rfX. .■' 
 
 UC-NRLF 
 
 B M bfl3 ^27 
 
 fAXATION 
 
 IN 
 
 NEW YORK STATE 
 
 BIDWELL 
 
J 
 
TAXATION 
 
 IN 
 
 NEW YORK STATE 
 
 BY 
 
 FREDERICK DAVID BIDWELL 
 ALBANY, NEW YORK 
 
 ALBANY 
 
 J. B, LYON COMPANY, PRINTERS 
 
 1918 
 
\\' 
 
 •^ 
 
 -5>^ 
 
 Entered according to Act of Congress in year 191 8 by 
 
 FREDERICK DAVID BIDWELL 
 
 In the office of the Librarian of Congress, at Washington, D. C. 
 
TAXATION IN NEW YORK STATE 
 
 CHAPTER I 
 COLONIAL TAXATION 
 
 Taxation in New York is unintelligible unless it is 
 correlated with the revenues and expenditures of the 
 government. A study of the revenue system in this 
 State from the earliest days, when it was a Dutch 
 colony, downi to the present time discloses how much, 
 and at times, all the revenue was derived from 
 indirect sources. 
 
 As the Dutch colony, New Netherland, the colonial 
 revenue was nearly exclusively derived from two 
 sources, from duties and from excise. In 1650, accord- 
 ing to Secretary Cornelius Van Tienhoven, the revenue 
 of the colony was derived from an eight per cent export 
 duty on beaver skins; an excise on beer of $1.20 (three 
 guilders) per tun, which was first imposed in 1644; 
 and an excise on wine of two cents (one stiver) per 
 can, which was first imposed in 1647. 
 
 In looking to their mother country for models of 
 tax forms to introduce into their American posses- 
 sions the Dutch settlers found numerous types of 
 indirect taxes to choose from, but no tax that bore any 
 resemblance to a general property tax. Every form 
 of indirect taxes had been developed by the Dutch 
 to carry on their war of independence. The importa- 
 tion and consumption of wine, beer and liquor was 
 heavily taxed after about 1580. Also many articles 
 of luxury as well as necessity were taxed either by an 
 import or an excise duty. Direct taxes did not play 
 an important role in Holland during this period. 
 
 [8] 
 
4''cc i''l yl'r,c \' .; Taction in New York 
 
 The State government by raising most of its 
 revenues to-day thru indirect taxes is going back to 
 the custom existing here during the Dutch occupancy. 
 According to the custom in Holland the revenues of 
 New Amsterdam were farmed out. Thus the burgher 
 and tapper excise was farmed out to the highest bid- 
 der at public auction. The burgher excise on liquors 
 w^as granted the city magistrates in 1654. It appears 
 to have been a tax on liquors bought directly from 
 the maker or wholesale dealer for private use, as dis- 
 tinguished from the tax on liquors handled by taj)- 
 sters. The rate was twenty stivers per tun of strong 
 beer, six stivers per tun of small beer, and thirty 
 stivers per anker of wine or distilled liquor. In 1659 
 the city excise brought in $1,400 (3510 guilders). The 
 city slaughter house was another source of revenue. 
 In'l656 this brought in $280 (710 Carolus guilders), 
 ; the farmer who paid this sum, receiving in return 
 five per cent of the value of all slaughtered cattle. 
 All persons slaughtering oxen, cows, calves and sheep 
 for private consmnption were to give notice to the 
 slaughter house fanner, procure a permit from him 
 and pay him his legal fee. 
 
 The city chest of New Amsterdam remained so 
 
 chronically empty that the city magistrates were often 
 
 driven tobeg the Dutch West India Company for 
 
 their salaries. Fees of notaries, secretaries, clerks 
 
 and similar officials, were in 1658 fixed by law. There 
 
 were dues for marking measures and barrels, wharf- 
 
 I age charges and special taxes of uniform amount on 
 
 I each household, for the rudimentary fire protection 
 
 and night watch. A fine of $10.00 (25 guilders) was 
 
 imposed for neglect to sweep a chimney in case it 
 
 i caught fire. Court fines were to be divided, one-third 
 
 I to the city, one-third to the officer, one-sixth to the 
 
 church and one-sixth to the poor. There was a fine 
 
 for tardiness and absence from the meeting of the 
 
 schout, burgomeisters and schepens. 
 
Colonial. Taxation 5 
 
 A more efficient fire protection was undertaken 
 between 1657 and 1658. Unpaid fire wardens had 
 long existed, Avhose duties it was to inspect fireplaces 
 and chimneys. It was now determined to purchase 
 fire ladders, hooks and buckets. For defraying the 
 original cost of these a tax of one beaver or eight 
 florins was levied. The city was also authorized to 
 collect annually, for maintaining the apparatus, one i 
 florin for each chimney. . In 1661 the honest city 
 fathers called the attention of Peter Stuyvesant, the. 
 director general of the colony, to the inequality of this] 
 tax, since the rich often had several fireplaces con-| 
 nected with one chimney, and the amount was accord- 
 ingly ordered to be levied upon each fireplace. It 
 was also provided that tenants of houses might deduct 
 half of this tax from the rent paid to the owner. 
 
 The city treasury derived a considerable smn of 
 money annually from the sale of the '' groote borger- 
 recht " and *' kligne " or '' porterrecht ". As early 
 as 1648 complaints were made by the resident mer- 
 chants of New Amsterdam that they were much har- 
 rassed by the competition of itinerant merchants, 
 coming especially from New England and settling 
 only for a short time in the town. In order to put a 
 stop to this sort of competition foreign traders were 
 compelled to set up and maintain an open store in 
 New Amsterdam, and to procure from the authorities 
 the lesser right of citizenship, known as the " kligne " 
 or " porterrecht ", to enable them to trade in the 
 town. This cost $8.00 or twenty guilders. By paying 
 $20.00 or fifty guilders the greater right of citizenship, 
 known as the '' groote borgerrecht ", could be pro- 
 cured. This qualified the holder for any city office 
 and among other privileges gave him freedom from 
 arrest by a subaltern officer. Two hundred and nine 
 persons bought the lesser right of citizenship, and 
 twenty the greater right of citizenship within two 
 months after the publication of this law. 
 
6 Taxation in New York 
 
 The vast importance of the present system of 
 municipal docks makes the establishment of the first 
 city wharf of special interest. The first city wharf 
 Iwas established in 1658. The new dock appears to 
 'have adjoined the great bridge across the Heere 
 Gracht or Grand Canal. The city was allowed to 
 collect eight stivers per last (about two tons) for 
 loading or unloading from this wharf or dock. The 
 burgomeister and schepens petitioned also repeatedly 
 for the revenue from the ferry to Brooklyn, then 
 farmed by the West India Company, but it Avas not 
 until the English period that this was conceded to the 
 city. This right, so long coveted, appears to have 
 been secured soon after the English capture; at any 
 rate, a municipal ordinance regulating its manage- 
 ment appears at that time, and in 1682 an offer was 
 made to the city council from William Merritt of £20 
 a year for twenty years for the privilege of maintain- 
 ing it. The ferry soon became the chief source of 
 municipal revenue. 
 
 Another reason why property taxes did not play an 
 important role in the early history of the Dutch colony 
 was that New Netherland was primarily a trade and 
 not an agricultural colony. This is showTi by the char- 
 acter of the West India Company. The first emigrants 
 in 1623 hastened to make treaties with the Indians and 
 engage in the profitable fur trade. As long as the 
 colonists were traders at New Amsterdam or Bever- 
 wyck, or were scattered along the river, their pos- 
 sessions consisted almost entirely of movalile goods, 
 so a property tax would have been difficult to intro- 
 duce. After the curtailment of the privileges of the 
 West India Company and of the Patroons, agricul- 
 tural village communities sprang up. But the colony's 
 revenue in the early days came almost exclusively 
 from indirect sources. 
 
 Interesting to note is that many of the early Dutch 
 villages in New Netherland held extensive tracts of 
 land in coimnon, which was called commondage. In 
 
Colonial Taxation 7 
 
 the Hudson valley considerable pasture and wood land 
 was held in common until after the Eevolution. It 
 was not till 1806 that the Commons of the Town of 
 Hurley in Ulster County was divided among the free- 
 holders of the to^vn by an act of the Legislature. 
 
 Quit rents were never developed into a distinct land 
 tax. The English followed the custom of the Dutch 
 of leasing the public lands to settlers for the yearly 
 payment of a small quit rent. The rates in 1678 were 
 from $.40 to $1.50 (30d. to lOOd.) per one hundred 
 acres. Apparently these low rates were never raised 
 and there was great laxity in collecting even these 
 small amounts. The single tax doctrine of ground 
 rents was not in favor with these early colonists. 
 
 In 1716 Governor Robert Hunter proposed in a let- 
 ter to the Lords of Trade to derive a large revenue 
 from the quit rents. His suggestion, however, went 
 unheeded. His letter is as follows : 
 
 ' ' There is one thing I would propose to your Lord- 
 ships In the Infancy of the English 
 
 government here Lands were granted without any 
 
 reservation of Quit Rents . Others were 
 
 granted with a reservation of such Quit Rents as then 
 were or should thereafter be established by the Laws 
 
 of this country, others are under a very 
 
 inconsiderable Quit Rent ; Those granted 
 
 are with Reservation of 60 cents (2s. 6d.) each 100 
 acres, but the quantity is so small and there is so little 
 in her Maj'. gift, that if all were patented, the Quit 
 Rent would amount to a very inconsiderable sum, so 
 that if your Lordships thought fit to advise the passing 
 of an Act of Parliament at home that all lands Avithin 
 this province granted or to be granted should pay to 
 her Ma.iesty a Quit Rent of 60 cents (2s. 6d.) I believe 
 it would goe a great way in raising a Fund sufficient 
 for the government here." 
 
 From the Documentary History of New York the 
 follo^^^ng table is taken which shows the irregular 
 character and small amounts of quit rents raised in 
 
8 
 
 Taxation in New York 
 
 the colony as compared with the amounts raised by 
 duties and excise: 
 
 Years 
 
 Quit Rents 
 
 Duties 
 
 Excise 
 
 1691 
 1693 
 1694 
 1695 
 
 £21.12.6 $75 00 
 38.11 130 00 
 
 149— i 500 00 
 36.17.6 125 00 
 
 £2521.2.11} $8,500 00 
 1916.8. i 650 00 
 3055.11.3 10,300 00 
 2313.17.10i 7,850 00 
 
 £203.12 $670 00 
 665.16.6 2,250 00 
 862.4.10 500 00 
 919.18^ 3,100 00 
 
 Quit rents were allowed to dwindle, altho they con- 
 tinued down to the time of the Revolution; when the 
 English authorities tried to induce lease holders to 
 conunute their annual quit rent by the payment of 
 a round sum. The quit rents raised by the Patroons 
 culminated in the celebrated anti-rent agitation of 
 1836-46, by which the State constitution of 1846 for- 
 bid the leasing of agricultural land for a longer period 
 than twelve years. This put a stop to quit rents in 
 New York forever. 
 
 The first taxes in New Netherland were largely of a 
 voluntary nature. In 1648 for the erection of a 
 church, and in 1667 for the maintenance of a minister, 
 voluntary offerings were solicited. "When in 1653 it 
 was necessary to put the city in a state of defense a 
 list of forty-two persons was made out, who were 
 provisionally to contribute $2,000 (95050 guilders). 
 No formal assessment of property was made, but the 
 magistrates assigned roughly to each burgher what 
 they deemed his fair share — ranging from four to 
 one hundred and fifty florins. The contributions 
 ranged from Hendrick Kip's $20.00 (50 guilders) to 
 Cornelius Van Steenwyck's $80.00 (200 guilders). 
 The unpopularity of this tax was shown by the 
 extreme difficulty found in collecting it. 
 
 Gradually compulsion has to be applied and the 
 taxes lose their voluntary nature. To illustrate the 
 transition period notice the ordinance of 1655, which 
 reads : — 
 
 ' ' The Director General and Council of New Nether- 
 land consent that the Burgomeisters of New Amster- 
 
Colonial, Taxation 9 
 
 dam shall first and foremost solicit both from 
 
 the trading shippers, merchants, factors and passen- 
 gers, and from the citizens in general, a voluntary 
 subscription and contribution, each according to his 
 condition, state and circimistances, and in case of 
 opposition or refusal either from any disaffected or 
 ill-disposed persons, which the Director General and 
 
 Council do not anticipate, the Burgomeisters, 
 
 with the President of the Schepens are authorized 
 to assess such according to their circum- 
 stances, and condition them to constrain to a reason- 
 able contribution and promptly to enforce it by execu- 
 tion. ' ' 
 
 There is still a voluntary character to this contribu- 
 tion, for Peter Stuyvesant heads the list and offers as 
 his share $20.00 (50 guilders) more than anyone else; 
 and as Cornelius Van Tienhoven offers $40.00 (100 
 guilders), it becomes necessary for Stuyvesant to give 
 $60.00 (150 guilders). Dominee Johannes Megalo- 
 pensis gives $20.00 (50 guilders) of his own free will 
 (vrijwillg) ; but Johannes DePeyster has to be assessed 
 (getaxert) at $20.00 (50 guilders). At the first meeting 
 of the Court all l)ut four offer voluntary contributions. 
 At the following meetings the more reluctant are pre- 
 sent and many then offer contributions, but are assessed 
 at a higher sum (presenteert doch getaxeert). Some 
 are assessed a beaver, others work at the city works 
 or send their slaves in lieu of a contribution. 
 
 In 1677 a l)roken dam was to be repaired in the 
 Town of New Castle, Westchester County, and those 
 who refused to contribute were to lose their common- 
 dage, as per order of the Court : 
 
 '' That the Burgers in generall be called together 
 ant yt those whoe will pay pro Rata towards it. To 
 have their parts, but those who Refuse, to Loose their 
 commandage. ' ' 
 
 When the Colonial Assembly was established in 
 1683 the property tax gained its first foothold. In 
 the Charter of Liberties of that year, it was provided 
 
10 Taxation in New Yoek 
 
 * ' That noe Aid, Tax, Tallage, Assessment, Customs, 
 Loaiie, Benevolence, or Imposition whatsoever shall 
 be layed, assessed, imposed or levyed on any of his 
 Majesties Subjects within this Province or their 
 Estates upon any manner of colour or pretence, except 
 by the act and consent of the Governor, Council and 
 Representatives of the people in general assembly, 
 mett and assembled. ' ' 
 
 On November 1, 1683 the Colonial Assembly passed 
 the first general tax and assessment law, which is 
 entitled ''An Act for the defraying of the publique 
 and necessary charge of each respective City, towne 
 and County throughout this Province and for main- 
 taining the poor and preventing Vagabonds." It is 
 interesting to notice the close relation between local 
 taxation and the maintenance of the poor. Henry 
 George writing his ''Progress and Poverty," in the 
 years 1877-79 says: " The tramp comes with the 
 locomotive, and alms-houses and prisons are as surely 
 the marks of material progress as are costly dwellings, 
 rich warehouses, and magnificent churches. Upon 
 streets lighted with gas and patrolled by uniformed 
 policemen, beggars wait for the passer-by." But if 
 we are to believe this act passed by the Colonial 
 Assembly in 1683 the people were troubled by vaga- 
 bonds and paupers long before the days of the loco- 
 motives and gas lighted streets, Henry George to the 
 contrary withstanding. 
 
 From the Journal of the General Assembly this 
 act of 1683 is copied. It reads as foUow^s : 
 
 " Bee it enacted by the Governour Councell and 
 Representatives in Generall Assembly and by the 
 authority thereof. That annually and once every 
 yeare there shall be Elected a certaine number out of 
 Each respective Citty, towne and County, throughout 
 this province, To be Elected and Chosen by the Major 
 part of all ^Freeholders and ffreemen, which certain 
 number Soe duely Elected, shall have full power and 
 authority to make an Assessment or certaine Rate 
 
Colonial Taxation 11 
 
 within their respective Cittyes, Townes and Countyees, 
 annually and once every yeare, which assessment and 
 certaine rate soe Established as aforesaid shall be paid 
 in to a certaine Treasurer, who shall be Chosen by the 
 Major part of all the ffreeholders and ffreemen of Each 
 respective Citty, Towne and County ; which Treasurer 
 soe duly Chosen shall make such payment for the 
 Defraying of all the publique and necessary Charges 
 of Each respective place above mentioned, as shall be 
 appointed by the Comiconers or their President, That 
 shall bee appointed in Each respective Citty, Towne 
 and County, within this province for the Supervising 
 the publique affairs and Charge of Each respective 
 Citty, Towne and County aforesaid. And bee It 
 further provided by the authority aforesaid, That the 
 Treasurer for Each respective Citty, Towne and 
 County shall keep a distinct booke of accounts Con- 
 taining a perticular account of all moneys, rates and 
 Assessments aforesaid, And alsoe of all disbursements 
 and pa^anents of money by warrants aforesaid, and 
 once in Every yeare he shall bring his accounts to 
 such persons as shall be appointed for the Audit of 
 the same under the penalty of one hundred pounds. 
 Except prevented by death or Sicknesse. And farther, 
 whereas it is the Custome and practice of his Maties 
 Realm of England, and all the adjacent Collonyes in 
 America, That Every respective Citty, Towne, parish 
 and precint doth care and provide for the poor who 
 doe inhabit in their respective precints aforesaid, 
 Therefore it is Enacted by the authority aforesaid. 
 That for the Time to come the respective Comiconers 
 of Every County, Citty, to\\me, Parish, Precint afore- 
 said, shall make provision for the maintenance and 
 Support of their poor respectively. ' ' 
 
 "And for the Prevention and discouraging of vaga- 
 bonds and idle persons to come into the province from 
 other parts, and alsoe from one part of the Province 
 to another, Bee it Enacted by the authority aforesaid 
 That all persons That shall come to inhabit within 
 
12 ' Taxation in New York 
 
 this Province or any part or place thereof and hath 
 not a visible Estate, or hath not a manual Craft or 
 occupacon, shall before he be admitted an Inhabitant 
 give Sufficient Surety That he shall not be a burthen 
 or Charge to the respective places he shall come to 
 inhabit in, which Security shall continue for two years. 
 Provided Alwayes That all those that have manual 
 crafts or occupacon may at all times come and inhabit 
 in any part within this province, and be always admit- 
 ted, Provided he maketh Applicacon Eight dayes 
 after his arrivall into any Citty, Towne or County 
 aforesaid unto such person or persons as are appointe 
 for the Governing the respective parts aforesaid And 
 alsoe all vessells That shall bring any passengers into 
 this Province, the Master of any such Vessells shall 
 within four and twenty hours after arrivall bring a 
 list of all such Passengers he brings into this province 
 with their quality and Condicons unto the Cheife 
 Magistrate of Each respective Citty, County, towne 
 aforesaid, under the penalty of tenne pounds Currant 
 money of this Province, Alwayes provided That if any 
 Vessell bring in any person not qualified as aforesaid, 
 nor able to give Surety for their well demeanour. 
 That than and in such cases the Master of said Vessell 
 or vessells shall be obliged to transport all such per- 
 sons to the place from whence they came, or at least 
 out of this Province and dependencies. And alsoe if 
 any Vagabonds, beggars or others remove from one 
 County to another and cannot give Security as afore- 
 said. It shall be luwfull for the constable to return such 
 persons to the County from whence they came." 
 
 In 1688 the assessment list of New York City's seven 
 wards amounted to £78,231 ($265,000). But it proved 
 to be an impossibility to obtain an impartial and cor- 
 rect assessment as evidenced by the petition addressed 
 to the Governor by the Colonial Assembly in 1692, 
 which reads: 
 
 '* that there may be a certain method for the 
 
 equal and proportionable assessing of subsidies, We 
 
Colonial Taxation 13 
 
 doe pray his Excell. would appoint Commissioners in 
 each respective County for the making an Estimate of 
 their Estates, that for the future there may not be such 
 uncertaintyes. " 
 
 This difficulty of obtaining a correct assessment is 
 still manifest in our present day taxation, and the 
 attempt to regulate it is at present embodied in the 
 institution of State and county boards of equalization. 
 During the eighteenth century there were numerous 
 attempts to overcome this difficulty of a correct assess- 
 ment by establishing fixed values at which all kinds of 
 property should be assessed. Thus according to the 
 Journal of the Colonial Assembly it was proposed in 
 1693 to assess arable and pasture land according to its 
 annual yield, and other property, such as slaves, 
 houses, cattle, sheep and goats, at varying sums. 
 
 The Colonial Assembly sought to spur on the asses- 
 sors to the fulfillment of their duty by changes in the 
 wording of their oath of office. In 1691 they were 
 bound by oath : ' ' Well, truly, equally and according 
 to their best understanding to assess and rate the 
 Inhabitants, Residents and Freeholders of the respec- 
 tive places for which they shall be chosen Assessors. " 
 
 When the tax law of 1691 was to be amended in 1703 
 
 it was described as follows: '' which hath been 
 
 by experience found to be very inconvenient and bur- 
 densome to the inhabitants of this Province, and hath 
 occasioned many Heats, Animosities, Strifes and 
 Debates and other differences." Apparently taxation 
 was no more popular in colonial days than it is at 
 present. 
 
