A. I am not sufficient of a lawyer to know whether that 
 could be done. 
 
 Q. Whether it should be done ; whether it is advisable to 
 do that? 
 
818 
 
 A. I think we have had laws on the statute books of 
 the State to the effect that men of means of the Common- 
 welth leaving large amounts over a certain amount are 
 liable to taxation for State purposes. 
 
 Q. Now, as to the question of assessment, Mr. Rhone, 
 does the 
 
 A. The assessors never asks the question, "What does 
 your farm bring in ? " That question we are never asked ; 
 they come on your farm and appraise it at what they think 
 it ought to be assessed at. 
 
 Q. "What is your experience of the fairness of these as- 
 sessments ? 
 
 A. That is a question upon which there has been a great 
 deal of discussion. No doubt some assessors will show 
 favoritism to their friends. In my experience, there is no 
 gross discrimination as to farmers shown. Take my 
 farm and that of my neighbor. They are about the same 
 number of acres and are assessed at the same valuation. 
 
 Q. Have you made any inquiry as to whether or not 
 this same spirit has been shown respecting the taxation of 
 personal property? 
 
 A. I do not know that it is not. 
 
 Q. As far as your experience goes, there has been no 
 preference shown an individual ? 
 
 A. No, there is more discrimination in the valuation of 
 real estate in cities than there is in rural communities, 
 because in rural communities everybody knows what his 
 neighbor's property is assessed at. In the city a whole 
 black may be assessed lower than another block and 
 nobody knows it but the officers, and if they are a party 
 to it, of course, they will not reveal it. We have more 
 discrimination in cities along that line than we have in 
 the country. 
 
 By Mr. Moyer : 
 
 Q. From your experience, do you find that the general 
 run of assessors in the rural districts or communities do 
 their duty? 
 
819 
 
 A. Yes ; and I don 't think there is a better business man 
 or farmer in Center county, where I live, than the assessor 
 of our township. I believe he is conscientiously honest in 
 the transaction of his business. 
 
 Q. That is, the assessors of your county, so far as your 
 personal knowledge is concerned ? 
 
 A. Yes. 
 
 Q. The testimony before this Committee has been to the 
 effect that the assessors have been wilfully neglectful of 
 their duty. That has been very strongly brought out. 
 
 A. That is along the very line of the County Commis- 
 sioners driving after the small fellow. Why don 't you drive 
 after these large corporations? 
 
 By Mr. Brown: 
 
 Q. You would not call a man who has fifteen, twenty or 
 forty millions a small man, would you? 
 
 A. No, sir. 
 
 Q. Suppose you were told that a man who has ten mil- 
 lions of personal property was omitted by the assessor, 
 what would you say? 
 
 A. I would say the assessor certainly grossly neglected 
 his duty and would be liable to be arranged before Court. 
 
 By Mr. Boyer : 
 
 Q. The testimony of the County Controller of Lancaster 
 was to the effect that in that county about five millions 
 failed to be returned at all for the purpose of taxation ? 
 
 A. That might all be. 
 
 Q. Where would the fault lie? 
 
 A. It might lie in two places, one the local assessor and 
 the other the County Commissioners. The County Com- 
 missioners might indicate to the assessors what they wanted 
 them to do. The assessors, who depend upon their political 
 support, are simply influenced by these interests. 
 
 By Mr. Brown: 
 
 Q. What means would you suggest to compel these people 
 to pay the tax on their moneys at interest ? 
 
820 
 
 A. Put the assessors stamp to it, and then they can collect 
 the interest as soon as it is returned. The United States 
 Government did that during the war. 
 
 By Mr. Brown: 
 
 Mr. Brown: Have the gentlemen of the Committee any 
 more questions to ask Mr. Rhone? 
 
 (No further questions.) 
 
821 
 
 HON. GEORGE MOSCRIP, having been introduced to the 
 Committee by Mr. Creasy, addressed the body as follows. 
 
 Mr. Chairman and Gentlemen of the Committee: This 
 matter of taxation of getting equal taxation in Pennsyl- 
 vania is one that is affecting the people who own real 
 estate more, perhaps, than anybody else. 
 
 One of the methods that has been suggested to help 
 equalize taxation is the passage of an Act to pay the min- 
 imum salary for the minimum term in the matter of school 
 teachers. If you remember, a few years ago, somebody 
 out in Erie county discovered an Act that would make all 
 the schools be paid for by the corporations. On second 
 thought, I think the people who exploited that idea, how- 
 ever, found it is not quite a practical thing. But it is a 
 practical thing that we pay all the people who serve every 
 district under a State law. If we should pay the minimum 
 salary for the minimum term, every district would come in 
 in the same way, so that it is a fair proposition. 
 
 Now, as to the justice of a law of this kind. If we stop 
 to consider, we believe that all property should help to 
 support the common school, and the owner of corporate 
 property has exactly the same use of the schools as the 
 owner of real estate ; yet, in the State of Pennsylvania, 
 the real estate people pay mostly all for the support of 
 public schools. For instance, for the last year the year 
 ending June 1, 1909 the entire cost of the public schools 
 for the year was $38,523,925.39. Now, then ; the corpora- 
 tions whom you have been told have over seven billions 
 of property, paid 7-J millions of that thirty eight mil- 
 lions and the real estate people paid the other thirty-one 
 millions. Now then, these people have exactly the same 
 interest in the common schools that the people on the farms 
 have. The share of the State tax of the cities and bor- 
 oughs is about forty millions the owners of the farms 
 
822 
 
 about thirty millions; that makes up seventy millions of 
 this property that goes for the support of schools, etc. 
 Now, suppose we could do something that would regulate 
 this matter so that the corporations would pay more than 
 the seven and one-half millions. Now, then, if we should 
 pass a law making the minimum salary for the minimum 
 term paid for by the State, we would just lift that much 
 money now over the heads of the real estate owners on 
 to the corporations ; and then that, anyway, would not be 
 one-half. 
 
 I took a little trip up to the State of New York recently, 
 and I found in one district in one township in New 
 York State that a railway was assessed at three hundred 
 thousand and for all local taxes. That is a great help 
 to the district. I don't like their entire system as well as 
 I do our own system. In our system the State taxes are 
 divided up and the State revenues are as nearly equal 
 as possible; but in that case, if no railroad was in the 
 township they would have to pay a larger tax. I noticed 
 that in districts where no railroads were the tax was much 
 higher. Where the railroads were, they taxed locally. 
 
 There are in the State of Pennsylvania 34,706 teachers. 
 If we should pay these teachers for the seven months the 
 minimum term if we should pay these teachers for the 
 minimum term at the minimum salary that would run 
 approximately forty-five dollars a month, possibly in a few 
 exceptions a little more than that. That would take 
 $10,932,390. Now, in the City of Philadelphia there were 
 4,457 teachers last year, and their minimum salary is 
 fifty dollars a month, and this fifty dollars a month would 
 mean a revenue to the City of Philadelphia from the State 
 of $1,559,950. It would give Philadelphia much more 
 money than it is getting now. They get about $900,000. 
 
 There is another phase, and that is this: We have 
 throughout the State of Pennsylvania a good many dis- 
 tricts that are unable to maintain the minimum term for 
 the reason that the tax limit is 13 mills and these districts 
 
823 
 
 are so poor that the tax only continues the term of six 
 months. I say this is a shame to the State of Pennsyl- 
 vania; it is a disgrace to the State of Pennsylvania that 
 we should not give the opportunity of the minimum term 
 to the poorest districts of the State. If we pass this law 
 it will provide for these districts I know it would. I 
 know the poorest districts of Bradford county would be 
 well provided for. 
 
 Now, there is another class of people that the gentleman 
 who has preceded me has told you about: That is the 
 farmer. I know what the city man's idea is of the farmer. 
 They think it is the fellow they meet at the State Fair 
 at the County Fair, perhaps up at the front. Don't you 
 know that the average country farmer is the fellow who 
 gathers his family about him and pulls his feet under the 
 table ? Take any ordinary township, this is the condition. 
 Now, then, the minimum salary for the minimum term 
 would provide for every such district. They would only 
 have to pay the tax for water power, repairs, etc., and 
 the teachers, which is the main expense, would all be paid 
 for him because the salary is the minimum salary in these 
 districts. 
 
 Now, could you do anything better could this Com- 
 mission do anything better than to recommend that this 
 law be passed that would touch so many people, and so 
 many people who need it? While you are doing this you 
 will be doing good to every citizen in the Commonwealth. 
 As I say, you will give the City of Philadelphia six hundred 
 thousand dollars of State money. Now, when you give 
 to the City of Philadelphia six hundred thousand dollars 
 of the State money, you are doing something for the home- 
 owners of the City of Philadelphia. It was thought at 
 the session of the last Legislature that it would be the 
 proper thing to build a State highway from Philadel- 
 phia to Pittsburgh, sixty feet wide. I ask you in all 
 consciousness whether they could not better support a 
 measure that would give their citizens the benefit of six 
 
824 
 
 hundred thousand dollars of tax lifted off their homes? 
 Someone told me that every road that goes out of Phila- 
 delphia that is worth mentioning is a macadam road. I 
 that is so, who will be benefited by these roads in Phila- 
 delphia? Men who do not own a horse or an automobile 
 cannot get any benefit from it, but every man who owns 
 a home would get the benefit of a law of this kind. 1 
 think we cannot do this Commonwealth any more good 
 than by passing a law of this kind, which will touch every 
 county, and, therefore, of proportionate benefit to all 
 the counties. 
 
 The teachers' wages in the State were about eighteen 
 millions of dollars, so you see a large share of this thirty- 
 eight millions is for teachers' wages. But you must re- 
 member, the State already provides for its schools. They 
 talk about the magnificent appropriations; you can see 
 it all in capitals the way they pronounce the word ''mag- 
 nificent;" but, nevertheless, gentlemen, if we compare 
 the Commonwealth of Pennsylvania with other States, our 
 appropriation is not large ; if we compare it with New 
 Jersey, it is not large. 
 
 As I stated, seven million five hundred thousand was 
 paid by the corporations and the rest was paid by the real 
 estate owners over thirty-one millions of dollars. 
 
 In the way I have suggested, all the ordinary districts 
 where there is no high school and where they only have 
 the seven months' term, would be well provided for. 
 Where there is a term of longer than seven months, that 
 would be paid for by the local authorities; and where 
 the teachers are paid more than forty dollars a month, 
 that would be provided by the local authorities; so it is 
 manifestly fair. The schools are for everybody, and every- 
 body should share in the expense. I believe this Commis- 
 sion cannot do a better thing than to recommend an equal- 
 ization in this matter. These schools are for everybody, 
 and all should share in the expenses ; and if you pass this 
 law, you go that far toward this proposition. 
 
825 
 
 When the appropriation is made, what should it be for? 
 For some particular thing which touches the few and does 
 not touch the many? Now, in the case of charities, that 
 is all right. When you appropriate money for roads, 
 should it be appropriated for localities, or should the 
 money be appropriated under a State highway law ? The 
 State highway law says there shall be money appropriated 
 to every county in the State according to the miles of 
 roadway. Where the money is appropriated, there is 
 where it should go. If it is right for the State to pay 
 entirely for a road for the few of the other counties, isn't 
 it right that they should pay for every locality in the State? 
 That would be a step toward the equalization of taxa- 
 tion. 
 
 By Mr. Brown : 
 
 Q. All that would require more revenue? 
 A. Yes. 
 
 Q. And that revenue is to be gathered in the way indi- 
 cated by Mr. Rhone? 
 
 A. Now, a word about that. The fact is potent here to 
 every person and to this Commission that seven and a half 
 billions of property only pays about one-third of what is 
 required for taxation in the State of Pennsylvania. They 
 get all the protection of the State ; these corporations en- 
 joy the privileges of police protection that is paid for by 
 the State ; and yet, you must figure that a little over seven 
 millions of tax is paid by the corporations and the balance 
 of about seventy millions have been paid by the real estate 
 owners. Now, the real estate owners in the boroughs and 
 cities, what do they own? Homes. Is there any income 
 from their homes? None at all. And yet they are taxed 
 in my own county over 3 per cent, in some districts. I 
 want to say, gentlemen, that the matter of just and equal 
 taxation is one of the most difficult matters that has ever 
 confronted mankind in the State of Pennsylvania. Take 
 the manufacturing corporations. But I would like to say 
 
826 
 
 that when you get a Commission made up of men like 
 this Commission, it seems there should be some method 
 adopted within the Constitution to make a concern with a 
 large income pay a large tax. I would like to recite one 
 instance along this line: I think it was in 1897 that a 
 bill was passed taxing all trust companies four mills on 
 the dollar, but at the end of the bill they made a little 
 provision that instead of the computation that it would 
 take to find the actual value of these shares, they could 
 just pay 10 mills on the par value of these shares. Now, 
 a certain trust company in Pittsburgh made its report in 
 1908 with a capital stock of fifteen hundred thousand dol- 
 lars; that made fifteen hundred shares at one hundred 
 dollars a share. The surplus was something like twenty 
 millions and the undivided profit was nine hundred and 
 ninety-seven thousand; and the method of computation 
 suggested was that they add the fifteen hundred thousand 
 and the surplus and the undivided profits together and 
 divide by the number of shares and get the value of a 
 share. That is what that would show. If they had fol- 
 lowed this they would have paid into the State one hundred 
 and five thousand dollars. But they did not. "When a 
 bank can make so much money that they can divide 
 twenty-four millions it is about time they should be gone 
 after. I have no excuse to make for men who do not return 
 their property. The way to tax them is to make them sur- 
 render their money for every dollar of it. 
 
827 
 
 JOHN A. McSPARRAN, of Furniss, Lancaster county, 
 Pennsylvania. 
 
 There are three general principles that underlie taxa- 
 tion that we feel are applied in Pennsylvania and which 
 should be remedied by a law on our statute books. The 
 first of these is that the Pennsylvania tax laws are in a 
 class by themselves. They tax what is specified and what 
 is not specified, goes untaxed. It is a proposition that 
 should be evident to everyone that those who enjoy the 
 benefits of government should help pay for the govern- 
 ment, and that, as a consequence, all class of property 
 should assist in the payment of the burdens of govern- 
 ment ; and that, if there are to be any exemptions, those 
 exemptions should be stated in a bill, and that all other 
 property should be subject to taxation. That our laws 
 has a great weakness in this respect has been brought out 
 particularly this morning. As it is to-day, the burden of 
 proof rests, as to that, with the assessor. If a question is 
 raised as to whether or not that particular class of prop- 
 erty is liable to taxation, it is up to the assessors to show 
 that it is ; and he must have the moral courage, as well as 
 the information, to show that, while possibly not just 
 mentioned exactly, yet it would come under some of the 
 heads mentioned by the bill. If our assessors did not have 
 upon them the burden of proof to assess that property, it 
 would be up to the owner of the property to show that 
 his property came within the limits of that exemption. 
 As a consequence there would be a great deal of work 
 taken off the duties of the assessor in meeting these desired 
 and these attempts on the part of the owners of the dif- 
 ferent classes of property to escape taxation. This is in 
 operation in other States of our Union. All property is 
 supposed to bear the burdens of the government and is 
 
828 
 
 taxed unless exempted ; and it should be so in the tax laws 
 of Pennsylvania. Those that have the exemption that are 
 unconstitutional should be wiped out. Our Constitution 
 reads, Article 9, Section one: "All taxes shall be uniform 
 upon the same class of subjects." Now, our tax laws in 
 Pennsylvania have exempted large associations of capital, 
 etc., by certain laws and they exempted them when they 
 were not specified in the exemptions written in onr Consti- 
 tution. Then, in Section two, it reads: "All laws exempt- 
 ing property from taxation other than the property above 
 enumerated, shall be void. ' ' Yet, there are on the statute 
 books of Pennsylvania these illegal exemptions of prop- 
 erty as laws of this State. Now, any tax law, no matter 
 how it is constructed, must of necessity observe the consti- 
 tutional provisions of the State ; and yet this has not been 
 done. That is one of the leaks in regard to the collection 
 and equalization of taxation in Pennsylvania. The in- 
 stance that has been cited with regard to the bank is 
 only another instance that applies along this line. 
 
 These great corporations escape these taxes largely be- 
 cause they are large enough and sufficiently well organ- 
 ized to thoroughly enter into the meaning of the benefits 
 of an exemption of that kind, while the small manufactur- 
 ing concern has the greater proportion of its capital in- 
 vested in its plant, has spent more upon the ground often 
 times in the building itself that is taxed for local purposes 
 and the outcome of that exemption has been that the little 
 manufacturing concern of Pennsylvania has been paying 
 more taxation in proportion than the big corporations; 
 and our laws have to say largely just as in the bank ques- 
 tion. The little bank that has no surplus cannot take ad- 
 vantage of the exemption; for if it did, it would pay a 
 greater amount than it did under the law ; but the large 
 institution can take advantage of it; and the constitu- 
 tion says that taxation shall be uniform on the same 
 class of subjects. There you can easily see that there are 
 great leaks in taxation that are simply outrageous in their 
 injustice. 
 
829 
 
 By the Chairman : 
 
 Q. A Judge of Dauphin declared that Act constitu- 
 tional ? 
 
 A. Yes, but why was an exemption ever put in there 
 upon which the question of constitutionality would have 
 to be passed at all? If it is right to collect four mills 
 from a little bank, it is right to collect four mills from a 
 bank that does its business by the millions. Why was it 
 ever put in there? The Constitution plainly stated that 
 the tax shall be uniform on the same class of subjects. 
 That exemption was evidently put in there to favor the big 
 corporations, because it could not favor the little one. It 
 was either put in there by mistake or it was put in there 
 to favor the larger corporations ; and you can get on which 
 ever horn of the dilemma you please. You take this 
 question of the great capital invested in manufacturing. 
 That capital is oftentimes invested in manufacturing in 
 a place that receives the development that it does because 
 of the gifts of the Almighty to that particular section ; as 
 a consequence the development of that business is a na- 
 tural development of that section. Yet our law enables 
 businesses of that kind that have a tremendous capital, that 
 are doing a tremendous business and have a simply fabul- 
 ous income, to be exempt from taxation, when they are 
 taking the raw materials that God Almighty has placed 
 in the hills of Pennsylvania and are working them over 
 and charging the people of Pennsylvania and the rest of 
 the world exhorbitant prices for these gifts of the Al- 
 mighty. 
 
 By the Chairman : 
 
 Q. "Why do you suppose that law was passed? 
 
 A. If there was any real theory it was perhaps that it 
 would encourage manufacturing in Pennsylvania. But 
 these manufacturers cannot leave Pennsylvania. There 
 was no need for any such condition. Where would they 
 go ? The minute they crossed the line of Pennsylvania in 
 
830 
 
 any direction they would not only be up against a State 
 tax, but a local tax also. Now, why would they go out 
 of the State why would they jump out of one State and 
 go into another that was further away from the raw ma- 
 terial and where they would have to pay more taxes? I 
 don't think they could move. They couldn't go into New 
 York; they couldn't go into any State in the Union that 
 I know of except Pennsylvania and Delaware ; and they 
 would be crowded if they would attempt to go into Dela- 
 ware. 
 
 Then the proposition is that corporate property should 
 be taxed upon its value. Now, this is the principle upon 
 which the farmers of this county are taxed. The question 
 arose a while ago as to whether or not property mortgages 
 should be taxed ; that it made a double tax upon the same 
 money. Any man that goes into business and barrows 
 money, does it with the idea that he will not only make 
 enough out of that money to pay the interests on it, but he 
 also expects it to be an asset in his business; and as a 
 consequence it is not a double tax entirely upon the money, 
 because there are two profits there; it has two earning 
 capacities one for the man who loans the money, and it 
 is supposed, also, if the borrower uses good business sense, 
 he borrows with the idea of making for himself an incre- 
 ment also. The great injustice is not from the fact that 
 the farmers of Pennsylvania are taxed double, or rather 
 those who borrow money are taxed on the mortgage in- 
 directly, but it is from the fact that from any other bus- 
 iness in the State that borrows immense amounts of capital 
 that in the determination of the value of the capital stock 
 that that tax is subtracted. For instance, if a railroad 
 owns four millions of capital stock, its bonded indebtedness 
 is thirty-nine hundred thousand; under the present law 
 it is at the discretion of the Auditor General who can 
 take into consideration the value of the stock. He may 
 deduct that whole thirty-nine hundred thousand dollars 
 from the four million which will leave one hundred thou- 
 
831 
 
 sand, when the value of the plant is four million. Now, 
 there is the rank injustice of the whole situation. When 
 they come upon the farms of Pennsylvania and assess 
 that farm they get the property value of that farm without 
 any regard to how much money that farmer is bringing in 
 on his investment, without any regard to how much capital 
 that man may have buried. They simply take the value 
 of that place as nearly as they can upon the basis upoix 
 which they are levying the assessments. When it comes 
 to these immens corporations, they carefully consider these 
 things and give them the opportunities necessary to pro- 
 cure these advantages that come from the finding out of 
 the value of the capital stock. 
 
 Now, in Pennsylvania, steam railroad companies have 
 an aggregate appraised value of capital stock, funded debt, 
 current liabilities reported to the State, $4,456,455,599. 
 There is a four mills tax upon the debt and eight mills 
 upon the gross receipts. That ought to bring into the 
 State somewhere between four and eight mills, when the 
 facts of the case are that it brings in two and eight- 
 elevenths mills. That is a leakage that is simply beyond 
 all reason and beyond all defense. There is no reason why 
 that tremendous amount of property should not be so 
 handled that it would give somewhere near the amount 
 the law expects of it. It is entirely too little. It does not 
 bring out that which the law sa3^s it should bring out. The 
 reason possibly is this : The value of these corporations is 
 gotten from the Secretary of Internal Affairs. These cor- 
 porations make a return to the Secretary of Internal Af- 
 fairs upon the value of the corporations; but when the 
 authorities come to assess the taxables of the corporations, 
 then these figures are put up possibly by a different set of 
 men for that purpose, and, as a consequence, there is a 
 different report made when the question of tax is raised 
 from that which is made when the Secretary of Internal 
 Affairs asks the value of the property. Then there is an- 
 other thing take a bond held by interests not within the 
 
832 
 
 State. It is at the same time a part of that property or 
 a part of the working value of that property, and while 
 you may tax the bond that is held by some other foreign 
 country, you cannot allow the value of that bond upon that 
 property as a part of the value of that property. That 
 property can pay it just as the farmers pay it. They 
 don't come to the farmers and ask where that money is 
 held, whether or not it is within the confines of the State. 
 It is simply a question of arriving at the value of that 
 property and then putting the valuation upon it. Tt 
 should be so in all classes of property, in all affairs, and 
 it is to make manifest these general complaints that we 
 want to place this system before you to-day, and for which 
 we are making our argument. That there may be a general 
 uniformity in the whole tax system of Pennsylvania of 
 such relation to the property of the State that the burden 
 of proof will not be thrown upon the officer of the law, 
 but that it will be thrown on the property owner to show 
 what he has and what should be taxed and what should 
 not be taxed. 
 
 By Mr. Brown: 
 
 Q. You would tax the gross value of these corporations? 
 That is your thought? 
 
 A. Yes. 
 
 Q. That is what the law contemplates now. Your com- 
 plaint is that it is not fully carried out? 
 
 A. That is my complaint. 
 
 Q. You would exempt the bonds and other evidences of 
 debt from taxation, and compel the corporations to pay 
 a tax on all its assets of every other kind. That would 
 include assets by money raised on bonds. In that case you 
 would not tax the same bond? 
 
 A. No. It would also be fair that where the returns 
 of that property are locally taxed, that the assessment 
 they pay for local tax be deducted from the gross. 
 
 Q. The Pennsylvania and Reading Railroad companies 
 do that? 
 
833 
 
 A. Well, I see different authorities on that. 
 
 Q. We tax the Pennsylvania Railroad in Philadelphia 
 for everything except the water tanks and road-beds? 
 
 Q. What law do you do that under ? 
 
 A. A special Act of Assembly. 
 
 Q. Was it earlier than 1899 ? 
 
 A. Yes, before that; Act of 1859. Your idea is to tax 
 every one locally throughout the county? 
 
 A. Not necessarily locally. 
 
 Q. Your thought is that the appropriation should come 
 back to the county? 
 
 A. Yes. 
 
 By the Chairman : 
 
 Q. What do you think about county option? For in- 
 stance, public utility corporations to tax real estate ; should 
 that be optional? 
 
 A. I don't see why. It is not optional with the farmer, 
 and why should it be optional with these concerns that 
 are making large percentages. You can get money to go 
 into these things quicker than you can get it to go into 
 the farms of Pennsylvania, and if these people can get 
 this money borrow by the millions or tens of millions, 
 why is there any reason that they should come to the 
 people of Pennsylvania and ask for option on the question 
 of taxation? Taxation is for the support of the govern- 
 ment in which every man, woman and child and every 
 class of people are interested. There is nothing exempted 
 from the benefits of government. Why, then, should they 
 ask for any exemption. The tax law simply says we need 
 so much money from the State and they should get it in 
 a uniform way. That is what we are here to-day for, to 
 get rid of these specialties to get rid of these deficiencies 
 in the law. Our own township officers never raise the ques- 
 tion, they 
 
 Q. The authorities assess your farms a great deal higher 
 than they do in the towns ; is that true ? 
 
 A. I think, possibly, it is. 
 41 
 
834 
 
 By Mr. Brown : 
 
 Q. These folks argue they are producers, that they em- 
 ploy hundreds of people and these people spend their 
 money buying from the farms and help increase the value 
 of the farms? 
 
 A. Well, that is true ; but when you talk of the question 
 of production, then we have the floor absolutely. The 
 American farmer produces more than all the corporations 
 in the country. There is no productive class like the 
 farmer. 
 
 By the Chairman : 
 
 Q. There must be people provided to take the farmers' 
 products ? 
 
 A. Yes, but there is no reason why provisions should 
 be made so that they get all and the farmers get nothing 
 to raise his crops. They take from the farmers the very 
 people who produce these things for the people to eat. 
 There is a gas company that claims an exemption as a 
 manufacturing company, while an electric light company 
 has to pay a tax. There are two rival companies light 
 and heat yet one is taxed and the other is not. 
 
 Q. I imagine that is because the gas is used so much as a 
 fuel? 
 
 A. No more than electricity will be. 
 
 Q. Prior to the time electricity was discovered I 
 imagine no man in his sane mind could say to-day that 
 gas companies should pay their pro rata share of the tax. 
 The reason for that is, no doubt, that it took the place of 
 coal for heating, etc., before electricity was discovered 
 and that was probably the reason why the law so indicated ? 
 
 A. Well, of course, I would not attempt to say what the 
 reason was. 
 
 By Mr. Brown : 
 
 Q. We have had one or two single tax advocates that 
 have advocated that land should be taxed for all State pur- 
 
835 
 
 poses for State revenue and it should be left to the counties 
 to tax any property they saw fit. You must tax land for 
 all State purposes and allow the counties the right to tax 
 anything for all purposes. That permission would also 
 give them the right of exemption also from county pur- 
 poses? 
 
 A. Mr. Creasy, my study has developed that Pennsyl- 
 vania is considered by tax experts to be the furthest ad- 
 vanced in the system of taxation, from a viewpoint of fair- 
 ness, of any State in the Union. How does it appeal to you ? 
 
 By Mr. Creasy: 
 
 Well, we get more money from personal property and 
 money at interest than any other State. 
 
836 
 
 JUDGE A. W. DENNISON, Pennsylvania State Grange. 
 
 Mr. Chairman and Gentlemen of the Commission: I 
 was asked by the Master of the State Grange this morning 
 to sort of wait until last and pick up the odds and ends. I 
 noticed when the rest of them got through with the argu- 
 ment that there was not very much odds and ends to pick 
 up. I had jotted down a few items that I thought I would 
 call your attention to, and one by one I have checked them 
 all off until they are all marked off. 
 
 As I understand the scope of this investigation, you are 
 to consider and then make recommendations to the next 
 Legislature as to what laws they can pass within the Con- 
 stitution that will tend to equalize taxation ; and you cover 
 several different subjects. One is the formation or creation 
 of corporations. 
 
 Eepresenting the State Grange and the farmers and the 
 laboring men of the State of Pennsylvania, I would not care 
 to go into a discussion of the question, except to say that 
 there is no antagonism by the farmers against the creation 
 of corporations, or, I may say, the creation of a trust, pro- 
 vided that they will obey the laws just like you ask a 
 private citizen to obey the law, and that they will not use 
 the great power 'that the great combination of wealth 
 gives them to take advantage of the small interests and 
 the private citizens of this Commonwealth. 
 
 That subject would be treated, perhaps, in the second 
 scope of your investigation, which is the regulation of cor- 
 porations. How you should regulate them under the State 
 laws. Because it is clear that they have no existence until 
 they are created by the Legislature; and the same power 
 that creates them can regulate them. 
 
 The thing that interests us farmers and laboring men of 
 Pennsylvania, so far as you tax corporations and the sub- 
 ject of their taxation, simply relates to the question of equal- 
 
837 
 
 ization of taxation. Now the State of Pennsylvania to-day 
 sets aside practically seven billions of dollars of the wealth 
 of this Commonwealth and says to the localities, "Keep your 
 hands off that ! ' ' They say, ' ' We '11 tax that exclusively for 
 State purposes. " " We will not only tax that seven billions 
 which your localities cannot touch, but we will come into 
 your county and tax every writ that is issued, every will 
 that is made, every deed that is recorded." And they say 
 to the localities, "Keep your hands off; we'll attend to 
 this. " Then they took the license fees of wholesale and re- 
 tail liquor dealers, but have recently said we could have* 
 some of this, and so we get some. Now, in doing all that, 
 they raise something like twenty-five millions a year. They 
 say to us localities that we can take about four billions of 
 real estate and tax it for local purposes, and we can have 
 the retail liquor license fees ; and in the State we get about 
 two and a half millions out of that. They say we can tax 
 mules and horses, and we get something like a half million 
 out of that. Then they say further, we can tax occupa- 
 tions, salaries and emoluments of office, and we get per- 
 haps nearly two and a half millions out of that. On 
 that four billions from the real estate we collect seventy- 
 seven and a half millions for use locally. Then the 
 State steps in and they raise so much off their seven 
 billions that they cannot possibly spend it. They give 
 some back again. They even give us something to run 
 our hospitals all over the State. But it is apparent to you 
 at once when we take eleven billions of dollars worth of 
 property that is asssessable in the State of Pennsylvania, to 
 take and set aside seven billions out of the eleven, while six- 
 teen to eighteen millions is what they raise from other 
 sources, and then take four billions and raise seventy-seven 
 and a half millions, there is some gross inequality. There is 
 something wrong somewhere. Now, that is what the Grange 
 asks what we believe to be fair and right ; that some change 
 be made either by saying to these localities that they can 
 tax some of these enterprises, or, if you maintain the sys- 
 
838 
 
 tern that you have, that you try to put them on an equality 
 so that the farmers and the home owners need not pay a 
 much higher rate than the other interests. I will submit 
 to you that the interests that only pay an average of three 
 mills make their money much easier than the home owners 
 who must pay on an average of eighteen mills six times as 
 much, and money harder to get. 
 
 The next question is, how will you do that? If you do 
 that you must raise more State revenue and appropriate it 
 in such a way as will relieve local taxation. There is no 
 other way I know to do it. How would you raise more State 
 revenue ? We have a school house in our township, and as 
 a member of the School Board I voted to raise the levy five 
 mills. We had to do it. I didn't do that because I have any 
 antagonism against the taxpayers, or because I wanted to 
 \vrong the taxpayers of our township, because my own tax 
 was included in that; but we had to have money, and the 
 only way I knew to do it, was to raise the levy. The same 
 thing can be done in the levies that we make against the 
 corporations if you propose to pursue that policy. The 
 township School Board makes a levy for school purposes. 
 The County Commissioners make it for county purposes. 
 The Legislature fixes a rate of levy for State purposes. 
 That rate of levy has been fixed at various amounts on 
 personal property and on banks at four mills, and on other 
 corporations at five mills. If you are going to raise more 
 money it seems to me that you must raise your levy. I don't 
 see any other way to do it. Now, another thing I want to 
 call your attention to if you pursue that policy that you 
 will watch that money very closely, or you can never get it 
 to where it will be of any benefit to the local taxpayer. You 
 will find out when you get it to the Legislature that there 
 i? a great many things ready to reach their hands in and 
 get that money. They will think the State officers are not 
 paid enough salary; they will want to get a little more 
 for that. They want a public park ; they will want money 
 for that. They want a road from Philadelphia to Pitts- 
 
839 
 
 burgh ; they will want money for that. And from some 
 letters I have gotten from the Good Roads Association, 
 I think they are trying to get all the money they can and 
 put it on the roads. So the danger of this system lies 
 in the fact that you will have to make some special effort 
 to keep that money within the lines that you contemplated 
 when you started out, and put it in such a place that it will 
 surely lower local taxation. 
 
 Now, it seems to me that the Grange has suggested a good 
 way to do it. In the first place, as Brother Moscrip sug- 
 gests, the minimum salary for the minimum term of the 
 school teacher. Then another good way would be to go into 
 the road districts and appropriate enough money to pay for 
 one-half of the repairs on the roads not to exceed twenty- 
 five dollars per mile in each road district. For instance, if 
 there is one thousand dollars to be spent on a road, let the 
 road district raise five hundred of it and the State raise five 
 hundred. Then another way in which they could help the 
 localities would be to let the State build and maintain and 
 repair all the macadam roads and stick to the policy of 
 putting them in every county. I was told last session down 
 there what you fellows got to do that on. Then there is 
 another way to lessen local taxation, and that is permitting 
 the counties to retain every dollar in the county that they 
 collect there. I mean by that, on personal property and 
 licenses. 
 
 By Mr. Brown : 
 
 Q. Where would the State get any money? 
 
 A. The State under the present laws would get all ex- 
 cept about five or six million dollars that it gets now ; and 
 if you raise the rate of levy that would give it much more. 
 When I speak of the counties retaining the tax, I am not 
 speaking of the capital stocks ; I am not speaking of the tax 
 on bonds ; I am not speaking of the tax on gross receipts ; 
 but I am speaking of the tax on personal property and the 
 licenses we collect in each county. In the whole State of 
 
840 
 
 Pennsylvania, it would amount to perhaps four or five mil- 
 lions of dollars. We collect now something like nine to ten 
 millions of dollars, and the county retains three-fourths on 
 the tax of personal property. What we advocate is that we 
 retain all of it and that we retain all license fees, mercan- 
 tile and otherwise. There is nine or ten million raised in 
 the counties that way, and we are only asking that the coun- 
 
 By Mr. Moyer: 
 
 Q. Some reference has been made to the fact that the 
 State is not a good housekeeper. What assurance would the 
 State have, under a law of this kind, that the county would 
 be a good housekeeper ? 
 
 A. Well, I will say to Brother Moyer that my experience 
 is that you will find just as much honesty in the country as 
 you will find in the cities; just as honest officials in the 
 country as in the cities ; just as honest officials in our court 
 house as in the Capitol building. 
 
 Q. The inference has gone forward that the moneys of the 
 State are not wisely expended; that the officials who have 
 charge of this money are not doing their duty. 
 
 A. Well, that appears to be true. But I see no reason 
 why the counties should not have a chance to spend the 
 money or steal a little of it if they want to the same as the 
 State officials have to spend or to steal millions. As to that 
 matter, I am a good deal like Mr. Rhone. I think a big ma- 
 jority of the people of the capital building and a big ma- 
 jority of the people of the counties are absolutely and 
 strictly honest. But I also believe that in any building, in 
 any county, in any State, that there are a few thieves who 
 try to crawl in there and get hold of things, and if the people 
 permit them to do so, they are liable to suffer. But because 
 they do that, there is no reason why a general charge of 
 dishonesty and incompetency should be put up against the 
 balance of mankind who try to be honest and try to do 
 right. 
 
841 
 
 By Mr. Brown : 
 
 A. I think that the status of civic integrity is higher in 
 Pennsylvania than any other State in the Union; as high 
 at least as any State in the Union, and I think we should 
 all appreciate that and take it at one hundred cents on the 
 dollar. 
 
 Mr. Moyer: 
 
 Q. You would be in favor of the paying of this money 
 over to the Commonwealth and then having it returned 
 again? 
 
 A. No, sir. The only reason there could be for that 
 is that the State might perhaps be able to get a better 
 report, a more uniform report, or maybe get industries 
 reported that might not be reported in the county; then, 
 the county might afterwards be able to get hold of these 
 interests and corporations within the State. So, I agree 
 with you there. Now, there is one thing I realize ; when 
 you commence to talk about that you will strike a very 
 delicate question. That question is, ' ' Shall we tax manu- 
 facturing corporations in the State of Pennsylvania ? " 
 You are all cognizant of the fact that the United States 
 Government levies a tariff on all manufactured articles, 
 and we all know and realize it; we believe in it and we 
 defend it; but we know positively and absolutely that 
 the manufacturers are the only ones that receive any 
 benefit from it directly. The protection enables them to 
 sell their products without competition from cheaper 
 stock so they can get a higher price. I may say further 
 that we believe in our corporations; the State could 
 scarcely do without them. But we believe in the homes; 
 we believe in our farms. We believe in railroads and all 
 other corporations, in that manufacturers hire men, they 
 employ labor; and the railroads employ labor. So do 
 the farmers employ labor when they can get it ; but they 
 cannot get the best men because these corporations that 
 we are favoring step in and say, "Come down and work 
 42 
 
842 
 
 for me and I will give you lots better wages than that 
 farmer can pay." 
 
 By Mr. Brown : 
 
 Q. Suppose the manufacturing concern who seduces 
 the farmers' employes does not pay 3 per cent, of the 
 money invested in the corporation, would you be in favor 
 of taxing that corporation? 
 
 A. Under the Constitution of the State of Pennsylvania 
 I would tax that corporation just exactly the same as 
 I would tax a corporation that is engaged in the iron and 
 steel business in the State of Pennsylvania, that make 
 millionaires out of almost every man that touches their 
 stock, because the Constitution says that the tax shall 
 be uniform upon the same class of subjects. We have 
 farmers in our locality who, for some reason or other, 
 cannot make both ends meet. They don't make 3 per 
 cent, or any other per cent., and can scarcely clothe their 
 families ; yet we make them pay their taxes just the same 
 as the home owner or anybody else. 
 
 Now, there is another thing to be considered and that 
 is, if you tax them, at what rate will you tax them ? The 
 same rate you tax other corporations, or the rate you tax 
 banks, or a lower rate? 
 
 At the last session of the Legislature, I introduced a 
 bill doubling the rate of levy and requiring manufac- 
 turing corporations to pay the same tax as other cor- 
 porations. If I invest my property in a farm, or in a 
 manufacturing corporation, or in a bank, or in anything 
 else, I should have a perfect right to get the same treat- 
 ment under the law, and should pay the same rate of 
 taxation, no matter where I invested the property. Af- 
 ter a more extensive study of the question, I became 
 convinced that this would raise an immense amount of 
 money, more than would be necessary to equalize the rate 
 between corporations and individuals, and I secured an 
 amendment to the bills in the Ways and Means Commit- 
 
843 
 
 tee, so as to provide for an increase of one mill upon the 
 rate now in force and one mill upon the capital stock 
 of corporations manufacturing corporations ; exempting 
 them from the assessed value of any part of their property 
 which would be subject to local taxation. For instance, 
 a corporation having a capital stock of one hundred thou- 
 sand dollars and twenty-thousand so invested in real es- 
 tate as to be taxed locally take the twenty thousand 
 out of the hundred thousand, and only tax them on tee 
 eighty thousand, and one mill on that. These bills as 
 amended were reported out of the Committee, but were 
 recommitted for argument. 
 
 Mr. Brown : 
 
 Q. Your figures would bring to the State a little over 
 a quarter of a million? 
 
 A. Just the manufacturing corporations? 
 
 Q. Yes. 
 
 A. Yes. These bills would have brought about a seven 
 million dollar increase. It seems to me something of that 
 kind ought to be done. 
 
 By Mr. Moyer: 
 
 Haven't the manufacturers of the State of Pennsyl- 
 vania declared their willingness to pay a one mill tax? 
 
 By Mr. Brown: 
 
 That is, provided the State requires more revenue. 
 
 By Mr. Dennison: 
 
 That is exactly the bill I had in the Legislature. That 
 will explain a question that was asked Mr. Rhone by 
 Mr. Brown. I believe you stated that someone had fixed 
 the value of manufacturing corporations in Pennsylvania 
 at three billions of dollars ? 
 
 By Mr. Brown: 
 
 Yes. 
 
844 
 
 By Mr. Dennison: 
 
 Now then, the value that Brother Brown must take 
 is here from the report of the Secretary of Internal 
 Affairs. It is requested that they report in the indus- 
 trial statistics. In 1907, I think, twenty-two hundred 
 corporations reported out of a total of seven thousand. 
 Thus it was a little less than one million, and you can 
 readily see why they reported that much, when, at the 
 same time, where is the billions in this? I would not 
 be surprised to know it was a whole lot more. I think 
 if you will levy a tax of one mill on manufacturing cor- 
 porations and turn it over to the Auditor General, or 
 State Treasurer, and they would issue a report, that we 
 could find out something about the value of these manu- 
 facturing corporations, and then, instead of raising a 
 million, we would possibly raise three or four. You 
 cannot tell. 
 
 By Mr. Brown : 
 
 Q. That ought to raise about three millions? 
 
 A. Yes. Now, there is another thing that was discov- 
 ered and which I have had in mind for some time and 
 that is the illustration of a certain trust company in 
 Pittsburgh. It is the clause at the end of the law that 
 says they can pay the ten mills on the par value of their 
 capital stock that permits the large banks to pay so little 
 tax. I particularly make the illustration that they paid 
 fifteen thousand on about twenty-six and a half millions 
 of dollars of capital or actual value, and if they had paid 
 the same rate that an ordinary bank pays they would 
 have paid one hundred and five thousand; and if they 
 had paid the same rate that the county taxpayers do, they 
 would have paid six hundred and eighty thousand dol- 
 lars. And they paid fifteen thousand. Now, I fully 
 grant you that the Supreme Court declared that Consti- 
 tutional, but I believe that if it was my case, I would 
 ask for a referee. 
 
845 
 
 By Mr. Brown: 
 
 Q. That does not exempt them from taxation on their 
 bonds. It only exempts them from local taxation. I 
 cannot understand how they got off with fifteen thou- 
 sand. They must have had a peculiar line of securities. 
 
 A. Let me call your attention to the fact that they pay 
 local taxation on their real estate, and they didn't pay 
 another cent of local taxation, and when they paid that 
 fifteen thousand dollars on their capital stock they in- 
 cluded the whole twenty-six millions of dollars ; and they 
 didn't have to pay another cent. 
 
 Q. The local assessor should have gone after them. 
 
 A. The local assessor has nothing to do with the case. 
 The only thing the local assessor can assess is the real 
 estate and the bank building. That is all the local 
 assessor can assess. When you come to assess the capi- 
 tal stock or to assess the indebtedness, the State says to 
 the local assessor: "Keep your hands ofti; we will take 
 care of that." They pay ten mills on the par value of 
 the stock and the State does not ask them to pay more. 
 But, understand, this is a trust company. They reported 
 in 1908, in the Bank Commissioner's report, something 
 like $36,000,000. 
 
 By Mr. Brown: 
 
 Q. The ten mills does not release them from local 
 taxation. The trouble is the local assessor does not go 
 after the four mills tax. 
 
 A. I want to call your attention to the fact that the 
 whole banking law provides that they shall pay four mills 
 on the value of their capital stock, to be ascertained by 
 adding the capital stock, the surplus and undivided 
 profits; that when they pay four mills, the law says 
 they are exempted from local taxation except upon their 
 building, and says identically the same thing when they 
 pay the ten mills that they are exempted from local 
 taxation. 
 
846 
 
 (Reads banking law, and instructs stenographer noi 
 to put in the record.*) 
 
 By Mr. Brown: 
 
 Q. The assessor should say what is paid and what is 
 not paid. There ought to be a way to check it up. 
 
 A. I have nothing to say about the duties of the local 
 assessors and whether they are performed or not; but I 
 do say this: I would have those gentlemen pay the four 
 mills on the actual value of their stock by adding it all 
 together. If they pay the ten mills, they pay it on the 
 par value of the stock. I am talking about money going 
 into the State Treasury: Even though the Supreme 
 Court has decided that to be constitutional you will 
 agree with me that it is neither fair, just or right. While 
 they may have a right to do that under the Constitution, 
 I shall ask the Legislature to do what is right and just, 
 even though they have a right under the Constitution to 
 do an injustice. 
 
 By Mr. Brown : 
 
 Q. That conies back to the tax on the actual value of 
 their property? 
 
 A. There is another thing I want to call your attention 
 to. This is not a new question. The people have been 
 after this for years. There was a time when the Republican 
 Party did not like things, and they called a special session 
 in 1906 and perhaps you were a member of it. They recom- 
 mended the Governor to issue another call in order to 
 permit them to take up four different subjects, and one 
 of them was the return of all personal property but I 
 will read to you : 
 
 First. To provide for the retention by the respective 
 counties of this Commonwealth of all personal property 
 and license taxes now paid by them to the State. 
 
 Second. To enable trolley roads in this Commonwealtn 
 to carry freight. 
 
 Third. To provide a system of taxation in this bom- 
 
847 
 
 monwealth that shall be uniform and equal on all classes 
 of property to the end that the railroad companies shall 
 pay the same tax on the dollar of value as the farmer, the 
 business, the laborer, and the mechanic. 
 
 Fourth. To revise and reform the general election laws 
 of the Commonwealth. This resolution was vetoed by 
 the Governor, giving as his reason that while of interest 
 and importance, they were subjects for general Legisla- 
 tion and could be better presented at a regular session. 
 The Legislature has been repeatedly asked to do these 
 things, but, I suppose, perhaps, because it is easier to 
 let the thing run along than change it, they have not 
 done it. The Legislature can afford to be fair and just 
 to its citizens, and when you do that you have their re- 
 spect and you have their support. It seems to me that 
 now the time is ripe, now that this Commission has been 
 formed, to rectify these wrongs, and do justice between 
 the citizens of the State and the corporations of the State. 
 In making these recommendations, we are not asking for 
 charity; we are not asking for special favors; we are 
 simply asking for Justice and a square deal. 
 
 By Mr. George Moscrip : 
 
 A gentleman in Tioga county asked me to submit this 
 proposition to your honorable body : They have there a 
 building known as "Merker Block." They have incor- 
 porated and say they have to pay a local tax on Merker 
 Block, and have no use for it for manufacturing purposes 
 or any other purpose. I didn't know whether you had 
 heard of this case or not. The point is whether it is just 
 to impose a tax on the case of this concern. I think the 
 rate should be nominal. They pay twenty-five and one- 
 half mills. 
 
 By Mr. Brown : 
 
 Mr. Creasy, what is your thought upon taxing manu- 
 facturing corporations? You have had quite an exper- 
 ience. Do you think that would have an injurious effect 
 upon the State revenue? 
 
848 
 
 By Mr. Creasy: 
 
 I think the manufacturing corporations, as a rule, 
 would submit to a tax of one mill, because it is evident 
 to all these big interests that are interested in the bet- 
 terment of Pennsylvannia and its schools and roads, that 
 we must have more revenue. I believe they would not 
 object to a one-mill tax, provided it was economically 
 spent, and distributed with good judgment. For the 
 purposes of building better roads, I think the manufac- 
 turers would reap a benefit indirectly that would more 
 than compensate the amount paid. 
 
 Mr. Brown: There is no doubt of the general senti- 
 ment in Pennsylvania for better roads. 
 
 Mr. Creasy : That is why we are speaking of distribut- 
 ing this money to these counties. It would put at least 
 forty-five hundred men to work making good roads. We 
 believe these forty-five hundred men would build more 
 good roads in ten years than the State could by the very 
 best management in twenty or thirty years. We are all 
 interested in good roads. The township authorities could 
 fix up these roads a great deal cheaper than the State 
 could. Let the State take hold of the macadam roads. 
 These roads come through our townships and our people 
 are not able to take care of them, because the township 
 is too poor to take that up. 
 
 Mr. Brown: Do you figure in your assessment of ad- 
 ditional revenues the need for additional State institu- 
 tions for the care of insane men and women. From letters 
 received by us, there seems to be a need for more institu- 
 tions of this kind. 
 
 Mr. Creasy: I think one thing should be changed and 
 that is this: Whenever a plan is perfected to build an 
 institution, it should not be allowed to run along for years 
 before the Legislature appropriates sufficient money to 
 complete the building contemplated. I think every Legis- 
 lature should appropriate the money to finish its own 
 
849 
 
 buildings, so that the next Legislature would not be 
 hampered by appropriating money that should have been 
 appropriated by the former Legislature. 
 
 Adjourned until two o'clock. 
 
850 
 
 Public Meeting, Williamsport, Pa., April 8, 1910. 
 AFTERNOON SESSION. 
 
 Meeting called to order at two o'clock P. M., present as 
 before. 
 
 McMcLaren : I enjoyed the talk this morning, and I 
 thought we had a lot of good speakers on the subjects I did 
 not know much about. 
 
 By Mr. Brown : 
 
 Q. What other defects have you noticed in the present 
 law as to the collection of personal tax? 
 
 A. I think the law is a good one. I believe the greatest 
 difficulty is in enforcing the law. 
 
 Q. What do you do to check up the returns of the assess- 
 ars ? Do you give your guide books to the assessors ? 
 
 A. No. The assessors are furnished with all the informa- 
 tion we can get. That is, the judgments and mortgages 
 from the records here. 
 
 Q. You give them the blank returns the Auditor General 
 furnishes ? 
 
 A. No, the blank returns are delivered first by the as- 
 sessors from house to house, and everybody is supposed to 
 make the return, whether they have anything or whether 
 they have not. If they have not, of course they state that 
 and swear to it. They don't all do that, however. 
 
 Q. What check do you put on the assessors? Do you 
 make them account for every one of these returns you give 
 them? 
 
 A. No, we haven 't. 
 
 Q. For every blank ? 
 
 A. No, they are just given to them. The State sends us 
 a great many more than we need, and we have not been, in 
 fact, very careful as to how many the assessor gets. 
 
851 
 
 Q. You depend entirely on the assessor for the returns? 
 
 A. Yes, sir. 
 
 Q. Do you ever do any investigating to ascertain whether 
 or not the returns are correct ? 
 
 A. Yes, we have in some instances here, we have imposed 
 the penalty in a number of cases. If the assessor comes in 
 with knowledge that seems to be substantial, we have im- 
 posed the penalty, and I find that if that is done pretty gen- 
 erally the people, of course, eventually will come in. When 
 the penalty amounts to as much money as they have out at 
 interest, of course, they are coming in then. Now, we are 
 doing that. 
 
 Q. What do you do to reach moneys on deposits evidenced 
 by certificates of deposits in your trust companies and 
 banks ? 
 
 A. Well, I think the assessors have just been relying on 
 the individuals to tell them the truth. 
 
 Q. How would it do to have the banks and trust com- 
 panies to make a return of all the moneys at interest? 
 
 A. I think that would be very good. I think it would 
 help the assessors and the county. 
 
 Q. Have you any idea of the amount of personal property 
 in this city that does not pay any State tax ? 
 
 A. No. 
 
 Q. Do you think it is a considerable amount? 
 
 A. I wouldn 't be surprised but what it is. 
 
 Q. What is the sentiment here on the subject of taxing 
 manufacturing corporations? You heard our friends, the 
 Grangers, this morning ? 
 
 A. Yes. In fact I never heard that discussed at all. 
 
 Q. Have you heard the taxpayers suggest any other sub- 
 jects of taxation? 
 
 A. No. I have heard suggestions of probably some in- 
 provement on the system of the assessors. In fact, I have 
 got two or three ideas of my own. 
 
 Q. What are they? 
 
852 
 
 A. Well, now, the first one, of course, I don't suppose it 
 would be constitutional, but if it is you probably have heard 
 of it before, and that is to make every person his own as- 
 sessor. Of course, this would have to be worked out and 
 graded, because if it were not the big property owner would 
 have it on the little fellow every time, as he usually has. 
 Now, this is just as a suggestion. You are sworn and you 
 make your own assessment. If, within sixty or ninety days, 
 or any period that your Legislative Committee or any Com- 
 mittee who might have that in charge, say within ninety 
 days, if he is offered a bona fide offer of cash within ninety 
 days after the assessment, with possibly 10 per cent, added, 
 he has got to sell. 
 
 Q. Some States have that now. 
 A. I did not know that. 
 
 Q. For some kinds of property. 
 
 A. Of course, the big fellow would have the advantage of 
 the little fellow, because lots of people would buy homes 
 ranging from five to ten thousand dollars, and they could 
 get that for them, and manufacturing establishments in the 
 city would not have as many mortgages. 
 
 Q. What is your feeling about the character of the as- 
 sessors you would get under the present system? Do you 
 think they fairly assess the property? 
 
 A. The system is not very good at the best. The whole 
 system, it seems to me, is not good. Here is another idea I 
 have, for the county to elect three county assessors, we 
 have three city assessors here, and I believe they could more 
 nearly get the correct value of property than having an 
 assessor in every township in the county. Of course, it 
 would take three assessors or five assessors possibly a year 
 or more to get over the county to do the work in the begin- 
 ning, but after we have it once done I believe three good 
 men would come nearer to equalizing the values of property 
 a good deal nearer than under the present system. 
 
 Q. Do you think that you would get better assessors by 
 
863 
 
 having them appointed by the Judges than by electing 
 them? 
 
 A. Elect them as we do here. Let the people elect three 
 county assessors, and let the people of Williamsport elect 
 three city assessors for city purposes. If it operates well in 
 the city, why not in the county ? 
 
 Q. What amount of personal property do you return here 
 in the county from Williamsport, can you recall? 
 
 A. You mean as compared with the county outside of the 
 city? 
 
 Q. No, how much in the county? 
 
 A. I cannot state that, I forget just what that is. You 
 mean personal tax? 
 
 Q. Yes. 
 
 A. I am afraid to make a statement. In the county, you 
 mean? 
 
 Q. Yes. 
 
 A. I do not know. Twelve or fifteen or sixteen millions, 
 somewhere along there, it seems to me. 
 
 Q. Do you think the present laws are all right, only they 
 need greater enforcement? 
 
 A. Yes, I think the greatest difficulty is that the laws are 
 not enforced. I think the present system of having a differ- 
 ent assessor in every township is bad. They are often under 
 the influence of one or more men, and sometimes the as- 
 sessors are honest and their judgment is poor ; they may be 
 honest but have very poor judgment. 
 
 Q. What about their compensation. Don't you think if 
 you paid a little more you would get a better qualified body 
 of men to do the work ? 
 
 A. In the townships ? 
 
 Q. Yes, sir. 
 
 A. I don't believe that would make much difference in 
 the townships. I have another word. As I understand the 
 business of this Committee is to 
 
854 
 
 Q. The thought is that if you are not justified in spend- 
 ing the State's money for certain purposes, you are not 
 justified in collecting it, not to pass upon individual cases 
 or anything of that sort. 
 
 A. What I am going to mention, we are troubled with 
 people coming in sometimes every week, sometimes al- 
 most every day, wanting to know when we are going to 
 pay bounty. It seems to me that if the State has a 
 bounty on certain noxious animals and that is to encour- 
 age the killing of them, then it seems to me we ought not 
 to depend upon appropriations to pay them. It seems 
 to me the Commissioners of all the counties ought to have 
 the right to pay as they go along, and send their report 
 to the Treasurer once a month or once each quarter. I 
 tell people I believe the Committee at the next session 
 of the Legislature will appropriate enough money to do 
 it. That is all I can tell them. I try to keep them in 
 a good humor. 
 
855 
 
 Judge W. B. Crocker: As a lawyer, I may state, from 
 the principle, I can see no reason why surplus income 
 should not be appropriated, a portion of it, for public 
 and social purposes, as well as the surplus income of 
 private corporations or individuals, but the State Su- 
 preme Court decided that an income of b per cent, was 
 not an unreasonable income. It would amount to about 
 the same thing. * * * 
 
 I do not see why public service corporations are en- 
 titled to any more consideration than any others. 
 
 Q. Have you in your mind any company earning over 
 6 per cent, today? 
 
 A. Oh, yes. One water company I represent earns, 
 I think, today 1\ per cent. 
 
 Q. Have you allowed for betterments there at all? 
 
 A. We do not deduct wear and tear, because there is 
 not enough wear and tear in the present system, but 
 whatever wear and tear there is we charge to expenses, 
 and there is some goes into our sinking fund. 
 
 Q. Is that allowing for addition development, too. 
 
 A. We charge that to improvement or maintenance 
 account whenever we make extensions, and they are not 
 very heavy, sometimes not over three hundred dollars a 
 year. 
 
 Q. How could that be determined unless you had a 
 public utilities commission, or something of that kind, to 
 say how you should keep your accounts and should be 
 appropriated for one and what for another? 
 
 A. There wouldn't be any objection to that. If it was 
 done uniformly that would be the way of arriving at it. 
 One thought occurred to me in listening this morning, 
 and that is on the question of local taxation, of taxing 
 mortgages as well as the land, or else deducting from the 
 assessed value the market value. I do think agricultural 
 
856 
 
 lands are taxed more in proportion to their actual value 
 than larger and more valuable holdings of real estate. 
 
 Q. That is the fault of the assessor, it is not the fault 
 of the law? 
 
 A. In a sense it is the fault of the assessor. The Act 
 of '95 tended to equalize assessments in Williamsport. 
 We increased the valuation by half a million. "We found 
 the sentiments of the assessors was that the interests of 
 those owning these properties and engaged in business 
 connected with them could not stand higher taxation, so 
 that it was a matter of what you might call financial 
 sympathy, but three years ago the assessors were in- 
 structed to assess the lands and the buildings separate, 
 and the result was that we increased our valuation from 
 nine to thirteen millions, and at the same time the tax 
 rate was lowered three mills, so we got the same revenue, 
 but it does seem a hardship to make the mortgagor pay 
 the tax on the real estate and also the four mill tax upon 
 the mortgage. 
 
 Q. Of course, the theory of the law is that he does not 
 pay the tax ; the land owner pays that. 
 
 A. Under that tax law, if you remember, a great many 
 arguments were made about imposing a State tax upon 
 the mortgagor. I think practically that is the result of 
 it. 
 
 Mr. Ryder: I just want to speak on State roads, but, 
 as I understand it, this is on legislation for roads and 
 everything else. It sort of made me laugh this morning 
 when I heard the gentleman ask whether we believe the 
 State a good housekeeper or not. I think the State is the 
 best housekeeper in the world. We have grievances up in 
 this section of the State. I suppose they have them all 
 over the State. We are led to believe that we get so much 
 money from the State, so much in repairing roads, and 
 when the time comes we don't get it. Now, our township, 
 is a case 
 
857 
 
 Mr. Brown : This Committee hasn 't anything to do with 
 this. 
 Mr. Ryder : Are you working on legislation. 
 
 Mr. Brown: No, only on the formation and regulation 
 of corporations, and revenue for State purposes. I assume 
 if the State can she ought to help out in the building of 
 roads. 
 
 Mr. Ryder: We believe in State aid, all right enough, 
 but we believe in getting it, but we don't believe in taking 
 only promises for it. That is all we get up in this section. 
 
 By Mr. Brown: 
 
 Q. What is the reason because there isn 't enough money 
 to go around! 
 
 A. I don't know. 
 
 By the Chairman : 
 
 Q. How many miles of State road have you in Lycoming 
 county ? 
 
 A. We have in our township 2.7 miles of road, cost 
 $57,800. That is the question I want to speak on. That 
 is, if you are looking for legislation to remedy these 
 things; that is, if you are interested in this subject. The 
 State claims we are in partnership with the State. I don't 
 find any way where we are, only in paying. The State 
 goes on and builds this road. The State goes on and takes 
 this money, without considering the townships ' rights at 
 all, takes this money from the county. There is a piece 
 in the paper last night about it. While the township is 
 willing and ready to pay it, it never had a word to say 
 about it. There is $57,800 for 2.7 miles of road. Then 
 the State goes to work and promises the supervisors 15 
 per cent, for maintenance. Now, I have a letter in my 
 pocket from the State Highway Department; if the gen- 
 tlemen care to hear it I will read it to you. This may not 
 concern you about paying the 15 per cent., but the town- 
 ship pays $4,000 for repairing the road and got back 
 
858 
 
 from the State $540. But the State goes on and simply 
 confiscates this money and keeps it and doesn't pay the 
 township what it owes it. 
 
 Q. What remedy do you suggest? 
 
 A. Why, I mean to say that when the State passes a 
 law that it is going to pay 15 per cent, bonus, I mean it 
 should pay it. 
 
 Q. Your thought is to turn the money into the county 
 and then have the county build its own roads? 
 
 A. That isn't the question. The State has promised 
 the township 15 per cent, bonus for all the cash they raise. 
 Many of the supervisors calculated on that certain amount 
 of money in their work, and have worked accordingly. 
 Now, the State doesn't pay it. Now, are the supervisors 
 all to appear as liars or fools before the public? The 
 State owes the township now between three and four thou- 
 sand dollars on that 15 per cent, bonus alone. We have 
 told our people we are going to get this money. Where 
 is it? 
 
 Q. They took it out of the township's share and paid 
 for the road with it, didn't they? 
 
 A. No, they took this money off of the county. The 
 county didn't pay the expenses for the township at all. 
 Our township is well able to pay for its own bills, but the 
 State refuses to pay its own bills under the present laws. 
 The State simply confiscates the money that belongs to 
 the County Commissioners. It is taking it, but refuses to 
 pay to the townships what it owes the townships. I am 
 ready to answer any questions in regard to that if you 
 want to ask any. 
 
 Mr. Brown: I think I understand your position. It 
 is hardly within the purview of this Committee to help 
 you any. 
 
 The Chairman: The resolution under which we were 
 created was simply to look toward the revision of the cor- 
 poration and revenue laws of the State. We find that 
 complaint pretty general along the line. 
 
859 
 
 Mr. Klein: As a native American, Pennsylvania born, 
 and one who is rather proud of it, I am ready at any 
 time to declare that Pennsylvania gives more to schools 
 and, charitable institutions than most of the States in the 
 Union; and one of the things that has bothered me some- 
 times, is how do the cities and boroughs get back any 
 portion of the taxes that go from them locally? That is, 
 as a public utilities corporation. It is true we get it 
 back in public charities and schools, and that sort of thing, 
 but I haven't had a chance to talk with my attorney and 
 don't know whether I am asking a foolish question or not, 
 but is there any provision for the cities and boroughs of 
 the interior getting back some of the taxes for their own 
 benefit that comes from public utilities, anything of that 
 kind? Is there any legislation covering that? 
 
 Mr. Brown : You are getting it for the schools and chari- 
 ties. 
 Mr. Klein: Yes. 
 
 Mr. Brown: Well, those things you would have to sup- 
 port yourself if the State did not get you the money. That 
 is why it is handed back to you. That is why it is di- 
 vided proportionately, so that each county gets its share. 
 
 Mr. Klein: But we have no voice. 
 
 Mr. Brown: The law gives them a voice by representa- 
 tion. Of course, that comes back according to your needs, 
 for your State institutions, etc., and you have an oppor- 
 tunity of sending your people to the State institutions for 
 care. That is why that is handed back to you. The coun- 
 ties get a certain amount of money that way. Of course, 
 you get it back indirectly by State Government and the 
 protection you have there. Everything goes back except 
 what is used by the State for proper purposes, for support 
 and maintenance. 
 
 Mr. Klein: But the city has no voice. Many of them 
 are struggling with an indebtedness, and along comes the 
 State and puts a tax on them, and they are not in shape 
 
860 
 
 to pay it. There is no way of getting a portion of the 
 tax on public utilities corporations and other corporations 
 which are controlled for a particular purpose? 
 
 Mr. Brown: No, I know of none. 
 
 Mr. Klein: That is what I thought. Now, as a mer- 
 chant, I object to the State mercantile tax that we pay to 
 the Commonwealth. "We also pay a State tax for the same 
 purpose. This relates to firms or partnerships. Now, many 
 merchants, individual merchants and firms take out char- 
 ters, and their object for doing that is to better protect 
 their business in case of death, to give favored and desir- 
 able employees an interest in the business; and it makes a 
 better proposition in many ways than a firm or a partner- 
 ship. They have to pay for a State tax, a city tax and 
 a corporation tax. Is there any provision for separating 
 that tax, those funds that we raise? Say, for instance, 
 a manufacturer is exempt; he pays no tax, but there is a 
 merchant 
 
 Mr. Brown: They pay tax on everything except their cap- 
 ital stock. They pay tax on bonds, and everything of that 
 kind. 
 
 Mr. Klein: It always looked to me as though the mer- 
 chant is taxed two or three times for the same thing. 
 
 Mr. Brown : In the first place your corporation does not 
 have to incorporate. You ask the State to give you a 
 franchise, which exempts you from personal liability for 
 debts; it is a special privilege. We don't have a franchise 
 tax in Pennsylvania. Some States have an additional 
 tax. The next is your mercantile tax. 
 
 Mr. Klein: That goes to the Commonwealth? 
 
 Mr. Brown: Yes, that goes to the Commonwealth, and 
 you have your local tax, that is a police tax, for local 
 protection that you get. You think that is double tax- 
 ation or treble taxation; one tax ought to cover it all? 
 
 Mr. Klein: Yes. 
 
 Mr. Brown: Well, there has been opposition to a mer- 
 
861 
 
 cantile tax. That is, a State mercantile tax. There is a 
 great deal of opposition to that. 
 
 Mr. Klein: You see, it is really three taxes. You pay 
 taxes to the Commonwealth once for a mercantile license, 
 and then you pay it again for the city, and in case you 
 are a corporation you have to pay so much tax. 
 
 By. Mr. Brown: 
 
 Q. You think that is an undue burden on the mer- 
 chants ? 
 
 A. I never had it entirely clear in my mind that it was 
 not a double taxation for the same purpose. 
 
 Q. Has it ever occurred to you that it was unfair as com- 
 pared to what other people pay? In other words, do the 
 merchants think they are paying more than their share of 
 the tax? 
 
 A. I don't know, sir. I can't answer that. 
 
 Q. In other words, each man ought to pay his share ? 
 
 A. You can't run the Commonwealth without it. 
 
 Q. Now, let us get down to it. Do you merchants think 
 you are paying more than your share of that tax? 
 
 A. This is my private opinion. I haven 't talked with any 
 merchants. I have been out in the State for two months, 
 but knowing that the Commission was here I just ran in 
 to hear what was said. I made no preparation for it. 
 I can't help but feel that in paying a mercantile tax and 
 then paying the city again for mercantile purposes, and 
 then paying the State again, if you choose to incorporate 
 the firms that are in partnership don't pay that. It seems 
 to me it is a matter that would require considerable in- 
 vestigation. I know several concerns that are incorpor- 
 ated for the purpose I have stated, to divide it among 
 their employees and give them additional credit, and all 
 that. 
 
 A. They pay just the same as a man pays for a 
 special privilege, and any other man who gets a special 
 privilege from the Commonwealth pays for it. 
 
862 
 
 A. That additional price or tax they pay for perpetua- 
 ing their business, giving to the employees shares of 
 stock, and so on. 
 
 Q. And exemption from individual liability for debts, 
 and so on. 
 
863 
 
 Public Meeting of the Committee held in the Chamber 
 of Commerce, Erie, Penna., on Friday A. M., April 15, 
 1910, at 11 o'clock. 
 
 Present: Gabriel H. Moyer, Vice Chairman and Sec- 
 retary, presiding; William H. Kayser, James F. Wood- 
 ward, David Hunter, of the Committee., Francis Shunk 
 Brown, Esq., Counsel. 
 
 Auditor General-Elect Sisson sat with the Commission. 
 
 The Chairman : The purposes for which this Commission 
 was created have been clearly denned in the circular let- 
 ter which you have all no doubt received. We, therefore, 
 shall not waste any time in making any extended remarks 
 on that point. We are here for the purpose of gathering 
 data and suggestions for legislation to revise our tax 
 laws wherein they are defective ; and for that purpose 
 we shall be very glad to hear the views of the gentlemen 
 who have been asked to appear before us. Mr. P. J. 
 Barber is here, representing the Erie Lithographing Com- 
 pany, and we would like to hear from him. 
 
 MR. P. J. BARBER, Erie, Pa. 
 
 Mr. Chairman, and Gentlemen of the Commission: I 
 did not come here prepared to say anything ; I came pre- 
 pared to listen. As I understand the situation, you are 
 gathering suggestions as to methods of taxation. 
 
 Sometime ago, when I was a candidate for the Legis- 
 lature, I noticed the mercantile tax was under discussion ; 
 and, like a great many other men who were candidates, 
 I was approached upon that subject as to where I stood 
 on the matter of repealing of the mercantile tax, and, of 
 course, without giving it any investigation, I didn't want 
 to be put on record until I had looked upon the subject 
 
864 
 
 more thoroughly and satisfied myself that the mercantile 
 tax was necessary to provide revenues for the State of 
 Pennsylvania. I am in favor of repealing any taxation 
 that is unjust, that is class legislation, so as to speak ; and 
 I so informed this gentleman who approached me on the 
 subject that I would investigate it, and if, in my judg- 
 ment, it was objectionable, I would be the very one to vote 
 for repeal. 
 
 The question of tax is, of course, one that touches 
 everyone who is interested in any property ; and they are, 
 naturally, of the opinion that all tax should be avoided 
 if possible to do so. This is naturally very much the same 
 in one business as it is in another. Our firm, of course, 
 pays a small State tax something like seventy-six dollars. 
 We pay a county tax of three to four hundred dollars 
 annually. 
 
 Mr. Moyer: 
 
 Q. You are a Pennsylvania corporation? 
 
 A. Yes, sir. The consensus of opinion was, as I gleaned 
 it, that the State has too much revenue. Now, of course, 
 we all know the Commonwealth is a good thing; but 
 wherever a tax is unequal, I should always be in favor of 
 repealing it or reducing it to the minimum. I believe 
 that (speaking for our firm) they are very well satisfied, 
 as there has been no complaint from the officers of the 
 company up to the present time about the treatment they 
 are receiving from the State ; and while that continues, I 
 have no hesitancy in saying that you will hear no ob- 
 jections from us. 
 
 If I knew something specific that you had in mind, I 
 might be able to discuss it; but I notice in your call for 
 the meeting that you are interested in corporations, or 
 the regulation of corporations and appropriations of mon- 
 ey to institutions not under State control, and the assess- 
 ment and collection of taxes in Pennsylvania. 
 
 By the Chairman: 
 
 Q. Are you connected with the hospitals here? 
 
865 
 
 A. Not in a specific way. I am interested in the Bureau 
 of Charities and some other institutions. 
 
 Q. Associated Charities? 
 
 A. Yes ; that is an organization composed of the various 
 charitable institutions here locally. 
 
 Q. Our counsel, Mr. Brown, will probably give you 
 a line of thought in that connection. 
 
 A. I am a great believer in appropriating all the money 
 a State possibly can for the care of its poor and its hos- 
 pitals, because the hospitals are not equipped as they 
 should be. Both hospitals in this city need a great deal 
 more money than they are getting. They are doing a 
 great work and the city is growing. 1 don't believe 
 the appropriations to the both hospitals have grown with 
 the city, and with the needs of the city. The appropria- 
 tions have not been sufficient for the needs of these in- 
 stitutions, and that is proven by the fact that private 
 individuals are called upon yearly to pay a great deal of 
 money that should be paid by the State. This makes a 
 double burden upon the taxpayers. And when, as a rule, 
 the people who are liberal are men of means who are 
 liable to taxation, I believe it is unfair always has been. 
 This is the position I have taken on that subject. 
 
 By Mr. Brown: 
 
 Q. Are you a manufacturing corporation? 
 A. Yes ; we manufacture in that we print. 
 
 Q. Are you exempted from the State tax on stock? 
 A. Yes. 
 
 Q. Are you under the manufacturer exemption law? 
 A. Yes. 
 
 Q. Have you ever made any effort to gather the senti- 
 ment of manufacturing corporations as to the fairness of 
 the levy of a tax upon the capital stock of such corpora- 
 tions, assuming that the Commonwealth of Pennsylvania 
 is not today collecting sufficient revenue to properly sup- 
 43 
 
866 
 
 port her charitable and other similar institutions and to 
 provide for the usual State outlays? 
 
 A. No. This matter didn't come to me really in time 
 to give much thought to that. I have not given the 
 thought to it I would like to in order to clearly state my 
 opinion on that question. 
 
 Q. Do manufacturing corporations, so far as you have 
 been able to gather the sentiment, feel that the burden is 
 sufficiently heavy upon them? 
 
 A. There does not seem to be any opposition to the 
 taxes as they are levied at the present time, excepting 
 the merchants. 
 
 Q. That is the mercantile tax? 
 
 A. Yes, that is the only objection I have heard. 
 
 Q. I am speaking now of the capital stock. That is 
 the only thing that the manufacturing corporations are 
 exempted from? 
 
 A. I don't see where they would have any objection 
 to the exemption. 
 
 Q. In answer to that question in Philadelphia, a mem- 
 ber of the Manufacturers' Club replied that they had 
 canvassed the subject and had come to the conclusion that 
 if the Commonwealth of Pennsylvania intended to con- 
 tinue in her liberal appropriations to charitable institu- 
 tions, and more money were needed for the building of 
 roads, that the manufacturing interests represented there 
 would not be dissatisfied with a levy of say one mill. 
 
 A. That is the amount of the Federal tax. 
 
 Q. And basing it on the manufactures of the Com- 
 monwealth, which aggregates say, three billions, it would 
 produce a revenue of about three millions. Is there any 
 sentiment like that in this district here? 
 
 A. I know of none. I suppose the proper man from 
 whom to get your information would be the secretary of 
 the Manufacturers' Association; and I am disappointed 
 not to see him here. 
 
867 
 
 Q. I understand he will be here at two o'clock this 
 afternoon. 
 
 A. He would have that data. I am only speaking from 
 my individual experience. I have heard no adverse 
 criticism. 
 
 By the Chairman: 
 
 Q. What is your private opinion regarding the taxing 
 of capital stock of manufacturing corporations say one 
 mill? 
 
 A. My individual opinion would be that if it were used 
 to relieve the burden or individual subscriptions to the 
 hospitals and institutions of that kind, it would be rather 
 a relief than a burden, because it would distribute it 
 among many, whereas now it is confined to a few men 
 who are liberally inclined. 
 
 Q. Do your manufacturing corporations contribute to the 
 hospitals ? 
 
 A. Yes, nearly every one when called upon for money on 
 charitable appeals and things of that kind every year. I 
 would rather see even one-half mill or one-quarter mill or 
 something of that sort put on the manufacturer, making it 
 general. 
 
 Q. Do you think appropriations of State money has a 
 tendency to diminish private contributions? 
 
 A. Yes, it has a tendency. 
 
 Q. Are the hospitals eager to get private contributions 
 at the same time they are receiving State aid ? 
 
 A. That is a qustion I would not care to enter into, be- 
 cause that would be criticising gentlemen who are interested 
 in the institutions. I would rather have men who are more 
 interested in that to answer that question. 
 
 By Mr. Brown : 
 
 Q. This is only among ourselves. Could the money given 
 to the hospitals here be used to better advantage if given to 
 one a combination of hospitals ? 
 
 A. No, I don't think so. 
 
868 
 
 Q. There has been a complaint in Philadelphia and Pitts- 
 burgh that it is too generally distributed ; that if the money 
 was given to one, better service would result to the people. 
 
 A. That would depend on local conditions. In this city 
 one hospital is under the auspices of the Catholic Church, 
 and there is another institution. I believe it is perfectly 
 fair to give both of these hospitals all the money they can 
 use for the benefit of charity patients. 
 
 Q. Are the beds well filled here? 
 
 A. I think so. I have an idea they are sometimes over- 
 crowded. I know some people have been denied admission, 
 even those who have been willing to pay for beds. I know 
 of several instances. As an ofiicer of one of the fraternal 
 orders I had occasion to visit both hospitals very often; 
 and I know at times it was very hard for us to get patients 
 admitted when we were willing to pay. I think this is one 
 of the things the State could do that would be appreciated 
 in Erie. 
 
 Q. I gather your thought that the State should be liberal 
 in her appropriations to these philanthropic institutions ? 
 A. Yes. 
 
 Q. Assuming the money would be properly expended, 
 and the revenues of the State were sufficient to satisfy these 
 demands, it is your thought that every taxable could be in- 
 cluded? 
 
 A. Yes. 
 
 Q. What other taxables could be returned? 
 
 A. That is a question I would rather someone else answer. 
 
 Q. Some say do away with all these private institutions, 
 and you will find others that say give more to them ? 
 
 A. I would do away with some of the rest of these things 
 if I were going to do away with anything. When these 
 things are here we must take care of them. If the present 
 has no need, we must take care of them for the future. It 
 seems to me that the city of Erie is not asking for as much 
 as they are entitled to in the way of hospitals. I think if 
 
869 
 
 a tax were levied upon some of those that are now ex- 
 empted, it would not be unjust at all. 
 
 Q. We would like to hear about the taxing about the 
 sentiment as to taxing public utility corporations, railroads 
 and others ? 
 
 A. The Treasurer is here, and the Controller and the 
 Mayor of the city. 
 
 Mr. Brown: We are here to gather information about 
 the subject of the formation and regulation of corpora- 
 tions, State revenues, the collection of money by the Com- 
 monwealth and the appropriation of that money. The 
 reason we asked about the hospitals is that if it is not right 
 to appropriate money to institutions not under State con- 
 trol, it is not right to tax private people for these charitable 
 institutions. If you have any thought, Mr. Mayor, as to 
 whether the law is defective, we shall be glad to hear from 
 you as to any suggestions you may have to offer ? 
 
 The Mayor : An officer I would like you to hear on that 
 is the City Solicitor. You are on the question of taxing 
 public utility corporation property? 
 
 Mr. Brown : We are here to gather the views of the peo- 
 ple here whether this should be taxed locally. 
 
 A. Well, on that point that was brought out at the last 
 conference of the first-class cities last summer. We think 
 in Erie that we get a much larger amount of tax out of that 
 character of property than they do in most third-class 
 cities. We follow the law as closely as we can, and we 
 are strict about our exemption as to what is clearly ex- 
 empted and on property held by public utility corpora- 
 tions, we fight it out with them. The result is that we are 
 getting a much larger amount of tax than most third-class 
 cities. I don't know that we are getting as much as we 
 should get. There is some certain property that is abso- 
 lutely essential that is exempted under the law. 
 
 Q. Is it your thought that that should not be exempted? 
 Some of the counties state that while it should be taxed 
 
870 
 
 there should be some equitable basis of taxation. Others 
 say it should be taxed locally? 
 
 A. That class of property is given fire protection, police 
 protection, light, water; it is given everything that the 
 city has to give in the same measure that every other class 
 of property is given. For that reason, if for no other rea- 
 son, I should think it should bear the same proportion of 
 taxation that any other piece of property would. 
 
 Q. How about the return of the personal property tax in 
 this county, the money at interest, for instance; is that 
 fairly returned? 
 
 A. I think it is pretty closely watched. There is a gen- 
 eral impression around that the returns are very fair. 
 
 Q. Have you any other thought or suggestion ? 
 
 A. No, not just now. How long will you be in session? 
 
 Q. All day. 
 
 A. I would like to bring the City Solicitor here. He 
 would probably have something that would be of advantage 
 to you. 
 
 Q. We would be glad to hear from the City Solicitor. 
 
 A. The Treasurer is here. He is very familiar with the 
 tax assessment here; and the Controller is here, who is very 
 familiar with the tax levy. If there are any questions 
 you would like to ask them, I know they would be pleased 
 to have you do so, and they will give you very direct 
 answers. 
 
 Q. I would like to ask the Treasurer about the collec- 
 tion of taxes. He sends out blanks from the Auditor Gen- 
 eral here? 
 By the Treasurer : 
 
 A. They come direct from Harrisburg. 
 
 Q. You don't send them out? 
 
 A. You mean who gets the list ? 
 
 Q. Yes. 
 
 A. They keep a record, I think, when the corporation 
 takes out a charter. 
 
871 
 
 Q. I mean the blanks for the return of money at inter- 
 est, for interest. 
 
 A. I thought you meant corporations. 
 
 By Marvin Griswold: 
 
 Q. Do I understand that this Commission is looking after- 
 revising the whole system of State taxation ? 
 
 By Mr. Brown : 
 
 A. We are here to consider any subject relative to the 
 collection of State revenue. 
 
 Mr. Griswold, Griswold Mfg. Co. : I am interested in 
 manufacturing corporations exempted from taxation on 
 capital stock in Pennsylvania. I think we should collect 
 a tax on loans and deduct that from for instance, we 
 have a bond issue and deducted that from the interest. 
 It seems to me it would be a hardship upon the borrowing 
 concern that has to borrow the money, and it seems 
 to be much more equitable if we didn't have that tax on 
 the loan but could put it on the capital stock. 
 
 Q. In other words, not tax the loan, but exempt the bond 
 and tax the capital stock? 
 
 A. Yes, that would strike every manufacturing corpo- 
 ration equally, and would tend to keep the corporations 
 from inflating their value of capital stock. It would make 
 them give what it is actually worth. The tax would be 
 more apt to bring out the true value. They would not capi- 
 talize good will perhaps as heavy as they have been. The 
 borrowing concern who is borrowing the money makes the 
 bond issue, while the man who loans the money is supposed 
 to pay the indebtedness tax; and corporations can borrow 
 money cheap when they have to pay a four mills tax ; and 
 this they take into consideration when they make a loan. 
 
 Q. How would it do to tax the gross value of all assets 
 of the corporations upon all their indebtedness ? 
 
 A. If you taxed the gross value, that is the gross value 
 
872 
 
 of the corporation, it would include the indebtedness. The 
 net value in some corporations does not amount to anything. 
 You would be taxing a dead wall. If you get away with 
 taxing the gross value of the capital, it would be a good 
 proposition. A small tax on a corporation would bring in 
 a good deal more money than a four-mill tax on loans. We 
 have to make out a detailed report to the Auditor General 
 where we ask for exemption in taxation, and answer a great 
 many questions required in filling out that report. We 
 should simply make affidavit that we are a manufacturing 
 corporation 
 
 Q. That report is to make sure that you should be ex- 
 empted, and the thought of the return is that something 
 might turn up in that report that will prove somebody not 
 exempted ? 
 
 A. I have looked over these blanks. 
 
 Q. It would simplify the returns if we took just the 
 gross assets wouldn't that be easier than the way it is 
 done now? 
 
 A. Include the stock, though. You know what capital 
 stock is. We have had a number of interests say that the 
 easiest way to get away from taxation was to become in- 
 corporated. There is too much given here. An exemp- 
 tion here and an exemption there now, if you take the 
 gross value of the assets of a corporation and levy a small 
 tax on that, then it does away with all this. These assets 
 include the bonded debt, moneys borrowed, moneys at 
 interest, etc. If you tax the gross assets you are taxing 
 everything, for instance, building, machinery, stock in 
 process of manufacture, and one man may estimate it at 
 100 per cent, more than the next man. 
 
 Q. But under the law, the Auditor General has a right 
 to send around his own auditor who may make his own 
 appraisement. The thought is that one man may be a 
 sort of a watchman over the other man's business. As to 
 the advertising of the assessments, if these were all pub- 
 
873 
 
 lished, every man would know what the other man's prop- 
 erty was assessed. 
 
 Mr. Brown: Do you pay a mercantile tax? 
 A. No. 
 
 Mr. Moyer, the chairman: 
 
 I would like to ask the Treasurer a few questions as to 
 the money at interest and the return thereof. How are 
 your assessors selected here ? 
 
 By City Treasurer Pinney : 
 
 A. Elected. 
 
 Q. By the people ? 
 
 A. Yes, sir. 
 
 Q. How many? 
 
 A. Three. 
 
 Q. Do you receive the money collected from the various 
 sources of the county? 
 
 A. No, sir, I am the City Treasurer. 
 
 Q. Do you. collect any State tax at all? 
 
 A. No. 
 
 Q. Aside from the revenue derived from your licensed 
 places? 
 
 A. That is all. 
 
 Q. We should have the County Treasurer here as to 
 moneys at interest. As a man of affairs and holding pub- 
 lic office here, Mr. Treasurer, what is your view regarding 
 the appropriation of money to private institutions where 
 the title of the property is not vested in the Common- 
 wealth? 
 
 A. Well, of course, hospitals and things of that kind, 
 I think, it is right for the State to help these along. People 
 of that kind should be taken care of by the State. 
 
 Q. Your view would be that the liberal policy that has 
 been established by the State be continued ? 
 
 A. Yes, sir. 
 
 Q. And increased if possible ? 
 44 
 
874 
 
 A. Yes. Now, for instance, the Harriot Hospital; they 
 want a building with forty or fifty more rooms, and they 
 haven't enough money to build it. "We took an old lady 
 to that hospital a few days ago and failed to get a bed for 
 her; and we had to put a cot up and wait a few days until 
 we could move her over to a room where somebody went 
 away. I think both hospitals should have more money. 
 
 Q. Why shouldn't the city itself help such institutions! 
 
 A. These hospitals take everybody. If a person is hurt 
 in some other State or city and brought into Erie, they 
 are taken to these hospitals. 
 
 By a Member of the Commission : 
 
 Q. People from Ohio, for instance? 
 
 A. They are from lots of places; and they are as wel- 
 come as any other. We take them from all over the United 
 States. 
 
 By the Chairman: 
 
 Q. And supported by the State 's revenue ? 
 
 A. Yes, sir. 
 
 Q. Do you think it is policy to continue to take care of 
 the sick and injured from all parts of the United States by 
 State appropriations? 
 
 A. Yes, if they come into the town and have no place 
 no home to go to let them go to the hospital. The city 
 should not take care of these cases. 
 
 Q. Mr. Brown, you have the data, in reference to the 
 State of Ohio. Does the State of Ohio appropriate money 
 to private charities? 
 
 By Mr. Brown : 
 
 There is no institution in Ohio supported that is not 
 under State control. There are very few States in the 
 Union that do. You might say that none of them do 
 that is, the majority of them don't. There are thirty-four 
 that make no appropriation, and nearly all the balance of 
 them do it in a modified way. 
 
875 
 
 JUDGE J. B. CESSNA, Erie, Pa. 
 
 Mr. Chairman and Gentlemen of the Commission: 
 
 I have been asked to say a word upon the line of bus- 
 iness spoken of. 
 
 I was born in Pennsylvania, but have lived in the West 
 for twenty-five or thirty years, so you young people are 
 entirely too young to be remembered by me. 
 
 I want to speak in reference to the equalization of 
 taxation ; on that thought and that line. I believe that real 
 estate is taxed too heavily and that there is a discrimina- 
 tion as to the burden on real estate that is not imposed 
 upon such corporations as railroads. I have been paying 
 taxes in Erie for twenty-five years or thirty-five years, and 
 I have a right to speak on that subject. What I want to 
 direct your attention to is (and I believe I am correct in 
 saying) that Pennsylvania real estate pays a tax of twenty- 
 five mills on the dollar, while railroads pay five mills on 
 the dollar. I think that is correct. I have given the mat- 
 ter some thought some years ago. Now, in Philadelphia 
 and Pittsburgh, and, I think, in Harrisburg, there they 
 are taxed on real estate; by the authority of an Act of 
 Assembly passed prior to our Constitution, they are taxed 
 on real estate. They are not taxed on real estate in Erie, 
 Pennsylvania, and there is no good reason to be given 
 why that should be ; they are not burdened too much and 
 it is right and proper that they should pay that tax. If 
 they pay a tax by authority of a special Act of Assembly 
 in Philadelphia, Pittsburgh, and, I think, Harrisburg, on 
 real estate, why shouldn't the real estate in Erie and other 
 parts of the State pay the same kind of a tax? Why don't 
 the railroads pay a tax on real estate in Pennsylvania? 
 Can you find any statute exempting them? No. My 
 recollection of reading the decision of the authorities is 
 that it comes through judicial interpretation. Now, I 
 
876 
 
 don't believe that decision was made in any State in 
 the Union outside of Pennsylvania. This has been handed 
 down and for that reason we give them the distinction 
 of exemption on their property. I think I am right in 
 saying that it is not a statute, but that it comes through 
 judicial interpretation. I think the time has come when 
 this should be changed; that the railroads should pay 
 taxes on their property in an equitable way ; not to make 
 it partisanism, but let them pay the same as you and I 
 pay; because taxation should be equal on all property. 
 It is wrong to tax one man's property and not another's. 
 Other States tax railroads. Out in Nebraska they tax 
 them there. About five years ago they increased the tax, 
 taxing all property at a certain rate. They increased the 
 tax on the Union Pacific Railroad between ninety-eight 
 and one hundred thousand dollars. They are all satisfied 
 and everything works harmoniously. So it is right to 
 tax them. Other States tax them. I am not an enemy 
 of railroads. I am no Populist never adopted that 
 theory; but I do believe that taxation should be equal 
 on all property, corporate or personal; that we would 
 secure better taxation throughout the State; it would be 
 equalized, as it should be. The parties who are making 
 the money and increasing their wealth the corporations 
 that are increasing their wealth are better able to pay 
 taxes than you or I. They get the benefits, as suggested 
 by our Acting Mayor they are protected by the city in 
 the police service, fire department ; but what do they pay 
 to the City of Erie ? Of course, this is all right and proper 
 and we should be commended for it ; but it should not stop 
 there. If their tax is not equal to the burden you and 
 I pay, then it should be made equal by law, if necessary, 
 so as to bring equal taxation to every taxpayer. What 
 would we do without railroads? They are necessary to 
 the State. "We could not live without railroads; they 
 are a blessing to the State, but in certain ways they can 
 be an injury. If they are allowed to escape taxation while 
 
877 
 
 unjust taxes are imposed upon you or me, it is a wrong 
 to the citizens of our State. I would ask Mr. Brown, on 
 the left, if I am correct as to railroads in the State of Penn- 
 sylvania ? 
 
 Mr. Brown: "We tax all except roadbeds and water 
 tanks. 
 
 Judge Cessna, continuing: I think that is a thought 
 that is worthy of investigation. I did not know your 
 Commission would be here until last night. I sincerely 
 hope the investigations of your Commission will result 
 in great benefit along these lines. We have come into a 
 period where we cannot do without these corporations, 
 and if they are properly encouraged, that is all that should 
 be done. They should not be encouraged at the sacrifice 
 of our citizens. 
 
 By Mr. Brown : 
 
 Q. You don't agree with some of the single taxers that 
 land should bear all the taxation? 
 
 A. No, sir ; I do not. 
 
878 
 
 MAJOR BROWN, called : It was not my intention to 
 come here to address this assembly ; but I happened to meet 
 some of my old friends on the train who invited me to 
 come to this hearing to-day. I have made something of 
 a study in the long years gone by of the question of 
 State taxation. I have no criticism to make upon the 
 policy that underlies taxation for State revenue. I be- 
 lieve it is the best that exists in any State in the Union. 
 And just here let me refer to a statement of the gentle- 
 man who has just taken his seat. He says that railroads 
 pay a five-mills tax on their capital stock. They pay 
 a five-mills tax upon the assessed valuation of their 
 capital stock. Take, for instance, the Pennsylvania Rail- 
 road Company that has a capitalization of, I think, about 
 four hundred millions of dollars. That stock may be 
 worth twice its par, and, if so and the markets show 
 that sales of stock have been twice its par then the re- 
 turn to the Auditor General would necessitate the fixing 
 of the valuation of that stock for the purpose of taxa- 
 tion according to its last sale. In other words, it is not 
 five mills on the par, but on the assessed valuation. Then 
 in addition to that, the public utility corporation pays a 
 four-mills tax on its bonded indebtedness. Take, for in- 
 stance, the Philadelphia and Reading Railroad it has 
 forty millions of capital stock and, I think, one hundred 
 and fifty millions, or upwards, on bonds. So, you see, it is 
 paying a good deal more than five mills on its assessed 
 valuation of capital stock. Then, in addition to that, the 
 law requires it to pay eight mills tax on its gross receipts. 
 So, the statement of the gentleman is hardly fair to pub- 
 lic utility corporations. There may be a disparity and 
 discrimination between them, but bear in mind that the 
 farms and houses in the State are assessed according to 
 the enterprise, the honesty and the prejudice, very largely, 
 of the assessor. In no county of the Commonwealth is 
 
879 
 
 real estate assessed within 75 per cent, of its actual value 
 (there may be exceptions), and in some counties of the 
 Commonwealth it is not assessed more than 22 per cent, 
 of its actual value. That is because the laws are not prop- 
 erly executed the law requiring that it should be assessed 
 at its actual valuation or as nearly so as possible. 
 
 Now, as to taxing manufacturing corporations. I hap- 
 pened to be a member of the Legislature in 1885 when the 
 law was passed repealing the tax on manufacturing cor- 
 porations the capital stock of manufacturing corpora- 
 tions. I voted against it. It was passed ostensibly for 
 the purpose of encouraging manufacturing interests in 
 Pennsylvania, which was most laudable ; but I argued 
 that the manufacturing corporation of Pennsylvania was 
 greatly benefited by the tariff, and that it should not 
 escape its share of the burden of public tax. I did not 
 think it should be assessed as high on the capital stock 
 as a public utility corporation, because public utility cor- 
 porations are generally exempted from local taxation, 
 while a manufacturing corporation is not. But when you 
 consider that the hospitals are largely filled as a result 
 of injuries that occur in manufacturing interests of Penn- 
 sylvania, it would seem fair there is some justification, 
 rather in the proposition that a small millage should 
 be put upon the manufacturing corporation of Pennsyl- 
 vania. Probably one mill would be justifiable. 
 
 By Mr. Brown, counsel: 
 
 Q. What was it before? 
 
 A. The millage on the capital stock of corporations was 
 the same as other corporations. The Act of 1885 simply 
 did away with the millage upon the assessed valuation of 
 the capital stock of manufacturing corporations. 
 
 Q. It has been suggested that the manufacturing cor- 
 porations should be exempted because they are producers. 
 Someone has answered that the Standard Oil, as well as a 
 manufacturing corporation, is a producer which is largely 
 
880 
 
 helped by nature, the same as the farmer and other in- 
 terests. Is there anything in that? 
 
 A. Your suggestion is as to whether on account of their 
 being producers and adding to the commerce of the State, 
 that they should have favoritism with reference to the 
 millage ? 
 
 Q. Yes. 
 
 A. I say yes, most decidedly; but even putting a one- 
 mill tax upon them for the purpose of helping to main- 
 tain our charities would still be a discrimination in their 
 favor, because other corporations pay a five-mill tax upon 
 the assessed valuation. 
 
 The gentleman has referred to the fact that in the 
 City of Philadelphia and in the City of Pittsburgh 
 the railroad corporations pay a local tax upon the prop- 
 erty which they own outside of the road-bed. This is a 
 special law; but it must be remembered in considering 
 this question as to the justness of putting more tax upon 
 public utility corporations that they are especially re- 
 served by the Commonwealth of Pennsylvania as a sub- 
 ject of taxation. That seems to have been a fixed policy 
 of the Legislature of this Commonwealth to reserve pub- 
 lic utility corporations all classes of public utility cor- 
 porations. Now, where does your money come from by 
 which your charities are supported? By which your hos- 
 pitals are maintained? By which your roads are built? 
 By which your local taxation is realized, in that the State 
 appropriates at least one-third of the expense of main- 
 taining the public school system of Pennsylvania? It 
 comes out of the public utility corporation almost in its 
 entirety. That should be considered. I don't think it 
 would be fair to increase the millage upon the assessed 
 valuation of the capital stock of these corporations, be- 
 cause it is only a few years ago that it was three mills; 
 then it was increased to four mills and now it stands at 
 five. When you come to consider the other taxes they have 
 to pay the eight mills tax upon the gross receipts, the 
 
881 
 
 four mills tax upon bonds, they are not escaping taxa- 
 tion by any means. 
 
 There is one thing, however, that ought to be considered 
 by you gentlemen who represent the State of Pennsylvania 
 in the halls of the Legislature, and that is the question 
 of taxation of the bonded indebtedness of corporations. 
 The law, as I stated, provides for a four mill tax. But 
 here is a corporation that may have ten millions of dollars 
 of capital stock and ten millions of dollars of bonded 
 indebtedness. If these bonds are owned in the State of 
 New York, which is the great financial center of the 
 country, why, these bonds escape taxation under the 
 Interstate Law. Is there any way, in fairness to other 
 corporations whose bonds are owned in the State -of 
 Pennsylvania and who have to pay a four mills tax upon 
 the value of these bonds, that you can get at in some 
 system, some scheme of legislation, to secure to the State 
 of Pennsylvania some revenue from the bonds of cor- 
 porations that are owned outside of the State of Penn- 
 sylvania ? To me, that is the greatest problem that exists 
 in the taxation question today. 
 
 Q. You would add the bonded indebtedness to the 
 capital stock and consider it all assets? 
 
 A. That would be all right provided the Federal Courts 
 did not say it was beating the devil around the stump. 
 I think the suggestion is a good one whether it would 
 stand the test is another question. 
 
 Another thing. I think the Legislature made a mistake 
 when it passed a law by which the corporations can re- 
 duce their capital stock to the minimum or increase it, or 
 reduce their bonded indebtedness or increase; that is, 
 you can make your bonded indebtedness as much as you 
 please without reference to the capital stock. I think 
 there is a means of the corporation escaping taxation. 
 
 Q. By bonds owned outside of the State? 
 A. Yes. 
 
882 
 
 Q. What is your thought about appropriations of money 
 to institutions not under State control? 
 
 A. I am one of those who believe there is more good 
 derived from a thousand dollars appropriated to private 
 charities than there is to public charities. 
 
 Q. As far as you know, this is the general sentiment 
 among people to whom you have talked? 
 
 A. I think it would be a great mistake to do anything 
 that would impair the usefulness of private charities. In 
 making appropriations to private charities, the State 
 ought to take a mortgage the same as they do on a normal 
 school property, so the State will be protected. The State 
 should be protected and the way to protect it is by 
 taking a mortgage for the money appropriated. 
 
883 
 
 MR. J. J. DESMOND, Erie, Pa., called. 
 
 Mr. Chairman and Gentlemen of the Commission: 
 About the only thing I can say is that I don't believe, 
 as a manufacturer, that there are any manufacturers in 
 the State (if there are it is a very small percentage) who 
 find any fault with the present taxation, or even with a 
 one mill tax; I know we should not. But what they do 
 strongly object to is the Federal tax and having the de- 
 tails of our business made public the system of giving 
 out a statement that gives our competitors practically 
 a complete knowledge of our business operations. So 
 far as the one mill tax is concerned, I think it should be 
 larger. For our part, from our standpoint, the manufac- 
 turer should pay it, and would willingly do so. 
 
 By the Chairman : 
 
 Q. On the capital stock. 
 
 A. So far as the capital stock is concerned, it has been 
 brought out by Mr. Brown that it is very easy to evade 
 that tax, if they make it strictly on the capital stock. 
 Take our own case. Our capital is two hundred thousand 
 dollars ; our surplus and undivided profits are six hundred 
 and twenty-five thousand more ; well, the tax would only 
 be one-third of one mill in that case. 
 
 By Mr. Brown: 
 
 Q. On the value of your assets? 
 
 A. Yes. I believe very strongly in the income tax. 
 That is a thing that would tend to prevent the spread of 
 Socialism. 
 
 Q. Gross or net income. 
 
 A. I mean net income. The man who has an income 
 is the man who can afford and ought to pay his share of 
 protection. The more he has the more protection he gets. 
 
884 
 
 Q. Does that follow. 
 
 A. I say the greater his income the more he has 
 to protect ; and if the Government is simply an institution 
 to protect property, preserve property and law and order, 
 every man can help support it according to his ability to 
 pay. The man who is getting one dollar and fifty cents 
 to two dollars a day is paying perhaps proportionately 
 one hundred times more than the man who has an income 
 of fifty to one hundred thousand dollars a year. I be- 
 lieve it is that inequality that is propagating Socialism. 
 
 Q. How would you work out this problem? What is 
 your thought on public utility corporations? 
 
 A. The income tax idea is that the man getting a big 
 income or a small income should be taxed according to 
 the income in proportion. The Senator from Philadel- 
 phia brought up the question coming up on the train of 
 the impossibility of collecting that or getting a return 
 for it. If there is a penalty put on it, it is just as easy 
 to get that information as it is to prevent burglary. The 
 man who dodges his tax is stealing and dodging his share 
 of Government expense. 
 
 Q. Do you find in your experience that many do evade 
 it, or is the disposition generally to respect the law and 
 make a fair return? 
 
 A. I believe generally it is intended to respect the law 
 among what you might call the little people or little 
 class. After a man gets control of a good deal of money 
 he becomes money mad and will do anything to dodge 
 the expenditure of it, just to pile it up ; he would do any- 
 thing within the law. 
 
 Q. Have you ever given any thought on the subject of 
 inheritance tax, direct inheritances to reach that class 
 of men of which you are speaking now? 
 
 A. I strongly believe in that. I know of the case 
 when we bought the property from the heirs of the man 
 who established our business the inheritance tax was 5 
 per cent. 
 
885 
 
 Q. That is a collateral tax? 
 
 A. Yes the heirs were well able to pay it; they had 
 done nothing to accumulate the money. 
 
 Q. I assume they would be equally as well able to pay 
 the direct inheritance tax? 
 
 A. Yes, just as well. The money in four cases out of 
 five the money that goes to the children goes very rap- 
 idly after they get it. 
 
 Q. What is your thought about roads building of 
 highways ? 
 
 A. I am a crank on roads. 
 
 Q. Do you think they should be built? 
 
 A. Yes. 
 
 Q. Do you think the State should build them? 
 
 A. I think the present law is an excellent one that the 
 State puts a portion of the money up as against the 
 counties or districts that are willing to show their in- 
 terest in it by putting up a portion. I have this to say, 
 that I think the Macadam roads are a failure ; but this is 
 a detail. 
 
 Q. "What about the public schools? It has been ad- 
 vanced that the State of Pennsylvania should contribute 
 to each county the minimum salary for the minimum term 
 of the school teacher. 
 
 A. Nothing should be cut off from the public schools. 
 
 Q. How about charitable institutions? 
 
 A. I think the State should be very liberal with these 
 institutions in the extreme, but should have a string to 
 it so it does not get into the hands of private individuals 
 or cliques. I have a case in mind where there is a great 
 deal of factional feeling and the control of the institution 
 is practically in the hands of one man; but I believe this 
 could be overcome. 
 
 Q. How would it do to make a per capita appropriation, 
 let the State pay to each institution a per diem amount; 
 wouldn't that obviate a great deal of this trouble t 
 
 A. Yes. 
 
886 
 
 Q. We have been told that upwards of ten thousand 
 beds in institutions in Pennsylvania are empty every 
 day. I presume a per diem would obviate a great deal 
 of that. 
 
 A. Yes, it would. 
 
 By the Chairman: 
 
 Q. What would you say to this proposition : That each 
 county take care of its own unfortunate people, the same 
 as it does of its paupers? 
 
 A. It would not be a broad way of looking at it. There 
 are some counties more able to divide the responsibility 
 up. We are dependent one upon the other. The county 
 that may not be able to take care of its own insane and 
 its paupers would have an infinite simally small percentage 
 of the population, and I believe that is why the State 
 divides these things up and makes them equitable. 
 
 In speaking, I digress a great deal from the original 
 point. One strong point I wanted to make was the ob- 
 jection to the publicity, which is the odious part of the 
 Federal tax. 
 
 Q. I don't think Pennsylvania has been offensive in 
 that way. 
 
 A. I would say so with the Auditor General. The 
 blanks they send out have questions that we don't want 
 to answer. 
 
 Q. Our intention is to take that up with the Auditor 
 General and see if that cannot be simplified. Let me ask 
 you while you are on your feet about the time of return? 
 
 A. It would be much more convenient if we made the 
 return the first of February instead of the first of De- 
 cember. Now about taxation. I believe there are a num- 
 ber of concerns like us. We have one tannery in Corry 
 and one in Spring Lake; we have it because it makes a 
 different grade of leather. It is under another name. 
 We own the stock. I believe so long as it is a manufac- 
 turing concern it should be taxed on these shares of stock 
 
887 
 
 as we hold them as part of our assets and ought to be 
 taxed the same as we are taxed. 
 
 By Mr. Brown: 
 
 Q. As one of your assets ? 
 
 A. Yes; that is all used in manufacture. In our last 
 report, I believe, they put that in as a separate item, not 
 as used in manufacture, and it actually is. 
 
 ADJOURNED until two o'clock P. M. 
 
888 
 
 The Commission reconvened at Erie, April 15, 1910. 2 
 P. M., the same members present, and Mr. Moyer, as 
 previously, presiding. 
 
 Mr. Moyer: As I understand it, we have with us this 
 afternoon the Clerk of the County Commissioners, who has 
 kindly consented to come here and give us some informa- 
 tion which we are seeking. We are especially concerned 
 with reference to the returns that are being made by 
 people who have money at interest. Mr. Robinson, we will 
 be very glad to hear from you. Step forward, please. 
 
 MR. J. A. ROBINSON, Clerk o<- the County Commis- 
 sioners. 
 
 Q. You mean the money at interest held by taxpayers to 
 be returned for State purposes ? 
 Mr. Moyer: Yes. 
 
 By Mr. Brown : 
 
 Q. Mr. Robinson, what is done with the blanks which 
 are furnished by the Auditor General for the purpose 
 of securing returns of property taxable for State pur- 
 poses? 
 
 A. They are sent out with the assessors. 
 
 Q. How do you make up your list? 
 
 A. We give them mortgage books with the mortgages and 
 judgments in there for the two offices, and also furnish 
 them with a blank and book with the rest of their para- 
 phernalia. 
 
 Q. Do you furnish them with a list so as to get at those 
 taxable ? 
 
 A. We instruct them to give a paper to every taxable. 
 
 Q. What do you mean by "every taxable"? Everyone 
 on the assessors* lists? 
 
 A. Yes. 
 
889 
 
 Q. What do you do to check these up? 
 
 A. In what way? 
 
 Q. Do you demand a return of these blanks, or a reason 
 for not receiving any return? 
 
 A. Yes, sir. 
 
 Q. Suppose they don't return them? 
 
 A. That is left a great deal with the assessor. When he 
 knows a man has not got anything he don't get his paper. 
 
 Q. Suppose a man has something and the assessors do 
 not make a return, is there any effort on the part of the 
 County Commissioners to follow that up? 
 
 A. Yes, sir. 
 
 Q. Do you scrutinize the return ? 
 
 A. Yes. 
 
 Q. Do you think all taxables are gotten ? 
 
 A. No. 
 
 Q. Where is the leak or trouble? 
 
 A. I think it is in the assessors' carelessness. 
 
 Q. Attributable to what the character of the assessor ? 
 
 A. Well, yes. The first thing, I think the assessors 
 should be appointed by the County Commissioners. They 
 elect people that are not capable, poor penmen. When a 
 man gets past doing anything else they elect him assessor. 
 I think it should be our best men. 
 
 Q. How about the pay do you think it is sufficient? 
 What do your assessors get? 
 
 A. Two dollars and a half per day. 
 
 Q. Do you think that is sufficient to obtain the services 
 of competent men? 
 
 A. No. That is too much for a good many of our as- 
 sessors, though. 
 
 Q. What return is there made of moneys at interest by 
 certificate of deposit in your banks and trust companies? 
 
 A. Well, some return and some don't. We cannot tell; 
 we have no way of knowing. 
 
890 
 
 Q. Can you tell us about what amount in Erie the last 
 year? 
 
 A. On certificates of deposit? 
 
 Q. Yes. 
 
 A. No; I cannot tell you. 
 
 Q. What leads you to believe that there is money at in- 
 terest not returned by the assessors? 
 
 A. Well, it is only a supposition. 
 
 Q. Have you ever made any attempt to tax anyone that 
 did not make a return make an estimated return? 
 
 A. We have had the assessors estimate them. 
 
 Q. With what result? 
 
 A. We got our money. 
 
 Q. Did you ever raise the estimate the next year? 
 
 A. Yes. It is this way. We estimate them at a certain 
 amount, when we start, and then we add 50 per cent. The 
 next year we will take that amount, with the 50 per cent, 
 added, and estimate again. 
 
 Q. Then you get near to what the real sum is? 
 
 A. Yes. 
 
 Q. To what extent is that done ? 
 
 A. Maybe two or three in a district. 
 
 Q. Have you any suggestions to make as to how that 
 difficulty could be avoided? 
 
 A. No; I don't know. 
 
 Q. Very few prosecutions, I guess, for failure to make 
 proper returns. Have you any in this county. 
 
 A. No, I think not. 
 
 Q. Have you any idea as to moneys at interest in banks 
 and trust companies 1 which is evidenced by certificates of 
 deposit not returned ? 
 
 A. No. 
 
 Q. How would it do to have returns made by the treas- 
 urers of trust companies and banks? Do you think that 
 would obviate the trouble ? 
 
 A. Possibly. 
 
891 
 
 Q. Is there any objection to that so far as you can see ? 
 A. No. 
 
 By Mr. Moyer : 
 
 Q. Making inquiry as to the tenure of office : Do you be- 
 lieve the assessors, if under the elective system, should be 
 elected to succeed themselves? 
 
 A. Well, it would take an assessor about three years to 
 learn all the ropes. 
 
 Q. That is what I am driving at. Isn't it a fact that 
 for instance, an influential man might live in a district 
 or township, and might have sufficient influence with the 
 assessor to have him defeated if he didn't make what he 
 thought was a proper return of his property it might 
 have an effect upon the assessor's judgment? 
 
 A. Yes; that is possible. I suppose the next man would 
 be just as liable, perhaps. 
 
 Q. That would be a question for the electors of the dis- 
 trict to determine. 
 
 A. Yes. 
 
 By Mr. Woodward : 
 
 Q. For which reason you think they should be appointed 
 rather than elected? 
 
 A. Yes, sir. Then the Commissioners have some au- 
 thority. We elect our collectors in townships; that, I 
 think, is better than appointing. In cities of the third 
 class, the collectors are appointed; but the assessors should 
 be appointed by the Commissioners. I think it would be 
 better to appoint the assessors and elect the collectors. 
 
 By Mr. Hunter: 
 
 Q. Why not appoint both? 
 
 A. It would be all right. We have a good set of col- 
 lectors in the city. 
 Q. You appoint them ? 
 A. Yes. 
 
892 
 
 Q. Do you find they work all right? 
 A. Yes. 
 
 Q. They work on a commission? 
 
 A. Yes. It isn't every man that makes a good collector. 
 Q. That is more reason why they should be appointed ? 
 A. Well, yes. You ought to do the same way with the 
 assessors? 
 
 By Mr. Brown: 
 
 Q. Have the County Commissioners ever made any ef- 
 fort to ascertain from the trust companies and banks as 
 to the probable amount of money at interest by certifi- 
 cates of deposit? 
 
 A. I think not. 
 
 PRESIDENT DAVENPORT, of the Manufacturers' As- 
 sociation, called. 
 
 Mr. Chairman and Gentlemen of the Commission: I 
 have just been elected president of the Manufacturers' 
 Association about fifteen minutes ago and I have hardly 
 entered upon my duties. I think it entirely proper to 
 call upon our secretary, Mr. Himrod, to be our spokes- 
 man in the issue. Others here may offer what they wish, 
 in addition to what Mr. Himrod has to offer. Mr. Himrod 
 will give some points here which we wish to cover. 
 
 SECRETARY RAY HIMROD, of the Manufacturers' 
 Association, called. 
 
 Mr. Chairman and Gentlemen of the Commission: 
 Pennsylvania is now a good manufacturing State. Now, 
 everything that is done to increase the expenses of the 
 manufacturers will tend to decrease their enlargement, and 
 will keep others from coming into the State. Their ad- 
 vantage to the State is that they bring more money from 
 outside into Pennsylvania than any other business, and 
 
893 
 
 they distribute their payrolls among a large number of 
 people. 
 
 By Mr. Brown: 
 
 Q. You don't think the manufacturer in Pennsylvania 
 would add the tax to the profit and the people would have 
 to pay it anyhow? 
 
 A. No, I do not; because they would drive business to 
 other places. I have known of cases where the fraction 
 of a cent was enough to lose business for us. One sug- 
 gestion was to make a tax on the business of manufac- 
 turers of a fraction of one mill. I think, in this case I 
 had in mind, it was something like -one-half cent, and we 
 lost the business. Competition is very close in a great 
 many lines of manufacture. One very large plant is con- 
 sidering enlarging their plant here. If you increase the 
 cost of manufacture that would be a reason for forcing 
 them away from here. 
 
 By Mr. Hunter : 
 
 Q. That difference in the success or failure to get the 
 business was on the dollar or on the hundred pounds? 
 
 A. On the 100 pounds. 
 
 Q. That would represent a good many hundred dollars. 
 
 A. I don't know. At that time it was on the average 
 rate. 
 
 By Mr. Moyer : 
 
 Q. The point was made this morning by a manufacturer 
 engaged in the tanning business, from Corry Mr. Des- 
 mond, I think it was No, it was Major Brown, who said, 
 in his opinion, because of the fact that the State appropri- 
 ates liberally to these charitable institutions and private 
 hospitals throughout the State, the manufacturers get the 
 benefit of these, inasmuch as these private charities ac- 
 cept injured employees; and in that way the manufac- 
 turers should contribute a share toward maintaining them, 
 so that the State might continue its liberal policy? What 
 do you think about that ? 
 
894 
 
 By President Davenport : 
 
 A. When a corporation is incorporated in this State 
 they pay a tax on their capitalization. As far as the 
 matter of the charitable institutions receiving State aid 
 is concerned, I think, upon investigation, you will find 
 that the corporations of this State contribute more as in- 
 dividuals as companies to the support of these insti- 
 tutions in the various parts of the Commonwealth than 
 the State does itself. I don't see any argument, so far 
 as that goes. It is a great good to the public to have these 
 corporations. They cannot exist without the corpora- 
 tions; and anything we can do to invite corporations to 
 come into the State seems of material benefit to the State 
 in every way, instead of taking any measures that would 
 prevent them from establishing themselves within our 
 Commonwealth. It seems to me we ought to go very slow- 
 ly in regard to further taxation, especially in view of the 
 fact that the national corporation law has just gone into 
 effect. 
 
 Mr. Himrod: I would like to read a letter I have re- 
 ceived from Mr. P. D. Wright, President of the Reed Man- 
 ufacturing Company, of Erie, which is addressed to the 
 Manufacturers' Association, touching upon the matter of 
 corporation tax in the matter of making reports. 
 (Reads:) 
 
 "The writer would like to see the laws with respect 
 to corporations so altered that the yearly report which 
 they require gives only such information as is neces- 
 sary to determine the amount of the tax due. The 
 corporation and loan reports, as required now, neces- 
 sitate giving information which is not necessary to 
 determine the amount of tax due, and we would like 
 to see all this unnecessary information, which is re- 
 quired by the present form, eliminated. 
 
 Yours very truly, 
 (Signed) P. D. WRIGHT, 
 
 President. 
 February 14, 1910. 
 
895 
 
 MR. EDWARD C. MOORE, Treasurer, Erie City Iron 
 Works, called. 
 
 Mr. Chairman and Gentlemen of the Commission: I 
 would like a little information, if you can give it to me. 
 I just made a note here that was brought up just before 
 we came in. Has this Commission any data as to the av- 
 erage age of these corporations incorporated under the 
 Act of '73? 
 
 Mr. Brown : We have not. 
 
 Mr. Moore: You take these corporations that have been 
 incorporated under the Act of '73 to date. A number 
 of the old ones have been increasing their capital. I was 
 trying to arrive at an average of the original charters 
 and increases. I suppose it would be safe to say it is not 
 over ten years. If you figure on that basis, one-third of 
 1 per cent, over a business of ten years, it would probably 
 be a pretty fair item. 
 
 By Mr. Brown : 
 
 Q. Three mills on the capital stock? 
 
 A. Yes. 
 
 Q. You tax manufacturing corporation stock three mills ? 
 
 A. I am just trying to figure how much time that would 
 cover. Someone estimated it was ten years. My idea was 
 to see how heavily we are taxed. There is no way to tell 
 unless you could strike an average, how much we are 
 paying per annum toward the support of the State.. 
 
 Q. The only way you are paying toward the support of 
 the State is you are paying the interest on your loans 
 and not paying any tax on capital stock. You pay the tax 
 on your loans and your local taxation. 
 
 A. I understand that, but I mean you are paying, orig- 
 inally, one-third of 1 per cent. 
 
896 
 
 Q. You are talking about a bonus? 
 
 A. Yes; I am trying to divide it up into annual tax. 
 There is another matter. You haven't given us much time. 
 It was only yesterday noon that we heard of this meeting 
 in Erie. We would have had time had we reported at 
 the Philadelphia meeting. 
 
 Q. Did you folks get letters some time ago from us? 
 
 A. I had one sometime ago saying you would hold a 
 meeting in Philadelphia. 
 
 Now about the foreign corporation law. You gentle- 
 men are posted on that. How does ours compare with 
 other States? 
 
 By Mr. Brown: 
 
 Practically the same as other States have. Some make 
 them make a better show-down than we do here. 
 
 Mr. Moore: 
 
 I have a letter here in which I have some suggestions 
 that I wanted to bring out. I have often wondered just 
 how our State arrives at this in connection with foreign 
 corporations " doing business" here. We go further than 
 some States in claiming what constitutes 'Doing business' 
 in Pennsylvania, our Courts holding, we believe, that even 
 selling by travelling salesman is 'doing business' in this 
 Commonwealth, but do we get the full benefit of this in 
 our tax returns? 
 
 Q. They must have an office. 
 
 A. If an Ohio corporation, for instance, files papers 
 here and pays in one-third of 1 per cent, on capital actual- 
 ly employed in the State, what provisions have we for a 
 follow-up system of securing larger returns on their saa- 
 ond and future business? Our system may be com- 
 plete, but it does seem as though if we are taxing foreign 
 corporations for capital employed, we might, to work to 
 advantage on other State 's plan of taxing them, on ' ' busi- 
 ness done." The Pennsylvania corporations pay heavily 
 
897 
 
 for any little privilege in our sister States, and a little 
 retaliation might hasten the day when we could all in- 
 corporate under Federal law, pay a substantial tax to 
 Washington and let them divide a portion on some equit- 
 able basis with the several States and keep the balance 
 to apply on an automobile for Speaker Cannon. We all 
 have a lot to learn about Corporation laws, and not being 
 an attorney, I may be away behind in the procession; I 
 may be very narrow and very prejudiced in my views; 
 but, after twenty-five years in the manufacturing business 
 I am prepared to state that I consider that the man, or 
 set of men, who rake up enough funds to start a real live 
 manufacturing corporation, are public benefactors. 
 
 By Mr. Brown: 
 
 We are not as strict as we should be. There is no 
 question but that we should follow the foreign corpora- 
 tion. Have you made any investigation as to the foreign 
 corporations around here? 
 
 A. I know what the other States are. We are paying 
 in Texas, as close to a thousand dollars a year for doing 
 the same as we do in Illinois for three a year. We are 
 paying in New York three to four hundred dollars a year 
 for doing the same as we do in Ohio and pay five to ten 
 dollars. 
 
 Q. You think Pennsylvania should be more strict as to 
 foreign corporations? 
 
 A. Yes, sir. I have no doubt you could get an enor- 
 mous amount out of that. People are coming in here and 
 doing a million dollars worth of business, and because 
 you can 't say ' * Mr. Man, you have some property here, ' ' 
 they escape taxation. Now Texas, of course, we wouldn't 
 want to follow. If a director in a Pennsylvania corpor- 
 ation looks out of the window in a Pullman running 
 through Texas, the State officials immediately wire for a 
 sworn statement of his company 's capital and surplus and 
 soak them a tax all the way to one-fifth of 1 per cent. 
 45 
 
898 
 
 They are too radical. We all feel the same about Texas 
 as Sherman, and we all know what Sherman said about 
 Texas. He said if he owned Hell and Texas, he would 
 rent Texas and live in Hell; and Texas has been trying 
 to get even with us ever since. They say, ' ' if you cannot 
 live in Texas, you have to pay your taxes just the same," 
 so they let us live up here in "Hell" and tax us just the 
 same, even though we cann it live in Texas. 
 
 Q. Do you think it is wise for Pennsylvania to follow 
 the same policy? 
 
 A. No, but we can learn from Texas. They have a 
 tax that runs from one-seventieth to one-fifth of 1 per 
 cent, on capital and surplus. New York arrives at the 
 amount of capital invested and business done in their 
 State, and putting this against the total investment and 
 business done elsewhere, calls this the pro rata share of 
 foreign corporations stock on which they may be entitled 
 to a tax. Taking the corporation's net worth, they then 
 assess you 1J mills on the dollar of such part as the above 
 plan shows to be taxable. Both New York and Texas, 
 taxes are annual, and based on sworn statements fur- 
 nished March 1st of each year. 
 
 I am thoroughly convinced that this same plan would 
 net a big income to Pennsylvania. If we are still short 
 and still have that "itchy" feeling for the corporation 
 scalp, we should then investigate the proposition of taxing 
 surplus of our home corporations. One concern has 
 1,000,000 capital and 1,000,000 surplus ; it derives all the 
 benefits of our corporation laws and pays to the State 
 $3333.34 for its charter. Another corporation capitalizes 
 its surplus and pays the State just double this amount. 
 I believe we could license the surplus at one-third of 1 per 
 cent, and then if the capital is ever increased, see that the 
 corporation is not charged a second time with this portion 
 of the tax. Are you familiar with New York affairs 
 along this line? 
 
899 
 
 Q. They get quite a good deal out of Pennsylvania cor- 
 porations. There is no doubt there will have to be a reg- 
 ulation of the subject of foreign corporations. 
 
 By Mr. Hunter: 
 
 About that surplus, it might be found in manufacturing 
 concerns in certain lines, and you might fail to find it in 
 similar concerns in identically the same lines but not as 
 efficient management as the others? 
 
 A. The State is giving them the same advantages to 
 pay the lower tax. You have the records. You will find 
 a whole lot of concerns with as much surplus as they have 
 capital. If you have a right to demand something of 
 them on that capital you certainly have a right to reach 
 that surplus. I am speaking now of the surplus in- 
 vested I mean money right in the business money in- 
 vested right in the business. Take my own concern, for 
 instance ; we have a two million capital and a half million 
 surplus. If I thought you were going to tax that surplus, 
 I would go back to the office and make a dividend, maybe. 
 At the same time, if we should ever increase our capital 
 to three millions, you would get a whack at that surplus. 
 Why not get it now? 
 
 Q. You don't think there would be any attempt to 
 evade the surplus, do you? 
 
 A. No, our books would show that we were bankrupt 
 if we did. In order to carry on business, we have to have 
 a surplus. If we would wipe out the surplus the state- 
 ment would look like thirty cents. I think the manufac- 
 turing corporations are public benefactors. They furnish 
 a market for the farmer and furnish a market for labor, 
 and are not getting the credit that is due them. I think 
 that when a few men rake up enough money to start a 
 manufacturing concern they are benefitting the whole 
 community. 
 By Mr. Brown: 
 
 Q. How do you differentiate between a manufacturer 
 
900 
 
 employing a thousand men and a department store across 
 the street employing a thousand men. What difference 
 is there? 
 
 A. I don't know how you mean. They pay a mercan- 
 tile tax which is probably as heavy. 
 
 Q. They both pay the mercantile tax. "What is the 
 difference between a department store that is taxed, and 
 a manufacturer across the street who does not pay a tax 
 on the capital stock? 
 
 A. The department store is doing a local business and 
 competing only with the department store across the 
 street, but the manufacturer is competing with manufac- 
 turers in other States, and if you soak him too hard he 
 has to get this back out of his customers. You have to 
 treat the manufacturers different from the stores, the 
 competition is so much greater. But I think you should 
 investigate that corporation foreign corporation. 
 
 Q. We are investigating it in every State. 
 
 A. I have looked over the Pennsylvania laws at dif- 
 ferent times. Other States just laugh at us. If we step 
 into New York and take a fifty thousand dollar contract 
 we have got to pay something for doing that business. 
 They stick you on that ; they stick you on bank accounts. 
 They do everything in New York to arrive at the extent 
 of your business inside that State line. If a concern's 
 agent happens to be in New York, they come back at 
 you 
 
 Q. You do not think the adoption of such a policy 
 would tend to keep out corporations which may be bene- 
 ficial? 
 
 A. No, I think Pennsylvania is such a market that these 
 fellows have got to come here to sell, and they wonder 
 why they are not charged a little for that privilege. Take 
 a building and construction company that gets a five hun- 
 dred thousand dollar contract in Pennsylvania. What 
 is it going to cost them ? They are going to make returns 
 
901 
 
 and say they haven't any investment in Pennsylvania, 
 and you won't get a cent out of that foreign construction 
 company. If a Pennsylvania construction company goes 
 over to New York, they make that company pay a tax 
 on their contract. 
 
 Q. "What, in your opinion, is the fairest State in the 
 treatment of foreign corporations? 
 
 A. I haven't had time to look into that. 
 
 Q. I mean from your experience? 
 
 A. I couldn't answer that now. I have been up against 
 it in a dozen different States and there are some of them 
 that don't get enough. I might say that Illinois charges 
 you three dollars for filing papers and Ohio charges ten 
 dollars? 
 
 Q. Are you deterred from going into New York to do 
 business because of the method of taxation? 
 
 A. No; we haven't thought that thing out. The busi- 
 ness has increased there and the question is up as to 
 whether or not it pays us. 
 
 Q. It isn't a prohibitive tax. 
 
 A. No; other folks have to pay the same tax. 
 
 Q. From outside the State? 
 
 A. Yes. 
 
 Q. Are you able to compete with people in New York 
 paying this tax? 
 A. Yes. 
 
 Q. You don't think if Pennsylvania would adopt such 
 a system that our people would lose the benefit of com- 
 petition she would get? 
 
 A. I think it should be followed up very closely; and 
 even if we got the smallest tax it would be a big thing 
 for the State when you come to consider the amount of 
 business done here by outside corporations. 
 
 And then, the last point I made about the surplus. I 
 think we are paying enough, but if we are not, it seems 
 that is the fairest way. 
 
902 
 
 Q. Get after the companies able to have a surplus? 
 A. Yes. If I am doing business here, there is no rea- 
 son why I should pay twice as much as you in the State. 
 
 Q. If the State wanted to collect sufficient revenue to 
 meet her ordinary needs and make appropriations to the 
 philanthropic institutions, have you any suggestions to 
 make as to where she should get it? 
 
 A. Well I have given you the foreign corporations. 
 They would amount to an enormous sum. 
 
 Q. It wouldn't be injurious to our people here in the 
 matter of competition? 
 A. I don't believe so. 
 
 Q. I wish you would write us as to your personal ex- 
 perience along the lines you have indicated in the various 
 States, etc. 
 
 A. I shall be glad to. 
 
 Q. Of course, what you write will be considered confi- 
 dential. 
 
 By Mr. Moyer: 
 
 Q. If the State should adopt a policy such as you sug- 
 gest, of following up the foreign corporations, do you see 
 any reason why the foreign corporations should not be 
 permitted to hold real estate in Pennsylvania? 
 
 A. No, I don't know why. There is no reason why they 
 should not be allowed to hold real estate. It is something 
 you can get at. If they hold real estate you can say, 
 "You certainly have got something here." 
 
 Q. You think it would be well to encourage them to 
 do it, so we could get at it ? 
 
 A. Yes. 
 
 Mr. Van Gleet: 
 
 "We had an experience where three-twentieths of one 
 a cent per pound spoiled the business for us on a whole 
 batch of 100 tons. That three-twentieths of one cent per 
 
903 
 
 pound was the entire profit on the whole batch. The 
 point I want to bring out is that a small tax might tend 
 to drive the manufacturing corporations out of the State. 
 I believe it would drive business out of the State. 
 
 By Mr. Brown : 
 
 Some say in Philadelphia that the additional taxation 
 would drive manufacturers out of Pennsylvania, while 
 others seem to think that this is of small importance that 
 the natural advantages, closeness of raw material, market, 
 and one hundred and one other elements are a good deal 
 more considerable than that of taxation. 
 
 By Mr. Brown: 
 
 Mr. Himrod, what is your thought as to the time of 
 return ? 
 
 A. At present it is the first Monday of November. The 
 new United States law is January 1. It would simplify 
 matters for all manufacturers if the time could be made 
 the same as the United States law. It would give more 
 figures and less estimates. 
 
 By Mr. Van Gleet : 
 
 May I take issue with the gentleman? We could not 
 make honest returns on January 1. We don't have every- 
 thing ready. There are a large number of manufacturers 
 who could not make an honest return on January 1, ex- 
 cept very wealthy concerns. 
 
904 
 
 J. C. THOMAS, County Solicitor, Erie, Pa., called. 
 
 Mr. Chairman and Gentlemen of the Commission : As I 
 understand it, this Commission is here to inquire into 
 taxation in general. 
 
 By Mr. Brown: 
 For the State of Pennsylvania. 
 
 Mr. Thomas : 
 
 Oftentimes our work has suggested the thought to me 
 that it is very foolish that we have to cart all the money 
 collected in Erie county for purposes of taxation down 
 to Harrisburg and then cart back three-fourths of it to 
 Erie county. It comes at a time when the County Treasury 
 is low. We go down there with four-quarters and leave 
 one-quarter there and bring back three-quarters. 
 
 Q. You mean simply return one-quarter that the Com- 
 monwealth is entitled to? 
 
 A. Yes. Now, as to the taxation, I noticed the board 
 here asked Mr. Robinson if the County Commissioners 
 performed their duty in following up the assessors to 
 see if they made returns. I would like to ask the Board 
 if the Auditor General's office carries out its duties in 
 collecting the tax on corporations in Pennsylvania. In 
 other words, I would say to this Board that in the City 
 of Erie there is a corporation whose returns, according 
 to the affidavit on file in the Auditor General's office, is 
 less than four thousand dollars. As a matter of fact that 
 corporation owns real estate at least six hundred thou- 
 sand dollars worth ; and yet the Auditor General has not 
 collected the tax. 
 
 Q. Has anybody been informed of that? 
 
 A. The Auditor General has been informed. Now as 
 to the Commissioners carrying out their duties: It is a 
 fact, I believe, that there are many men in Erie county 
 
905 
 
 that are sending their money out of this State to other 
 States and are not paying taxes on it, and I believe they 
 are liable for the taxation. I don't think the assessors 
 get him. That state of affairs should be remedied. 
 
 Q. What is your thought about it? 
 
 A. I never thought about it. I know it is done right 
 along. 
 
 Q. Don't they make any return at all? 
 
 A. Well, there are cases 
 
 Q. Why can't the assessors take those men and make 
 returns for them? You say there are a large number. 
 They could estimate them and then add 50 per cent. How 
 is he going to get away from that? The assessors has 
 a right under the law to guess at it. The law compels 
 him to make a return for the man if the man does not 
 make a return himself. 
 
 A. The trouble is to get them to do it. 
 
 Q. There is law enough to do it. If he makes a return 
 and you put the penalty on, the man has to come to the 
 front, don't he. Then, if he comes to the front you have 
 a chance to examine him under oath. 
 
 A. That is probably true. Our assessors are elected 
 and they cater to the wishes of the people and politics 
 figure in it. 
 
 Q. The law should be made a little more drastic in 
 some way to compel them to do it. 
 
 A. Yes. As a matter of fact the assessors should be ap- 
 pointed by the County Commissioners and the collectors 
 also should be appointed. It seems the County Commis- 
 sioners would be the proper board to do it. If they didn't 
 return properly then, the County Commissioners could call 
 the assessor up and say, "you are not performing your 
 duty; if you don't we will have you before the Court 
 for non-performance of duty." The way it is now, they 
 are elected by the people and they owe nothing to the 
 County Commissioners. They say, "I am elected by the 
 people of Springfield Township." 
 
906 
 
 Q. What does the assessor get for doing the work? 
 
 A. He gets a percentage of the taxes. 
 
 Q. Then he has to get his overtime from somebody? 
 
 A. The County Commissioners. 
 
 Q. Suppose the County Commissioners would say we 
 will not pay you unless you have done the work as the 
 law says you should do it. Don't you think that would 
 make them hump themselves a little? 
 
 A. He would get his fee if he had served the time. 
 
 Q. Not if he had not performed his duties faithfully? 
 
 A. He might be discharged from office, but he would 
 have to be paid for twenty days at two dollars a day, 
 and I am inclined to think he could recover this twenty 
 days' fee, because he put in twenty days' actual service. 
 
 Q. Wouldn't the discharge have its effect on some other 
 assessor? 
 
 A. That is true; but we cannot reach them now. 
 
 By Mr. Hunter : 
 
 Q. You cannot discharge them now? 
 
 A. Not unless we could show non-performance of duty. 
 
 Q. Isn't it a case of mere laxity of duty? 
 
 A. I do not think you can enforce the system as long as 
 they are elected. I don't believe you could get the service 
 under the elective system that you could if they were ap- 
 pointed by the County Commissioner. 
 
 City Treasurer Pinney : The Commissioners could say, 
 "I will get you appointed for a hundred dollars; that's 
 another thing. 
 
 By Mr. Brown: 
 
 Q. Some state the judges should appoint them? 
 
 Mr. Moyer: The judges pass upon liquor license ap- 
 plications, which are not directly within their other func- 
 tions, and it seems a safe place to lodge that power. 
 Others suggest that the County Commissioners should have 
 the power to appoint them. The Poor Assessor gets too 
 
907 
 
 much money for his work and the good assessor does not 
 get enough. The suggestion has been thrown at several 
 meetings that five dollars a day would be a fair compensa- 
 tion for a first-class man. Do they work more than twenty 
 days? 
 A. No, Mr. Robinson can give you the data. 
 
 By Mr. Brown : 
 
 Q. What do any of them do when not working? 
 A. I don't know; not much, I guess. 
 
 By Mr. Hunter : 
 
 Q. Wouldn't it be much better, then, to employ fewer 
 men and give them permanent employment ? 
 
 A. Well, that would probably be all right in cities. 
 
 Q. Why wouldn't it be better in counties, too? 
 
 By Mr. Brown: 
 
 Q. Wouldn't it pay the county to pay a man by the 
 year to do the work properly? 
 
 A. I think it would. You take a man that is made 
 assessor. He can give up a position that he may have 
 and then go back again to it when he gives up the job of 
 assessor which has taken maybe a hundred days. The city 
 assessors, it takes them the whole year; they get around, 
 get their reports in and then it is time to run for the 
 next year. 
 
 Q. How does the city assessor compare with the county 
 assessor's work ? 
 
 A. The county assessor works for thirty days ; then they 
 make their report. They don't get very good pay. I 
 suppose they are farmers who don't do very much during 
 the winter, in December and January. 
 
 Q. Someone advocated in Philadelphia that the State 
 collect all these taxes from all the counties and distribute 
 them around among the counties afterward. 
 
 A. There are a great many people in Erie that would 
 like to come into the City Treasurer's office and pay 
 
908 
 
 the county, school and State tax at one time, and then 
 have the County Treasurer send a check to the County 
 Commissioners for the amount of the county tax, the 
 School Commissioners for the school tax, etc. 
 
 Q. That is as a convenience for the taxpayer ? 
 
 A. Yes. 
 
 Mr. Moyer : The amount of money that it would take 
 for a larger salary, that is, for the assessment, would be 
 more expensive under the system suggested, for instance, 
 if they were paid a fixed salary by the year; and yet, it 
 is a fact also, that that would be more than made up 
 by the return because of more faithful service. Don't you 
 think so ? 
 