 An act passed by the Colonial Assembly, December 
 16, 1758, says that " whereas the method now used in 
 the City of New York in Taxing Real and Personal 
 Estates is found to be Uncertain and Unequal," real 
 estate was to be assessed at two-thirds part of the rent 
 or yearly income, and if occupied by the owner or pro- 
 prietor to be assessed on oath in like ])roportion accord- 
 ing to what the true income might be in case the same 
 were rented out. 
 
14 Taxation in New York 
 
 A special act for Ulster County passed by the Colo- 
 nial Assembly, October 20, 1764, says that ' ' Whereas 
 the Taxing, Rateing and Assessing, Heretofore made 
 by the Assessors in the County of Ulster, Hath not 
 been Equal, and in due proportion to the Real and 
 personal Estates, which the Freeholders and Inhabi- 
 tants of said County do Possess and enjoy, Assessors 
 of each respective Town, Manor and Precinct were to 
 Assemble together and agree upon a certain rule or 
 plan to calculate the true value of the real and personal 
 estates within said County. " Assessors were liable to 
 fine under this act for it also says : " Every Assessor 
 or Assessors who shall or may Neglect, Delay or 
 Refuse to perform the duty required of him or them 
 by this act shall forfeit the sum of 5£. ' ' 
 
 People were not as honest as they should be in colo- 
 nial days, for there had to be a new levy in Ulster 
 County in 1764 to raise arrears of taxes according to 
 an act of the Colonial Assembly as follows : 
 
 '* Whereas several of the Collectors within the said 
 County having collected the Taxes which have been 
 Assessed for their respective Districts, have converted 
 the same to their own use and are now insolvent." 
 
 A special act for Orange county, passed by the Colo- 
 nial Assembly, January 27, 1770, says that " Whereas 
 the ascertaining the Quotas of proportions of each 
 respective Precinct in the County of Orange towards 
 the Taxes, Rates and Contingent County Charges to 
 be assessed and raised upon the said County, hath 
 hitherto been attended with great Difficulty and Uncer- 
 tainty; and given Occasion for Disputes and Discon- 
 tent, for preventing for the future. ' ' 
 
 **Be It Further Enacted that every Person subject 
 to such Tax or Charge, shall at all Times when required 
 by the Assessors of the Precinct wherein he resides, 
 or either of them give him or them a view of all the 
 improved Land in his Occupation and a just Account 
 of all the Horses Cattle and Chattels which are his 
 Property, and ought to be subject to such Tax or 
 
CoLOXiAL, Taxation 15 
 
 Charge, and if any Person shall secret or conceal from 
 the Assessors any Part of his improved Land Horses, 
 Cattle or Chattels, which ought to have been subject to 
 such Tax or Charge he shall forfeit for ever}^ such 
 Concealment four Times the Amount or Value of the 
 Tax which ought to have been assessed." 
 
 So much is being said and written concerning the 
 failure of our present system of taxation, and it is 
 often stated that in colonial days when life was more 
 simple and property had not become split up into so 
 many complex subdivisions the general property tax 
 worked fairly well. But by reading these numerous 
 acts of the Colonial Assembly concerning taxation the 
 same difficulties were experienced then that are present 
 to-day. 
 
 The manner of obtaining the value of assessable 
 property is indicated by the law of March 19, 1774: 
 
 ''Assessors shall make an assessment in 
 
 the manner following, to wit : they shall proceed from 
 house to house, throughout the said county, till they 
 have gone thro' the whole, and shall make out a true 
 and exact List of all the names of the Freeholders and 
 Lihabitants of the said county, and against the names 
 of every such person shall set down the value of all 
 his or her estate, real and personal, as nigh as they can 
 discover the same to be within the said county." A 
 self valuation under oath by the taxpayers has never 
 been attempted in New York. 
 
 The law of April 1, 1799, provided '' that the valua- 
 tion of houses and lands within this State lately made 
 by the United States census shall as soon as the same 
 be completed, be deemed to be the value of all such 
 houses and lands for the purposes of taxation." Real 
 estate was only affected by this law, for the Federal 
 census takers paid particular attention to this class of 
 property. iUso the aforesaid valuation was to con- 
 tinue for three years. 
 
 This law fixed the value of various kinds of personal 
 property as follows: " That all personal property, 
 
16 Taxation in New York 
 
 which is by this act made taxable, shall be set in the 
 list at the prices hereinafter mentioned : — Every ox or 
 bull of four years old and up^vards, at fifteen dollars ; 
 each cow more than one, owned by any one person, of 
 four years old or upwards, at ten dollars; all neat 
 cattle of three years old, at six dollars each; all neat 
 cattle of two years old, at four dollars each; each horse 
 or mare of one year old at eight dollars ; each horse or 
 mare of two years old at fifteen dollars; each horse or 
 mare of three years old, at twenty dollars ; each horse 
 (except stallions) and each mare more than four, and 
 not exceeding eight years old, at thirty dollars; each 
 gelding or mare more than eight, and not exceeding 
 twelve years old, at twenty dollars; each gelding or 
 mare more than twelve and not exceeding sixteen years 
 old, at eight dollars; each stallion or stud horse of 
 more than four years old at three hundred dollars; 
 every mule of one year old, at eight dollars; every 
 mule of two years old, at sixteen dollars; and every 
 mule of three years old and upwards, at twenty-five 
 dollars; all swine more than eight, owned by any one 
 person, of more than one year old, three dollars; all 
 coaches at eight hundred dollars ; each chariot and post 
 chaise, at seven hundred dollars; each phaeton or 
 coachee on steel springs, at three hundred dollars; 
 every other four wheel pleasure carriage, and every 
 two wheel top carriage, at fifty dollars ; every brass or 
 steel wheel clock at forty dollars ; each gold watch at 
 fifty dollars ; and all other watches at twelve dollars ; 
 every able bodied slave held for life from twelve to 
 fifty years old, at one hundred dollars ; all river sloop 
 and vessels above thirty tons burden and not exceed- 
 ing sixty tons, at seven hundred and fifty dollars. And 
 the said assessors shall also ascertain according to the 
 best evidence they can obtain and set down in such list 
 the value of the residue of the personal estate of every 
 person residing in such division or assessment district, 
 exclusive of their farming utensils, arms and accoutre- 
 ments for serving in the militia, tools and implements 
 
Colonial. Taxation 17 
 
 of their respective trades and professions, ships and 
 vessels and their cargo employed in trade and com- 
 merce out of this State, articles of the produce of any 
 of the United States, and purchased for exportation 
 and sale." 
 
 The statement is often made that in colonial days 
 slaves went with the land and were assessed as real 
 estate. But so far as New York is concerned this 
 statement is not borne out by this act of 1799 which 
 assessed slaves as personal property at the rate of 
 one hundred dollars for every able bodied slave held 
 for life from twelve to fifty years old. 
 
 This act of 1799 contains the first exemptions from 
 taxation, which includes property of the United States, 
 or of the State, churches or places of public worship, 
 personal property belonging to an}^ ordained minister 
 of the gospel, court house, gaol, alms house, or prop- 
 erty belonging to any incorporated library ; also farm- 
 ing utensils, arms and accoutrements for serving in the 
 militia, tools and implements of their respective trades 
 and professions, ships and vessels and their cargo 
 employed in trade and commerce out of this State, 
 articles of the produce of any of the United States, and 
 purchased for exportation or sale. 
 
 Two years later the assessors were allowed to alter 
 the Federal census valuation of real estate as circum- 
 stances required. This was the only time in the history 
 of the State when the Federal census was to be taken 
 by the assessors as the valuation of real estate. A 
 general tax law was passed in 1823 and among other 
 provisions was one that *' all real and personal prop- 
 erty shall be valued b}' the assessors for the purpose 
 of taxation at the value they would appraise such 
 estate in pa\Tnent of a bona fide debt due from a sol- 
 vent debtor." 
 
 During the Revolutionary War New York was under 
 two governments. The southern part of the State, 
 including the counties of Westchester, New York, 
 Richmond, Kings, Queens and Suffolk were under 
 
18 Taxation in New York 
 
 English dominion from the arrival of the English 
 army in the smnmer of 1776 until the end of the war. 
 The English therefore were in possession of the custom 
 house at the port of New York and the Americans had 
 to rely on taxation for revenue with which to prosecute 
 the war. A tax levied by the Colonial Assembly, March 
 28, 1778, made a distinction between real and personal 
 estate, the former to be taxed at a rate of three pence 
 in the pound and the latter at a rate of one and a half 
 penny in the pound. If this system of classifying prop- 
 erty and taxing the different classes at varying rates 
 had been continued there would be less complaint that 
 personal property was escaping taxation and that most 
 of the burden was falling upon real estate. There has 
 been too much of an attempt to tax all kinds of prop- 
 erty at the same rate which has caused most personal 
 property to evade taxation altogether. 
 
 New York always obtained considerable revenue 
 from custom duties. A tariff act passed in 1784 
 exempted from all duties goods and merchandise im- 
 ported into the State from any of the other thirteen 
 states ; but the following tariff act passed by the Legis- 
 lature April 11, 1787, made no such exemption and 
 discriminated especially against Connecticut and New 
 Jersey : 
 
 "Be it enacted by the people of the State of New 
 York, represented in Senate and Assembly, and it is 
 hereby enacted by the authority of the same. That, 
 from and after the first day of August next, all such 
 goods and merchandise, as are hereinafter enumerated 
 and mentioned, which shall be imported or brought into 
 this State, by land or water, shall be subject to duties 
 and imposts hereinafter mentioned, that is to say. 
 
 Every gallon of molasses, one penny. 
 
 Every gallon of distilled spirituous liquors, four 
 pence, 
 
 Every gallon of Maderia wine, eight pence. 
 
 Every gallon of wines, other than Maderia wine, 
 four pence. 
 
CoLONiAii Taxation 19 
 
 Every gallon of linseed oil, eight pence, 
 Every gallon of porter, ale or beer, six pence. 
 Every bushel of malt, fonr pence. 
 Every bushel of salt, water measure, six pence. 
 Every pound of snuff, six pence. 
 Every pound of manufactured tobacco, three pence, 
 Every pound of loaf or lump sugar, two pence. 
 Every pound of other sugar, a half penny. 
 Every pound of coffee, one penny, 
 Every pound of chocolate, three pence. 
 Every pound of pepper, three pence. 
 Every pound of pimento or alspice, one penny, 
 Every pound of steel, three farthings. 
 Every pound of dressed leather, four pence. 
 Every pound of tanned leather, three pence, 
 Every pound of spikes, and every pound of nails 
 commonly called three penny nails, and of all nails 
 of a larger size, one penny, 
 
 Every pound of Bohea tea, imported direct from 
 Asia, in ships or vessels of the built of this State, or 
 whereof three-fourths parts are owned by citizens 
 residing in this State, three pence. 
 
 On every pound of Bohea tea, otherwise imported, 
 four pence. 
 
 Every pound of tea of a superior quality, imported 
 directly from Asia, in ships or vessels of the built of 
 this State, or whereof three-fourths parts are owned 
 by citizens residing in this State, six pence. 
 
 Every pound of tea of a superior quality, otherwise 
 imported, eight pence. 
 
 Every pound of cheese, four pence. 
 Every pound of starch or hair powder, four pence, 
 Every hundred weight of cordage, four shillings. 
 Every hundred weight of liar iron, four shillings, 
 Every pound of raisins, currants, almonds, prunes 
 or figs, one penny, 
 
 Every hundred weight of iron hollow ware, six shil- 
 lings. 
 
20 Taxation in New York 
 
 Every hundred weight of nail rods, four shillings, 
 
 Every dozen bottles of wine, in bottles commonly 
 called • quart bottles, and in that proportion for all 
 wines in bottles, two shillings, 
 
 Every dozen bottles of malt liquors, in bottles com- 
 monly called quart bottles, and in that proportion for 
 all bottled malt liquors, one shilling and six pence. 
 
 Upon carriages of pleasure from a foreign port as 
 follows : 
 
 Every coach, chariot or post chaise, or coach, chariot 
 or post chaise box, fifteen pounds, 
 
 Every other four wheeled carriage of pleasure, eight 
 pounds. 
 
 Every two wheeled carriage of pleasure, four 
 pounds, 
 
 Every clock, twentj'' shillings. 
 
 Every dozen of scythes, siths or axes, twelve shil- 
 lings. 
 
 Every saddle, ten shillings. 
 
 Every dozen of saddle trees, twelve shillings. 
 
 Every pair of women's or children's shoes or slip- 
 pers of stuff or morocco leather, sixpence. 
 
 Every pair of women's silk shoes, one shilling, 
 
 Every pair of men's or women's leather shoes or 
 slippers, six pence. 
 
 Every pair of boots, four shillings. 
 
 Every pair of boot legs, one shilling and sixpence, 
 
 Every dozen packs of playing cards, four shillings. 
 
 Every pair of wool or cotton cards, six pence, 
 
 And the following articles at and after the rate of 
 seven pounds ten shillings per centum ad valorem, to 
 be computed on the prime cost : 
 
 Anchovies, olives, capers, horse harness, bridles, stir- 
 rup irons, bridle bits, pictures with or without frames, 
 paper hangings, pewter and block tin hollow ware, pan- 
 tiles and all sorts of earthen and glassware, china ware, 
 writing paper, blank books, quills, brushes, horn combs 
 and all other articles made wholly of horn, plane 
 
CoLoxiAx, Taxation 21 
 
 stocks, and all kinds of manufactured tools of wood, 
 men's and women's hats (excepting wool hats) foreign 
 marble, and cabinet and joiners' work. 
 
 And the following articles at and after the rate of 
 five pounds per centum ad valorem to be computed on 
 the prime cost, that is to say : 
 
 Beef, pork, butter, candles, soap, anchors, all uten- 
 sils made in the whole or in part of copper, tin or 
 brass, bellows, shovels and spades, sad irons, screw 
 augurs, frying pans, drugs and medicines, flour of mus- 
 tard, white rope, twine and white lines. 
 
 And all other goods and merchandise not herein 
 before enumerated and mentioned, at and after the 
 rate of two pounds ten shillings, per centimi ad 
 valorem, to be computed upon the prime cost, except- 
 ing raw hides, whale and fish oil, mahogany, logwood, 
 lignum vitee, Nicaragua wood, red wood, fustick, and 
 all other dye woods, sheeps and cotton wood, whale 
 bone, beaver, peltry, furs, deer skins, wood, madder, 
 cochineal, rocou, bees wax and elephants ' teeth, and all 
 goods and merchandise, of the growth, production and 
 manufacture of any of the United States of America. 
 
 And be it further enacted by the authority aforesaid, 
 That from and after the passing of this act, no higher 
 or other fees shall be demanded or received by the col- 
 lector for the port of New York, for entering inwards 
 and clearing out any vessel or boat, the property of 
 the citizens of any of the United States, arriving either 
 from the State of Connecticut, or from the eastern 
 division of the State of New Jersey, and having on 
 board any goods or merchandise subject to the pav- 
 ment of duties, by this act, or any law of this State, 
 and for which the duties have not been paid, than the 
 following, that is to say, for every vessel or boat of the 
 burthen of forty tons and upwards, and under seventy 
 tons, the sum of twenty shillings. 
 
 For every vessel or boat, of the burthen twenty tons 
 and upwards, and under forty tons, the sum of twelve 
 shillings. 
 
22 Taxation in New York 
 
 And for every vessel or boat with a deck thereon of 
 less burthen than twenty tons, the sum of eight shil- 
 lings. And for entering inwards, and clearing out- 
 wards, any vessel or boat, the property of a citizen or 
 citizens of any of the United States, arriving either 
 from the State of Connecticut, or from the eastern 
 division of the State of New Jersey, and not having 
 on board any goods or merchandize subject to the pay- 
 ment of duties, by any law of this State, no higher or 
 other fees than the following, that is to say : for every 
 vessel or boat of the burthen of forty tons and up- 
 wards, and under seventy tons, the sum of five shillings. 
 For every vessel or boat of the burthen of twenty tons 
 and upwards, and under forty tons, the sum of three 
 shillings. And for every vessel or boat, with a deck 
 thereon, of less burthen than twenty tons, the sum of 
 two shillings. ' ' 
 
 The City of New York, with its population of thirty 
 thousand souls, had long been supplied with firewood 
 from Connecticut, and with butter, cheese, chickens and 
 garden vegetables from the thrifty farms of New Jer- 
 sey. This trade was ruinous to domestic industry 
 thought the people of New York, and so under the 
 above custom duties act every Jersey market boat 
 which was rowed across Paulus Hook to Cortlandt 
 Street was required to pay entrance fees and obtain 
 clearances at the custom house, just as was done by 
 ships from London or Hamburg ; and not a cartload of 
 Connecticut firewood could be delivered at the back 
 door of a country house in Beekman Street until it 
 should have paid a heav>^ duty. 
 
 An address of Melancton Smith when the adoption 
 of the Constitution of the United States was under 
 consideration said in part as follows : 
 
 '* It cannot be controverted, that Connecticut and 
 New Jersey were very much influenced in their deter- 
 mination on the question, by local considerations. The 
 duty of impost laid by New York, has been a subject 
 of complaint by those states. The new constitution 
 
Colonial. Taxation 23 
 
 transfers the pow<'r of imposing tliese duties from the 
 state to the general government, and carries the pro- 
 ceeds for the use of the union, instead of that of those 
 states. This is a popular matter with the people of 
 
 Connecticut and New Jersey To excite in the 
 
 minds of the people of Connecticut and New Jersey 
 an attachment to the new system, the amount of rev- 
 enue arising from our impost has been magnified to a 
 
 much larger smn than it produced The amount 
 
 of the revenue from impost for two years past has not 
 exceeded fifty thousand pounds currency, per annmn, 
 and a drawback of duties is allowed by law, upon all 
 goods exported to Connecticut and New Jersey in casks 
 or packages unbroken." 
 
 Many prominent citizens of" the State were loath to 
 surrender to the general government this right to raise 
 revenue in New York by the imposition of custom 
 duties, and these people opposed the adoption by New 
 York of the United States constitution. 
 
 The question of taxation played a prominent part in 
 the pros and cons relative to the adoption of the United 
 States constitution. George Clinton in the New York 
 Journal for December 16, 1787, in opposition to the 
 adoption of the Constitution, among other things, said : 
 '* There will be a capitation or poll tax, a tax on win- 
 dow lights, etc. and a long train of impositions which 
 their ingenuity will suggest; but you ^vi\\ be numbered 
 like the slaves of an arbitrary despot; and what will 
 be 3'our reflections Avhen the tax master thunders at 
 your door for the duty on that light which is th<' bounty 
 of heaven." 
 
 Ak'xander Jlamilton in Xuml)er 'AG of The Federal- 
 ist, answering some of these objections to the taxation 
 article of the Constitution said: "Many specters 
 have been raised out of this power of internal taxation, 
 to excite the apprehensions of the peoiple — (loul)le sets 
 of revenue officers — a duplication of their burdens by 
 double taxations, and the frightful forms of odious and 
 op])ressive poll taxes, have been played off with all the 
 ingenious dexterity of political legerdemain. 
 
24 Taxation in New York 
 
 As to the first point there are two cases in which 
 there can be no room for double sets of officers; one, 
 where the right of imposing the tax is exclusively 
 vested in the Union, which applies to the duties on 
 imports; the other, where the object has not fallen 
 under any State regulation or provision, which may 
 be applicable to a variety of objects. In other cases 
 the probability is, that the United States will either 
 wholly abstain from the objects preoccupied for local 
 purposes, or will make use of the State officers, and 
 State regulations, for collecting the additional impo- 
 sition. ' ' 
 
 The Federal government has levied five direct taxes 
 upon the states, one in 1798, one in 1814, one in 1815, 
 one in 1816, and one in 1861. New York's quota of 
 these direct taxes is given in the following table : 
 
 1798 $181,680.70 
 
 1814 430,141.62 
 
 1815 860,283.24 
 
 1816 430,141.62 
 
 1861 2,213,333.00 
 
 In recent years the Federal government has been 
 invading the State's sources of revenue by knying an 
 income tax and an inheritance tax. The last tax has 
 been levied in spite of the protest of the National Tax 
 Association. 
 
 It is interesting to note that Hamilton thought that 
 the cost of the State governments after they paid their 
 debts contracted during the Revolutionary War would 
 never exceed a million dollars a year. To-day the cost 
 of the State government of New York alone amounts 
 to over sixty million dollars a year. 
 