 A. Yes, it might be. They don't pay enough so a man 
 can give his whole time to it for that work, they ought 
 to pay a man so he could live. Take in the City Treasurer 's 
 office. The City Treasurer has to pay 3 per cent, out 
 of his own pocket for collecting delinquent taxes. I don't 
 know why it should not be right for the city to pay 
 that. He has to put out about one hundred dollars to 
 collect delinquent taxes. 
 
909 
 
 Acting-Mayor Cochran : When the Treasurer, Controller 
 and myself came up we were under a misapprehension 
 and we came over with facts and figures; more figures 
 than anything else. I spoke of the assessment of the 
 property of public utility corporations and the levying 
 of taxes on that property as discussed at a meeting of the 
 third-class cities along in 1909. I went back to the office 
 and found I had a report of that session and I am going 
 to give you this if you care to have it. 
 
 Mr. Brown: We have a copy, thank you. 
 
 Mr. Barber : You have gone over the tax question thor- 
 oughly. Now, as to what Mr. Pinney says about the col- 
 lecting of the State, school and county tax at one time. 
 It is not so many years ago when the State tried to collect 
 the school tax. That was taken out of the hands of the col- 
 lectors, and I want to call your attention to the fact that 
 when the tax was taken out of the hands of collectors and 
 they wanted people to come to the School Board office to 
 pay the tax, they were shy about ten thousand dollars ; and 
 since they have put it in the hands of collectors to collect 
 it from year to year, the delinquent taxes has been very 
 small. If they all had to come to City Hall to pay the 
 tax I think you would be out some of the tax. These 
 collectors go to a house sometimes twelve or fiteeen times 
 before they get the money. If they didn't go, they 
 wouldn't get their money. They have an occupation 
 tax, and if they don't pay the occupation tax, they can 
 arrest them, and somebody has to pay their board while 
 they are in there. They don't do that very often, because 
 it would not pay to do that. I don't think you could 
 improve the Erie system by making any change. I think 
 it is good the way it is. 
 
 Mr. Brown: I am satisfied with Erie so far as I have 
 seen of it. An interesting fact about this matter is that 
 
910 
 
 a great many people have the idea that the powers of 
 this Commission are inquisitorial and they are afraid of 
 it. The Commissioners who collect the tax are always will- 
 ing to be heard, as they like to complain about how hard 
 it is to get the money from taxation; so we never have 
 any trouble in getting the commissioners and solicitors 
 and county treasurers and city treasurers to come before 
 us; but we have great trouble in getting the people here 
 who pay the taxes, because they have to pay it. 
 
 We are very thankful to you gentlemen for your kind- 
 ness in coming here. We have had a very good meeting. 
 
 This Commission is not going to do anything rash. We 
 are here to listen to advice and make our report to the 
 Governor the first of July, this year. 
 
 Adjourned. 
 
911 
 
 Public meeting of the Commission held in the Lacka- 
 wanna County Court House, Scranton, Penna., April 16, 
 1910, being called to order by the Chairman at 10 A. M. 
 
 Present: Gabriel H. Moyer, Vice-chairman and Secre- 
 tary, presiding; William H. Kayser, James F. Woodward, 
 David Hunter, of the Committee; Francis Shunk Brown, 
 Esq., Counsel. 
 
 Senator Edw. F. Blewitt sat with the Commission. 
 
 By the Chairman : 
 
 Gentlemen, this Commission was created by the Legis- 
 lature in 1909. The purposes for which it was created 
 have been clearly set forth in a circular letter, which I pre- 
 sume the most of you have received and with which you are 
 familiar. 
 
 I may say here that it is not the business of this Com- 
 mission to pry into the private affairs of any corporation. 
 We are simply here seeking testimony and to receive such 
 suggestions and recommendations as we can gather from 
 the views of the citizens of the Commonwealth, and to listen 
 to such views as are expressed by the gentlemen who appear 
 before us. It is our duty to make a report to the Governor 
 of the Commonwealth during July of the present year, and 
 we shall make such recommendations as we may see fit and 
 as will be for the betterment of the people of the Common- 
 wealth. 
 
 I understand Mr. Mark K. Edgar is present representing 
 the Board of Trade, and desires to make a statement. 
 
 By Mr. Mark Edgar : 
 
 Gentlemen of the Committee of the Legislature: The 
 Scranton Board of Trade have received two or three differ- 
 ent communications relative to the formation and the pur- 
 poses of this Commission of the Legislature, and have been 
 
912 
 
 very much interested in the program of work outlined in 
 that connection. 
 
 The matter has been referred to the Committee on Legis- 
 lature and Taxes of the Scranton Board of Trade, and they 
 have already had two meetings for the purpose of going 
 over these matters and laws of particular interest to this 
 community for the purpose of making recommendations to 
 this Committee. But, owing to the short notice of this 
 Committee received as late as half past four yesterday 
 afternoon, we were taken unawares in the matter, and are 
 not able to make any recommendations here this morning. 
 The Chairman of the Committee is in New York City at 
 the present time, and it is doubtful, even if he were l^ere, 
 whether or not he would be in a position to make any rec- 
 ommendations here this morning. 
 
 However, it is the purpose of the Scranton Board of 
 Trade to submit certain recommendations to this Commit- 
 tee, which they will have to do later on. 
 
 I thank you, Mr. Chairman, for the privilege of making 
 these remarks this morning. 
 
 The Chairman: It has been suggested that any gentle- 
 man in the audience desiring to be heard will please send 
 his card up, as we have no means of becoming acquainted 
 with you. 
 
 MR. S. S. JONES, of Carbondale, Pa. 
 
 Mr. Chairman and Gentlemen of the Committee: I 
 might say, first, that we are glad you took the pains to come 
 into this locality and give us an opportunity to be heard. 
 
 I am here representing one of the first hospitals in this 
 part of Pennsylvania. At no time have we been able to 
 pump out of the State Treasury as much money as we have 
 actually needed. We have made one or two trips to Har- 
 risburg to meet the Committee on Public Charities to en- 
 deavor to make them understand just the difficulties we 
 were laboring under. 
 
913 
 
 We have realty and property that represents an outlay 
 of more than eighty thousand dollars. Of that entire sum, 
 about one-quarter has been contributed by the State from 
 time to time. We are receiving at the present time ten 
 thousand dollars a year for maintenance. Our maintenance 
 account has run a little over fourteen thousand dollars for 
 the past two years ; the deficiency we have made up by such 
 contributions we managed to get out of the people and out 
 of entertainment. But this does not cover the caretaking 
 of the realty. During the last three months we have been 
 obliged to do repairing to the extent of about three thous- 
 and dollars, and we have about as much more to do. We 
 have done this without the funds in sight, and we have 
 trusted to some other scheme by which we can get money 
 enough to take care of it. 
 
 It seems along the line of taxation I have nothing to say, 
 unless it was to have a commission to take care of assess- 
 ments and taxation throughout the entire State. 
 
 By Mr. Moyer : 
 
 Q. The title of this realty of the Hospital is vested in 
 whom? 
 
 A. Vested in the Board of Directors. 
 
 Q. Dou you think the State of Pennsylvania should con- 
 tinue its liberal policy of making appropriations to private 
 charities where title of the property is not vested in the 
 Commonwealth ? 
 
 A. Under some conditions, yes. But I would rather be in 
 favor of having the State take over the property or take 
 over a general oversight of the institution. If that could 
 not be done, then I would be in favor of having a local com- 
 mission ; that is, a commission made up of a number of men 
 who could familiarize themselves with the work, but also 
 inform themselves as to the difficulties we have in raising 
 funds among our people. 
 
 Q. What is your hospital ? 
 
 A. The Emergency Hospital. 
 
914 
 
 Q. What would you say as to a consolidation of some of 
 your hospitals? 
 
 A. I believe that would be a practical plan. We have 
 managed our hospitals along the most economical lines. 
 
 Q. Where would you consolidate your hospital? 
 
 A. I don't know that I could exactly answer your 
 question. We take care of a district that extends forty 
 miles east and thirty miles west. We are the center of 
 a very large district. There are four railroads and we 
 have to take care of the accident cases of these railroads. 
 There are forty or more collieries where accidents are oc- 
 curring weekly ; and we take care of these. Last year we 
 had four hundred and eighty-two people at our little 
 hospital. 
 
 By Mr. Hunter : 
 
 Q. Do the local collieries contribute to the support of 
 the institution? 
 
 A. The Delaware and Hudson have contributed three 
 hundred dollars a year. 
 
 Q. About how much would you spend on their cases? 
 
 A. I cannot give you that definitely about thirty or 
 forty dollars a week. 
 
 By Mr. Brown: 
 
 Q. On that one company? 
 
 A. Yes, sir. 
 
 Q. How many other companies are there? 
 
 A. Three others. 
 
 Q. Do the others contribute at all? 
 
 A. They are not contributors. 
 
 Q. How much are you doing for them? 
 
 A. Well, perhaps one-third for each of the other com- 
 panies. 
 
 Q. Suppose you would put them on a per capita basis, 
 the State paying you so much a day for each indigent 
 patient, instead of paying you a lump sum? 
 
915 
 
 A. That is the basis now. They pay at the rate per 
 week. 
 
 Q. Suppose they paid for each patient by the day ; would 
 that make any substantial difference? 
 
 A. I suppose it would. 
 
 Q. How are your beds? Practically filled the year 
 round ? 
 
 A. Some part of every month they are filled. 
 
 Q. Does the State appropriations eliminate private con- 
 tributions in any way? 
 
 A. I cannot say it does, but it is a rule that any emerg- 
 ency case is cared for without charge. 
 
 Q. Do you think the State 's giving money to the institu- 
 tion is an incentive for others to help ? 
 
 A. Not always. The institution is looked upon as pub- 
 lic property it is ours and we have a right to go there. 
 
 Q. Do you think you would get as efficient management 
 under the State as you are getting under your local in- 
 terests and local help? 
 
 A. I think we would get along very much better if the 
 hospital would do the work it is intended to do. 
 
 Q. You don't think the supervision under a Board of 
 Charities is sufficient to produce the efficiency that should 
 be 
 
 A. Well, for the reason that these gentlemen come 
 around once a year and spend an hour with us and we 
 don't have a chance to become acquainted with them. 
 
 By Senator Blewitt : 
 
 Q. Does your institution publish an annual report ? 
 A. Yes. 
 
 Q. Would you mind seeing that the Commissioners get 
 a copy of it? 
 A. I will see that they do. 
 
 By Mr. Moyer: 
 
 Q. I understand you are a former member of the Legis- 
 lature ? 
 
916 
 
 A. I was a member a long time ago. 
 
 Q. Assuming that the State has insufficient revenue for 
 the purpose of continuing its policy to care for the building 
 of public roads, and for the appropriation of moneys to 
 private charities and for the purpose of taking care of the 
 poor people of the Commonwealth and the unfortunate 
 people, and that more revenue is required, what would 
 you say as to the advisability of taxing the natural re- 
 sources of the Commonwealth? For instance, levying a 
 tax upon coal? 
 
 A. Well, I am governed in making answer to that ques- 
 tion by a selfish reason, by the interest I have in main- 
 taining our local institutions. Inasmuch as land owners, 
 corporations and individuals are expected to contribute a 
 large share of the State 's revenue, I should say that every- 
 thing that is taxable should bear a reasonable amount of 
 taxation. 
 
 Q. What would you say, for instance, of a small millage 
 form of taxation being placed on manufacturing cor- 
 porations on their capital stock? 
 
 A. I cannot answer that question because I am not 
 familiar with profits along that line. 
 
 Q. Under the Exemption Act of Pennsylvania, they are 
 exempted from paying any capital stock tax. You are a 
 member of the Board of Trustees ? 
 
 A. Yes. 
 
 Q. As a manager of that hospital, you take in injured 
 persons. If an employee of a manufacturing corporation 
 were injured, you certainly would not close the doors upon 
 that employee? 
 
 A. No. 
 
 Q. Assuming that the manufacturing corporations, 
 through their employees, receive treatment at such hos- 
 pitals, isn't it a fact that they should bear their just share 
 of raising revenue of the Commonwealth so that the State 
 may continue its policy of giving appropriations to these 
 private charities? 
 
917 
 
 A. I believe that is correct, if it can be equalized in 
 some way, so that each would pay their share. As it is 
 now, we receive occasional contributions from some of 
 the small manufacturing concerns ; but the amount is not 
 in any way adequate to the services we give. 
 
 Q. Very small in comparison? 
 
 A. Yes. Another thing that is peculiar. We take care 
 of everybody or every accident case. If a stranger is 
 taken sick in the State, we take care of them, without 
 charge. I have often said to a patient about the time he 
 was discharged, " While you are here* as an emergency 
 case at the expense of the State of Pennsylvania, or an 
 institution of Pennsylvania, there is no reason why you 
 should not contribute what you feel you are able to con- 
 tribute. Well, I have done that hundreds of times, and I 
 never received but two contributions one was ten dollars 
 and the other was five. People expect to be taken care of 
 without charge in institutions of this kind. They are 
 things we have to work against. We take care of wealthy 
 people who are able to contribute, but they don't feel 
 called upon to do so. We are supposed to take care of all 
 accident cases. We take up a collection (at least we try 
 to) asking the men to contribute a day's wages. Aside 
 from the first two, we have not been able to collect 8 
 per cent, of the approximate amount earned. 
 
 By Mr. Brown: * 
 
 Q. I suppose if the State did not appropriate money, 
 these people would feel bound to pay. They would assume 
 that there would be no other means of support of the 
 institution f 
 
 A. Well, that would be pretty hard, I suppose. I don't 
 know what would become of the institution if the State 
 did not contribute as liberally as it is appropriating now. 
 It is contributing perhaps 70 per cent, of the cost of the 
 care-taking of the patients. 
 
918 
 
 By Mr. Hunter: 
 
 Q. You state the State contributes ten thousand dollars 
 per annum towards the maintenance of your institution? 
 
 A. Yes, sir. 
 
 Q. How do you make up the other four thousand? 
 
 A. The Ladies' Auxiliary gives entertainments oc- 
 casionally. 
 
 Q. Do you have any pay patients? 
 
 A. Yes, our pay patients last year brought us ap- 
 proximately twelve hundred dollars. 
 
 Q. Leaving twenty-five hundred dollars to make up? 
 
 A. Yes, or thereabouts. 
 
 Q. Your institution is practically a free institution? 
 
 A. Yes, it certainly is. We take care of the deserving 
 and the undeserving. 
 
 Q. If you continue to receive ten thousand dollars from 
 the State, don't you think you would be able to collect 
 a considerable amount from your patients ? 
 
 A. "We have not been able to. We have had a deficiency 
 every year that has accumulated, now reaching ap- 
 proximately fifteen thousand dollars. 
 
 By Mr. Moyer: 
 
 Q. How many free beds do you have ? 
 
 A. Forty-three or four. 
 
 Q. Always filled? 
 
 A. Of course, we cannot say they are always filled be- 
 cause they are divided into surgical and medical wards, 
 and sometimes there are two or three empty beds in those 
 wards. 
 
 By Mr. Hunter : 
 
 Q. At times they are all filled? 
 
 A. Yes. More than that, we have had as high as fiftyr 
 three beds and had to use the sitting room to put up cots. 
 
919 
 
 JUDGE H. A. KNAPP, Scranton, Pa., called. 
 
 Mr. Chairman and Gentlemen of the Commission : I 
 certainly appreciate the privilege of being permitted to ad- 
 dress the gentlemen of the Committee on the visit of the 
 Commission to Scranton, although I was not aware of the 
 coming of the gentlemen until yesterday. 
 
 I suppose one of the questions to be considered by this 
 Commission is that of State appropriations which are made 
 to charitable institutions in this vicinity. In addressing 
 myself to you, I wish to be very brief, indeed, and do not 
 desire to take up too much of your time. 
 
 I, perhaps unfortunate for myself, have been to a certain 
 extent, associated and connected with two or three of the 
 charitable institutions here, and have, from time to time, 
 appeared before committees of the Legislature which have 
 come to Scranton, and, also, at their sittings in Harrisburg. 
 I have formed a very definite opinion in regard to the con- 
 ducting of the charitable institutions in this vicinity. 
 
 As to the charitable institutions in this section, I think 
 we have much wiser, and economical, and careful, and effi- 
 cient management by the directors and officers that are 
 chosen to manage them. 
 
 In regard to the question as to whether or not it is ad- 
 visable to continue to appropriate money to charitable in- 
 stitutions that are not under State control, I don't know 
 that my opinion would have much weight; but I should 
 say that if there is any question on the part of the State 
 as to that, there would be no objection so far as these in- 
 stitutions here are concerned to have the State assume con- 
 trol. I mean by that by the appointment of such officers 
 and directors as they do in other institutions. The State 
 appoints members of the Board of Directors of the State 
 Hospital here which is under State control ; they are local 
 
920 
 
 men; and there would not be the slightest objection so far 
 as charitable organizations are concerned, to the appoint- 
 ment of a local board here to conduct these organizations. 
 I think I can speak for almost all of the officers and direc- 
 tors of the organizations here in this matter. I know I 
 would be immensely relieved if someone could be ap- 
 pointed to take my place as President of the Board of As- 
 sociated Charities, Director of the Consumptive Hospital 
 upon the Hill, and as a member of the Board of the Home 
 for the Friendless. If the State would fill these three offices 
 it would remove a great load from my mind. 
 
 By Mr. Woodward: 
 
 Q. That is, obligate the State to support these institu- 
 tions in their entirety? 
 
 A. I don't know as to that. I can only speak for the 
 three I have mentioned. None of these three have ever re- 
 ceived one-half of their revenues from the State, although 
 the Home for the Friendless has been more liberally helped 
 by the State in the two past years of the Legislature ; but, 
 yet, it has spent as much derived from private sources as 
 it has reveived from the State. That is in this latter time. 
 In previous time, it received nothing from the State. So 
 that by careful and economical management and by the 
 charitable inclination of the people it has created a fund 
 out of which it has built a large, fine and handsome build- 
 ing worth I don 't know how much several hundred thous- 
 and dollars. It is true, during the last two sessions of the 
 Legislature they have been quite liberal, because they had 
 to build an extension and had to make extensive repairs 
 to the old building, and so they received, I think, at the 
 last Legislature, eighteen thousand dollars for two years; 
 and the Legislature before, I think sixteen thousand dol- 
 lars ; prior to that they never received anything more than 
 about three thousand dollars for two years. Now these 
 three institutions I speak of have always put as much from 
 their private sources toward their expenses as they have 
 
921 
 
 received from the State ; and I can say of these institutions 
 that they are carefully, economically and efficiently man- 
 aged; and I believe the State would be at liberty to appoint 
 a member or members of the Boards of Directors, and they 
 would be welcomed on the part of those who are now in 
 charge. 
 
 Now, I think it would be an unwise move if the State 
 were to discontinue appropriating money to these chari- 
 table institutions. They have been allowed to grow up here 
 fostered by the State ; they have served a useful purpose ; 
 and to withdraw suddenly and entirely the support of the 
 State from these institutions would certainly break them 
 up, destroy them. The people here are supporting them 
 liberally and to the utmost of their resources. If the need 
 for that was doubled, I think the Committee can readily 
 see it would be too much. Most of these charities would go 
 by the Board. They would have to be closed up and they 
 would be withdrawn from their useful work. The senti- 
 ment that seems to be springing up and seems to be grow- 
 ing in some quarters of the State do no longer appropriate 
 sums of money to charitable institutions not under State 
 control, I hope will not become the prevailing sentiment, 
 because I think it would be, as far as this particular city 
 is concerned, a public calamity. 
 
 By Mr. Brown : 
 
 Q. Your thought is that if there is not sufficient revenue 
 collected for the purpose of maintaining these institutions 
 as they are maintained, and also for the normal increase 
 annually, that additional revenue should be collected by 
 the State? 
 
 A. Well, now, in regard to that, I think the very great- 
 est care should be exercised in extending this to new insti- 
 tutions. I can see that the encouragement given by the 
 State by appropriating a sum of money to an institution, 
 will induce somebody else to say, 'Let us start a new hos- 
 pital; the State will sooner or later contribute to the sup- 
 
922 
 
 port of it.' Now, perhaps the startling rapid growth of 
 these things should bo checked. We ought to be very care- 
 ful in taking on new objects, so people would not be encour- 
 aged to start these new charities. Then I think that very 
 great care should be taken that the appropriations are not 
 larger than are actually needed. I don't think they should 
 be allowed to grow. I think ten or fifteen years ago the 
 State of Pennsylvania was exceedingly liberal to its chari- 
 table organizations. 
 
 Q. Isn't there a normal increase in the needs? 
 
 A. Yes, I think so. 
 
 Q. Would a per capita basis do? Let the State pay so 
 much a day for the maintenance, care and support of its 
 patients ? 
 
 A. I think the State would be paying even more money 
 than now if they did. 
 
 By Mr. Moyer : 
 
 Q. Wouldn't it be more equitable? 
 
 A. Yes, possibly so. 
 
 Q. That would be the result sought by the per capita 
 basis. The camplaint seems to be in certain sections that 
 more money is being appropriated than in others, some of 
 the counties getting more than they really should. 
 
 By Mr. Brown : 
 
 Q. Would it be possible to consolidate the hospitals in 
 the city of Scranton. Jt has been suggested that there are 
 too many hospitals, and that one hospital could be better 
 qualified to do the work, better appliances, better facilities, 
 etc., than by distributing the money between three or four 
 hospitals. 
 
 A. I am not intimately connected with the hospitals to 
 make my opinion very heavy. The Lackawanna Hospital 
 is an institution of the State, and the Hahnnemann Hospital 
 has a different school of medicine. I am not connected with 
 either one. No doubt the Committee will hear representa- 
 
923 
 
 tives from these institutions. The West Side Consump- 
 tive Sanitarium I am a director of, but that you see is a 
 consumptive hospital, and the only objection we have had 
 was that none of the other institutions, or hospitals I should 
 say, would take consumptive patients at all. 
 
 Q. Why shouldn't they take them? Why shouldn't there 
 be a consumptive ward in the hospitals? 
 
 A. That is a question of hospital matters on which my 
 judgment would not be good. As the Committee knows 
 that in the first instance the treatment of consumption re- 
 quires some altitude. It requires the patient to get out of 
 the city; it requires pure air purer than you get in the 
 cities; it requires special treatment in the way of diet, etc. 
 Whether it is possible or whether it is not, the fact remains 
 that it was impossible to get consumptive patients admitted 
 into any hospital in Scranton, and the consequence was that 
 these consumptive people were obliged to stay home and the 
 disease was spreading rapidly until some of the people here 
 decided it was about time there was a place where consump- 
 tives could be sent for treatment, so they purchased a piece 
 of land on the top of the West Mountain about four or five 
 miles from where this Committee is now seated. The air is 
 fine; it has a grand altitude; it is several hundred feet 
 higher than the city and the air is absolutely pure; and 
 there we have maintained it from that time, year after 
 year, for the good and benefit of our city, asking State aid 
 every time but not receiving it until the last Legislature, 
 when they were given the sum of five thousand dollars for 
 two years. That is not more than one-third of what is ex- 
 pended there. The people admitted are poor almost al- 
 together, none paying the amount it costs to keep them 
 there, because the diet of milk and eggs is an expensive 
 diet. They keep there on an average of twenty-five pa- 
 tients, and they have cured many and have improved many. 
 Some have gone there so low that there was absolutely no 
 chance for them. The result, on the whole, has been good. 
 It has been demonstrated that it is a beautiful and magnifi- 
 cent charity, but it needs the State aid. It needs more. 
 
924 
 
 By Mr. Brown : 
 
 Q. Assuming there is an absolute need on the part of 
 these meritorious institutions for more money than the 
 State is now collecting ; do you think the list of taxables 
 should be increased for that purpose ? 
 
 A. That is a subject that I have not considered. 
 
 Q. You have to look at both sides of the matter. 
 
 A. This is a matter I have given so little thought that my 
 opinion would not be worth anything. 
 
 By Mr. Hunter: 
 
 Q. Each one of these institutions you have mentioned, 
 I assume, has its individual superintendent, its own clerical 
 force, engineer, etc. Why can't they be under the control 
 of one man, these several institutions, one superintendent 
 to care for all of them, with a slightly increased salary? 
 
 A. You see you get back into the hospitals again ; I don 't 
 know anything about the hospitals with the exception of 
 the consumptive hospital; they pay one lady there who is 
 a trained nurse. She is engineer, bookkeeper, superinten- 
 dent and everything. She stays there the year round and 
 takes care of the place. There could not be any more eco- 
 nomical management than there is there. The Home for 
 the Friendless is different ; they have a matron and a hun- 
 dred people under her ; old ladies and children ; that is the 
 kind of people they take there old ladies without homes 
 and children without homes, from Scranton and various 
 parts of Lackawanna county. She is absolutely necessary 
 there; nobody could take her place there. There is no ex- 
 pense there that is not absolutely necessary. The only other 
 institution I am familiar with is the Board of Associated 
 Charities, and that is quite a different thing altogether. It 
 could not be in any way consolidated with or come under 
 the same management or connected with the Home for the 
 Friendless or one of these other hospitals. It has its office 
 here in the city. It is a Board of Associated Charities, and 
 Dr. Israel is here, who is secretary of the Board; and I 
 hope the Committee will hear him. 
 
925 
 
 By Mr. Woodward : 
 
 Q. It is made up of the various charities throughout the 
 city? 
 
 A. Yes, a sort of a clearing house for the Associated 
 Charities. It has a wide-awake officer who is always on the 
 job ; she is an officer appointed a police officer by the city, 
 and she is out on the streets of the city from early in the 
 morning until late at night. When she sees poor children 
 on the streets, and when she sees anything out of the way 
 on the streets, or neglected girls, it has her most constant 
 attention. Wherever these are observed they are helped by 
 being sent to these various charities. It is a sort of a clear- 
 ing house. I think most any man in Scranton would tell the 
 Committee that this has been the source of an immense 
 amount of good. 
 
926 
 
 DR. ISRAEL, Secretary Board of Associated Charities, 
 Scranton, called. 
 
 Mr. Chairman and Gentlemen of the Committee: I 
 hardly think it necessary for me to take up your time. I 
 may say that the Board of Associated Charities was es- 
 tablished seventeen years ago. It is a sort of a clearing 
 house such as can be effective in ministering to the miserable 
 condition of the submerged people of the city. Our asso- 
 ciation ministers to all those who are seeking to reclaim 
 their lives, whether men, women or children. She investi- 
 gates parents whose daughters are brought here from the 
 country and she keeps her hands on all those things through 
 the advice of counsel, a board composed of fifteen men 
 made up of the representative Christian bodies of the city. 
 In this way we try to keep, and I think we have succeeded 
 in keeping, a very large part of the misery of the city under 
 control, at least to a certain extent. We are now progress- 
 ing in the development of a home for boys. We have five 
 or six that we are now taking care of by boarding them; 
 there are forty to fifty that we have now arranged for, and 
 we have rented an institution in which we hope to open a 
 boarding house for boys to tend toward the salvation of 
 what we might call the submerged ones of our community. 
 
 I am a representative of another institution which, I 
 think, demands a great deal of attention from the Legisla- 
 ture ; that is in connection with the Oral School, of which I 
 wish to speak. This teaches the deaf mutes how to speak. 
 The school is under the control of the State insofar as they 
 appoint the representatives of the directorship. But we 
 have received so little that we have not been able, except in 
 occasional years, to meet the running expenses of the insti- 
 tution. I think this institution that is directly interested 
 in the educational part of the work of the State should be 
 receiving a certain sum, considerably beyond what it is re- 
 ceiving to-day. 
 
By Mr. Hunter: 
 
 Q. I am of the opinion that this associated charity is 
 a most excellent work. I don't think they have gone far 
 enough with their work. Why couldn't they, instead of 
 stopping at the aid of those who require it, go further, 
 and see that the State, who is a large contributor to these 
 institutions, and other individuals who contribute, are 
 protected also? It seems to me, if they would have repre- 
 sentatives to this Board of Associated Charities a mem- 
 ber of two from each of these several institutions, they 
 could get together and jointly determine the amount of 
 help required from the State, and have it properly dis- 
 tributed. 
 
 A. "We would be delighted to do that, if the scope of 
 the Associated Charities could be made as broad as that. 
 
 By Mr. Woodward: 
 
 Q. Do you think you could get the Associated Chari- 
 ties to do this? 
 
 A. That is a question; there is no objection on our part. 
 
 By Mr. Brown : 
 
 Q. Why shouldn't these people get together and deter- 
 mine the best distribution of the State's money? 
 
 A. That is something I have not brought up. It seems 
 ideal if it can be done. Would your appropriations then 
 be so much, to be divided among these institutions in 
 accordance with the judgment of the representatives of the 
 institutions ? 
 
 By Mr. Hunter : 
 
 Q. That would be in line with my idea. I mean to have 
 representative citizens of a community to determine jointly 
 what was required in their community for the several in- 
 stitutions, and go before the State authorities at the proper 
 time. I think that would be much stronger than a repre- 
 sentative committee from the individual institutions, be- 
 cause they have their own ends to answer, or their axe 
 to grind, and are trying to get as much for their own insti- 
 tution as they can. 
 
928 
 
 A. Might I ask if it would make any difference in the 
 main. The Boards of the institutions that are represented 
 here today are representative men of this community. You 
 have the leading business and traveling men, in every re- 
 spect, in the community. If these men would get together, 
 wouldn't it result in each institution being represented by 
 these men, putting in the same claim, feeling the needs 
 of the case, as they do. They could simply combine the 
 amounts in presenting them to you in combination, rather 
 than for the individual institution. 
 
 Q. Not all. Some of them; in the case of an institution 
 asking too much. In other words, I think the effect would 
 be a more equitable distribution of the funds. 
 
 A. I believe that could be met without the slightest 
 trouble. 
 
 By Mr. Brown : 
 
 Q. Have you given any thought to the comparative cost 
 of these different institutions ? 
 
 A. As a whole? 
 
 Q. I mean severally, as to the cost of supplies. Some 
 one has suggested that considerable money could be saved 
 by having a State department to buy the supplies for all 
 the institutions throughout the State and to furnish them 
 to institutions on requisition. It has been suggested that 
 the State could buy 25 per cent, cheaper than the insti- 
 tutions ? 
 
 A. I don't suppose where things are bought they are 
 bought as low as they might be in much larger quantities 
 at wholesale. One-half of the things that are used are 
 given them by the merchants. They stop there and just 
 leave the things and don't ask any pay. The home has 
 been established so long that it just lives in the eyes of 
 all the people. 
 
 Q. If you bought your supplies outside you would prob- 
 ably drive these people from doing this? 
 
 A. That is what I think. 
 
929 
 
 JUDGE EDWARDS called. 
 
 Mr. Chairman and Gentlemen of the Commission: I 
 wish to bid you good morning, as I am very glad to see 
 you here. I didn't know you were in session until this 
 morning. I was under the impression that you were to 
 be here at 1 o'clock this afternoon, and it was only by 
 the merest accident that I heard you were in Court No. 
 2. A gentleman called at the office a while ago and said: 
 "What is going on in Court No. 2? The room is full 
 of people and there are five very good looking men on the 
 bench." I came here and found the Commission. I 
 am very glad to see you here, and glad to see you going 
 around the State to see if you can devise some reason- 
 able way, some satisfactory way, to solve the problem you 
 have before you. I think you have the heartiest sympathy 
 of all the thoughtful people in this State in the effort 
 you are making. 
 
 I don't know what line your investigation will take up 
 here, but the first thing I want to impress upon you is 
 (and my knowledge is confined to Lackawanna county, as 
 to the charitable institutions of this county) that your 
 efforts should be not to diminish in any way the appropria- 
 tions made for charitable institutions in this county, but 
 to devise some means by which you can have more money 
 from this State in order to increase the appropriations 
 for the hospitals and other charitable institutions of this 
 city. 
 
 By Mr. Brown: 
 
 Q. To which, I suppose, you would add the public schools 
 and building of roads ? 
 
 A. Well, the public schools, by all means; but not the 
 
 building of roads. The roads will be for the future; the 
 
 charitable institutions are for the present, as are the 
 
 public schools. I am in favor of good roads and all that 
 
 46 
 
930 
 
 How will you get more money ? I don 't know. If I was 
 a member of this Commission, that would be my great 
 ambition to devise some satisfactory way by which the 
 revenue of this rich State could be increased. Very likely 
 you gentlemen have some plan, some suggestion along 
 that line. Shall we put a tax on coal, for instance? Well, 
 I don't know. I thought maybe my friend Judge Knapp, 
 who represents most of the coal interests in this county, 
 would say something about that. I see no objection what- 
 ever in taxing the coal and riches that come out of the 
 land of this county and using that money for the support 
 of the community and charitable associations and insti- 
 tutions of this county. I know of no reason. There is no 
 constitutional objection. It would be a tax that would 
 be easily devised and the least felt tax of any I know of. 
 I have always thought there should be a tax of so much, 
 if only one cent a ton or two cents a ton, and that money 
 should be appropriated, not for roads and public schools, 
 if you please, but should be appropriated to the needs 
 of these charitable institutions which have been made neces- 
 sary on account of the taking out of these riches from the 
 very earth. There is where a part of this money should 
 come from. 
 
 Q. What is the general sentiment in this community in 
 this respect? 
 
 A. About the same, as I make it. Everybody, except 
 the owner of the coal beds. They are pretty reasonable, 
 too. I think they would come along. The coal corpora- 
 tions in this county I know as well as I do anybody in 
 the county, and they are charitable men, liberal men, and 
 I think they would come along. 
 
 Q. Why shouldn't these interests get together and sug- 
 gest to this Committee what they think would be a fair 
 tax for this purpose not leave it to the Committee to 
 guess; we should then have the benefit of every thought 
 on that subject? 
 
 A. The difficulty would be that it is pretty hard to get 
 
931 
 
 a body of men together to get them to agree as to a sys- 
 tem by which you can take money out of their pockets. 
 
 Q. The Manufacturers' Association of Philadelphia sent 
 a representative before us, who said: " Assuming that 
 there is not sufficient revenue, that there should be more 
 for this purpose, and there should be a tax of one mill on 
 the capital stock and that this tax would be satisfactory 
 to them. Why don't some of these other interests come 
 forward and offer to pay their share of the burden ? ' ' 
 
 A. I think the suggestion is a very good one. Of course, 
 my suggestion is not of a general character ; it is in regard 
 to the money received from such a tax; I want the money 
 that would be received from a tax on the tonnage of coal 
 in the anthracite and bituminous regions appropriated for 
 charitable purposes, because it is that character of industry 
 that has made these institutions necessary in this county. 
 
 I am president of the West Side Hospital, Association, 
 and I am now going to the other side of that. I only use 
 this as typical of the hospitals in this city and county. 
 They are all alike. I don 't want you to run away with the 
 idea that the people of Scranton are not taxed to the ut- 
 most in support of charities in this city. They have 
 their hands in their pockets all the time. There is hardly 
 a day, and I know not a week, that the best people of the 
 city are not called upon in one direction or another. Let 
 me give you an illustration, and the reason I mention it 
 is the condition of the West Side Hospital. It is on the 
 west side of the river. Four years ago, the State of Penn- 
 sylvania, seeing the character of the old building that 
 was there, appropriated eight thousand for the purpose of 
 starting a new building. We built it, and it cost us forty 
 thousand, and we still have the building up there, and it 
 is one of the best hospitals according to its size in the 
 State of Pennsylvania. We never would have put that 
 forty thousand dollar building up there unless, four years 
 ago, the Legislature had given us eight thousand dollars 
 to start a new building. We would not have assumed the 
 
932 
 
 responsibility, but we thought it safe to assume it, because, 
 when the Legislature met they gave us twenty to twenty- 
 five thousand dollars to pay upon that building; but the 
 Governor had to use his blue pencil and strike it out. We 
 never would have put up that building unless it was that 
 the eight thousand had been appropriated. There is a 
 population there of forty thousand, almost one-third the 
 population of this entire city. Ninety-five per cent, of the 
 people over there are wage-earners and widows and or- 
 phans. Whatever money we get we get from private pa- 
 tients. We only got about fifteen thousand for two years, 
 and still, we have had as high as forty-seven, forty-eight 
 and fifty patients there at a time. According to my re- 
 cords, we got about five hundred dollars a quarter from 
 private patients, and used all of it to maintain the others. 
 Ninety-five per cent, of the patients in the West Side Hos- 
 pital are charity patients; they haven't a cent of money, 
 and, therefore, there is no use in talking about their being 
 able to pay. 
 
 Q. Why wouldn't a county like Lackawanna take care 
 of its own? 
 
 A. You give us the revenue from this county and we 
 will take care of the charities of this county yes, and of 
 Luzerne with it. Give us the money we pay the State 
 and we will take care of five counties, of five aggregations 
 of charitable institutions, such as we have in Lackawanna 
 county. 
 
 Q. A poor county that has not such revenue cannot take 
 care of its own. The State ought to take care of its own ? 
 
 A. Undoubtedly. Let me make one suggestion, which 
 I like very much. It would be a good idea to have some 
 Board put here in Lackananna county consisting of seven, 
 or nine, or eleven men some odd number that shall be a 
 kind of a clearing house as to how the appropriations for 
 the charitable institutions in Lackawanna county shall 
 be distributed. The only way I can see in which you can 
 do that is, just as soon as the Legislature meets next 
 
933 
 
 winter, have a bill offered in the House and Senate and 
 passed to appoint such men, who shall sit permanently. 
 
 Q. That would be more effective that the Board of Chari- 
 ties? 
 
 A. The State Board of Charities is no use to us up here. 
 
 Q. Have you given any thought to this subject? Sup- 
 pose the State of Pennsylvania has not enough revenue 
 to finish her State institutions; should she do that first, 
 or should she appropriate to institutions not under State 
 control? 
 
 A. Well, you certainly cannot cut off the appropria- 
 tions to these hospitals that have been living on State aid. 
 
 Q. What is your thought is Pennsylvania practically 
 the only State in the Union that appropriates money to 
 institutions not under her control ? 
 
 A. I think so. It is one of the proudest tiaras in the 
 crown of Pennsylvania that she does take care of her 
 charity patients and poor people. It is a great honor to 
 the State of Pennsylvania, and I don't want them to fall 
 down upon it. 
 
 By Mr. Moyer : 
 
 Q. What do you think about the question of the con- 
 solidation of hospitals? 
 
 A. Well, if it is under control of the State it would 
 not be as convenient. You talk about the State buying 
 the supplies for the various institutions and the institu- 
 tions being furnished with the supplies upon requisition. 
 I never heard of the State buying anything cheap, or 
 putting up a cheap building. The management of the 
 West Side Hospital makes requisition quarterly and gets 
 bids from wholesale houses, and I imagine we can buy 
 as cheap as the State cheaper. I don't see how consolida- 
 tion is going to help them. The expenses of these different 
 hospitals are very small, comparatively, the moment you 
 get outside of Philadelphia. I know in our own county 
 everything is run on a very economical schedule, and we 
 
934 
 
 are putting our time and money and best judgment into 
 these institutions in order to produce the best results. You 
 wouldn't think of consolidating all the management of 
 the hospitals in Scranton ? 
 
 Q. Isn't it a fact that there are too many hospitals in 
 Pennsylvania to-day? 
 
 A. Yes, sir. 
 
 Q. The complaint seems to be general where there are 
 two or three or four doctors not getting along very well, 
 they meet and form a medical organization and call on 
 their influential friends to have an appropriation given 
 them to start a hospital ? 
 
 A. Yes, that is right. 
 
 Q. That is the complaint that is coming to this Com- 
 mittee. 
 
 A. Isn't there an authoritative body that has a right to 
 decide whether any body of men or any hospital organiza- 
 tion has a right to go ahead and build any kind of a build- 
 ing without permission? 
 
 By Mr. Woodward: 
 
 Q. They take out the contract and go ahead without 
 consulting the State Charities or any other Board. Some 
 of them overlook the fact that they should make appli- 
 cation through the State Board of Charities, and later on 
 to the Legislature to ask its members to appropriate 
 money 
 
 A. It should be that nobody could start a new build- 
 ing of any kind without first having the permission, after 
 investigation of an authoritative board representing the 
 State. 
 
 By Mr. Moyer : 
 
 Q. If the State appropriates money for the purpose of 
 erecting buildings where the title is not vested in the Com- 
 monwealth, shouldn't the State have prior lien? 
 
 A. It has under the Act. 
 
935 
 
 By Mr. Woodward: 
 
 Q. Wouldn't it be a good idea if each community would 
 erect its own building, and then the State assist in the 
 support of the work after the building had been erected 
 by the people of the various local communities? It would 
 tend to eliminate the criticism you make. 
 
 A. Under power of some board 
 
 By Mr. Brown : 
 
 Q. If they didn't get the preliminary authority they 
 couldn 't erect the building ? 
 
 A. Yes, that would be a good idea. 
 
 Q. Have you given any thought to the taxing of manu- 
 facturing corporations? What is the consensus of opinion 
 in this community as to taxing the manufacturing corpora- 
 tions ? 
 
 A. I have no knowledge at all. I think it would be 
 proper to levy a particular per ton tax on all coal mined 
 for the support of the charitable institutions. You will 
 have to depend upon men who have devoted their time to 
 the science of taxation. It is not a thing that can be 
 considered off-hand. It stands to reason that every coal 
 land owner and miner should at least provide for the con- 
 sequences of mining it. I have always been in favor of 
 the English Act by which all corporations are obliged 
 to care for their own employees and pay for all damages 
 arising from accident, so long as the negligence on the 
 part of the person hurt is not of a gross character. 
 
 Mr. Moyer: Before Judge Knapp leaves the room I 
 would like to have an expression of opinion from him re- 
 garding his views of the taxation on edal, or the natural 
 resources of the Commonwealth on coal and oil? 
 
 Judge Knapp: You can readily understand my situa- 
 tion in regard to that. I am a practicing attorney here 
 and have all kinds of clients. I would have to be excused 
 on that account. 
 
936 
 
 Judge Edwards: I would make a suggestion that if 
 there is any way you can get the heads of the coal com- 
 panies together that they will, no doubt, fall into the re- 
 quirements of the Legislature. 
 
 Mr. Brown: This Commission has got the power of the 
 Legislature to subpoena, produce books and papers and 
 go to the outermost limit. We have yet to issue the first 
 subpoena. It seems to me they should all come forward 
 and say what should be done for the common good. 
 
 A. I don't suppose they have had an opportunity. 
 
 Q. We send out nearly forty thousand letters to every 
 interest in Pennsylvania, every one; we asked them to 
 give suggestions so as to give all interests an opportunity 
 to present their views. We have probably received four 
 or five thousand replies. 
 
 A. They might have such a letter drafted before the 
 Committee in Harrisburg. I have no doubt they will be 
 there. 
 
937 
 
 SENATOR EDW. F. BLEWITT. 
 
 Mr. Chairman and Gentlemen of the Commission : Judge 
 Edwards talked on the very lines I wished to speak about ; 
 that is, the taxation of coal. 
 
 As you are aware, in the anthracite regions that begins 
 down in Dauphin county very close to the capital and 
 runs a distance of twenty miles from here they mine 
 during the year sixty millions of tons of coal. Most of 
 that coal is taken out of this State ; it is sold in New York, 
 in the East, a little in the South, some in the Northwest ; 
 but it is a product that leaves here and goes outside of 
 the State. 
 
 To my mind, a tax of two, three, four or five cents a 
 ton would not be an improper one. In the first place, the 
 people of the Commonwealth would not have to pay for 
 it; it would be the persons on the outside. All this is 
 familiar to residents of the anthracite regions. 
 
 Now, there are a great many things about our hospitals 
 that might be explained. 
 
 In the mining of this sixty-six million tons of anthracite 
 coal in this district, there are killed during the year in 
 the neighborhood of six hundred people who leave many 
 wives and hundreds of orphans. These widows and or- 
 phans are in most instances helpless. There is no remedy 
 for them; the State does not provide anything for them 
 and the result is the little boys and little girls you find 
 in the mills and the factories, and who are under age, and 
 in many instances, where their mothers swear they are, 
 are there as a consequence of this condition. 
 
 If we could arrange to tax five cents a ton, that would 
 be in the neighborhood of three millions of dollars for the 
 State. 
 
 Every day, night and Sunday they are taking the coal 
 from this Lackawanna Valley, and the county of Lacka- 
 
938 
 
 wanna; this is going on for twenty-four hours in th 
 day with the result that within the lifetime of the young- 
 est man in this room, we will be denuded of coal in this 
 county and we will have nothing left here except a few 
 little manufacturing plants here and there; and because 
 they cannot get coal, even they will go away, too. I urge 
 this Committee strongly to put a tax on coal, not only an- 
 thracite, but bituminous. We can go further than the 
 coal ; we go to the oil. In the State of Pennsylvania, the 
 oil derricked runs away up into the hundreds of millions 
 of dollars and Pennsylvania doesn't get a benefit of a cent 
 of it. 
 
 I owe money myself on property, about six thousand 
 dollars. I am paying four mills on that six thousand 
 dollars to the State of Pennsylvania and there is no 
 reason why a poor man should have to pay that four mills. 
 Why don't those other interests pay that that are taking 
 all their money away from us ? Why don 't you tax them 
 and relieve the poor man who buys a home? Instead 
 of my paying 6 per cent, on my loan, why shouldn't I 
 pay only 5 6-10 per cent.? Let the one who is reaping 
 the benefit of our valleys here pay for it. I think the 
 sentiment of this valley from one end to the other is that 
 a tax on coal would be just. Besides, it would not be a 
 tax on the corporation ; it would be too small. Going out- 
 side of these valleys are one hundred and sixty-six 
 millions of bituminous coal and sixty-six millions of an- 
 thracite coal. Now, suppose we have a tax on that of two 
 cents a ton ; there is an income of four millions of dollars. 
 The State of Pennsylvania is not in debt ; it does not owe 
 a dollar. It is the only State in the Dnion that is not 
 in debt. At the last Legislature, we provided for every- 
 thing. It is a fact that our hospitals do not receive what 
 they really should. I am speaking of my own district in 
 comparison with the other sections of the State. Talk 
 about amalgamation of hospitals. That is out of the 
 question in this section of the State. Hospitals are to be 
 
939 
 
 considered local in the sense that Judge Edwards was 
 talking about the West Side Hospital removed from here 
 about a mile. Over there they have a population of about 
 forty thousand; the mines are back of it. Now, when a 
 man is injured in the mines you cannot rush him over 
 these hills and cross this hill here to get his wounds taken 
 care of, because it means his death ; but you have to send 
 him to the hospital close by the very breakers or mines 
 in which the accidents occur. You must have one in the 
 industrial section. It is this way in Philadelphia ; almost 
 every two or three blocks there is a hospital in the indus- 
 trial section. It is different entirely in the Schuylkill dis- 
 trict in Lacka wanna county. I don't know every hospital 
 in the State, but I know this : that it is a fact that, in my 
 opinion and in the opinion of others that is well founded, 
 that a great deal of this money is misapplied. But it is 
 not in this section of the State. We have an institution 
 record here in our hospitals that is not followed by the 
 other parts of the State. 
 
 I went to the Governor a few years ago and had ap- 
 pointed twenty-five leading citizens of Lackawanna coun- 
 ty on the Hospital Board, of which Dr. Israel is a member ; 
 it is composed of ladies and gentlemen. We have met 
 and organized and have some notes on each hospital in 
 this district. In their capacity they are going around, 
 and they take one hospital one month and one the next 
 and so on, and it is a continuous performance until they 
 visit every hospital in this district. I hope at the meeting 
 of the next session, when our members of the Legislature 
 are asked to present bills to the Legislature, they will 
 have their report ready. I know they will. The person- 
 nel of the members is sufficient guarantee. They will 
 tell us what they should be given for these hospitals. The 
 appropriations to hospitals as given by the Legislature are 
 wrong. There is something wrong with the principle. 
 Some of them get larger appropriations by political stam- 
 ina ; others from some other source. There is no uniform- 
 
940 
 
 ity. Then again, I am deadly opposed to giving any ap- 
 propriation to any hospital except under this special stip- 
 ulation. For instance, if the State gave the Hahne- 
 mann Hospital, one of the institutions of our city, fifty 
 thousand dollars for maintenance for two years, I would 
 make a lien against the property ; and if, after the Auditor 
 General had gone over the books and satisfied himself 
 that the money was judiciously expended and for the pur- 
 poses for which it was given, I would remove that lien; 
 that would cut off any misapplication of funds. 
 
 Now, as to the mercantile tax. The mercantile tax is, 
 in a way, a fair one. In the first place, let me give you 
 an instance. A man came to me the other day and said : 
 "I am worth five hundred thousand dollars all in real es- 
 tate ; John Smith has five hundred thousand dollars in his 
 store. All he has to pay is a two hundred dollar mercan- 
 tile tax. Do you think that is square ? " I put this same 
 proposition up to this Committee. Now, I believe a great 
 wrong is done in the application of the mercantile tax on 
 the small merchant. We have in this valley men who are 
 bereft of their limbs, or widows, or some persons who are 
 unable to go out and earn a livelihood, who start a little 
 store, maybe, for their little orphans, but they are put 
 on the mercantile list and have to pay their tax. I think 
 that is entirely unjust and improper. I think the law 
 should be changed so as to eradicate such a system. 
 
 As to the propriety of taxing the larger corporations 
 that have all their money invested in them, I think it 
 would be a good idea to make the tax larger. The tax 
 should be equalized. The burden should not be all on 
 real estate. 
 
 By Mr. Woodward : 
 
 Q. How about manufacturing corporations? 
 
 A. I think the manufacturing corporations should pay 
 their tax. Now we have a way in Scranton, and in some of 
 our borough towns, that when a manufacturing company 
 
941 
 
 comes into our midst, we give them relief for ten years 
 from the payment of taxes. I think when any manufac- 
 turing company exceeds this it is making money for its 
 stockholders and should bear its burden of the tax its 
 full proportion. I feel that we should equalize the taxa- 
 tion, no matter which way it runs. 
 
 In the matter of taxation, I don't know whether it 
 would come within the scope of this Committee or not, but 
 I want to speak in the matter of the election of assessors. 
 We have examples here in Scranton. Certain people of 
 influence take more pains over the election of a tax as- 
 sessor than they do a President of the United States. If 
 we had the whole seven assessors of Lackawanna county 
 elected by the people, it would be the best way. 
 
 By Mr. Brown : 
 
 Q. You mean by the people at large ? 
 
 A. Yes, I think they should elect our assessors ; let them 
 be responsible to the people and not to any board or any- 
 thing else. 
 
 Q. You would not favor appointing them by the County 
 Commissioners ? 
 
 A. I would not, no. 
 
 Q. That has been suggested in several counties to have 
 them work directly under the County Commissioners. 
 
 Judge Edwards: 
 
 I hope the present gentlemen who will be in the next 
 Legislature will support Senator James' bill on that ques- 
 tion of assessing. 
 
942 
 
 JOHN J. DUEKIN, County Commissioner, called. 
 
 Gentlemen of the Commission : As far as the hospitals 
 are concerned, I don't know a thing about that. Upon 
 the taxes and that sort of thing I have had some exper- 
 ience. I cannot see why a corporation should get out of 
 paying on its building. Take the traction company, the 
 telephone company, the electric light company; they buy 
 a lot, or buy a building, and after they buy it is exempted 
 from taxation. I cannot see why they should not pay a 
 just amount. The same way with railroad companies, 
 and then, again, the banks. 
 
 By Mr. Brown : 
 
 Q. Is that the sentiment of the people that the public 
 service corporations should pay a tax for local purposes. 
 
 A. Yes. The banks used to make a return to the County 
 Commissioners of the money on loan. We don't get that 
 any more. Of course, we lose that amount of money. 
 And then, these other institutions, they used to make a 
 return of the money. We don't know anything about 
 that. We were down to Harrisburg one time and asked 
 for the State books of this section, but we didn't get 
 them we wanted to get 
 
 Q. How long has that been? 
 
 A. About four years ago. And then the express com- 
 panies: I think the law should be changed on that. If 
 they have twenty or thirty head of cattle, we cannot 
 assess that twenty or thirty head of cattle; they are ex- 
 empted. I think that is a very queer law. 
 
 Q. How do you follow up your assessors? Do you give 
 your assessors guide books? 
 
 A. Yes, what we call a blotter. 
 
 Q. You give them the blanks that the Auditor General 
 furnishes you? 
 
 A. That is, the State tax blanks? 
 

 943 
 
 Q. Yes. How do you know how many to give them? 
 
 A. We get it from the record of deeds and mortgages. 
 
 Q. How do you check them up? 
 
 A. "When they come in? 
 
 Q. Yes. 
 
 A. By a book. 
 
 Q. Suppose you find many of them are not returned, 
 do you make any search for them? 
 
 A. Yes, we send out notices for them to make their re- 
 turns or we will estimate them. 
 
 Q. What is your thought on the money on interest as 
 evidenced by certificates of deposit in the trust companies 
 and banks? 
 
 A. Don't have any. 
 
 Q. None here? 
 
 A. No. 
 
 Q. Don't your individual taxables return any of that? 
 
 A. Only trust companies. 
 
 Q. How would it do to have the treasurer of the trust 
 company make a return of that? 
 
 A. That is included in their return to the State. 
 
 Q. How much money do you presume there is in Scran- 
 ton on deposit in trust companies and banks evidenced 
 by certificates of deposit? 
 
 A. More than a million dollars. 
 
 Q. You don't get any of that? 
 A. No. 
 
 Q. What is your thought about the appointing or elect- 
 ing assessors? 
 
 A. I think it should be done by the County Commis- 
 sioners. I think in the body of seven there should be 
 three of one party and four of another party a majority 
 and minority representation. 
 
 Q. What is your thought? 
 
 A. I think we would get better results. 
 
944 
 
 Q. You mean, for instance, the Democrats to assess 
 the Republicans and the Republicans to assess the Demo- 
 crats ? 
 
 A. Yes. 
 
 Q. "Wouldn't you get the same results if you sent them 
 from different localities from which they resided? 
 
 A. Possibly. 
 
 Q. How about the compensation ? Are they paid enough 
 to get the best class of men available? 
 
 A. Now? 
 
 Q. Yes. 
 
 A. No. 
 
 Q. What do you pay? 
 
 A. Two fifty a day. 
 
 Q. How many days in the year are they employed? 
 
 A. There is no regular time. 
 
 Q. About how many? 
 
 A. I should say all over the county probably 100 days. 
 
 Q. Your thought is to have seven employed the year 
 around at an annual salary? 
 
 A. Yes. 
 
 Q. You would get a better class of men? 
 
 A. Yes. 
 
 Q. Do you find much favoritism among these assessors ? 
 
 A. Yes, all over the county. Here and there is an 
 honest assessor. Two-thirds of them are dishonest. 
 
 Q. Have you ever done anything in the way of checking 
 them up ? 
 
 A. Yes. 
 
 Q. Ever have any prosecutions? 
 
 A. No, we never went that far. 
 
945 
 
 F. W. FLEITZ, ESQ., called. 
 
 I cannot say anything to this Commission until I know 
 what your purpose is and what you are investigating. 
 
 Mr. Moyer : "We are revising the revenue and corpora- 
 tion laws where they may prove defective. 
 
 General Fleitz: In the first place, this entire question 
 of taxation in the State of Pennsylvania is a very large 
 one. 
 
 What should be done in Pennsylvania? 
 
 There should be a new, complete, Act passed, embodying 
 the entire system of taxation, both for State and for local 
 purposes; or two Acts passed, one for the State and one 
 for local taxation. 
 
 As it is now, we have on the statute books the Act of 
 eighty-seven, the Act of eighty-nine, the Act of ninety-one, 
 the Act of ninety-three, also the Act of eighty-five ; these 
 are five Acts covering the corporation tax of the State. The 
 unfortunate part of it is that there is included in the Act 
 of eighty-five what is known as the personal property tax, 
 which was originally a State tax and is still so-called, a 
 State tax. My distinguished friend, Senator Blewitt, just 
 alluded to the amount of money he was paying to the 
 State. A great many talk about that tax as they would a 
 State tax. It is not a State tax ; it is a local tax. In other 
 words, 75 per cent, of it is returned to the various coun- 
 ties from which it emanates. It passes through a lot of 
 hands, and any considerable amount of money that passes 
 through a great many hands is apt to stick more or less 
 along the line. So this leaves the State only about 16 per 
 cent, of the entire amount collected; then it has been 
 demonstrated that about 80 per cent, escapes taxation 
 under the laws, so the personal property tax should be 
 eliminated as a State revenue altogether. 
 
 There should be a general Act passed designating the 
 subjects for taxation. There should be a tax for State 
 
946 
 
 purposes that would include all the subjects which the 
 Legislature thinks should pay tribute to the State. There 
 should be no direct tax levied by the State. Probably an 
 indirect tax falls with less severity than any other tax 
 we can levy. Of course, it should include the most notable 
 illustrations of unfairness, such as in the case of the gas 
 companies. The gas companies pay no tax. The electric 
 light companies pay a tax on their capital stock and a 
 gross receipt tax. There is no reason why a gas company 
 should not pay a tax upon its property and assets. This 
 has just been left out either unintentionally or designedly 
 for a great many years. 
 
 In the new Revenue Act, which should be framed by 
 this Commission, upon its recommendation the bonus sub- 
 ject should be entirely changed. The courts of this State, 
 by a process of reasoning that I have never been fully 
 able to understand, have held that a bonus is not a tax, 
 although it is included in the provisions of a bill entitled 
 "An Act to provide revenue by taxation," and it has 
 gone through for the last twelve years, based on the old 
 decision that a bonus is a price paid for a privilege. If a 
 bonus is not a tax, what is it? It is levied and collected 
 under the soverign power of the State to derive revenue 
 for its own expenses and to assist its people. 
 
 By Mr. Brown: 
 
 Q. The bonus is primarily supposed to be an evidence 
 of good faith? 
 
 A. The bonus is a price paid for a privilege. In its 
 inception, the idea of a bonus was a sum required to be 
 paid by foreign people coming in, as contradistinguished 
 from a tax levied upon our own people. They were called 
 bonus laws. That ought to be included in the general scope 
 of taxation. 
 
 Let me point out the inequality of the bonus laws. In 
 1901, the Legislature passed an Act. Prior to that time 
 domestic corporations paid a bonus as of J or 1/3 of one 
 per cent. In 1901 I assisted in drawing up a bonus tax 
 
947 
 
 which would require foreign corporations to pay the 
 same bonus that our own corporations paid. That Act 
 was handled until its language was so ambiguous that 
 the courts held that the bonus did not apply to any cor- 
 poration which had come into the State prior to its pass- 
 age. It went further in the case of the American Car 
 and Foundry Company, and held that it would not apply 
 to any increase of capital brought into the State by cor- 
 porations in the State at the time of the passage of the 
 Act. In the case of our own corporations, under the Act 
 of eighty-seven, every increase they make of their capital 
 stock they pay a bonus. Under the Act of ninety-one, 
 these other corporations can bring into the State more 
 than a million dollars and pay no tribute to the State. 
 
 Q. How are you going to get around that? 
 
 A. By passing an Act requiring a bonus on ajay ad- 
 ditional capital brought into the State by foreign cor- 
 porations now in or hereafter coming into the State. 
 
 The trouble with the whole taxation is this : The courts 
 have held that the authority of the Legislature is supreme 
 and is the expressed will of the people in regard to taxa- 
 tion ; but that authority should be expressed in such clear 
 language that there can be no mistake as to the intention 
 of the Legislature. Every decision is in favor of the 
 person upon whom the tax is levied. The courts have 
 adopted the idea that they can do nothing except when 
 they are expressly warranted by the letter of the law. 
 So on with the whole subject of taxation the same way. 
 
 If such an Act were passed it would wipe the slates of 
 all unconstitutional laws, eliminate all objectionable and 
 inconsistent systems and reach all the subjects legitimately 
 requiring a tax, and that might or might not include manu- 
 facturing corporations. Senator Blewitt has said it would 
 fall with severity upon small corporations. It should be 
 borne by the big corporations. 
 
 There is another point I wish to speak upon. That is 
 this tax on coal. This is an old subject. During the 
 
948 
 
 twenty-three years I have been connected with the Legis- 
 lature that has come up time and time out of mind. We 
 have tried to find some way of putting into force the 
 creation of a fund to take care of the disabled miners 
 and the widows and orphans of those killed. in the mines. 
 The distribution of money derived in this way, to the 
 relief of the miners and their widows and orphans, would 
 conflict with the provisions of the Constitution, which 
 directs that pensions shall only be granted to those having 
 been in the military service. If anyone can point out to 
 me how this can be done without amending the present 
 Constitution, I would like to have him put his finger on 
 it. I have never been able to find it. 
 
 Q. Don't you think the moral obligation for such an 
 appropriation would cause the money to be appropriated 
 for the purposes indicated by Senator Blewitt? 
 
 A. We have tried to make that argument in the Legisla- 
 ture. We have tried to get them for twenty years to 
 take into consideration the peculiar situation in these 
 regions with reference to the liability of men being killed 
 or injured in the mines. I think the Legislature has pretty 
 fairly recognized that recognized it in the erection of 
 State Hospitals. There are three hospitals now in the 
 anthracite regions for the express purpose of taking care 
 of the miners, but they cannot do it all. There are also 
 hospitals in the bituminous regions for the same purpose. 
 I think the State has done wonderful work. 
 
 I think there should be some changes made in the 
 corporation statutes of the State. I think also that the 
 personal property tax should be given by the Legislature 
 to the local authorities. 
 
 By Mr. Woodward : 
 
 Q. In other words, you would like to have the counties 
 collect the four-fourths instead of three-fourths? 
 
 A. Yes. That system is best that leaves the levying and 
 collection of the tax within the immediate vicinity of the 
 
949 
 
 taxpayers. The home rule, if you please, in taxation is 
 most equitable and just. 
 
 Q. Do you think the counties would get as much under 
 the present system if left to themselves than if left to the 
 supervision of the State? 
 
 A. Yes. In the first place the local assessor sends out 
 these bulletins under the direction of the County Com- 
 missioners these pink slips. The local assessor sends out 
 his slips ; some are filled out in the majority of cases not. 
 Then he makes such returns as he thinks are fair. The city 
 authorities have no voice in levying the tax. 
 
 Q. What could be done that would serve the purpose 
 more effectually? 
 
 A. Put that tax in the hands of the County Commis- 
 sioners. Let them appoint the necessary assessors. There 
 should be local assessors. These local assessors should 
 be the men to assist in collecting the tax against land and 
 the tax against personal property. 
 
 Q. You think they would take more interest if they 
 knew they were to get it all ? 
 
 A. Positively, yes. Ninety-five per cent, of the people 
 of this county look upon that as a State tax which they 
 pay directly to the State. There is less moral obligation. 
 The people look upon a State tax just as they do upon a 
 corporation tax, a good thing to evade if they get a 
 chance. The whole idea is wrong, but it is true. If a 
 fellow can beat the State out of a tax he will do it every 
 time, but he looks upon his local tax in a different light. 
 I will venture to say that in this county of Lackawanna, 
 or in Philadelphia county, and, in fact, every county of 
 the State, at least 60 per cent, of the personal property 
 escapes taxation entirely. 
 
 Q. Suppose I say they collect two billions of personal 
 tax. Wouldn't you say it reached a sufficiently large 
 amount to justify the collection of it ? 
 
 A. It should be collected in a different way. In the 
 
950 
 
 first place, I don't believe over 40 per cent, of the personal 
 property is taxed. These local assessors report from the 
 County Commissioners to the County Treasurer, and the 
 report is sent on to Harrisburg. There is no way of 
 checking it up. The only way we have there is to take 
 it and compare it with what it was last year. Then we 
 take into consideration whether stocks and bonds were 
 higher than last year. If the report is too low, we in- 
 crease it and send it bacK to the County Commissioners. 
 Now, I have in mind the case of a certain county in Penn- 
 sylvania where we had positive knowledge that certain 
 private banks were not returning their mortgages and 
 judgments. I heard at that time they had upwards of 
 three millions, so we abitrarily put three millions and a 
 half of additional personal property tax on the returns of 
 that county, and we went into court and sustained it. 
 We arbitrarily placed it on them without an assessment 
 being made. "We just happened to know that fact. So, 
 the whole subject of personal property taxation should be 
 turned over to the counties the assessment, levying and 
 collecting; and should not be under State control at all. 
 Now, as to the taxes of corporations, whether too high 
 or too low, that is a question that should be determined 
 by the necessity for revenue. The revenues of the State 
 have been increasing constantly. In 1889, when Governor 
 Stone took office, the Treasury of the State was depleted 
 and the appropriations made and due amounted to a con- 
 siderable sum, more than the money then on hand in the 
 State Treasury, and the State could not meet its current 
 debts. The Treasurer issued two and a half millions of 
 bonds, and since that time there has been no change in 
 the revenue laws of the State no beneficial changes, yet 
 the revenues have increased. We have increased the ap- 
 propriation to common schools from ten to fifteen mil- 
 lions; the appropriations to charitable institutions have 
 crept up from one and a half to something like six 
 millions ; ten millions have been spent on good roads ; thir- 
 
951 
 
 teen millions have been spent on the new Capitol; two 
 and a half millions of bonds paid for, and we have got in 
 the Treasury upwards of eight or nine millions of dollars. 
 I fail, for my part, to see any occasion for changes in 
 the State revenue at all. I think there ought to be a new 
 taxation law in order to equalize the taxation. 
 
 In 1890, I was secretary of that energetic commission 
 known as the Grange Tax Commission of Pennsylvania, 
 and we held our meetings as you gentlemen are holding 
 them now. Different interests in Pennsylvania came for- 
 ward and gave their testimony and they all had different 
 ideas. After they had presented their points, it occurred 
 to us that the whole thing was a fight of local taxation 
 for local purposes of corporate property. The theory was 
 that all property in the State, the corporate as well as the 
 so-called common property, should be subject to taxation 
 for local purposes. The question was thoroughly consid- 
 ered. There was some objection raised that if you tax a 
 corporation generally for local purposes, that it would be 
 unfair to tax them again for State purposes. We found, 
 upon investigation, that the counties that would profit by 
 that arrangement were the big, prosperous counties of the 
 Commonwealth. Counties like Lackawanna and Phila- 
 delphia would have a large, juicy plum, and the revenue 
 of the State would be diminished. I think we should 
 be a little careful. It is a good suggestion that the real 
 estate should bear a proportionate share of local taxation. 
 In addition to that there must be, for State purposes, a 
 State tax upon the property and assets. 
 
 By Mr. Brown: 
 
 Q. That would include real estate? 
 
 A.. That is the theory. There is a great mistake in the 
 minds of some lawyers that these corporations have a tax 
 on capital stock. It is clear to the gentlemen of the Com- 
 mission and you, and, in fact, anyone who has given this 
 subject some thought, that the tax upon corporations is 
 
952 
 
 levied upon the property and assets of the corporations, 
 and we only take the capital stock as a fair standard of 
 measurement of the value of the assets. The tax is levied 
 on the property and assets The capital stock is a thing 
 that passes from hand to hand and we use that as a 
 standard of measurement. 
 
 Now, about the subject of hospitals; I have known a 
 great deal about that, particularly for the past few years. 
 I am connected with three hospitals and have a general 
 interest. 
 
 Every hospital in this valley is doing a good work, and 
 eyery hospital has used and is using to the best advantage 
 every dollar it is getting or had gotten from the State. 
 
 Some member of the Commission spoke about too many 
 hospitals. There cannot be too many hospitals if well 
 managed. But, in the main, the State of Pennsylvania 
 should not put money into building hospitals at all except 
 those under the State control. It should, however, be 
 more liberal in appropriations for the maintenance of the 
 indigent. The charitable people of this vicinity are bur- 
 dened to death trying to take care of a very large number 
 of absolutely necessary charities. 
 
 By Mr. Woodward: 
 
 Q. Have you any idea what proportion of the money 
 necessary to run your institutions here is collected by sub- 
 scription. 
 