 The Legislature on October 22, 1779, passed an act 
 of attainder against the following loyalists and also 
 confiscated their property: 
 
 '' That John Murray, earl of Dunmore, formerly 
 governor of the colony of New York; William Try on, 
 
Colonial Taxation 25 
 
 esquire, late governor of the said colony ; John Watts, 
 Oliver DeLancey, Hugh Wallace, Henry White, John 
 Harris Cruger, William Axtell and Roger Morris, 
 esquires, late members of the council of the said 
 colony; George Duncan LudloAv, and Thomas Jones, 
 late justices of the Supreme Court of the said colony ; 
 John Tabor Kempe, late attorney general of the said 
 colony; William Bayard, Robert Bayard, and James 
 DeLancey, now or late of the City of New York, 
 esquires; David Matthews, late mayor of the said 
 city; James Jauncey, George Folliot, Thomas AAliite, 
 AVilliam McAdani, Isaac Low;, Miles Sherbrook, 
 Alexander Wallace, and John Wetherhead, now 
 or late of the said city, merchants; Charles Ingiis, 
 of the said city, clerk, and Margaret, Ms wife; 
 Sir John Johnson, late of the county of Tryon, 
 knight and baronet; Guy Johnson, Daniel cfaus, 
 and John Butler, now or late of the said county, 
 esquires ; and John Joost Herkemer, now or late of the 
 said county, yeoman; Frederick Philipse and James 
 DeLancey, now or late of the said county of West- 
 chester, esquires; Frederick Philipse (son of Fred- 
 erick) now or late of said county, gentleman; David 
 Colden, Daniel Kissam the elder, and Gabriel Ludlow, 
 now or late of the county of Queens, esquires ; Philip 
 Skeene, now or late of the county of Charlotte, esquire ; 
 and Andrew P. Skeene, son of the said Philip Skeene, 
 late of the county of Charlotte; Benjamin Seaman, and 
 Christopher Billop, now or late of the county of Rich- 
 mond, esquires ; Beverly Robinson, Beverley Robinson 
 the younger, and Malcolm J^forrison, now or late of the 
 county of Dutchess, esquires; John Kane, now or 
 late of said county, gentleman; Abraham C. Cuyler, 
 now or late of the county of Albany, esquire; Robert 
 Leake, Edward Jessup, and Ebenezer Jessup, noAv or 
 late of the said county, gentlemen; Peter Du Bois, and 
 Thomas H. Barclay, now or late of the county of 
 Ulster, esquires ; Susannah Robinson, -wife of the said 
 
26 Taxation in New York 
 
 Beverly Robinson, and Margaret Morris, wife of the 
 said Roger Morris; John Rapelje of the county of 
 Kings, esquire; Gleorge Muirson, Richard Floyd, and 
 Parker "VVicldiam, of the county of SuffoD^, esquires; 
 Henry Lloyd, the elder, late of the State of Massachu- 
 setts Bay, merchant; and Sir Henry Clinton, knight, 
 be and each of them are hereby severally declared to 
 be, Ipso Facto, convicted and attainted of the offense 
 of adhering to the enemies of this State." 
 
 Of the above mentioned loyalists Reverend Charles 
 Inglis, who is designated clerk in the attainder, was the 
 rector of Trinity Church in New York City ; John Joost 
 Herkemer was a brother of General Nicholas Her- 
 kemer, the American commander at the Battle of Oris- 
 kany; and Abraham C. Cuyler was the mayor of 
 Albany and David Matthews was the mayor of New 
 York City at the outbreak of the Revolutionary War. 
 So bitter appears to have been the feeling at that time 
 that the wives of some of these loyalists were also 
 attainted. 
 
 It is difficult to justify these harsh measures. The 
 constitution of the United States adopted in 1788 pro- 
 hibits Congress from passing any bill of attainder and 
 also prohibits any State from passing any bill of 
 attainder. 
 
 Alexander Clarence Flick in his book, ' ' Loyalism in 
 New York during the American Revolution," estimates 
 that the State of New (York realized over three million 
 six hundred thousand dollars from the sale of the con- 
 fiscated estates of the loyalists. No complete records 
 are on file in any State department, but from the pub- 
 lic sale of the forfeited estate of James DeLancey in 
 New York City the sum of $234,198.75 alone was real- 
 ized. The important and lasting effect of confiscation 
 in New York State was that large manors and estates 
 were cut into small lots and sold to the common people, 
 thus leveling, equalizing and making more democratic 
 the whole social structure. 
 
CHAPTER 11 
 INTERNAL IMPROVEMENTS 
 
 The period in the history of the State from 1789 to 
 1842 was one of great internal improvements carried 
 thru largely by governmental aid. During these fifty- 
 three years agriculture was the dominant industry, 
 and the needs of the farmer were principally two in 
 number, namely, for capital and for transportation. 
 
 As the country was new and developing rapidly in 
 many directions, capital was scarce and in great 
 demand. For the State it was a period of surplus 
 financiering due to the large receipts from the sale of 
 public lands and the interest derived from the State 
 securities, which became productive thru the funding 
 act of Congress. The State was looked to for aid and 
 assistance by struggling farmers and manufacturers. 
 And the State responded by loaning its funds to 
 counties, cities, banks, manufacturing companies, 
 corporations and individuals, and also became a stock- 
 holder in numerous banks and navigation companies. 
 Illustrating the State's generosity are a few of the 
 loans : 
 
 In 1795 the Legislature loaned to James Caldwell 
 of the City of Albany the sum of £8,000, on account of 
 his factory ha\dng been destroyed by fire. The same 
 year it loaned the sum of £4,000 to Josiah G. Pierson ; 
 and John Boyd's manufactury for making scythes in 
 the Town of New Windsor, Ulster County, having been 
 destroyed by fire, he received a loan of £1,500 in 1795. 
 
 The statutes prior to the constitutional convention 
 of 1846 show State aid to thirty-three corporations, 
 many of them receiving aid more than once. These 
 enterprises included ])anks, bridges, canals, charity, 
 institutions of learning, manufacturing, mining, navi- 
 
 [27] 
 
28 Taxation in New York 
 
 gation, railroads, and turnpikes. The policy of render- 
 ing State aid to private enterprises was not only the 
 subject of frequent legislative action, hut it also 
 received executive approval. The governors' speeches 
 and messages contain frequent references to this sub- 
 ject, and executive discussion and recommendations 
 concerning it doubtless reflected the general sentiment 
 of the time. 
 
 To provide transportation facilities the State took 
 upon itself the burden of digging canals. In 1816 a 
 barrel of flour could be transported from Cayuga to 
 Montreal for $1.50, whereas it cost $2.50 to convey it 
 to Albany. It is not known who first proposed con- 
 necting the great lakes with the Hudson River by 
 means of inland communications, altho George Wash- 
 ington in July 1783 went west on the Mohawk River as 
 far as Fort Schuyler and at that time he saw the 
 advantage of a water icommunication between the Hud- 
 son River and the great lakes. 
 
 The construction of the Erie canal was begun in 1817 
 and completed in 1825, and its stimulating effect upon 
 all branches of business, caused a perfect mania for 
 canal construction to sweep over the State and each 
 county clamored for a canal of its own at the expense 
 of the State. 
 
 The financial plan for the management of the Erie 
 canal was as follows : The canal fund was to consist 
 of the proceeds from a tax of twelve and one-half cents 
 a bushel on salt manufactured in the State, duties on 
 goods sold at auction, a tax on steamboat passengers, 
 tolls from the canal, grants and donations, and a tax on 
 real estate located Avithin a distance of twenty-five 
 miles from the canal. In 1820 the question of collect- 
 ing this tax on real estate to be benefited by the canal 
 was discussed, but no action was taken, and no collec- 
 tion was ever made. Thus the first attempt of the 
 State to raise funds by what was virtually a special 
 assessment failed. 
 
Colonial Taxation 29 
 
 Grants of land was made to the canal fund by cor- 
 porations and individuals as follows: The Holland 
 Land Company, 100,623 acres in Cattaraugus county, 
 on condition that the canal be completed for boats of 
 at least five tons Imrden ; Hornby, 3,500 acres ; Bayard 
 and McEves, 2,500 acres ; Gideon Granger, 1,000 acres ; 
 and fifty-six persons contributed smaller amounts. Ap- 
 plication for aid was made to the United States and to 
 neighboring states on the groimd that they would be 
 benefited by the canal; Imt no sums were obtained in 
 this way. In spite of these provisions, chief reliance 
 was placed upon loans, and during the years from 1817 
 to 1825, the State borrowed $7,896,150 for this purposo. 
 
 There was no sinking fund provided for paying off 
 the canal debt. The canal fund was merely a trust 
 fund, created to furnish revenue for carrying on the 
 work of constructing the canal, and the capital or 
 income of this fund bore no relation to the amortiza- 
 tion of the principal and the interest on the annual 
 loans. There were canal enthusiasts at that time who 
 believed the canal tolls would bring in so much revenue 
 that they would not only pay for the maintenance of 
 the canal, but would pay for the cost of construction, 
 and might also help pay the cost of State government 
 as well. 
 
 In 1825 the Cayuga and Seneca Canal and the 
 Oswego Canal w^ere authorized by the Legislature. In 
 1829 two more canals were authorized namely, the 
 Crooked Lake and Chemung Canals. In 1830 when the 
 construction of the Chenango Canal was under dis- 
 cussion the canal commissioners reported " That the 
 Chenango Canal would not produce an amount of toll 
 ..... .equal to the interest on the cost and the expense 
 
 of its repairs and superintendence or of either of 
 them." Both the State Controller and the Governor 
 pointed out that the State should not incur additional 
 expenses A\itliout at the same time providing the mivans 
 of defraying such expenses. But all these notes of 
 
30 Taxation in New York 
 
 warning fell upon deaf ears, for the Legislature 
 ordered the canal commissioners to proceed with the 
 construction of the Chenango Canal. 
 
 In 1836 the Black River Canal was authorized by the 
 Legislature. Time has shown that the greatest benefit 
 derived from this canal has been the permanent and 
 ample supply of water which this canal affords to the 
 Rome level of the Erie Canal. 
 
 The same year the Genesee Valley Canal was author- 
 ized. The Genesee River, which meets the Erie Canal 
 at Rochester, is separated from the Allegany River at 
 Olean by a very narrow divide. By constructing a 
 canal across this divide and by canalizing the two 
 rivers, an unbroken inland w^ater communication would 
 be afforded between the important sections of New 
 York and the Mississippi Valley. 
 
 The Champlain Canal was constructed the same time 
 as the Erie Canal. 
 
 By 1835 some improvement of the Erie Canal was 
 conceded to be a necessity, as the original canal no 
 longer sufficed to carry the increasing volume of traffic. 
 ''An Act relating to the Erie Canal," was passed that 
 year which provided for the enlargement of the Erie 
 Canal, and the construction of a double set of lift locks. 
 The cost of this was estimated at $12,416,150, and the 
 time required was estimated at twelve years. The 
 enlargement was not completed until 1862, and the 
 actual cost was over thirty million dollars. 
 
 Governor William Learned Marcy in his message 
 of 1835 said the general fund had been reduced below 
 two hundred thousand dollars. " Prom the origin of 
 our government down to a late period, taxes were 
 imposed whenever the condition of the treasury 
 required it, to raise the means of defraying our 
 ordinary expenses. Taxation was discontinued in 
 1826, not because the income of the general fund 
 was supposed to be sufficient to meet the charges on 
 the treasury, but with the deliberate intention of 
 
Internal Improvements 31 
 
 relieveing the people from further burdens until the 
 capital of that fund should be exhausted. The 
 policy of this course was questionable. What was then 
 foreseen by all as inevitable — the exhaustion of this 
 fund — has happened." He urged the restoration of 
 the general fund, either by an appropriation of canal 
 tolls or by a general tax, and strongly objected to bor- 
 rowing money without making any provisions for its 
 payment, except by relying on indirect revenues. " No 
 government that had a proper regard for its public 
 credit or its permanent prosperity, ever contracted a 
 public debt without providing a revenue for the pay- 
 ment of the interest, at least, if not for its extinguish- 
 ment; and none that neglects to make such a provi- 
 sion but supplies necessities whether ordinary or 
 extraordinary, by loans and provides the interest on 
 them by new loans, can long prosecute successfully 
 public enterprises requiring large expenditures. I 
 therefore deem it essential to the success of the sys- 
 tem of internal improvements that you should, in some 
 way, provide adequate means for paying the interest 
 on the public debt that must be incurred by its further 
 prosecution. ' ' 
 
 Again in 1837 Governor Marcy informed the Legis- 
 lature that temporary loans had been necessary from 
 the literature, bank and common school funds in order 
 to meet the demands of the treasury and that new loans 
 would have to be made to raise funds to pay these 
 temporary loans. 
 
 The chief difficulties in the State's canal system aside 
 from extravagance and laxity of administration have 
 been in the financial plans adopted. To construct 
 canals out of the surplus revenues was not a wise 
 policy on account of the inevitable loss and derange- 
 ment which resulted whenever these funds were insuffi- 
 cient. The competition of the railroads, which resulted 
 in forcing down the rates of toll, could not perhaps 
 have been foreseen, but a different financial plan might 
 have obviated this calamitv. 
 
32 Taxation in New York 
 
 STATE AID TO RAILROADS 
 
 State aid for railroads was solicited under the 
 plausible pretext of developing the resources of the 
 iState, but in many cases it resulted in swelling the 
 State debt and increasing the burden of taxation. 
 State bonds were issued to railroad companies with 
 the expectation that the railroads would pay the 
 annual interest and the principal as it fell due. Many 
 of the early railroads failed and the bonds were thrown 
 back on the State for redemption. In 1836 three mil- 
 lions of dollars were authorized to be loaned to the 
 Erie Railroad. On March 12, 1842, the railroad 
 announced its inability to pay the interest of the 1st 
 of April on the three millions of dollars loaned to it. 
 
 Not only the State, but counties, cities, towns and 
 villages loaned money with a lavish hand to aid in the 
 construction of railroads. Even as late as 1915 fifty- 
 one towns and seven cities were paying interest upon 
 railroad bonds to the extent of $4,623,590. A report 
 submitted to the Constitutional Commission in 1872 
 stated that the bonded indebtedness of toAvns, villages 
 and cities at that time in the State in aid of railroad 
 construction amounted to $26,946,662. These sub- 
 divisions of the State vied with one another in offering 
 bonuses and other special privileges to the railroads 
 for the purpose of inducing them to come thru their 
 localities. The time came, however, in the development 
 of the railroads when the communities saw that they 
 had gone too far, and that public policy demanded a 
 more conservative course. 
 
 Section 9 of the Constitution of 1846 declared that 
 the credit of the State should not in any manner be 
 given or loaned to or in aid of any individual, associa- 
 tion or corporation, thus preventing subsidies to rail- 
 roads or to other enterprises originated by private 
 capital. In the constitutional convention of 1846 this 
 
Internal Impeovements 33 
 
 section was adopted unanimously, so thoroly had 
 the feeling become by tliis time that there had been 
 a gross abuse in the matter of the State loaning money 
 to private enterprises. It was not until 1874 that a 
 constitutional amendment prohibited the different sub- 
 divisions of the State from loaning money to private 
 enterprises. This amendment read as follows: " Xo 
 county, city, town or \'illage shall hereafter give any 
 money or property, or loan its money or credit, to or 
 in aid of any indiWdual, association or corporation, 
 or become, directly or indirectly, the o^iier of stock in 
 or bonds of any association or corporation, nor shall 
 any such county, city, town, or ^^llage be allowed to 
 incur any indebtedness, except for county, city, town 
 or village purposes." 
 
 The original charters gave the railroads a right to 
 carry passengers only. In 1836 the Xew York Central 
 Eailroad was allowed to carry freight on condition that 
 it paid the regular canal tolls, and in 1844 this privilege 
 was extended to all the railroads. Later this demand 
 was enforced only during the season of canal naviga- 
 tion, and finally in 1851, all canal tolls on railroads 
 were abolished. The decreasing tolls on canals began to 
 cause alarm in 1854, and the Coromittee of AVays and 
 Means of the State Assembly reported a bill to reim- 
 pose tolls on railroads. It was seen now apparently for 
 the first time that the canals could not compete with the 
 railroads. The tolls on canals had been frequently 
 reduced to meet the competition of railroads. In 1851 
 the tolls on the canals amounted to $3,702,000, but in 
 1859 they had fallen to $1,812,280. 
 
 The railroad rates were ruinously low during the 
 open canal season, and during the closed season were 
 high again. At last in 1882 by a constitutional amend- 
 ment all tolls on the canals were abolished and they 
 were made entirely free. Since then the canals have 
 been maintained bv taxation. 
 2 
 
34 Taxation in New York 
 
 STOP AND TAX 
 
 There was no direct State tax from 1826 to 1842. 
 The supporters of internal improvements were desi- 
 rous of making the financial condition of the State 
 appear as prosperous as possible, and both political 
 parties in the Legislature opposed taxation and sup- 
 ported every subterfuge devised to meet the annual 
 expenses without resorting to taxation. In spite of con- 
 tinued warnings from the State Controller, the capital 
 of the general fund was used in paying the annual 
 expenses of the State. 
 
 During the panic of 1837 the State's credit was in 
 jeopardy and affairs looked very black indeed, as 
 money could not be readily borrowed. This is the 
 period spoken of by W. P. Snyder, Auditor General of 
 Pennsylvania, in his annual report for 1906 when he 
 said: '' From 1830 to 1853 was a period in the finan- 
 cial affairs of the Commonwealth of Pennsylvania 
 during which it defaulted in the pa^anent of the inter- 
 est upon its debt, and was driven to the last extremity 
 in raising revenue." 
 
 Yet in spite of the financial depression existing the 
 Ways and Means Committee of the State Assembly 
 in 1838 of which Samuel B. Ruggles of New York 
 City was chairman, presented a '' Plan to borrow 
 forty million dollars to be employed in the more speedy 
 enlargement of the Erie Canal, and the prosecution of 
 a gigantic and magnificent scheme of internal improve- 
 ments, for developing the mighty realties which the 
 future had in store." 
 
 Azariah Cutting Flagg was Controller of the State 
 at the time, and his report concerning the Ruggles 
 Plan was one of the great financial documents of this 
 period. He pointed out that if it Avas sound policy 
 to borrow to the fullest extent of the means possessed 
 for paying the annual interest, there was nothing 
 that would warrant the contraction of a debt of over 
 twelve million dollars since the net revenues of the 
 State would be sufficient for paying interest on only 
 
Internal Improvements 35 
 
 that amoimt. Furthermore, he said, " It is goin^ to 
 the utmost verge of prudence to create a debt sufficient 
 to absorb the Avhole annual surplus in paying interest, 
 and at least the prospective increase from tolls ought 
 to be left untouched, as a sinking fund, to redeem the 
 principal of the debt. ' ' Another fallacy equally grave 
 consisted " in the total omission to take into account 
 the prospective, but certain and inevitable expenses of 
 keeping the canals in repair and collecting the tolls. 
 These expenditures for a period of twenty years would 
 amount to twenty million dollars." 
 
 The financial rule as adopted by the Legislature in 
 1839 was stated, *' to avoid the necessity of resorting 
 to taxation however small, the obvious and sound rule 
 of our financial policy will be to adjust the loans of 
 each year so that the annual interest on the whole 
 debt may always fall within the clear income of the 
 State." The plan was to borrow as long as the sur- 
 plus tolls afforded means of paying the interest, and to 
 make no provision Avhatever for paying the principal. 
 The result was to destroy the confidence of money 
 lenders to such a degree that in the winter of 1842 the 
 six per cent bonds of the State, which in 1833 bore 
 twenty per cent premium, were not saleable at twenty 
 per cent discount. 
 
 The credit of the State was now at its lowest point 
 of depression; the contractors on public works had 
 been without pay, in some cases, many months, and 
 the total amount due them and other arrearages 
 exceeded one million dollars. The State debt, with inter- 
 est amounted to $25,999,074. Controller Flagg in his 
 report for 1842 stated the case very tersely as follows : 
 *' It is not now a question whether the completion of 
 this canal will be beneficial to a particular section, but 
 it is a question of solvency or insolvency; it has 
 become purely a question of finance. The impulse for 
 internal improvement and local interests regardless 
 of the condition of the finances has pressed the State 
 to the very brink of dishonor and ])ankruptcy. ' ' 
 
36 ' Taxation in New Yoek 
 
 The result was the '' Stop and Tax Law of 1842," 
 which provided for raising a tax of one mill on each 
 dollar of real and personal estate. Also all expen- 
 ditures for construction on the canals were suspended, 
 and only necessary expenditures for maintenance and 
 repairs were allowed. Bonds of the 'State to the 
 amount of $25,089,337, bearing seven per cent interest 
 for seven years, was authorized to pay the State debts, 
 and these bonds of the State were to be redeemed by 
 taxation. 
 
 The people were now aroused to take some action to 
 prevent another recurrence of this policy of dishonor 
 and near bankruptcy, and so the constitutional con- 
 vention of 1846 was called. Up to this time there was 
 no constitutional debt limit, no opportunity for the 
 people to reject or sanction the creation of a debt, and 
 no provosion for sinking funds. The new constitution 
 provided that the Legislature could not contract a 
 State debt of one million dollars or over without the 
 people first voting on the proposition. There was how- 
 ever, this exception, that in case of invasion or to sup- 
 press insurrection the Legislature could create a State 
 debt of one million dollars or over without first giving 
 the people the opportunity to vote on the proposition. 
 A sinking fund to pay the canal debt was provided. 
 And also the credit of the State should not be loaned 
 to any corporation. The constitution of 1846 was 
 adopted by the people by a larger majority than that 
 given to the adoption of any other constitution sub- 
 mitted to the people for their approval, thus showing 
 the almost unanimous desire for a reform in their 
 financial matters. 
 
 How few realize to-day that the State was nearer 
 bankruptcy in 1842 than at any other time in its his- 
 tory, all brought about by the lack of a sound financial 
 system to carry on the internal improvements then 
 under way. The canal system was a wonderful impetus 
 to the development and growth of the State, but it was 
 unfortunate that it was entangled with a bad financial 
 plan. 
 
CHAPTER III 
 
 EARLY SOURCES OF STATE REVENUE 
 
 The General Fund in 1789 consisted of the State 
 lands, a considerable amount of cash and securities 
 acquired thru the operation of the Funding Act of 
 Congress, and the ordinary revenues. It was expected 
 that the annual revenue would be more than sufficient to 
 pay all the ordinary expenses of the government for 
 many years. Unfortunately, however, the fund was so 
 badly managed that by 1835 Governor Marcy in his 
 annual message to the Legislature stated that the 
 general fund had been reduced below two hundred 
 thousand dollars. 
 
 SALE OF PUBLIC LANDS 
 
 During the years 1790 to 1795 the proceeds from the 
 sale of public lands amounted to fifty per cent of the 
 entire State revenue. The greatest amount received 
 in any one 3'ear was in 1792, when three hundred and 
 twenty-five thousand dollars was received out of a 
 total revenue of $595,500. It was thought that a fund 
 would accumulate from this source which would relieve 
 the people of the burden's of taxation for the support 
 of the government. No such fund, however, was 
 allowed to accumulate. 
 
 In colonial days lands were generall}^ granted with 
 the reservation of a certain rent to be paid annually 
 either in money or kind. The rates in 1678 were from 
 $0.40 to $1.50 '(30d to lOOd) per one hundred acres. 
 Apparently these low^ rates were never raised and 
 there was great laxity in collecting even these small 
 amounts. 
 
 In 1710 Governor Robert Hunter thought the colonj^ 
 could collect a large revenue from the quit rents. But 
 
 [371 
 
38 Taxation in New York 
 
 his suggestion went unheeded. During the Revohition- 
 ary War the English authorities tried to induce lease- 
 hoklers to commute their annual quit rents by the pa,y- 
 ment of a round sum. 
 
 In 1819 an act was passed combining many useful 
 provisions of former acts relating to the collection and 
 commutation of quit rents. The act of 1819 made the 
 settlement very easy. Payment of sixty per cent of 
 the arrears and commutations would release the lands 
 and the rents were discharged upon all lands upon 
 which arrears had been paid up to 1814. 
 
 The homestead laws of 1783 to 1801 required actual 
 settlement on each six hundred and forty acres to be 
 made in seven years. By the acts of 1801, 1806 and 
 1809, the time was extended seven years from 1801, 
 which would make settlement to be made before 1808 ; 
 then by the act of 1806 extension Avas given ten years, 
 which would cause settlement to be made before 1818; 
 and finally the act of 1809 gave a further extension of 
 ten years, bringing settlement down to 1828. 
 
 The policy of selling off the public lands was adopted 
 early in the history of the State. A military tract of 
 one million and seven hundred thousand acres was set 
 apart in the center of the State to pay bounties to the 
 soldiers of the Revolutionary War. Under a law passed 
 in 1791 to sell ihe public domain there was sold 5,542,- 
 173 acres of land for $1,030,433. 
 
 The largest land grant made by the State at any time 
 was located in Northern New York, and is known as 
 Macomb's Purchase. As indicated by its name, it 
 was not a grant, strictly, but a sale. The price paid 
 was eight pence per acre. The purchase was made 
 January 10, 1792. It comprised 3,934,899 acres, 
 extending over most of the territory now included in 
 Franklin, Herkimer, Jefferson, Lewis, Oswego, and 
 Saint Lawrence counties. Although the tract took its 
 name from Alexander Macomb, two other persons, 
 Daniel McCormick and William Constable, were 
 
Early Sources of State Revenue 39 
 
 associated with him in the enterprise and appear to 
 have been jointly interested as owners. 
 
 John and Nicholas Roosevelt, James Caldwell, 
 William Cooper and many others secured thousands 
 of acres of land from the State at prices ranging from 
 one to three shillings per acre. The State lands were 
 thus distributed in a lavish manner. Speculators 
 bought from the State large tracts of land, opened it 
 up for settlement to colonists, and in many cases 
 reaped large fortunes through their speculations. By 
 1822 only 991,657 acres of the State's public lands were 
 left, and these were turned over to the Common School 
 Fund to be sold and the proceeds to constitute a per- 
 manent fund. 
 
 In a very careless manner were the sale and manage- 
 ment of the State's public lands conducted. In 1804 
 an inquiry into the number of mortgages held by the 
 State showed that a considerable number were unpaid, 
 that others had been paid and not cancelled, and that 
 the affairs were in a chaotic condition. Suits had to 
 be brought against the commissioners to recover the 
 amounts due the State. Tracts of land were sold to 
 which the State had not a clear title, and this resulted 
 in subsequent litigation on the part of the State. 
 
 In 1883 the State adopted a new policy. It pro- 
 hibited the further sale of lands which it owned in 
 the Adirondack and Catskill counties. In 1915 the 
 States 's forest preserve consisted of 1,493,660 acres 
 of land which it owned in the Adirondacks and 114,- 
 282 acres of land which it o^^med in the Catskills. 
 Thus the State is buying back some of the land which 
 it sold so cheaply over one hundred years ago. It is 
 open to criticism whether the State acted wisely in 
 disposing of its public lands so lavishly. The needs 
 of the State were not so pressing as to demand forced 
 sales of land as was shown l)y the large surplus 
 revenue in the State treasury at that time. True the 
 State needed settlers ; but the public lands could have 
 been disposed of in smaller parcels, and not only 
 
40 Taxation in New York 
 
 would the returns have been greater, but a more equal 
 distribution of land would have resulted. 
 
 In Albany, Columbia, Delaware, Rensselaer and 
 Schoharie counties were large tracts of land which 
 were held by the descendants of the patroons of the 
 Dutch colonial period. Even as late as 1848 Governor 
 John Young in his annual message to the Legislature 
 estimated that one million and eight hundred thousand 
 acres were still held on leasehold tenures, and that at 
 least two hundred and sixty thousand persons were 
 directly affected by their provisions. 
 
 Tenants held tracts on the manorial estates under 
 perpetual leases. During the forties an anti-rent 
 agitation was started by these holders of perpetual 
 leases. They tried to impeach the title of their land- 
 lords and refused to pay their rent. They were able 
 to get a section placed in the constitution of 1846 
 forbidding the leasing of agricultural land for a longer 
 period than twelve years. This section was retained 
 in the constitution of 1894 and is still part of the basic 
 law of the (State. It resulted in breaking up the per- 
 petual leases and prevented absentee landlordism in 
 this State, a system which has been the curse of many 
 countries of Europe. 
 
 From 1789 to 1822 inclusive the State has received 
 from the sale of public lands the sum of $1,771,859. 
 
 LOTTERIES 
 
 While the statesmen of the early period of the 
 State 's history were slow to raise revenue by imposing 
 a direct tax upon the people, they found another means 
 of raising revenue and that was by lotteries. The 
 preambles to many of the early lottery statutes show 
 that lotteries were proposed to avoid the necessity 
 of taxation, said to be too heavy for the people to bear 
 by reason of losses sustained or indebtedness incurred 
 in time of war. 
 
 McMaster in his history of the United States says : 
 ** The funding act of 1790 was highly popular in 
 
Early Sources of State Revenue 41 
 
 the Northern and Eastern states, because here the 
 greater part of the army had been maintained and here 
 tens of thousands of farmers, tradesmen and mer- 
 chants had come into possession of certificates in final 
 settlement. In a moment they found themselves in 
 possession of valuable government script. A rage for 
 speculation sprang uj) of which one phase of tliis mania 
 for speculation was the lottery craze. Money grew' 
 easier and plentiful, even the poorest laborer in the 
 ditches was enabled to gratify his taste for speculation 
 by venturing a few shillings in a part ticket in one of 
 the hundred lotteries for schools, bridges, roads, 
 churches, etc." 
 
 The State lotteries were in the hands of managers 
 appointed by the Legislature who conducted the lot- 
 teries, collected the funds, paid the prizes and turned 
 the receipts over to the institution for which the lot- 
 tery was drawn, or to the State Treasurer. Fourteen 
 per cent of the returns were allowed these managers 
 as compensation and for defraying all necessary 
 expenses. The reports of the State Treasurer for this 
 period does not show the total sums collected from 
 lotteries as a large percentage of the receipts did not 
 pass thru the State Treasurer's hands at all. 
 
 It would be exceedingly difficult to enumerate all the 
 acts of the Legislature regarding lotteries, and the 
 sums raised, since one lottery was often suspended to 
 make room for another. An Assembly conmiittee was 
 appointed in 1819 to report upon the sums raised by 
 lotteries. The following table is taken from this 
 report : 
 
 Su7ns Actually Raised by 1819. 
 
 Purpose Amount. 
 
 Roads $109,100 
 
 Hudson River Improvement 108,000 
 
 Literature 62,641 
 
 Union College 111,338 
 
 Connnon Schools 37,500 
 
 Botanical Garden 74,268 
 
42 Taxation in New York 
 
 Purpose Amount 
 
 Board of Health 25,000 
 
 Charity 20,000 
 
 Sag Harbor 5,000 
 
 Capitol Building 32,000 
 
 Grand total $584,847 
 
 Sums to he Raised. 
 
 Union College $284,000 
 
 Historical Society 12,000 
 
 Reimburse State Treasury 100,000 
 
 All Others 165,791 
 
 Total $561,791 
 
 When the constitutional convention of 1821 met, 
 lotteries were felt to be a nuisance and an agitation was 
 in progress to have them prohibited. In this consti- 
 tutional convention Delegate Ogden Edwards of New 
 York City said that lotteries were the very worst mode 
 which could be resorted to for the purpose of raising 
 revenue; and Delegate John Duer of Orange County 
 said that the larger portion of the revenue derived 
 from lotteries would always be drawn from the pock- 
 ets of the poor, and that by a process which was cer- 
 tain to debauch the morals and augment the poverty of 
 those who were betrayed into vice by legislative 
 seduction. 
 
 By a vote of 53 to 47 in the constitutional convention, 
 Section 11 of Article 7, providing that no lottery should 
 hereafter be authorized in the State, was adopted; 
 and when the people by their votes approved the con- 
 stitution of 1821, the door was forever closed to the 
 raising of revenue for the State by means of lotteries. 
 
 ONONDAGA SALT SPRINGS 
 
 The State acquired the Onondaga salt springs from 
 the Indians in 1795 by the payment of one thousand 
 dollars and the annual royalties of one hundred dollars 
 
Early Sources of State Revenue 43 
 
 and one hundred and fifty bushels of salt. In 1797 a 
 superintendent was appointed, and the tracts was 
 divided into ten-acre lots and leased to individuals, 
 requiring each lessee to manufacture ten bushels per 
 year and four cents per bushel was charged. In 1817 
 the duty was raised to twelve and one-half cents and 
 the proceeds w^ere to go into the canal fund for the con- 
 struction of the Erie Canal. It was at this time that 
 New York salt was selling for two dollars a bushel, 
 wiiile salt from the springs in other states sold for 
 four dollars to seven dollars. It was confidently 
 expected and predicted that the New ,York works would 
 supply the valleys of the Ohio and the Mississippi 
 with salt and that an increasing revenue would be 
 derived. So optimistic were the people about the 
 value to the State of these salt springs that a section 
 was inserted in the State constitution of 1821 prohibit- 
 ing the State from forever disposing of them, which 
 reads as follows : ' ' The Legislature shall never sell 
 or dispose of the salt springs belonging to this State, 
 nor the land contiguous thereto, which may be neces- 
 sary or convenient for their use; but the same shall 
 be and remain the property of this State." 
 
 Alas, the fond hopes of the early promoters of the 
 salt industry of deriving a large part of the State's 
 revenues from the salt springs were doomed to dis- 
 appointment. In 1822 the tax on salt was reduced to 
 six cents per bushel. In 1840 a bounty of three cents 
 a bushel was given by the State on salt shipped out- 
 side the State. While this liounty caused a marked 
 increase in the amount of salt manufactured, it pro- 
 voked much opposition among the people, who saw a 
 situation produced whereby an inhabitant of Massa- 
 chusetts could get Onondaga salt cheaper than an 
 inhabitant of New York, while an inhabitant of New 
 York had to pay annually his proportion of the bounty 
 which went to a few manufacturers. The State Con- 
 troller in his annual report for 1845 said that it was 
 
44 Taxation in New York 
 
 ** more just and equal to support the government by 
 general assessment on property than by a tax on salt, 
 which was an article of necessary consumption to every 
 family in the State." The bounty law was now 
 repealed, and the tax on salt was reduced to one cent 
 per bushel. 
 
 However, the State constitution adopted in 1846 still 
 contained the section prohibiting the State from for- 
 ever disposing of the Onondaga salt springs. When 
 the constitutional convention of 1867 met the salt 
 springs had ceased to be a revenue producer to the 
 State, but were now being operated at a loss. This 
 was occasioned by the fact that salt could be produced 
 in Michigan and other parts of the West much cheaper 
 than here. Yet a movement to eliminate the section 
 prohibiting the State from forever disposing of the 
 Onondaga salt springs from the proposed constitution 
 was voted dowm in the constitutional convention of 
 1867. Even as late as 1892 an amendment to the con- 
 stitution to give the Legislature power to dispose of 
 the Onondaga salt springs was voted down by the 
 peojjle. 
 
 When the constitutional convention of 1894 met all 
 reference to the Onondaga salt springs was omitted 
 from the new constitution and when the people adopted 
 this constitution, the way was clear for the Legislature 
 to dispose of them. Governor Levi Parsons Morton's 
 message to the Legislature in 1895 said : ' ' The prohi- 
 bition against selling the Onondaga salt springs has 
 been abrogated. These springs are a constant source 
 of useless and, therefore, unjustifiable expense to the 
 iState, and the disposition to be made of them ought 
 to be promptly considered and determined." 
 
 Following Governor Morton's suggestion the Legis- 
 lature in 1895 adopted necessary legislation for the 
 sale of the Onondaga salt springs and they were finally 
 disposed of in 1898. Thus, just one hundred years 
 following their acquisition by the State, the attempt 
 was given up to raise revenue by a State industry. It 
 
Early Sources of State Revenue 45 
 
 is pathetic to see how the people retained the Onondaga 
 salt spring long after they had become a losing propo- 
 sition. Many insisted that by a proper management 
 they could be made to yield a profit ; but the manage- 
 ment of them had been changed many times, and it was 
 not for a lack of proper management that they failed 
 to produce revenue. One must conclude that the 
 people wanted the cost of State government paid by 
 other means than by direct taxation. 
 
 STEAMBOAT TAX 
 
 A law passed April 15, 1817, provided a tax of $1 
 for each passenger by steamboat on the Hudson River, 
 for each trip over one hundred miles, and half that sum 
 for any distance less than one hundred miles, and over 
 thirty miles. All moneys collected by the steamboat 
 tax was to go into the canal fund for the construction 
 of the Erie Canal. 
 
 It proved a very unpopular way of raising revenue, 
 and in 1821 the tax was assumed by the steamboat 
 companies and was commuted in a fixed pajmient of 
 five thousand dollars a year. The tax was discontinued 
 after 1823. The total amount raised by the steamboat 
 tax was $73,51 0. 
 
 The advocates of the steamboat tax were canal 
 enthusiasts who thought the great highwav of travel 
 would be by way of the Hudson River and the Erie 
 Canal to the growing country of the West. Of course 
 no account was taken of the railroads, and it Avas the 
 latter perhaps more than anvthing else which 
 destroyed the feasibility of the steamboat tax. 
 
 PEDDLERS' LICENSE TAX 
 
 In colonial days itinerant peddlers were much more 
 common than at present. Even as early as 1648 com- 
 plaints were made by the resident merchants of New 
 Amsterdam that they were much harassed by the com- 
 petition of itinerant peddlers coming especially from 
 New England. Foreign traders were then compelled 
 
46 Taxation in New York 
 
 to pay twenty guilders for the privilege of selling their 
 wares in New Amsterdam. 
 
 At varying rates, depending upon Avhether the trav- 
 eling was on foot, with a one-horse wagon, or a team 
 and wagon, the peddlers' license tax has been con- 
 tinued dowai to the present time. It has never been a 
 great revenue producer, and the receipts in any one 
 year never exceeded three thousand five hundred dol- 
 lars. In 1910 it yielded only sixty dollars. It seems as 
 tho the State might better abandon this means of rais; 
 ing revenue, and allow it to be developed by the 
 municipalities. 
 
 AUCTION DUTIES 
 
 The auction duties resulted from a tax imposed upon 
 the sale by auction of wines and spirits, whether 
 domestic or foreign, and all goods, merchandise and 
 effects of foreign production imported into the State. 
 In 1801 auctioneers were required to take out a license, 
 to give a bond, and their charges were limited to two 
 and one-half per cent, of their sales. 
 
 In 1817 when the construction of the Erie Canal was 
 authorized it was enacted that the receipts from the 
 auction duties should go into the canal fund for the 
 construction of the Erie Canal. The same year the 
 system was changed and auctioneers were no longer 
 licensed, but instead were appointed by the Governor 
 and the Senate. The rates were reduced to one and 
 one half per cent, on the majority of goods. In 1838 
 a change was made again and the privilege of acting 
 as auctioneers was extended to every person giving 
 the requisite bond and filing it with the State 
 Comptroller. 
 
 The largest sum ever collected from auction duties 
 in any one year was in 1866 when it amounted to 
 $269,720. This tax has been dwindling in recent years,^ 
 only $394 being collected in 1893. From 1800 to 1893 
 inclusive the State has collected $8,969,895 from auc- 
 tion duties. This is another source of revenue which 
 the State could better leave to the municipalities to 
 develop. 
 
CHAPTER IV 
 PUBLIC EDUCATION 
 
 In 1917 there was levied by tax for the support of 
 the public schools of the State the sum of $70,521,- 
 739.58. This is more than the cost of the State 
 government. Add to this $6,754,609.34 given by the 
 State in aid of the public schools, and when w^e con- 
 sider the amount spent in support of higher education 
 consisting of colleges and universities, and the amount 
 spent in supjjort of parochial schools, we can realize 
 the magnitude of the educational system of the State. 
 
 As a Dutch colony schools were established thruout 
 the settlements. Adam Roelantsen was the earliest 
 knowTi schoolmaster in the colony. He was licensed 
 to teach August 4, 1637. What salary he received, and 
 from whence it came can only be surmised as prac- 
 tically nothing is known of his school keeping. 
 
 The Dutch schools were closely allied with the Dutch 
 church. In the cliurch beside the minister were the 
 voorlezer or reader, and voorsanger or precenter. The 
 voorlezer^s duty was l)efore the sermon to read a chap- 
 ter out of the Bil^le and beside as clerk to keep the 
 church records. The voorsanger set the psalms. Very 
 frequently the same pei'son acted as both voorlezer and 
 voorsanger, and the schoolmaster was generally both 
 voorlezer and voorsanger. 
 
 In 1649 a complaint called the Great Remonstrance 
 was sent to Holland by prominent inhabitants of New 
 Amsterdam and among other things they complained 
 of the misappi'opriation of the funds collected by pub- 
 lic subscription for a school house and of the irregular 
 manner in w^hich the school was kept, and expressed 
 the opinion that two masters should be employed. 
 
 Upon tlie advent of the second period of English rule 
 in 1674 the schools passed under the control of the 
 
 [471 
 
48 Taxation in New York 
 
 Dutch cliiircli. The English could see only a menace 
 to their power in maintaining schools for the Dutch. 
 Consequently these Dutch schools were no longer offi- 
 cial schools. Neither were they free schools as tuition 
 was charged, although the poor were exempted from 
 paying tuition. With a short sighted policy these 
 Dutch schools did not teach the English language and 
 while they continued down to the Revolutionary War 
 they gradually died out as the people more and more 
 became an English speaking people. 
 