 A. In the State hospital, very little. The State hos- 
 pital, because it belongs to the State, is looked upon as 
 a relief from local charity. I know that has been the 
 case here. The people who go there, in the main, are 
 poor, ignorant foreigners, without money, friends or rela- 
 tives; therefore, local interest does not attach to them 
 as it does to the local charities. 
 
 The Hahnemann Hospital collects about 65 to 70 
 per cent, of tiie money they use for maintenance. 
 The reason for that is that the Hahnemann happens to 
 
953 
 
 be located in this section of the city and is supported very 
 largely by a wealthy class of people. They are interested 
 in it and are doing a great work with it. The same thing 
 is true of the Sanitarium up on the hill. These are two 
 things that appeal to the charitable people of this city 
 particularly. Now, the Taylor Hospital down in the min- 
 ing section has a very hard time to raise money for the 
 hospital, but they hold different affairs and struggle very 
 bravely to raise money. It is only fair to say that they 
 are doing all they can. But I wanted to suggest one 
 thing. The appropriations to the various hospitals should 
 be based on maintenance at a certain fixed rate per pa- 
 tient, and bear some relation to the number of free pa- 
 tients treated in the hospital during the preceding two 
 years. 
 
 Mr. Woodward: 
 
 Q. Why shouldn't it be based on the charity patients 
 alone ? 
 
 A. I mean the charity patients. If the State would 
 adopt a plan of paying 75 per cent, of the actual 
 cost of the indigent treated in these hospitals, it would be a 
 good thing. Have the superintendent of the hospital make 
 a quarterly return as to how many free patients there were 
 treated in his hospital; have the Auditor General approve 
 these vouchers and pay them the pro rata. However, this 
 would be the difficulty: A little hospital in an isolated 
 location could not possibly, no matter how efficiently man- 
 aged, take care of the patients at the same per capita as a 
 large hospital. If you would fix a certain rate, as the State 
 does with its indigent insane, to apply all over the State, 
 it would be more or less of a hardship on certain small hos- 
 pitals where the cost is greater. 
 
 By Senator Blewitt : 
 
 Q. What would you have the State pay annually for the 
 indigent ? 
 
 A. Seventy-five per cent, of the actual cost. 
 
954 
 
 Q. Why not all? 
 
 A. For this reason : Just as soon as the State takes care 
 of these, the charitable people will cease to have an in- 
 terest in them. So far as the charitable work is concerned, 
 it becomes a State institution and not a local institution. 
 If the State would take care of the entire amount, I think 
 it would take the incentive away from the charitable people 
 to contribute toward the support of the institution. You 
 know, in charitable work, the man who gives five dollars 
 will have a keener interest than the fellow who gives noth- 
 ing. He will watch that hospital, and will keep in touch 
 witih it. 
 
 Q. The State supplies a certain percentage of the total 
 amount now ? 
 
 A. That is true, but some institutions get 80 per cent, of 
 their entire cost of maintenance; others get 25 to 30 per 
 cent. The one getting 25 or 30 per cent, may be doing a 
 great deal more charitabl work in proportion to the number 
 of people in its wards than the one getting 80 per cent. 
 
 Q. Is your idea to have a local board cover these insti- 
 tutions ? 
 
 A. No, it would lessen the interest. The people back of 
 the Hahnemann, for instance, are people who have a gen- 
 eral interest in charitable work. They are people of con- 
 siderable means and they have taken hold of the work and 
 have made a great success of it. If you take it out of their 
 control and put it on a common basis with the other hos- 
 pitals in the county, it would lessen their interest. 
 
 Q. Talking of the Hahnemann Hospital,, at the last ses- 
 sion the House appropriated, I think, twenty-five thousand 
 to be used for the building which" is now there plastering 
 it and doing some other work. But the Governor vetoed 
 it. What is your idea as to the State giving money to 
 build hospitals in which they have no ownership? 
 
 A. My idea has been against that for the last twenty 
 years. 
 
955 
 
 Q. You would limit the appropriations to maintenance 
 only? 
 
 A. I would do this. I would adopt this rule. I think 
 there should be some notice, some time given these insti- 
 tutions. The State has adopted a course which has 
 amounted to a custom, and to stop it suddenly would work 
 a great injustice ; if the State would adopt a hard and fast 
 rule of this kind now, it would work a great injustice to 
 this class of people ; it would perhaps be fatal to them. I 
 think there should be some notice given that the next Leg- 
 islature, for instance, would try to take care of these 
 things incurred, but afterward no other improvements 
 would be paid for by the State, but that 75 or 80 per cent, 
 of the cost of maintenance of the indigent would be given 
 them. 
 
 Q. How would you bind the succeeding sessions of the 
 Legislature to a proposition of that kind ? 
 
 A. You couldn't bind them, but if there was a hard and 
 fast rule to that effect, say after the next Legislature, it 
 would then be comparatively easy -for you gentlemen to 
 say, * ' That is against the rule ; it cannot be done. ' ' 
 
 Q. What advantage is it to the State to own these build- 
 ings? 
 
 A. None. Take the hospital at White Haven conducted 
 by Dr. Flick. I was one of the earliest advocates for that 
 appropriation to the "Free Hospital for Poor Consump- 
 tives." (That is the style and title of the institution.) 
 The State paid one hundred and twenty-five thousand dol- 
 lars, not for maintenance, but for building and making 
 that spot a sanitarium and hospital. Finally there was a 
 conflict between Dr. Flick and the politicians, and the re- 
 sult was that at the last session he refused to accept State 
 aid and said, ''We'll run this on a free basis. Here is one 
 hundred and twenty-five thousand they put in our plant; 
 it is true they paid us for maintenance in all about four 
 hundred thousand dollars. We will just appropriate this 
 
956 
 
 plant with its one hundred and twenty-five thousand dol- 
 lars of State money and run it ourselves and give out the 
 statement that the politicians have been so objectionable to 
 Dr. Flick that they crippled his work." Who is going to 
 stop them? 
 
 By Mr. Woodward: 
 
 Q. The reason Dr. Flick gave me for withdrawing his 
 application was that he was making application for three 
 hundred thousand and two hundred thousand dollars of 
 this was to go into a building, and the Committee on 
 Charities refused to recommend that. They did, however, 
 recommend the amount necessary for maintenance. He 
 said he would decline any appropriation unless it gave 
 him the full amount asked for. 
 
 By Mr. Fleitz: 
 
 A. I asked him to admit a man, and he wrote back that 
 he would not violate his rules for any politician in the 
 State. I think it would work out best on the equitable 
 basis of distributing the appropriations for maintenance 
 of the indigent after the next session of the Legislature 
 when you should clean up the hospital question completely. 
 
957 
 
 MR. C. L. S. TINGLEY, Secretary and Treasurer, Scran- 
 ton Street Railway Company, called. 
 
 Mr. Chairman and Gentlemen of the Committee : I have 
 alrady written the Committee giving my views on this sub- 
 ject of taxation, but someone telephoned me that they would 
 like to have me up here. 
 
 By Mr. Brown : 
 
 Q. The thought was that even though you had written the 
 Committee at quite some length, the courtesy was due you 
 to give you an opportunity to appear before us and pre- 
 sent whatever views you might have to give. Your criti- 
 cism appears principally to be on a different time of re- 
 turn? 
 
 A. Yes, that is owing to the numerous reports that are 
 asked for by the State bodies. It practically demands the 
 time of one or two men in a corporation such as ours to do 
 nothing but make out State returns. Now, if all the reports 
 could be based upon a uniform year it would facilitate 
 matters very much, and, I think, it would answer the same 
 purpose. 
 
 By Mr. Brown : 
 
 Q. What time would you suggest? 
 
 A. I would suggest either the calendar year or the Gov- 
 ernment fiscal year, which is June 30. 
 
 Q. What is your folks' thought on local taxation? 
 
 A. That it would be a good thing if a certain amount of 
 taxation on corporations could be levied by local authori- 
 ties. 
 
 Q. So you could divide the tax up between the State and 
 the county? 
 
 A. Yes. It is the public impression that the local au- 
 thorities get no benefit from the tax levied on corporations, 
 
958 
 
 and the argument always is that we get all these valuable 
 franchises and pay nothing for them. Now, if this arrange- 
 ment could be made so the local authorities would get 
 directly, instead of indirectly, some of the tax we are com- 
 pelled to pay, I think it would be a good thing. 
 
 There was one subject brought up this morning by a 
 gentleman speaking about hospitals, as to contributions 
 from the corporations to support hospitals. I would say 
 here, in speaking for our own corporation, that it is our 
 practice to pay for every patient that we send to a hospital ; 
 so that our emergency cases are not charity cases. 
 
 By Mr. Brown : 
 
 Q. Do you know any reason why all corporations should 
 not do that? 
 
 A. I don't. 
 
 Q. Do you think it would be an unusual burden upon 
 them? 
 
 A. Of course, I cannot speak for the mining corpora- 
 tions, but for our corporation it would not be an unusual 
 burden. In addition to paying for our cases, we give a 
 small contribution to the hospitals. 
 
 By Mr. Woodward : 
 
 Q. Do you know what charge they make for the care of 
 your accident cases? 
 
 A. I cannot answer that off hand; it depends largely 
 upon the nature of the accident how serious a character ; 
 whether an operation is required or not. 
 
 By Mr. Fleitz (addressing Mr. Tingley) : 
 
 Q. Wouldn't it be better to have all corporation reports 
 filed on the thirty-first of December, because the Govern- 
 ment reports are now required to be filed on that date ? I 
 only mention that because at a recent conference of the 
 State officials the question was taken up. Inasmuch as the 
 Government has passed this corporation tax and requires 
 them to make their reports on the thirty-first of December, 
 
959 
 
 don't you think it would be better for the State to change 
 theirs to that date? 
 
 A. I would answer that as far as the railway company 
 is concerned the reports are too voluminous. 
 
 Q. Let me tell you that there is a movement to have 
 these two reports co-extensive, being approved by the 
 corporations themselves, from the standpoint that it is bet- 
 ter to have the tax report made at the same time it is made 
 to the Treasury Department for the simple reason that you 
 can check it up. The fiscal year of the State begins the 
 first Monday in January. The corporation reports are 
 required on the first of November for the tax and the first 
 of January for the bonds and evidence of indebtedness; 
 and on June 30 for the Department of Internal Affairs. 
 
 A. I think it would be better for them all to be at one 
 time. The calendar year would be very much better for 
 the reason that these reports to the Secretary of Internal 
 Affairs have to be made up in the summer time, which is 
 the busiest season of the year for us; it is also vacation 
 period. It would be very much easier for us and more 
 convenient if we could make them up in the winter time, 
 when business is more or less slack and the force is not on 
 vacation. 
 
 By Mr. Fleitz (addressing the Commission) : 
 
 One more suggestion with reference to the State Board 
 
 of Charities ; something to take its place. 
 I am thoroughly of the opinion that the State Board of 
 
 Charities is of small use to the Commonwealth. I don't 
 
 say, of course, that this arises out of the inability of the 
 
 men composing the Board. 
 
 By Mr. "Woodward : 
 
 Q. Would you be in favor of a salaried Board that would 
 give all of its time ? 
 
 A. Yes, a Commission, with one man to be known as 
 Superintendent of Charities, to be elected by the people or 
 
960 
 
 appointed. I believe the entire charities of the State, such 
 as the insane asylums, and the building of State buildings 
 in various places should be put into a Department of Char- 
 ities, the head to be appointed by the Governor or elected 
 by the people, who will exercise and assume control of 
 these matters, as the Auditor General does the tax gather- 
 ing of the Commonwealth, with sufficient force of men, who 
 would have the purchasing of supplies, letting contracts, 
 with entire supervision and control of the money in the 
 institution that is, the money appropriated to the institu- 
 tion. Have some one big enough to have supervision and 
 control of all this money that is appropriated in enormous 
 amounts to these institutions. I think that certainly de- 
 serves the closest thought of your Commission. I think 
 this Board of Charities should be wiped out. There should 
 be traveling auditors and legislation requiring that each 
 institution shall be visited regularly and a public ac- 
 countant employed in order to keep perfect track of it 
 in each institution. 
 
 By Mr. Brown : 
 
 Q. There are so many of them that it would require a 
 good deal of time ? 
 
 A. As it is now, what is the result? The Auditor Gen- 
 eral's office has to check them up with an insufficient force 
 of men, and the result is they cannot give it the time. 
 
 Adjourned at one-thirty P. M. 
 
961 
 
 Public Meeting, May 13, 1910, 11 A. M., 496 City Hall, 
 Philadelphia, Pa. 
 
 Present: James P. McNichol, Esq., Chairman; Gabriel 
 H. Moyer, Esq., Vice Chairman; James F. Woodward, 
 Esq., and AVilliam H. Keyser, Eq., of the Committee; 
 Francis Shunk Brown, Esq., Counsel. 
 
 The meeting was called to order by the Chairman. 
 
 MR. HARRY J. SHOEMAKER, representing the Penn- 
 sylvania Manufacturers ' Association, called : 
 
 Mr. Shoemaker : Our speaker just this moment stepped 
 out, and in his absence I would say that the gentleman 
 who speaks for our association represents the Pennsyl- 
 vania Manufacturers' Association, a concern consisting of 
 upwards of seventy-five manufacturing interests in our 
 S'.;it^, and cjiuploysiig upward of o() ; 000 men, and it is 
 constantly growing. Mr. Samuel Roberts, of Norristown, 
 president of the Grater -Bodey Lumber Company, has been 
 appointed one of the speakers representing our associa- 
 tion this morning before your Committee, and Mr. Joseph 
 S. Rambo, also of Norristown, the head of the Hosiery 
 Manufacturers' Association of Pennsylvania, will ask to 
 say a few w^ords before you. 
 
 Our association appointed a committee of eight mem- 
 bers to appear before you today, but the notice was so 
 very short, unfortunately, and it was impossible for them 
 to come. I have a telegram from our Erie representative 
 saying that the Erie association was heard before you 
 while you were at Erie, and they would only refer to 
 the conference held at that place as to what their senti- 
 ments would be They could only repeat what was said 
 at that time, and could not possibly get away. 
 47 
 
962 
 
 MB. SAMUEL ROBERTS, of the Manufacturers' Asso- 
 ciation, called. 
 
 Mr. Roberts : Mr. Chairman and Gentlemen of tho Com- 
 mittee. At a meeting of the Manufacturers' Association, 
 of which I am a member, last night there were two of us 
 delegated to come before you and present our side of the 
 case as we see it. I do not suppose you wan', very much 
 time taken up, and I do not propose to take up very much 
 of your time. I am not a talker. I am just a plain, ordi- 
 nary business man, more given to work than to talk. 
 
 We feel, all of us, and we represent an association there 
 that comprises practically all of the manufacturing in- 
 terests in Montgomery coauty and vicinity, that at this 
 time in our history it; one of the v/orst times to talk about 
 putting any additional tax upon the manufacturing in- 
 terests. You know as well as we do that we have the 
 National tax to contend with, which has not been decided 
 one way or the other, whether we have to pay it or not. 
 We have had an additional burden put upon us by reason 
 of the employers' liability legislation, which makes each 
 manufacturer carry a heavy liability policy, or practically 
 be at the mercy of every accident that may happen. We 
 feel that now, above all times, would be the worst time 
 possible to put any additional tax upon corporations or 
 manufacturing industries. 
 
 It seems to be the favorite howl and talk of the public 
 today: "Soak the corporations." I say to you that 90 
 per cent, of th^ corporations in the association of which 
 I am a member have formed corporations, not for any 
 benefit that might be received from legislation, but simply 
 for the benefit of maintaining and continuing their bus- 
 iness, so that if any one partner died his business might 
 be carried on, and that has been practically the only 
 
963 
 
 reason why 70 to 80 per cent, of the manufacturers 
 have incorporated. We do not receive any more bene- 
 fit than a partnership does really less. We are taxed 
 and they are exempt under the National tax, and we feel 
 that a tax at this time would be a very unjust and burden- 
 some load to put upon us. "We have practically made the 
 country what it is today. The manufacturing industries 
 of Pennsylvania are the backbone and have caused the 
 growth and the stand that Pennsylvania has in the 
 country today, and I believe that if you unjustly tax the 
 corporations I believe first that they are taxed practi- 
 cally all they can stand or bear a;:d if you put any more 
 tax on them you will not only keep prospective manufac- 
 turing industries from coming here, but eventually may 
 drive some of the present ones that are here out of the 
 State. That is n surmise, of course. 
 
 By Mr. McNichol: 
 
 Q. What would you suggest in lieu of a tax on manu- 
 facturers ? 
 
 A. As to increase of revenue, do you mean? 
 
 Q. As to ways and iaeans to secure more revenue. 
 
 A. Well, the suggestion that you have brought forth 
 yourself is a suggestion that one of our members brought 
 up in our association, and I think it is a very good one, 
 to tax the man that runs the automobile. We all have au- 
 tomobiles; every ^ne in our association last night has a 
 machine, and every man in it would be perfectly satisfied 
 to pay a fair tax, if the money went to the maintenance of 
 the roads. 
 
 Q. That is only getting at the small end of the capabili- 
 ties of the big fellow, who is able to pay more in another 
 direction. He takes the surplus out of his earnings from 
 his manufacturing industries and buys an automobile. 
 
 A. How can you get at the large man without hitting 
 the small man ? 
 
964 
 
 Q. We have let the small man pay about 95 or 98 per 
 cent. We want to get at the big fellow who is running 
 off to Europe every year and spending enormous amounts 
 in Europe and Paris, and see if we can't get some of it 
 back here. 
 
 A. Mr. Chairman, if you can get at any law that will 
 tax the man who is perfectly able to pay it and making 
 undue profits in some cases, then it would be just. But 
 you cannot get at the big fellows without hurting the 
 little ones. Maybe you will get at two or three who have 
 a lot by singeing and hurting the little fellows. 
 
 By Mr. Brown : 
 
 Q. Assuming that we have sufficient revenue as it is, 
 how do you discriminate between the corporation not a 
 manufacturer, and the corporation that is a manufac- 
 turer? Why should a manufacturing corporation be ex- 
 empt and the other taxed? For instance, each employing 
 the same number of men and located, for instance, one 
 across the street from the other ? 
 
 A. I do not exempt them. You mean the corpora- 
 tion 
 
 Q. We all know manufacturing companies pay every 
 tax except a tax on capital stock ; they do not pay as deal- 
 ers ; they are exempt from license tax and on capital stock. 
 Why should the manufacturing corporation be exempt 
 from these two taxes, when the other corporation directly 
 across the street, employing the same number of men and 
 having the same amount of capital invested in its plant, 
 is not exempt ? 
 
 A. I do not just grasp the idea that you are getting at. 
 Do you mean the difference between a partnership and a 
 corporation? 
 
 Q. No, not at all. I am discriminating between a cor- 
 poration other than a manufacturing corporation, and a 
 manufacturing corporation. All other corporations pay a 
 tax on their capital stock ; manufacturing corporations do 
 not. Why should they not, the same as the others ? 
 
965 
 
 A. Both employ the same number of men and produce 
 the same results. 
 
 Q. What do you mean by "produce the same results"? 
 Of course, they do not produce the same result. One may 
 manufacture the stock and the other sell it. 
 
 A. Any corporation employing the same amount of 
 capital and the same number of men ought to be on the 
 same level. 
 
 Q. And you v'ould make no difference between them? 
 A. No, sir. 
 
 Q. Suppose there is a corporation across the street from 
 Lit Brothers, a manuf a cturing corporation. Your opinion 
 is that the manufacturing corporation should be taxed the 
 same as the other? 
 
 A. No, because the manufacturing concern is producing, 
 and the other concern is simply a seller of some one else's 
 production made all over the country and brought in here. 
 
 Q. For instance, the seller doesn't receive one-half of 
 the net income from the business he does, as compared 
 with the manufacturer; you still think the manufacturer 
 should be exempt? 
 
 A. I certainly do. 
 
 Q. In other words, o.ie man gets 10 per cent, as a result 
 of his labor and investment and enterprise and pays a 
 tax on that, you think that the manufacturer who gets the 
 same as a result of his enterprise and thrift should not 
 pay anything. 
 
 A. That manufacturing concern across the street from 
 Lits is making it possible for Philadelphians to go there 
 and buy stuff from Lits, and because he is giving employ- 
 ment to hundreds of men. If there is any one concern in 
 the country that ought to be taken care of and not loaded 
 up with taxes, it is the manufacturing industries of this 
 State, because they have made the State and are making 
 \t today. 
 
966 
 
 By Mr. McNichol : 
 
 Q. Hasn't the State made the manufacturer? 
 
 A. I don't think so. 
 
 Q. You don't want us to believe you people are respon- 
 sible? Don't you think the State Government has taken 
 care of them for the last twenty-five years? 
 
 A. I think they have, but I think the manufacturers 
 have taken care of the State more than the State has 
 taken care of them. The manufacturing industries of the 
 country have made the government of the State possible. 
 
 Q. Very few manufacturers of the State have gone to 
 the wall by reason of not getting compensation for their 
 work ? 
 
 A. Possibly, not in the last ten years. 
 
 Q. Less than tmy other State in the Union? 
 
 A. Yes. I don 't think the manufacturers have any rea- 
 son to complain about legislation in the past. They are 
 not taking that view of it here. They are simply trying 
 to take care of their interests in the future. 
 
 Q. In other words, they have got a good thing and don't 
 want it disturbed? 
 
 A. In some cases they have. I will be frank and say 
 to you it is possible, but I don't believe if you take the 
 manufacturing industries right straight through, 75 or 80 
 per cent, of them have just got a bare living out of their 
 industries, and the other 20 per cent, may be making enor- 
 mous profits. If you could get at the man who was mak- 
 ing abnormal profits without hurting the other fellow, it 
 would be a good thing to do. 
 
 Q. That is what we are depending on you gentlemen to 
 furnish the information and show us how to do it. 
 
 By Mr. Brown: 
 
 Q. Mr. Brown, representing the Manufacturers' Asso- 
 ciation, appeared before us and said if the State was not 
 collecting sufficient revenues at present, he thought the 
 
967 
 
 manufacturing interests of the State would be willing to 
 be subjected to a tax of one mill. He said he had con- 
 ferred with the interests represented there, and he thought 
 they would be entirely satisfied, and on the basis of three 
 billions of stock it would bring a revenue of three millions 
 to the Commonwealth. Have your folks given that any 
 thought ? 
 
 A. Yes. 
 
 Q. I am not assuming that there is any necessity for 
 additional revenues, but assuming that there is, what 
 would be your thought? 
 
 A. That very question was talked over, because we had 
 heard rumors about there being a one mill tax put on, and 
 it was discussed among us, and we are all adverse to it. 
 We do not want any more tax. It is natural and we are 
 looking at it from our view of the case. We do not want 
 any more tax, and we feel we are justified in asking you 
 not to put any more tax on us. We feel there is no just 
 reason why you should do it. There is a law in Mont- 
 gomery county to increase the valuation of property; 
 every manufacturing concern in our county has had his 
 property pushed up from 20 to 25 per cent, local tax. We 
 have got that to contend with and the National tax, 
 and the most expensive tax of all, we have got to contend 
 with and maintain, I believe, it is the liability insurance 
 we have to carry in order to protect ourselves. It is not 
 only one, but it is the culmination of all these taxes that 
 make us come hore and protest. 
 
 By Mr. McNichol : 
 
 Q. You mean the liability law as represented by the 
 State or National law? 
 
 A. The State and the National, both. 
 
 Q. Where do you get any hardship from that? 
 
 A. It means we have got to carry the insurance to pro- 
 tect ourselves. 
 
 Q. You naturally would carry the insurance anyway? 
 
968 
 
 A. We did not, a great many of us, until about five 
 years ago. 
 
 Q. And then, in the last five or six years the protection 
 to labor has increased for the benefit of the working man, 
 and rightfully so. 
 
 A. I grant you that, but it is a tax nevertheless. I do 
 not object to that liability law. 
 
 Q. It is only a tax in case you are going on and paying 
 it, but suppose something happened in the meantime and 
 you didn't have that insurance, then your tax would be 
 much greater, wouldn't it? 
 
 A. In former years the laws were not as severe on the 
 liability as they are today, and consequently there wasn't 
 as much chance for a man to recover. 
 
 Q. We are trying to do for the little taxpayer what we 
 have done for the working man and broaden the scope of 
 our protection. 
 
 A. We are not here to protest against the liability law, 
 because we believe in it. 
 
 Q. I believe it is one of the best pieces of legislation 
 that has ever been passed. 
 
 By Mr. Brown: 
 
 Q. How do you distinguish between the manufacturer 
 and the middle man? Is the middle man today in this 
 State in any better condition to pay tax than the manu- 
 facturer is? 
 
 A. I couldn't answer that question. 
 
 Q. Have you folks made no investigation along that 
 line? 
 
 A. I don't think we have. I couldn't answer that in- 
 telligently. 
 
 Q. Of course, the middle man does pay a mercantile 
 tax? 
 
 A. Yes. We pay ourselves part of the mercantile tax, 
 but I couldn't answer that question at all, because I am 
 not posted on that. 
 
969 
 
 Q. Have you ever given any thought as to other tax- 
 ables, assuming that there is not sufficient revenue for the 
 proper needs of the Commonwealth? 
 
 A. Well, isn't there sufficient? 
 
 Q. I am assuming now that there is not. Have you ever 
 talked among yourselves as to the right or propriety of 
 the State appropriating to State institutions not under her 
 control? 
 
 A. Yes. I did not catch your idea. That was dis- 
 cussed also last night. 
 
 Q. What is the consensus of opinion? 
 
 A. Against that. 
 
 Q. Why. 
 
 A. Because there is a great many or tnese concerns you 
 are carrying on and building up and up, and they may 
 take that thing over sometimes after while and run it 
 for their own interests. There is nothing to stop them. 
 
 Q. You think the State isn't getting a proper return? 
 
 A. The State should have some ownership in every 
 building they appropriate money to. 
 
 Q. How far has that been discussed in your associa- 
 tion? 
 
 A. Not very far. We just took that up on the side last 
 night. That was one of the chief objections, and there 
 was about ten or fifteen minutes discussion on that verq 
 question, and White Haven was one of the institutions 
 mentioned very prominently in the talk as being an insti- 
 tution that had been well taken care of by the State. 
 
 Q. Has there been any discussion among you as to other 
 directions in which in your opinion money could be saved ? 
 
 A. I suppose you mean 
 
 Q. Without imposing any tax upon you, or which you 
 would not think it proper or fair should come out of you* 
 pockets? Have you given any thought to that? 
 
 A. Well, no, I don't think we have. It was the appro- 
 priations to State institutions that we talked of more than 
 anything else. 
 
970 
 
 MR. JOSEPH S RAMBO, representing the Montgomery 
 County and State Manufacturers Associations, called. 
 
 Mr. Rambo : I represent the Montgomery County Manu- 
 facturers ' Association, the same as Mr. Roberts, and inci- 
 dentally the State Manufacturers' Association. I am 
 sorry our president, Mr Grundy, is not here today. I 
 think he could represent the State affairs much better 
 than myself. 
 
 The question was asked a while ago of Mr. Roberts of 
 the difference between the merchant corporation and the 
 manufacturing corporation. "Well, the manufacturing cor- 
 poration is a benefactor. It brings money from a dis- 
 tance into the town, and the merchant corporation takes it 
 out. He absorbs it and puts it in bank and puts it in cir- 
 culation outside of town. That is the principal difference 
 between the two I see. Besides that, if a manufacturer's 
 business goes bad, his plant depreciates; his money is 
 all tied up in machinery, and his plant depreciates from 
 50 to 75 per cent, pretty near st once, If a mer- 
 chant goes bad, his stock is all good merchandise usually, 
 except possibly a little old stock, and you can generally 
 get about one hundred cents on the dollar. 
 
 By Mr. Brown: 
 
 Q. You think there is a greater risk in manufacturing? 
 
 A. Considerably greater. Besides that, I think the 
 profits are very much less. 
 
 Q. The questions I have asked have been indicated, a 
 great many of them, from letters received by the Commit- 
 tee. For instance, a number of corporations have written 
 to this Committee that they thought there was an unfair 
 discrimination in taxing them and exempting the manu- 
 facturer. That is the reason I am asking the manufac- 
 turers why they should be exempt? 
 
971 
 
 A. I heard you ask the question and thought I would 
 answer it. There are very few of us manufacturers who 
 are making big money. There is a few, of course, who do 
 make big money, and you would be taxing 90 per cent., 
 or maybe 95 per cent, that have a struggle to get along 
 in order to get the other 10 per cent., and it would be 
 unfair. Besides every community is hunting for manu- 
 facturers. Why? Because they are benefactors to any 
 community. 
 
 Q. Have your folks made any comparison between the 
 relative results of other interests and yours? 
 
 A. No, we did not go into that particularly. 
 
 Q. Because from the letters we have received it would 
 seem that the manufacturer was probably considered the 
 most prosperous in the community? 
 
 A. We do not have to go far to change your views on 
 that. There are very few manufacturers become very 
 wealthy, and I dare say 25 per cent., or maybe a greater 
 per cent., fail entirely before they die. We can look all 
 around us here and see merchants springing up like mush- 
 rooms, millionaires. You do not see manufacturers doing 
 that. There are very few of them ever become million- 
 aires. 
 
 By Mr. McNichol: 
 
 Q. Will you give us a list of the manufacturers in the 
 last ten or fifteen years, a sort of a synopsis of their 
 financial condition? 
 
 A. The manufacturers who have failed ? 
 
 Q. Yes, those who have been prosperous and those who 
 have passed out by reason of failure? 
 
 A. I don't know as I want to point out all those who 
 have been prosperous. There is very few, it seems to me. 
 I can point out failures in my own town there. There is 
 only two left of wool manufacturers in my own town, out 
 of about twelve or fifteen which started there since I did 
 in the last twenty or twenty-five years. 
 
972 
 
 By Mr. Brown : 
 
 Q. To what do you attribute that? They have had this 
 exemption you have had, and the same facilities you have 
 had; why is that? 
 
 A. Yes. Well, it is hard for me to attribute it 
 
 Q. They have not left Pennsylvania because they have 
 been too heavily taxed? 
 
 A. No, they haven't. They haven't gotten any results, 
 either because of management, or something or other. 
 Most of them seemed to be business people, but there 
 wasn't enough in the business for them to get along on. 
 As I said, only about 10 per cent, of the manufacturers do 
 make much money; a few of them get wealthy and the 
 rest of them seem to hang on. 
 
 Q. How about the middle-man to whom the manu- 
 facturer sells and who handles his goods; is he in a 
 better condition? 
 
 A. The jobber? 
 
 Q. Call him the jobber? 
 
 A. He doesn't have his money tied up in machinery and 
 plant like that. Of course, he has a big building sometimes 
 in the center of a city, which usually improves, but his 
 merchandise he buys and sells and it doesn't depreciate 
 like machinery in a manufacturing plant. He gets fair 
 returns. Perhaps he has lots of competition. I don't 
 think the jobber or the middle-man has as good a time 
 of it as the retailer. Just taking it from a general view- 
 point, the retailer seems to be more prosperous right 
 along. 
 
 Q. Have those with whom you associate given any 
 thought as to what taxables should be added to the present 
 list, assuming there is not sufficient revenue? 
 
 A. We did not take anything up except automobiles. 
 I proposed that some time ago. Mr. Wilson Brown, of the 
 Manufacturers' Club, spoke of it at the last meeting here, 
 I think, some time in April. I was sick at the time. I 
 
973 
 
 think we should make the license on automobiles about a 
 dollar per horse power. It is a luxury and everybody 
 that runs an automobile has such large expenses other- 
 wise that they wouldn't feel that. 
 
 Q. I presume for additional revenue that would be a 
 a very small drop in a very large bucket? 
 
 A. It has been estimated it would raise a million dollars 
 or more. That would go a good way towards good roads. 
 It ought to go to the Road Department, I think. 
 
 Q. One of the principal demands has been from the State 
 Grange people, who think larger sums should be given 
 for school purposes? 
 
 A. Farmers are more prosperous than the manufac- 
 turers. The farmers are not taxed much, and they are more 
 prosperous to-day than the manufacturers. They are not 
 as large producers. The manufacturers are producing 
 more to-day than the farmers in dollars and cents. 
 
 Q. The farmers will show you they are assessed out of 
 proportion, and produce statistics to show that the 
 farmer pays a higher rate than any other interest. They 
 gave us those figures, and I would be pleased to give you 
 a copy of it. 
 
 A. They are the most prosperous of any class of people 
 to-day, I think. Now, you asked a while ago about the 
 class of manufacturers who might be taxed. I would not 
 want to suggest that there is particularly, but the only 
 manufacturer who is sure of making any amount of money 
 is one who is manufacturing a patented article, or some- 
 thing of that kind, and has a monopoly, and there isn't 
 so many of those, I don't suppose. 
 
 Q. They work under patents? 
 A. Yes. 
 
 Q. They have exclusive rights, those people? 
 A. Yes. They can get their profits, where those who 
 have plenty of competition can't get them. 
 
974 
 
 By Mr. Moyer : 
 
 Q. What do you think the State's attitude should be 
 towards its private charities in this Commonwealth, with 
 reference to continuing appropriations? 
 
 A. Well, as Mr. Roberts stated, we talked over that mat- 
 ter last night, and we were all of one opinion, that 
 the State should not, when they didn't have the money 
 to spare, appropriate money to charitable institutions in 
 which they did not have some control or some ownership. 
 If they had plenty of funds, it would be a different thing. 
 
 Q. You think, therefore, the title to the property should 
 be vested in the Commonwealth ? 
 
 A. If they want money from the Commonwealth. At 
 least they ought to have credit to the extent of the amount 
 they appropriate. 
 
 Q. That seemed to be the opinion of the gentlemen who 
 were assembled together last evening; is that your 
 thought ? 
 
 A. Yes. 
 
 By Mr. Brown : 
 
 Q. As a matter of information, the average rate 
 of tax on real estate in Pennsylvania is estimated to be 
 eighteen mills, and the average rate of tax on personal 
 property is three and a quarter mills. That is, six times as 
 much? 
 
 A. There are lots of corporations besides the manufac- 
 turing corporations that are not as good to the State as 
 others. Every community is after manufacturers. They 
 give them inducements to come there, and after they get 
 them there then if they are succssful the community is suc- 
 cessful. I think as the State has made these inducements, 
 which I think other States do to get manufacturers, they 
 ought to encourage them instead of trying to discourage 
 them. 
 
 Q. The thought is this, that they, having been exempted 
 since 1885, are in a position to-day to help the State; 
 
975 
 
 that is the consensus of opinion of those who have written 
 us? 
 
 A. There might be a few, a small percentage, that are 
 in shape to be taxed, but I do not see how you can dis- 
 criminate. Besides that, all these are propositions to tax 
 manufacturers or manufacturing corporations. They 
 leave out the individual and the partnerships, who are 
 just as able and just as good competitors as we are. They 
 make just as much money as the corporations, and per- 
 haps more, and not only that, but in taxing the corpora- 
 tions you tax a lot of small stockholders, and in leaving 
 out the partnerships or individuals who are competitors 
 they have the whole concern themselves, and they are left 
 exempt in this National Tax Bill, and it has been talked 
 the same way in proposed bills in the State. It is a dis- 
 crimination against the fellow who incorporates his busi- 
 ness; sometimes they incorporate as a matter of 
 necessity; they don't have money enough, and the manu- 
 facturer gets several people together with small means. 
 There is no reason why they should be taxed, and the other 
 fellow who has plenty of money to run his business will 
 be exempt. 
 
 Q. You would distinguish between competitive busi- 
 nesses? 
 
 A. Yes. You dare not discriminate against them. It 
 is unfair and unjust. 
 
 Q. I mean between them, and not against them. 
 
 By Mr. Woodward : 
 
 Q. You said you believe the charitable institutions who 
 receive State aid should not receive it unless the State 
 held title to the property? 
 
 A. Well, held title to it to the extent to which they 
 receive State aid. 
 
 Q. Do you think that would be a good thing for the 
 State to take title and continue to support these institu- 
 tions ? 
 
976 
 
 A. Well, I haven't looked into that. You can answer 
 that question. I think this is a matter for the State to 
 look into. 
 
 By Mr. Brown : 
 
 Q. Why can't your Pennsylvania Manufacturers' Asso- 
 ciation look at this subject from all viewpoints and give 
 us the benefit of their judgment, not from the interest of 
 the manufacturer or the middle-man or from any other 
 person with selfish interests, but from the interest of what 
 is best for all people of the Commonwealth ? Why should 
 not all these interests do that? 
 
 A. Well, you naturally think we come here in behalf 
 of our own interests, but at our meeting last night and the 
 way I have felt right straight along has been in the general 
 interest of the Commonwealth. I am sincere in what I say. 
 I am not looking at the matter in a selfish way entirely. 
 
 Q. Your thought is that no matter what money may be 
 needed, that under no circumstances should manufactur- 
 ers be taxed ; I mean the capital stock ? 
 
 A. Yes, I think it would be a great mistake to tax the 
 manufacturers, because, as I said before, they are great 
 benefactors to any community, and you want to encourage 
 them rather than discourage them. 
 
 By Mr. McNichol : 
 
 Q. On that score you don't want us to believe the manu- 
 facturing corporation is invited into a community for 
 the benefit which is going to accrue to that community, do 
 you? 
 
 A. I certainly do. 
 
 Q. Isn't it a fact that men who embrace that particular 
 line of business with their capital, do so for the profits that 
 are in it ? 
 
 A. I admit that. 
 
 Q. Isn't that true in every business? 
 
 A. Yes, the men who embrace that business now are not 
 going in it for fun, of course. 
 
977 
 
 Q. You don't want us to believe a man puts a million 
 and a half in a manufacturing plant for the purpose of the 
 benefits largely that are going to accrue to the inhabitants 
 of Philadelphia or any other community? 
 
 A. I don't say that. 
 
 Q. You are talking about what benefits accrue to the 
 particular community? 
 
 A. The man who goes in a business goes in it for his 
 own gain always, but when he does that he benefits the 
 community and the community needs him as much as he 
 needs the community. 
 
 Q. And the community recognizes that and deals with 
 him accordingly? 
 
 A. They are bidding for them all the time. We hear 
 of them doing it. 
 
 Q. They are remote spots and the conditions are not 
 favorable, but you take a city like Philadelphia, those 
 men are seeking Philadelphia, and not Philadelphia seek- 
 ing them. I know if I had $500,000 to invest in a manu- 
 facturing business, we would get the most desirable spot 
 productive of the most beneficial results. 
 
 A. How would you get that desirable spot? 
 
 Q. By having competent men to locate us in a spot that 
 would have all the facilities that would be necessary to 
 properly conduct that business. 
 
 A. Isn't it a fact that if you had a hundred thousand 
 dollars to put into a large manufacturing plant, and you 
 let it be known, that different sections of Philadelphia 
 would be after you to get it? 
 
 Q. Yes, but I would locate in that section wherein I 
 \vould be told by a man who would be competent to tell 
 me, where I could produce my goods for the least cost and 
 sell it for the largest profits. The manufacturer does not 
 go to the community unless he finds favorable conditions ? 
 
 A. Certainly, he is looking out for his own interest, too. 
 I am making the point that the communities are seeking 
 
978 
 
 manufacturers, and why? Because they are benefactors; 
 they bring money to the communities. 
 
 Q. Those communities are seeking them because they 
 have no other facility by which they can develop the 
 growth of their community, but the manufacturer seeks 
 the community that has got desirable conditions. 
 
 A. When you come to a city like Philadelphia it is 
 quite different from towns like Norristown or towns a 
 great deal larger all through the State. 
 
 Q. I agree with you. 
 
 A. I will give you an instance right in my own town, 
 and I dare say there are hundreds of towns in the State 
 doing the same thing. We have been asked to bid for 
 different manufactories there, I suppose a half dozen times 
 at least within the last year, and we have always made 
 an effort to get them, because we think they are bene- 
 factors. Not only the business men are seeking them, but 
 the manufacturers themselves, for the benefit of the town 
 and the community. That is the general thing every- 
 where. 
 
 By Mr. Brown : 
 
 Q. That would not be governed by any State tax; that 
 would be governed by the local tax? 
 
 A. That is not considering any tax at all. That is show- 
 ing manufacturers are benefactors to any community and 
 every community wants them. What I want to say along 
 that line is that we should not discourage them by trying 
 to tax them and drive them out of the State. There are 
 not such big profits in manufacturing as some people 
 try to make the public believe there are. 
 
 By Mr. Moyer : 
 
 Q. The State's resources would have something to do 
 with locating the plant ? 
 A. The State 's resources ? 
 Q. Yes, the natural resources of the Commonwealth? 
 
979 
 
 A. Sometimes in certain things, if a man is using any 
 large amount of fuel he would want to get near a coal 
 mine, providing he couldn't get a freight rate as cheap 
 as he could up near the mine. 
 
 Q. Take the large steel corporations in the "Western 
 part of the State, the statement was made at Pittsburgh 
 that they Y^ould likely locate in the State of West Virginia 
 or some other nearby State if they were taxed, because 
 of the accessibility of fuel. 
 
 A. Fuel and waterways and things like that, where they 
 have lots of freight like a steel plant, but there are different 
 States have those facilities. 
 
 Q. Would you rather have your manufacturing plant, 
 for instance, in Norristown, than you would in Arizona 
 or New Mexico? 
 
 A. I haven't given that any consideration, but we nat- 
 urally think so. 
 
 Q. You get better returns? 
 
 A. Yes, but there are plenty of towns in Pennsylvania 
 besides Norristown. 
 
 Q. I mean anywhere in Pennsylvania? 
 
 A. Yes. 
 
 By Mr. Brown: 
 
 Q. Norristown is all right, from your point of view? 
 
 A. Yes, I like Norristown. I have no objection to it. 
 
 Mr. Shoemaker: There is one other gentleman on this 
 Committee who would like to ask for your consideration. 
 You have been exceedingly kind. 
 
980 
 
 MR. ROBERT A. GARWAITE, Treasurer of the J. Ell- 
 wood Lee Manufacturing Company, of Conshohocken, 
 called. 
 
 Mr. Gartwaite: I would just like to supplement Mr. 
 Rambo's remarks in regard to manufacturing concerns 
 leaving the State and going into other towns and bor- 
 oughs. I have an instance in our own concern. We have 
 just had an offer to go to New Brunswic*, New Jersey, 
 and to go to Illinois and be given ground free if we would 
 bring our plant there, and although there are only about 
 five or six thousand people in Conshohocken, the Borough 
 Council got together and requested us to remain in Con- 
 shohocken. We employ about five hundred people, and it 
 would undoubtedly be a great loss to the town if we were 
 to leave. While you say that the people do not seek the 
 manufacturers, I think we can take exceptions to that, in 
 that these people have kept right after us to stay in Con- 
 shohocken, and the only reason we stay there is simply 
 because it is the home of the company, and we do not 
 get any better facilities than we would if were over in 
 New Brunswick, New Jersey. Of course, >ou say a place 
 like Philadelphia might be more attractive, but in a large 
 majority of cases you will find the manufacturer can go to 
 any place he doesn't have to be in a large city if he is 
 on a good railroad and can get a good siding and reason- 
 able freight rates; it doesn't matter whether there are 
 twenty thousand or a hundred thousand people in the 
 town he is located in, because the manufacturer produces 
 and he has to ship his products any way and is not de- 
 pendent upon the surrounding people and the city in 
 which he is located for his support. 
 By Mr. McNichol : 
 
 Q. How about his help? Do you mean to say you could 
 
981 
 
 retain your help as easily in a town of five thousand in- 
 habitants as you could in a town of a hundred thousand? 
 
 A. I mean to say you can go to a town of five thousand 
 people with such a plant as ours and get plenty of help. 
 
 Q. And retain them ? 
 
 A. Yes. We have no unions out there and everything 
 goes along very smoothly, and. in iact, people are coming 
 all the time from other places wanting to locate there. 
 Also, I think that a great many Senators and the people 
 at Harrisburg are under the impression that manufac- 
 turers are, as you say, bloated bond-holders. I think you 
 will find, as Mr. Rambo said, that 75 to 80 per cent, are 
 just struggling along for an honest profit. Take our big 
 corporations, such as the Steel crowd and the Standard 
 Oil bunch, you will find they are men who have made 
 money out of the manufacturing, probably, but the rest 
 of the people have made their money in banking and have 
 worked until they have become very wealthy. The story 
 of the manufacturers going to Europe and Paris and 
 spending money made in this country, I think is greatly 
 exaggerated. 
 
 By Mr. Nichol: 
 
 Q. What would you term Carnegie a bloated bond- 
 holder or banker? What category would you put him in? 
 
 A. He is a millionaire. 
 
 Q. And Rockefeller? 
 
 A. He is a millionaire. 
 
 Q. What do you find the people taking passage to Eu- 
 rope, such as Garey. 
 
 A. The Steel crowd, I admit, and the Standard Oil 
 crowd are the milliona'res who ha/e been manufacturers, 
 but the majority of the rest of them have made their 
 money out of railroads and stocks and bonds, such as 
 the Vanderbilts and the Goulds and Astors. 
 
 Q. I think you should furnish a list of statistics as to 
 the standing of the manufacturers? 
 
982 
 
 A. I say the people in general throughout the State 
 think the manufacturers are making immense profits, 
 where in reality they are only making a legitimate honest 
 profit, 75 per cent, of them. 
 
 Q. We do not believe that. You are only quoting some 
 of the Democratic newspapers here in the city. We 
 would like for you to give us th"; facts to disabuse the 
 minds of the people ? 
 
 A. You must admit a great many people in the country 
 have made their money 
 
 Q. I have been trying to figure out and discover how 
 they did make it. I haven't been able to make it out how 
 they did do it. 
 
 A. If you make a tax that would take in all that crowd 
 you will be doing something. 
 
 Q. We are after them. 
 
 By Mr. Brown: 
 
 Q. How do you distinguish in the illustration I gave to 
 Mr. Roberts, between taxing a man on one corner, having 
 the same amount of capital invested, and not taxing the 
 manufacturer across the street? 
 
 A. I think if you place the manufacturer on one corner 
 and a merchant on the other corner 
 
 Q. I am assuming each gets the same result, the net 
 earnings at the end of the year and the net result, charg- 
 ing off everything you would ordinarily charge off to 
 profit and loss in the manfacturing and mercantile busi- 
 ness, and each man has made exactly the same from his 
 business. Why would you tax one and not the other? 
 
 A. Because the merchant was probably benefiting from 
 more than the one concern across the street. 
 
 Q. The net result is the same? 
 
 A. What I mean is that he is selling more than that one 
 company's product, and therefore he is benefiting from 
 more than one manufacturing concern, and if the manu- 
 
983 
 
 facturer closes down probably that concern would go on, 
 because it takes many more people to manufacture goods 
 than it does to sell it. 
 
 Q. You don't think a man should pay tax according to 
 his ability to do so ? 
 
 A. I think the manufacturers of this State are taxed 
 enough, and I think with this new National Government 
 tax going into effect it is going to be very hard. I know 
 it is going to be hard in our case, and we sell to State in- 
 stitutions such as hospitals. 
 
 Q. "We have had one manufacturer here who said it 
 didn 't make much difference ; he would simply add it on 
 to the price of his product, and it didn't make any dif- 
 ference to him. 
 
 A. But if you place a manufacturer on one corner and 
 a merchant on the other, both employing the same num- 
 ber of help, and both making the same percentage 01 
 profit, you will find that the merchant is making his profit 
 out of more than one concern ; therefore he is benefiting 
 probably from four to five manufacturers throughout the 
 United States. 
 
 Q. What is the net result to the Commonwealth? 
 
 A. Well, of course, if they both pay taxes, the Common- 
 wealth would get it from both sources, but it would be 
 harder on the manufacturer. 
 
 Q. I mean outside of the tax. What is the difference 
 in the general net result to the Commonwealth outside 
 of the question that one pays and the other does not pay ; 
 how is the Commonwealth benefited? Isn't the man on 
 the corner with the store 
 
 A. Don't you think there should be some distinction 
 between a manufacturing man who is producing and the 
 merchant who is selling the product? 
 
 Q. That is what I am trying to find out from you? 
 
 A. I certainly do. I think the man that is producing 
 and is really keeping the town together should be given 
 
984 
 
 more credit and should be exempt from certain taxes, 
 than the man who is simply a merchant and buys and 
 sells goods from probably five or six different concerns 
 throughout other different States. The merchant could 
 go out of business, but it wouldn't hurt the town. If the 
 manufacturer went out of business it would hurt the town 
 materially. 
 
 By Mr. McNichol : 
 
 Q. Very few manufacturers who went out of business 
 had a profitable investment. In your recollection can you 
 give us any idea of the number of manufacturers who 
 went out of business and who had a profitable investment? 
 
 A. He would be foolish if he did. 
 
 Q. Consequently his business would become a sort of 
 burden upon him and fail to produce proper revenue, and 
 that would be the cause of putting him out of business? 
 
 A. He would go out of business if he didn't make a 
 profit. 
 
 Q. If he is not making good returns for the amount 
 of money invested, very few of them neglect to change 
 their location. 
 
 A. I don't quite agree with you there. As I said, the 
 community, from the fact that it is a community, does not 
 benefit the manufacturer to any great extent, because his 
 product is sold probably hundreds of miles from where 
 he is located. 
 
 Q. The cost of production is largely taken into con- 
 sideration in locating a plant, isn't it? 
 
 A. You can go to any town, and if you are in a town 
 of 5,000 for instance, where we are, we could go over to 
 New Brunswick and get the same labor facilities we have 
 now. 
 
 By Mr. Brown : 
 
 Q. But you have to pay a tax there, just the same as 
 you are now ? 
 
985 
 
 f 
 
 A. Yes. This National tax which is going into effect 
 doesn't affect partnership concerns. It will affiect us to 
 a great extent, and if, as you say, you can pass some 
 law which will take in concerns such as the Standard Oil 
 and the United States Steel Trust, you will be doing some- 
 thing, but the poor people who are only making ten or 
 twelve thousand dollars a year are going to be taxed, so 
 it runs up, you know. 
 
 By Mr. Woodward: 
 
 Q. Do you think the State ought to continue the policy 
 of appropriating money to private charities? 
 
 A. I think they should when they retain an interest in 
 the property, but there are a great many people that are 
 living off the State who are connected with these private 
 charities, no doubt. But I think if you discontinue your 
 appropriations to the State organizations I think we, for 
 one, would go out of business, because our business is 
 largely selling to the State hospitals, and they are the 
 only hospitals that pay. 
 
 By Mr. Brown : 
 
 Q. That is the trouble. Take this proposition and you 
 go on and talk about it, and you get right back where 
 you started from. You try to leave out the links in the 
 chain and when you leave out one the thing falls apart. 
 
 A. If you retain an interest in every public charity to 
 which you appropriate money, of course you are not los- 
 ing anything. 
 
 By Mr. McNichol : 
 
 Q. Would it be necessary for our State hospitals to pur- 
 chase the articles that you supply from you people alone ? 
 Are there no other persons in the business that would 
 be able to furnish them? 
 
 A. Yes. 
 
 Q. That is a sort of an inducement why you don't leave 
 Pennsylvania ? 
 
986 
 
 A. I should say no. They buy even now too much from 
 out of the State. 
 
 Q. You are trying to show Pennsylvania why they 
 should buy more of you? 
 
 A. No. That argument we used about ten years ago to 
 no effect. 
 
 By Mr. Woodward: 
 
 Q. If we would continue to appropriate these moneys, 
 your concern then would not object to paying one mill 
 tax? 
 
 A. The money we would get from the State hospitals, 
 the interest on it, probably wouldn't pay the one mill tax. 
 
 Q. You probably would charge the State one mill extra? 
 
 A. Because the hospital goods we sell them is sold at 
 very nearly cost in the first place, and in the second place 
 it goes to pay a few salaries. 
 
 By Mr. Brown: 
 
 Q. Let me ask you on that line : You sell to a number of 
 hospitals? 
 
 A. We sell the State hospitals. 
 
 Q. Do you sell a number of them? 
 
 A. We sell quite a few throughout all the States. 
 
 Q. I understand that they buy the goods at a very 
 slight profit to you? 
 
 A. A very slight profit; they get the best wholesale 
 prices. 
 
 By Mr. McNichol: 
 
 Q. You also sell to private institutions? 
 
 A. Yes, and we sell to dealers. 
 
 Q. And I understand the State gets the best price 
 
 A. The best price obtainable. 
 
 Q. Not only here, but other States? 
 
 A. If the State buys $20 worth of cotton a year, 
 
987 
 
 they get the same piece of cotton as the man who buys 
 $10,000 worth. That is a fact. 
 
 Mr. Rambo : I just want to answer a question in re- 
 gard to the eighteen mills and the three and a quarter 
 mills. Mr. Brown asked me about the difference, and in 
 looking over it it looks to me as though we pay the 
 eighteen and the three and a quarter. 
 
 Mr. Brown: Providing you pay on the real estate and 
 at the same time pay the other. 
 
 Mr. Rambo: We pay on the real estate. The question 
 has been asked several times about manufacturers going 
 out of business, and so on, and to name some. I did not 
 name any particular ones, but I know there must be 
 eight or ten, as I said, in my own line, right in my own 
 town, that have gone out of business. 
 
 Mr. Brown : That is a case of drying up, as it were. 
 
 Mr. Rambo : I can name three iron masters who died 
 poor in my own town. 
 
 By Mr. McNichol: 
 
 Q. What was their age when they died; how old were 
 they when they died? 
 
 A. That doesn't make any difference. I don't know 
 anything about that. 
 
 Q. Oh, yes, it does. 
 
988 
 
 Mr. Brown: We have the representative of the Phila- 
 delphia Real Estate Brokers' Association here, Mr. D. E. 
 Dallam. 
 
 Mr. Dallam : I only received notice of the meeting yes- 
 terday, so I am not prepared. I am a very poor speaker 
 and may make a rambling speech. 
 
 Mr. Brown: You gentlemen may not have had but a 
 few minutes' notice, but you have been thinking over the 
 subject for months. 
 
 Mr. McNichol: What is Mr. Dallam going to talk 
 about ? 
 
 Mr. Brown : Mr. Dallam is going to talk on the subject 
 of adding to the list of taxables. 
 
 Mr. McNichol : For the purpose of reducing the burden 
 on real estate? 
 
 Mr. Brown: Yes, along the line of contribution to the 
 general revenue. 
 
 Mr. Dallam : We are all selfish, and therefore we speak 
 to selfish interests. First, as I said before, we are entirely 
 interested in city tax. The position is this: The City of 
 Philadelphia must have an additional income, and under 
 the present law, as I said before, practically all the city 
 has is a right to tax real estate. Now, we want, therefore, 
 the taxing powers of the city enlarged or some of the taxes 
 collected in the County of Philadelphia to be diverted to 
 city purposes. Of course, people say to me: "You have a 
 very low tax in Philadelphia. ' ' Yes, I grant you. The City 
 of Philadelphia collects less money really than any other 
 large cities in comparison, without throwing any bouquets, 
 but what we ask is an equitable apportionment of the 
 taxes. 
 
 Now, the tax per capita, for instance, if there is a hun- 
 dred dollars to be raised and there are one hundred peo- 
 
989 
 
 pie to pay it, that is ten dollars a head, but where out 
 of the hundred people you make ten pay it, we do object. 
 That is the way it is. Now, of the accumulated capital 
 of the City of Philadelphia only one-tenth of it is in real 
 estate, and yet that one-tenth practically pays all our city 
 tax. Of course, the other nine-tenths part of it pay the 
 State tax. We want that diverted. 
 
 Now, at the present time I say without contradiction, 
 
 and I have been at it for forty years, that we are paying 
 
 more to-day out of our net return from our real estate for 
 
 taxes than ever before. We are paying at least 25 per 
 
 cent, of our net revenue goes to the city tax, and in New 
 
 York, which collects over 125 millions, the highest rate 
 
 I can find on Broadway is 18 per cent. Therefore, we 
 
 say that this has practically stopped the purchase of real 
 
 estate in Philadelphia for investment. Parties are buying 
 
 now for some special purposes, either for homes or some 
 
 factory sites or to increase a man's business, or speculators, 
 
 with the hope of unloading on somebody else. We 
 
 claim personal property ought to bear its particular share 
 
 of tax, and if any increase is made we think it should be 
 
 put upon something else besides real estate. If there is 
 
 any increase to be made, we want it put upon somebody 
 
 else. Mr. Brown asked me particularly about a mercantile 
 
 tax. Now, we have here what we call practically a license. 
 
 We have three of them, we have the liquor license, brokers ' 
 
 license and mercantile license. We ought to have here all 
 
 that combined. I am suggesting these other ways of 
 
 avoiding taxing us we ought to have an occupation tax, 
 
 and that was covered by the third resolution of the 
 
 Real Estate Brokers' Association presented here on 
 
 February 25, which reads: 
 
 ''Each and every individual, firm, limited partnership 
 and corporation engaged in a legitimate business or pro- 
 fession, having an office or place of business for the trans- 
 action of same, shall pay a license to the county in which' 
 said office is located." 
 
 The first thing would be for the city or the county to 
 
990 
 
 have a registration of every person engaged in any capa- 
 city, except as an employe. Now, if nothing else, they 
 should be registered. Now, the question is if we take that 
 
 mercantile tax as it is 
 
 Mr. Brown: Let me interrupt you there. Would it be 
 on gross receipts? 
 
 Mr. Dallam: I am talking of registration. We will 
 come to how to collect it afterwards. First, we have the 
 registration of every person. Now, at present the little 
 woman at the corner who sells tobacco and candy must 
 pay $2.50 when she opens her doors, and the manufacturer 
 on the other side of the street doesn't pay a cent, and 
 the doctor or dentist who lives adjoining this little woman, 
 who has probably three or four thousand dollars a year 
 income, he don't pay a cent. The question is why 
 shouldn't they all be registered, and if we tax everybody 
 and everything in that way, then we will get a lower tax 
 among us all. As I say, instead of ten people paying the 
 tax a hundred will pay the tax, and it will be diminished 
 on all of us. 
 
 By Mr. Brown : 
 
 Q. Why should the real estate broker pay a tax and the 
 lawyer not pay one ? 
 
 A. I have asked that question, but that hurts the pro- 
 fessional feelings. 
 
 Q. What is the reason for it f 
 
 A. There is no reason for it. I do not employ a cent of 
 capital. Of course, I have my own capital. It doesn't 
 require a cent of capital for you to put your house in my 
 hands for sale, and I secure a purchaser for it, and get 
 a hundred dollars for it. As I said in my address before 
 the Brokers' Association, one-half of the real estate is 
 sold by the lawyers and trust companies that don't pay 
 a cent, and until the Act of 18951 went to the Legisla- 
 ture at Harrisburg and I applied for the repeal of the 
 Act of 1862, and the Legislature of 1895 repealed it. I 
 
991 
 
 cite here as an exact case, yesterday I bought a property 
 for a corporation. I was told it was worth $75,000, and 
 I charged them $750. A lawyer sold it and charged them 
 $800, and under the Act of 1862, which was repealed, we, 
 as real estate brokers, were compelled to make a return 
 of that sale and pay $22.50, and the lawyer did not pay 
 anything to the State. We pay one-half of 1 per cent, 
 upon our gross receipts without allowing anything for 
 our office expenses, which may in some offices run one- 
 half we pay one-half of 1 per cent, and do not object to 
 paying it, but I think the lawyer should pay his share as 
 well as I do. 
 
 Now, you asked me the concrete question as to what 
 tax would be just. Those that are older than I am I am 
 old enough but those older gentlemen know the United 
 States in 1862 passed an internal revenue tax, and after 
 consideration they fixed upon one dollar a thousand as a 
 just charge upon a man's savings, and we were then com- 
 pelled to go down and make an affidavit as to our active 
 sales for the preceding year. There is no reason why every 
 manufacturer or man who sells his goods and every re- 
 tailer and wholesale dealer should not pay the same. 
 The retailer pays fifty cents to-day and the wholesaler pays 
 a dollar. Who can tell the difference when a man has a 
 sign out, "Wholesale and Retail Dealer"? I think they 
 should pay a dollar and everybody pay it, the manu- 
 facturer included. 
 
 As regards professional men, taken off on the second of 
 May, there are 659 people in the five professions, arch- 
 itects, dentists, doctors, engineers and lawyers. Those 
 men are in the Philadelphia directory. None of them 
 pay a cent. 
 
 Q. Why wouldn't you include there every man who 
 doesn't work for another? 
 
 A. I picked them out merely to show the number. They 
 were easy to count. I think our resolution is very plain : 
 "Each and every individual, firm, limited partpership 
 
992 
 
 and corporation engaged in a legitimate business or pro- 
 fession, having an office or place of business for the trans- 
 action of same, shall pay a license to the county in which 
 said office is located." Now, if we do that we will get a 
 great deal of money. 
 
 As regards the amount we will get on this mercantile 
 tax from manufacturers, you asked me that question. 
 I have not yet been able to find any one in the associa- 
 tion who is able to tell me the output of Philadelphia. 
 According to Mr. , he and I went over it, the 
 
 output of the City of Philadelphia manufacturers in 1876 
 was over $500,000,000. That would be $500,000. Now, 
 according to my estimate, the best I can find out, the out- 
 put of the City of Philadelphia manufacturers is about 
 $900,000,000. That would be $900,000 simply at one mill. 
 
 Q. What answer have you got to make to the manu- 
 facturers that that is a prohibitive tax ? 
 
 A. If the manufacturer can not make as much or more 
 than the wholesale dealer he is going out of business. 
 They are not in business for fun. If the business is not 
 profitable they fail. It is like any other man they are 
 looking out for their own interest. I think if they can't 
 pay one-tenth of 1 per cent, on the sales, because that is 
 what it amounts to they pay 1 per cent, to the broker 
 who sells goods for them, and 1 per cent, to the merchant 
 if they can't pay one-tenth of 1 per cent, on the sales, 
 I don't think the business is worth carrying on. We peo- 
 ple in the City of Philadelphia whom I represent, we are 
 simply selfish, we do not want any more tax placed upon 
 us ; we are paying enough. We are paying more than we 
 ever did, and I think if the State will divert that tax, that 
 will divert $900,000, because the City of Philadelphia must 
 have about $5,000,000 more added to its income. You may 
 juggle figures and re-assessments and all that rigamarole, 
 you can't get out of it. I don't think it is fair. 
 
993 
 
 By Mr. McNichol: 
 
 Q. How do you make your calculations of that $5,000,000 
 more for current revenue? Give us the facts. On what 
 basis do you make that assertion? 
 
 A. If you will talk to any of the operative builders 
 
 Q. I am talking to Mr. Dallam, who has made the as- 
 sertion that no matter how you juggle figures, the City 
 of Philadelphia must have five millions more added to its 
 income, and when a man makes that assertion he must 
 have some ground for making it ? 
 
 A. That is arbitrary. It is arbitrary with me. I will 
 take the responsibility for it. I have had property in the 
 lower part of town and I was asked how much it would 
 require to put a main sewer there, and they say three or 
 four hundred thousand dollars. I will say to you in Rich- 
 mond street we cannot do any building whatever north 
 of the gas plant until we get our main sewers in, and it 
 will take almost three hundred thousand dollars to main 
 sewer those streets. 
 
 Q. How many streets are there? 
 A. About five or six of them. 
 
 Q. You do not consider a main sewer is a question that 
 affects the current revenue of the city? 
 A. No, but 
 
 Q. Let us get down to the question of current revenue 
 of our city ? 
 
 A. I am speaking entirely from the standpoint of the 
 real estate builder. 
 
 Q. I am looking from the viewpoint of the five millions 
 additional that would be required to run the current ex- 
 penses of the City of Philadelphia, and I am hunting for 
 information from just such men as you as to what you 
 include in that item that you say represents the five 
 millions of dollars? 
 
 A. Don't interrupt me until I get through. It all comes 
 in the word "running the city." You may run the city 
 48 
 
994 
 
 with one amount of money, and somebody else might run 
 it with another amount of money, but the way I want 
 to run it is this : I want, when the operative builder sees 
 a piece of ground, and he says, "I can use it, I can get a 
 sewer " 
 
 Q. I just want to check you up as you itemize. You 
 don't mean to have this Committee believe that the in- 
 stallation of sewers or opening of streets should be con- 
 sidered in the item of current expenses ? 
 
 A. Oh, no, not that. 
 
 Q. Give us your idea. 
 
 A. That is my way of counting it. 
 
 Q. No, as a practical man you wouldn't put it that way. 
 A sewer is a permanent improvement. 1 want to get 
 from you, Mr. Dallam, wherein you have the facts that 
 it requires five millions of dollars additional to run the 
 current expenses of the City of Philadelphia ? 
 
 A. I put it in this way, and I think you will agree with 
 me, Mr. McNichol, that we can spend it very advantage- 
 ously no matter where we get it; I don't dispute it for a 
 moment, we could spend five millions of dollars very ad- 
 vantageously, yet before it can be spent 
 
 Q. On what? 
 
 A. Main sewers and opening the streets. 
 
 Q. Let me ask you a question. Instead of requiring 
 money for additional current expenses, as you say we do, 
 is not the trouble in Philadelphia that we are operating 
 under a constitutional provision passed thirty or forty 
 years ago, and under which no business of an up-to-date 
 character is being conducted under? 
 
 A. What do you mean the pay-as-you-go bill? 
 
 Q. We pay as we go every day. In other words, if you 
 have a permanent investment or improvement to make, 
 the city has the right to have the borrowing capacity to 
 put that permanent improvement in at once ? 
 
 A. If you put it that way, yes. 
 
995 
 
 Q. "Would you, as a business man, operate your financial 
 conditions as you did thirty years ago? 
 
 A. I don't know as I exactly would. I would have to 
 do it more economically. 
 
 Q. You are not operating to-day as you did thirty years 
 ago? 
 
 A. I don't know "but I am. 
 
 Q. You have advanced with the conditions and with 
 the times; your production has advanced in that re- 
 spect? 
 
 A. Yes. 
 
 Q. The trouble with Philadelphia as a business proposi- 
 tion, and you will admit it, is that the borrowing capacity 
 is limited to 7 per cent, and it should be 10 or 12 per cent., 
 so that when the growth of the city requires a permanent 
 improvement to be made in the City of Philadelphia, it 
 should not be compelled to wait two or three years for it ? 
 
 A. I want the money. I don't care how you get it. 
 Interest items are a very small item. I don't care where 
 you get it, we want five million dollars additional money 
 for this year, and last year, and so on. You may take 
 it out of a public loan or a loan for current expenses. 
 
 Q. Should it be taken out of current improvements? 
 
 A. "We perfectly agree with you, that a permanent im- 
 provement like a thirty-foot sewer should be taken out 
 of a permanent loan, but I know we don't get the money 
 and we don't get the improvements, and therefore the 
 real estate fraternity know we have to submit to more 
 taxes. 
 
 Q. I will give you one reason why you haven't got it. 
 To our regret, we for once in our lifetime listened to the 
 voice of a reformer, and in doing that the City of Phila- 
 delphia has got to suffer for two or three years until we 
 get ourselves up-to-date and in condition as other cities. 
 
 A. Other States allow 10 per cent., we know, and the 
 New York people have complained that having left it at 
 10 per cent., they are now going to get an Act passed 
 
996 
 
 to draw special bonds against special improvements. 
 Their necessities have outgrown their income, yet they 
 get thirty millions a year out of New York City, and we 
 only get twenty-five millions. 
 
 Q. If we had sixty millions of bonds we could take care 
 of every permanent improvement and complete everything 
 in the City of Philadelphia for the next thirty years. 
 
 A. We have got to have the money. You remember that 
 the moment we get a main sewer and we open up a street, 
 a piece of property which I sell a man for six thousand 
 dollars an acre and which at that time is probably taxed 
 at forty thousand dollars, the moment his houses are built 
 it is taxed for $250,000 and the city gets that much revenue 
 back. 
 
 Q. Yes, but you wouldn't think it was a fair proposi- 
 tion to make the people of to-day pay an additional tax to 
 build that sewer? 
 
 A. No, certainly not. That is a different question. 
 When I say we must have 
 
 Q. Just a common-sense question? 
 
 A. Certainly. 
 
 By Mr. Brown : 
 
 Q. You have made a comparison between the propor- 
 tions of the net income taken from the real estate owner 
 in New York and in Philadelphia ? 
 
 A. Yes, sir. 
 
 Q. And it is 25 per cent, in New York and 18 per cent, 
 in Philadelphia ? 
 
 A. Oh, no. Twenty-five per cent, of our annual revenues. 
 
 Q. Isn't it because our houses are two-story houses, 
 and most of the houses there are three-story ? 
 
 A. Yes. 
 
 Q. It costs just as much to pave the street and light 
 the street here in the City of Philadelphia, where we have 
 two-story houses, as it does where they have three-story 
 houses ? 
 
997 
 
 A. In a New York block the same size houses have a 
 two-million dollar assessment, and it will just cost the city 
 as much to maintain that street as it would a block in which 
 the assessment was more, but my point is this, that the 
 taxes have grown so high that we get to-day less per- 
 centage from our houses than we ever did, and that is 
 now about 25 per cent, of our net income, and in New 
 York the maximum amount is only 18 per cent. 
 
 Q. You folks have advocated a tax on art, pictures, 
 and so on. Do you think that is the consensus of opinion? 
 
 A. Our consensus of opinion is to tax everything in 
 sight. 
 
 Q. You think the man who owns a two or three story 
 house, or any other house, would be better satisfied if 
 his personal property therein is taxed? 
 
 A. The first idea of taxation is to exempt necessities as 
 much as possible and tax luxuries as much as they will 
 bear. Therefore, when we in our resolution suggested an 
 exemption to a householder of a thousand dollars, we 
 thought that would exempt three-quarters of the ordinary 
 housekeepers, but the man who chooses to decorate his 
 house with fine art and paintings and other bric-a-brac, we 
 thought he should pay for that luxury. The same way 1 
 first proposed a tax on automobiles. As I said, a man 
 drives up to my house in an automobile that cost $4,000, 
 on which he doesn't pay any tax, whereas, if I sell a man 
 a $4,000 house he pays $60 a year. The man with the 
 luxury gets off free. 
 
 Q. Probably if he had not had the automobile he would 
 not have come to your place and you would not have 
 induced him to spend a hundred thousand dollars in some 
 other place. 
 
 A. In the Ohio Tax Law, 1910, they tax everything 
 there. 
 
 Q. How much of that do they collect? We had a man 
 before us out in Pittsburgh, an expert from Ohio, and 
 
998 
 
 they practically admitted that they couldn't collect any- 
 thing of their personal tax; it was a dead letter, and he 
 came to advise us to exempt all personal property? 
 
 A. That is the law of Ohio, 1910. The table that goes 
 with it shows the amount of the collection and assessment. 
 As to the way of collecting those things, that, of course, 
 is a matter for quibble. Most of it, we know, is an income 
 tax, and we can't get it, and the way to collect is to assess 
 an approximate estimate. In the way the broker makes a 
 return, it is a very fair way, and that is, he swears 
 whether he has made ever ten thousand dollars and less 
 than twenty thousand dollars. Any man is perfectly will- 
 ing to say that. Or, if he has made over twenty thousand 
 dollars, he is perfectly willing to say, but what they do 
 object to is to specifying the exact amount. 
 
 Q. That is graduated between lump sums ? 
 
 A. Yes. 
 
 Mr. Brown : We have the Board of Mercantile Apprais- 
 ers here on an invitation, and the Chairman, Mr. Van 
 Valkenburg, has spoken to me and suggested that the 
 information could be gotten from Mr. Ransley, as he is 
 probably more experienced than some of the others. 
 
 Murdock Kendrick : I represent the Board in their dis- 
 agreements, which are very few, with the taxables, and we 
 came here in response to an invitation from the Counsel 
 or Secretary of your Commission. We did not know 
 just what you wanted. We have not formulated any 
 particular ideas. We are spending most of our time in 
 enforcing the law as it exists at the present time. We 
 have statistics here which will give you the amount we 
 have collected during the last three years, the amount 
 it cost to collect, etc. It was suggested by your counsel 
 that they would like to know what experiences the ap- 
 praisers found in going around, as to the agreeableness 
 or disagreeableness of their visits. I can say, because 
 I have been present during the ten days during which 
 
999 
 
 we have had appeals from the assessments, that out of 
 50,000 assessments there were during those ten days not 
 more than 500 who presented themselves to make ap- 
 peals from the bills that they had received, and in at least 
 half of those cases they were where the taxables had re- 
 fused to make returns in accordance with the law, and 
 the appraisers when there was a failure t(> make a return 
 always solved the doubt in favor of the Commonwealth 
 and rated them a little higher than they thought per- 
 haps they were actually entitled to, in order to bring the 
 taxable to make a return. 
 
 By Mr. McNichol: 
 
 Q. You say there were 50,000 taxables? 
 
 A. Yes, sir, and possibly out of that number 500 ac- 
 tually came in in the ten days fixed for appeals, appeals 
 from the ratings that had been given, and at least half 
 of those were not where the Board refused to accept the 
 return, but where no returns were made to the Board, 
 in accordance with their duties under the law they had 
 to rate them. 
 
 Q. You want to know what the Committee want, and 
 Mr. Brown can give you an idea of what the meeting is 
 for and why the Mercantile Appraisers were called here. 
 
 Mr. Brown: I might say that there has been an agi- 
 tation in this State for many years, and at the last ses- 
 sion of the Legislature it took an acute form in a 
 united opposition to the continuance of the levying of 
 the mercantile license tax, and we have received so 
 many letters in fact out of the 50,000 letters sent out 
 throughout the State covering all the subjects which this 
 Committee has been appointed to investigate, a very 
 large number of them have been in opposition to the 
 mercantile license tax, and in every class practically 
 there has been opposition to it, and the thought is 
 that we should gather and get all the information pos- 
 sible as to the fairness of the tax, and as to whether 
 
1000 
 
 or not it is one that should be repealed. It is in that 
 spirit of gathering information on the subject that we 
 have invited these gentlemen here today, so we can have 
 the benefit of their judgment. That is the general 
 thought. 
 
 Mr. Kendrick: I would say to the Commission in re- 
 sponse to that that the first argument that might be made 
 is a historical argument, that it has been one of the oldest 
 taxes in continuous existence in this Commonwealth for 
 almost a hundred years. It seems to me the logical con- 
 clusion to be drawn from the last argument we heard on 
 behalf of the real estate brokers must be an income tax 
 is the fairest tax, and while I am only expressing my 
 own opinion, I trust sincerely that this Commission in 
 making its report will consider seriously the advisability 
 of framing an income tax and also an inheritance tax. 
 I speak with regard to that for myself. But the mer- 
 cantile tax laws as now enforced have, I think, all the 
 good features of the income tax, without having the bad 
 feature in the income tax, which is the inquisitorial 
 tendency. "We do not ask each dealer just what he makes 
 each year. We ask him what his gross sales are, and on 
 his gross sales, irrespective of profits, a certain percent- 
 age is taxed. 
 
 By Mr. McNichol : 
 
 Q. Is that percentage fixed by law? 
 
 A. Yes, one mill on retailers and one-half a mill on 
 wholesalers, and the reason for that is that, as a rule, the 
 retailer makes a larger percentage on the amount of 
 goods sold than the wholesaler; as a general business 
 proposition the wholesaler has to sell twice as much goods 
 in order to get the same profit that the retailer does. The 
 percentage of the retailer is greater. That is, classifying 
 all retailers. The Acts draw a distinction between what 
 is a wholesaler and what is a retailer. 
 
1001 
 
 Q. You do not mean to tell this Committee that the 
 wholesaler makes less than the retailer? 
 
 A. Percentage, yes, sir, and that is the theory on which 
 these Acts were framed, and I believe it to be true, and 
 I think that as a general business proposition you will find 
 that the wholesale merchant does not get as large a 
 commission or percentage of profit as the retailer does 
 the gross, I mean. The Act makes that distinction and 
 also defines what a retailer and what a wholesaler is. 
 The wholesaler is one who sells to somebody else not the 
 consumer, and the retailer is one who sells to the con- 
 sumer only. 
 
 Mr. Brown : Another thing, probably, Mr. Kansley or 
 one of the appraisers would be better qualified to speak 
 about it, but we find in a number of the letters that 
 there is no opposition to the tax, but they complain large- 
 ly outside of the city that all in the same class are not 
 taxed j in other words, that the tax does not operate 
 equally on all. They say, "We are glad to pay our tax 
 providing the other fellow in the same business pays his 
 share " 
 
 Mr. Kendrick: Of course, we cannot speak for anybody 
 outside of the County of Philadelphia, but so far as the 
 County of Philadelphia is concerned, I can assure this 
 Commission that the law is equally administered as to 
 all persons of the same class. It may be that an ap- 
 praiser when he has a whole district without any super- 
 vision other than the County Treasurer might make ex- 
 ceptions, but whether through ignorance or mistake or 
 otherwise there are exceptions made, that would not af- 
 fect the wisdom of the law, but only the propriety of its 
 administration. 
 
 Mr Brown: If you want to answer for the whole Board 
 as to the practical workings of it, I will go on and ask 
 you some questions. 
 
1002 
 
 Mr. H. C. Ransley : I will answer any questions you want 
 to ask. My experience has been, so far as being a mercan- 
 tile appraiser, that we have also received many letters 
 from time to time, as you have complained, that people 
 have not been assessed, where the man or the firm making 
 the complaint says that they have been assessed, but that 
 their competitors have not. We have made an investiga- 
 tion of those facts as complained of in the letters, and 
 every time, so far as the district that I have in hand is 
 concerned, I have found that those complaints were false. 
 The appraiser to a great extent has his own district posi- 
 tively in charge. He is responsible for his district. I 
 have never investigated any other complaints but those 
 being made of the district that I have in charge, and it 
 is fair to presume that the complaints that you have re- 
 ceived have no more foundation than the complaints that I 
 have investigated in the City, that they are not made 
 on facts. In the first place taxes of any kind are not 
 popular with the people, and therefore complaints will 
 be made from time to time. In other words, I believe 
 that the great bulk of your letters complaining are not 
 really founded on facts, judging from the experience that 
 I have had. 
 
 Q. How do you start out to make your appraisements; 
 what is the first step? 
 A. The first step is to send out 
 
 Q. In the first place, there are five in your Board. 
 A. Five members on the Board. 
 
 Q. Five mercantile appraisers? 
 A. And each member has a clerk. 
 
 Q. What is the first thing you do towards getting a list 
 of taxables? 
 
 A. We send out about the first of the year, usually the 
 last two or three days in December, a blank form request- 
 ing all those who are 
 
1003 
 
 Q. How do you get the names of those to whom you 
 send the blank form? 
 
 A. From the previous assessment that has been made 
 in the year previous. 
 
 Q. You take that from the book that is furnished to the 
 City Treasurer; a complete list 
 
 A. No, we take that from our own canvass that has 
 been made. 
 
 Q. "Why don't you take it from the return which has 
 been made to the City Treasurer 
 
 A. Because we take all our own street books and per- 
 fect the State book according to our street book, our 
 street book being at all times recognized as the book of 
 original entry, and therefore should be the reliable book. 
 
 Q. Does your street book tally with the City Treas- 
 urer's book for the preceding year? 
 A. I may state it does. 
 
 Q. That is the idea? 
 A. It must do so. 
 
 Q. Because the City Treasurer's book is made up from 
 the street book? 
 
 A. Which is the book of original entry. 
 
 Q. And from this street book you send the preliminary 
 notice? 
 
 A. Yes. 
 
 Q. What is the next step? 
 
 A. We will have probably 20 per cent., 20 to 30 or 35 
 per cent, of the people will make sworn returns. Those 
 who do not make returns, it is then the duty of the ap- 
 praiser to call upon them. 
 
 Q. Isn't it the duty of the appraiser to call on all of 
 the taxables? 
 
 A. Why should he call upon the man who has made 
 sworn returns? That would be merely interfering with 
 his day's business. 
 
1004 
 
 Q. How do you know whether the man who makes the 
 return has made a correct return, unless you go into his 
 place and take a look yourself? 
 
 A. Well, as we go around 
 
 Q. What I ask you has been suggested by these differ- 
 ent things? 
 
 A. As we go on the street of the man who has made a 
 return the appraiser naturally will size up the business. 
 If he has been in the district any length of time he is 
 more or less familiar with the size of the business, the 
 depth of the store, the stock carried, and so on. He must 
 have been at some time in that store. He will then find 
 out whether that is, he will judge whether that return 
 is low or not. If it is low, it is customary for the ap- 
 praisers to mark ''Low Appraisement," and next year 
 when returns are made again and sworn to, to refuse to 
 accept them until an investigation is made or an explana- 
 tion made. 
 
 Q. What is your next step ? From the street books you 
 send a notice, and then those that do not reply you visit? 
 
 A. We call on them, not only getting the old appraise- 
 ments, but all new appraisements. 
 
 Q. How do you get new appraisements? 
 A. By visiting them, being upon the street, by the ac- 
 tual street canvass from house to house. 
 
 Q. So by that means none can escape ? 
 
 A. Absolutely none, providing the appraiser is diligent. 
 
 Q. Well, have you folks ever had any complaints that 
 the appraiser had not been diligent? 
 
 A. As I say, we have received letters just the same as 
 you have, complaining; say, for instance, John Jones 
 writes that so-and-so in the same neighborhood has never 
 been appraised and has boasted that he has never been 
 appraised. I have investigated those complaints in the 
 district which I have and found in every case they were 
 not true. 
 
1005 
 
 Q. What is your next step? 
 
 A, Then after the returns are completed, and under the 
 law they must be completed before the first of May, then 
 we have a hearing. There are appeals to be made where 
 any one claims that the appraisement is exorbitant, or 
 that error or a mistake has been made. They then ap- 
 pear before the Board and have a hearing. They are 
 sworn to the facts, and probably we will have no more 
 than 10 or 12 per cent, of the entire appraisement, 
 appear for a hearing complaining as to the appraisement. 
 After the hearing the books must be written up, one copy 
 going to the City Treasurer and the other going to the 
 Auditor General. Those copies, as I said before, are 
 exact copies of our street book, which is the book of orig- 
 inal entry. 
 
 Q. Since the passage of the Act of 1897, providing for 
 the licensing of brokers, has there been any diminution in 
 the revenues? 
 
 A. Yes, there has been, to iny mind, that is from cer- 
 tain firms, individuals or corporations, but in its decreas- 
 ing for one year, which was the returns for 1908, I am 
 satisfied that to a great extent that is traceable to what 
 was called the rich man's panic. Many business men 
 complained of a falling off of the business. Being en- 
 gaged in a little business myself, I am satisfied that that 
 was true. Again, the new Act that went into effect rela- 
 tive to brokers had a tendency to cut down the returns of 
 that year. That is, as to the money paid into the State. 
 For instance, many people who had formerly been classi- 
 fied as wholesalers I won't say many, but some that 
 were classified as wholesalers, under the new Act claimed 
 that they were brokers. 
 
 Q. Have you made any general re-classification since 
 that Act, so as to put the brokers all in one class, and the 
 wholesalers who were formerly doing the same business 
 back where they were? 
 
 A. What is that, Mr. Brown? 
 
1006 
 
 Q. 1 say have you separated and taken all of the whole- 
 salers who were doing a brokerage business, and made 
 any separation so as to bring the brokers directly under 
 the Act of 1907? 
 
 A. We always separate the brokers in our returns to 
 the Treasurer and Auditor General. 
 
 Q. Has that been done on the request of those doing a 
 brokerage business, or just done by the Board since the 
 Act? 
 
 A. Well, I believe entirely by the Board at a hearing. 
 
 Q. I just wanted to find out the consensus of opinion 
 or sentiment of the people in regard to whether they 
 should be considered brokers or doing a wholesale busi- 
 ness? 
 
 A. I believe the Board decided what they believed was 
 the true interpretation of the Act. 
 
 Q. Have you folks given any thought as to the lessening 
 of the cost of collection of these taxes, as to whether or 
 not that cost can be lessened and still produce substan- 
 tial re&ults? 
 
 A. In the first place, the figures I have had access to 
 show that it cost about 10 per cent, to collect the tax 
 I doubt very much if it could be reduced. 
 
 Q Isn't it a very large sum for the collection of what 
 is practically fixed by law? 
 
 A. When I say 10 per cent., that is for the entire State. 
 In the City of Philadelphia I think it is about 8 per 
 cent., between 8 and 9 per cent. We have tried and 
 tried and gone to extremes in the matter to reduce 
 the cost of collection. We have done everything in our 
 po\ver to prevent cases going to the magistrates to be 
 sued out where we knew the State could not collect. While 
 a man might be liable under the Act, it appeared ridicu- 
 lous to us that we should sue out that individual when 
 he had not enough goods to. pay the Magistrate's costs, 
 and therefore could not pay anything to the State. We 
 
1007 
 
 would only add to the cost, and it has been the determina- 
 tion of the Board for years to cut that down as far as 
 possible. In other words, where we find that the stock 
 is not sufficient to warrant the payment of the Magis- 
 trate'? fees and so that they can collect the tax as charged 
 by the Stale, we do not sue it out. I am satisfied we are 
 right m doing that, because the Magistrate's costs would 
 be added to the State's costs. 
 
 Q. How do 3'ou fix your classification tax; how do you 
 determine that? 
 
 A. As wholesalers? 
 
 Q. Yes? 
 
 A. That is fixed by law. 
 
 Q. You get 62| cents for each classification? 
 
 A. For each classification with the exception of brok- 
 ers, and the broker pays 75 cents. 
 
 Q. How do you fix that; from what list is that made 
 up? Is that from your returns to the Treasurer or your 
 street books? 
 
 A. That is from the returns to the Treasurer. 
 
 Q. Not from your original street book? 
 
 A. No. 
 
 Q. That would be for every one who would be properly 
 classified? 
 A. Yes, sir. 
 
 Q. You are sure of that return? 
 A. Yes, sir. 
 
 Mr. Kendrick: They make two returns one to the 
 Treasurer and one to the Auditor General. 
 
 Mr. Brown: I understand that. But I want to find 
 out where complaint has been made that there is more 
 money paid for classifications than there were classifica- 
 tions. 
 
 A. It would not be possible. It could not be. 
 
 Q. That is the reason I am asking you what list you 
 
1008 
 
 make up your classifications from. It is from the street 
 
 book 
 
 A. We also pay according to the returns mads to 
 the City Treasurer and the Auditor General. As I say, 
 those returns are copied from the book of original entry, 
 the street book. 
 
 .Q. Have you folks given any thought to the difference 
 in the cost of collection of that mercantile tax and the 
 real estate tax? I want to get your thought on it. Why 
 should there be a difference between collecting this 
 mercantile license tax and in the State tax? 
 
 A. Well, in the first place, the printing will enter into 
 the expense to a great extent. 
 
 Q. The what? 
 
 A. The printing, winch is done by the State. That, of 
 course, will be charged up. Now, as I say, the State cost 
 I think I am right when I say it runs to 10 per cent. 
 Now, that, of course, will include the printer's bill, which 
 must of necessity run into big figures. Again, outside of 
 the County of Philadelphia all appraisements must be 
 advertised. That again runs into big figures. 
 
 Q. You don't do that here? 
 
 A. Understand under a special Act Philadelphia does 
 not publish the appraisements, on account of a special 
 Act. 
 
 Q. That is the distinction 
 
 A. That would cut it down in the State. I am satisfied 
 I am right when I say it would probably cut down the ex- 
 pense 2 per cent. 
 
 Q. We have a number of letters which say the reason 
 given for the abolition of this tax is that there is such 
 a great disparity between that and the real estate cost. 
 The Receiver of Taxes adds about 90/100 of 1 per cent., 
 and the cost of the revision is very small, too. 
 
 Mr. Kendrick: It doesn't cost any more to collect 
 the tax from John Wanamaker or Lits than it does 
 
1009 
 
 from a small cigar man on the corner, but there are 
 a great many people who pay a much smaller tax than 
 the ordinary householder, and that is the reason that 
 the percentage of collection is greater. 
 Mr. Kansley : The volume is greater. 
 
 By Mr. Brown : 
 
 Q. But both are fixed. The store-keeper who pays a 
 tax on his house, that is fixed, and if he is taxable under 
 the mercantile license law, it is fixed there, so why should 
 there be a disparity in the cost of the collection of the tax, 
 he being severally assessed by different assessors, and the 
 money for which practically goes to the same destina- 
 tion? 
 
 A. The salaries paid to the appraiser of real estate is 
 not as much in the first place as that paid to a mercantile 
 appraiser, but still there are more in number of the real 
 estate assessors. 
 
 Q. That wouldn't aiTect the percentage? 
 
 A. That is my impression off-hand, Mr. Brown. 
 
 Mr. Brown : The taxes on real estate are much larger 
 than the taxes on personality. It is the personality that 
 is in question here. I wish you folks would give a little 
 thought to that, Mr. VanValkenburg, because we have a 
 number of letters about that. 
 
 Mr. VanValkenburg: I would like to ask you if 
 there has been any complaint as to the burden of this 
 tax upon anybody? 
 
 Mr. Brown: Not so much that, but that some paid 
 and some do not. That seems to be the complaint 
 throughout the State on all taxes. Everybody seems to 
 be willing to do it, providing the other fellow pays his 
 share. 
 
 Mr. VanValkenburg : Mr. Dallam made a remark 
 comparing the manufacturer with the little shop-keeper. 
 The only burden undor this tax is upon the little shop- 
 keeper that does a gross business of from one hundred 
 
1010 
 
 to a thousand dollars a year, and that is the criticism 
 of the Act, if any, but in actual practice of collecting 
 this or making these appraisements we find in my district 
 particularly little shop-keepers or little candy stores that 
 don't do a gross business of $250 a year, and maybe 
 not a hundred dollars. We are obliged to appraise them, 
 and the lowest tax is $2.60. 
 
 Mr. Brown: I suppose you have complaints from 
 those more than the large ones? 
 
 Mr. VanValkenburg : That is where the burden is. 
 Of course, they submit, but they have the real burden. 
 We find no complaint from the wholesaler and retailer 
 who pays one dollar upon every thousand dollars of 
 business done. 
 
 Mr. Brown : Will you folks prepare, or have prepared, 
 Mr. VanValkenburg, a memorandum showing the changes 
 since the 1907 law, that is the re-classification from the 
 1907 law? For instance, take 1907, a man would have 
 been taxed for $100,000 or $50,000, and he comes in under 
 the 1907 law part for brokerage and part for the other. 
 Will you have a table made showing that difference, and 
 also showing the relative appraisements, say for 1908, 
 1909 and 1910? The thought is to see just how in the 
 volume of business this tax has worked. 
 
 Mr. VanValkenburg : With reference to the Brokers* 
 Act, I can give you off-hand and very briefly : In 1907, 
 that was before the Act went into effect, we collected 
 under the old Brokers' Act $21,515. In 1908, when the 
 new Act goes into effect, $30,190. In 1909, which was 
 based upon 1908 business, which was a very bad year, 
 it was $33,365, and no increase in the wholesale or re- 
 tail. 
 
 By Mr. Brown : 
 
 Q. That shows they were drifting from the wholesale 
 and other classes into the broker class? 
 
 A. Well, yes. No decrease, however. In fact, there 
 was an increase of over $50,000 >n 1907 and 1908. 
 
1011 
 
 Q. In the aggregate? 
 
 A. Yes. 
 
 Q. That is, you got more brokers? 
 
 A. Under the retail and wholesale, so there Js an 
 increase under the Brokers' Act, an increase in three years, 
 except 1908 there was a slight decrease, due to the panic 
 year, I think, but the two years indicate an increase rather 
 than a falling off. 
 
 Q. You evidently have that table already prepared? 
 
 A. Yes, sir, I have that. I have three years. 
 
 Q. Now, if we can have the other, so that we can make 
 some comparison there between 1908, 1909 and 1910, the 
 increase or reduction 
 
 A. I think this will be of some value to you. Just one 
 other thing I think of that is in favor of this Act, and 
 that is it is not subject to the fluctuations a corporation 
 tax is. You are absolutely sure of one million dollars 
 from this source every year, an^ that will surely increase 
 unless it is in the case of a panic such as we passed 
 through a year ago. 
 
 Q. Mr. VanValkenburg, ho^v? much do you depend upon 
 the return of the taxable? 
 
 A. Well, that is in some cases a farce and a joke. 
 
 Q. In other words, do you take his word? 
 
 A. Well, each appraiser is qualified to administer an 
 oath, and they are supposed to make these returns under 
 oath. In our experience we find people do not think much 
 about an oath. They swear to most anything. That is, 
 a certain class. 
 
 Q. If it is a good tax, of course, the law ought to be 
 enforced? 
 
 A. Yes. 
 
 Q. What have you to suggest as to a better method of 
 enforcing that law? 
 
 A. Well, I haven't any. I think if the appraiser does 
 his work properly he should go on the premises, and if he 
 has any doubt make the appraisement himself. 
 
1012 
 
 Q. Do you folks do that? 
 
 A. Yes, sir. 
 
 Q. Is that very offensive to the people ? 
 
 A. Not at all. 
 
 Mr. Kendrick : Not to the guilty. 
 
 A. In fact, they expect us. They don't make the return. 
 
 Q. Do you examine into their books at all? 
 
 A. Yes. 
 
 Q. In other words, you do everything you think ought 
 to be done to get a proper return? 
 
 A. Yes. 
 
 Q. In looking over the returns to the Auditor General 
 my thought was that there seemed to be a small return 
 for pool tables and bowling alleys, and things of that 
 sort. Are all pool tables and all those things outside of 
 social clubs, saloons and all 
 
 Mr. Kendrick : Most of them are in saloons, and the 
 saloonkeeper comes up and swears he does not keep it 
 for profit or charge anything. The nearest decision 
 we have in favor of fixing the tax is the decision that says 
 where a man put up a sign "Pool Room. Games must 
 be settled for immediately afterwards, " and the method 
 of settling was for the loser to buy drinks for the par- 
 ticipants, the saloonkeeper was held liable for the tax 
 of keeping shuffle boards and pool tables. This year it 
 is thought they will assess all keepers of pool tables or 
 shuffle boards. 
 
 By Mr. Brown: 
 
 Q. Mr. VanValkenburg, under what class do you head 
 the men who are known as loan sharks and usurers. 
 We have some communications about those, that they are 
 taxed and are exhibiting their certificates from the 
 Board as an authority to go on and do business. What 
 is the thought of the Board on that subject? 
 
 A. I don't think that. We were charged with that, 
 and it isn't true. The appraisers are supposed to have 
 
1013 
 
 personal knowledge of every appraisement of every man, 
 and every appraisement he makes. I am sure that for the 
 last three years this Board has not issued any license for 
 loan sharks. The reports given me will show that. 
 
 Q. Has there been an increase in the number of ap- 
 praisements each year? 
 
 A. Yes. 
 
 Q. Greatly increased each year? 
 
 A. Yes, sir. 
 
 Q. And does that increase in amount, too? 
 
 A. Yes, sir. 
 
 Q. More appraisements and more revenue? 
 
 A. Yes, and more money. I think this would be a proper 
 suggestion from our standpoint. I think the manufac- 
 turers should pay a tax. I think the time has arrived 
 when they should be taxed. 
 
 Q. You mean you think the manufacturers should 
 
 pay 
 
 A. A mercantile tax, yes sir. It could be done with 
 the same force and under the same Act. Of course, we 
 do have a great many manufacturers on our list. 
 
 Q. Have you talked any with manufacturers? You 
 get around among them. What is the thought that you 
 get? 
 
 A. I am unfortunately over in the center of opposition 
 to that, and I hear more of that end of it than I do the 
 other side, but I believe generally the manufacturer is 
 willing to pay a tax. 
 
 Q. As you folks go ai ound have you had any suggestions 
 from the people who pay this tax as to what others should 
 do? Complaints that they are paying more than their 
 share? I mean to gather the general thought on the 
 subject? 
 
 A. No, unless that it would be that the manufacturer 
 should pay. That, of course, we hear all the time. They 
 don't see why the manufacturer should be exempt. 
 
1014 
 
 
 Mr. Brown: I may ask you for further informa- 
 tion, if you will grant me the courtesy. I will write you 
 a letter, as I read over the correspondence I have got- 
 ten, and I may want data to check up those things. 
 
 Mr. Moyer: Did you go into the matter of com- 
 plaint about the expense of collecting this mercantile 
 tax? 
 
 Mr. Brown: I have asked a number of questions 
 and I can ask Mr. VanValkenburg whether or not the 
 collection can be less expensively done. 
 
 Mr. Moyer: What are the advantages of advertis- 
 ing, if any, in the State? 
 
 Mr. Brown: I only asked him about the local situa- 
 tion here. 
 
 Mr. Moyer: That seemed to be the chief complaint 
 all over the Commonwealth, that the machinery for the 
 collection of this tax was so expensive. Many people 
 seemed to think the advertising ought to be cut out. 
 
 Mr. VanValkenburg: I don't think, as a matter of 
 fact, that that amounts to very much, simply a report 
 written in a country newspaper, and you know what that 
 is, perhaps $75. 
 
 Mr. Brown : I stopped on my way in here this morn- 
 ing to ask the City Treasurer if he had any memoranda 
 or tables showing the cost to the State, and he handed 
 me something I think you had prepared there. 
 
 Mr. Kendrick: The report from the Auditor General's 
 office shows that. It cost us 8.9 per cent, last year, 
 and in addition to that percentage there is a certain 
 amount of fees which goes into the City Treasury which 
 was not made in the report, and which would re- 
 duce that. That is the fee which goes to the City which 
 is supposed to pay the State Department of the City 
 Treasurer's office. 
 
 Mr. Moyer: The chief complaint at Pittsburgh, in Alle- 
 gheny county, they had advertised, and they said the 
 bill for that was enormous. 
 
1015 
 
 Mr. VanValkenburg : That is a very bad situation out 
 there. They are under a special Act and there should be 
 some legislation, and the bill was prepared last year 
 similar to our special Act here, but it wasn't passed. 
 
 Mr. Moyer: The most of the complaints came in from 
 the merchants of that locality, who said they did not 
 object to paying the tax, but what they did object to was 
 so much of this tax was paid to support the machinery 
 for the purpose of collection. 
 
 Mr. VanValkenburg : That is a very bad showing out 
 there, and it makes a bad showing in the State. 
 
 Mr. Brown: It raises the average. 
 
 Mr. VanValkenburg: Yes, but we feel here the actual 
 expense will not exceed 6 per cent., and that is about as 
 cheaply as the tax could be collected. 
 
 This Board has made every effort to hold the social 
 clubs. We believe there are people engaged in the retail 
 business conducting a meeting house for pool and billiard 
 players, and we have also tried to hold the express com- 
 panies, whereever they have an office. 
 
 Mr. Brown : We would be glad to receive any sugges- 
 tions you may wish to make in order to make the law 
 more effective. 
 
 Mr. Ke?idrick: W"e will confer and communicate with 
 you. 
 
 Mr. Carroll: I happened to be in office at the tune tne 
 Act of 1900 went into effect and I have been there ever 
 since, about half of that time as a clerk, and the other 
 half as an appraiser, and I find the people are satisfied 
 with the present Act, more so than they were with the 
 old Act. Some of the larger firms pay more than they 
 did under the Act of 1900, but at the s&me time they 
 are satisfied to this extent that they brought every person 
 in. There are no e'xemptings. In the previous Act there 
 was an exemption clause. I feel satisfied the present Act 
 
1016 
 
 is satisfactory to the business men, and in my going 
 around during the last ten years I find, as a rule, they are 
 satisfied, with the exception of the agitators, and they 
 aren't satisfied. When the matter is properly explained 
 to the business man he is satisfied. I think the majority 
 of them are satisfied with the tax at the present time, 
 providing it is properly administered and properly col- 
 lected. I find very little fault with the average business 
 man who keeps any kind of books at all. As a rule, no 
 complaint at all. But take it in the district I have, there 
 are a great many small storekeepers, lots of them don't 
 speak the English language. They don't keep books at 
 all. They have one song they sing : they take in so much 
 a week and they don 't give any different from that. The 
 appraiser in the majority of instances like that has to use 
 his own discretion by visiting the place. Not in all cases 
 is the affidavit of the person taken. The appraiser 
 knows in Jots of cases they are not making a proper re- 
 turn and he refuses to take it. It is as I say only by a 
 personal visit that you can really do your duty properly, 
 and I think the Act as it stands at the present is not un- 
 popular with the business men, except when the agitators 
 misrepresent things to them. 
 
 Mr. Brown: Mr Kendrick has said that 1 per cent, ap- 
 peal to the Board. How many go on to the Court and are 
 decided? 
 
 Mr. Carroll : None at all, except 
 
 Mr. Kendrick . There were only three appealed to Court 
 last year. 
 
 Mr. Brown : Do they express any dissatisfaction or say 
 it is the amount they object to? 
 
 Mr. Kendrick: Perhaps one out of a hundred come in, 
 but it is our opinion that the great majority of them 
 go out with smiles on their faces. 
 
 Mr. Carroll : When a man swears he did $3,000 a year 
 business, after a personal visit to that man he will not 
 hesitate to tell you he takes in from $125 to $200 a week, 
 
1017 
 
 and will also swear to that, and the appraiser has to use 
 his discretion. That is a sample of what you get some- 
 times, but you don't get it from a man who keeps books. 
 
 By Mr. McNichol: 
 
 Q. How do you make your classifications in the larger 
 caseo? 
 
 A. We take into consideration the location, character 
 of business, how much of a return they made before that. 
 We find little fault with the people who keep books. It 
 is a msiness proposition with them. The people of for- 
 eign nation ality who do not keep books, we have trouble 
 with them. 
 
 Q. Do they swear to the return in the larger cases? 
 
 A. Oh, \es. Also I would like to say this: In some 
 cases it may be a new business, and a man may be in busi- 
 ness a month or two, and therefore he can't make a re- 
 turn .for a whole year. It is within the discretion of the 
 appraiser to rate that man counting up twelve months 
 the amount of business he might have done in twelve 
 months, and the amount is figured out. Of course, if he 
 had been in business twelve months, he could make the 
 proper return for the full year. 
 
 Q. What information do you generally require to classi- 
 fy under the mercantile Act and the subsequent Act of 
 1907, known as the Brokers' Act? 
 
 A. Well, that matter, of course, has been gone into by 
 Mr. Kendrick and Mr. Ransley in regard to that. Since 
 that time there has been a different classification made 
 of quite a number of people 
 
 Q. A la^ge number? 
 A. Yes, sir. 
 
 Q. Especially among the large people? 
 
 A. Some of them only made a return as a wholesale 
 dealer, but since that time they have been classified as a 
 broker and also sometimes as a wholesale dealer. 
 
1018 
 
 Q. How often have they been classified as both? 
 
 A. I couldn't tell you off-hand. 
 
 Mr. VanValkenburg : There was no falling off under 
 the Retail Venders' Act. There was an increase in two 
 years ,and also an increase under the Brokers' Act. 
 
 Mr. McNichol: The Board would not recommend the 
 repeal of the Brokers' Act? 
 
 Mr. VanValkenburg: It would not, no sir. There are 
 features, I think, but on the whole it is a very good Act. 
 
 Adjourned to meet at the call of the Chair. 
 
1019 
 
 Public meeting of the Commission held in Room 496, 
 City Hall, Philadelphia, on Tuesday, October 4, 1910, at 
 11 A. M. Present : James P. McNichol, Chairman ; William 
 H. Keyser, James F. Woodward, William C. Sproul, of the 
 Commission; Francis Shunk Brown, Esq., Counsel. 
 
 Meeting called to order by the Chairman. 
 
 Mr. Brown: 
 
 Mr. Chairman and Gentlemen : For the information of 
 those present who have not attended any of the previous 
 meetings of this Committee, it might be well to inform 
 them of the reason why we are here. 
 
 This Committee was appointed by a joint resolution of 
 the Senate and the House of Representatives of the Com- 
 monwealth, to constitute a Joint Committee composed of 
 three members of the Senate and three members of the 
 House, for the purpose of considering a revision of the 
 revenue laws of this Commonwealth, together with a con- 
 sideration of certain proposed amendments in the gen- 
 eral corporation laws of the Commonwealth. 
 
 Tn pursuance of that duty, the Committee has visited 
 Pittsburgh, Williamsport, Scranton, Erie, and we have had 
 several meetings here in Philadelphia for the purpose 
 of ascertaining from our people who are interested their 
 views upon the subjects outlined. For this purpose we 
 have heard representatives from all business interests 
 and all tax paying interests, our idea being to give the 
 people of the Commonwealth who pay the taxes an op- 
 portunity to present their views of the reasonableness 
 and fairness of the methods of the taxation systems of 
 the Commonwealth. As we have gone around, we have 
 had suggestions a hundred of them yes, a thousand of 
 them from all interests. Some of these interests are rep- 
 resented here today. We have invited here today repre- 
 sentatives of the railroad companies, of banks, saving 
 
1020 
 
 funds, trust companies, insurance companies and other 
 interests, for the purpose of ascertaining from them their 
 views as to whether or not the present taxation system of 
 Pennsylvania is fair and equitable, and if not, wherein it is 
 not so, that we might have the benefit of their suggestions, 
 that when we make our report to the Legislature, the 
 proper consideration might be given their suggestions. 
 
1021 
 
 As the Pennsylvania Eailroad Company is probably the 
 largest tax payer of the Commonwealth, we would re- 
 quest Mr. Nichols to appear for them. 
 
 Mr. H. S. P. Nichols, representing the Pennsylvania 
 Railroad Company: 
 
 Mr. Chairman and Gentlemen of the Commission: I 
 am here to represent the Pennsylvania Railroad Company 
 today. 
 
 Mr. Brown: 
 
 In the first place, Mr. Nichols, has your company any 
 suggestion to make as to any proposed amendments to 
 our laws or any changes which they would consider bene- 
 ficial? If so, we should be glad to hear thems. 
 
 Mr. Nichols: I cannot, as you suggest, state definitely 
 any suggestions that the Pennsylvania Railroad Company 
 may have to make with reference to any proposed changes 
 in the taxation system of Pennsylvania, but I will say, in 
 behalf of the company, that we are perfectly willing and 
 we consider it our pleasure, as well as our duty to co- 
 operate with this Committee in suggestions it has to make 
 with reference to any changes it has to suggest or any 
 changes in the method of taxation it might suggest. If 
 this Committee will, at any time, intimate to the company 
 exactly along what lines they want an expression of the 
 views of our company. I will say now to the Committee 
 that an executive officer, of the company will present to 
 them in writing the views of the company along the lines 
 suggested by the Committee. 
 
 Mr. Brown : It has been suggested that the taxation of 
 railroad companies and transportation companies, in fact, 
 all corporations, but especially transportation companies, 
 should be on the basis of gross receipts. Direct your atten- 
 tion to furnishing this Committee your views as to how 
 such a tax would operate from the standpoint of the com- 
 
1022 
 
 pany as well as that of the State, and if such a tax, in the 
 opinion of the company, would be considered a fair 
 method. 
 
 It has also been suggested that there should be a local 
 tax on the real estate of transportation companies. The 
 counties complain that they do not get the benefit they are 
 entitled to from the inclusion of the real estate values in 
 th valuation of the capital stock, and that they should tax 
 this real estate locally; and the thought is by some that 
 that valuation should be deducted as an item from the 
 valuation of the capital stock. 
 
 Mr. Nichols : They get it on the real estate located in 
 the county, and all these counties also get taxes from the 
 company in the matter of the distribution of the school 
 fund. 
 
 Mr. Brown: But they think that ought to be done 
 locally. They would tax the water tanks and road-beds 
 locally. There have been suggestions that the values of real 
 estate as included in the capital stock valuation have not 
 been the full values of the real estate as compared to 
 similar real estate in these several localities. 
 
 Mr. Nichols: You are speaking of real estate, as I 
 understand you, that is used in connection with the rail- 
 road not real estate not used in connection with the rail- 
 road purposes? 
 
 Mr. Brown: Yes. 
 
 Mr. Nichols : That is taxed in Allegheny and Philadel- 
 phia counties. 
 
 Mr. Brown: There has been another suggestion : That 
 there ought to be an assessment of the total valuation 
 of all assets, irrespective of liabilities. The farmers claim 
 that their debts are not allowed for in the assessment 
 of their real estate, and hence there should not be any 
 abatement or reduction allowed to anybody else. 
 ^ Mr. Nichols : That is along the lines suggested by the 
 Supreme Court that they cannot be deducted but are to 
 be taken into consideration. 
 
1025 
 
 Mr. Brown: Yes. The Supreme Court decided you 
 can consider debts but not deduct them. It has also been 
 suggested that that a corporation should pay a tax on 
 all bonds, whether owned by the residents or otherwise. 
 In other words, there should be no preference shown as 
 against the non-resident : but that the company should pay 
 the tax on all bonds and should be assessed against them 
 as such. 
 
 Mr. Nichols : I understand from that that they should 
 pay a tax on all loans they might issue? 
 
 Mr. Brown: Yes. 
 
 Mr. Nichols: Irrespective of who may own them. 
 
 Mr. Brown : The contention is that with many corpora- 
 tions in Pennsylvania there is little or no effort made to 
 ascertain the residence of the bond-holders, and many 
 large amounts go untaxed. 
 
 Mr. Nichols: I assume you gentlemen want a legal 
 opinion on that? 
 
 Mr. Brown: One gentleman, when he appeared before 
 us, claimed that liabilities represent assets. They are sup- 
 posed to represent the actual value of the company and 
 are embodied in their assets, hence should be taxable as 
 such and should not be deducted. 
 
 Mr. Nichols : We will see that answer is made to these 
 various questions that have been suggested. I don't 
 think the Committee would expect that I would be able to 
 give at once an answer to questions which have not been 
 fully considered. Those matters have been the subject of 
 legislation for sixty years, and I would not want to say 
 that our companj^ could do it in a day. 
 
 The Chairman : I thought you kept your business up-to- 
 date? 
 
 Mr. Nichols : Yes ; but this is new business. The other 
 is old business. 
 
 Mr. Brown: Is there an objection to the toll-paying 
 custom in our present laws? 
 
1024 
 
 Mr. Nichols: Yes. 
 
 Mr. Brown : We would like to have your views also on 
 the time of return. There have been many suggestions 
 that the fiscal year should be the calendar year. Give 
 us your views on that. 
 
 Mr. Nichols: There might be a difficulty there owing 
 to the fact that the Interstate Commerce Commissioners 
 require our accounts to be made up to a certain date. 
 That would have to be taken into consideration. 
 
 Mr. Brown: I think there is a movement to make them 
 agree with that. 
 
 Mr. Nichols : That would be subject to the future orders 
 of the Interstate Commerce Commission. 
 
 Mr. Brown: Your company is supposed to return all 
 property under its cortrol? 
 
 Mr. Nichols: Yes, it appears on the returns furnished 
 the Auditor General. It appears exactly just as stock is 
 owned and controlled by the Pennsylvania Railroad Com- 
 pany. 
 
 Mr. McNichol: We are referring to public railways 
 under the control of the railroad company. 
 
 Mr. Nichols: They will appear that way. We make 
 that return and it appears exactly what these companies 
 are. We have furnished it to the Auditor General and 
 can furnish it to this Committee, and thus it will appear 
 before you what the facts are. 
 
 Mr. Brown : You understood what I mean by toll ? 
 
 Mr. Nichols: Yes, sir. 
 
 Mr. Brown: Is there anything else on your mind, Mr. 
 Nichols? 
 
 Mr. Nichols: No, sir. But if you will make any sug- 
 gestions to the Pennsylvania Railroad, we will be very glad 
 to take the matters up and give such information as re- 
 quested. 
 
 Mr. McNichol, Chairman : Thank you, Mr. Nichols. 
 
1025 
 
 Mr. Brown : We would be pleased to hear from Mr. W. 
 E. Taylor, Vice President of the Philadelphia and Reading 
 Railroad Company. Mr. Taylor, have you any suggestions 
 to offer as to any changes in the present taxation methods ? 
 If so, we would be pleased to hear them. 
 
 MR. W. R. TAYLOR, Vice President of the Philadelphia 
 and Reading Railroad Company : 
 
 Mr. Chairman and Gentlemen of the Commission : My 
 people expect me to bring to them the suggestions and 
 plans of this Committee, and the company will consider 
 and stand willing to give you any information we have 
 and to make any suggestions we think proper. 
 
 Mr. Brown: I presume you are not in a position to 
 answer as to whether or not the company has any sug- 
 gestions to make as to the taxation system? 
 
 Mr. Taylor: My people do not understand that the 
 Committee has any definite plan, and any suggestion they 
 wish to make to the company will receive consideration. 
 If you submit the plan as outlined to the Pennsylvania 
 Railroad Company, I am sure my people will be glad tc 
 investigate it and give you their views and furnish you 
 with any information we may have. 
 
 Mr. Brown : Is your company satisfied with the present 
 methods of taxation? 
 
 Mr. Taylor: Now, I wouldn't express any opinion on 
 that subject either. I am merely here for the purpose 
 of obtaining the views of the Committee so we can make 
 our answer to them. We have received one communica- 
 tion from the Committee in regard to our real estate and 
 are engaged in making up a statement such as you desire. 
 
 Mr. Brown : That is in reference to the suggestion made 
 by the farmers as to the subject of local taxation? 
 49 
 
1026 
 
 Mr. Taylor: Yes, the first communication. We have 
 here a return that our three companies made to the Audi- 
 tor General last year the Reading Company, the Rail- 
 way Company and the Philadelphia and Reading Coal and 
 Iron Company. 
 
 Mr. Brown : So far as I know, we have received no com- 
 plaints from the railroad companies that the present taxa- 
 tion system was not fair so far as they are concerned. 
 
 Mr. Taylor: Well, I don't know. 
 
 Mr. Brown: T presume unless complaints are heard we 
 are to consider them as satisfied. 
 
 Mr. Taylor : I guess they are like every other tax payer. 
 They all think they are paying too much taxes. 
 
 The Chairman : Mr. Taylor, how long will it take to an- 
 swer the questions? 
 
 Mr. Taylor: On the subjects that Mr. Brown presented 
 to Mr. Nichols? 
 
 The Chairman : Yes. 
 
 Mr. Taylor : Well, at least a couple of weeks. A week 
 or ten days probably at least. 
 
 The Chairman: I just asked the question so it would 
 guide us. 
 
 Mr. Taylor: If these questions are submitted to our 
 people they will take them under consideration imme- 
 diately. 
 
 Mr. Brown: We communicated with all railroads and 
 other taxable interests in Pennsylvania as soon as the 
 Committee was appointed. We have heard from some. 
 It was done in the hope that those interested in taxation 
 would come forward and give us their views on the sub- 
 ject. 
 
 Mr. Taylor: I don't think our .company ever received a 
 communication that would warrant them in coming for- 
 ward. 
 
1027 
 
 Mr. Brown: We have Mr. George S. Garrett, of the 
 Philadelphia and Reading Coal and Iron Company here. 
 Perhaps he has some suggestions to make. 
 
 Mr. Taylor : AVhat I have said about the Railroad Com- 
 pany will apply to the others. 
 
 Mr. Brown : Then we will excuse Mr. Garrett. 
 
1028 
 
 MR. J. F. SCHAPERKOTTER entered appearance for 
 the Lehigh Valley Railroad Company. 
 
 Mr. Brown: We will now be pleased to hear from the 
 United States Express Company. I believe they are rep- 
 resented today by Mr. W. W. Callin. We would liite to 
 hear from Mr. Callin. 
 
 MR. W. W. CALLIN, Attorney for United States Ex- 
 press Company: 
 
 Mr. Chairman and Gentlemen of the Commission : I am 
 here to represent the United States Express Company. 
 
 Mr. Brown : Is your company satisfied with the present 
 system of taxation in Pennsylvania? 
 
 Mr. Callin: I don't know of any objection we have. 
 I would not like to commit the company on that. 
 
 Mr. Brown: Are you familiar with the subject of taxa- 
 tion of your company? 
 
 Mr. Callin: To a certain extent, yes. 
 
 Mr. Brown: Have you your return with you? 
 
 Mr. Callin: Yes, sir. 
 
 Mr. Brown: May I see it, please? 
 
 Mr. Callin: (Hands Mr. Brown returns). 
 
 Mr. Brown : Is it for 1909 ? 
 
 Mr. Callin : There is 1909 and 1908 together. 
 
 Mr. Brown: You don't have capital stock. You have 
 interest ? 
 
 Mr. Callin : Yes, only interest. The company is not in- 
 corporated. 
 
 Mr. Brown: Your interest represents ten millions? 
 Mr. Callin: Yes. 
 
 Mr. Brown : What is the total value of the assets of the 
 company as represented by business in Pennsylvania ? 
 
1029 
 
 Mr. Callin: Do you mean real and personal property? 
 
 Mr. Brown : Yes, assets in Pennsylvania. 
 
 Mr. Callin : It comes to approximately one hundred and 
 fifty thousand. 
 
 Mr. Brown : What is your bonded debt in Pennsylvania 
 for which you get reduction ? 
 
 Mr. Callin : None at all. 
 
 Mr. Brown: Have you any suggestions to make at all 
 to the Committee? 
 
 Mr. Callin : I have none at all. I expected the Commit- 
 tee would have suggestions that perhaps we might be able 
 to take up. 
 
 Mr. Brown : We invited you down here to get infor- 
 mation as to the present system and get suggestions from 
 you as to any changes you thought proper. 
 
 Mr. Callin: I don't think any have been thought of 
 along that line. 
 
 Mr. Brown (referring to paper) : Does that show 
 the total amount of business done in Pennsylvania? 
 
 Mr. Callin: No, this just shows the gross earnings an- 
 nually. 
 
 Mr. Brown: What does that amount to? 
 
 Mr. Callin : The tax for the last half of the year 1910 
 is three thousand five hundred and fifty- four and for the 
 first half three thousand five hundred and forty-four 
 about seven thousand for the year. 
 
 Mr. Brown: What does that represent in property? 
 Mr. Callin : That is hard to say. 
 
 Mr. Brown: What is the gross profit? What is the 
 profit resulting from your business in Pennsylvania? 
 
 Mr. Callin: The books of the company are not kept in 
 such a way that you can separate the expense of doing 
 business in any one State. 
 
 Mr. Brown : How does that compare with the mileage in 
 Pennsylvania compare with the mileage elsewhere? 
 
1030 
 
 (No answer). 
 
 The Chairman: What is the approximate amount? 
 
 Mr. Callin: As I stated before, the books of the com- 
 pany are kept and the business is done in such a way 
 that it is impossible to state the profits for one State. 
 The best we can do is to approximate this take the gross 
 business throughout the country as a basis. We have 
 had great difficulty in separating these. 
 
 The Chairman : What is the percentage of business done 
 in Pennsylvania of the whole business? 
 
 Mr. Callin: I have not the gross earnings report here, 
 and I cannot tell you off-hand. 
 
 The Chairman: It looks like a small return to the 
 State, just in a casual way of looking at it? 
 
 The Chairman: What is the net profit of the company 
 on the whole of its business? 
 
 Mr. Callin : A little less than 63 per cent. The gross 
 business was a little over seventeen million and the net 
 was four hundred and forty-five thousand. 
 
 The Chairman : Do you mean to say that is all the profit 
 the express company paid? 
 
 Mr. Callin : Yes, net profit in operation. 
 
 Mr. Brown : What is the net profit on the whole busi- 
 ness done? 
 
 Mr. Callin: That is the total business done. 
 
 Mr. Brown: The only way you can get the amount of 
 business done in Pennsylvania is by comparing the total 
 amount of business done with what is done here. How 
 about finding out from the dividends paid? 
 
 Mr. Callin: You cannot tell by the dividends paid be- 
 cause they are paid largely out of surplus investments. 
 The earnings of operation would not suffice to pay them. 
 
 Mr. Brown : Are you required to pay anything on your 
 surplus? 
 
 ^ Mr. Callin : No, we do not pay any tax on our surplus 
 The return here to the State shows that the personal prop- 
 
1031 
 
 erty in use in the business, by which is meant stocks and 
 bonds of the company, amounts to about eight millions 
 of dollars. 
 
 The Chairman: You don't want to say that the United 
 States Express Company cannot give us a signed state- 
 ment of their business in Pennsylvania? 
 
 Mr. Callin: We cannot get a precise account of the 
 expense of doing business in the State. 
 
 The Chairman: Would it be possible for us to enter 
 the United States Express Company's place and ascertain 
 for ourselves? 
 
 Mr. Callin : Yes. We would be very glad if you could 
 ascertain it. We have been trying to get a line on that 
 for some time. 
 
 The Chairman : The Pennsylvania business is as profit- 
 able as any business that the company conducts, isn't it? 
 
 Mr. Callin: That is a matter for the company to de- 
 termine. 
 
 The Chairman: Who would be the man to get that 
 information from? 
 
 Mr. Callin: Mr. Edward Platt, the treasurer of the 
 company. 
 
 The Chairman: Mr. Brown, will you kindly make a 
 note of that name? 
 
 Mr. Brown: How do you fix the gross earnings for 
 Pennsylvania ? 
 
 Mr. Callin: Take the way bills and count the earnings 
 as shown on the face of the way bills. 
 
 Mr. Brown: You don't make any comparison for the 
 number of miles? 
 
 Mr. Callin: Do you mean the mileage proportion? 
 
 Mr. Brown: ifes. 
 
 Mr. Callin: Nc. 
 
 No further questions by the Committee. 
 
1032 
 
 MR. SAMUEL T. BODINE, First Vice President and 
 General Manager, United Gas Improvement Company, 
 called. 
 
 Mr. Bodine : Mr. Chairman and Gentlemen of the Com- 
 mission : In the notice I received requesting my presence 
 here, you stated that it had been suggested to this Com- 
 mittee that the total value of the assets of corporations of 
 the class the United Gas Improvement Company is in 
 should be a basis or subject of State taxation and that real 
 estate should be taxed locally. 
 
 That is exactly the state of affairs so far as we are 
 concerned. We are taxod upon the market value of our 
 stock for the year, which I think is a fair representation 
 of the value of the assets. It is a larger value than we 
 carry on our ledger. 
 
 This is subject to the following exemptions: Amount 
 of capital invested in actual tangible property and real 
 estate outside the State of Pennsylvania, amounting to 
 about two millions of dollars ; amount invested in patents 
 necessary for the conduct of the business, about fifty 
 thousand dollars ; investment in the stock of other corpora- 
 tions of the State of Pennsylvania, about two million 
 six hundred thousand dollars ; invested in the Philadelphia 
 Gas Works, about twenty millions of dollars that is made 
 up by the common stock of the Equitable Gas Light Com- 
 pany, three million two hundred thousand, and invest- 
 ment for betterment, :n addition to that, seventeen mil- 
 lions, making the total of about twenty millions. That 
 reverts to the city at the end of the lease, and we have 
 to recover it out of the price of gas year by year. 
 
 So far as we are concerned, we are undoubtedly sat- 
 isfied with the method of taxation, although there are one 
 or two amendments in matters of detail that might be 
 made. 
 
1033 
 
 The tax year in the State of Pennsylvania is a very 
 awkward year. That was made, I believe, when the Legis- 
 lature met in the middle of December, with the idea that 
 they would have to have these reports to get the amounts 
 available for appropriation. But most of the corpc ra- 
 tions, particularly since the Federal tax, have adopted the 
 calendar year. It is impossible for us to give a report 
 to the Auditor General when he asks us for our profits 
 for the period covered, but if it was for the calendar year, 
 we would be delighted to state that in detail. 
 
 There is another question which I think is important. 
 It is a matter of contention between a representative of 
 our company and the Auditor General ; and that is, 
 whether the market value of the stock should be taken 
 as an average for the whole year or simply the market 
 value during the first fifteen days of November. The 
 Auditor General takes the point of view that whichever 
 happens to be the higher figure is the figure for taxation, 
 and we take the other view. 
 
 For 1909, our return would make our tax to the State 
 three hundred and nine thousand five hundred dollars 
 for the year. The Auditor General claims three hundred 
 and eighteen or nineteen thousand. We paid the three 
 hundred and nine thousand on account and submitted the 
 other question to the Dauphin County Court for decision. 
 
 If you have any detail questions, Mr. Douthert, the 
 secretary of the company, is here. He has charge of 
 our taxation matters. 
 
 Mr. Brown : Why should a corporation that has invest- 
 ments in the stock or other corporations be relieved from 
 paying a tax on theso investments, because the other cor- 
 porations pay a capital stock tax? 
 
 Mr. Bodine : Because it would be double taxation. 
 
 Mr. Brown : If I own a farm and have a mortgage on 
 it, I pay a tax on the mortgage. If I borrow money from 
 a trust company and am using that money in a dozen dif- 
 ferent ways, I pay a tax on all of it. Why should a cor- 
 
1034 
 
 poration be relieved of: that tax? In other words, you 
 have stock in a company that pays 10 per cent. That 
 corporation pays a tax on its capital stock, and why should 
 you be relieved from paying a tax on the 10 per cent, that 
 you receive? 
 
 Mr. Bodine: If it was in the same State (in the State 
 of Pennsylvania), it would be paying twice on the same 
 property. I am only a layman, I am not a lawyer ; but 1 
 have always been instructed by members of your profes- 
 sion that double taxation is unconstitutional. 
 
 Mr. Brown : What is your thought on taxing a corpora- 
 tion on its bonds, representing money on loan? 
 
 Mr. Bodine : I think that is exactly the same thing. That 
 debt has to be paid. 
 
 Mr. Brown: But what it represents has gone into tlie 
 corporation and the corporation has used? 
 
 Mr. Bodine : Yes ; but that does not apply to us. 
 
 Mr. Brown: I am only asking you gentlemen, as you 
 represent a large corporation. You speak of paying a 
 local tax. Your company does not pay a local tax on 
 operating plants? 
 
 Mr. Bodine: We pay taxes on a valuation of seven 
 hundred and ninety- one thousand dollars in the City of 
 Philadelphia. 
 
 Mr. Brown: In addition to the gas companies? 
 Mr. Bodine : They belong to the City of Philadelphia. 
 
 Mr. Brown : Any property independent of that belong- 
 ing to the city? 
 
 Mr. Bodine : We have none outside of that belonging to 
 the City of Philadelphia. 
 
 Mr. Brown: Any operating works of your own at 
 all? 
 Mr. Bodine : No, sir. 
 
 Mr. Brown : So far as you know, do the operating plants 
 of gas companies pay a tax on their real estate ? 
 Mr. Bodine : They do not. 
 
1035 
 
 Mr. Brown: It has been suggested they should pay a 
 tax on real estate and deduct from the valuation in the 
 item of capital stock ? 
 
 Mr. Bodine : Gas companies are manufacturing com- 
 panies and I think thoy should be free from the tax. 
 
 Mr. Brown : Why should the manufacture of gas be 
 exempted and the manufacture of electric light pay a 
 tax? 
 
 Mr. Bodine : I think it has been held that the electric 
 light companies are in a different class from the gas com- 
 panies. I don't think there is any more reason why an 
 electric light company should pay a tax than a gas com- 
 pany. I don't think the gas company should pay as large 
 a tax as the electric light company, because they get a 
 higher rate per unit of light than the gas companies, and 
 they embark in business with the knowledge that they 
 would be taxed and were able to regulate their prices 
 accordingly. 
 
 Mr. Brown: Is there any reason why gas companies 
 should not be included with the other manufacturing 
 companies? 
 
 Mr. Bodine : I see ro reason why they should not. 
 
 Mr. Brown: Do you think they should be included 
 in the same class as electric light companies? 
 Mr. Bodine: No, I do not think they should. 
 
 Mr. Brown: You think they should be subject to a 
 lower rate? 
 
 Mr. Bodine: Yes, for the reasons I have given. 
 
 Mr. Brown : In estimating the value of the capital stock 
 of the companies owned by the United Gas Improvement 
 Company, is your opinion that the real estate is valued at 
 its fair valuation and so included in the capital stock ? 
 
 Mr. Bodine : Yes. 
 
 Mr. Brown: You pay local tax on everything except 
 what is used in the manufacture of gas? 
 
 Mr. Bodine : Now you are getting back to the United 
 
1036 
 
 Gas Improvement Compary. The U. G. I. pays local 
 taxes on all real estate it owns which is not used for the 
 purposes of the Philadelphia Gas Works. They pay taxes 
 on the building at Broad and Arch streets, assessed at 
 seven hundred md twenty-five thousand dollars; the 
 building at Broad and Tasker streets and one up in Ken- 
 sington, which are leased to the Philadelphia Department 
 for office purposes. They pay taxes on a certain portion 
 of land in West Philadelphia which they had to buy in 
 order to get that on which we built our new gas holder 
 and distributing department. So much has gone into 
 our report to the Controller of the City of Philadelphia, 
 We pay taxes in Philadelphia of seven hundred and nine- 
 ty-one thousand dollars on real estate; five mills tax on 
 the capital stock, which amounts to three hundred and 
 nine thousand five hundred dollars. 
 
 Mr. Brown : How do you get the estimate of your valua- 
 tion, by sales of capital stock? Do you keep a record? 
 
 Mr. Bodine : Yes, from daily official reports of the Stock 
 Exchange. 
 
 Mr. Brown: That you furnish the Auditor General? 
 
 Mr. Bodine : Yes, in the shape of an affidavit of myself 
 as Vice President, and the Treasurer and Assistant Treas- 
 urer. 
 
 No further questions by the Committee. 
 
1037 
 
 Mr. Brown : We would be pleased to hear from Colonel 
 Beath, President of the United Firemen's Insurance Com- 
 pany. 
 
 COLONEL ROBERT B. BEATH, President of the 
 United Firemen's Insurance Company: 
 
 Mr. Chairman aud Gentlemen : First, a word on behalf 
 of my colleagues in the business, who have received the 
 request of the Committee in regard to taxation. 
 
 Rather than enter into new and unknown measures of 
 taxation we are satisfied with the present tax on the capi- 
 tal stock and on the premiums. It is, of course, under- 
 stood that increased taxation must come from the insured 
 in the matter of premiums. 
 
 We are prepared to give you any figures you may re- 
 quire, but I may say to the Counsel of the Committee 
 that these figures can be found in the Insurance Com- 
 missioners' reports on file. They are easy of access and 
 you have these for all the companies in the State of Penn- 
 sylvania, with the exact figures given in detailed reports 
 made to the departments on the 31st day of December of 
 each year. 
 
 Mr. Brown: What is your thought on the discrimina- 
 tion made against fire insurance companies? Mr. Fouse 
 says that a discriminatory tax has militated against doing 
 business in other States? 
 
 Mr. Beath : I do not understand Mr. Fouse 's application 
 on this as applied to fire companies. It would only affect 
 us seriously if the tax on other State companies should be 
 increased. 
 
 Mr. Brown: That is the retaliatory tax? 
 
 Mr. Beath: The so-called reciprocal tax. In other 
 words, if you ir crease the tax on outside companies, it 
 comes back at as by way of retaliation in about thirty 
 
1038 
 
 States of the Union, the principal ones being New York, 
 Illinois and Massachusetts. 
 
 Mr. Brown : Do these thirty States include all in which 
 the most of the insurance business is done? 
 
 Mr. Beath: Yes. Some of the others don't amount to 
 much. Some years ago, on that account, the tax in Penn- 
 sylvania on outside companies was reduced from 3 per 
 cent, to 2 per cent. I think I have the figures then pre- 
 pared on this point. 
 
 Mr. Brown: Your thought is what? What should be 
 the tax? 
 
 Mr. Beath: They should stand just where they are to- 
 day. We should make our returns on the present well es- 
 tablished basis. If you take the gross assets as a basis of 
 taxation it would include the premiums outstanding, 
 which would amount to hundreds of thousands of dollars 
 in this State alone. Then the premium on stocks and 
 bonds and accrued interests on stocks and bonds these 
 necessarily go into our assets and swell them to that ex- 
 tent. They are all available, coming in afterward. In 
 order to get at that properly, you would have to take the 
 report and eliminate these three items, and then you have 
 the net assets of the company; but this will change year 
 by year and month by month, you might say. This is 
 easily measured by our business. When it comes to a 
 question of assets, I think it would be bad policy to 
 change the present system 
 
 Mr. Brown: As to foreign companies? 
 Mr. Beath: Yes. 
 
 Mr. Brown: You would put the tax on gross premiums 
 and eliminate the capital stock tax? 
 
 Mr. Beath: That would apply only for the Pennsyl- 
 vania companies, but how it would work out would re- 
 quire some figuring. 
 
 Mr. Brown : You have nothing to tax outside other than 
 the premiums? 
 
1039 
 
 Mr. Beath : We have the capital stock tax valued by the 
 Auditor General. 
 
 Mr. Brown: Isn't that more equitable? 
 
 Mr. Beath: Yes. 
 
 Mr. Brown: Have you any objection to talking with 
 your interests in Pennsylvania to get the consensus of 
 opinion on the subject? 
 
 Mr. Beath : I W!J1 be pleased to do so and report later. 
 
 Mr. Brown : Thank you. 
 
 No further question by the Committee. 
 
1040 
 
 Mr. Brown: We would be pleased to hear from Mr. 
 Porter, of the American Fire Insurance Company. 
 
 MR. CLARENCE E. PORTER, President of the Ameri- 
 can Fire Insurance Company. 
 
 Mr. Chairman and Gentlemen of the Committee: I 
 think General Beath has pretty thoroughly covered the 
 ground. One thought I would add, however, is tha\, Uie 
 more you burden us with tax, the more it will come back 
 on the public. 
 
 Mr. Brown : Isn't that so with every tax, as a rule? 
 
 Mr. Porter: No, because we furnish an indemnity that 
 effects commercial credit. In our line of business we 
 stand good in case of public loss. If you increase your 
 tax, then you will simply place it back on the public to 
 pay for it. 
 
 Mr. Brown: Are you satisfied with the present laws? 
 
 Mr. Porter: I feel that you are taxing the companies 
 at the present time on everything that is taxable. To 
 increase the tax, taking into consideration the effect of 
 the retaliatory laws, would make a tremendous burden 
 on the Pennsylvania corporations. 
 
 Mr. Brown: I think Mr Fouse suggested we might in- 
 crease on the local companies and reduce on the foreign 
 companies; and the balance of the trade would be with 
 the foreign companies. 
 
 Mr. Porter : Well, that would be a matter of compe- 
 tition. I don't know what things are, offhand. 
 
 Mr.. Brown : If the present laws are harmful to the local 
 companies thera ought to be some remedy for it. Have 
 you folks an association here? 
 
 Mr. Porter: No, except we meet from time to time in 
 
1041 
 
 Colonel Death's office. We can get the officers together 
 and talk over the matter. We will be very glad to co- 
 operate with you, I am sure, in giving you any informa- 
 tion you desire. 
 
 Mr. Brown : We would be very glad to have any infor- 
 mation you can give. 
 
1042 
 
 Mr. Brown : We have the vice president of the Fidelity 
 Trust Company with as. We shall be pleased to hear 
 from him. 
 
 MR. WILLIAM GEST, Vice President of the Fidelity 
 Trust Company. 
 
 Mr. Chairman and Gentlemen: On receipt of the first 
 communication from this Committee, our company ad- 
 dressed a letter to this Committee, which stated as fully 
 as necessary the position of the company as to the present 
 taxation. I have the letter here dnd will read it if you 
 desire. 
 
 Mr. Brown : Mr. Gest, what was the amount of deposits 
 of the Fidelity Trust Company for 1909? 
 
 Mr. Gest: I cannot tell you. The present amount of 
 deposits is twenty-seven millions. That is probably some- 
 what above the average. 
 
 Mr. Brown: What proportion of that amount bears 
 interest ? 
 
 Mr. Gest : I giiess almost all. 
 
 Mr. Brown : All bearing interest at what rate ? 
 
 Mr. Gest: Some, almost all, at 2 per cent.; some, pos- 
 sibly at V. per cent. 
 