 During the English administration of the colony the 
 English government did nothing for elementary edu- 
 cation. It founded Kings College, now Columbia 
 University, but concerned itself very little with the 
 education of the common people. A missionary body 
 of the Church of England, the Society for the Propaga- 
 tion of the Gospel in Foreign Parts, however, did estab- 
 lish and support schools in the colony in which it 
 insisted that the English language should be taught. 
 Between 1704 and 1775 it employed about sixty teach- 
 ers, schools being maintained in Albany, New York, 
 Richmond, Suffolk, and Westchester counties. The 
 annual stipends allowed its teachers ranged from £10 
 to £40. 
 
 The desire of this missionary body was so to engage 
 public opinion in the colony — that self support of the 
 schools would after a few years be assmned by the 
 inhabitants. But that time never came. Whether it 
 was poverty or educational indifference that prevented 
 the development of a public school system in the New 
 York colony is hard to say. Apparentl}^ there was a 
 determination on the part of the colonists not to have 
 taxation imposed upon them for educational purposes. 
 The wealthy of course educated their children by 
 means of special tutors or private schools and so were 
 not interested in the education of the poor man 's child. 
 
 The schools established by this missionary body 
 were to some extent charitv schools, as there was 
 
Public Education 49 
 
 always an assurance in the support given the school- 
 masters that a specified number of children should be 
 taught gratis. Those able to do so i)aid their tuition. 
 The non-paying scholars were usually in proportion of 
 one-fourth to one-half of the enrollment. These schools 
 were not reserved for the sole benefit of the children 
 of church adherents, but admitted pupils generally. 
 When the (State at the close of the Revolutionary War 
 entered upon an educational policy it is very likely it 
 patterned the common schools after the schools main- 
 tained here for nearly one hundred years by the 
 Society for the Propagation of the Gospel in Foreign 
 Parts. 
 
 The first legislative enactment in regard to a com- 
 mon school was in 1791 and was an act for building a 
 school house and maintaining a school in the Town of 
 Clermont, Columbia County. It authorized the appro- 
 priation of moneys in the hands of the overseers of 
 the poor, from excises and fines, for the erection of a 
 school house and for maintaining a schoolmaster in 
 said town. Even here no attempt to support the school 
 by direct taxation was imposed. 
 
 The English evacuated New York City in November, 
 1783, and within two months thereafter the State Legis- 
 lature was in session and Governor George Clinton in 
 his official message to that body stated that the most 
 important subject for their consideration was the 
 necessity of providing for the education of the youth 
 of the State. Year after year Governor Clinton, in his 
 annual messages, continued to impress upon the Legis- 
 lature the importance of providing elementary schools. 
 Whatever we may think of Governor Clinton 's conduct 
 in opposing the adoption of the constitution of the 
 United States by this State, the cause of education 
 never had a more devoted friend and advocate than its 
 first governor. It was not until 1795 that the Legis- 
 lature took action for the establishment of common 
 schools thiniout the State. It may seem strange now 
 
50 Taxation in New Yoek 
 
 that there was so much delay in this matter. The 
 expense of inaugurating a school system was a con- 
 sideration at that day which made many men cautious ; 
 there w^ere those w^ho believed that parents should meet 
 the entire expense of the education of their children; 
 and there were others who were positively opjoosed not 
 only to the State 's assuming direction of public educa- 
 tion, but even to the idea of educating the masses at all. 
 
 The law of 1795 authorized an annual appropriation 
 of £20,000 a year for five years " For the purpose of 
 encouraging and maintaining schools in the several 
 cities and towns in this 'State, in which the inhabitants 
 residing in the State shall be instructed in the English 
 language, or be taught English grammar, arithmetic, 
 mathematics and such other branches of knowledge as 
 are most useful and necessarj^ to complete a good 
 English education." This law appears to be the death 
 knell of the Dutch schools, for the Dutch schools and 
 the English schools had been existing side by side in 
 the colony for nearly one hundred years. 
 
 As originally passed by the Assembly the law of 
 1795 provided for the annual appropriation of £30,000 
 continuously, but it was amended in the Senate to 
 £20,000 annually for five years. The amended bill 
 finally passed the Assembly by a vote of 27 to 24. Wliy 
 was the Assembly more favorably inclined towards 
 public education than the Senate 1 Was the Assembly 
 more democratic and the Senate more aristocratic ; or 
 was there opposition from the Dutch whose schools 
 could receive no share in the State appropriation of 
 £20,000, as the law of 1795 insisted that the English 
 language should be taught? Even as late as 1846 Dele- 
 gate George A. Simmons, a la^vyer of Essex County, 
 whose ancestors came from England, proposed in 
 the constitutional convention of that year a liter- 
 acy test for voters that they should be able to read and 
 write the English language; when Delegate Tunis G. 
 Bergen, a farmer of Kings Count}^, whose ancestors 
 
Public Education 51 
 
 came from Holland, sought to amend it to also include 
 the Dutch language, stating that according to the 
 articles of capitulation in 1664 the Dutch were guaran- 
 teed all their rights, and the free use of the Dutch lan- 
 guage was one of these rights. No vote was taken on 
 either of these propositions in the convention, however. 
 The Dutch language Avas clung to very tenaciously by 
 the descendants of the first settlers and even as late as 
 the forties there were sections in the Hudson Valley 
 where children could not speak the English language 
 when first entering the public schools. It is fortunate 
 that the Legislature in 1795 allowed no bilingual system 
 of education in this State. 
 
 According to the law of 1795 the £20,000 a year was 
 to be apportioned to the localities which maintained 
 schools. Each town was required to raise by taxation 
 a sum equal to one-half the amount apportioned to it 
 from the State fund. When we realize that to-day the 
 localities contribute by taxation nine-tenths of the 
 money which supports the public schools of the State 
 and that the State contributes only one-tenth, we can 
 see how generous the State was in 1795 in offering to 
 contribute two-thirds of the money for the support of 
 the pul)lic schools if the localities would by taxation 
 raise one-third. 
 
 In 1798 there had been organized 1,352 public schools 
 in the 'State having a registration of 59,660 pupils. 
 Unfortunately the law expired in 1800 and the State 
 did nothing more for the conmion schools until 1812. 
 The Assembly passed a bill in 1800 to continue the 
 appropriations, but the Senate failed to act on it. The 
 law of 1812 divided the State outside of the City of 
 New York into school districts with a school organiza- 
 tion in each district at the head of which was one or 
 three trustees elected by the people. In 1917 there 
 were over ten thousand school districts in the State. 
 The school trustees were required to keep a school 
 in each school district for a certain number of weeks 
 
52 Taxation in New York 
 
 each year. They were now required to raise by tax- 
 ation an amount equal to the amount received from the 
 State. The localities' share of the burden was thus 
 increased from one-third to one-half. Under the law 
 of 1795 it was optional with the localities whether 
 to have public schools or not, but under the law of 
 1812 it became obligatory for the localities to have 
 public schools. 
 
 During the interval between 1800 and 1812 when 
 the State was doing nothing for the common schools 
 an educational work was begun in New York City in 
 1805 under private auspices which continued down 
 to 1853. There were many private schools in New York 
 City which were attended by the children of the aris- 
 tocratic and wealthy families. There were also man>" 
 charitable and church schools, but the twelve promi- 
 nent citizens of New York who founded the Public 
 School Societ}^ of New York City in 1805 knew that 
 there were many children in the city who liad no 
 opportunity to obtain an education. The first presi- 
 dent of this society was DeAVitt Clinton, who con- 
 tinued as such until his death in 1828. The society's 
 incorporation was entitled '' An act to incorporate the 
 society instituted in the City of New York for the 
 establishment of a free school for the education of 
 poor children who do not belong to, or are not provided 
 for, by any religious society." This society received 
 voluntary contributions and appropriations were 
 made to it by the city and by the State. It participated 
 pro rata in the apportionment of the State school 
 funds. 
 
 Gi-adually public sentiment became opposed to a 
 private corporation's management of schools which 
 were supported almost wholly from the public treas- 
 ury. Po]:)ular opinion earnestly supported the idea 
 that public authorities should control the public schools 
 and, in 1842, the provisions of the common school law 
 of 1812 were extended to New York Citv and a board of 
 
Public Education 53 
 
 education and the other necessary machinery for oper- 
 ating the schools of a city ^\'ere created. In 1853 the 
 Public School Society surrendered to the city board of 
 education all its property, real and personal, valued 
 at $454,421.85 and wliich included seventy-eight 
 schools. Thus ended a system of private management 
 of public schools. The managers of the Public School 
 Society are entitled to the greatest chedit for so mag- 
 nanimously surrendering their school property to the 
 City of New York. 
 
 The State constitution adopted in 1894 forbids any 
 aid to denominational schools as follows : 
 
 " Neither the State nor any subdivision thereof, 
 shall use its property or credit or any public money, 
 or authority or permit either to be used, directly or 
 indirectly, in aid or maintenance, other than for exami- 
 nation or inspection, of any school or institution of 
 learning wholly or in part under the control or direc- 
 tion of any religious denomination or in which any 
 denominational tenet or doctrine is taught." 
 
 DoA^ii to 1867 the public schools of the State were 
 not free schools. Tuition was charged the children 
 whose parents were able to pay for the same. Among 
 the several duties of school trustees at that time were 
 the follo^\'ing prescribed by " To ascertain by the 
 teacher's list the persons who have sent to school, 
 and the nmnber of children each has sent, and the 
 number of days each child has attended and to charge 
 all such persons with the balance necessary to be 
 raised beyond the public moneys for the payment of 
 teacher's wages, each in proportion to the number of 
 days and children sent by him. 
 
 To exempt from the pa^Tiient of such charge, in 
 whole or in part, such indigent inhabitants of the dis- 
 trict as they may deem proper, and to file a list of 
 such exemptions in the district clerk's office. 
 
 To add the amount of such exemption to the first 
 
54 Taxation in New York 
 
 tax list thereafter to be made out by them, or to collect 
 it by a separate tax. 
 
 To make out a rate bill for the remainder of such 
 balance, containing the name of each person remain- 
 ing charged and the amount to him and to annex 
 thereto their warrant, under their hands, with or 
 without seal, for the collection thereof. 
 
 To deliver such rate bill, with their warrant 
 thereto attached, to the collector. 
 
 To collect by a district tax any portion of any such 
 rate bill which shall prove to be uncollectible." 
 
 This was known as the rate bill system. The 
 expenses of the school district were met in three dif- 
 ferent ways. The fund apportioned by the State, 
 which was about twenty dollars for each district, was 
 to be applied exclusively toward the payment of the 
 teacher's salary; those children whose parents were 
 able to pay were compelled to pay for their tuition; 
 while tuition of the indigent and the expense of pro- 
 viding a school house, fuel, etc., was to be met by a 
 school district tax. This desire to avoid taxation was 
 responsible for the rate bill system. For the school 
 year of August 1, 1865, to July 31, 1866, there was col- 
 lected in the State by rate bills the sum of $709,025.36, 
 and for the fifty-three years this odious system was 
 in force probably over twenty million dollars was 
 collected by rate bills. 
 
 The rate bill system placed a burden upon the poor 
 which they were not able to meet. To avoid it, they 
 must acknowedge that they w^ere indigent. The chil- 
 dren alfected were therefore publicly branded as 
 indigent children and the recipients of charity. The 
 whole rate bill system was repugnant to the propel 
 spirit of democratic institutions. And yet this ques- 
 tion of doing away with the rate bill system was one 
 of the most troublesome in the development of the 
 public school system of the State. It was a subject 
 of bitter controversy in the Legislature for many years 
 
Public Education 55 
 
 before the solution was finally reached. In the con- 
 stitutional convention of 1846 the friends of the free 
 school system fought desperately to do away with the 
 rate bills, but without success. It was time of retrench- 
 ment and the people did not want to be burdened with 
 increased taxation. 
 
 Year after year the free school advocates fought on, 
 and when the Legislature did pass an act doing away 
 with the rate bills the Court of Appeals declared the 
 law unconstitutional on account of technicalities. 
 Finally in 1867 the Legislature passed a law abolishing 
 rate bills and making the public schools of the State 
 free to all of its children between the ages of five and 
 eighteen. The constitutionality of this law was never 
 challenged. The Jong fight was at last over and it 
 is unfortunate that taxation so long stood in the way 
 of the best interests of the State. Few now realize 
 the heroic struggle of fifty years ago to make the 
 pul)lic schools free, which culminated in the law of 
 which section tAventy-six reads as follows : 
 
 *' Hereafter all moneys now authorized by any 
 special acts to be collected by rate bills for the payment 
 of teachers' wages, shall be collected by tax, and not 
 by rate bill." 
 
 To aid public schools are several State fmids, the 
 largest of which is the Common School Fund. This 
 was created in 1805 from the net proceeds of the sale 
 of five hundred thousand acres of State land. There 
 could be no distribution of tliis fund until the annual 
 revenue amounted to fifty thousand dollars. The first 
 distrilmtion was made in 1815 and one has been made 
 annually since that date. The amount of this fund is 
 about five million dollars. 
 
 In 1836 New York received as its share of the sur- 
 plus in the United States treasury the sum of $4,014,- 
 520. This surplus in the United States treasury at 
 that time was deposited with the several states for 
 safe keeping until called for on the basis of their repre- 
 
56 Taxation in New York 
 
 sentation in Congress. This money has never been 
 called for by the national government and probably 
 never will be. New York State devoted this money 
 wholly to the cause of education and it is known as 
 the United States Deposit Fund. The canal enthu- 
 siasts, however, were determined that it should be used 
 for canal construction, but the friends of education 
 triumphed and the money was applied to what has 
 proved to be a much better use. The fact that the 
 loan at that time was thought to be only temporary 
 and would have to be repaid at least in ten years ' time 
 probably had something to do with its disposition. 
 
 There are several other funds, one known as the 
 Literature Fund and another as the Gosepel and 
 School Fund. 
 
 Probably no more important advance in educational 
 matters since the abolishment of the rate bill system 
 in 1867 was the enactment of the township law by 
 the Legislature in 1917. This measure consolidated 
 all the school districts of the town into one, abolished 
 the office of school trustee, and created a board of 
 education for each town. Equalization of the school 
 taxes among the residents of the town was one of the 
 beneficial results of this measure. Heretofore there 
 has been a great inequality in the school taxes paid 
 by the residents of the town. School tax rates in one 
 school district were very much higher than in other 
 school districts. In some school districts the rail- 
 roads and other corporations paid nearly all the school 
 taxes, while in school districts where there were no 
 railroad or other corporation property the school 
 taxes were excessive. 
 
 As the population of the rural school districts has 
 been dwindling in recent years, and each school dis- 
 trict had to maintain a public school a certain number 
 of weeks each year, it resulted in some of the rural 
 schools being maintained with but very few scholars. 
 By the consolidation of all the school districts of a 
 
Public Education 57 
 
 towTi into one district, one or more central schools 
 could be maintained, providing a better education for 
 the children of the town. Those living at a distance 
 from the school could be transported by conveyance. 
 The children residing in the country are entitled to 
 just as good an education as the children residing in 
 the cities. At the time of the enactment of this law 
 there were in the State fifteen public schools having 
 but a single scholar, eighty-six public schools having 
 but two scholars, sixteen public schools having but 
 three scholars, and over six hundred public schools 
 having less than seven scholars. 
 
 And yet this good measure was repealed by the 
 Legislature of 1918. Increased taxation was the'prin- 
 cipal objection raised by the rural people against the 
 township law. Outside of the cities of the State the 
 increase in school taxes in 1917 over 1916 amounted 
 to $3,500,990. The normal increase from year to year 
 is about seven hmidred thousand dollars. 'So that* two 
 million eight hundred thousand dollars was the increase 
 in taxes chargeable to the township law. This is an 
 increase of fifty-two cents per capita for the rural 
 districts. There is no doubt that eventually a town- 
 ship law will be permanently placed upon the statute 
 books of New York State. Following the example 
 of the free school advocates of the nineteenth century 
 who were over twenty years in making the public 
 schools of the State absolutely free to all children, 
 the township people will figlit on until tliev finally 
 triumph. 
 
 The State has never adopted a definite policy in 
 regard to education. How far sliould the education of 
 the youth of the State go? Should the State provide 
 a common school education and stop tliere, or should 
 It provide a high scliool education, or should it give 
 every child in the State a college education ? Ought 
 the State to teach each child a trade or profession » 
 These are questions that will some dav demand a 
 
58 Taxation in New York 
 
 solution. Some contend that it is becoming more and 
 more difficult to obtain manual labor, that only for- 
 eigners can now be secured to dig ditches and do hard 
 labor, and that the State is going too far with its 
 educational process. But these same people insist on 
 their boys having an education. It is someone else's 
 boys that must do the manual labor. AVho is to decide 
 whose boys shall have an education and whose boys 
 shall be hewers of w^ood and drawers of water? 
 
 In 1915 there were 43,817 women teaching in the 
 public schools of the State and only 5,326 men teaching 
 in the public schools. Thus nearly nine-tenths of the 
 public school teachers of the State are women. This 
 is interesting when we recall that no women were 
 employed as teachers in the early Dutch schools of 
 the colonial period. In marked contrast the early 
 English schools of the colonial period did employ 
 women teachers. The first English school master con- 
 ducting a school in New York was William Huddle- 
 ston, and he was assisted in teaching the scholars by 
 his wife, Sarah Huddleston. After the death of her 
 husband, she assisted her son, Thomas Huddleston, in 
 conducting the school, and after the death of her son, 
 she managed the school alone for over six months, or 
 until Thomas Noxon was appointed schoolmaster. 
 
 There was quite a demand that Mrs. Huddleston be 
 appointed schoolmistress of this first English school 
 and a petition signed by sixty-eight leading citizens 
 of New York City including the mayor, president of 
 the council, aldermen, justices, lawyers and merchants 
 was sent to England to this effect, but all to no purpose. 
 This first English school in the colony was at one time 
 held in the city hall of New York City, and in that 
 city William Huddleston, the first English school- 
 master in the colony, taught for thirty^five years. 
 The teaching record of the Huddleston family, father, 
 son, and mother, was one of personal sacrifice and 
 earnest devotion to educational uplift, which covered 
 a period little short of half a century. 
 
Public Educatiox 59 
 
 The salaries paid the teachers of the public schools 
 of the State are entirely inadequate. No servants of 
 the State do more and receive less compensation than 
 the public school teachers. Good public schools with 
 well qualified, conscientious teachers will result in a 
 high type of citizenship constituting the State. Under 
 such conditions there will be need of less policemen 
 and criminal courts. AMiat the celebrated English 
 statesman, John Bright, said many years ago is still 
 true to-day: 
 
 '' I think that the influence of a good man or a good 
 woman teaching ten or twelve children in a class is 
 an influence in this world, and the world to come, 
 which no man can measure, and the responsibility of 
 which no man can calculate. It may raise and bless 
 the individual. It may give comfort in the family 
 circle, for the blessing which the child receives in the 
 school it may take home to the family. It may check 
 the barbarism even of the nation. " 
 
 In 1757 Johannis Mutts of the Precinct of Haver- 
 straw, in what was then the County of' Orange, died 
 and directed in his will that his lands and possessions 
 should be used for the establishment of a free school 
 for the poor children that belong to the Dutch Church 
 in the Precinct of Haverstraw. Johannis Mutts was 
 unable to read or write and he signed his will ^^^th his 
 mark, but he had an appreciation for the value of an 
 education. Yet being an alien his property after his 
 death was seized by John Tabor Kempe, the attorney 
 general of the New York colony, as an escheat to the 
 cro^\Ti of Great Britain, and consequently the free 
 school for the poor children of the Dutch Church in 
 the Precinct of Haverstraw was never established. 
 
 Twenty-two years later by the irony of fate John 
 Tabor Kempe had his own property confiscated by 
 the State government and he himseif was attainted 
 for treason and banished from the State for beino- a 
 loyalist and adhering to the enemies of the State. 
 
CHAPTER V 
 
 THE LAISSEZ=FAIRE PERIOD OF NEW YORK 
 HISTORY 
 
 The period from 1842 to 1880 may truly be called 
 the laissez-faire period of New York history. The 
 State withdrew from the domain of internal improve- 
 ments and left the field open to private capital and 
 initiative. With this withdrawal began the rise of 
 corporate power. The few feeble attempts of the 
 State to regulate rates on railroads were soon thrown 
 off. (State regulations were regarded as a check and 
 hindrance to progress. There were marked changes 
 in economic conditions. New York 's agriculture began 
 to feel the competition resulting from the develop- 
 ment of western agricultural lands; a depression of 
 farm values began and, by 1880, Ohio had wrested 
 from New York the leadership in American agricul- 
 ture. 
 
 Side by side with the decline of agriculture, there 
 was going on the development of manufrcturing indus- 
 tries, wliich by 1870 had in the value of their products 
 surpassed those of agriculture. Manufacturing indus- 
 tries had become well established by the middle of the 
 century, and the development which followed during 
 the next few decades was amazing. All eyes were now 
 turned away from the State as an aid to industrial 
 enterprise, and attention was centered upon the rising 
 powers of manufactures and railroads. The State 
 was no longer needed to encourage industries; the 
 industries had become self-sufficient and all powerful. 
 