 Mr. Brown: What proportion of that, in your opinion, 
 pays tax to the Commonwealth; 1 mean on which the 
 tax is paid by the depositor? 
 
 Mr. Gest: I am only speaking for the company as far 
 as the law goes; anything else I may say is my own 
 opinion. I do not know how much of this deposit pays 
 a tax. 
 
 Mr. Brown : Can you make an approximation ? 
 Mr. Gest: No. Do you mean whether the depositors 
 return it? 
 
 Mr. Brown: Yes. 
 
1043 
 
 Mr. Gest: I have no way to know whether any de- 
 positors make any returns or not. 
 
 Mr. Brown: We are preparing a table showing the 
 total amount of wealth and the total amount returned for 
 taxation. I was told by the president of a trust company 
 that this was not returned for taxation? 
 
 Mr. Gest : I believe it is a general rule. It is generally 
 regarded that they are not included in that tax that 
 that tax is intended to catch investments. Of course, these 
 deposits are fluctuating and it would not be right to re- 
 turn them for the whole year, when they would be there 
 for a year and maybe only for a day. These deposits 
 often represent money used in the course of business and 
 money withdrawn for investment, and if you tax these 
 deposits for the whole year, and then tax the investments 
 into which they find their way, it will be unjust. 
 
 Mr. Brown: The man who gets 2 per cent, pays the 
 same tax as a man who gets 3, 4, 5, 6 or 7. It has been 
 suggested that you make a tax on the amount of in- 
 terest paid? 
 
 Mr. Gest : My own personal thought is that such a law 
 would be subject to the same objections that would be 
 brought against an income tax. 
 
 Mr. Brown : What do you think of a law requiring the 
 treasurer of a trust company to pay a return to the 
 Commonwealth as a tax on the interest the company has 
 paid to its depositors? 
 
 Mr. Gest: You didn't put that question. I thought you 
 meant requiring the individual to make the return. If 
 you make the trust company or depository the agent of the 
 Commonwealth you will be involved in a number of diffi- 
 culties, and it would most certainly result in a very large 
 withdrawal of money. 
 
 Mr. Brown: Where would that go to? 
 Mr. Gest : New York or Camden. A great amount, in 
 my opinion, would go to New York. Certainly a great 
 
1044 
 
 corporation which puts its money at interest would rather 
 go to New York where there is no tax, than here where 
 there is a tax. A great many of these large corporations 
 have deposits in both places, and there is no doubt that 
 should there be a tax of this kind our share of the de- 
 posits would be withdrawn. I think such a tax as that is 
 impractical. 
 
 Mr. Brown : How about moneys evidenced by certificate 
 of deposit issued by the company? 
 
 Mr. Gest: I think he should return it as money at 
 interest. 
 
 Mr. Brown: Suppose he does not return it? Why not 
 have the company return it and pay it for him? 
 
 Mr. Gest: Because they are temporary certificates. In 
 Philadelphia there are not very many of them issued. Our 
 company has no certificates of deposit outstanding what- 
 ever, and we haven't issued any for some time. 
 
 Mr. Brown : There has been considerable criticism along 
 these lines as we have gone around the State. We have 
 been told that there is ten millions of dollars in Lancaster 
 county trust companies on which no return is made for 
 taxation ? 
 
 Mr. Gest : A tax on moneys at interest or on income will 
 always be evaded by unscrupulous people. It is inherent 
 and will never be obviated. 
 
 Mr. Brown: How does the Fidelity Company fix the 
 value of its stock? 
 
 Mr. Gest : We return under the Act of 1909, in which 
 the tax is based upon the value of the capital stock, sur- 
 plus and undivided profits. 
 
 Mr. Brown: How is the real estate valued in that? 
 
 Mr. Gest: The real estate is included in the general 
 assets and therefore results in double taxation on that. 
 
 Mr. Brown: The real estate is, of course, included in 
 that valuation? 
 
 Mr. Gest: Yes. 
 
1045 
 
 Mr. Brown: Is that valuation revised in any way by 
 the Commonwealth, or is the valuation taken as final? 
 
 Mr. Gest: I don't know how far they have revised it. 
 They have the right to revise it. 
 
 Mr. Brown: How would it be to tax your property 
 locally and deduct that as an item in the valuation of the 
 capital stock? 
 
 Mr. Gest : I think that would be an entirely just reduc- 
 tion. 
 
 Mr. Brown: You see no reason why they should not 
 be taxed locally, provided that deduction is made? 
 
 Mr. Gest : No. 
 
 No further questions by the Committee. 
 
1046 
 
 MR. EDWARD SYDENHAM PAGE, Secretary of the 
 Girard Trust Company, called. 
 
 Mr. Brown : Have you any suggestions to make to the 
 Committee as to a tax on trust companies, banks, saving 
 institutions, etc. ? 
 
 Mr. Page : No. I think I agree with what Mr. Gest has 
 said. I think what we want is some positive basis as we 
 have now the book value of the stock capital, surplus 
 and undivided profits. In our mind, to tax the total assets 
 would take in the deposits, which, in view of the fact 
 that they are not under our supervision, are likely to be 
 drawn out at any time. If the tax on these is made, 
 we may be called upon to pay a tax largely in excess of 
 what we are getting the use of. 
 
 Mr. Brown: How do you fix the value of your real 
 estate ? 
 
 Mr. Page : Generally speaking, our real estate is on our 
 books at its assessed valuation. 
 
 Mr. Brown: City assessment? 
 
 Mr. Page : Yes. 
 
 Mr. Brown: What proportion is that in comparison 
 with the real value? Take your new building, for in- 
 stance ? 
 
 Mr. Page : The property is assessed at two millions and 
 a half. That doesn't take in the cost of the building itself. 
 That is charged off as we built the building. 
 
 Mr. Brown : Take your building what is the total value 
 of your property there at Broad and Chestnut to-day- 
 at the last time you made the return? 
 
 Mr. Page: What, the stone building? 
 
 Mr. Brown: Yes. Have you your last return to the 
 Commonwealth ? 
 
 Mr. Page : Yes. 
 
1047 
 
 Mr. Brown: May I see it? (looking over return). I 
 notice your building is returned February 18, 1910, real 
 estate at two millions eight hundred and ninety-six thou- 
 sand five hundred and forty-six dollars. What real estate 
 does that cover? 
 
 Mr. Page : That covers our property Broad and Chest- 
 nut and also certain properties we have foreclosed on 
 mortgages that go back over twenty-five years ago. 
 
 Mr. Brown: Can you give us any idea as to the real 
 value of that property? 
 
 Mr. Page : I can give you an idea of that at Broad and 
 Chestnut. The ground cost in the neighborhood of two 
 and a half millions of dollars and we put the building 
 there, costing a million and a half of dollars. 
 
 Mr. Brown: That is four millions? 
 
 Mr. Page : Yes. 
 
 Mr. Brown : What is the real value of that corner ? 
 
 Mr. Page : It depends on what you want to 
 
 Mr. Brown: What you carry on your books? 
 
 Mr. Page : At its assessed valuation ? 
 
 Mr. Brown : The building itself as profit and loss ? 
 
 Mr. Page : Yes. In making our return to the State we 
 take the valuation as shown on our books. 
 
 Mr. Brown: Why don't you include the total value of 
 the property? Why don't you return to the State the 
 total value of that property, instead of returning the land 
 less the buildings? 
 
 Mr. Page: In the judgment of our board, they don't 
 think it a tangible asset. If the Girard Trust Company 
 got into difficulties and wanted to realize on the building, 
 there would be no buyer for it. It is more or less orna- 
 mental. 
 
 Mr. Brown: Wouldn't that apply to almost any other 
 building? For instance, John Wanamaker's building? 
 
 Mr. Page : John Wanamaker is an individual, and here, 
 we are taking care of the depositors ancl stockholders. 
 
1048 
 
 Mr. Brown: You are doing that for profit the same as 
 John Wanamaker is selling goods for a profit? 
 
 Mr. Page : Yes. 
 
 Mr. Brown: If the real estate of corporations now 
 included in the capital stock was taxed locally it would 
 be taxed for a higher sum and the counties that get the 
 money would get a higher sum out of it the counties 
 would get an additional benefit? 
 
 Mr. Page : I understand what you say, but I don't think 
 that is possible. The City of Philadelphia does it not 
 assess its tax for the county's use? 
 
 Mr. Brown: Yes. 
 
 Mr. Page : And if they thought that property was not 
 a fair valuation at two and a half millions after the real 
 estate tax was deducted from the State tax (the capital 
 stock tax) they would increase our 
 
 Mr. Brown : But it is not assessed as high as it ought to 
 be, because it is taken into consideration with numerous 
 other items, whereas, if separated, it would be its full 
 value. In other words, in Philadelphia they would get the 
 benefit of five millions of dollars and the State would 
 lose the tax on the two million eight hundred and ninety- 
 six thousand. 
 
 Mr. Page : That is something we would not like to con- 
 sider. The company in making returns, make the returns 
 on its book values, taking the price of its securities and 
 real estate at which it is carried on its books. In other 
 words, if we bought a bond at one thousand dollars, we 
 would return it at that. We don't re-appraise it. We 
 just take our values which we think are approximate. We 
 don't mark it up or mark it down except in 1907, when 
 we marked down quite extensively. Therefore, these re- 
 turns show our book value, based on the book value of our 
 securities. 
 
 We consider the building at Broad and Chestnut as 
 more or less monumental in character, and while it cost 
 quite considerable amount of money, we couldn't realize 
 
1049 
 
 that amount on it. In view of the fact that we are re- 
 turning our book value, all we can do is to take the figures 
 that our assets represent, and add them together. 
 
 Mr. Brown : I wish you would give us your thought on 
 whether or not it would be practical to levy a tax on the 
 gross receipts and eliminate the capital stock; whether 
 or not it would be a practical method for the Common- 
 wealth of Pennsylvania to levy a tax on the gross receipts 
 on companies such as yours. Mr. Gest, I would like you 
 to give that some thought, too. Of course, I don't want 
 your answer now. (Addressing Mr. Page) : Do the trust 
 companies have an association in Pennsylvania? 
 
 Mr. Page : No. 
 
 Mr. Brown: You get together, don't you? 
 
 Mr. Page : Yes The tax used to be based on the earn- 
 ings. The book value you don't seem to think is the right 
 way? 
 
 Mr. Brown: Any question I ask here is simply from 
 suggestions made throughout the State by others. 
 
 Mr. Page : To :ne, the book value is a very fair way to 
 get at it. If the books of companies were regulated, the 
 stockholders would get book value 
 
 Mr. Brown: If you sold your building at Broad and 
 Chestnut, the stockholders would get their share of the 
 four millions and not the two millions, which is its value 
 on the books? 
 
 Mr. Page: Yes. 
 
 Mr. Brown: \\hat is your thought of the treasurer of 
 your company being made the agent of the State to return 
 the tax on moneys at interest? 
 
 Mr. Page: My thought -is that it is not a good thing. 
 
 Mr. Brown: Why do you think these moneys should not 
 bear their share of the tax? 
 
 Mr. Page: Because I dcn't consider a depositor as hav- 
 ing money at interest. 
 
1050 
 
 Mr. Brown; \Yhat is the difference between a man who 
 deposits money in your company and gets 3 per cent, and 
 a man who owns a Government bond and gets 3 per cent. ? 
 
 Mr. Page : Unless it is some special arrangement he 
 gets 2 per cent. 
 
 Mr. Brown: The average depositor? 
 
 Mr. Page: Yes. 
 
 Mr. Brown: AVhy shouldn't that money bear its share 
 of the tax the same as any other interest money? 
 
 Mr. Page: Well, simply upon the theory that it is in- 
 come. 
 
 Mr. Brown: AU interest is income. 
 
 Mr. Page: Ypu would then be taxing income. 
 
 Mr. Brown: Isa't all interest income? 
 
 Mr. Page: No;; the amount on deposit. The amouut on 
 deposit largely represents income. If you are going to 
 tax a deposit that is made up of income, then you have 
 an income tax. 
 
 Mr. Brown: AVhy shouldn't moneys received by me, 
 for instance, coming from an income, pay a tax just as 
 much as from somebody else who has loaned money to 
 somebody else and gels the interest? 
 
 Mr. Page : Because I think the loan is a fixed invest- 
 ment. 
 
 Mr. Brown: Isn't the income he gets from the trust 
 company a great deal more certain than anything he 
 would get from some solvent debtor where he might have 
 to sue to recover? 
 
 Mr. Page : If a man chooses to leave his income on de- 
 posit in tne trust company, he will get 2 per cent. But, 
 on the other hand, he may take it out any moment if he 
 wants to use it. I think if they are going to be taxed 
 on their deposits, a great many of the people would not 
 bother about making a return and would put their money 
 in a national bank, which does not pay interest on the 
 deposits. 
 
1051 
 
 Mr. Brown: Are there many that don't pay interest on 
 deposits? 
 
 Mr. Page: I don't know that. I was just throwing out 
 that idea. There are a great many individuals that bank 
 in the national banks, because they are accommodated 
 in other ways than getting interest I should think that 
 might be a means of shifting the deposits without gaining 
 anything for thy State. 
 
 Mr. Brown : How about the time of return ? Is that 
 satisfactory to your company? 
 
 Mr. Page: Yes. 
 
 Mr. Brown: You pay prior to the 1st of March and 
 get the benefit of that? 
 
 Mr. Page: es. 
 
 Mr. McNichol: As your association has taken up the 
 question as to the revision of the system for the better- 
 ment of conditions have you given it any thought in 
 the last few years, as to whether you are carrying suf- 
 ficient burden in the way of pay/nents to the State, or 
 whether there should be some correction in the laws, in 
 your opinion, wherein you would have a more equal dis- 
 tribution than now exists? 
 
 Mr. Page : "We feel that we are taxed sufficiently. I 
 mean our capUtii stock tax of fifty thousand and our real 
 estate tax of some thirty-fi^e or fo >n ty thousand. I think 
 that is quite an amount to pay m taxes. 
 
 Mr. McNichol. Yo-i men are in a position to aid the 
 Legislature in revising or equalizing the burden. A 
 great many people believe they are unduly or unjustly 
 taxed. People in your atmosphere believe the same way. 
 We find that the man who is paying rent is being taxed 
 unjustly to the extent that those who are doing a large 
 business are only paying a small proportionate share 
 of the burden. The time is coming when these things 
 have to be corrected, and it is from you gentlemen that 
 the Legislature looks for information which will enable 
 them to bring about satisfactory results. 
 
1052 
 
 Mr. Brown: Take your company, for instance ; what 
 dividend did your company pay in 1909 ? 
 Mr. Page: They paid 30 per cent. 
 
 Mr. Brown: 30 per cent, dividend? 
 Mr. Page : We raised our dividend on July 1, 1909, up to 
 30 per cent. 
 
 Mr. Brown: You paid 30 per cent, for the year? 
 Mr. Page : Yes. 
 
 Mr. Brown: Assuming that the State of Pennsylvania 
 needs more money for roads, needs more money for her 
 public schools and other public utilities assuming she 
 needs that, we would like to have a thought from you 
 gentlemen as to whether or not there should not be some 
 contribution from such companies towards making up 
 the sufficient sum? 
 
 Mr. Page: In the way of taxes? 
 
 Mr. Brown: Yes, by additional taxation. 
 Mr. Page : We are assessed a State tax to take care of 
 the roads and streets. 
 
 Mr. Brown : I am speaking about building public high- 
 ways and State roads and public schools, which is a State 
 institution. We would like to have a thought from you 
 gentlemen as to whether or not you should not help, and 
 if not, why not. If you have an association in this city 
 in whieli all the institutions are represented, we should 
 like to have the consensus of thought upon it. 
 
 Mr. McNichol : We have got to pass upon the question 
 of an income tax, that question that has occupied the 
 thought and mind of the people for yeats. Don't you 
 think it is up to you gentlemen to help the Commonwealth 
 by furnishing such information and suggestions as you 
 can? 
 
 Mr. Page : I think it would be a good thing. If our 
 company can be a help to you, I know they will be glad 
 to assist you. 
 
1063 
 
 Mr. McNichol: We would like to have these sugges- 
 tions from men who come in contact with that particular 
 line of work. We want to be fair to everybody and we 
 want to get the best suggestions possible. 
 
 Mr. Brown : Will you be on hand tomorrow, please, Mr. 
 Page? 
 
 Mr. Page : Someone from Our company will be present. 
 
1054 
 
 MR. T. M. DALY, President of the Continental Title and 
 Trust Company, called. 
 
 Mr. Brown: Mr. Daly, have you any suggestions to 
 make to this Committee as to the present system of taxa- 
 tion? If so, we would be glad to have you make them. 
 
 Mr. Daly: Well, we were complaining some years ago 
 because the companies were taxed on the selling value or 
 market value of their stock, and it was the consensus of 
 opinion that that was a very unfair standard. It meant 
 in some cases that the stock was above par and in other 
 cases the sales were below the book value, because people 
 had some doubts as to the future earning capacity of that 
 particular company. 
 
 I remember one year, when there were very few shares 
 of our stock offered for sale, and when a small lot was 
 offered a man who wanted to piece out his holdings, he 
 bought it at a figure in excess of the market value. That 
 man for that year determined the assessable value of our 
 assets for the purpose of taxation. 
 
 Mr. McNichol: He was figuring on the future? 
 
 Mr. Daly: Yes; and he was one man against a hundred. 
 We were entirely at the mercy of the one man for that 
 year's taxes. 
 
 Mr. McNichol : You are figuring on the book value? 
 
 Mr. Daly : Yes. The bankers and business men interest- 
 ed in the business appealed to the Legislature because 
 this plan of assessing became burdensome and oppressive. 
 As I say, they appealed to the Legislature and there was 
 a conference, which resulted in the book value being ac- 
 cepted as the proper standard for assessment. That is 
 the standard today, and it is the proper standard. 
 
 Mr. Brown : What about real estate 
 
1055 
 
 Mr. Daly: There has been some question suggested as 
 to the undervaluation of real estate. 
 
 Mr. Brown: Or the undervaluation of any other estate? 
 
 Mr. Daly: That is fully answered by the fact that a 
 man going to a national bank in order to borrow to the 
 utmost of his ability will hardly be accused of underesti- 
 mating his assets, but he will probably state everything 
 he has in order to get as full a value as he can. 
 
 So, with a trust company, it would be manifestly to 
 its interest to make as good a showing as possible, because 
 the public is usually influenced by the strength of a com- 
 pany based upon its capital and surplus. 
 
 I think it is fair to assume that every company put 
 in that position would put its best foot forward in th^ 
 swelling of its assets and would not undervalue any of 
 its assets. 
 
 Mr. McNiehol : What is the dividend paid to your stock- 
 holders. 
 
 Mr. Daly : Six per cent, on the money paid in. 
 
 Mr. McNiehol: How about surplus? 
 
 Mr. Daly : Our capital paid in is five hundred thousand 
 dollars and we are a few dollars short of three hundred 
 thousand. Our stock is selling at forty-seven and forty- 
 eight. 
 
 Mr. McNiehol : How many years organized 1 
 Mr. Daly: Twelve years organized. That money has 
 been earned. We started in with no surplus, and what 
 we have done since has been earned. That is why I think 
 that the present method of valuing is a fair one. 
 
 As to the question of valuing real estate separately, as 
 suggested by Mr. Brown take our own particular case, 
 for instance. We carried for some time some real estate 
 which was valued by the city at probably one-quarter of 
 what we valued it on our books. We finally sold it at our 
 own value. Now, if that were taken at the city valuation, 
 the returns to the State would be much less than the valua- 
 
1056 
 
 tion based on our book value. So, if you are going to 
 value the real estate separately, you may gain and you 
 may lose. 
 
 Mr. Brown : The suggestion is this : As the item of real 
 estate now is not given serious consideration by the State 
 authorities in the value of the capital stock, it would be 
 in the future if it was assessed by the local authorities 
 locally? 
 
 Mr. Daly : I doubt if there is very much difference. That 
 would involve another point, and that is, how would 
 encumbered real estate be valued? Trust companies are 
 usually unwilling owners of real estate except that needed 
 for their offices, and when they get it encumbered it would 
 not be fair to disregard the encumbrances in assessing 
 State taxes. Take, for example, a hundred thousand dol- 
 lar property subject to a fifty thousand dollar mortgage? 
 
 Mr. Brown : That is not carried as one hundred thousand 
 dollars worth of real estate with fifty thousand dollars 
 against it? 
 
 Mr. Daly : That would be carried on the books at fifty 
 thousand dollars. 
 
 Mr. Brown : The contention is that if that one hundred 
 thousand were taxed locally, it would be taxed at one 
 hundred thousand, and there would be no rebate for the 
 fifty thousand? 
 
 Mr. Daly: You would increase our burden by this 
 method. Of course, there are various plans that could be 
 adopted which would be fair, and all that we ask is a fair 
 plan. 
 
 Mr. Brown: The contention is that the one hundred 
 thousand should be taxed just the same as one hundred 
 thousand dollars that any other person has, whereas, in 
 the value of the capital stock, it is assessed at fifty thou- 
 sand. Why shouldn't the "A" trust company pay the 
 same tax as I pay? 
 
 Mr. Daly: You don't pay a State tax on your prop- 
 erty 
 
1057 
 
 Mr. McNichol: If I engage in business, I have to pay 
 a tax. You are taking the question of separating your 
 individual ownership, and denying the right, in the man- 
 agement of your business, of the State to tax, and that you 
 should bear an equal burden. The argument is as to the 
 individual payment of taxation. That is the thing we 
 have got to unravel? 
 
 Mr. Daly : If you are taxing a business, there is some 
 system of taxation for that. We are not saying the State 
 has not a right to tax, but the question is as to the fairness 
 of the method to be adopted. A company having only 
 40 per cent, equity in real estate should not pay State 
 taxes on that real estate on a 100 per cent, basis of valua- 
 tion. We are doing business on capital stock, assets and 
 earnings. Tax us what is fair on these. If we own 40 
 per cent, of real estate and somebody else owns 60 per 
 cent, of it, and you charge us with 100 per cent., that 
 will be a burden. 
 
 By a Member of the Committee : Most of the real 
 estate held by trust companies, outside of their office build- 
 ings, are sort of unwilling assets? 
 
 Mr. Daly: Yes; the most of it we are obliged to take 
 in business transactions, that come to us loaded with en- 
 cumbrances. 
 
 By a Member of the Committee : To avoid these troubles, 
 what would be your view in regard to putting the trust 
 companies under gross income tax, rather than book 
 value 1 
 
 Mr. Daly: I don't know. I don't think that would be 
 fair either. If any income is to be taxed in the business, 
 it should be the net income. The amount of money you 
 are obliged to pay out 
 
 By a Member of the Committee : It is the same as the 
 running expenses of any other business, isn't it? 
 
 Mr. Daly: A banking company is somewhat different 
 from other businesses. On the money you take in deposit, 
 you are asked to pay interest. We have to pay 2 per cent. 
 50 
 
1058 
 
 on check accounts and 3 per cent, on ten-day accounts. 
 This is about the most we can do consistent with good 
 banking methods. Some of the saving funds have raised 
 their percentage to three sixty-five. I don't know whether 
 or not any of the trust companies tried to follow their 
 example, but a great bulk of the well-managed trust com- 
 panies would prefer a loss of deposits and a loss of business 
 rather than do anything that would have an injurious 
 effect on the business. 
 
 Mr. Brown : Why should they be favored over any other 
 taxpayers ? 
 
 Mr. Daly: Taxation, as I say, should not be burden- 
 some. Every company should contribute a fair share. 
 Take the case Mr. Gest mentioned about deposits going to 
 another city. I know of a case of a woman who went be- 
 tween New York and Philadelphia, and who made an 
 investment here and lived here for a while. She had a 
 twenty thousand dollar mortgage here. She said she 
 didn't think she would stay here because she would have 
 to pay a State tax. She said she would go to New York 
 to live and make her home there. 
 
 Mr. McNichol: Is it not true that 85 per cent, ot the 
 money in Philadelphia is sent over to New York, any- 
 how? 
 
 Mr. Daly: I cannot say that. 
 
 Mr. McNichol : Do you know if any part of your com- 
 pany 's money is sent over there for investment? 
 Mr. Daly : No, we sent no money there. 
 
 Mr. McNichol : It is a general belief that big money was 
 made in New York for the past ten years on account of 
 the big demand for large amounts of money? 
 
 Mr. Daly : I don't think in that time we have sent any 
 money at all over there. We have been able to invest our 
 money here. 
 
 Mr. McNichol: But this has been done? 
 Mr. Daly : Yes. 
 
1059 
 
 Mr. McNichol : Is it a fact that taxation drives out in- 
 vestors ? 
 
 Mr. Daly: Yes, and a general depression of business. 
 There was a time when you couldn't give money away, 
 and in New York, at that time, they were willing to pay 
 a fair return. 
 
 Mr. Brown : Let us have your thought on companies that 
 pay high rates of dividend. Shouldn't they be taxed 
 on the gross receipts ? 
 
 Mr. Daly : The net income would be fairer. 
 
 Mr. Brown: Why not gross receipts. The operating 
 expenses are the same. Wouldn't it reach these companies 
 that pay 20 and 25 per cent, dividend, to make them pay 
 proportionately with the companies that pay, say 6 per 
 cent. ? 
 
 Mr. Daly : No, sir ; for you would not get the same re- 
 sult. I think the fairer way would be the net income. 
 
 Mr. Brown : That would involve a whole lot of figuring, 
 and sending a man to your company to go into your 
 affairs ? 
 
 Mr. Daly : You would hare to do that to get the gross 
 income. You would have to go into our affairs and see 
 what our receipts were from each particular source. 
 
 Mr. Brown: The Commonwealth would have to pass 
 upon whether you had too many clerks, or whether this 
 was fair, or that was unfair 
 
 Mr. Daly : In other words, the accounting officer would 
 say, "You are not running this business right. John 
 Brown is doing a great deal more business than you are 
 and in a better way." And then you are getting into the 
 inquisitorial. I think the net income represents the very 
 best judgment and the very best knowledge of those in 
 charge of the company. 
 
 Mr. McNichol: Can you enlighten this Committee as 
 to a comparison of the laws of this State and the laws 
 of New York? 
 
1060 
 
 Mr. Daly : I don't think they tax deposits in New York. 
 I think that non-residents investing money here in 
 mortgages and things of that kind should pay the same 
 tax that residents do. I do believe there are some peo- 
 ple who loan money here, and by living outside of the 
 State escape the taxation. Then, another example shows 
 the danger of legislating against the non-resident. In 
 Jersey, it is a difficult matter to foreclose a mortgage. I 
 had a mortgage down there in the hands of one of the 
 ex-Judges, and it took six or eight months to foreclose. 
 The same thing could be done here in probably three 
 months. In speaking of the matter, I was told that this 
 slow procedure was for the benefit of the debtor, and as 
 most of the lenders were non-residents, the Legislature did 
 not favor them. That condition made it difficult to get out- 
 side money for New Jersey mortgages. In the particular 
 case I have in mind, the debtor was for several months 
 trying to place the mortgage. You can go to Atlantic 
 City to-day and get 6 per cent, without any trouble for 
 money on good mortgages. 
 
 Mr. Brown: You think there should be some short-cut 
 for collection? 
 
 Mr. Daly: I am speaking of people outside the State, 
 and of the danger of drastic legislation against them. 
 
 Mr. McNichol : Is your company engaged in the surety 
 business, Mr. Daly? 
 
 Mr. Daly : No, we are not doing a surety business regu- 
 larly, and what business we are doing is going security for 
 persons, acting in a fiduciary capacity, and in these cases 
 moneys must be deposited with us. We take no risks 
 whatever. 
 
1061 
 
 W. U. HENSEL,'of the Lancaster Trust Co., 
 Lancaster, Pa., called. 
 
 Mr. Brown: Mr. Hensel, we would be pleased to hear 
 any suggestions you may desire to make to the Com- 
 mittee. 
 
 Mr. Hensel : I think as far as the Lancaster Trust Co. 
 is concerned, we are satisfied with the present method 
 of taxation; but, before going into that, I would like to 
 say to the members of this Commission, with all due defer- 
 ence, that they are misinformed when they are told that 
 there are ten millions of dollars on certificates of deposit 
 in Lancaster banks that go untaxed. 
 
 Mr. Brown : Mr. Eschelman said this, I believe, at one of 
 our meetings in Philadelphia. 
 
 Mr. W. H. Keller: We pay no interest on certificates 
 subject to check. The only interest we pay is on the cer- 
 tificates of deposit, and the whole issue of these in all the 
 trust companies does not amount to ten millions of dol- 
 lars ; and a great proportion of the certificates out are re- 
 turned for taxation. The assessors in the different town- 
 ships have gone to every person and asked them if they 
 had certificates of deposit, and the proportion is consid- 
 erably over 50 per cent, that are returned for taxation. 
 We pay 4 per cent, on certificates of deposits left with 
 us for a year; for six months, we pay 3 per cent. Some 
 pay only 3^ for a year and these investments are re- 
 garded as permanent investments and a great proportion 
 are returned for taxation. 
 
 Mr. Brown: You don't pay on two weeks' notice? 
 
 Mr. Keller : In trust companies I know if the deposit is 
 drawn out at the expiration of the certificate, they pay 
 the interest earned at the termination of the certificate. 
 
1062 
 
 Mr. Brown : Is there any rule for that in Lancaster as 
 distinguished from any other city? 
 
 Mr. Keller : It seems to be the practice there. 
 
 Mr. Brown: Is there any reason why you should not 
 pay a tax on your real estate? 
 
 Mr. Keller : We pay a tax on our real estate. Our real 
 estate is carried on our books at what it cost, which is 
 approximately what it is worth. We pay local tax oil 
 that in the valuation of our capital stock. 
 
 Mr. Brown: Have you any suggestions to make to the 
 Committee as to any amendments to the present laws ? 
 
 Mr. Keller: None, except I think we all feel all the 
 trust companies feel that it would be a great injustice 
 to tax the gross income or the net income either. Again, 
 we do not all operate our institutions for the same cost, 
 and as long as the running charges are not the same, 
 it seems to me a gross income tax would be an unequal 
 method of taxing these institutions. I would think the 
 present method of taxing the value of the stock would be 
 the most satisfactory and equitable way of getting at it. 
 
 Mr. Brown: Has any of the Committee any further 
 questions to ask Mr. Keller? 
 
 No further questions asked by the Committee. 
 
 MR. HENSEL, of the Lancaster Trust Company, called. 
 
 Mr. Hensel : I think the stock of trust companies ought 
 to be taxed on just what it is worth in the hands of 
 its holders. It certainly ought to tax its debts. 
 
 Mr. Brown : You are satisfied with the present laws ? 
 
 Mr. Hensel : I think the present law is a very good one 
 in that respect. 
 
1063 
 
 JAMES AYLWARD DEVELIN, President of the Mort- 
 gage Trust Company, Philadelphia, called. 
 
 Mr. Develin : I do not know that it is practically worth 
 while for me to go into the special business, the nature 
 of the business of the Mortgage Trust Company, which 
 it is specially engaged in. So far as I know there are 
 only two companies engaged in the special business of 
 selling or issuing debenture bonds that are secured by 
 mortgage. 
 
 Most of the companies have been obliged to take real 
 estate outside of the State, which we think ought not to 
 be taxed in our capital stock. 
 
 Mr. Brown : You are satisfied with the present laws ? 
 
 Mr. Develin : I was satisfied better with the old law. I 
 thought that the valuation, which was ascertained partly 
 by the market price of the stock, was the better way to 
 get at it than the book value, as under the present law, 
 because I thought that introduced the element of ability 
 to pay the tax ; that net income was affected in that way, 
 because the market value of the stock fluctuated largely, 
 according to the profits of the company, and that in turn 
 decided or determined to a certain extent at least the 
 ability of the company to pay the tax. In the case of 
 our company we felt the hardship of the book value 
 method, because we owned a large amount of real estate 
 situated outside of the State, and which was of very un- 
 certain value. Whether or not the present law is the 
 best method of determining generally, I am not prepared 
 to say. Perhaps it is, but in my own case and in the case 
 of companies engaged in a similar business, I think, in 
 fact, it is a hardship. We also pay a tax upon our de- 
 bentures, and I think, but I am not sure of this, that the 
 companies who do not issue debentures, but do practically 
 
1064 
 
 the same business, escape taxation. I am not sure about 
 that. 
 
 Mr. Brown : They ought to be included in .the same 
 class with you? 
 
 Mr. Develin: Yes. Well, I do not say that. I do not 
 want to bring that burden upon anybody else, but that 
 we are better satisfied with the old law, and for that rea- 
 son we made an attack it was our company, I believo, 
 whose name was used in the attack upon the Act of 1907, 
 which changed the basis of taxation, although perhaps 
 they were one of the smallest concerns. 
 
1065 
 
 WM. H. KINGSLEY, representing the Penn Mutual Life 
 Insurance Company, called. 
 
 Mr. Kingsley : Mr. Chairman and Gentlemen : I am not 
 going to take very much of your time this morning. Since 
 I have been listening to all that has been said, I believe 
 that our grievance is monumental. I have learned a good 
 deal about taxation, and a great deal of the taxation as 
 related to the condition under which the capital stock of 
 these companies is fixed, and objection has been raised 
 to that system. The Penn Mutual Life Insurance Com- 
 pany stands almost alone as a company, having no capital 
 stock. It operates its business solely on a mutual basis. 
 Its? so-called assets to the extent of 95 per cent, of their 
 amount are in reality liabilities. They are trust obliga- 
 tions that are being held for two or three hundred thou- 
 sand people all over the country, returnable to them in 
 the event of death and in the event of a lapse of time, 
 and withdrawable almost as bank balances or any deposit 
 may be. It has been argued that some relief should be 
 afforded the companies who are forced to pay on the ave- 
 rage market value of their stock during the year just pro- 
 ceding the levy. I would like for a moment to point out 
 what happens to us, because we have no capital stock on 
 which to pay dividends. We are obliged to pay a four 
 mill tax on our entire taxable assets. Other companies in 
 the same line of business, having a capital, received the 
 benefits of the method of taxation, and we are placed to 
 a disadvantage which last year resulted in our company 
 paying more money for taxation than its entire admin- 
 istration expenses. We do not consider it an equitable 
 basis, and we believe the attorney for the Committee was 
 in error when he said the Pennsylvania Railroad Com- 
 pany was the largest taxpayer in Pennsylvania, because 
 we think we have that distinction in so far as it relates 
 
1066 
 
 to the four mill tax, and we do not want to be selfish and 
 hold it any longer. We would like very much indeed to 
 have some relief from the position in which we are placed. 
 I think there is one other company you referred to this 
 morning, the Fidelity, which, in a measure, is in the same 
 class, but in being a larger company it does not suffer quite 
 so much. It appears to us that we have been taxed from 
 every possible angle. In the first place, the premium is 
 ascertained when its amount is ascertained when the 
 policy is issued; we are immediately taxed eight mills. 
 The next day that premium is transferred into an in- 
 vestment, in order to carry out the terms of the policy, 
 and thru is taxed four mills as a personal possession 
 Then along comes the Insurance Company of the State 
 which supervises us, which is entirely proper, and which 
 was the purpose for which taxes were originally collected 
 from insurance companies, and we pay for that super- 
 vision. They then value our policies at the rate of one- 
 half ci-nt per thousand dollars. So, as I stated before, 
 our taxes last year were one hundred and thirty-seven 
 dollars more than our entire administration expenses. 
 
 Member of the Committee : What was your total tax? 
 Mr. Kingsley : Our total tax paid was $520,777. 
 
 A Member of the Committee : How does that compare 
 with the tax on similar companies in other States? 
 
 Mr. Kingsley : It is very much more heavy and burden- 
 some and the rate of tax imposed by other States upon 
 insurance companies, even where it is lower than Penn- 
 sylvania, has been recently lessened, because they have 
 appreciated the power and force of the argument that 
 has been made against tax levy on insurance companies 
 We accumulate money for the benefit of a man who can 
 withdraw it, and perform a greater function than a saving 
 fund, because we have the clement of life insurance, and 
 we feel there should certainly be no discrimination as be- 
 tween a Mutual Life Insurance Company and a fraternal 
 
1067 
 
 organization, which does not serve its members as well as 
 the old line life insurance companies or saving funds, in 
 that it only returns the money which is deposited 
 
 A Member of the Committee : Neither of which is taxed. 
 
 Mr. Kingsley: Neither of which is taxed. This is a 
 subject which has been before the members of the insur- 
 ance fraternity for some years, and organizations have 
 gone back to the original belief that the purpose of taxing 
 insurance companies is to provide funds for its super- 
 vision. We have gone somewhat into statistics, and we 
 find that a drug store doing a business of $64,000 a year, 
 pays a .tax of $91. Our tax on $64,000 a year business is 
 $1,280. A grocery store doing a business of $61,800 pays a 
 tax of $70.00, and we pay a tax of $1,239. A retail drug 
 store doing a business of $342,000, pays $639, and we pay 
 $6,840 on the same amount of business, and a wholesale 
 implement house doing a business of $464,000 pays $283, 
 and we pay $9,280. We realize the fact that insurance 
 companies, in common with all other beneficiaries of the 
 State's protection, should pay a fair proportion of the ex- 
 penses of the Government, both local and State, but I 
 think you gentlemen must agree that in comparing the 
 situation of a mutual company with that of a stock com- 
 pany there is a great injustice and burden placed upon 
 the mutual company, for which it is very desirable 1 3 seek 
 relief. Of course, we try to think out the remedy. We 
 are rot tax dodgars. We have already done our share, 
 and we feel a great deal moro than our share, in contribu- 
 i:'ug to tax revenue, but we believe that if the mutual 
 life insurance companies were taxed upon their surplus, 
 you would come nearer having an equitable basis than 
 under the present system, and in that way perhaps bring 
 about an anomalous position with the stock company, be- 
 cause it is the surplus accumulated by the company which 
 gives market value to its stock. It is all net profit. It is 
 the surplus alone which reflects the value of the stock in 
 the market, and in that way you could perhaps take the 
 
1068 
 
 surplus of a mutual life insurance company and regard 
 it in the same light you would the market value of a 
 stock company, and tax it on that basis. 
 
 Mr. Brown : Do you carry a surplus in addition to your 
 reserve? Do you make a distinction between them? 
 
 Mr. Kingsley: We carry both. Our reserve is made 
 by the laws of the State. They require us to maintain a 
 reserve, say 3 per cent. If we earn 4 per cent, we 
 pay a four-mill tax, which is equivalent to one-tenth of 1 
 per cent. If you have any considerable number of invest- 
 ments of that sort, you haven't enough margin to properly 
 conduct your business. 
 
 Mr. McNichol : Have you made any attempts to remedy 
 the condition? 
 
 Mr. Kingsley: Without being offensive to the Legisla- 
 ture, we have spoken to some of the members, and they 
 have always said it was a condition which should be looked 
 into and should be remedied, and we pinned our faith 
 to that, and in the meantime have paid our tax under 
 protest, to protect what we thought was our position, in 
 the event of the Legislature taking proper action. 
 
 Mr. Brown: Mr. Foust addressed the Committee on 
 this subject several weeks ago, and he seemed to share the 
 same opinion. 
 
 Mr. Kingsley : I have not consulted Mr. Foust about it. 
 In fact, I did not know he had been before the Committee. 
 While it won't disturb the revenue of the State, at the 
 same time you want equity, and there are not many mutual 
 life insurance companies in the State, and the other States 
 do not treat them as we are treated in Pennsylvania. 
 
 Mr. Brown: How about the tax on foreign insurance 
 companies ? 
 
 Mr. Kingsley : You are coming to the point of premium 
 collections. We have the same retaliatory law which they 
 mildly call a reciprocal law, where as we tax so will they 
 tax. 
 
1069 
 
 Mr. Brown : Is that beneficial to our home companies ? 
 
 Mr. Kingsley: Well, we would have to study that out. 
 I would not want to answer that off-hand. 
 
 Mr. Brown: I always thought it was. 
 
 Mr. Kingsley: I believe it would be, and we believe 
 the support from the insurance companies should come 
 from that direction, from the collection of premiums, from 
 the vitals of the business, rather than the residuum. We 
 are compelled to maintain the reserve which you spoke of 
 a little while ago, and we are merely custodians of those 
 funds, and they change every day and pass out into the 
 hands of those for whose benefit they are accumulated, 
 just as the deposit of a bank would be. 
 
1070 
 
 FRANK B. SHATTUCK, representing the Postal Tele- 
 graph Company, called. 
 
 Mr. Shattuck : I came here on behalf of the Postal Tele- 
 graph Company, which received itself and through these 
 numerous light companies a great many requests they 
 are all along the line that has been mentioned here as 
 to whether or not the tax ought to be on the actual value 
 of the property. I have had considerable experience in 
 looking into the returns and making them for the Postal 
 Company and others, and I am emphatically in favor of 
 the present situation. Of course, in any method of fixing 
 the tax on capital stock, the judgment of individuals must 
 come into play, but where you get the actual figures of 
 the gross income and expenses and other figures which 
 go to make market value, you can do it better with those 
 figures than if the judgment of people was passed upon the 
 value of a telegraph line. It is almost impossible actually 
 to fix what its value is. Good will enters into it ; whether 
 or not you have paid damages as an additional servitude, 
 and it has been held in our Superior and Supreme Courts 
 that you can institute such proceedings at any time if the 
 property has not been condemned actually. By reason of 
 these decisions it is an existing liability really. But rights- 
 of-way and the right to go into the highway, which exists, 
 I take it, upon the part of companies which have accepted 
 the Post-roads Act of Congress, and not upon the part 
 of those who have not, to the same extent, you could not 
 properly value a telegraph line. And the way it was 
 originally constructed is a great factor when you take 
 depreciation into consideration. Different companies de- 
 sire different kinds of wire and will equip it more ex- 
 pensively than others. Telephone lines would come within 
 the same definition. It is my judgment that there would 
 be trouble existing between the taxing officers and the 
 
1071 
 
 companies, and more dissatisfaction than exists now, if 
 the tax was levied on the value of a telegraph or telephone 
 line. The present system is working very well, I think. 
 There is very little trouble in regard to it. The stock is 
 fixed at the market value, just the same as stock of other 
 corporations, taking all the factors into consideration that 
 they have to report upon. I do not know of any dissatis- 
 faction on the part of any of the companies in regard to 
 the present system. 
 
 Mr. McNichol : Would it be possible for the telegraph 
 companies to consider paying an additional tax? 
 
 Mr. Shattuck : Well, frankly speaking, I do not think 
 the telegraph and telephone companies are over-taxed by 
 the State. I am opposed to the numerous methods in- 
 dulged in by cities and boroughs and first-class townships 
 all over the State. I do not really conceive they are over- 
 taxed. They might stand some more. 
 
 Mr. Brown: What is the dividend of the Postal Teie- 
 graph Company, say for the past year? 
 
 Mr. Shattuck : You see, I cannot answer those questions, 
 for the reason that there is no Postal Telegraph stock in 
 the market, and there is no American District Telegraph 
 Stock in the market; there is no Commercial Telegraph 
 stock in the market, or any stock of any corporation 
 which is generally known as a Postal Telegraph or a Com- 
 mercial Cable Company. All of that stock is held by the 
 Mackey Companies of Boston, which also hold the stocks 
 of a great many other corporations. It is only within 
 the last six months that it has sold ten million^ of 
 dollars worth of American Telegraph and Telephone Com- 
 pany, the Bell parent company. That Mackey Company 
 owns a great many corporation stocks, and it owns prac- 
 tically all of the stocks of these companies, and they are 
 known as Postal Companies, Commercial Cable Com- 
 panies, Pacific, and others. 
 
 Mr. Brown : Would a tax on intra state messages be 
 objectionable, and if such a tax were levied, would it be 
 added to the tax on the customers? 
 
1072 
 
 Mr. Shattuck: I do not think you possess the power 
 to levy a tax on inter state messages, because a telegraph 
 message has been held to be inter-state commerce. 
 
 Mr. Brown : I say intra state. I say what would be the 
 objection to a tax on messages within the State, and if 
 such a tax were levied, would it be added to the charge 
 to the customer? 
 
 Mr. Shattuck: Well, the objection to levying a tax is 
 the same one every man has. He hates to pay any tax. 
 He does not amble forward and ask to pay the tax. 
 Whether or not it would be added to the message, I do not 
 know. 
 
 Mr. Brown : Do you recall that there was a bill in the 
 last Legislature to tax messages? Do you recall that? 
 Mr. Shattuck : I recall it. 
 
 Mr. Brown: I thought probably your companies had 
 given some consideration to that and come to some con- 
 clusion about it? 
 
 Mr. Shattuck: Of course, speaking generally, it would 
 depend on, perhaps, a meeting between the Postal Tele- 
 graph Company and the Western Union officials. Gen- 
 erally speaking, the regular ten-word rate is in a certain 
 amount, say twenty, twenty-five, thirty or thirty-five cents. 
 Of course, extra words bring it into pennies, but a tax 
 on messages, I take it, would be in pennies, and for that 
 reason it might not be added on. 
 
 Mr. Brown: And again it might? 
 
 Mr. Shattuck: Again it might, and as a result, of 
 course, it might be worse for the public. Now, they have a 
 law of that kind down in Maryland. I don't know. It made 
 the operator stamp the hour that the message was delivered 
 for transmission, and putting a tax on it also. The result 
 was that it cost the public more in the long run than it 
 otherwise would have, because they added it on in different 
 ways, charging them for messenger service and so on. 
 Of course, I could not answer for what the executive of- 
 
1073 
 
 ficers of those two corporations might do. I know their 
 general feeling is against taxation, and I believe if they 
 were taxed they would certainly give it earnest considera- 
 tion as to whether or not the public should pay. 
 
 Mr. Brown: Well, the presumption is against the 
 public. 
 
 Mr. Shattuck : They have no other source of telegraph- 
 ing practically then with one or the other of these cor- 
 porations, and therefore so long as they serve the public 
 equitably in the way of making charges, there is no com- 
 plaint on the part of the public. 
 
 Mr. Brown : It might resolve itself into the upper and 
 nether mill stone? 
 
 Mr. Shattuck : I really think it would. That is my per- 
 sonal opinion, but I am not able to speak for the executive 
 officers. 
 
 Mr. Brown: Mr. Shattuck is the only man who has 
 come before us asking to be taxed. Do you wish to ask 
 him any questions? 
 
 Mr. Shattuck : I say I do not think they are over-taxed 
 in the State? 
 
 Mr. Brown : It is the borough tax and license, and one 
 and a hundred other things? 
 
 Mr. Shattuck: It is the boroughs and first-class town- 
 ships that I have made complaint about. I do not know 
 as it would produce a great deal of extra income even if 
 they were taxed a reasonable amount more. I do not think 
 the income to the State from telephone and telegraph com- 
 panies is very much. 
 
 Mr. McNichol : Not half as much as it should be. 
 
 Mr. Shattuck : I would not want to see it doubled, but 
 take an ordinary fair raise of 10 per cent, or something 
 like that, I do not think it would amount to much in 
 dollars and cents. 
 
1074 
 
 WILLIAM H. KELLER, of the People's Trust Company, 
 Lancaster, Pa., called. 
 
 Mr. Keller: I do not know as I have anything special 
 to say. 
 
 Mr. Brown: I invited the Lancaster Trust Company, 
 because Mr. Eschelman came here and stated that they had 
 a grievance, and it was out of courtesy to Mr. Eschelman. 
 
 Mr. Keller : I can corroborate what Mr. Newman stated 
 to you, that the amount that was placed on deposit is 
 entirely too high. We do not pay any interest on any- 
 thing except certificates of deposit, and that while these 
 certificates of deposit are all fixed for a certain time, yet 
 the universal custom has been to pay them on presentation, 
 and if we did not pay them there would be a run on the 
 bank. That has been the custom. They are paid. The only 
 result is that if they are presented at less than six months, 
 they lose their interest. If they are presented after six 
 months or over they get 3 per cent., and if they are allowed 
 to remain in for a whole year they get 4 per cent. I think 
 a trust company and a bank are in a different situation 
 from any other class or corporation. Their business is 
 borrowing and lending money, and therefore their assets 
 are in proportion to their net capital stock. The great 
 bulk of the assets of a bank or trust company are really 
 liabilities. We do not believe there could be any fairer 
 method of determining the tax than that which is de- 
 termined now. Previous to the Act of 1907 there was 
 nearly always previously continuous friction between the 
 Auditor General and the different banking institutions as 
 to the exact market value of the capital stock. Taking 
 their book value, there can be none. It is shown on the 
 books, and there can be no falsification. It has worked 
 very well, and we think any change from it would be a 
 mistake. 
 
1075 
 
 Mr. Brown : Do you change the value of your real estate 
 from year to year? 
 
 Mr. Keller : The value of the real estate is changed from 
 year to year as there are additions to it. 
 
 Mr. Brown : If your real estate appreciates in value do 
 you change that on your books? 
 
 Mr. Keller : Not on the books, unless there has been some 
 material change, like a building added or something of that 
 kind. It is generally carried at the cost, but I may say the 
 cost of nearly all banking institutions in Lancaster is away 
 ahead of the assessed value. 
 
 Mr. Brown: How about the selling value of the 
 building ? 
 
 Mr. Keller: The selling value is somewhat less than 
 the amount that is carried on the books, because the bank- 
 ing houses are, as a rule, rather nice institutions. They are 
 well built and look well, and I doubt if they were exposed 
 to public sale whether they would bring unless there had 
 been a material increase in the ground as much as they 
 actually cost with their fixtures. 
 
 Mr. Brown: And at what they are carried on your 
 books? 
 
 Mr. Keller : Yes. And as Mr. Newman has said, we are 
 all taxed locally, of course. We pay our tax to the county, 
 and to the city, and to the school district, on the as^^ssed 
 valuation of our real estate, in addition to paying State 
 tax. 
 
1076 
 
 HARRY L. LEAM, representing the Shamokin Trust 
 Company, called. 
 
 Mr. Brown : Have you any suggestions to make to us ? 
 
 Mr. Learn : Well, I think the present law is pretty good. 
 I do not think you can get a fairer or more equitable way 
 of arriving at the tax value than the actual book value. 
 
 Mr. Brown : Do you carry your real estate on your books 
 at its assessed valuation? 
 
 Mr. Learn : The only thing we have charged off on the 
 real estate is for furniture and fixtures. The rest we carry 
 at exactly what we paid for it. 
 
 Mr. Brown : As it increases in value, do you keep pace 
 with the valuation from year to year? 
 
 Mr. Learn: No, we have not increased the value. We 
 are paying just like the other trust companies, we are 
 paying a borough and county, poll and school tax, of 
 course, and also paying to the State. 
 
 Mr. Brown : How about your moneys at interest ? 
 
 Mr. Learn : We do not issue certificates of deposit. We 
 pay interest on the time they deposit at the rate of six 
 months or longer, we pay 3 per cent. 
 
 Mr. Brown: They are not taxed? 
 
 Mr. Learn: No. 
 
 Mr. Brown: The depositors as a rule do not pay the 
 tax? 
 
 Mr. Learn : That I do not know. 
 
 Mr. Brown: You never heard any complaint? 
 
 Mr. Learn: No. I believe this, in regard to the sug- 
 gestion that was made here, that if they were to appoint 
 the trust companies as officers to return to the State what 
 moneys are there, I think it would cause no end of trouble. 
 To begin with, money that has to be with us six months 
 before we pay any interest, very often it is there six 
 
1077 
 
 months and one day and taken out. If we returned it 
 to the State, how would we collect it? 
 
 Mr. Brown: You pay, for instance, $10,000 a year in 
 interest, and if you paid that tax on it, you deduct it from 
 your depositors' accounts? 
 
 Mr. Learn : How would you do that ? A large portion 
 of the accounts we have the preceding year are checked 
 out. 
 
 Mr. Brown : When you pay the interest, there is a time 
 when you pay interest? 
 
 Mr. Learn: Yes. 
 
 Mr. Brown: When you pay interest, deduct the tax. 
 Let the thing be contemporaneous ? 
 
 Mr. Learn : I believe that would result in driving a lot 
 of depositors away from the bank. 
 
 Mr. Brown : Where would they go to ? 
 
 Mr. Learn : They would go to the savings funds. 
 
 Mr. Brown: Tax the savings funds the same? 
 
 Mr. Learn : That is what they would do undoubtedly, if 
 you put the tax on you are speaking of. 
 
 Mr. Brown : Is there any reason why saving and trust 
 deposits should not be taxed the same as a bank or trust 
 company? 
 
 Mr. Learn : I do not see any reason. I think they should 
 be put on an equal basis. 
 
 Mr. Brown : So if they were, it would be rather foolish 
 
 Mr. Learn: Certainly. It would also act against the 
 banks in another way, or the trust companies. It would 
 result in a good many using the old stocking, instead of 
 the bank. A good many would hoard it at home. 
 
 Mr. Brown: You think they would rather lose it al- 
 together, rather than to pay the 3 per cent, extra tax? 
 
 Mr. Learn: Yes, they take chances. Lots of them are 
 taking chances now. That I know. 
 
1078 
 
 FRANCIS N. WHITNEY, ESQ., Tax Attorney for the 
 Western Union Telegraph Company, called. 
 
 Mr. Whitney: On behalf of the Western Union, I read 
 the notice that was sent to Col. Fowler, and it speaks of 
 taxing real estate locally. Now, if it is contemplated by 
 this Commission to alter the tax laws of the State of 
 Pennsylvania so as to place upon the local assessor the 
 power to attempt to value telegraph property, it will sim- 
 ply mean a chaotic condition. There is no assessor that 
 is intelligent enough to tax a railroad locally, or a tele- 
 graph company or express company locally. 
 
 Mr. McNichol : How is it possible for any business man 
 to value his plant and show appreciation and fix a value 
 on it, if it would not be possible to do that, and why is it 
 not possible to value a pole or a wire as a part of the 
 plant ? 
 
 Mr. Whitney : As a whole, yes, but not in short sections. 
 I mean taking the boundaries of a borough, or a town- 
 ship, or a county, and attempting to make a good many 
 bites at one cherry. 
 
 Mr. McNichol : Take the county of Philadelphia. 
 
 Mr. Whitney : The county of Philadelphia, the property 
 as a whole here might be valued and might come pretty 
 near its value. Of course, the element of depreciation 
 would enter largely and that would be the stumbling 
 block, as to the amount of depreciation. I think myself 
 that the scheme provided by the State for taxing the 
 property as a whole, taking its capital stock at its average 
 value for a year, arrives at the value of the property and 
 you tax every element in that. 
 
 Mr. Brown : In the valuation of capital stock, of course, 
 it included all the assets? 
 
 Mr. Whitney : Everything. You take into consideration 
 every element that is taxable. 
 
1079 
 
 Mr. Brown : How is it possible for one man practically 
 today to tax the value of all the real estate of the "Western 
 Union in Pennsylvania? 
 
 Mr. Whitney: He does not do it. 
 
 Mr. Brown: He takes your word? 
 
 Mr. Whitney: He doesn't do it, no. I do not mean 
 that. It isn't necessary to value its tangible property 
 under the existing law. For that reason I believe the 
 present law is preferable by far to any law that would 
 require a tangible valuation. I think when you come to 
 make a tangible valuation for ad valorem assessment, you 
 are going to have a 
 
 Mr. Brown: What does your return to the State of 
 Pennsylvania include? 
 
 Mr. Whitney: We return all miles of line in the State, 
 the total miles for the system, $99,817,100 of capital 
 stock, and we give the average price of the stock for the 
 last fifteen days in November, and the highest and lowest 
 for the year preceding the first Monday in November. 
 Then it is upon those stock valuations that the capital of 
 the company is valued. That is, the capital outstanding 
 is a little over ninety-nine millions of dollars, and then 
 that amount is apportioned to the State of Pennsylvania 
 on the mileage ratio. 
 
 Mr. Brown : And that is all the State gets? 
 Mr. Whitney: No, they pay on gross receipts. 
 
 Mr. Brown: If I understand, like all transportation 
 companies, you pay a gross receipt tax? 
 Mr. Whitney: Yes. 
 
 Mr. Brown: And there is no attempt to get at the real 
 value of the physical property? 
 
 Mr. Whitney: I don't see how there can be. 
 
 Mr. McNichol : Why couldn 't it be done ? You have 
 got your accounts of what you paid for lumber and poles? 
 Mr. Whitney : That is true. 
 
1080 
 
 Mr. McNichol: You have got your labor account of 
 your men for construction? 
 
 Mr. Whitney : Yes. 
 
 Mr. McNichol : What is the difference 
 
 Mr. Whitney: If the State was to make the valua- 
 tion 
 
 Mr. McNichol: We are talking about your valuation 
 and submitting it to the State, and if the State wants to 
 investigate that proposition that is their business. 
 
 Mr. Whitney : That is not what I understood this Com- 
 mission to be after. It was what was taxable locally. 
 
 Mr. McNichol : You say it would be impossible to tax it 
 locally? 
 
 Mr. Whitney : I think it would. I don 't think the ordi- 
 nary assessor has intelligence enough to value a railroad 
 or telegraph line. You get all kinds of value. We have 
 them in New York State, and we have a frightful con- 
 dition there. We have there an assessment by the State 
 Board of all lines that occupy the highways, and all the 
 rest of the property is assessed by the local assessor, and 
 we have all kinds of valuations and all kinds of trouble. 
 
 Mr. McNichol: What do you pay in to the State of 
 Pennsylvania in the way of tax ? 
 
 Mr. Whitney: On the Western Union, or on its allied 
 lines? 
 
 Mr. McNichol: On the whole system? 
 
 Mr. Whitney : I cannot give you that. I do not know 
 the gross amount. We pay our gross earnings tax and on 
 intra state business. The last six months' bill was paid 
 a few days ago, and it was on intra state business about 
 $120,000, not quite $120,000 ; I think $116,000 or $118,000. 
 
 Mr. Brown : How does the valuation of the capital stock 
 compare with the real physical value of your property ? 
 
 Mr. Whitney: I do not know that we ever made an 
 inventory of the property in Pennsylvania. Our books 
 are not kept by State lines at all; they are kept as a 
 
1081 
 
 whole, or in some instances the expense and repairs ac- 
 counts are kept by districts ; they are made up of railroad 
 routes. Nearly all of the lines of the Western Union are 
 on right-of-way of railroads. 
 
 Mr. Brown: At present your stock is practically fixed 
 on the market value? 
 
 Mr. "Whitney : Yes, which I think is a fair way of assess- 
 ing the value of the property. Of course, it is taxed ever^ 
 year, and if that price is high one year and low the next, 
 while the physical property does not vary in cost, to that 
 extent it is a fair way to equalize it with other proper- 
 ties. 
 
 Mr. McNichol : How long has that system been in 
 vogue? 
 
 Mr. Whitney : As long as I know, and that is 
 
 Mr. McNichol : Do you think it is fair that the Western 
 Union or any other corporation should be permitted to go 
 on under conditions existing thirty-five or forty years ago, 
 and avoid the increased responsibility and duties devolv- 
 ing upon every citizen? 
 
 Mr. Whitney : We do not avoid it, because we pay upon 
 our increased mileage and increased returns increased 
 receipts. 
 
 Mr. McNichol: On a basis formed thirty-five or forty 
 years ago. Isn't it out of all proportion and ridiculous 
 at this present day? That is what the Legislature is 
 confronted with. Men who are occupied in laborious 
 work, and are having their rental increased 35 or 50 per 
 cent., when in point of fact a corporation is allowed to 
 go on and run on the same system they were run years 
 ago. You wouldn't say you are conducting your business 
 with the public as you conducted it thirty years ago ? 
 
 Mr. Whitney: No, I don't think we are. 
 
 Mr. McNichol : You have made improvements and your 
 income is much larger, the receipts being that much more? 
 
1082 
 
 Mr. Whitney : Our income has kept pace with the ex- 
 penditure. 
 
 Mr. McNichol: The State of Pennsylvania is trying 
 to adjust conditions. 
 
 Mr. Whitney: I hope when they do adjust them, they 
 won't go out of the frying pan into the fire, and get back 
 to the local assessor. We have kept pace with the others 
 by paying on the increased mileage and increased invest- 
 ment. 
 
 Mr. McNichol : And every increase you add to it means 
 that much increase of income to your stockholders? 
 
 Mr. Whitney: Which we have paid on. 
 
 Mr. Brown: How much is the dividend in your com- 
 pany? 
 
 Mr. Whitney : Last year the dividend was 3 per cent. 
 
 Mr. Brown: Twenty-five years ago it was what? 
 
 Mr. Whitney: Twenty years ago it was 5 per cent. 
 
 Mr. Brown: What is charged off before that dividend 
 is fixed? How large do you put the surplus or undivided 
 profits, for instance? 
 
 Mr. Whitney: The company has no surplus account as 
 generally understood. Their surplus has been invested 
 from time to time in the extension and building of new 
 lines. The construction of new lines does not come in 
 as an operating expense. 
 
 Mr. Brown: So the net results to your stockholders 
 are only 3 per cent. 
 
 Mr. Whitney: Three per cent., the last three years, 1 
 think, since the strike of 1907. Prior to that it was 5 per 
 cent, for twenty years. 
 
 Mr. Brown : How is that compared to the Postal ? 
 
 Mr. Whitney: I don't know anything about the Postal. 
 I do want to impress upon this Committee the fact that 
 we have a burden, a very great burden, in the State of 
 Pennsylvania, pole tax, wire tax, license tax, and things 
 of that kind, and it has been extended now to townships, 
 
1083 
 
 but fortunately the Legislature saw fit in 1905 not to 
 send us to a jury, but it left the Court of Common Pleas 
 to determine the rate, which makes it a very fair way of 
 determining. 
 
 Mr. Brown : How is our tax compared with New York, 
 the net results to the Company? 
 
 Mr. Whitney : It is a New York company, and of course, 
 they have to pay there a tax on their capital stock, an 
 excise tax, as it is called, which is similar to the gross 
 receipts here, and franchise tax for doing business, and 
 then we have a special franchise, right of occupancy of 
 streets. 
 
 Mr. Brown: That is the same thing you pay the bor- 
 oughs and townships in Pennsylvania for? 
 
 Mr. Whitney: They levy a pole tax. In the City of 
 Philadelphia we have a pole and wire tax, and recently 
 under an ordinance of June last a conduit tax ; that is, the 
 conductors and conduits. 
 
 Mr. Brown: You are satisfied with present conditions, 
 as I understand you? 
 
 Mr. Whitney : Yes, I think it is a fairer way to estimate 
 the tax. 
 
 Mr. McNichol: Can your company stand an additional 
 burden? 
 
 Mr. Whitney: We are paying 3 per cent. now. The 
 gross receipts for the preceding year ending June 30, 
 1909, were about thirty million dollars, and the operating 
 expenses were over twenty-five million. We have $38,- 
 500.000 of bonds, and of course, that is a fixed charge. 
 The interest on those bonds varies from 4 to 5 per cent. 
 
 Mr. McNichol: You do make the interest and enough 
 to pay 3 per cent, on the stock? 
 
 Mr. Whitney: Yes. 
 
 Mr. McNichol : Quite a profitable company for the bond- 
 holders. 
 
 Mr. Whitney: For the bondholders, yes. 
 
1084 
 
 Mr. Brown: Does that stock represent actual cash to 
 the company? 
 
 Mr. Whitney: Yes, property, not actual cash, because 
 in some instances the old telegraph companies organized 
 in this State, the Erie, Delaware River and Susquehanna, 
 Philadelphia and Wilkesbarre, some of the old companies 
 were purchased by stock of the Western Union at differ- 
 ent times, and those pay capital stock tax. I am very 
 anxious to avoid the local assessors. 
 
 WALTER C. SINGER, representing the Erie Railroad, 
 enters his appearance. 
 
1085 
 
 Fublic Meeting of the Committee held at Room 496, 
 City Hall, Philadelphia, Wednesday, October 5, 1910, at 
 eleven o'clock A. M. 
 
 Present: James P. McNichol, Esq., Chairman; Win. C. 
 Sproul, Win. H. Keyser, James F. Woodward, of the Com- 
 mittee ; Francis Shunk Brown, Esq., Counsel. 
 
 Mr. Brown: As the Committee is aware, we have in- 
 vited here today probably a hundred to one hundred and 
 ten of representative men and women of Philadelphia 
 and this section of Pennsylvania, who are payers of large 
 sums in taxes to the State of Pennsylvania, for the pur- 
 pose of obtaining from them their views upon the pro- 
 priety of the State of Pennsylvania ratifying the proposed 
 amendment to the Constitution of the United States au- 
 thorizing the Federal Government to tax incomes, and a 
 similar invitation has been extended to all banks, sav- 
 ings institutions, trust companies, and like institutions, 
 which represent a large amount of capital, all of which 
 would be subject to that tax if this amendment were 
 adopted. We have also with us today the representatives 
 of the various Legislative Committees, who have asked 
 for an audience or hearing for the purpose of protesting 
 against the continuance of the mercantile tax law. If 
 it is your pleasure, we will take the Legislative Commit- 
 tee first. Mr. Lord, is there anyone present who will 
 speak for the association as an association? 
 
 Mr. Lord : No, sir. We will file a brief. 
 
1086 
 
 Mr. Brown: I will commence with the Philadelphia 
 Commercial Exchange. 
 
 MR. SAMUEL L. McKNIGHT, President of the Philadel- 
 phia Commercial Exchange, called. 
 
 Mr. McKnight : I shall not inflict upon you any lengthy 
 argument in addition to the brief which has been filed 
 in behalf of the association which I represent, but I beg 
 permission to advance one or two suggestions that would 
 seem to be pertinent to the occasion. The Act to provide 
 revenue by imposing a mercantile tax on venders of or 
 dealers in goods, wares and merchandise, does not seem 
 from its phraseology to have been especially aimed at the 
 branch of business in which my colleagues and myself are 
 engaged, but it has seemed to strike our trade with more 
 than the ordinary force. Let me illustrate briefly my 
 meaning by first pointing out that some of the members 
 of the Commercial Exchange are brokers, some are 
 wholesalers and some are retailers. 
 
 The Act provides that each retail vender shall pay an 
 annual mercantile license tax of two dollars, and one mill 
 additional on each dollar of the whole volume, gross, of 
 business transacted annually. Each wholesale vender 
 shall pay an annual mercantile license tax of three dol- 
 lars, and one-half mill additional on each dollar of the 
 whole volume of business transacted annually. Each 
 dealer in or vender of goods, wares or merchandise at any 
 exchange or board of trade shall pay a mercantile license 
 tax of twenty-five cents on each thousand dollars worth, 
 gross, of goods so sold. 
 
 Mr. Brown : He pays a tax of three dollars ? 
 
 Mr. McKnight: Yes. This seems to be an unfair dis- 
 crimination against the wholesaler and retailer, who pay 
 respectively twice and four times as much as those who 
 
1087 
 
 deal upon the Exchange or Board of Trade. Actually, 
 however, the dealer upon the Exchange or Board of 
 Trade who pays twenty-five cents is usually a broker, 
 who sells to a wholesaler (that pays fifty cents) and the 
 latter in turn sells to a retailer, who pays one hundred 
 cents upon the $1,000, thus making three taxations upon 
 the same article. 
 
 I am not here to protest against the broker or dealer 
 upon an exchange or board of trade paying but twenty- 
 five cents upon the $1,000, as against the higher rates 
 charged to our other branches of membership, but I would 
 protest against the three assessments upon the one trans- 
 action, which under the present law must be paid if the 
 law is observed. The broker, selling upon commission, 
 which may not amount to more than $2.50 or $5.00 at the 
 utmost, can scarcely afford to give one-tenth or one-twen- 
 tieth of his earnings to the State for the privilege of 
 conducting his business lawfully; and the jobber upon 
 the floor of an exchange, who would be ranked as a 
 wholesaler, could as illy afford to pay the same proportion 
 of his gross earnings, even if his figured profit should be 
 twice that of the broker, his rate being also double. It 
 would also seem undue discrimination to charge the small 
 dealer or retailer, handling his merchandise by the petty 
 quantity, a still higher or again doubled rate, for the 
 privilege of doing business. I would again insist that it 
 is unjust to make three handlers of a car of grain or feed, 
 the broker, wholesaler, and the retailer, each contribute 
 a tax to the State, based upon the gross price of the ar- 
 ticle handled. 
 