 During this laissez-faire period the general property 
 tax bore all the burdens. New York had changed from 
 an agricultural tp an industrial and commercial state, 
 but her tax system had remained unchanged. The bur- 
 den of taxation rested upon the farmers and the owTiers 
 
 [60] 
 
Laissez-Faike Period of New York History 61 
 
 of tangible property while the great mass of indus- 
 trial capital escaped taxation. The question of tax- 
 ation was becoming more and more a troublesome 
 problem. 
 
 The canal craze had materially abated, although 
 the management of them presented many difficulties. 
 By 1859 the receipts from canal tolls had reached 
 their lowest point, being not sufficient to pay the sums 
 required for the sinking fund under section one of the 
 constitution. Some advanced the proposition of sell- 
 ing the canals and paying off the State debt in view 
 of the diminishing revenues and the necessity for 
 further taxation. But it was feared that if this was 
 done the canals would inevitably fall into the hands 
 of the railroads, rates would be raised to the highest 
 limits of their power of enforcement, and the regula- 
 tive benefit of the canals would be lost forever. 
 
 During the Civil War the canal tolls increased enor- 
 mously on account of the closing of the southern ports 
 and the stopping of trade on the Mississippi Valley. 
 But with the coming of peace they continued to decline 
 and by a constitutional amendment adopted in 1882 
 they were abolished entirely. 
 
 The follo^^'ing table taken from the " History of 
 New York Canals " published by the State Engineer 
 and Surveyor in 1906 shows the total operation of all 
 oanals from their beginning to September 30, 1882 : 
 
 Canaub 
 
 Canal 
 revenues 
 
 Cost of 
 operating 
 
 Loss in 
 Operatinii 
 
 Profits in 
 operating 
 
 
 $1,261 
 
 301.099 
 
 8.837 
 
 1.054.356 
 
 6,416.341 
 
 525 . 565 
 
 744.027 
 
 45.049 
 
 121.461.871 
 
 860.165 
 
 65,894 
 
 3,708.548 
 
 217.100 
 
 7,770 
 
 $18,039 
 
 1.552.230 
 
 994 
 
 1.027.5.39 
 
 5,630,023 
 
 2,022,259 
 
 2,081.739 
 
 424.6,58 
 
 29.270.301 
 
 2.814.809 
 
 144, 0<U 
 
 3,371,446 
 
 41,170 
 
 20 
 
 $16,778 
 1.251,131 
 
 
 Black Rivar 
 
 
 
 $7,843 
 
 
 
 26,817 
 
 
 
 786,318 
 
 
 1.496,694 
 
 1,337.712 
 
 379.168 
 
 
 
 
 
 
 
 92.191.570 
 
 
 1,954,644 
 78.167 
 
 
 
 
 
 .337.102 
 
 Oneida Lake Improvement 
 
 Seneca River Towing Path .... 
 
 
 175.9.30 
 
 
 7.750 
 
 
 
 
 $135,418.-324 
 
 $48,399,288 
 
 $6,514,294 
 
 $93,533,330 
 
62 Taxation in New York 
 
 The above table shows that seven canals, the Bald- 
 winsville, Black River, Chemmig, Chenango, Crooked 
 Lake, Genesee Valley, and Oneida Lake, did not pro- 
 duce revenue enough to pay operating expenses. 
 Outside of the Black River Canal, which has afforded a 
 permanent and ample supply of water to the Rome 
 level of the Erie Canal, these canals should never have 
 been constructed. 
 
 From now on the canals were operated as economi- 
 cally as possible. In fact so little was done to keep 
 them in repair that the locks and other wooden parts 
 began to rot to pieces, the canal banks were constantly 
 w^ashing away, and the canal bottom was filling up 
 with accumulated silt. 
 
 In 1876 commissioners appointed by the Legislature 
 made the following report concerning the Chemung 
 Canal : ' ' That the structures were in a bad condition 
 and would require large expenditures to put them in 
 a safe and useful state, that two miles of the route 
 at the Elmira end had already been abandoned, the 
 canal at that time terminating in an open field." 
 Their advice was to have the canal abandoned and the 
 Legislature provided for its abandonment at the close 
 of the canal season of 1878. 
 
 The Crooked Lake Canal was officially abandoned 
 in 1877, although there had been no navigation on the 
 canal since 1875. In 1887 the Oneida Lake Canal was 
 abandoned. In 1877 the canal commissioner reported 
 concerning the Chenango Canal: '' This rather 
 * worthless ditch ' has been a source of much per- 
 plexity, and an expense of nearly four thousand dol- 
 lars for about six weeks' navigation, in October and 
 November 1876 . . . There was no navigation upon 
 this canal during the calendar year of 1877, for the 
 reason that no dependence could be placed on the 
 various dilapidated structure holding out ... It 
 will be a good riddance for the State when the time 
 
Laissez-Faire Period of New York History 63 
 
 arrives for the sale of what is left of the old Chenango 
 Canal." In view of this recommendation it did not 
 take the Legislature long to act, and the Chenango 
 Canal was abandoned in 1878. 
 
 The Genesee Valley Canal had been constructed with 
 the idea of providing an unbroken inland water com- 
 munication between the important sections of New 
 York and the Mississippi Valley by means of the 
 Genesee and Allegany Rivers. But neither the State 
 of Pennsylvania nor the United States government 
 carried out their alleged plans of improving the 
 Allegany River, so that the original scheme of 
 drawing trade from the Ohio and the other great 
 rivers, to Avhich its waters afforded access, was 
 destroyed. Pennsylvania did not wish to further New 
 York's interest in this way, for she now had means of 
 transporting goods from Pittsburg to the coast without 
 permitting any other state to reap the advantages of 
 their transportation. The Genesee Valley Canal 
 traversed a country of floods and it required large 
 expenditures for maintenance and repair. As it never 
 paid operating expenses it was abandoned by an act 
 of the Legislature September 30, 1878. 
 
 There are many conflicting statements as to whether 
 the canals ever paid for their cost of construction and 
 maintenance. The iState Engineer and Surveyor in 
 his *' History of New York Canals " states that they 
 did pay for themselves and also turned into the State 
 treasury the sum of over eight million dollars besides. 
 But Charles Zebina Lincoln in his " Constitutional 
 History of New York " states that the canals did not 
 pay for themselves, but were a loss to the State of over 
 thirty-four million dollars. Both obtain their data 
 from the report of John A. Place, Canal Auditor in 
 1882, who submits the total receipts and expenditures 
 of the canals from their inception in 1817 down to the 
 abolishment of the canal tolls in 1882. 
 
64 Taxation in New York 
 
 The following summary taken from this same report 
 of John A. Place indicates a loss of over twenty-three 
 million dollars : 
 
 Receipts. 
 
 Avails of loans $70,534,004 40 
 
 Less loans repaid. . . 59,158,658 81 
 
 $11,375,345 59 
 
 Canal tolls 134,566,107 77 
 
 Sales of land 320,518 15 
 
 Interest on deposits, etc 6,068,951 13 
 
 Rent of surplus water 138,823 73 
 
 Miscellaneous 2,939,442 44 
 
 $155,409,188 81 
 
 Expenditures. 
 
 Premium on stock $743,611 02 
 
 Interest on loans 47,246,868 39 
 
 Canal commissioners, etc 84,043,752 21 
 
 Seneca Lock Navigation Company. . 53,871 88 
 
 Purchase of Oneida Lake Canal 50,000 00 
 
 Contractors 8,147,809 10 
 
 Superintendents 28,080,850 67 
 
 Collection and inspection ^ . . 3,074,672 57 
 
 Weighmasters 407,519 75 
 
 Miscellaneous 7,138,049 10 
 
 $178,987,004 69 
 
 Excess of expenditures over receipts $23,577,815 88 
 
 After the Civil War the State went to the other 
 extreme of granting very small appropriations for the 
 canals. If the State was very lavish in its expenditures 
 for the canals in the thirties and forties, it was very 
 niggardly in its expenditures during the seventies and 
 eighties. Governor Samuel Jones Tilden's annual 
 
Laissez-Faire Period of New York History 65 
 
 message to the Legislature in 1876 recommended 
 retrenchment in canal management. iState Engineer 
 and Surveyor iSilas iSeymour in his report for 1883 
 said that ' ' It was a forgone and inevitable conclusion 
 that the canals must go. ' ' 
 
 At last it was felt that something had to be done in 
 the way of improvement to the remaining canals that 
 in view of the decreasing tonnage that was passing 
 thru them and the ruinous competition of the rail- 
 roads they would close of themselves. In 1895 the 
 people voted an appropriation of nine million dollars 
 for improvements to the canals, but this was only an 
 improvement of a temporary character. Finally in 
 1903 the people voted an appropriation of one hun- 
 dred and one million dollars known as the Barge Canal 
 Act. It provided for a new canal in place of the Erie 
 Canal to be seventy-five feet wide at the bottom, twelve 
 feet deep, and at least one thousand one hundred 
 twenty-eight feet of water cross section. This money 
 was to be raised by the issuance of eighteen-year bonds. 
 In 1909 the people voted an appropriation seven 
 miUion dollars to be raised by a bond issue for the 
 transformation of the Cayuga and Seneca Canal into a 
 barge canal. It is too early yet to say what the result 
 of these improvements to the canal system of the iState 
 will be, but it is hoped they will work out for the best 
 interests of the iState. There is a better financial plan 
 under which these latter improvements are being 
 carried out; for the people have profited by their 
 sad experiences of the early forties. 
 
 In 1917 the total tonnage passing through the canals 
 of the State was 1,297,225, the lowest tonnage since 
 1842, when it was 1,236,931. Altho. the new barge 
 canal is practically completed the tomiage passing 
 thru New York's canals continues to decline. 
 
 During this laissez-faire period of New York's 
 history the State had changed from an agricultural to 
 an industrial and commercial coimnonwealth, but its 
 3 
 
66 Taxation in New Yoek 
 
 taxation system was still that of the general property 
 tax. At the fourth National Tax Conference held at 
 Milwaukee in 1910 a report was adopted relative to 
 the failure and break down of the general property tax 
 thruout the whole United States. 
 
 In a primitive democratic community the simplest 
 way to reach the taxable ability of the individual is 
 thru his property. In an agricultural commonwealth 
 the general property tax is a satisfactory index of 
 relative taxable faculty because the property is homo- 
 geneous. To tax the individual and to tax the prop- 
 erty of the individual is virtually the same thing. But 
 when New York became an industrial and commer- 
 cial State, property was no longer homogeneous. 
 With the development of commerce and industry on 
 a vast scale, property split up into all sorts of forms 
 and the old homogeneity disappeared. It became prac- 
 tically impossible to reach all forms of property 
 equally. All property'' can not be taxed alike, because 
 it is humanly impossible under modern conditions to 
 reach all property alike. 
 
 The cost of State government was rapidly increas- 
 ing as sho"v\ni by a studj^ of the iState tax rates. The 
 highest tax rate known in the history of the State was 
 in 1872 when the State tax rate was nine and three- 
 eighths mills on one dollar of property. The State 
 began looking around for new sources of revenue. It 
 came in 1880 when the first State tax on corporations 
 was imposed. 
 
 The only officers provided for in the constitution of 
 1777 were governor, lieutenant governor, chancellor, 
 justice of the supreme court, and treasurer. The 
 governor received $3,000, and each of the other officers 
 received $1,250 a year. From time to time other 
 officers were added. Their salaries were fixed by law 
 in the annual appropriation bill, and while they varied 
 slightly from year to year, yet they remained exceed- 
 ingly small. In 1840 the governor receivel $4,000, 
 
Laissez-Faiee Peeiod of New Yoek Histoey 67 
 
 the controller $2,500, the treasurer $1,500, the adjutant 
 general $800, and the office expenses of these depart- 
 ments varied from $100 to $500. In 1798 the expenses 
 of the judiciary amounted to $7,596, less than the 
 salary of one supreme court justice at the present 
 time. This amount grew, until by 1842 the expen- 
 ditures for the judiciary exceeded that for either the 
 Legislature or the administrative offices. 
 
 In 1789 the members of the Legislature received 
 twelve shillings per day and traveling expenses at the 
 rate of thirty miles per day. The State constitution 
 adopted in 1821 provided the compensation paid should 
 not exceed $3.00 per day. The same provision was 
 retained in the State constitution of 1846, which pro- 
 \dded that the aggregate compensation should not 
 exceed $300 and $1 was allowed for every ten miles 
 traveled. In 1874 an amendment to the iState constitu- 
 tion was adopted which fixed the salary of the mem- 
 bers of the Legislature at $1,500 a year and $1 was 
 aUow^ed for every ten miles traveled. This section has 
 remained unchanged to the present time. 
 
 In the early days it was customary to extend relief 
 to widows and families of deceased public officials, but 
 this policy apparently is no longer in vogue. Gradually 
 new offices, commissions and bureaus have been insti- 
 tuted, and the expenses of the State have been mount- 
 ing upwards. In fact the State government is becom- 
 ing more and more the government of a bureauocracy. 
 
 The State passed thru the greatest war in the his- 
 tory of our country during this period and it is worth 
 while to note what New York did during the Civil 
 War. During the course of the war the State is 
 credited with having furnished 448,850 men, about 
 half the male population between the ages of eighteen 
 and forty-five, and with having spent over fourteen 
 million dollars from her own funds. 
 
 A far more important cost of the war was the amount 
 spent by counties, cities, towns and villages of the 
 
68 Taxation in New York 
 
 State. An investigation made by the bureau of mili- 
 tary records in 1868 disclosed the following facts : 
 
 In the 47 counties which rendered full 
 
 reports amount spent was $58,523,509 01 
 
 In the 12 counties which rendered 
 
 incomplete reports amount spent 
 
 was 7,404,447 50 
 
 In the 5 cities which rendered incom- 
 plete reports amount spent was . . . 2,694,666 27 
 In the 771 to^^^lS wliich rendered full 
 
 reports amount spent was 32,265,128 95 
 
 In the 132 towns which rendered 
 
 incomplete reports amount spent 
 
 was 4,142,991 60 
 
 $105,030,743 33 
 
 This vast expenditure of money by the subdivisions 
 of the State was for bounties, fees and expenses, inter- 
 est on loans, and for the support of the families 
 of soldiers. It proves conclusively that at no time in 
 the history of the commonwealth was the people more 
 patriotic than during the Civil War. 
 
 The national guard was organized in 1861. All male 
 citizens between the ages of eighteen and forty-five 
 constitute the militia of the State. Down to 1870 all 
 those not belonging to the uniformed militia or 
 national guard constituted the reserve militia. All 
 members of the reserve militia were obliged to assem- 
 ble on the first Monday of September in each year for 
 parade and inspection armed and equipped at their 
 own expense. Those failing to appear were subject 
 to a fine of $1. This was called general training day. 
 Thus for nearly one hundred years New York State 
 had universal military training. The last year the 
 commutation fines were collected was in 1860 when the 
 sum of $33,621 was collected from those failing to 
 
Laissez-Faiee Period of New York History 69 
 
 appear at the general training day. The Legislature 
 of 1863 remitted the fine of one dollar for non-attend- 
 ance at the general training day in September, 1862, 
 and also provided that the annual general training 
 day in September, 1863, should be dispensed with. No 
 more general training days were held in the State, but 
 the system was not finally abolished by the Legislature 
 until 1870. The general training day gradually petered 
 out and as early as 1840 Governor William Henry 
 Sew^ard in his annual message to the Legislature that 
 year spoke of the general training day as follows : 
 
 ' ' It is manifest that the militia system has lost some 
 of the popular respect with which it was once regarded. 
 ... At present the rich and the fortunate evade in 
 a great degree the performance of military duty, while 
 its expenses and sacrifices fall without abatement upon 
 those members of society w^ho are least able to bear 
 them. ' ' 
 
 Even in 1860, the last year the commutation fines 
 were collected for non-attendance at the general train- 
 ing day, eleven counties of the State failed to collect 
 any fines at all. In the early history of the State 
 nearly all the male citizens were familiar with and had 
 handled a gun from boyhood up, so that a general 
 training day once a year probably was all that was 
 needed. But at present most of our citizens are not 
 familiar with firearms, and a general training day once 
 a year would not cover the needs of universal military 
 training. 
 
 From 1789 to 1819 the State's fiscal year coincided 
 with the calendar year. In 1819 the fiscal year was 
 changed to end November 30th. In 1831 it was 
 changed to end Septeml)er 30th, and in 1916 it was 
 again changed to end June 30th. There is not the 
 uniformity there should be as to ending of the fiscal 
 year of the State and its political subdivisions. The 
 school year ends July 31st. Most cities close their fiscal 
 year December 31st. Villages unless incorporated 
 
70 Taxation in New York 
 
 under a special act close their fiscal year February 
 28th. Counties close their fiscal year December 31st; 
 while towns have no definite time for closing their 
 fiscal year. It is impossible with all this confusion of 
 fiscal years to so group /States taxes, county taxes, 
 city taxes, village taxes and school taxes so as to cover 
 the same period of time. 
 
 Up to 1797 the accounts of the State Avere kept in 
 pounds, shillings and pence, but in that year an act 
 was passed requiring them to be kept in dollars and 
 cents. For reducing these early figures to dollars and 
 cents a ratio was deducted from figures found in the 
 legislative documents of the period, and the ratio thus 
 obtained was that one pound equals $2.50, or one 
 dollar is worth about eight shillings. 
 
 The constitution of 1777 gave the right of suffrage 
 only to freeholders who o^^med property worth twenty 
 pounds or paid twenty shillings a month rent and who 
 had been rated and actually paid taxes in the State. 
 The qualification for voters under the second constitu- 
 tion adopted in 1821 were : A period of residence, the 
 performance of military service and the payment of 
 road taxes. Colored men were required to own and 
 to have paid taxes upon $250 worth of property in 
 order to vote. It was not until the fifteenth amendment 
 to the United States constitution was adopted in 1870 
 that colored men not owning property were given the 
 right of suffrage in New |York State. An amendment 
 to the constitution adopted in 1917 extended the right 
 of suffrage to women. The last vestige of slavery in 
 the State vanished mtli the emancipation of July 4, 
 1827. 
 
 From 1789 to 1795 bounties were paid upon hemp. 
 Two thousand dollars were given away in premiums 
 on woolen cloth in 1808, and later bounties were 
 extended to the manufacture of broadcloth. From 
 1840 to 1845 bounties were paid on salt exported out 
 of the State. In 1821 the State paid $22,659 as boun- 
 
Laissez-Faire Period of New York History 71 
 
 ties for the destruction of wolves and other wild 
 animals. At that time a bounty of twenty dollars was 
 paid on every full grown wolf, and the county in which 
 the wolf was killed paid an equal amount. Bounties 
 paid by the State for the destruction of these wild 
 animals must have cost the State thousands of dollars 
 in the early days. The last of the bounty system was 
 the sum of one cent a pound given by the State to 
 encourage the beet sugar industry in the State. The 
 first bounty for this purpose was paid in 1898 and the 
 last payment was in 1908. During the ten years this 
 bounty act was in force the State paid in bounties the 
 sum of $499,132 to try and develop the sugar beet 
 industry in New York. Climatic conditions were 
 responsible for the failure of this industry in this 
 commonwealth. If statistics had been gathered as to 
 New York's climatic conditions this waste of money 
 could have been avoided. 
 
 It was not until 1831 that imprisonment for debt was 
 done away with in this State. In Governor Enos 
 Thompson Throop's message to the Legislature of that 
 3^ear was the following : ' ' The notion of imprisonment 
 in the nature of punishment for debt is repugnant to 
 humanity, and condemned by wisdom. ' ' 
 
 The most complete census ever taken by the State 
 was the census of 1845. According to this census there 
 were 6,443,855 sheep in New York State at that time. 
 To-day there are less than five hundred thousand sheep 
 in the State, yet the .State is just as large as it was 
 seventy-three years ago and on account of its hilly, 
 mountainous character is well adapted for sheep rais- 
 ing. The only answer is the depredation of dogs. The 
 State council of farms and markets reports that during 
 six months from July 1, 1917, to December 1, 1917, 
 there were 12,692 sheep in this State bitten by dogs. 
 
 According to Lewis Penwell, chief of the wool divi- 
 sion of the war industries board at Washington, it 
 takes seventy-one pounds of scoured wool to equip one 
 
72 Taxation in New Yokk 
 
 soldier. This means the wool of twenty sheep. The 
 United States government estimates the present pro- 
 duction of wool in this country to be two hundred and 
 eighty million pounds of grease wool, and for army, 
 na^^^, marine and semi-governmental purposes the 
 government will need for the fiscal year ending June 
 30, 1919, the sum of two hundred eighty-three million 
 and five hundred thousand pounds of scoured wool. It 
 can readily be seen therefore that there is no wool for 
 the civilian population of our country. 
 
 The sheep is the most important domestic animal 
 we have. Without its wool we would practically 
 have no clothes to wear and would have to go naked. 
 In what way other than as ingrates must we charac- 
 terize those people who appropriate the sheep's wool 
 for their clothing yet will not lift a finger for the pro- 
 tection of the sheep from the depredations of dogs. 
 In the celebrated words of Joseph H. Manley of Maine, 
 spoken during the pre-convention period of 1896: 
 *' God Almighty hates an ingrate." 
 
 Perhaps the laissez-faire period of New York's his- 
 tory is well typified by a recommendation contained 
 in the annual message to the Legislature of Governor 
 Lucius Robinson in 1879 in which he asked for the 
 abolishment of the State insurance and banking 
 departments. He said: 
 
 ''All experience has shown that every branch of 
 business is most successfully conducted when left to 
 the management of those who understand it, with their 
 hands as free from, and uutranuneled by, legislative 
 interference, as practicable." 
 
CHAPTER VI 
 NEW SOURCES OF STATE REVENUE 
 
 Down to 1823 the State took no cognizance of cor- 
 porations for taxation purposes. In the general tax 
 law enacted by the Legislature in 1823 it was provided 
 that all incorporated companies recei\ing a regular 
 income from the employment of capital were defined 
 as persons and were to be assessed and taxed in the 
 same manner as individuals. The proper " officer of 
 the company was to pay the tax, and deduct it from 
 the dividends of stockholders in proportion of the 
 amount of stock held by each. The tax might be com- 
 muted into an income tax, if the company so desired, by 
 a direct payment into the county treasury of ten per 
 cent, of all dividends, profits or income, in lieu of any 
 tax levied upon the property. 
 
 This attempt to treat corporations as individuals 
 led to some amusing incidents. The Bank of Ithaca 
 was notified by Road Commissioner Samuel King to 
 appear at eight o'clock on the morning of October 2, 
 1833, to work forty-nine days on the highways. The 
 bank did not appear, either in person or by substitute, 
 nor did it proffer a commutation payment. The bank 
 was fined by a justice of the peace $49, whereupon the 
 bank carried the case to the .Supreme Court, which 
 decided that a corporation had no corporeal body and 
 no material existence, and that it was incapable of 
 performing labor. Hence it was not liable to assess- 
 ment to work on a highway. The Legislature now took 
 a hand in the matter and enacted a statute which pro- 
 vided that the commissioner of highways was to appor- 
 tion all moneyed or stock corporations appearing upon 
 the last assessment roll of the town among the inhab- 
 itants who were compelled to work on the highways, 
 and such corporations were required to work on the 
 
 [73] 
 
74 Taxation in New York 
 
 highway a certain number of days not exceeding fifty 
 days. The same commutation was allowed corpora- 
 tions as was allowed individuals, namely, paying sixty- 
 two and one-half cents for each day. Corporations 
 were thus re-established as persons, even for worldng 
 on the highways. 
 
 In 1853 the statute of 1823 was amended so that cor- 
 porations in commuting their property tax into an 
 income tax were to pay a tax of five per cent, of their 
 net profits or income when such net profits or income 
 did not equal five per cent, of the capital stock. Other- 
 wise corporations were to be assessed by local assess- 
 ors upon their real estate and upon their personal 
 property, the last to be computed as follows: The 
 capital stock of the corporation together with its sur- 
 plus profits or reserve funds exceeding ten per cent, 
 of the capital less the real estate value. In 1857 the 
 commutation privilege was abolished. The statute of 
 1857 is now Section 12 of Article 1 of the tax law. 
 It has been called the most ambiguous tax statute in 
 the United States. The Court of Appeals has described 
 the section as follows : 
 
 '^ There is a most extraordinary confusion of ideas 
 in the section. . . . " And again : ' ' Its interpreta- 
 tion has met some difficulty of solution by the very 
 bungling and confused manner in which the statute is 
 worded. ' ' 
 
 It would seem to be the duty of the Legislature to 
 clarify the meaning of Section 12 of the tax law and 
 make it intelligible to both assessors and corporations, 
 
 CORPORATION TAXES 
 
 In 1880 the first State tax on corporations was 
 imposed in this State. Pennsylvania had been collect- 
 ing taxes from corporations for many years and since 
 1866 had had no tax on real estate for State purposes. 
 New York modeled her first system of State taxes on 
 
New Sources of State Eevenue 75 
 
 corporations from that of her sister state, Pennsyl- 
 vania. The receipts from these taxes the first year 
 were only $141,127; but the State Controller in his 
 annual report thought that the time would come when 
 they would yield two million dollars a year in revenue. 
 They now yield over thirteen million dollars a year 
 in revenue, and from their beginning in 1880 down to 
 and including 1917 the State has collected $182,098,422 
 from State taxes on corporations. 
 
 New York's first State taxes on corporations were 
 taxes both upon the capital stock and upon the gross 
 earnings. The tax upon the capital stock, which has 
 been amended several times, is now Section 182 of the 
 tax law. At first it exempted banks, savings banks, 
 trust companies, insurance companies, foreign com- 
 panies and manufacturing companies. Foreign com- 
 panies were brought under the provisions of the law in 
 1885 by being assessed upon the amount of capital stock 
 employed within the State. As originally enacted the 
 tax was to be computed as follows: If the dividends 
 amounted to six per cent, or more upon the par value 
 of the stock, the tax was to be one-fourth of a mill for 
 each per cent, of dividends so made. If there were no 
 di\ddends, or if they were less than six per cent., then 
 the tax was to be one and one-half mills per dollar on 
 the valuation of the stock. Should a part of the stock 
 pay more than six per cent, dividends, this was to be 
 taxed at the one-fourth mill rate, while the rest, if its 
 dividends were less than six per cent., was to be taxed 
 at the other valuation. 
 
 In 1886 an organization tax was enacted providing 
 that for the purpose of incorporating within the State 
 corporations were to pay a tax of one-eighth of one 
 per cent, upon the amount of their capital stock. This 
 rate was reduced in 1901 to one-twentieth of one per 
 cent. 
 
 The gross earnings tax upon transportation com- 
 panies, which was first enacted in 1880, is one-half of 
 
76 Taxation in New York 
 
 one per cent. It includes steam railroads, express 
 companies, pipe line companies, steamboat companies, 
 and palace and sleeping car companies. In 1881 tele- 
 phone and telegraph companies were also included with 
 a tax of one-half of one per cent, on their gross earn- 
 ings. Then in 1896 elevated railroads and surface 
 street railroads were taxed at the rate of one per cent. 
 on their gross earnings. 
 
 Light, water and power companies were first taxed 
 by the State in 1896. The rate is one-half of one per 
 cent, upon their gross earnings and also three per cent, 
 on dividends when dividends are in excess of four per 
 cent, of their paid up capital. 
 
 Life insurance companies were taxed one per cent, 
 on premiums by an act of 1880. This law was repealed 
 in 1887, but re-enacted in 1905. The present tax 
 on insurance companies is somewhat complicated. 
 Domestic insurance companies, that is fire, life and 
 marine, under the corporation tax law pay a tax at 
 the rate of one per cent, of their premiums; but life 
 insurance, health and casualty companies of foreign 
 countries pay a tax under the insurance law of two 
 per cent, of their premiums; and fire and marine 
 insurance companies of other states of the United 
 States pay a tax under the insurance law of two per 
 cent, of their premiums, while similar companies of 
 foreign countries pay a tax under the insurance law 
 of one-half of one per cent of their premiums to the 
 State Treasurer and in addition two per cent, to the 
 local fire department or State Superintendent of 
 Insurance respectively. 
 
 The propriety of a tax on life insurance companies 
 is often discussed. Life insurance companies or at 
 least mutual life insurance companies are not profit 
 making organizations. A tax on them is really a tax 
 on thrift and foresight. For life insurance companies 
 are primarily a means of co-operation to distribute 
 the cost of providing for dependent widows and chil- 
 
New Sources of State Revenue 77 
 
 dren and of saving a fund for old age. But in answer 
 it can be said that modern life insurance is often util- 
 ized as a safe means of investment as well as insur- 
 ance against death. Other investments are taxed, why 
 not these investments? 
 
 As long as the general test is the ability to pay, it is 
 impracticable to avoid the taxation of thrift. It is 
 true such a tax may discourage thrift. But a system 
 of taxation which tries to penalize waste and thrift- 
 lessness and to reward thrift and industry ^yi[l break 
 down, because the more it succeeds the less revenue 
 will it yield. All capital is the result of saving, and 
 capital will continue to pay most of the taxes. 
 
 Savings banks were first taxed by the State in 1901. 
 This is a tax of one per cent, on their surplus and 
 undivided earnings. When this tax was first imposed 
 it was freely predicted that great hardship would ensue 
 and the familiar argTiment was made that the tax 
 was le\ded upon the savings of the poor. These 
 alarmists were mistaken. The rate of dividends has 
 remained four per cent, in nearly all savings banks of 
 the State. Many other states tax not only the surplus 
 of savings banks, but tax the deposits in savings banks 
 as well. In New York savings bank deposits have been 
 exempt from taxation since 1857. New York's special 
 tax commission of 1906, appointed to study the State's 
 system of taxation and advise methods of improvement, 
 recommended among other things that sa\4ngs bank 
 deposits of over $1,000 should be taxed. The 1898 
 annual report of the State Tax Commission cited a 
 case where a depositor testified under oath before a 
 board of assessors that he had $53,875 deposited in 
 various savings banks of the State and consequently 
 escaped paying any tax upon it whatsoever. 
 
 The tax on trust companies, and also upon State and 
 national banks, which was imposed in 1901, is one per 
 cent, on the amount of their capital stock, surplus and 
 undivided profits. With trust companies the receipts 
 
78 Taxation in New Yoek 
 
 go to the State, but with State and national banks the 
 receipts go to the localities. This tax exempts these 
 institutions from a local personal assessment. 
 
 In 1880 foreign bankers were to pay a tax of one- 
 half of one per cent, on the average of all sums of 
 money used in the State during the year. In 1900 
 the law was changed so that foreign banks have to 
 pay a tax of five per cent, on the interest of moneys 
 loaned or employed Avithin the State. 
 
 This system of taxation of corporations in this State 
 is complicated and should be simplified. They are 
 described in the tax statutes as franchise taxes. 
 Franchise is a very elusive word, but no one has given 
 a better definition than Professor Edwin Robert 
 Anderson Seligman of Columbia University, who says 
 that '* a franchise is the right conferred by government 
 of conducting an occupation either in a particular way 
 or accompanied with particular privileges." In trac- 
 ing the historical development of franchise it is always 
 found associated with privilege. In mediaeval Europe 
 one of the chief sources of royal income consisted of 
 the so called fines for licenses, concessions and .fran- 
 chises. Franchises were payments by individuals 
 or associations for all kinds of special privileges. 
 Some of these privileges or franchises were the right 
 to conduct some business in a particular way, the 
 right of exporting commodities, the right to retain 
 or to quit office, and the right to the general favor of 
 the crown. A franchise of an individual or of a cor- 
 poration Is, therefore, simply a privilege — something 
 over and above the value of the property. As the 
 State grants to corporations privileges or franchises 
 it has a right to place a tax on these privileges or 
 franchises. 
 
 Whether these corporation taxes should be upon the 
 gross or net earnings is difficult to determine. A tax 
 on gross earnings is easily ascertained and is not 
 susceptible of evasion. But if ability to pay is the test, 
 
New Sources of State Revenue 79 
 
 then the earning capacity of the corporation as 
 evidenced by its net earnings is the best rule. 
 
 The author believes that taxes upon corporations are 
 shifted from the corporation with increased costs to the 
 consumer and that it w^ould be cheaper for the con- 
 sumer to pay the tax in the first place to the govern- 
 ment thru an income tax. 
 
 INHERITANCE TAXES 
 
 The first inheritance tax law in this country was 
 enacted by Pennsylvania in 1826. The first federal 
 inheritance tax law was enacted in 1862, but was 
 repealed when internal taxation was reduced after the 
 Civil War. During the Spanish-American War 
 another federal inheritance tax law was enacted, which 
 was subsequently repealed. However, in 1916 the 
 federal government enacted a new federal inheritance 
 tax law in a time of peace and probably this law mil 
 remain in force from now on. According to the United 
 States census bulletin, taxation and revenue systems 
 of State and local governments, thirty-nine state of the 
 Union had inheritance taxes in 1912. 
 
 New York enacted its first inheritance tax law in 
 1885. This law exempted the immediate relatives of 
 the deceased, such as father, mother, husband, wife, 
 children, brother and sister, and lineal descendants of 
 brother and sister born in lawful wedlock, and the wife 
 or mdow of a son, and the husband of a daughter. 
 Only collateral relatives receiving over $500 were 
 taxed, and the rate was five per cent, on the property. 
 In 1890 this law was extended to include the direct 
 heirs, but the tax was only to be upon their inheritance 
 of personalt\\ 
 
 In 1910 the Legislature enacted a very drastic 
 inheritance tax law for New York. Class one con- 
 sisted of father, mother, widow and minor child. An 
 exemption of $5,000 was allowed and the rates were 
 from one to five per cent. Class two consisted of hus- 
 
80 Taxation in New York 
 
 band, adult child, brother, sister, wife or widow of a son 
 or the husband of a daughter, adopted child in certain 
 cases, and lineal descendants of decedent. The rates 
 were the same as in class one, the only difference from 
 class one was the amount of the exemption, which was 
 $500, instead of $5,000. But in class three, which 
 included more distant relatives and strangers, and 
 where the exemption was $100, the rates were from five 
 to twenty-five per cent. 
 
 Such a drastic law resulted in much evasion, many 
 people preferring to distribute their propert}^ during 
 their lifetime, rather than have the State take such 
 a large portion of it after their death. To promote 
 uniformity thruout the states the National Tax Asso- 
 ciation at its fourth annual conference held at Mil- 
 waukee in 1910 recommended a model inheritance 
 tax law. The New York Legislature in 1911 enacted 
 a new inheritance tax law which followed this model 
 quite closely. The rates are as follows : 
 
 Direct Heirs 
 
 $5,000 to $50,000 One per cent. 
 
 50,000 to 250,000 Two per cent. 
 
 250,000 to 1,000,000 Three per cent. 
 
 1,000,000 or over Four per cent. 
 
 Collateral Heirs 
 
 $1,000 to $50,000 Five per cent. 
 
 50,000 to 250,000 Six per cent. 
 
 250,000 to 1,000,000. Seven per cent. 
 
 1,000,000 or over ". Eight per cent. 
 
 Most defenders of the inheritance tax law declare 
 that it is the function of the State to check the aggrega- 
 tion of wealth into a few hands, and to provide for the 
 equalization of fortunes. The opponents of the inher- 
 itance tax law insist that this is socialism, and that such 
 a law is opposed to the family theory of property, 
 •which assumes that as a man acquires property largely 
 
New Sources of State Eevexue 81 
 
 in order to leave it to his children for whom it is his 
 duty to provide, this perpetuity of the means of family 
 support should not be attacked by the government. 
 
 The inheritance tax law has developed out of the 
 probate duties that were once paid in Europe as 
 charges on transfers and transactions. But to-day 
 inheritance taxes cannot be called fees paid to the 
 government to defray the expenses of probate courts. 
 Of course probate courts are a source of expense to 
 the government and a source of special benefit to those 
 who utilize their services, but if the inheritance tax was 
 a system of probate fees, then the charges would have 
 to be so light that practically no revenue would be 
 produced. 
 
 Andrew Carnegie has advanced the novel theory that 
 the American Republic is the partner in every enter- 
 prise where money is made honorably and so is a 
 co-heir with the children and relatives of the deceased. 
 It is exceedingly difficult to draw a sharp line where the 
 family consciousness ends. The State is sometimes 
 represented as a larger family and the bond of kinship 
 between distant relatives loses itself in the whole 
 nation. 
 
 Some have advanced the theory that inheritance 
 taxes are back taxes paid at time of death. Their rea- 
 soning is that general property taxes are to a large 
 extent evaded during life, and therefore the property 
 should be made to pay when the tax cannot be evaded 
 or at the time of the death of the owner. However, the 
 validity of this argument is questionable because it is 
 well nigh impossible to prove the relation between the 
 amount of the inheritance tax and the aggregate of 
 taxes evaded during life. Again taxes on real estate 
 are generallv paid; it is the tax on personal property 
 that is evaded. If this reasoning is sound then the 
 inheritance tax ought to take the shape only of a tax 
 on the successions to personal property. 
 
 The theory that the inheritance tax is a capitalized 
 
82 Taxation in New York 
 
 income tax paid once and for all at the close of life, 
 instead of in small amounts during each year, is not 
 very sound. In the first place, the existing tax system 
 either does, or does not, reach the income or property 
 of the living taxpayer. If it does, as it ought to do, 
 then to capitalize at death what has already been paid 
 involves double taxation. If it does not, the theory is 
 still objectionable on the score of inequality, because 
 when two people with the same fortune die at different 
 ages and pay the same tax, the amount means a very 
 divergent rate. For if the tax paid by the first person 
 who has enjoyed his income forty years, is equivalent 
 to the capitalization of a five per cent, tax, then the 
 amount payable by the second person, who has enjoyed 
 his income only ten years, would be tantamount to a 
 twenty per cent. tax. Anyone can see the inequality of 
 this. 
 
 LIQUOR TAXES 
 
 Prior to 1896 the control of the liquor traffic in the 
 State rested entirely with the local license boards. In 
 that year a law was enacted providing for a State 
 license system, with charges based upon the population 
 of the various municipalities. One-third of the proceeds 
 of the tax was to be payable to the State and two-thirds 
 to the town or city. In 1903 a change was made, the 
 State receiving on-half and the locality one-half. 
 Then in 1915 the State took three-fifths and left two- 
 fifths to the locality. But in 1916 a return was made 
 to the enactment of 1903 by giving one-half to the 
 locality and reserving one-half to the State. Finally 
 in 1917 the receipts were divided one-fourth to the 
 State and three-fourths to the locality. There has not 
 been much scientific study of the proper distribution of 
 these receipts and the many changes have caused con- 
 fusion and uncertainty. 
 
 Local option is allowed in the various cities and 
 to^\Tis which determine whether liquor shall be sold in 
 those communities or not. The largest amount of 
 
New Sources of State Revenue 83 
 
 revenue the State has ever received in any one year 
 from the liquor tax law was in 1917 when the State's 
 receipts were $12,685,228. This amount will gradu- 
 ally decrease on account of the spread of no license 
 territory in the State. As prohibition continues to 
 spread the time is not far distant when the State will 
 receive no revenue from the liquor tax law. 
 
 The principal argument advanced for the liquor tax 
 law^ at the time of its enactment in 1896 was that the 
 administration of such a law would be far more 
 effective if completely divorced from local influences. 
 This has proved to be the* case for the liquor tax law 
 is levied by State officials wdth a far greater degree 
 of efficiency and therefore with a far greater resultant 
 revenue, than was formerly done by localities. The 
 year previous to the enactment of the State excise law 
 of 1896 the localities had collected from liquor licenses 
 the sum of $2,921,268. The first year the new law 
 was in operation there was collected $10,663,882, of 
 which the localities received two-thirds or $7,109,254, 
 so that the localities received nearly three times as 
 much when the liquor traffic was placed under State 
 regulation as when regulated locally. 
 
 When the localities had charge of levying liquor 
 licenses there was much favoritism displayed, the rates 
 varied greatly in different localities, and also from 
 year to year according to the views of local excise 
 boards, and petty persecution was often visited upon 
 liquor sellers who were not in sympathy with those in 
 control of the city or town government. All this was 
 corrected by the State law enacted in 1896, which was 
 enacted primarily for this purpose and not as a revenue 
 or tax measure. 
 
 RACING TAXES 
 
 In 1887 an annual tax of five per cent, upon the gross 
 receipts for admission to race tracks on which there 
 was racing during the year was imposed. The pro- 
 vision of the penal code prohibiting the selling of 
 
84 Taxation in New York 
 
 pools was suspended between May 15th and October 
 15th for thirty days only to a racing association. This 
 act did not apply to county or town agricultural 
 societies or fairs. The income derived from the racing 
 taxes was to be distributed among the various county 
 or town agricultural society fairs to improve the breed 
 of cattle, sheep and horses. The most ever collected 
 in any one year from the racing taxes was $247,443 in 
 1908. In 1910 the law was repealed. During the 
 twenty-three years the law was in operation the State 
 collected $2,199,998 from this source of revenue. 
 