 The theory of taxation that is based upon the gross 
 volume of sales seems to me to be entirely wrong. It is 
 an incentive to concealment of figures, or, if the books of 
 the merchants are to be investigated under the law, an 
 undue prying into their business and its extent. It 
 strikes unequally because it penalizes with an extra tax 
 the dealers in merchandise, while permitting those who 
 
1088 
 
 do not handle merchandise an immunity that is prejudicial 
 to the former. The dealings upon the floor of our ex- 
 change are in actual commodities, and every transaction 
 would have to pay its share of the tax. 
 
 If the State needs the money which this form of taxa- 
 tion now provides, it would seem to me that an equal sum 
 could be raised in a much more equitable manner. Our 
 members do not object to contributing their proper quota 
 to the expense of conducting a government, but they be- 
 lieve the mercantile tax should be based upon a fixed an- 
 nual payment according to the nature of the business 
 done, that is, so much per annum for a broker, so much 
 for a wholesaler and so much for a retailer. The latter 
 takes the greater risk of the three, and should not be 
 compelled to pay the highest rate for the privilege of 
 doing business, and no law is just that would place three 
 rates of taxation upon the same article and collect all 
 three upon that article. 
 
 Let me briefly explain why the tax is especially severe 
 upon our trade, when compared with the ordinary or 
 average business affected by the tax. The merchant in 
 other lines buys a thousand dollars worth of goods, or 
 something that he wholesales or retails for a thousand 
 dollars, and his profit is from 10 to 25 per cent., 
 certainly not less than 10. That means a profit of not 
 less than $100. If a wholesaler, he pays fifty cents tax, 
 or if a retailer one dollar, out of a profit of from $100 
 to $250. But in handling grain, where a man works upon 
 a fraction of a cent per bushel, or at most a cent a 
 bushel, and a thousand dollars does not represent more 
 than a thousand bushels of wheat, or fifteen hundred 
 bushels of corn, or sixteen hundred bushels of oats, the 
 profit in handling a thousand dollars worth of goods or 
 grain is not more than from ten to twenty dollars. 
 
 Yet the grain man is charged fifty cents, if a whole- 
 saler, or one dollar, if a retailer, upon his ten or twenty 
 dollars profit, as compared with the same charge to oth- 
 
1089 
 
 er merchants upon a profit of from one hundred to two 
 hundred and fifty dollars, or more than ten times as heavy 
 a rate for the privilege of doing business. 
 
 I would like to file a brief, and in this connection we 
 also claim under the present Federal laws any tax placed 
 upon interstate sales is illegal. 
 
 Mr. Brown: As I understand, you do not object to the 
 tax, but you think there should be a separate class made 
 of those in your business? 
 
 Mr. McKnight: I object to it on account of it being 
 on the gross sales, more than anything else. If it was 
 put upon the profits of the business, that would be fair. 
 
 Mr. Brown: Would not a tax put upon the profits in- 
 volve a lot of clerical work and examining, and all that 
 sort of thing, more so than just lumping it all and taking 
 the gross sum? 
 
 Mr. McKnight: That is right, but you can see where 
 it affects the different lines of profit, and in our line of 
 business we think it is unconstitutional in a certain 
 sense, although 1 am not a lawyer. I buy a car load oi 
 wheat from a dealer in the country; he pays a tax on 
 it. I sell it to a miller, and you put a tax on it which I 
 have to pay. The miller turns it into flour and sells me the 
 flour back, and he does not pay any tax at all. And then 
 I sell it to a small dealer and he pays a double tax on it, 
 the same lot of stuff, and in this case the miller is 
 exempt. I think we ought to abolish the whole thing. 
 
 Mr. Brown: In what way would the brokers and the 
 men in your class of business pay their contribution to 
 the State in the way of revenue ? 
 
 Mr. McKnight: We pay a regular tax for doing busi- 
 ness. Of course, my argument here shows we are willing 
 to pay a certain share of it. We ought to be taxed on 
 the profit of our business, what we make on it, rather 
 than the gross sales. 
 
 Mr. Brown: A license tax such as you suggest, charg- 
 51 
 
1090 
 
 ing one class so much, and another class so mucn, chat 
 wouldn't hardly be fair if one man did ten times the 
 business another did? 
 
 Mr. McKnight: I don't see how you are going to get 
 at it any more fairer, because the difference in profits is 
 so great. We sell large quantities of stuff and it runs into 
 money very quickly, but the profits on it are very small 
 necessarily. 
 
 Mr. Brown: Will your association, through your coun- 
 sel, prepare such a bill as you think will be equitable? 
 
 Mr. McKnight : Yes, we can do that. 
 
 Mr. Brown: And will you give us some data upon 
 which you would base the support of such a bill, such 
 a proposed Act? You folks must have the figures which 
 show what is done in these different classes, or they are 
 available, and we would appreciate the receipt of that, 
 which would be a help to us. 
 
 Mr. McKnight: The difficulty is in getting figures. It 
 is so hard to get at it on that account, although the li- 
 cense tax would be the easiest. 
 
 Mr. Brown: Is this tax highly burdensome upon your 
 members? 
 
 Mr. McKnight: It is upon the very large dealers, be- 
 cause they work on such a small margin of profit. 
 
 Mr. Brown : Take, for instance, a man who would make 
 a net income of $10,000 a year; what would be his tax 
 payment to the Commonwealth ? Would it be burdensome 
 to him, the tax that he has to pay? 
 
 Mr. McKnight: Well, I couldn't answer that, because 
 I don't know how much business he did to make the 
 $10,000. Some men might only sell a small amount. 
 
 Mr. Brown: Take your own individual case. Has the 
 tax been a burden to you? 
 
 Mr. McKnight: Not particularly it hasn't, no, only 
 nobody likes to pay taxes to any extent. 
 
 Mr. Brown: As a general proposition, they do not. I 
 
1091 
 
 don't like to ask gentlemen who come here personal 
 questions as to their incomes, and all that, but it seems 
 to me if a man could tell us what his income is and then 
 say, "I pay a lax of so much, and that in my opinion 
 is excessive/' then we would have something to judge 
 from. 
 
 Mr. McKnight : The chairman of my Committee is more 
 familiar with figures than I am. I would like you to ask 
 him a few questions Mr. Warner. 
 
1092 
 
 MR. GEORGE M. WARNER called. 
 
 Mr. Warner: In answer to your question to Mr. Mc- 
 Knight I want to say this tax is exceedingly burdensome. 
 Take my own case, before it was construed so as to elim- 
 inate business which we call interstate business, some 
 years ago, personally I returned everything, whether it 
 was interstate or intrastate, I returned everything. Then 
 we found through the Mercantile Appraiser's office here 
 that they considered that the law, the Federal law, would 
 not allow them to tax interstate business. Conse- 
 quently they eliminated interstate business from our 
 assessments, which, of course, reduced the burden, but we 
 rest on the general proposition that it is unfair to tax any 
 business on the basis of its gross sales, because I may 
 be doing a business of $500,000 and making only $5,000, 
 and another man may do a business of $50,000 and make 
 $10,000. 
 
 Mr. Brown: Why the difference? 
 
 Mr. Warner-. The difference is in the nature of the 
 business. 
 
 Mr. Brown : In the methods or the conduct of the busi- 
 ness? 
 
 Mr. Warner: I suppose John Wanamaker's are ten 
 times what mine are, on the amount of money I handle. I 
 claim the State has no right to tax me because I am 
 doing a large business, no right to tax me on my gross 
 sales. 
 
 Mr. Brown: Would not a tax on the net sales involve 
 the examination of the methods and conduct of business, 
 and prying into businessmen's affairs? 
 
 Mr. Warner: I grant you your point in so far as it 
 might affect some men, but there would be no more pry- 
 ing into my business to get my income than there would 
 be to get my gross sales. I can give it to you off the book. 
 
1093 
 
 Mr. Brown : Suppose you come to a person who is not 
 so willing to give it to the assessor, he is compelled to 
 obtain it, and it would involve considerable knowledge of 
 bookkeeping, wouldn't it? 
 
 Mr. Warner : I don't see how it would, because he would 
 guess at the gross sales right along. Many of them do. I 
 think the law in its present state fosters iniquity. I 
 think it is born in sin and conceived in iniquity, in one 
 sense. 
 
 Mr. Brown: Does every business house keep an ac- 
 count of its gross sales? 
 
 Mr. Warner: I doubt if 20 per cent, of the people 
 who make this return do it, except at a guess. I have done 
 it carefully on my books, adding them up every year and 
 am still doing it, but it is an unjust burden on us who 
 make an honest return. The whole thing itself is an 
 injustice. 
 
 Mr. Brown: Why do you say that? Wherein is the 
 injustice, assuming every man is expected to pay his 
 share, whatever that share may be, towards the expenses 
 of his Government and the support of society? 
 
 Mr. Warner : I am willing to do that and to do it, but 
 I contend it is not justice to tax my gross sales without 
 any reference to what my profit is out of those gross sales ; 
 that in the grain business, like the stockbrokers, we handle 
 enormous amounts of money for a very small margin, and 
 yet we are taxed on our gross sales. The law seems to 
 discourage industry altogether ; the more business you do, 
 the more you must pay, without any reference to whether 
 you are making a profit out of it or not. 
 
 Mr. Brown : Take your own case, if you choose to say 
 what your income from your business has been and what 
 tax you pay, or, if you do not care to give your own 
 personal experience, say what the result of your talk with 
 your fellows engaged in this particular business has been ; 
 what proportion do they pay in tax? 
 
1094 
 
 Mr. Warner: I don't object to telling you, if I could 
 give it exactly from memory. Some years ago when we 
 were returning interstate business as well as other 
 business, I paid a tax of about $45.00 on a net income of 
 about $2,000. Now, I pay a tax of, say $22 or $23, but 
 my net income has been very greatly reduced. It was cut 
 in half last year. I don't mind telling it at all. My net 
 income was just cut in half last year, owing to the dull 
 times, and yet the law takes no cognizance of that at all. 
 The law says if you double your sales and halve your in- 
 come, you must pay us twice to support you ; that is, to 
 take care of you. 
 
 Mr. Brown: Can you say from communications you 
 have had with those in the same line of business what their 
 feeling is? 
 
 Mr. "Warner : I judge they would not very much differ 
 from that. We all suffered last year and the year before, 
 and I guess all these gentlemen are suffering from dull 
 times, but we hold to the principle that a tax on the gross 
 sales is not a correct principle. I do not see how the 
 gentlemen of this Committee can sustain it. 
 
 Mr. Brown : You think a tax on net income is the fair 
 way to get at it ? 
 
 Mr. Warner: I think that is just and fair. I am in 
 favor of an income tax all over the country, from Maine 
 to California, and from Minneapolis to Florida; it is the 
 only just thing, and every one ought to be made to make 
 an honest return. If we are going to make an honest re- 
 turn of our gross sales, we will of our income, and any 
 man representing the State can come down and look at 
 my books and see what my income was last month or 
 last year. We think if we are making a large revenue, we 
 should pay a correspondingly large tax, but if that revenue 
 is reduced, then the tax should be reduced. 
 
 Mr. Brown: Do you think the State ought to tax a 
 house that has been vacant for years and no income secured 
 from it? 
 
1095 
 
 Mr. Warner : I do not think so. 
 
 Mr. Brown: You think all unproductive real estate 
 should be exempt from taxation? 
 
 Mr. "Warner: I would not call that fair, but I am not 
 in the real estate business. 
 
 Mr. Brown: I assume the burden should be placed 
 somewhere ? How would you do in a case like that, where 
 a man owns real estate and gets no rent from it, should 
 he pay a tax or be exempt? 
 
 Mr. Warner: I think he should pay a small tax. He 
 has the property and the possibility of income from it. I 
 think he ought to pay a small tax on it. I think it should 
 be graded. 
 
 Mr. Brown: I am trying to get your thought. Sup- 
 pose a man who has a house next door to you is unable 
 to rent it, and you living in the next adjoining house 
 with an income, why would you tax the one and exempt 
 the other? 
 
 Mr. Warner: Well, I think a man who has a large 
 amount of real estate should pay some tax on it, whether 
 the property is productive or not, because he takes up 
 ground that belongs to his fellows, but that is a very dif- 
 ferent thing from the grain business. 
 
 Mr. Sproul: You state you are in favor of an income 
 tax? 
 
 Mr. Warner: Yes. 
 
 Mr. Sproul: Now, would you have that income tax 
 levied by the Federal Government and collected by it, or 
 reserved to the State for its income ? 
 
 Mr. Warner : Well, Mr. Sproul, I am not quite enough 
 of a lawyer nor a Theodore Roosevelt to answer that ques- 
 tion. I think it would be better for the State to collect 
 that. 
 
 Mr. Brown : Mr. Roosevelt has answered that he thinks 
 the Federal Government should get everything in sight, 
 the inheritance tax and the income, too. 
 
1096 
 
 Mr. Warner: Please repeat that question. 
 
 Mr. Sproul : You said you favored an income tax, and 
 we wondered whether you meant that you wanted it 
 collected by the Federal Government for Federal purposes, 
 or if the State should reserve the income tax for its own 
 support ? 
 
 Mr. Warner : At first blush I should say the State had 
 better collect its own income tax. I think that is more in 
 accordance with American institutions. 
 
1097 
 
 MR. WILLIAM A. HUEY, representing the Philadelphia 
 Commercial Exchange, called. 
 
 Mr. Huey : As one of those who pays taxes, this is a tax 
 that I never understood right. You have heard our mem- 
 bers of the Committee here explain themselves in refer- 
 ence to it, and I do not wish to go over the same ground 
 they have covered, but I think the State could devise 
 some other form of taxation that would accomplish the 
 purpose without inflicting upon us a tax which I think is 
 not right. Now, the line of business I am engaged in, I 
 think, is bearing what I would term excessive taxation, 
 when you consider how it is earned, and it never gets 
 rid of this tax until it is used up or consumed. If there 
 could be a law framed that would get at the income of 
 our business, I should think that would be a fair law. 
 
 Mr. Brown: The net income? 
 
 Mr. Huey: The net income. I am one of those who 
 make returns on my gross sales, I believe, to the dollar. 
 Our chairman said he did not think there were over 20 
 per cent, that paid taxes, but I do say I take my monthly 
 sales and make returns. In the last year I have lost some 
 accounts. The State has got its tax from me. As my 
 accounts are largely credit, I run the risk of losing ac- 
 counts at times, like all other business men. 
 
 Mr. Brown: Your tax you pay is what proportion of 
 your net income? 
 
 Mr. Huey : I am not figuring on the net income. I am 
 figuring on the gross sales. 
 
 Mr. Brown : Suppose you were taxed on your net in- 
 come, what proportion of your net income is your tax ? 
 
 Mr. Huey : I am taxed on it all. 
 
 Mr. Brown: I know, but what percentage? 
 
 Mr. Huey : That I would have to consider to see what I 
 can afford to pay. 
 
1098 
 
 Mr. Brown: What are you paying? 
 
 Mr. Huey : I am not paying on my income. 
 
 Mr. Brown : You are paying on your gross sales ? 
 Mr. Huey: Yes, sir. 
 
 Mr. Brown: No matter what you pay, it is a certain 
 proportion of your net income? 
 
 Mr. Huey: Yes, I understand that, but you asked me 
 to say off-hand what I should pay. That is not a question 
 for me to say. There are some businesses that run on a 
 very small margin. Other businesses can afford to pay 
 more. 
 
 Mr. Brown: You think it ought to be classified? 
 
 Mr. Huey : Well, I think if it is an income tax it should 
 be classified. 
 
 Mr. Brown : You said the tax was burdensome and un- 
 fair and all that. What proportion of your net income is 
 your tax; is it 1 per cent? 
 
 Mr. Huey : Well, I would have to go to my figures 
 
 Mr. Brown: You do not know? 
 
 Mr. Huey : I am obeying the law, as far as I know, and 
 paying my tax according to the law, and as to the net 
 income, as I say, I would have to figure it. I don't know 
 that. I lose bills every year. 
 
 Mr. Brown: It is our business to know just how this 
 tax is burdensome and unjust. If a man doesn't know 
 just how much he pays and what proportion his payment 
 is to his net income, it is pretty hard for us to conclude 
 whether it is fair or unfair. 
 
 Mr. Huey: Wouldn't you think it is unfair to tax a 
 merchant for a bill he loses, that he can't collect? 
 Wouldn't you consider that is an unjust tax? That is 
 the present law, as I understand it. Don't you think that 
 is an unjust tax? 
 
 Mr. Brown: What my personal thought may be does 
 not cut much figure in it. What I asked is the result 
 of inquiries and suggestions that have been made to us 
 
1099 
 
 as we have traveled over this State. It has been advocated 
 that the State ought to tax not only on the sales, but the 
 stock in the stores. The farmers think the State ought to 
 tax the stocks in the stores; that while a man may own 
 a half million dollar stock and pay no tax on it, yet the 
 man who owns a half million dollars worth of real estate 
 does pay a tax on it. 
 
 Mr. Huey : I can't give you any more light than I have. 
 I am in favor of an income tax. 
 
 Mr. Brown: Net income tax? 
 
 Mr. Huey : Yes. And whether the State collects it, or 
 the National Government, that is a question for you legis- 
 lators to consider, but I think the State ought to con- 
 sider about her finances. We are all interested in the 
 development of our State, and we ought to look after the 
 interests of the State. 
 
 Mr. McNichol: What is the custom in other States in 
 regard to taxing members of your association? 
 
 Mr. Huey: I do not know, sir. Some States have no 
 law such as we have here, I understand, the State of New 
 Jersey, for instance. We sell goods in Trenton, we ship 
 goods from the West and we deliver in any State where 
 we can secure a customer. Our chairman has said that 
 would be interstate business, and that is not taxable, 
 which I believe is right. As to the other State laws, I am 
 not acquainted. It is only what I do with the goods 
 after I get them. 
 
 Mr. McNichol : Don't you think that it would be wise for 
 you gentlemen to find out what the custom is in other 
 parts of the country and let us have your information? 
 
 Mr. Huey: As it is now, I couldn't tell you. 
 
 Mr. McNichol: How much tax do you think you are 
 paying? 
 
 Mr. Huey: On the business I am handling? 
 ' Mr. McNichol: Yes. 
 
 Mr. Huey : Well, in the volume of my business it doesn't 
 
1100 
 
 pile up as high as grain. For instance, I am a wholesale 
 dealer in hay, arid in the seasons I do a large business yet it 
 don't figure largely, but some years are higher than 
 others. 
 
 Mr. McNichol : That is true in all business, is it not ? 
 Mr. Huey: Yes. I should say somewhere from fifty to 
 sixty dollars, I think I paid last year. 
 
 Mr. McNichol : What was your profit at the end of the 
 year on all that business? 
 
 Mr. Huey : Well, now, I would have to go into figures. 
 I have accounts laying over which ought to be paid, and 
 I can't tell when I close my year's business whether they 
 are going to be paid or not. 
 
 Mr. McNichol: Give us the accounts that have been 
 paid. How much of a profit have you made in the con- 
 duct of your business whereon you paid the fifty or sixty 
 dollars tax? 
 
 Mr. Huey: I couldn't do it off-hand. 
 
 Mr. McNichol: Well, about? Five or six thousand 
 dollars ? 
 
 Mr. Huey: Oh, gross, I should say more than that. 
 
 Mr. McNichol: Considerably more than that? 
 
 Mr. Huey : Yes, but it is the expense of doing it. 
 
 Mr. McNichol : Do you think that is an unjust burden ? 
 
 Mr. Huey : It is the expense of doing that kind of busi- 
 ness. 
 
 Mr. McNichol : We all have expenses in conducting our 
 business. We find that if we buy hay or feed we have 
 to pay an enormous price for it. 
 
 Mr. Huey: And we have to pay for it long before we 
 get it. We get our draft long before we see the goods. 
 There is this much about it. I spoke to one of our mer- 
 chants about this matter more than two-thirds of my 
 business is commission, I suppose and one gentleman said 
 to me, "You are paying too much." He says, ''You ought 
 only to pay on your net income from your commissions, 
 
1101 
 
 you don't own these goods." "You see, you have a law 
 that is unfair. ' ' I never thought of that, and I guess that 
 gentleman was right. You see you have a law that 
 wants looking into very much, this present law. 
 
 Mr. McNichol : I think you gentlemen are the ones who 
 should look into this, where the defects are, and give us 
 your ideas of where it should be corrected. We would 
 like to have that information from you gentlemen, in re- 
 gard to the custom in other parts of the country. 
 
1102 
 
 MR. N. B. KELLY, representing the Philadelphia 
 Chamber of Commerce, called. 
 
 Mr. Kelly: Counsel representing the Philadelphia 
 Chamber of Commerce is detained in Court to-day, and 
 therefore could not be present. Mr. Shoemaker, who is 
 the chairman of the Philadelphia Drug Exchange Com- 
 mittee, will answer for the Chamber of Commerce as well 
 as the Drug Exchange. I would like to say that the 
 Chamber of Commerce membership is not opposed to the 
 mercantile tax if it is equitably distributed throughout the 
 State? We think these legislators in devising a law for 
 the levying of taxation should secure revenue sufficient to 
 run the State. "We think also that the legislators in mak- 
 ing those laws should consider the laws of other States, 
 taking into consideration the competition that our mer- 
 chants and manufacturers have to contend with by reason 
 of the State laws throughout the country. Take, for 
 illustration, in the State of Pennsylvania; the manufactur- 
 ing corporation is first taxed by the State Government; 
 he is again taxed by the State of Pennsylvania for his 
 charter, if he secures his charter through the State of 
 Pennsylvania, and if he does his business from some place 
 other than his office he is again taxed a mercantile license 
 tax, which to my mind is very unfair and not in accord 
 with the laws of many of the other States. My experience 
 has been in traveling throughout this country that the 
 States try to encourage industrial institutions to do busi- 
 ness within their States, and I think the State of Penn- 
 sylvania is as well able to do as much for its merchants 
 and manufacturers as any State in the Union. 
 
 Take, for instance, the State of Louisiana. The State 
 of Louisiana has passed a law exempting manufacturers 
 from taxation for a period of ten years, for the purpose 
 of inducing manufacturers to come to that State and locate. 
 
1103 
 
 There are other States that offer even greater induce- 
 ments. 
 
 Mr. McNichol: When was that law passed? 
 
 Mr. Kelly: I think it was passed in 1893. 
 
 Mr. McNichol: How many manufacturers have they 
 secured by the passage of such a law? 
 
 Mr. Kelly: Oh, you can go through the country 
 
 Mr. McNichol: We just want to know what the result 
 has been from a beneficial standpoint? 
 
 Mr. Kelly: I think it has been very beneficial to the 
 State of Louisiana and has induced a number of manufac- 
 turers to locate there. I think the statistics will show 
 the manufactures of Louisiana have increased very ma- 
 terially in the last ten years. The latest indusial statis- 
 tics are riot yet published, but from advance information 
 that I have had as a result of my connection with the 
 Census Department, I may state that they have very ma- 
 terially advanced. 
 
 Mr. McNichol: Do you want this Committee to believe 
 that advancement has not been indicated in Pennsylvania 
 in the promotion of industrial interests? 
 
 Mr. Kelly: I don't want you to believe that, no, sir, but 
 I do want you to believe that there are inequalities in the 
 law for taxing corporations in Pennsylvania, a mercantile 
 house doing business, that should be eradicated. 
 
 Mr. McNichol: Have you got a table of such conditions? 
 
 Mr. Kelly: I haven't it here before me, but I think you 
 will have the facts before you get through with this in- 
 vestigation. I want to speak in a general way by saying 
 that I believe the State of Pennsylvania is in a better po- 
 sition to encourage its merchants and manufacturers pos- 
 sibly, than any other State in the Union, and I think it is 
 the desire of the legislators to do that, but I think you 
 will find upon investigation that there are inequalities 
 at the present time that should be eliminated or some sys- 
 tem of taxation made by the next Legislature that will 
 equitably tax all of the interests concerned. 
 
1104 
 
 Mr. McNichol: You are in a better position than any 
 other man, I suppose, to tell us the industrial increase 
 in the last ten years? 
 
 Mr. Kelly: I think it has been in the State of Pennsyl- 
 vania, as well as a great many Western States. I don't 
 think the State of Pennsylvania will show the same pro- 
 portion of increase in its manufactures as some of the 
 other States. 
 
 Mr. Brown: Is there any State that has a larger in- 
 crease, except the State of New York ? 
 
 Mr. Kelly : You have got to take, of course, into consid- 
 eration, the population of your States. I can't compare 
 the State of Pennsylvania with Massachusetts or Ohio. 
 I have got to compare it with 
 
 Mr. Brown: You don't think the City of Philadelphia, 
 that is a hundred and some miles from the sea ; can be 
 compared with a city that lies on the sea? 
 
 Mr. Kelly: I don't consider that, because we are a hun- 
 dred miles from the sea, that we are inferior to New York 
 ic any particular. I think we have an advantage over 
 New York in a great many particulars, due to our more 
 economic cost of transportation, which New York has not 
 got. 
 
 Mr. Biown: That would not make in any way a dis- 
 crimination against manufacturers? 
 
 Mr. Kelly: No, sir, I don't think so. I don't take any 
 exception to anybody so far as Pennsylvania has to do 
 business in competition with New York. 
 
 Mr. Brown: Why has the City of New York taken this 
 long stride ahead of Philadelphia in your opinion? 
 
 Mr. Kelly: I wouldn't like to go into that now. You 
 have a Committee appointed for the purpose of investi- 
 gating that point. I don't care to inject that into this 
 proposition. I want to say very emphatically that the 
 State of Pennsylvania is in a position to compete with 
 any State in this Union from a manufacturing or mer- 
 
1105 
 
 cantile standpoint, if we are accorded the same privileges 
 accorded by other States. 
 
 Mr. Sproul: Don't you think our laws, so far as they 
 relate to manufacturers and also the license tax on mer- 
 chants, are more liberal than in New York? 
 
 Mr. Kelly : In some respects, yes, and in other respects, 
 no. 
 
 Mr. Sproul: What do you mean by that? 
 
 Mr. Kelly : Taking for illustration the tax on manufac- 
 turing corporations 
 
 Mr. Sproul: We have no State tax on manufacturing 
 corporations. 
 
 Mr. Kelly : We have to make returns to the State based 
 on the sales of our manufacturing corporations. 
 
 Mr. Sproul : But you pay no tax on them. You make 
 returns of your business, but you don't pay any tax as a 
 manufacturing corporation. 
 
 Mr. Kelly: No, but you do tax the manufacturing cor- 
 poration indirectly. 
 
 Mr. Sproul : If he pays local tax, to be sure. 
 
 Mr. Kelly: And he pays the local tax in my line in an 
 inequitable way. If he does his business through his 
 warehouse or through his mill he pays no tax, but if he 
 does it through his warerooms he pays his tax. Why 
 should he do that? He doesn't do that in the State of 
 of New York. 
 
 Mr. McNichol: Why does he have a salesroom? 
 
 Mr. Kelly: Simply as a matter of convenience. 
 
 Mr. McNichol: Oh, no. He has it for the purpose of 
 advertising and bringing trade to that business. 
 
 Mr. Kelly: Not at all. I don't agree with you. I will 
 give you a concrete proposition. Here is a manufacturer 
 who has a mill at Twelfth and Snyder avenue; he manu- 
 factures dress goods at Twelfth and Snyder avenue and 
 sends them up to Kensington to be dyed, and then instead 
 of sending them all the way back to Twelfth and Snyder 
 
1106 
 
 avenue lie sends them to his office, which is 209 Chestnut, 
 and he distributes those goods from that office or those 
 warerooms. 
 
 Mr. McNichol : That is where his people come to inspect 
 them. 
 
 Mr. Kelly: His business is practically all done by 
 salesmen. He doesn't sell his goods through the store. 
 
 Mr. McNichol: It is convenient for him to have that 
 central office. 
 
 Mr. Kelly: It is only convenient to this extent, that 
 instead of his having to establish his office where his mill 
 is located and taking up the land there perhaps for his 
 office, he has it located at a central point where it is more 
 convenient to him and more convenient for his purposes 
 of doing business. I don't think that is a fair tax. I 
 think that is perhaps one of the inequalities of the tax- 
 ing of manufacturing corporations which should be ad- 
 justed. I have no complaints to make, as I say, about 
 the State of Pennsylvania taxing its merchants, manu- 
 facturers and corporations, provided it is done in an equit- 
 able way, and I think the State of Pennsylvania, as I said 
 before, is better equipped than any State in the Union to 
 take care of its citizens, and I think it is the desire of the 
 legislators of the State themselves, so far as my exper- 
 ience has gone in representing the Chamber of Commerce, 
 to be fair to these manufacturers, and I think you want 
 pointed out to you those inequalities so they can be ad- 
 justed. 
 
 Mr. Crown : What is there in our law that has given the 
 preference to New York City in manufacturing? 
 
 Mr. Kelly : I brought out one of the inequalities to you. 
 Mr. Shoemaker will go into this matter in detail. You 
 take your rate of taxing corporations as compared with 
 some of the other States; take New Jersey for illustra- 
 tion. They encourage corporations to take out charters 
 in New Jersey, yet a man would rather take out a charter 
 in Pennsylvania than in New Jersey. 
 
1107 
 
 MR. CLAYTON F. SHOEMAKER, Chairman of the Com- 
 mittee on Legislation, Philadelphia Drug Exchange, 
 called. 
 
 Mr. Shoemaker : It is not my intention this morning to 
 appear as a representative of the Chamber of Commerce, 
 although I am a member of that association, but in the 
 absence of Mr. Kelly's colleague I wish to file this brief in 
 behalf now of the Philadelphia Drug Exchange and like- 
 wise of the Philadelphia Chamber of Commerce. It is 
 not my intention to go into detail on the subjects which 
 are included in my brief, but I wish to say a few words 
 in regard to a few of the subjects which have been 
 brought out here this morning thus far. 
 
 In the first place, I want to allude to the subject of 
 sales made in interstate commerce. was informed 
 some time ago by a distinguished attorney of Philadelphia 
 that he had officially advised his clients that it was not 
 legal jn the part of the State of Pennsylvania to impose 
 this tax upon interstate transactions, and he had advised 
 them not to pay it, and some of his clients were not 
 paying it. I was not aware that the Board of Appraisers 
 had officially accepted any ruling of that kind, and I don't 
 think that is generally understood by merchants in this 
 State or city. I think they understood they were to pay 
 the tax on all transactions, whether interstate or other- 
 wise. The question has been raised this morning in re- 
 gard to the custom in other States, and I have included 
 that in my brief, but so long as it has been brought up 
 here I would like to say a few words in regard to it. 
 
 Now, I want it distinctly understood that so far as the 
 people for whom I speak are concerned, they do not op- 
 pose this tax because of individual hardship, or because 
 of the tax of their particular line of business, but they 
 oppose it on the broad ground that it is an occupation 
 
1108 
 
 tax. It is an occupation tax, pure and simple, a tax upon 
 the occupation of a merchant. When these gentlemen 
 may in a little while ask me what sort of a tax I propose 
 shall take the place of it, I do not believe there is any 
 tax necessary to take its place, but if there is the mer- 
 chants of this State will not complain if physicians and 
 lawyers and all other people who earn money in this State 
 are taxed. 
 
 Mr. Brown : Why shouldn 't they ? 
 
 Mr. Shoemaker : Then we will pay our part uncomplain- 
 ingly. 
 
 Mr. Brown : Is there any reason in your rnind why they 
 should not? I have never heard any. 
 
 Mr. Shoemaker: I am not representing them. I am 
 only standing here for the mercantile community, to pro- 
 test against what they consider an uneqaal tax. 
 
 Now, reverting to the subject of what has been done in 
 other States. About four years ago the subject was being 
 discussed, and I wrote to the State Government of every 
 State in the Union, and I found there was only seven 
 States in the whole Union which imposed a mercantile 
 tax, and those States were unimportant States Dela- 
 ware, Connecticut and far Western States who needed 
 the money. New York doesn't impose a mercantile tax. 
 Neither does New Jersey nor Ohio. If we are not re- 
 quired to pay a tax on intrastate commerce then that 
 robs that argument of a good bit of its force. Now, the 
 question has been asked as to what sort of a percent- 
 age 
 
 Mr. Brown : Is the tax that is exacted by the Common- 
 wealth -of Pennsylvania an important element in this 
 question of competition? The total mercantile tax col- 
 lected in Pennsylvania, say for last year, was about a mil- 
 lion dollars. 
 
 Mr. Shoemaker: Yes. 
 
 Mr. Brown : From all over the State. Do you consider 
 
1109 
 
 that item of a million dollars is an important element in 
 this matter of competition? I am talking about what 
 was collected by the Mercantile Appraisers throughout 
 the Commonwealth. Has that item of one million dollars 
 so collected a substantive effect on this matter of compe- 
 tition between the merchants of this State and other 
 States. 
 
 Mr. Shoemaker : When you ask me that question I will 
 say in reply that that particular question comes up every 
 now and then with a good deal of force. Now, you gen- 
 tlemen do not realize what the condition of a wholesale 
 merchant is. 
 
 Mr. Brown : Let me interrupt. Can you recall any im- 
 portant business transaction that has ever been had by 
 the members of your association in which this element of 
 taxation ever entered, as to the fixing of prices or as to 
 doing business with any one? 
 
 Mr. Shoemaker : We frequently, when a very close piece 
 of business comes up, because at times a thing will come 
 up, although our expenses of doing business are from 
 12J to 13J per cent., we very often turn over an import- 
 ant transaction which has to be handled at, maybe, 1 per 
 cent, or 2 per cent. 
 
 Mr. Brown : But do you figure the tax ? 
 
 Mr. Shoemaker: I just want to tell you if you are 
 figuring on turning over a big deal at 1 per cent., then 
 you have got to think quite seriously about the mercantile 
 tax, and you do think about it. 
 
 Mr. Brown : What is the total amount of business done 
 by these different interests? 
 
 Mr. Shoemaker: In the City of Philadelphia? 
 
 Mr. Brown : The tax is a million dollars. 
 
 Mr. Shoemaker : The figures will show that. So that, as 
 I said before, it has always been my feeling and under- 
 standing that the merchants generally, Philadelphia and 
 the balance of the State, really have returned the amounts 
 of their gross sales regardless of interstate commerce. 
 
1110 
 
 The question has likewise been brought up in regard 
 to what percentage of profits was squandered in this way. 
 Of course, you gentlemen will understand that the profits 
 in a wholesale business, for example, and the profits in 
 a manufacturing line are very different, varying in the 
 same line on account of different surroundings and dif- 
 ferent conditions, different questions, different kinds of 
 management, and so on, but in a general way I should 
 say that the mercantile tax might easily constitute from 
 3 to 5 per cent, of the net income of the merchant. 
 
 Mr. Brown: How does this tax bear upon you person- 
 ally? Of course, all my questions, you understand, are 
 not for prying. I am simply trying to get the fact. 
 
 Mr. Shoemaker: It is a hardship, because a good deal 
 of our business is done at a very small profit, and we 
 have to average up on the profits. We sell some things 
 very close, and some things we make a better profit on. 
 
 Mr. Brown: Is it not a fact that men in your line of 
 business are, on the average, as prosperous as those in 
 any other line of business in our city? 
 
 Mr. Shoemaker : No, sir. 
 
 Mr. Brown: With the same capital? 
 
 Mr. Shoemaker: No, sir. I want to say right here, I 
 have had a good deal of experience in this thing. That is 
 an exploded idea. People have the idea that the drug 
 business is a mine of wealth, and I want to say that my 
 individual and personal knowledge has been such that it 
 makes me weep salt-water tears to find that a wholesale 
 merchant in another business was making a net profit 
 of nearly double ours. 
 
 Mr. Brown: He is a fellow-member in the Chamber of 
 Commerce with you? 
 
 Mr. Shoemaker: I can't help that. 
 
 Mr. Brown : When you are fixing a price in your Bus- 
 iness, do you mean to say a small item of tax is con- 
 sidered? 
 
1111 
 
 Mr. Shoemaker : "When we fix a general price, if we are 
 going to buy a thing for sixty cents a dozen and sell 
 a quarter of a dozen at a time, or sell for seventy-five cents, 
 it has no bearing on that, but when a man comes to me 
 and says he wants to buy $5,000 worth, and you don't 
 have to move it, and he says he will pay you 1 per cent., 
 then the question is whether you want to take that trans- 
 action and pay the mercantile tax, and you have to think 
 about it on that occasion every time. 
 
 Mr. Brown : I am trying to learn just what proportion 
 this mercantile tax bears to your business? 
 
 Mr. Shoemaker: You have our figures there. 
 
 Mr. Brown: The argument has generally been ad- 
 vanced throughout the State that it is what the lawyers 
 call too small to bother with, that there is no reason why 
 the great State of Pennsylvania should concern herself 
 with it. You gentlemen say it is not so little, that it is an 
 important factor. I am trying to find out how important 
 a factor it is. 
 
 Mr. Shoemaker : One of the most objectionable features 
 is the unjust character of the thing in another direction. 
 The wholesaler buys goods out of a diminished profit, by 
 the fierceness of competition, and he is obliged to pay so 
 many hard dollars he feels he ought not to be obliged to 
 pay or asked to pay, unless a lawyer pays the same thing, 
 but the objection on the part of the small dealer is more 
 forcible. 
 
 Mr. Brown: You would all be satisfied if we lawyers 
 and doctors paid substantially the same tax ? 
 
 Mr. Shoemaker : I think we will all be satisfied. I would 
 be. If all wage-earners were compelled to pay the same 
 tax, and the State needed it, I would not object to paying 
 it in that way. I do not think any fair-minded man would. 
 
 Mr. Brown : It is the inequality that bothers you ? 
 
 Mr. Shoemaker: The inequality of the thing. I want 
 the Committee to distinctly understand I do not stand 
 here and weep, I do not plead the baby act, I do not talk 
 
1112 
 
 about personal hardship or the inequalities of my business, 
 or anything else. It is simply the character of the tax, 
 the inequality of the system. 
 
 Mr. McNichol : How many men are engaged in the drug 
 business, in your particular line of business? 
 
 Mr. Shoemaker: Wholesale or retail? 
 
 Mr. McNichol: Wholesale? 
 
 Mr. Shoemaker : The number of houses or men ? 
 
 Mr. McNichol : Houses ? 
 
 Mr. Shoemaker: Most of the business is done here by 
 five wholesale houses. There are two or three smaller 
 ones. 
 
 Mr. McNichol: What was the total amount of your 
 business for the year 1909 ? 
 
 Mr. Shoemaker : Well, the total amount of the business 
 was more than half a million. 
 
 Mr. McNichol : What was your profit after all expenses 
 were paid ? 
 
 Mr. Shoemaker: I decline to state that here. 
 
 Mr. McNichol : What was your tax that you paid to the 
 State for your mercantile apportionment? 
 
 Mr. Shoemaker: I don't remember the exact amount. 
 I think it was three hundred dollars, or something of that 
 kind. 
 
 Mr. McNichol: On a business of $500,000? 
 
 Mr. Shoemaker: Yes. 
 
 Mr. McNichol: Don't you think that business men 
 should bear some burden other than what you claim the 
 wage-earners should bear? 
 
 Mr. Shoemaker: I am not talking about that. I am 
 not talking about the men who carry the hod. 
 
 Mr. McNichol: I am talking about the wage-earner, 
 getting down to some basis ? 
 
 Mr. Shoemaker: If you wish me to say whether the 
 merchants should be exempted or should not be subject 
 to a thing which a lawyer or physician pays, I say in reply 
 
1113 
 
 I do not think anything should be asked of him that should 
 not be asked of the other, and I say it on the broad ground 
 that in the first place the merchant the dangers of his 
 occupation are not to be compared with the others. 
 
 Mr. Brown: You think a merchant can't collect his 
 accounts as easily as a lawyer can collect his fees? 
 
 Mr. Shoemaker: No, it isn't that, but the lawyers and 
 physicians have nothing at risk except their health. The 
 merchant has his entire capital at risk, and he doesn't know 
 when the tide of business may set against him and he 
 may be fairly wiped out. I just want to say that when 
 bad years come we don't make anything. Two years ago 
 we paid our mercantile tax when we didn't make our ex- 
 penses. That is a hardship. 
 
 Mr. McNichol : You do not mean to tell me, as a practical 
 business man of years of experience, that if you find in 
 your wholesale business one year a depreciation that you 
 would shut your eyes to the opportunity of the next year 
 in making good that depreciation? 
 
 Mr. Shoemaker : I am not taking into consideration, as 
 I said before 
 
 Mr. McNichol : We are taking up a business proposition 
 now. 
 
 Mr. Shoemaker: Certainly, I should look at it in me 
 way you state. 
 
 Mr. McNichol : And every business man does tne same 
 thing ? 
 
 Mr. Shoemaker : Of course. 
 
 Mr. McNichol: Has the wage-earner that opportunity! 
 
 Mr. Shoemaker : Well, we don't ask the ordinary wage- 
 earner to pay it. 
 
 Mr. McNichol: Don't you think that we who have op- 
 portunities that are beyond the scope of the ordinary 
 every-day wage-earning proposition, should bear our pro- 
 portionate share of the burden in the State of Pennsyl- 
 vania and the City of Philadelphia ? 
 
1114 
 
 Mr. Shoemaker: I don't admit the scope. 
 
 Mr. McNichol: What is your reason for it? We can- 
 not sit here and take your views in a general way without 
 some foundation to place them on ? 
 
 Mr. Shoemaker : So far as I see it, the situation is simply 
 this: The question for this Committee to decide is 
 whether it is absolutely necessary for the State to have 
 this revenue. If it is necessary, then I say that the lawyer 
 and physician should be ".axed. If it is not necessary, then 
 the merchant should be exempt. That is the position I 
 stand on. 
 
 Mr. McNichol : We go farther than that. We are met 
 on the other side by men who are paying taxes, whether 
 they hare earning power or not, on real estate and prop- 
 erty and things of that kind. 
 
 Mr. Shoemaker : I pay my taxes on my real estate. 
 
 Mr. McNichol : You men who are engaged in business 
 come along and give us a general proposition, without 
 giving us any facts or figures or any foundation on which 
 to base an argument to meet the proposition advanced by 
 the other people, and if we brought both people here 
 in argument, it would take months and months to over- 
 come their differences of opinion. 
 
 Mr. Shoemaker: Permit me to ask you why the State 
 of Pennsylvania should impose a tax which New York 
 does not impose ? 
 
 Mr. McNichol : I think, in answer to that question, with- 
 out being familiar with all the details of taxation in 
 New York, that the business man in Philadelphia has 
 much more preference as to the burdens he carries in 
 comparison with New York, largely in his favor. 
 
 Mr. Sproul : New York imposes a great many taxes we 
 do not impose. 
 
 Mr. Brown : New York taxes dozens of items that Penn- 
 sylvania does not attempt to, and they make the same 
 complaint over there. 
 
1115 
 
 Mr. McNichol : If you gentlemen have the information, 
 that is what we are after. If Mr. Kelly has that in- 
 formation and would let us have it, we would like to 
 familiarize ourselves between now and the meeting oi 
 the Legislature so we can correct those abuses. 
 
 Mr. Kelly: You, as the Chairman of the Investigation 
 Committee, are in a better position to obtain the details 
 than we are. If you haven't that information and cannot 
 get it, we will get it for you. 
 
 Mr. McNichol: In my business I don't wait for any 
 Legislative Committee or anybody else to secure the in- 
 formation I am seeking. I have it in my possession. Now, 
 if you gentlemen are oppressed by the laws of the State 
 of Pennsylvania, I think it is your duty to give us that 
 table? 
 
 Mr. Shoemaker: It isn't so much a question of the par- 
 ticular line of business as it is a question of taxation by 
 the State of Pennsylvania. First of all, what is necessary 
 for the State, and secondly, how the best interests of the 
 State shall be served. Now, we have not touched on 
 an income tax, but here I am an employe and own bonds 
 or stocks in a corporation, and I pay a tax on it. I have 
 life insurance policies, and I pay a tax on them. That 
 all goes into the coffers of the State of Pennsylvania. In- 
 directly I am paying taxes just as much as this gentle- 
 man is. The question is whether your system is correct 
 or not. I do not think it is. 
 
 Mr. McNichol: Have you made an investigation of it? 
 Mr. Shoemaker: I certainly have. 
 
 Mr. McNichol : We would like to have your information, 
 if you would give it to us ? 
 
 Mr. Brown: You mean the whole system the system 
 as a whole? 
 
 Mr. Shoemaker: I think there are inequalities that 
 should be eliminated and should be worked out. I think 
 the principle of the tax of the citizens of the State of 
 
1116 
 
 Pennsylvania, through either corporate or mercantile in- 
 terests, should be, first of all, based on the amount of 
 tax that is required to run the State, and then an equitable 
 standard of taxation so it taxes everybody. 
 
 Mr. Brown : Supposing I were to tell you that the con- 
 sensus of opinion at the International Tax Conference, 
 which met at Milwaukee, where forty States were repre- 
 sented, that the text-writers on the subject conceded that 
 Pennsylvania to-day is far ahead of any State in the 
 country, would that have any effect upon your opinion ? 
 
 Mr. Shoemaker : I would be glad to furnish the Com- 
 mittee with the information that I have. 
 
 Mr. Brown : And in other States 
 
 Mr. Shoemaker : I won't promise for other States. 
 
1117 
 
 ME. C. STUART PATTERSON, representing the Western 
 Saving Fund Society, called. 
 
 Mr. Patterson : I am here ready to answer any questions 
 or give any information in my power. What would you 
 like me to speak about? 
 
 Mr. Brown: I outlined at the opening of the meeting 
 that we had requested representative citizens to appear 
 here and give us their views upon the propriety of the 
 State of Pennsylvania ratifying the proposed amendment 
 to the Constitution of the United States authorizing the 
 Federal Government to tax incomes from whatever source 
 derived, and you are here in" response to that invitation. 
 
 Mr. Patterson : I am very strongly of the opinion that 
 the State ought not to ratify that amendment. In the 
 first place, you have got to remember that we have to deal 
 with State taxation and with United States taxation. The 
 income tax ought to be reserved to the States. The diffi- 
 culty about an income tax in general is this, that wherever 
 the collection of the tax depends upon a return to be made 
 by the individual taxpayer, that tax operates unequally 
 against people who make honest returns. Unfortunately, 
 we all of us know that everybody is not at exactly the 
 same point of honesty ; certainly not so far as regards the 
 tax question, and therefore where the individual is to make 
 his return, the person who makes an honest and full return 
 will pay a larger proportion of the tax than the person 
 who does not. That is an objection to the income tax in 
 general. 
 
 The income tax for that reason ought to be reserved for 
 merchants, and not be a part of a general taxing system. 
 In the next place, as I said before, the income tax ought 
 to be reserved to the States. The Constitution, as con- 
 strued by the Supreme Court, has established that. Now, 
 this amendment is objectionable upon two grounds. Even 
 
1118 
 
 
 if the power ought to be given to the Government of the 
 United States, it ought not to be given by the adoption 
 of the pending amendment. In the first place, the language 
 of the amendment subjects to taxation income from what- 
 ever source derived. Therefore, the bonds of the State of 
 Pennsylvania and the bonds of all agents, municipal and 
 otherwise, of the State of Pennsylvania, would be sub- 
 jected to taxation, and the fact of that taxation would 
 necessarily interfere with the sale of such bonds. That is 
 one point. There is another point that ought to be borne 
 in mind, and that is this : The income tax is a direct tax. 
 All direct taxes are subject, under the present Constitu- 
 tion, to the requirement of their apportionment among 
 the States. All direct taxes are subject to the requirement 
 of uniformity. The amendment proposes to relieve the 
 imposition of the income tax from the requirement of 
 apportionment, but it does not and they cannot change 
 the nature of the tax. It can not convert a direct tax 
 into an indirect tax, and if it could it does not purport so 
 to do. Therefore, if the power be given by this amend- 
 ment to the United States, they will take the power with- 
 out any limitation either as to the apportionment or as to 
 the uniformity, and therefore it would be perfectly com- 
 petent for the Government of the United States under that 
 amendment to impose a greater tax upon the citizens of 
 one State than upon the citizens of another State, or upon 
 the citizens of one part of the country than upon the 
 citizens of another part of the country, and with the sec- 
 tional feeling that exists between the East and the "West, 
 who is going to guarantee that there may not be, with 
 the dominant Western party in possession of the Govern- 
 ment of the United States, taxes imposed upon the East 
 at a greater rate than the tax imposed upon the West ? 
 
 Mr. Brown: What is the general impression among 
 financiers as to the result which you have just suggested? 
 
 Mr. Patterson: That I am not able to say, because I 
 have not discussed it with anybody at all, but I think as 
 a lawyer you will see the force of that objection. 
 
1119 
 
 Mr. McNichol : As a lawyer, would that be held consti- 
 tutional ? 
 
 Mr. Patterson: The proposition is that an amendment 
 to the Constitution shall be adopted, which would 
 specifically authorize that very thing, and the Supreme 
 Court would be bound by the amendment. 
 
 Mr. McNichol: They could assess the "Western portion 
 of the country at a particular income tax rate, as against 
 a larger income tax in the Eastern part of the country? 
 
 Mr. Patterson: Unquestionably. There is no doubt 
 about it, under the wording of the amendment. 
 
 Mr. Brown: In other words, they could include some 
 and exclude others? 
 
 Mr. Patterson: They may. 
 
 Mr. Brown: And would it not normally bear more 
 heavily upon the Eastern States, the collection of such a 
 tax? 
 
 Mr. Patterson : Yes. "We have the evidence of that with 
 regard to the income tax of 1861. If you will permit me fc 
 I will give you the exact figures as to that. Under the in- 
 come tax of 1861 and its supplements, where the amount 
 exempted was $600, the tax was paid by 460,000 persons, 
 and when the amount exempted under the supplement was 
 $1,000, the tax was paid by less than 250,000 persons. 
 The State of New York paid nearly one-third of that tax, 
 and the States of New York and Pennsylvania paid nearly 
 one-half of the total collection in the country, and an in- 
 come tax would now, of course, as your counsel has said, 
 bear most heavily upon the Eastern States. But the main 
 point I would like to impress upon the Committee is this : 
 The great danger that we have got at the present time is 
 the consolidation of the States into one government. The 
 great reason for the prosperity of this country has been 
 that we have had in the different States local self-govern- 
 ment, and if you are going to give the whole power of 
 taxation to the Government of the United States, it in- 
 evitably will result in consolidating everything into one 
 
1120 
 
 aggregate government and doing away with the State 
 Governments, and doing away with and imparing the 
 prosperity of the country. 
 
 Mr. Brown : In other words, they could tax the citizens 
 of our Commonwealth and of our different political sub- 
 divisions as they might see fit ? 
 
 Mr. Patterson : Yes. 
 
 Mr. Brown: And practically, if they so chose, tax us 
 out of existence ? 
 
 Mr. Patterson : The power to tax is the power to destroy. 
 There is no limit other than the will of the taxing power. 
 I think the answer to that, Mr. Chairman, is simply to 
 quote a word from the somewhat famous letter written by 
 Junius to Sir William Blackstone, in which Junius said: 
 "Laws are made not to trust to what men will do, but to 
 guard against what men may do." That is the whole 
 object of law. The whole object of law is not to trust the 
 individual, but to establish a rule which protects the com- 
 munity by putting a limitation upon the actions of every- 
 body. This is citilization. That is all I have to say. 
 
1121 
 
 MR. SAMUEL DICKSON, called. 
 
 Mr. Brown: We have invited, as I outlined, the repre- 
 sentatives here of those who are directly interested in the 
 question as to whether or not the State of Pennsylvania 
 should ratify the proposed amendment to the Constitu- 
 tion of the United States, authorizing the Federal Govern- 
 ment to tax incomes from whatever source derived, and 
 also as to the levying of a direct inheritance tax, and I 
 have no doubt the Committee would be glad to hear your 
 views on those subjects. 
 
 Mr. Dickson: I represent the Clearing House and the 
 Fourth Street National Bank, and also Drexel & Com- 
 pany. They have no particular direct interest, other than 
 as citizens in general, in the income tax, and I am not 
 authorized to speak on behalf of any officer or stock- 
 holder of those institutions in reference to that. I heard 
 some of Mr. Patterson's remarks, and I think that one 
 point that he made ought to be decisive against the pro- 
 posed amendment giving Congress the power. That is, 
 that it would be a tax that would operate most unequally 
 and unfairly upon the people of the country. It would 
 be paid practically by New York, Pennsylvania and the 
 New England States, while the majority of the members 
 of Congress are probably from w r est of the Alleghenies 
 and it would be a tax imposed by the votes of the legisla- 
 tors whose constituents would not feel the tax. Of 
 course, there would be no check upon them in the amount 
 which they would impose, nor is it necessary, because it 
 is always competent for Congress, if it needs the money, 
 to raise it not merely by the duties on imports, but also 
 by excise tax, stamp tax, and otherwise. Of course, the 
 income tax has been introduced particularly of late years 
 abroad. Formerly when it was imposed from time to time 
 in England it was always on something that was tempo- 
 52 
 
1122 
 
 rary, and they either reduced or repealed it from time to 
 time. All European countries, I believe, now are com- 
 pelled to revert to income tax. Certainly we are not re- 
 quired to do that with the Federal Government, because 
 they have all the money they really need, and there is 
 no reason why Pennsylvania, which has ample revenue, 
 should resort to that. In addition to that, we know how 
 it was in our own country when we had the income tax. 
 It was one of the most odious and objectionable taxes we 
 had, as Mr. Patterson pointed out, and the honest man 
 pays a great deal more than the dishonest man, relatively. 
 But it operates unfairly upon the people where they have 
 got the capital invested, and it is very hard and unfair 
 on them. 
 
 Mr. Brown : Bight there, the fact that these people have 
 capital invested is one of the reasons why they think 
 you and I should be taxed and their tax should be re- 
 duced. 
 
 Mr. Dickson : Their capital remains, whereas the lawyer 
 or the doctor has simply his own person. While he has a 
 capital, it is made up of expenditures over many, many 
 years of expenditures. A medical man to-day, in order 
 to qualify himself, not only spends four or five years in 
 a medical school, but he has a training in hospitals which 
 occupies four or five years more, and he is pretty well along 
 in'life before he is able to begin his practice, and he repre- 
 sents really a very large expenditure. No lawyer ever 
 thinks of charging off a certain per cent, to represent 
 what is a depreciation by reason of advancing years, or 
 anything of that kind. He never does it. I doubt if he 
 ever does get his capital back in that way. But I do not 
 propose to discuss that question. At the meeting of the 
 Clearing House, I understood there were a number of 
 banks represented there, but they all agreed that this was 
 not a matter the Clearing House had anything to do with, 
 that it is not within the scope of their authority, and it 
 was the informal expression of opinion that they generally 
 
1123 
 
 feel that they would rather bear with the laws they have, 
 than fly to others they know not of. They are quite content 
 with things as they are. First, we are accustomed to this 
 particular method, and, secondly, we would not care to 
 be subjected to any other. 
 
 Mr. Brown : Would you care to give us your views upon 
 the subject of taxing direct inheritances? 
 
 Mr. Dickson : I am not prepared to discuss that. I think 
 there is one law which you would find strictly unpopular. 
 
 Mr. Brown : Assuming that direct inheritances are taxed 
 to-day in practically every nation on earth, and in, say, 
 twenty-five States of this Union, what would be your 
 thought on that condition? 
 
 Mr. Dickson: I should not be convinced by that, no. 
 I think, of course, if it were a matter of absolute necessity, 
 the people should have to submit to it, but it is a great 
 hardship, it seems to me, when the head of a family is 
 taken away, that those who are dependent upon him and 
 who enjoy the benefit of the income he is able to earn, 
 are to be subjected to a large deduction from their in- 
 heritance. Of course, you will remember that the collateral 
 inheritance tax, which is never paid, I think, thankfully 
 or gratefully by the one who has to pay it, was the result 
 of the great disasters which followed at that time the 
 enormous expenditure of the State in public works 
 canals, bridges, toll roads, turnpikes, and matters of that 
 sort, so they incurred a debt of something like forty mil- 
 lions of dollars, and then when the depression and dis- 
 aster followed the panic of 1837 and along in the early 
 forties, it was impossible to create a revenue to pay the 
 interest, and Pennsylvania was very unjustly charged 
 with repudiating it. It was obliged to. The income did 
 not yield what it had been yielding before in good times, 
 what it was expected to yield, and at that time they created 
 the collateral inheritance tax. The Act of 1844 imposed it. 
 Except in emergencies, I do not think there ought to be 
 a direct inheritance tax. 
 
1124 
 
 Mr. Brown : Why should there be a distinction between 
 the collateral and the direct? 
 
 Mr. Dickson: Because the collaterals, as a rule, get 
 something from the testator who was not the principal 
 source of support, whereas if you tax the children of a 
 man when he dies, they are deprived of his earning power, 
 and you know how it has been with members of our bar, 
 where men engaged in the active practice and earning 
 large incomes, with large families, have been obliged to 
 spend their entire income, and they are stricken down in 
 the prime of life and their children are deprived of a 
 means of education. 
 
 Mr. Brown : The law does not impose any legal obliga- 
 tion upon you or me to provide for our children after 
 death. The only obligation is that we cannot exclude our 
 widows. "Why should the State do more than the testator 
 himself, or the decedent himself, is required to do ? 
 
 Mr. Dickson : It is true that it has not been necessary 
 to impose a legal obligation of that kind. In France they 
 do. Very wisely they provide that the father shall not 
 devise or bequeath away more than one-half of his estate, 
 as the children have a vested interest in his estate. I 
 think it was a very wise law r . Hitherto with us the pos- 
 sibility of earning a livelihood has been so good and the 
 means of providing for one 's self have been so abundant, 
 that we have not found it necessary to resort to that kind 
 of legislation. You remember Dr. Franklin in his day 
 pointed out what w r as a very remarkable difference be- 
 tween conditions here and abroad, and that was that a 
 widow with a family of children was the most marriageable 
 of women, because a man could marry her and then he 
 would have his wife 's children to help carry on the business 
 or do the work for him. Actually in those days children 
 after they passed the age of five or six or seven years 
 were an asset instead of a liability, but unfortunately that 
 is not so to-day. 
 
 Mr. Brown: It has been presented to us that the social 
 
1125 
 
 element which has tended to contribute so largely to the 
 large fortunes should have some consideration at least 
 at the death of the recipient of those benefits. Mr. 
 Carnegie has said that at least 50 per cent, of these great 
 fortunes should go back to the State, and a man who has 
 been reported 1o be so penurious, Russell Sage, has 
 said that a large percentage of these large fortunes should 
 go back to the State to represent the social liberty. 
 
 Mr. Dickson : In the case of Eussell Sage, his widow 
 has been using his estate to better advantage than almost 
 any right person that I know of in this country. 
 
 Mr. Brown : And many of the States of the Union pro- 
 vide for this direct inheritance tax to go to the universities, 
 in direct recognition of their services. Why should not 
 Pennsylvania, assuming there is great need for more in- 
 come for legitimate purposes, such as building roads and 
 improving the school system, etc., levy a direct inheritance 
 tax for those purposes? 
 
 Mr. Dickson: As I say, large inheritances, of course, 
 could afford it, but then they do bear their portion of taxa- 
 tion on property of different kinds, and it is certain to be 
 a hardship on the average, and you have got to be governed 
 by averages. It would be a great hardship on the aver- 
 age family, who are deprived of the support they have 
 been having. 
 
 Mr. Brown : You are a man of large affairs and repre- 
 sent very large interests. Assuming that there is need 
 for more revenue and that the present taxables are taxed 
 to the limit, what is your thought upon the propriety of 
 the State levying such a tax? Do you feel it is unrea- 
 sonable. 
 
 Mr. Dickson: I am going to simply say this, it is a 
 subject which I have only given superficial consideration 
 to, and my impressions have been from the circumstances 
 which have come to my observation, and the cases under 
 my observation have been those where the inheritance tax 
 would have been a very great hardship. I am not pre- 
 
1126 
 
 pared to say that, taking it by and large, it would be 
 so, or any other tax, but I think that on the whole it 
 would be an unjust and unfair tax, for a man pays his 
 tax during his lifetime, and if the property does come into 
 the hands of his children they will have to pay his tax 
 after they inherit it. 
 
 Mr. Brown : You think a man ought to accumulate to- 
 day a large fortune and transmit that to others, probably 
 years and years to come, who have no part or parcel in 
 it and make no contribution to the State, whereas he prob- 
 ably in amassing that fortune has used the resources of 
 the State which can never be returned to her? 
 
 Mr. Dickson: Your Question is a double-barreled one. 
 I think you are dealing with very larere fortunes. Now, 
 the number of very larere fortunes is not so very great. 
 Really, I think a law which misrht be modified to advantage 
 is the spendthrift law. I think it is a srreat mistake and 
 a great misfortune to allow these great fortunes of many, 
 many millions to be put in trust and held practically in- 
 tact, and to foster absenteeism, which is becoming quite 
 as bad as it was in Ireland. Undoubtedly Ireland did 
 suffer from the fact that the landlords took their rents 
 and spent them in London. Now, with us, we know 
 where the fortunes are supposed to be measured by the 
 hundreds of millions, and where children are able to live 
 not merely in idleness, which perhaps is no erreat difficulty 
 with the State, and they are probablv better off than if 
 they were at work, but where they are able to set such 
 examples of extravagance as to endanger the community 
 very much Newport. 
 
 Mr. Brown: They are a menace? 
 
 Mr. Dickson: They are a menace. If you will direct 
 your attention to modifying the law of special trusts, then 
 you can depend upon their coming back in a comparatively 
 short time. 
 
 Mr. Brown : We are trying to gather information upon 
 this, and, of course, there are numbers of interests that 
 
1127 
 
 insist upon this direct inheritance tax being levied. That 
 is why we are making this inquiry here. 
 
 Mr. McNichol : Then you believe, Mr. Dickson, that we 
 should look for our tax in other directions without the 
 direct inheritance tax? 
 
 Mr. Dickson: Yes, sir. Really, Mr. Chairman, I think 
 you should look rather to the reduction of the expen- 
 ditures. I think you have enough sources of taxation now 
 to raise enough revenue, and I think if the affairs of the 
 State were economically administered, you would have 
 all the income we need. There is one line of expenditure 
 as to which the State of Pennsylvania has been rather 
 niggardly, and that is in regard to its institutions of 
 learning. Now, the State of Michigan has maintained the 
 University of Michigan year after year, no matter what 
 the condition of the State has been, and has been making 
 a full appropriation to carry on that great university, 
 one of the greatest in the country. The University of 
 Pennsylvania has received now and then a petty appro- 
 priation to pay for part of the expenses of building a 
 hospital ward, or something of that kind. 
 
 Mr. McNichol: Wherein have you the knowledge that 
 there should be a curtailment of expenses in any par- 
 ticular direction? 
 
 Mr. Dickson: I only know generally from reading the 
 newspapers, and, of course, the newspapers are not satis- 
 fied with anything, we know. 
 
1128 
 
 SAMUEL B. SCOTT, Esq., representing Germantown 
 Business Men's Association, called. 
 
 Mr. Seott: The Germantown Business Men's Associa- 
 tion is one of the constituent members of the United 
 Business Men's Association. I only want to make two 
 points about the mercantile license tax, which have al- 
 ready been brought out here more or less in detail, but as I 
 am not a merchant, but simply a lawyer,! cannot speak as a 
 witness, as some of these other men have done, but sim- 
 ply present two of the theoretical and general objections 
 to the mercantile license tax. The first objection is on 
 the ground of its discriminatory nature. That is to say, 
 the objection which you have heard urged here against 
 the merchants paying tax, while other forms of business 
 activity, from the professions to manufacturing corpora- 
 tions, are exempt. Now, in the long run, it is undoubt- 
 edly true that if you tax anybody unjustly, somehow or 
 other they will succeed in throwing the burden to some- 
 body else, but in the long run, in the course of decades 
 or hundreds of years, it is probable the thing will work 
 itself out more or less adequately, but in the meantime 
 you who have been discriminated against, have suffered. 
 There seems to be an idea prevalent, which I think is a 
 totally false economic idea, that there is some particular 
 virtue in the economic function of manufacturing, which 
 should get special consideration from the State. My be- 
 lief is this, that everything which is necessary for society 
 today is necessary, and that one is no more necessary 
 than another, and that the economic work of vending 
 wares is exactly as important to a community as that of 
 manufacturing wares, and that the exemption not only 
 from mercantile tax but from even a capital stock tax, 
 which is granted in favor of the manufacturer, is a totally 
 unwarranted, uneconomic discrimination in his favor. 
 
1129 
 
 That is the theoretical base upon which all these objec- 
 tions which you have heard voiced by different individ- 
 uals here is finally founded. I think when you are con- 
 sidering the general scheme of taxation it ought to be 
 directed as far as posible towards eliminating the ques- 
 tions of discrimination which are not based upon real 
 economic foundations. 
 
 The second general point is that it is the wrong meth- 
 od of taxation to tax industry as against property. The 
 objection I think you have mentioned as having been 
 made by the State about the stocks of stores not having 
 been taxed, whilst that is well taken } each merchant 
 ought to be taxed not upon his business, not upon the 
 amount of business which he does, but upon the amount 
 of property or capital which he has invested. It is no 
 more difficult to ascertain that than it is to ascertain the 
 value of the property of a corporation. 
 
 Mr. Brown: He is taxed that now, if he is a corpora- 
 tion? 
 
 Mr. Scott: Yes, if he is a corporation. The question 
 if he is a corporation adds a totally new subject of taxa- 
 tion, which on a mercantile business is a third tax. First, 
 his local and real estate; second, his capital stock tax 
 to the State, and, third, on top of all that, his mercantile 
 license tax. For the moment I am leaving out the ques- 
 tion of whether or not he is a corporation, because I think 
 that is an addition and does not touch the economics. It 
 has been brought out here by the men who are more in- 
 timately in touch with the facts that a tax on gross sales 
 is a very inequitable method of arriving at the tax upon 
 a man's property. The theory of the law was that if 
 you took his gross sales you got a pretty accurate esti- 
 mate of how much he was worth, but it has been shown 
 that enormous sales may go on and with enormous profits, 
 and with no capital whatsoever. For instance, take the 
 broker. Suppose I was to make a contract with a large 
 mining firm for half a hundred thousand tons of coal, 
 
1130 
 
 and I should go to a large consumer and negotiate that 
 contract. I have no capital involved whatsoever. I might 
 make a very large profit, if I was fortunate in making 
 a good turn; I might make ten cents a ton and I might 
 not make such a great profit, but out of that enormous 
 difference the mercantile license tax takes no account 
 whatever. 
 
 Mr. McNichol: "Why shouldn't he pay something, say 
 a mercantile tax, to the State? 
 
 Mr. Scott: Because I think he only ought to pay on 
 the money which he finally succeeds in making and 
 saving. I don't think as a general proposition that men's 
 efforts should be taxed. He may have started as an office 
 boy and gradually by his industry and efforts got himself 
 in such a position. 
 
 Mr. McNichol: Those are remote conditions, 
 Mr. Scott: Those are only illustrations, perhaps inade- 
 quate ones, but the general proposition I am trying to 
 lay down is that the tax ought to be on property, and 
 not on men's efforts. 
 
 Mr. Brown: You don't believe men's efforts alone pro- 
 duce results in business, do you? Are you not forgetful 
 of the social feature of it? A man may have a monopoly 
 of the business and manufacturers are compelled to buy 
 from him. He may be specially favored in a hundred 
 ways. 
 
 Mr. Scott: That is the principle upon which public 
 franchise taxes are estimated, but the ordinary business 
 man who enters in open competition with every oiher 
 business man some men are more successful, usually 
 because they are better men if his success is so great 
 that he accumulates property, tax him on it. If he spends 
 it, somebody else gets it and is taxed on it. 
 
 Mr. Brown: Wouldn't you do that, if you taxed net in- 
 come instead of gross sales? 
 
1131 
 
 Mr. Scott : Net income is only palliative. It is what 
 the merchants have suggested as better than gross sales. 
 I don't think it comes up to the requirements of the 
 theory. What you ought to tax is the value that man has 
 used in his business. Not necessarily money, but what- 
 ever he has. 
 
1132 
 
 WELLINGTON M. BERTOLET, ESQ., representing the 
 Pennsylvania Retail Coal Merchants' Association, called. 
 
 Mr. Bertolet: We are opposed to the mercantile tax. 
 In the first place, we are speaking for the Pennsylvania 
 Retail Coal Merchants' Association, a body of about seven 
 hundred and fifty retail coal merchants, of whom one hun- 
 dred and ten are doing business in the City of Philadel- 
 phia. These men we estimate handle approximately two 
 million tons of anthracite coal per year, at an estimated 
 sale value of ten million dollars, on which they are pay- 
 ing the one mill tax under the mercantile license tax law, 
 as well as the individual license tax of $2.00. These 
 men, in the first place, appreciate the fact that the mer- 
 cantile license Act is a revenue Act, pure and simple, 
 but at the same time it has not been made clear to us 
 that as a revenue measure it is at all necessary. We 
 assume that the Legislature does not wish to tax anybody 
 unless they need the money for revenue purposes, and an 
 examination of the Auditor General's report for 1909 
 seems to show that the debt of Pennsylvania is small, and 
 what small debt we have is more than covered by our 
 sinking fund, and moreover that at the end of the fiscal 
 year of 1909 there seems to have been a balance of six 
 millions dollars in her Treasury, which is the case of the 
 four or five years previous. So if it turns out to be the 
 fact that we have enough revenue in our Treasury without 
 the mercantile license tax, without the $1,200,000 which 
 was paid in last year under this Act, it seems to me there 
 ought to be a very good reason why a tax of this kind 
 should be discontinued. 
 
 Mr. McNichol : Do you think it is a wise policy to spend 
 from jive to seven years in the construction of roads and 
 buildings, when there is not enough money in the State 
 
1133 
 
 Treasury to complete them? As a business man, you 
 would not enter into an enterprise unless you had the 
 money to do it with? 
 
 Mr. Bertolet : I might borrow it. 
 
 Mr. McNichol : Well, you would borrow it, but the State 
 doesn't have access to that borrowing proposition, be- 
 cause the Constitution prohibits it. If you were barred 
 from borrowing money, you would have to go in some 
 other direction. 
 
 Mr. Bertolet: Yes. 
 
 Mr. McNichol: What about the roads? You see if we 
 allowed our conditions to exist in Pennsylvania today, 
 which is practically worse than any other State in the 
 Union, almost, if we allowed them to continue for a period 
 of years 
 
 Mr. Bertolet: I think if the people of Pennsylvania 
 want their roads, they ought to tax their people for roads, 
 but the question is whether the mercantile license tax law 
 is the proper method to do it. 1 am taking the report of 
 the Auditor General to show that as the finances of the 
 State today are considered, we do not need any more 
 revenue for our current expenses. 
 
 Mr. McNichol: But the Constitution prohibits the 
 Legislature from borrowing any money for any improve- 
 ments. Where are you going to get the money? That 
 ia what we want to hear from you gentlemen; how we 
 are going to get the money. 
 
 Mr. Bertolet: We desire to show that the mercantile 
 tax law is not the best method of getting it> and I am 
 speaking merely for the retailers, and I think it ought 
 to be pointed out that the retail end of the mercantile 
 business has been paying three-fourths of this tax. I am 
 reading from the Auditor General's report of 1909, and I 
 find the retailers paid $908,000 of that tax that year, 
 whereas the wholesalers paid $314,000, and the brokers 
 $48,000. We cannot understand why any distinction of 
 that sort should be made between the retailer in business 
 
1134 
 
 and the wholesaler. We think that the majority of this 
 tax, if it is to be imposed at all, should be imposed upon 
 the men who have the least risk in business, and at the 
 same time are generally understood to make the greatest 
 net profit. It seems to me that it is well understood, and 
 it is borne out by the reports of Bradstreet and Dun, 
 that the retailer in business today undergoes the greatest 
 risk of any branch of business, and at the same time his 
 percentage of profit is the smallest. I think you gentle- 
 men will agree with me that the retailer today who makes 
 a profit of 10 per cent, is doing a good business and it is 
 exceptional. Therefore, why should the retailer be asked 
 to pay a mill on the gross volume of business, whereas 
 the wholesaler pays one-tenth. Therefore, we say this 
 measure is unequal in that respect. 
 
 Another point we wish to make is that the retailer 
 stands as a distributor between the wholesaler and the 
 public. He is the man who is compelled to supply the 
 public with the necessaries of life, and therefore he must 
 incur all the risk of credit, which naturally comes by 
 supplying that class of people. In the second place, we 
 take exception to this measure because it taxes the gross 
 volume of business. To take an isolated instance, I was 
 connected professionally with a small corporation who 
 did a business of $43,000 in the year 1908. That year that 
 business lost $1,200, and still they paid their mercantile 
 tax of $43, plus the $2.00 in fees. That is an illustration 
 to show exactly what happened to a losing retailer under 
 this Act, and we think if this tax is necessary at all it 
 should tax the net income and not the gross volume of 
 business. It seems to me it is not an answer to that prop- 
 osition to say that the net profit is more difficult to deter- 
 mine. It is not any more difficult than the present meth- 
 od of going into a man's books. Under the mercantile 
 license Act if the mercantile appraiser is not satisfied with 
 the return, he can call the merchant before the County 
 Treasurer and open his books and show up his private 
 
1135 
 
 affairs just as much as if he required a report upon the 
 net income. We do not desire to shirk necessary taxa- 
 tion, but if the tax is necessary we feel the Act should be 
 so amended as to tax only the net income or net profit 
 of the business, rather than the gross sales. We have 
 some objection to this Act on the score of its administra- 
 tion. A careful study of the cost of collection under this 
 Act seems to show that it costs about 10-J per cent, of the 
 amount collected to bring in this $1,200,000 to the State. 
 We are astounded to find that of the $156,000 which it 
 cost to collect this tax, $67,000 last year were spent in 
 advertising the mercantile list in the newspapers of the 
 State. 
 
 Mr. Brown: Outside of Philadelphia? 
 
 Mr. Bertolet : Outside of Philadelphia, which, I believe, 
 gets along without any advertisement. I cannot under- 
 stand what good advertisements of that character do. It 
 serves no notice to the public. The only good that the 
 public can gain from a list of that sort is that there are 
 twenty coal merchants in Reading, etc., and it does not 
 do the merchants any good. They have no advertisement 
 to gain. In fact, to us it seems the only persons who are 
 benefited by that tremendous expenditure of over one- 
 third of the cost of collecting this tax are the newspapers 
 themselves, and we feel that this Act, if it is to remain 
 in force, should be amended, and furthermore, as a gen- 
 eral proposition, representing these business men, we feel 
 that beyond the desire to increase our taxes for the pur- 
 pose of building roads or making other public improve- 
 ments, there are opportunities (as this $66,000 item) to 
 gain revenue by retrenchment. 
 
 Mr. Brown: How are you to do that, unless you cut 
 off the appropriations to the hospitals and other chari- 
 table institutions? Are you in favor of that? 
 
 Mr. Bertolet: I am certainly in favor of curtailing ap- 
 propriations to charitable institutions other than those 
 fully controlled by the State. 
 
1136 
 
 Mr. Brown: Take the schools. The Superintendent of 
 Public Instruction says there is need for the expenditure 
 of from twelve to fifteen millions of dollars more for the 
 payment of teachers' salaries. Now, that would only 
 bring her school system up to date. What is your thought 
 on that? Do you think that we ought to bring the school 
 system up to what it is in other places, and furnish the 
 money? 
 
 Mr. Bertolet: I think we ought to bring it up to the 
 quality of other States, but I don't see how that method 
 would do it. I think the appropriation for the schools 
 is going to be made. My only criticism is that large ap- 
 propriations seem to be made to semi-public hospitals, you 
 might call them ; hospitals which are governed by business 
 men, which are not under the control of the State, and 
 my experience has been that a good business man who 
 is on the board of directors of a hospital will make it a 
 matter of personal interest to go to Harrisburg and ap- 
 pear before a committee in order to get an appropria- 
 tion for that hospital. It is a matter of business pride. 
 
 Mr. Brown : And then he goes out in the community and 
 raises how much money to help it? 
 
 Mr. Bertolet: He may go out and help raise some 
 money, but on the other hand he may not appear at the 
 hospital to find out how that money is being spent. The 
 Auditor General's report shows the tremendous cost of 
 semi-public institutions, as compared with purely State 
 hospitals. I think he goes into the question of clothing 
 the inmates and all that, and it shows by careful business 
 management the cost of conducting these institutions 
 could be lessened. It seems to me that is a method of 
 retrenchment, and it doesn't necessarily follow from that 
 argument that we object to the support of charitable in- 
 stitutions by the State, but if the State is going to sup- 
 port them, it seems to me it is the duty of the State to 
 see that they are properly managed. I have a short 
 brief I would like to file. 
 
1137 
 
 Mr. McNichol : If you iiave any particular information 
 that any particular institution is not being properly man- 
 aged, I would like to have it. 
 
 Mr. Bertolet: I haven't it. I have only gathered it 
 from general information. 
 
 Mr. John Cadwalader, Jr. : I have asked permission of 
 Mr. Brown to read a letter my father sent. He takes a 
 great deal of interest in this matter, and asked me to read 
 it, and with your permission I will do so. 
 
 York Harbor, Maine, October 4, 1910. 
 
 Mr. Francis Shunk Brown, Esq., 
 Room 496, City Hall, 
 Philadelphia. 
 Dear Sir : 
 
 I regret extremely that rny absence prevents my 
 being present tomorrow at the public meeting to be held 
 by the Committee you represent, in regard to the ratifi- 
 cation by Pennsylvania of the proposed amendment to 
 the Constitution of the United States authorizing the 
 taxation of income from whatever source derived. 
 
 I trust the Committee will report adversely on this 
 question. 
 
 The wisdom of the framers of the Federal Constitution 
 was nowhere more clearly shown than in the provisions 
 relating to taxation. Realizing the great importance of 
 avoiding a conflict and duplication by Federal and State 
 authorities, the provision for aii exclusive source of reve- 
 nue for the Federal Government, the first paragraph of 
 the 8th Section of Article 1 provides that Congress shall 
 have the power to lay and collect taxes, duties, imposts 
 and excises to pay the debts and provide for the common 
 defence and general welfare of the United States. And 
 by the second paragraph of Section 10, Article 1, it is 
 provided that no State shall, without the consent of Con- 
 gress, lay any imposts or duties on imports or exports. 
 The fourth paragraph of Section 9, Article 1, which pro- 
 
1138 
 
 vides that no capitation or other direct tax shall be laid 
 unless in proportion to the census directed to be taken, 
 gives the power then absolutely necessary to lay an in- 
 come tax; but in such a way that the States would be 
 called upon to make their pro rata contribution, and thus 
 avoid the confusion and injustice that will arise if this 
 power of levying direct taxes and especially the direct 
 tax known as an income tax is devolved upon Congress. 
 The wisdom of separating the subjects of taxation for the 
 different communities entitled to lay taxes has been rec- 
 ognized by our State with admirable results. The reliet 
 of all real estate from taxation for State purposes and 
 placing that all-important source of revenue under the 
 control of the various counties by which a just and equal 
 appraisement and rate can be secured by those directly 
 interested has been most advantageous. The exclusive 
 power to raise revenue by taxing imports for the Federal 
 Government can be exercisd in a manner to secure a 
 greatly increased revenue above that now secured by Act 
 of Congress. The suggestion that it is important for the 
 purpose of obtaining necessary revenue for the Federal 
 Government that the enormous centralized power of levy- 
 ing taxes upon individuals be given to it is antagonistic 
 to every theory upon which the separation of State and 
 Federal authority is based. The equal representation of 
 any State in the United States Senate at once becomes 
 entirely unjust and unreasonable. Four States, New 
 York, Pennsylvania, Ohio and Illinois, contain about one- 
 third of the whole population and probably more than 
 three-fifths of all the taxable wealth of the United States. 
 It direct taxation of the people of these four States is 
 to be lett to Congress, except as now provided, then their 
 representation of but eight Senators will be grossly in- 
 sufficient to protect their proportionate rights from un- 
 equal legislation. It is remarkable that this subject of 
 taxation of incomes should have become so widely con- 
 sidered as a proper power for the Federal Government 
 when no important State has ever exercised it within 
 
1139 
 
 their own bounds, though free to do so. While it is a 
 relief to have the proper method of securing Constitu- 
 tional powers obtained by an amendment to the instru- 
 ment rather than by a strained interpretation or misin- 
 terpretation of the plain language used therein, it seems 
 to be the result of mere sensational excitement rather 
 than of sober thought that this amendment has been 
 proposed. Theoretically there is much to be said in favor 
 of such taxation. Practically it is not only almost im- 
 possible to have an equitable basis for the tax, but from 
 its necessarily inquisitorial character nothing could be 
 more offensive. In England the returns are strictly con- 
 fidential. In this country the prevalent thought in re- 
 gard to the tax is publicity. In our city real estate pays 
 a tax equal to about 30 per cent, upon the annual pro- 
 ductiveness, either actual or estimated. It can hardly 
 be contended that this is not an extreme burden. If a 
 federal income tax is to be added to this the loss of 
 taxing value to the community will, of course, follow, 
 and general derangement of revenue will follow. The 
 great objection to the amendment is the great addition 
 to centralization of power in the United States Govern- 
 ment and the surrender by the States of their sovereign 
 power of taxation to an extent they are not carefully 
 considering. That so-called socialism is at the bottom of 
 the movement is evident, and it appears very attractive 
 to a class to imagine that they will not bear the burden. 
 It is always difficult to instruct the average citizen so 
 that he can understand that all burdens of taxation are 
 shifted from one class to a lower until finally resting upon 
 the lowest, which cannot transfer it. 
 
 I have written this without time even to read it over, 
 and it is necessarily crude, but I wish, however imper- 
 fectly, to express my earnest hope that Pennsylvania 
 will reject a measure so injurious to her best interests as 
 well as the best interests of every other State. 
 Very respectfully yours, 
 
 JOHN CADWALADER. 
 
1140 
 
 Mr. Brown : In that connection I might read two let- 
 ters which may be of interest to the Committee, one from 
 Mr. John G. Johnson, and one from Mr. Jos. G Rosen- 
 garten. 
 
 September 30, 1910. 
 Francis Shunk Brown, Esq., 
 
 Counsel, Joint Committee of the Senate and House of 
 
 Representatives of Pennsylvania. 
 Dear Mr. Brown : 
 
 I beg to acknowledge receipt of yours of the 29th of 
 September. 
 
 I tried to find, but have failed, a paper signed by sev- 
 eral New York lawyers, which was addressed to the New 
 York Legislature in opposition to the adoption of the 
 Income Tax Amendment to the Constitution of the 
 United States. It very clearly puts the points of objec- 
 tion. 
 
 I regret I cannot be present at the meeting of the Com- 
 mittee ; but I think the imposition of an Income Tax is 
 very greatly to the prejudice of Eastern interests. 
 
 It will serve to inaugurate socialistic or semi-socialistic 
 plans and principles. 
 
 I see no reason why the Constitution of the United 
 States, which was worked out by men who thoroughly 
 understood the needs of the Nation, should be altered in 
 this respect. 
 
 Very sincerely yours, 
 
 JOHN G. JOHNSON. 
 
 October 1, 1910. 
 Francis Shunk Brown, Esq., 
 
 Counsel for Pennsylvania Committee on Corpora- 
 tion Revenue Laws. 
 Dear Sir: 
 
 Yours of September 27th, inviting me to attend your 
 meeting on October 5th, is at hand. Absence from 
 
1141 
 
 Philadelphia will prevent my doing so. Let me, however, 
 make my earnest protest against any favorable action 
 by your Commission on the proposed amendment to the 
 Constitution of the United States authorizing the Federal 
 Government to tax incomes from whatever source de- 
 rived. It is high time that the States should conserve 
 their own resources and maintain the exclusive right to 
 tax incomes, wherever necessary. The expenditures of 
 the Federal Government have increased, are increasing 
 and ought to be diminished. To do that effectually the 
 best course is to limit its sources of revenue, not to en- 
 large them by an income tax. That should be reserved 
 for the States. Then, for example, the State of Pennsyl- 
 vania could surrender its tax on personal propert; T to the 
 cities, just as it has given them the tax on real estate. 
 Municipal expenses must and ought to increase to meet 
 the proper demands of our urban population for proper 
 outlays for improvements, e. g., better water supplies, bet- 
 ter water fronts, better sanitation, and other such needs 
 of our great and growing cities. Our rural population, 
 too, ought to get the personal taxes within their 
 counties for better roads, better schools and better 
 sanitation through modern methods. The State of 
 Pennsylvania can now meet all just demands with 
 the income from taxes on corporations, franchises, 
 etc., easily raised and steadily increasing. All other 
 taxes are needed by and ought to be given to counties 
 and cities and the use of such income strictly supervised 
 by competent State inspectors. The improved sanitation 
 by the Health Department of the State shows what State 
 experts could do for roads and other needs of rural dis- 
 tricts. The Federal Government ought to limit its grow- 
 ing expenditures, and the best way to do that is to limit 
 its revenue. The tariff is and should be its main supply, 
 and by maintaining, or, if need be, increasing the present 
 rates of duty on imports, domestic manufactures and 
 commerce will be increased and the country enriched 
 
1142 
 
 from its own resources, and not impoverished by impor- 
 tation of articles that can be grown or made here. To 
 amend the Constitution so as to allow the Federal Govern- 
 ment to levy an income tax would weaken the resources 
 of the States and lessen their ability to provide for the 
 just demands and pressing needs of their population. A 
 Federal income tax means an increase of Federal tax 
 gatherers, now an unpleasant feature of our daily life. 
 The methods of collecting State and county and city taxes 
 are now familiar and easily applied. Any change back 
 to the Federal income tax of war times could only be 
 justified, but until that unhappy state of affairs arises, 
 let us restrict Federal revenues to Federal needs and keep 
 an income tax for the States. 
 
 Yours truly, 
 J. R. ROSENGARTEN. 
 
1143 
 
 MR. CHARLES L. FLUCK, President Northwest Business 
 Men's Association, called. 
 
 Mr. Fluck: Mr. Chairman and Gentlemen of the Com- 
 mission: I have been asked to represent the Northwest 
 Business Men's Association in opposition to the mercantile 
 tax. 
 
 Through no fault of mine, I am not in a position to 
 hand a brief to this Commission to-day, but I have the 
 thoughts and suggestions which have been thrown out 
 by some of the questions that I believe the Commission 
 is anxious to know. They can have them for what they 
 are worth. And, in stating that the Northwest Business 
 Men's Association is comprised of a membership of some- 
 thing like three hundred and fifty business men of North- 
 west Philadelphia, I believe their opposition would be 
 the same as mine, personally, in this respect : That if the 
 payment of the mercantile tax is necessary to maintain our 
 schools, or asylums, or our homes and institutions, then 
 we do not object to paying that tax. 
 
 But we believe that the tax is not necessary to main- 
 tain these institutions. 
 
 The gentleman who preceded me spoke on the question 
 of Treasury balance, and I will not worry the Commis- 
 sion by going over that thing again, because that is the 
 position I was going to take. 
 
 Now, Mr. Counsel and gentlemen of the Commission, in 
 relation to the mercantile tax, I wish to present to you 
 my process of reasoning. This is the point: 
 
 I, to-day, might be a mechanic; that is, I might make 
 my living by some kind of labor. If, tomorrow, I go into 
 the business of selling merchandise, although I apply 
 the same industry in making my livelihood, my standing, 
 so far as the State is concerned, would be entirely changed ; 
 because the State, which did not tax me for my industry 
 
1144 
 
 in making my living in a mechanical way, would im- 
 mediately step in and say, "We are going to tax you now, 
 because you are in business." I submit, gentlemen, that 
 if I have stepped out of the mechanical field into the 
 business field, the State gives me no more protection, it 
 gives me no more privileges, than I had when I was a 
 mechanic. I may be called upon to devote a great deal 
 more industry and time and work to make my living in the 
 selling merchandise business, either wholesale or retail ; 
 and yet the State comes along and says, "We need some of 
 that money to maintain the State." That is the position 
 that every business is taking on the question of the mer- 
 cantile tax that it is an unjust levy; that he is not 
 getting any more than a man who is not doing business as 
 far as the State is concerned in the shape of privileges. 
 
 Now, if, instead of an individual going into business, 
 I combine with three, or four, or five other men and apply 
 to the State for a charter to engage in a mercantile busi- 
 ness, I am then getting a special privilege from the State, 
 in the fact that the minute we become an incorporated 
 body in the transaction of business, my personal re- 
 sponsibility ceases. 
 
 Now, in the nature of corporations, there are two classes 
 of corporations. That is, the State will grant incorpora- 
 tion to men who want to go clearly into the mercantile 
 business. They do not give it to them as an exclusive 
 privilege for going into that particular business. But 
 there is a class of people who have gone to the State and 
 have become incorporated to do certain things, and to do 
 these same things, the State of Pennsylvania will not give 
 the same privilege to any other group of men. By that, 
 I mean particularly, as an example, the corporations such 
 as the street railway companies of the City of Philadel- 
 phia. That is, the State will charter a combination of 
 men, making them an incorporated body, to relieve them 
 of personal responsibility, but it will not give the same 
 right to any other group of men. That is an exclusive 
 privilege. 
 
1145 
 
 The question I want to ask this Commission now, is 
 this : Why not determine where the revenues of the State 
 shall come from, beginning at the point of asking the 
 question, Who are the specially benefited people in the 
 State? Who are the people that have received benefits 
 greater than any other individual or any other corpora- 
 tion in the State of Pennsylvania. Why don't these peo- 
 ple who have received exclusive privileges also be made to 
 bear the burden, if necessary, to a reasonable degree in 
 replacing the revenues that are unjustly imposed upon us 
 as small business men? 
 
 I want to give you just one example of what I mean. For 
 instance, a great many years ago there was a company in- 
 corporated a concern known as the Ridge Avenue Pas- 
 senger Railway Company ; its authorized capital stock was 
 seven hundred and fifty thousand dollars fifteen thou- 
 sand shares at fifty dollars a share. There was paid in 
 on that stock four hundred and twenty thousand dollars, 
 or twenty-eight dollars a share. That concern that is, 
 the property of that concern (and the only property it 
 has remaining to-day, gentlemen) is the exclusive right 
 that the State gave it to run a street railway on Ridge 
 avenue. It has no property of its own at all so far as rolling 
 stock is concerned; it has been leased, and leased, and 
 leased. That property to-day is bringing one hundred 
 and eighty thousand dollars a year on those fifteen thou- 
 sand shares of stock, and the business proposition is 
 worth three millions of dollars. In other words, the con- 
 dition of affairs is that the company has been given an 
 exclusive right to do a certain thing, and the State pro- 
 tects it in that privilege ; it was originally authorized to 
 be capitalized at seven hundred and fifty thousand dol- 
 lars, only four hundred and twenty thousand ever paid 
 in on it, but is worth today three millions of dollars. 
 
 Mr. Brown : What is it taxed at, Mr. Fluck ? 
 Mr. Fluck : I cannot give you tax figures. They pay a 
 tax on capital stock the same as others. 
 
1146 
 
 Mr. Brown: It is taxed away above the money yoi 
 say is paid in? 
 
 Mr. Fluck : Yes. I only question this point. Since May, 
 I have been trying to get some Government reports to be 
 able to answer such questions as you have put at me to 
 be able to come here and give you the necessary proof of 
 what I may say. 
 
 Mr. Brown: I think this was all published some time 
 ago by the Transit Company? 
 
 Mr. Fluck: I am not speaking about the Philadelphia 
 Rapid Transit Company. I am talking about the people 
 who own the franchises for Ridge avenue. These are the 
 people you are not getting at. I say there is something 
 that calls for correction, and it is in the value of the 
 capitalization. For instance, the enormous difference in 
 the value of the capitalization between the seven hun- 
 dred and fifty thousand authorized capitalization, of 
 which four hundred and twenty thousand dollars was 
 paid in, and the three millions of dollars that the proposi- 
 tion is worth to-day on a 6 per cent, basis. 
 
 Mr. McNichol : Are you in business, Mr. Fluck ? 
 
 Mr. Fluck : Yes. 
 
 Mr. McNichol : How long have you been in business ? 
 
 Mr. Fluck : About fourteen or fifteen years. 
 
 Mr. McNichol: What was the capitalization of your 
 business at the start? 
 
 Mr. Fluck: It was very small it was nothing. 
 
 Mr. McNichol : Approximately ten dollars, a hundred 
 dollars, a thousand, or what ? 
 
 Mr. Fluck : Nothing. 
 
 Mr. McNichol : What would you sell it at to-day ? 
 
 Mr. Fluck: I would sell it at a figure that I would 
 not care to mention here to-day, but a great deal more than 
 nothing. 
 
 Mr. McNichol : Will you tell us what brought about 
 that enormous increase of to-day over fifteen years ago 
 in your business? 
 
1147 
 
 Mr. Fluck : I will say that it was through no exclusive 
 privilege given to me by the State of Pennsylvania. 
 
 Mr. McNichol : Getting back to Mr. Carnegie, how can 
 you get at him? He has derived all the benefits of the 
 times, the demand for a particular material and things of 
 that kind without the question of exclusive privilege. A 
 man who has a particular business is going to make his 
 future by his exclusive industry? 
 
 Mr. Fluck: Yes, but Carnegie had opposition, and he 
 has it to-day and should have it. I have had opposition 
 in all the years that this thing has been brought about. 
 That is what my business represents to-day as compared 
 to years ago my industry, my hard work. 
 
 Mr. McNichol : Isn 't it true that the Ridge avenue line 
 has had competition and opposition for years and years 
 up to the time a certain period when they consoli- 
 dated? 
 
 Mr. Fluck: No. There was no opposition on Ridge 
 avenue. 
 
 Mr. McNichol : But there was, until the Union Traction 
 Company, I think it was, opened these lines. I remember 
 the railway situation there ? 
 
 Mr. Fluck: Yes, but, Mr. McNichol, the opposition I 
 mean is this: That no other group of men will get from 
 the State of Pennsylvania the right to run a railway on 
 Ridge avenue. 
 
 Mr. Brown : It would be inconsistent to run two. How 
 do you distinguish between your individual efforts and 
 the united element in the running of a business? No 
 matter how hard you work, if the State of Pennsylvania 
 did not build schools and churches, and do all sorts of 
 other things to bring the people here to buy your goods, 
 you would not profit. Shouldn't you make some con- 
 tribution on that account ? 
 
 Mr. Fluck : I have stated, Mr. Brown, that I am willing 
 to make that contribution. I stated that, personally, if 
 the payment of the mercantile tax was necessary to main- 
 
1148 
 
 tain our schools, asylums, homes, and other institutions, I 
 am willing to pay it. But I believe the State is going about 
 placing its hands in the pockets of some merchants 
 throughout the State of Pennsylvania for various sums 
 running from five, ten and twenty dollars, when they are 
 overlooking certain people that have obtained exclusive 
 privileges from the State, and could easily bear the burden 
 that the small men are called upon to bear. 
 
 Mr. Brown : You mean those with these exclusive privi- 
 leges are not paying their share today. They all say 
 they are. You would be surprised to read some of the 
 complaints filed. The small men demand a tax from every 
 man in the Commonwealth, and they would put them in 
 jail for not paying it. 
 
 Mr. Fluck : Mr. Brown, the position I am taking is 
 one that I have clearly set forth, and I am clearly trying 
 to set forth that you gentlemen are looking for places 
 to place burdens that other people object to. 
 
 Mr. Brown : As I understand you, your thought is those 
 with exclusive privileges should bear the burdens. Are 
 you figuring in that the element of convenience to the 
 public? If you didn't have a traction company in Phila- 
 delphia it would not amount to shucks. If you hadn't 
 the Ridge avenue line, a large portion of Philadelphia, for 
 instance, would be inaccessible. 
 
 Mr. Fluck: If we hadn't the Ridge avenue line we 
 would have had a better one long ago. 
 
 Mr. Brown: The higher you tax them, the more you 
 may have. Is that your idea? 
 
 Mr. Fluck : There are certain people to-day who are do- 
 ing nothing for the community. 
 
 Mr. McNichol: Have you knowledge to that effect? 
 
 Mr. Fluck : They exist as a corporation. 
 
 Mr. McNichol: Can you give us the corporation you 
 especially refer to? 
 
 Mr. Fluck : I will do it willingly. 
 
1149 
 
 Mr. McNichol: We will be glad to have you file your 
 proof. 
 
 Mr. Brown: Do you consider the mercantile tax as 
 bothersome to the merchants to-day? 
 Mr. Fluck: Undoubtedly. 
 
 Mr. Brown : Is it an element you fix in doing business, 
 and competition with others? 
 Mr. Fluck : No. 
 
 Mr. Brown: It is a diminutive tax, isn't it? 
 
 Mr. Fluck : Yes, it is so small it is bothersome. I, as a 
 small man, will say the mercantile tax I pay is, for in- 
 stance, twenty dollars a year. I don't object to paying 
 that. But when the State comes along and says they 
 want that twenty dollars from me when it is clear that 
 they do not absolutely need it, and if they do need it, 
 there are other sources of revenue where people have 
 gotten exclusive privileges from the State which I have 
 not, I feel like saying that that twenty dollars is unjustly 
 taken out of my pocket. 
 
 Mr. Brown : As a matter of fact, outside of the corpora- 
 tions which are exempted, there is no advantage in a cor- 
 poration except if suit is brought 
 
 Mr. Fluck : That is right. 
 
 Mr. Brown : Is it not so that a corporation offers no ad- 
 vantage to a man who goes into the corporation except 
 for his interest fixed by his shares of stock? 
 
 Mr. Fluck : Yes. 
 
 Mr. Brown : Is that any special advantage over the other 
 man in the same line of business? 
 Mr. Fluck : I won't argue that. 
 
 Mr. Brown: Do you consider a corporation any better 
 (being a corporation) than the individual who does the 
 same business? 
 
 Mr. Fluck : There is the advantage in the fact that he 
 is relieved from personal responsibility. 
 
1150 
 
 
 Mr. Brown : The officers are sued if it amounts to any- 
 thing ? 
 
 Mr. Fhick: I won't argue that. There are some cor- 
 porations in the State of Pennsylvania which have been 
 greatly benefited by the State. These stockholders have 
 been greatly benefited; they are enjoying exclusive 
 privileges which mean millions of dollars a year to 
 them. 
 
 Mr. McNichol : Don't you refer to fifty years ago? 
 
 Mr. Fluck: The conditions are so to-day. 
 
 Mr. McNichol : "Where are they now the conditions to 
 which you refer as to the Ridge avenue line? 
 
 Mr. Fluck : I am not asking this Commission to correct 
 the conditions, but I am suggesting to this Commission 
 that there are to-day in existence certain corporation 
 bodies which are enjoying exclusive privileges from the 
 State of Pennsylvania, and which, under the circum- 
 stances, I don't believe are bearing their share of the 
 burden. 
 
 Mr. Brown: I think it is true that Pennsylvania, with 
 possibly a few corrections here and there, is taxing its cor- 
 porations fairly considering the franchises. It is included 
 in the capital stock. The Pennsylvania Railroad pays a 
 tax, in the capital stock, of lour-fifths of 1 per cent, on 
 the gross receipts, and is locally taxed on its buildings. 
 What more tax would you put on them ? 
 
 Mr. Fluck : I must confine myself to the street railway 
 conditions, because I have not been able to get statistics 
 together to make argument except along these lines. 
 
 I am willing to state that the greater part of the revenue 
 comes from the tax on corporations. I have before me 
 the platform of the Republican party, the governing 
 party of Pennsylvania in the year 1909, which brings that 
 out very clearly. 
 
 Mr. Brown: The governing expenses of the State of 
 Pennsylvania are as low as any State in the Union. Do 
 you know that ? 
 
1151 
 
 Mr. Fluck : I am on this statement now, and that state- 
 ment is a good, strong statement. 
 
 Mr. McNichol : We want you to give us your views and 
 file your papers and we will take the matters up. When 
 it comes to a question of politics, we will adjourn from 
 this building and take up the matter in another room. 
 
 Mr. Fluck : I only wish to read this statement. 
 
 Mr. McNichol : We ask you to give your views and file 
 your papers and we will be glad to take them up. 
 
 Mr. Fluck: The mercantile tax represents one million 
 dollars, which represents one-twenty-eighth of the reve- 
 nue of the State of Pennsylvania at the present time, and 
 niy position is that the one-twenty-eighth of the revenue 
 of the State of Pennsylvania is placed upon people who 
 are getting no special consideration from the State and 
 should not be called upon to pay that tax. 
 
 Mr. Brown: Don't you get the same consideration from 
 the State that I would get if I had money at interest on 
 which I paid a tax. If I pay four mills two-fifths of 1 
 per cent, on my money at interest what more benefit 
 do I get than you? 
 
 Mr. Fluck: I am not talking about that. 
 
 Mr. Brown : You say you do not reap any benefit from 
 the State, and hence you should not pay a tax. 
 
 Mr. Fluck: Why should I pay this special tax which 
 is imposed upon me? Why should it be imposed upon 
 me? 
 
 Mr.. Brown: You get the united benefit which must be 
 figures in other men's individual efforts. A man living 
 on an island means nothing, but in the City of Philadel- 
 phia he has all manner of possibilities. That element 
 should be considered in systems of taxation. 
 
 Mr. Fluck: I am willing to pay for that element if I 
 am in a location which has great possibilities. My 
 place in which I do business is already taxed by the City 
 of Philadelphia. 
 
1152 
 
 Mr. McNichol: For which it gives you greater returns 
 than any other section of the country. Isn't that so, Mr. 
 Fluck? 
 
 Mr. Fluck: I believe, Mr. Chairman, that we have the 
 greatest city in the country. 
 
 Mr. McNichol : And you are glad to be in business here T 
 
 Mr. Fluck : I expect to stay here in business. 
 
 Mr. Brown : Does your business give a fair return, so 
 far as a small business is concerned? 
 
 Mr. Fluck : I have no complaint to make with the return 
 from my business; but I do complain that the State of 
 Pennsylvania comes to me and says to me, "We want you 
 to pay a tax," and I believe that it is an unjust tribute 
 that I am paying to the State of Pennsylvania. If 
 there are people who have received a great deal more 
 from the hands of the State than the small business man, 
 those people should be willing to bear the burden. 
 
 Mr. McNichol : What is your business ? 
 
 Mr. Fluck: The drug business. 
 
 Mr. McNichol: Can you tell us the volume of your 
 business for the year 1909? 
 
 Mr. Fluck : I will tell you privately. It is none of the 
 public's affairs. I would state that some of the argu- 
 ments that have been presented against the mercantile 
 tax were intended to demonstrate the extent of dishon- 
 esty. I don't know that anybody has ever been dishonest 
 m making a return of the volume of his business. I wil\ 
 say for myself, that when the mercantile assessors come 
 along, I carry my books out before them, and they have 
 the privilege of computing the columns for themselves; 
 and I believe the majority of the small merchants do the 
 same. If this Commission wants the volume of my busi- 
 ness, they can readily ascertain it at the office where my 
 returns are made. 
 
 No further questions by the Commission. 
 
1153 
 
 Mr. Brown : I believe we have with us Mr. Purvis, of the 
 Philadelphia Saving Fund. We would be pleased to hear 
 from him. 
 
 MR. G. COLESBERRY PURVIS, of the Philadelphia 
 Saving Fund. 
 
 Mr. Chairman and Gentlemen: I believe that every- 
 body should pay a tax. The only question is, how to 
 'make it fair, so as to have it fall in an equitable manner. 
 Therefore, I am not here to say anything against the tax 
 of the Philadelphia Saving Fund, although I represent 
 two hundred and seventy-two thousand of the wage earn- 
 ers of Philadelphia the working people who gather 
 together a large sum of money, averaging about four 
 hundred dollars apiece; and we pay a 3 per cent, tax on 
 the net earnings. 
 
 What I am here to say is that we are glad to pay that 
 tax, for we represent these wage earners. As I said 
 before, everyone should pay a tax, and I say that the tax 
 law should be as it stands today. 
 
 Mr. Brown: It has been suggested that the deposits 
 in your saving fund should pay a four mill tax. 
 
 Mr. Purvis : The answer to that is that the Legislature 
 at their last session repealed that tax for the very 
 reason that it was unjust they relieved us of that tax. 
 We pay this one tax, now, of 3 per cent. 
 
 Mr. Brown : Why should the depositor in your institu- 
 tion who received interest be exempted from the pay- 
 ment of a tax on that interest, when the depositor in some 
 other institution of another character has to pay a tax 
 on the moneys which he has at interest? 
 
 Mr. Purvis : This is a tax on savings. In reference to 
 that, if you take the Act of Assembly literally, it would 
 apply to all deposits of savings funds, banks, trust com- 
 53 
 
1154 
 
 panies and banks of every form; but there has been, 
 from the time of the enactment of that Act, the consensus 
 of opinion that the Legislature did not intend to include 
 money that was moved backward and forward, that was 
 here today and tomorrow might be drawn out. In review- 
 ing that law, Mr. Eastman, in his tax book, says that 
 while it is within the letter of the law, he does not believe 
 it was intended by the Legislature, and, consequently, I 
 may add here, there are very few returned. 
 
 Mr. Brown: Why shouldn't they be returned? 
 
 Mr. Purvis : Suppose we give the return of tax, and the* 
 next day they draw it out then it is not paid until the 
 following August? 
 
 Mr. Brown: Suppose the treasurer of your institution 
 pays tha tax based on the average deposits. Thai is, you 
 pay the interest on the deposits, and then take it from the 
 depositors again. 
 
 Mr. Purvis: That is just the tax that the Legislature 
 has removed from us. 
 
 Mr. Brown: I am asking now why, in justice to all 
 who are not depositors and who pay taxes, you should 
 be exempted? 
 
 Mr. Purvis: For the reason that we pay one tax of 3 
 per cent. 
 
 Mr. Brown: You pay that tax? 
 
 Mr. Purvis : Yes. 
 
 Mr. Brown: As an incorporated society, you pay that? 
 
 Mr. Purvis: Now, you take the annual savings banks; 
 with a tax of 1 per cent, on the surplus, I don't think 
 that would be as good as the 3 per cent, on the net earn- 
 ings, because there is the investment, and it might not be 
 the surplus that it ought to be applied to. Then you 
 take, as was suggested in your circular suppose you put 
 a tax on the assets. You must recollect that the great 
 bulk of our assets are composed of bonds, on which the 
 corporation has already paid a tax, so that you would 
 
1155 
 
 be imposing another tax again when they are considered 
 as assets of the savings bank. 
 
 There are only nine savings banks without capital 
 stock. We pay the depositors' tax and expenses and all 
 the rest; whatever is over goes to surplus and deposits. 
 There are only nine savings banks in Pennsylvania with- 
 out capital stock, which represent, in the City of Phila- 
 delphia, over three hundred and fifty thousand of the 
 wage earners that means about one-quarter of the pop- 
 ulation represented by the depositors. 
 
 Mr. Brown : What do the deposits amount to ? 
 
 Mr. Purvis: One hundred and eighty-seven millions in 
 the whole State. They are subject to this 3 per cent. tax. 
 Now, what I suggest is that the tax as it stands is a 
 perfectly just and right one ; and the wage earners, whom 
 we represent, are taxed as high as working people ought 
 to be. 
 
 Mr. Brown: Mr. Purvis, what is your thought on the 
 income tax? 
 
 Mr. Purvis : An income tax, I think, if it could be fairly 
 taxed, is the fairest tax in the world. 
 
 Mr. Brown: By the Federal Government or reserved 
 by the State? 
 
 Mr. Purvis : I think it should be reserved for the State. 
 There is a reason. I think the present tax on the cor- 
 porations is the proper tax for the Federal Government. 
 A corporation is a modern institution in which you have 
 gathered together the stockholders from whom you get 
 the income tax, and those are the ones who can afford 
 to pay it. It seems to me that when you tax a corpora- 
 tion, or the stockholders, you have gotten at it in the 
 fairest way. 
 
 Mr. Brown : What is your thought on the direct inheri- 
 tance tax, Mr. Purvis? 
 
 Mr. Purvis: I would exempt small estates if it could 
 legally be done. Then have a trifling tax regulated as 
 
1156 
 
 the estate increased in amount. I see no reason why it 
 could not be done. 
 
 Mr. McNichol: What would you call a small estate, 
 Mr. Purvis? 
 
 Mr. Purvis: I would say I would not tax anything un- 
 der ten thousand dollars. 
 
 Mr. McNichol: How about ten thousand dollars for a 
 man with four, five or six children? 
 
 Mr. Purvis: I would raise it. 
 
 Mr. McNichol : In other words, you would exempt large 
 families. 
 
 Mr. Purvis: I would if it could be legally done. I 
 think everyone should bear his burden according to his 
 ability. 
 
 Mr. McNichol: How about the State providing a 
 bounty for the raising of children? It would give a de- 
 served measure of relief to those who are doing their 
 duty to the State and society generally. 
 
 Mr. Brown : I see no reason why that suggestion should 
 not be adopted, Mr. Chairman. Mr. Dooley says the 
 State taxes dogs, and he sees no reason why bachelors 
 should not be taxed. 
 
 Mr. McNichol: I believe in people going along and en- 
 joying the pleasures of life, and where a man has a cer- 
 tain amount of money distributed between too many 
 people, there would not be much in it for any one of them. 
 
 Mr. Purvis : There is another thought I want to throw 
 out, which, I suppose, would not be met with favor, and 
 yet, at the same time, it would count, I think. We tax 
 in the collateral inheritance tax, 5 per cent on all legacies. 
 Wouldn't it encourage legacies to hospitals and homes if 
 they were made free from the collateral tax? We tax 
 these legacies, and yet they are all in relief of the State. 
 They are all in aid of the State, and the State taxes them. 
 All these moneys go to support and build up things that 
 
1157 
 
 the State would otherwise have to build and maintain. If 
 it was freed from that, wouldn't it encourage legacies? 
 
 Mr. Brown: "We have a brief on that subject, Mr. 
 Purvis. 
 
 No further questions by the Commission. 
 
 Mr. McNichol: It is the desire of the Commission at 
 this time to have lunch. If there are any gentlemen who 
 desire to be heard, we shall be glad to return this after- 
 noon for that purpose. 
 
 Mr. Brown: Well, Mr. Chairman, there are quite a 
 number to be heard. 
 
 Mr. McNichol: "We will then adjourn until two-thirty 
 this afternoon. 
 
 ADJOURNED AT ONE-THIRTY P. M. 
 
INDEX TO REPORT. 
 
 Amendments to Constitution. PAGE. 
 
 Graded inheritance taxes 150 
 
 Income tax (Federal) 228 
 
 State debt for roads 130 
 
 Anthracite coal tax 161 
 
 Substitution for local taxes 162 
 
 Act 165 
 
 Notes 166 
 
 Appeals from tax settlements 214 
 
 Act 216 
 
 Appropriations to charitable institutions 45 
 
 (See CHAEITABLE INSTITUTIONS.) 
 Artificial gas companies. 
 
 Tax on capital stock 180 
 
 Act 181 
 
 Tax on gross receipts 181 
 
 Act 183 
 
 Attorney General, suggestions by 230 
 
 Auditor General. 
 
 Appeals from tax settlements 214 
 
 Act 216 
 
 Board of Revision of Taxes in Philadelphia, appoint- 
 ment by 205 
 
 Act 206 
 
 Note to Act 208 
 
 Clerks, additional 201 
 
 Act 209 
 
 Corporation taxes, collection of 201, 214 
 
 Corporations not for profit 191 
 
 Investigation, additional powers of 202 
 
 Lien of State taxes in his office 232 
 
 Escheats, additional powers of investigation 220 
 
 Personal property tax. 
 
 Collection of, by Auditor General 201, 203 
 
 Acts 209, 212 
 
 Notes 210 
 
1160 INDEX. 
 
 Personal property tax Continued. PAGE. 
 
 Centralization of assessment under Auditor 
 
 General 194, 201 
 
 Suit f o'r by Auditor General 203 
 
 Act 212 
 
 Recommendations of 232 
 
 Reports to 214, 215, 218 
 
 Uniformity of 218 
 
 Act 219 
 
 More detailed reports to be required 214 
 
 Act 216 
 
 Stock transfer tax suggested by 232 
 
 Automobile tax 156 
 
 Act 157 
 
 Bar Association, Pennsylvania. 
 
 Committee on Revision of Statutes 12 
 
 Bituminous coal 164 
 
 Conference of States with regard to 164 
 
 Board of Public Charities. 
 
 Abolition of 100 
 
 Present work of 99 
 
 Recommendations of 97 
 
 Statistics furnished by 59 
 
 Board of Revision of Taxes in Philadelphia. 
 
 Appointment by) Auditor General 203 
 
 Building Commissions abolished 99 
 
 Acts 101 
 
 Census, by State 235 
 
 Charitable Institutions 45 
 
 Act providing lien of appropriation for construction. . . 5? 
 
 Act creating Department 99 
 
 Acts transferring completion of to Department 101 
 
 Appropriations to 45, 54 
 
 Construction 56 
 
 Table of appropriations for 69 
 
 Lien of appropriations for 56 
 
 Act 57 
 
 Defects of present system 52 
 
 Method of making 54 
 
 Methods of other States 48 
 
 Recommendations as to method 95 
 
 Tables of 46, 55, 59 
 
 Beds occupied, tables 80 
 
 Department of State Charitable Institutions 93, 99 
 
INDEX. 1161 
 
 Charitable Institutions Continued. PAGE. 
 
 Free treatment. 
 
 Cost of 59 
 
 Methods of determining 93 
 
 Table 59 
 
 Dispensary 93 
 
 History of 48 
 
 Local sick poor, aid of 95 
 
 Patients treated, tables 80 
 
 Eeal estate of, tables 80 
 
 State institutions 95 
 
 Coal. 
 
 Anthracite 161 
 
 Bituminous 164 
 
 Conference of States with regard to 164 
 
 Collection of revenue 191 
 
 Conference, State conference on taxation 208 
 
 Conference with Ohio, Maryland and West Virginia on oil, 
 
 gas and bituminous coal 164 
 
 Continuation of work of Committee 13, 205 
 
 Corporation Laws 11, 191 
 
 Uniform Business Corporation Law 12 
 
 Corporations not for profit. 
 
 Report by Prothonotary to Auditor General 191 
 
 Act 193 
 
 Department of State Charitable Institutions 93, 99 
 
 Act creating 105 
 
 Acts transferring duties of Building Commissions to.. 101 
 
 Departments of State Government. 
 
 Suggestions by 230 
 
 Deposits in bank, collection of tax on 196 
 
 Erie, meeting at 7 
 
 Escheats 220 
 
 Acts 209, 221, 225 
 
 Notes 224 
 
 Expenditures of State generally 45 
 
 Necessity of increased expenditures 127 
 
 Pamphlet Laws, printing of 226 
 
 Act 227 
 
 Table of 132 
 
 Factory Inspector, suggestions by 234 
 
 Fisheries, Department of, suggestions by 234 
 
1162 INDEX. 
 
 PAGE. 
 
 Foreign corporations 14 
 
 Act regulating- generally 14, 16 
 
 Notes 27 
 
 Act validating contracts 15, 17, 36 
 
 Notes 36 
 
 Act revising law regulating holding of real estate 36 
 
 Agents of 16, 17 
 
 Contracts of 15, 17, 36 
 
 Definition of 19 
 
 Federal Courts, resort to by foreign corporations. .16, 19 
 
 Jurisdiction over 17, 19 
 
 Real estate held by 15, 18, 36 
 
 Registration of 16 
 
 Eepeal of Acts relating to 20 
 
 Service of process on 17 
 
 Forestry, Department of, suggestions by 234 
 
 Gas , 164 
 
 See ARTIFICIAL GAS COMPANIES 180 
 
 Conference of States with regard to 164 
 
 Grange, Pennsylvania State, requests of 131, 178, 200 
 
 Highways (see ROADS) 127 
 
 Income tax, amendment to Federal Constitution 228 
 
 Inheritance Tax. 
 
 Act laying direct tax 141 
 
 Act exempting charities 150 
 
 Charity, Act exempting 140, 150 
 
 Comparison with other States 134 
 
 Constitutional amendment 136 
 
 Resolution for 150 
 
 Direct 133 
 
 Exemptions 136, 140 
 
 Grading 136 
 
 Constitutional amendment for 150 
 
 History 133 
 
 Resolution to amend Constitution 150 
 
 Table of 152 
 
 Insurance Commissioner, suggestions by 234 
 
 Insurance Companies. 
 
 Surplus and reserves 176 
 
 Act 170 
 
 Tax on premiums 169 
 
 International Tax Reform Association 10, 209 
 
 Letters sent by Committee 3, 9 
 
INDEX. 1163 
 
 PAGE. 
 
 Lien of State corporation taxes 231 
 
 Act 232 
 
 Lunacy, Committee on, abolition of 100 
 
 Manufacturing Companies. 
 
 Tax on capital stock 178 
 
 Act 181 
 
 Meetings, public, held by Committee 6 
 
 Mercantile licenses 167 
 
 Advertising of 168 
 
 Act 168 
 
 Mines, Department of, suggestions by 235 
 
 National Civic Federation 209 
 
 Oil 164 
 
 Conference of States with regard to 164 
 
 Pamphlet Laws, expense of printing 226 
 
 Act 227 
 
 Personal property tax. 
 
 Act authorizing suit for 212 
 
 Act empowering Auditor General to investigate 209 
 
 Act regulating Board of Eevision in Philadelphia 205 
 
 Note 210 
 
 Act repealing exemption of savings institutions 176 
 
 Act requiring school districts to report 193 
 
 Board of Revision of Taxes in Philadelphia 205 
 
 Centralization of assessment and collection 194, 201 
 
 Collection of, generally 195, 232 
 
 Deposits in bank, collection of tax on 196 
 
 Evasion of 195, 199, 204 
 
 Exemptions from. 
 
 Savings institutions 175 
 
 Small estates 140 
 
 Rate, change of 197 
 
 School districts, collection by 192, 193 
 
 Success of Pennsylvania methods 195 
 
 Suits for 203 
 
 (See AUDITOR GENERAL) 
 
 Philadelphia, meeting at 6 
 
 Pittsburgh, meetings at 6, 9 
 
 Premiums of insurance, tax on 169 
 
 Provident Life and Trust Co., attempt to tax 179 
 
 Public Service Corporations. 
 
 Tax on real estate 187 
 
 Act 188 
 
 Notes . 189 
 
1164 INDEX. 
 
 PAGE. 
 
 Railroad Commissioners, suggestions by 234 
 
 Report of Committee to Governor 2 
 
 Reports to Auditor General, uniform 218 
 
 Act 219 
 
 Note 219 
 
 Resolution constituting Joint Committee 1 
 
 Revenue laws generally 44 
 
 Revision of statute law 12 
 
 Roads 127 
 
 Automobile tax applied to 157 
 
 Expenditures of other States 127, 136 
 
 Mileage of improved roads, table 128 
 
 State debt for improved roads, amendment to Consti- 
 tution 130 
 
 Savings Institutions. 
 
 Exemption from four mills tax 175 
 
 Act repealing exemption 176 
 
 School districts. 
 
 Collection of four mills tax by Treasurers of 192 
 
 Act 193 
 
 Schools, expenditures for 131 
 
 Scranton, meeting at 7 
 
 Secretary of Agriculture, suggestions by 234 
 
 Secretary of the Commonwealth, suggestions by 234 
 
 State Charitable Institutions 95 
 
 Acts transferring completion to Department of State 
 
 Charitable Institutions 101 
 
 Amounts necessary to complete 132 
 
 Appropriations, lack of 96 
 
 Department of (see DEPABTMENT OF STATE C HABITABLE 
 INSTITUTIONS). 
 
 New institutions needed 98 
 
 Stock transfer tax 232 
 
 Subjects of taxation 133 
 
 Tables. 
 
 Appropriations to charity 46 
 
 Charitable institutions 59 
 
 Inheritance taxes 152 
 
 Mileage of improved roads 128 
 
 Taxation, change of subjects of 133 
 
 Timber, exemption from taxation 163 
 
 Transfer companies, tax on gross receipts 172 
 
 Act 172 
 
 Williamsport, meeting at 6 
 
INDEX TO TESTIMONY. 
 
 PAGE. 
 
 Albright, Haines D 516 
 
 Allegheny County Bar Association, Pittsburgh 649 
 
 Allegheny County Laundrymen's Association 797 
 
 Allegheny General Hospital, Pittsburgh 750 
 
 Allen, George 549 
 
 Alexander, Dr. Maitland 750 
 
 American Fire Insurance Co 1040 
 
 Association of Life Insurance Presidents 571 
 
 Baldy, Dr. J. M 371 
 
 Barber, P. J 863, 909 
 
 Barnes, John Hampton 617 
 
 Barney, Charles D 282, 327 
 
 Bartow, Henry B 520 
 
 Beath, Eobert B 1037 
 
 Beaver, James A 696 
 
 Bertolet, Wellington M 1132 
 
 Black, Samuel W 736, 749 
 
 Blewitt, Senator Edw. F 937 
 
 Board of Assessment and Revision of Taxes, Pittsburgh . . . 660 
 
 Board of Associated Charities, Scranton 919, 926 
 
 .board of Mercantile Appraisers, Philadelphia 998 
 
 Board of Revision of Taxes, Philadelphia 498 
 
 Bodine, Samuel T 1032 
 
 Boyle, Patrick C 773 
 
 Brown, C. E 784 
 
 Brown, Major 878 
 
 Brown, Wilson H 581 
 
 Bucks County Commissioners 543 
 
 Bucks County Treasurer 542 
 
 Cadwalader John 314 
 
 Cadwallader, W 543 
 
 Callin, W. W. (U. S. Express Co.) 1028 
 
 Canfield, A. C 797 
 
 Carrol, Mortimer F 1016 
 
 Cattell, Henry W 335 
 
 Caven, Frank H . . 553 
 
1166 INDEX. 
 
 PAGE. 
 
 Cessna, Judge J. B 875 
 
 Chalf ant, George L 727 
 
 Chamber of Commerce, Pittsburgh 801 
 
 Children's Aid Society, Philadelphia 378 
 
 City Solicitor, Pittsburgh 784 
 
 Clearing House, Philadelphia 1 12 1 
 
 Clement, Samuel M., Jr 396 
 
 Cochran, Acting Mayor 909 
 
 Continental Title and Trust Co 1054 
 
 Cornell, William W 542 
 
 County Commissioners, Berks County 456 
 
 County Commissioners, Bucks County 543 
 
 County Commissioners, Delaware County 486. 549 
 
 County Commissioners, Montgomery County 473, 484 
 
 County Commissioners, Lackawanna County 942 
 
 Creasy, William T 803, 835, 847, 848 
 
 Crocker, Judge W. B 855 
 
 Dallem, David E 553, 586, 587, 988 
 
 Daly, T. M 1054 
 
 Davenport, Mr 892, 894 
 
 Dennison, Judge A. W 836, 843, 844 
 
 Desmond, J. J 883 
 
 Develin, James Aylward 1063 
 
 Dickson, Samuel 1121 
 
 Diehl, Samuel G 564 
 
 Drexel & Co 1121 
 
 Edgar, Mark K 911 
 
 Edwards, Judge, Scranton 929 
 
 Ellwood Lee Manf ' g Co 980 
 
 Emergency Hospital, Scranton 912 
 
 Episcopal Hospital, Philadelphia 353 
 
 Erie City Iron Works 895 
 
 Erie City Treasurer 873 
 
 Erie County Commissioners 888 
 
 Erie County Solicitor 904 
 
 Erie Lithographing Co 863 
 
 Erie Manufacturers' Association 892 
 
 Erie, Mayor 909 
 
 Erie Railroad Company 1084 
 
 Eschlemann, H. Frank 430, 459, 464 
 
 Etting, Theodore M 378 
 
 Farmers' and Mechanics' Bank, Philadelphia 520 
 
 Federal Furnace League 589* 
 
INDEX. 
 
 1167 
 
 PAGE. 
 
 Fidelity Mutual Life Insurance Co., Philadelphia 571 
 
 Fidelity Trust Co., Philadelphia. 1042 
 
 Fleitz, F. W 945, 958, 959 
 
 Flick, Dr. Lawrence 297 
 
 Fluck, Charles L 1143 
 
 Fourth Street National Bank, Philadelphia 1121 
 
 Fouse, L. G 571 
 
 Frederick Douglass Memorial Hospital, Philadelphia 416 
 
 Garrett, George S 1027 
 
 Garwaite, Robert A 980 
 
 George, W. D 779 
 
 Germantown Business Men's Ass'n, Philadelphia 1128 
 
 Gest, William 1042 
 
 Girard Trust Co., Philadelphia 617, 1046 
 
 Gratz, Simon 489 
 
 Griswold. Marvin 871 
 
 uriswold Manf ' g Co 871 
 
 Gynecean Hospital, Philadelphia 371 
 
 Hackenburg, William B 328 
 
 Hagginbotham, William M 470 
 
 Hahnemann Hospital, Philadelphia 282. 323 
 
 Hardy, R. J 782 
 
 Harrison, Dr. Charles C 260 
 
 Heckert, H. F 735 
 
 Hensel, W. U 1061 
 
 Himrod, Ray 892 
 
 Home for Friendless Children, Scranton 919 
 
 Homoaopathic Hospital, Pittsburgh 686 
 
 House of Refuge. Philadelphia 358 
 
 Huey, William A 1097 
 
 Imbrie, A. M 649 
 
 Israel, Rev. Rogers 926 
 
 Jackson, John J 733 
 
 Jefferson Hospital, Philadelphia 276 
 
 Jewish Hospital, Philadelphia. 328 
 
 Johnson, John G ' 1140 
 
 Jones, S. S 912 
 
 Jones & Loughlin 730 
 
 Keil, H. S 730 
 
 Keller, W. H 1061, 1074 
 
 Kelly, N. B 1102 
 
1168 INDEX. 
 
 PAGE. 
 
 Kendrick, Murdock 998 
 
 Kenny, John F 486 
 
 Kingsley, William H 1065 
 
 Klein, M 859 
 
 Knapp, Judge Henry A 919, 935 
 
 Krewson, James 473 
 
 Lacey, Mrs A. C 369 
 
 Lackawanna County Commissioners 942 
 
 Lancaster Trust Co., Lancaster 1061, 1062 
 
 Learn, Harry L 1076 
 
 Lehigh Valley Railroad Co 1028 
 
 Lewis, Francis A 353 
 
 Lewis, John T., Jr 365 
 
 Lippert, Dr. M. G 423 
 
 Logan, Col. Albert J 752 
 
 Logan, George B 757 
 
 Lord, H. V. S 1085 
 
 McKnight, Samuel L 1086 
 
 McLaren, M. (State Grange) 850 
 
 MacLaughlin, Dr. George W 411 
 
 McClintock, Oliver 685 
 
 McConnick, Samuel B 635 
 
 McFadden, Mr., University of Pennsylvania, Philadelphia.. 274 
 
 McNair, William N 782 
 
 McSparren, James 804 
 
 McSparren, John A 827 
 
 Magee, William A., Mayor Pittsburgh 739 
 
 Manufacturers' Association of Erie, Pa 892 
 
 Manufacturers' Association, Montgomery Co 970 
 
 Manufacturers' Club, Philadelphia 581 
 
 Mattern, William, Reading, Pa 456, 461, 464 
 
 Mayor of Erie, Pa 869 
 
 Medical Notes and Queries, Philadelphia 335 
 
 Medico-Chirurgical Hospital, Philadelphia 286 
 
 Meetings. 
 
 Philadelphia, Jan. 28, 1910 239 
 
 Philadelphia, Feb. 4, 1910 378 
 
 Philadelphia, Feb. 18, 1910 489 
 
 Philadelphia, Feb. 25, 1910 553 
 
 Pittsburgh, March 24, 1910 622 
 
 Pittsburgh, March 25, 1910 696 
 
 Pittsburgh, March 26, 1910 784 
 
 Williamsport, April 8, 1910 803 
 
INDEX. 
 
 1169 
 
 PAGE. 
 
 Erie, April 15, 1910 863 
 
 Scranton, April 16, 1910 911 
 
 Philadelphia, May 13, 1910 961 
 
 Philadelphia, October 4, 1910 1019 
 
 Philadelphia, October 5, 1910 1085 
 
 Mercantile Appraisers, Philadelphia 998 
 
 Mercy Hospital, Pittsburgh 680 
 
 Miller, W. S 722 
 
 Montgomery County Treasurer 470 
 
 Montgomery County Commissioners 473, 484 
 
 Moon, Dr. Robert C 426 
 
 Moore, Edward C 895 
 
 Morrow, Eustace S 776 
 
 Mortgage Trust Co., Philadelphia 1063 
 
 Moscrip, George 821, 847 
 
 Mossell, Dr. N. F 416 
 
 Moyer, Dr. (Mercy Hospital, Pittsburgh) 680 
 
 Nichols, H. S. P 1021 
 
 Nolan, James 363 
 
 iNorthwest Business Men's Ass'n, Philadelphia 1143 
 
 Old Ladies' Home, Philadelphia 369 
 
 Page, Edward Sydenham 1046 
 
 Patterson, C. Stuart 597, 1117 
 
 Penn Mutual Life Insurance Co 1065 
 
 Pennsylvania Home Teaching Society for the Blind, Phila. . 426 
 
 Pennsylvania Hospital, Philadelphia 365 
 
 Pennsylvania Institution for the Instruction of the Blind, 
 
 Overbrook 314 
 
 Pennsylvania Lines West of Pittsburgh 691 
 
 Pennsylvania Manufacturers' Association 961, 962, 970 
 
 Pennsylvania Railroad Co 1021 
 
 Pennsylvania Retail Coal Merchants' Association 1132 
 
 Pennsylvania Seamen's Friend Society, Philadelphia 411 
 
 Pennsylvania State College 696 
 
 Pennsylvania State Grange 803 
 
 Pennsylvania Tax Reform Association 516 
 
 People's Trust Co., Lancaster 1074 
 
 Philadelphia Chamber of Commerce 1102 
 
 Philadelphia Clearing House 1121 
 
 Philadelphia Commercial Exchange 1086 
 
 Philadelphia Drug Exchange 1107 
 
 Philadelphia and Reading Coal and Iron Co 1027 
 
1170 INDEX. 
 
 PAGE. 
 
 Philadelphia and Reading Railway Co 1025 
 
 Philadelphia Board of Revision of Taxes 498 
 
 Philadelphia Museums 404 
 
 Philadelphia Real Estate Brokers' Association 553 
 
 Philadelphia Saving Fund Society 607, 1153 
 
 Phoenixville Hospital, Phoenixville 423 
 
 Pinney, City Treasurer 873 
 
 Pittsburgh Board of Assessment and Revision of Taxes. . . . 660 
 
 Pittsburgh Board of Trade 722, 727 
 
 Pittsburgh Chamber of Commerce 801 
 
 Pittsburgh City Solicitor 784 
 
 Pittsburgh Controller 778 
 
 Pittsburgh Mayor 739 
 
 Pittsburgh Real Estate Dealers 736 
 
 dorter, Clarence E 1040 
 
 Postal Telegraph Co 1070 
 
 Potter, William 276 
 
 Presbyterian Hospital, Pittsburgh 757 
 
 Private Bankers' Association, Philadelphia 613 
 
 Prixer, Charles S 589 
 
 Public Meetings. 
 
 Philadelphia, Jan. 28, 1910 239 
 
 Philadelphia, Feb. 4, 1910 378 
 
 Philadelphia, Feb. 18, 1910 489 
 
 Philadelphia, Feb. 25, 1910 553 
 
 Pittsburgh, March 24, 1910 622 
 
 Pittsburgh, March 25, 1910 696 
 
 Pittsburgh, March 26, 1910 784 
 
 Williamsport, April 8, 1910 803 
 
 Erie, April 15, 1910 863 
 
 Scranton, April 16, 1910 911 
 
 Philadelphia, May 13, 1910 961 
 
 Philadelphia, October 4, 1910 1019 
 
 Philadelphia, October 5, 1910 1085 
 
 Purvis, G. Colesberry 1153 
 
 Rambo, Joseph S 970 
 
 Ransley, H. C ' 1002 
 
 Real Estate Brokers' Association, Philadelphia 553, 988 
 
 Real Estate Dealers, Pittsburgh 736 
 
 Reed Manufacturing Co., Erie 894 
 
 Rhone, Leonard 804, 809 
 
 Roberts, Samuel 962 
 
 Robinson, J. A 888 
 
INDEX. 1171 
 
 PAGE. 
 
 Rosengarten, Joseph G 358, 1140 
 
 Ryder, Mr 856 
 
 Saint Francis' Hospital, Pittsburgh 735 
 
 Saint Joseph's Hospital, Reading, Pa 363 
 
 Saylor, Adams F 484 
 
 Shamokin Trust Co 1076 
 
 Schaperkotter, J. F 1028 
 
 Scott, Samuel B 1128 
 
 Scranton Board of Trade 911 
 
 Scranton County Commissioners 943 
 
 Scranton Street Railway Co 957 
 
 Seabrook, Dr. Alice M 350 
 
 Seller, Ernest, McKees Rocks, Pa 782 
 
 Shattuck, Frank R 1070 
 
 Shoemaker, Clayton F 1107 
 
 Shoemaker, Harry J 961 
 
 Singer, Walter C 1084 
 
 Single Tax Society of Pennsylvania 624 
 
 Sisson, Hon. A. E 863 
 
 Smith, Edgar F., University of Pennsylvania, Philadelphia. . 271 
 
 Smith, E. Z 660 
 
 Smith, Lee S 801 
 
 Snyder, Dr. O. J 311 
 
 Sparks, Dr. Edwin E 719 
 
 State Board of Charities 244, 761, 773 
 
 State College 696, 719 
 
 Stephens, Frank 624, 648 
 
 Stevenson, George 613 
 
 Stewart, D. J 686 
 
 Strawbridge, Dr. George 489 
 
 Taylor, W. R 1025 
 
 Tax Reform Association of Pennsylvania 516 
 
 Temple College, Philadelphia 396 
 
 Thomas, J. C 904 
 
 Tingley, C. L. S 957 
 
 Torrence, Francis J 761 
 
 Tustin, Ernest L 323 
 
 United Firemen's Insurance Co., Philadelphia 1037 
 
 United Gas Improvement Co., Philadelphia 1032 
 
 United States Express Co 1028 
 
 University of Pennsylvania, Philadelphia 260, 271, 274 
 
 University of Pittsburgh 635 
 
 Urquhart, George C 691 
 
1172 INDEX. 
 
 PAGE. 
 
 Van Gleet, Mr 902 
 
 Van Valkenburg, F. A 1009 
 
 Walton, Henry F 286 
 
 Warner, George 1092 
 
 West Penn Hospital, Pittsburgh 752 
 
 Western Savings Fund Society, Philadelphia 597, 1117 
 
 Western Union Telegraph Co 1078 
 
 West Side Hospital Association, Scranton 929 
 
 Westinghouse Interests, Pittsburgh 733 
 
 Wharton, Bromley 244 
 
 White Haven Sanitorium 297 
 
 Whitney, Francis S 1078 
 
 Witt, Peter 778 
 
 Wilcox, J. M 607 
 
 Wilson, Dr. W. P 404 
 
 Women's Hospital, Philadelphia 350 
 
 Wright, P. D 894 
 

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