 STOCK TRANSFER TAXES 
 
 On June 2, 1905, an act went into effect taxing all 
 transfers of stock at the rate of two cents on each 
 $100 of face value or fraction thereof. The tax was to 
 be paid by affixing stamps either upon the books of the 
 company or upon the memoranda of sales. No transfer 
 of stock on which the tax was not paid at the time of 
 transfer could be made the basis of any action in legal 
 proceedings. Brokerage firms are required to keep a 
 book showing all transactions in the sale of stock and 
 this book is subject to the inspection of the State 
 controller. The State controller is also allowed to 
 examine books for the purpose of ascertaining whether 
 the tax has been paid or not. The largest amount 
 received by the State from the stock transfer tax law 
 in any one year was in 1917 when the receipts were 
 $7,786,511. 
 
 New York's special tax commission of 1906 recom- 
 mended the extension of the stock transfer taxes to 
 produce, cotton, wool, coffee, metal, and other 
 exchanges. When the law was first enacted in 1905 its 
 advocates claimed that it would check illegitimate 
 speculation upon the stock exchange. The claim is 
 made that illegitimate speculation, especially in com- 
 modities, frequently results in a " corner " of some 
 one or more of the necessaries of life. To this extent 
 
New Sources of State Revenue 85 
 
 speculation is not in the interest of the ordinary con- 
 sumer, and is a species of gambling for the benefit of 
 the members of the exchanges and those who speculate 
 therein. 
 
 Both the stock transfer taxes and the liquor taxes 
 are business taxes and not property taxes. Business 
 taxes have been developed in Europe, especially the 
 Gewerbesteuer or business taxes of Prussia first 
 enacted in 1820, but more thoroly developed in 1891 
 by Doctor Johannes von Miquel, the Prussian minister 
 of finance. All businesses are placed in four classes 
 according to the capital employed or earnings made 
 and each class pays a different rate. The taxpayers 
 rated in the same class constitute a tax association. The 
 government does not levy the tax against each indi- 
 vidual business, but notifies each tax association of the 
 total amount of tax each association must collect, which 
 IS the product obtained by multiplying the number of 
 business undertakings represented in the association 
 by the average rate for the class in which it belongs. 
 The officers of each tax association then apportion the 
 tax among the members of the association. In 1891 of 
 the total taxes collected in Prussia, thirteen per cent, 
 came from these business taxes. In Germany the town 
 IS to a certain extent an association of business inter- 
 ests and the Gewerbesteur works satisfactorilv. But 
 business taxes are not suitable to an American com- 
 monwealth unless New York is to revert to the system 
 of taxing everything in sight. 
 
 MORTGAGE TAXES 
 
 The original law passed in 1905 imposed an annual 
 tax on every recorded mortgage. The real estate asso- 
 ciations of the State after a determined fight in the 
 Legislature in 1906 secured an amendment to the 
 original law making it a recording tax, so that for each 
 $100 of the principal of the mortgage debt, and each 
 remaining major fraction thereof, a tax of fifty cents 
 
86 Taxation in New York 
 
 is imposed at the time of the recording of the mortgage, 
 and ihe same is thereafter exempted from local taxa- 
 tion. The amount of money collected is divided 
 equally between the State and the localities in which 
 the mortgaged premises are located. The largest 
 amount the State has received from this source of 
 revenue in any one year was in 1910 when $1,931,848 
 was collected. 
 
 The advocates of this law contended that mortgages 
 were to a large extent escaping taxaflion by local 
 authorities and therefore the State had a right to 
 secure revenue in this way. Even under the mortgage 
 tax law they claimed the localities in securing one-half 
 of the receipts would receive more than they had 
 obtained previously when they were allowed to assess 
 mortgages as personal property and levy a tax against 
 it at the local tax rate. As nearly all mortgages are 
 recorded at the date of issue it is a sure way of reaching 
 these loans. 
 
 In 1910 Mayor William Jay Gaynor of New York 
 City severely criticised the mortgage tax law saying 
 that mortgages were not property and therefore should 
 not be taxed. His views are shared by many others. 
 It is the old view that property should bear the burden 
 of taxation. Property owes no duty to pay taxes. 
 The State has direct relations not, with property, but 
 with persons. Every community professes to tax. the 
 individual according to his ability to pay, which may 
 be measured by his property or by any other standard. 
 
 When the State is in pressing need of more revenue 
 an attempt may be made to have the original law of 
 1905 re-encated, so that mortgages will pay an annual 
 tax. An exhaustive report published by the New York 
 Tax Reform Association in 1906 showed that while the 
 1905 mortgage tax law was in operation the interest 
 rates throughout the State were increased by just the 
 amount of the tax, proving conclusively that the bor- 
 rower was forced to pay the tax. Wlien the law was 
 
New Sources of State Revenue 87 
 
 amended in 1906 interest rates went back to their 
 former level. The man who borrows money to build a 
 home, or to carry on a business, is handicapped enough 
 already without having the State exact toll from him 
 in the way of a mortgage tax. 
 
 SECURED DEBT TAXES 
 
 This law was passed in 1911. It permitted the owner 
 of certain securities to present the security or a 
 description of it to the State controller and upon pay- 
 ment of a tax of one-half of one per cent, of the face 
 value to secure exemption from the local assessment 
 as personal property at the local rate. 
 
 The secured debts that came under the law were 
 mortgages on real estate located outside the State, 
 serial bonds, notes and debentures secured by such 
 mortgages, or by any mortgages not subject to the 
 recording tax law, bonds of other states and munici- 
 palities. The term includes all bonds and similar 
 securities that are not exempt, and that do not come 
 ulider the recording tax, but ordinary notes are not 
 included. 
 
 All the revenue of the secured debt law goes to the 
 State. The largest amount received by the State in 
 any one year from this law was $1,411,567 in 1912. 
 The law expired in 1915, but was reimposed in 1916 
 under the name of investment taxes so as to exempt 
 securities for a five-year term. All securities that had 
 paid the tax under the law of 1911 were exempted from 
 the law of 1916. This law is not a taxation statute, 
 but an exemption statute, and it has no justification 
 whatever. The bill was accelerated thru the Legis- 
 lature by the single taxers. Under its provisions a 
 distinguished citizen of New York City took ten million 
 dollars worth of bonds to the State Controller, paid 
 the State tax of one-half of one per cent., and had them 
 exempted forever from local taxation. New York City 
 lost thereby a large amount of needed revenue. 
 
88 Taxation in New York 
 
 MOTOR VEHICLE TAXES 
 
 In 1917 the sum of $2,026,189 was collected by the 
 State from a tax on motor vehicles. As originally 
 enacted the State retained all the revenue collected, 
 but as amended in 1917 one-half of the receipts now go 
 to the localities. People owning automobiles have to 
 pay a license to the Secretary of State according to 
 the horse power of their automobile. The advocates 
 of this law contend that the State is spending a great 
 deal of money on the roads of the State for the benefit 
 of the automobilists and therefore the automobilists 
 should contribute towards their construction and 
 maintenance. Horse owners also contend that the so- 
 called good roads are so hard and slippery that they 
 cannot use them. In common justice there should be 
 constructed by the side of the State roads dirt roads 
 for the use of horse-drawn vehicles. 
 
CHAPTER VII 
 STATE EXPENDITURES 
 
 The expenses of the State now amount to over sixty 
 million dollars a year. They are bound to increase. 
 In a few years they will be eighty million dollars a 
 year, and then one hundred million dollars a year. 
 Where will all this money come from? Undoubtedly 
 from increased taxation, both direct and indirect. 
 
 One of the most important causes of the growing 
 expenditures of the State has been the increasing 
 number of new offices and commissions created in the 
 last few years. In nearly every case these commis- 
 sions have been created to exercise supervision and 
 control over private industry or business in the interest 
 of society as a whole. Here it is we see the changed 
 attitude of the State toward the life of its citizens. Not 
 only every class of society is being brought under the 
 care and supervision of the State, but every activity 
 of every citizen is being regulated in the interests 
 of all. 
 
 There has not been much planning in the creation 
 of these commissions. They have grown up without 
 system. Some of them overlap each other in their 
 work, and there ought to be an entire reconstruction, 
 consolidating many of them together. The work the 
 State is doing can be done more efficiently with fewer 
 commissions and also more economically. 
 
 The State controller classifies the expenditures 
 mider the following divisions : Executive, administra- 
 tive, legislative, judicial, regulative, educational, agri- 
 cultural, defensive, penal, curative, charitable, protec- 
 tive, constructive, and general. 
 
 The executive division includes the salary of the 
 governor, office employees and office expenses. The 
 appropriation for the executive division in 1917 was 
 
 [S9] 
 
90 Taxation in New York 
 
 $137,201. Under the first State constitution of 1777 
 the governor was to be a wise and discreet freeholder. 
 Remembering their struggles with the royal governors, 
 the people were distrustful of the executive depart- 
 ment and under the first constitution of 1777 the gov- 
 ernor did not have the power of veto or the power of 
 appointment. The council of revision, consisting of 
 the governor, chancellor, and the judges of the 
 supreme court, or any two of them, were to revise all 
 bills passed by the Legislature. It was not until the 
 constitution of 1821 was adopted that the governor was 
 given the power to veto bills. During the forty-five 
 years that the first constitution was in force only three 
 laws approved by the council of revision were after- 
 wards declared unconstitutional. In a republic it is 
 the duty of the executive to enforce the laws and con- 
 sequently the executive ought not to be part of the 
 legislative branch of the government and help make 
 the laws which he does by having the power to veto 
 bills. 
 
 The council of appointment consisted of the gover- 
 nor, and four senators, one from each of the senatorial 
 districts, to be openly nominated and appointed by the 
 assembly each year. Senators were not eligible to the 
 council of appointment for two years successively. A 
 majority of the council of appointment constituted a 
 quorum. The governor had no vote, but in the event of 
 a tie had a casting vote. For the election of senators 
 the State at that time was divided into four great dis- 
 tricts, the southern, the middle, the western, and the 
 eastern. There were very few elective officers in the 
 early days, and mayors, sheriffs and nearly all local 
 officers were appointed by this council of appointment. 
 At the time of the constitutional convention of 1821 the 
 patronage of the council of appointment was enormous 
 at that time 8,287 military and 6,663 civil officers held 
 commissions from the council of appointment. The 
 
State Expexditures 91 
 
 constitution of 1821 abolished both the council of 
 revision and the council of appointment. 
 
 The administration division includes the salaries of 
 the secretary of state, controller, treasurer, attorney 
 general, civil service commission, office employees and 
 office expenses. The appropriation for the adminis- 
 tration division in 1917 was $1,869,818. 
 
 The secretary of state is an inheritance from the 
 colonial period. It is not mentioned in the constitution 
 of 1777. The secretary of state is the custodian of the 
 State archives, and also has functions in relation to 
 elections and corporations. From 1821 to 1854 the 
 secretary of state had super\'ision over the common 
 schools of the State. 
 
 The office of auditor general existed in the colony 
 for nearly a century before the Revolutionary War. It 
 was abolished in 1797 and the office of cont^roller 
 created as a substitute for it. The controller is the 
 financial officer of the State. When we recall the great 
 work done by Azariah Cutting Flagg, who was con- 
 troller from 1842 to 1847, in preventing the State from 
 going into bankruptcy during that period, we must 
 conclude that the controller is one of the important 
 offices of the State. 
 
 The office of treasurer was provided for by the con- 
 stitution of 1777. At first appointed each year by the 
 Legislature, it was not until 1846 that the treasurer 
 was elected by the people. This useless office should 
 be abolished. What little work is done by the treasurer 
 can be better performed by the State controller. 
 
 The office of attorney general existed in the New 
 York colony. Before the office of district attorney was 
 created in 1801, the attorney general went from county 
 to county and prosecuted criminal cases. It was a far 
 more important office in that early period than it is at 
 present. 
 
 The civil service commission was created in 1883. 
 This commission conducts civil service examinations. 
 
92 Taxation in New Yoek 
 
 The legislative division includes the salaries of sen- 
 ators, assemblymen, lieutenant governor, employees 
 and expenses. The appropriation for the legislative 
 division in 1917 was $2,729,134. As all if the State's 
 great enterprises and constructive work originates 
 with the Legislature, this is the most important branch 
 of the State government. 
 
 The judicial division includes the salaries of the 
 judges of the court of appeals, judges of the supreme 
 court, court of claims, State reporter, and employees 
 and office expenses. The appropriation for the judi- 
 cial division in 1917 was $3,369,949.. The supreme 
 court was constituted by the colonial assembly in 1691. 
 The court of appeals was constituted by the constitu- 
 tion of 1846. Before that date there had been a court 
 of errors consisting of the chancellor, judges of the 
 supreme court, and all members of the State senate. 
 It w^as felt that this court had outlived its usefulness, 
 for it was not apt to declare any laws unconstitutional 
 when the majority of the court was made up of sena- 
 tors who had passed the laws. Under the constitution 
 of 1821 all judicial officers in the State with the single 
 exception of justices of the peace were appointed by 
 the governor. This was czarism with a vengeance. 
 The constitution of 1846 deprived the governor of 
 these despotic powers and made all judicial ofl&cers 
 elective. 
 
 The board of claims was created by statute in 1883, 
 and changed to a court of claims in 1897. 
 
 The regulative division includes the excise depart- 
 ment, health department, industrial commission, pub- 
 lic service commission, and tax department. The 
 appropriation for the regulative division in 1917 was 
 $4,831,753. 
 
 The excise department was created in 1896 to admin- 
 ister the liquor tax law. When New York becomes a 
 
State Expenditures 93 
 
 prohibition state, the work of this department will 
 cease. 
 
 The department of health is a continuation of the 
 State's activities along the line of public health. In 
 1794 the governor was allowed to spend sums not 
 exceeding $2,500 for the purpose of preventing the 
 spread of contagious diseases. A few years later 
 quarantine regulations were put into operation on all 
 vessels entering the port of New York, three health 
 commissioners were appointed, a lazarette was built, 
 and a detention station was erected on Bedloe's Island 
 at State expense. A tariff schedule was imposed upon 
 all captains, mates, passengers and sailors entering 
 the city of New York, and the sums collected went to 
 the support of sick seamen and foreigners in the quar- 
 antine station, while the balance went to the Hospital 
 of New York. If there were any deficiencies it was 
 made up by the State. 
 
 For a time the three State health commissioners had 
 charge of the cleaning of the streets of the City of 
 New York, but the expense was borne by the city. In 
 1799 New York City was given the power of draining 
 lots, filling up marshes, and installing a sewerage sysi- 
 tem. Thus occurred the transfer of the responsi- 
 bility for the health of the city from the State to the 
 municipality. 
 
 The State board of health was created in 1880 and 
 it collects and preserves statistics relating to mortal- 
 ity, disease and health thruout the State. It has super- 
 vision over the work of local health authorities and is 
 charged with the enforcement of the public health law 
 and the sanitary code. 
 
 The industrial commission came into being in 1915 
 as a consolidation of the labor department and the 
 workmen's compensation commission. The labor de- 
 partment was created in 1901 by consolidating the 
 bureau of labor statistics, started in 1883, with the 
 
94 Taxation in New York 
 
 board of mediation and arbitration, and factory inspec- 
 tors, started in 1886. In the eighties industrial strikes 
 first began to be a disturbing element to society, and 
 largely to prevent if possible these misunderstandings 
 between em})loyers and employees these bureaus were 
 created. The workmen's compensation commission 
 came into being in 1914 with the enactment of the work- 
 men's compensation law, a measure along the line of 
 social justice. 
 
 There arc two public service commissions, one called 
 the first district public service commission, which has 
 supervision over all the public service companies of 
 New York City excepting steam railroads, telephone 
 and telegraph companies ; and the second district pub- 
 lic service commission, which has supervision over all 
 the public service companies outside of New York 
 City in the State and also of the steam railroads and 
 telephone and telegraph companies for the whole State. 
 
 The two ])ublic service commissions were formed by 
 the consolidation in 1907 of the railroad commission 
 and the gas commission. The railroad commission was 
 organized in 1883 and the gas commission in 1905. 
 
 The tax department is a continuation of the State 
 board of assessors constituted in 1859 to equalize real 
 estate assessments as between counties for the levying 
 of State taxes. It now has the assessment of the cor- 
 poration taxes and the special franchise taxes. It also 
 apportions mortgage taxes when the same are in more 
 than one tax district. It would seem that all the State 
 taxes should be in charge of this department. This 
 would mean that the motor vehicle taxes now in charge 
 of the secretary of state ; the liquor taxes now in charge 
 of the excise department; and the inheritance taxes, 
 stock transfer taxes, and investment taxes now in 
 charge of the controller would be transferred to the 
 tax department. 
 
 The ('(lueational division is under the control of the 
 
State Expenditures 95 
 
 University of the State of New York, governed by a 
 board of regents, now twelve in number. They choose 
 a commissioner of education who has supervision over 
 all the public schools of the State. The appropriation 
 for the educational division in 1917 was $10,021,631. 
 The University of the State of New \York was created 
 by the Legislature in 1784 to revive Kings College, now 
 Columbia University, which had been discontinued 
 during the Revolutionaiy War. The regents of this 
 university were charged with the duty of incorporating 
 academies and colleges. The State's permanent pub- 
 lic school system was organized in 1812, and down to 
 that date the board of regents of the University of the 
 State of New York had chartered three colleges, Col- 
 umbia, Union and Hamilton, and had also chartered 
 thirty academies. 
 
 Under the agricultural division is the council of 
 farms and markets created in 1917 by a consolidation 
 of the department of agriculture and the department 
 of foods and markets. The appropriation for the agri- 
 cultural division in 1917 was $3,003,219. As early 
 as 1806 the State contributed money to agricultural 
 exhibitions where prizes were awarded. In 1841 the 
 first State fair was held at Syracuse. In 1881 the State 
 made its first appropriation for an agricultural experi- 
 mental station. In 1884 the department of agriculture 
 was created and also the dairy commission, altho the 
 two were afterwards consolidated together. In 1914 
 the department of foods and markets was organized 
 to aid in the creation of local markets, investigate the 
 cost of food production, and strive to bring about a 
 closer co-operation between producers and consumers. 
 
 The defensive division has charge of the military 
 affairs of the State and is in charge of the adjutant 
 general. The first adjutant general was appointed in 
 1784. The expenditures for this division must neces- 
 sarily be of a fluctuating character as the expenses in 
 
96 Taxation in New Yoek 
 
 time of war are much greater than in time of peace. 
 The appropriation for the defensive division in 1917 
 was $8,162,513. 
 
 The penal division is in charge of the penal institu- 
 tions of the State. The Legislature in 1796 provided 
 for the erection of two State prisons, one at Albany 
 and the other in New York City. The one at Albany 
 was never built, but Newgate Prison was constructed 
 in New York City and opened for inmates in 1797. It 
 was soon found to be inadequate and it was determined 
 to sell it and build a new one. Sing Sing was selected 
 as the new site chiefly because of an extensive quarry 
 of marble on the premises, which would afford employ- 
 ment to the convicts. It was opened in 1825, but 
 another prison had been constructed and opened at 
 Auburn in 1820. The prison at Dannemora was erected 
 in consequence of the assertion of artisans that the 
 pursuit of mechanical employments by convicts was 
 prejudicial to their interest, and so the prison in Clin- 
 ton County was erected for the purpose of mining and 
 working iron. It was opened in 1845. The Matteawan 
 State hospital for insane criminals was opened in 1892. 
 To carry out more humane methods of having prison- 
 ers work out in the open upon a large farm is the pur- 
 pose of the Great Meadow prison at Comstock in 
 Washington County, which was opened in 1911. 
 
 Under the constitution of 1846 there w^ere three 
 inspectors of State prisons. The constitution was 
 amended in 1876 and a superintendent of State prisons 
 substituted in place of these inspectors. The appro- 
 priation for the penal division in 1917 was $2,397,960. 
 
 On June 30, 1916, there were 5,486 prisoners in the 
 four State prisons, Auburn, Dannemora, Great Mea- 
 dow and Sing Sing. There were 1,676 inmates in 
 reformatories, Elmira, Napanoch and reformatories 
 in New York City. Also there were 612 inmates in 
 refuges for women at Albion and Bedford Hills. 
 
 The curative division is in charge of the State hos- 
 
State Expenditures 97 
 
 pitals for the insane. The State Care Act was passed 
 by the Legislature in 1893 by which all the insane 
 patients ceased to be a charge upon the several coun- 
 ties and became a charge upon the State. The insane 
 patients were transferred to the State hospitals as 
 rapidly as buildings could be provided for them. The 
 care of the defective classes began to claim attention 
 about 1840. Up to this time their care had been left to 
 local authorities, to private individuals or to private 
 institutions. In 1854 Governor Horatio Seymour in 
 his annual message to the Legislature said: '' While 
 any of our unfortunate insane remain unprovided for, 
 it is obvious that the State has not performed her 
 whole duty toward her suffering children. ' ' 
 
 At present the State has thirteen State hospitals 
 for the insane, which in 1915 contained 34,249 inmates. 
 There were also 964 insane persons in private institu- 
 tions. Down to 1915 the State had expended over 
 thirty-one million dollars for building equipment and 
 furnishing for these thirteen institutions. The appro- 
 priation for the curative division in 1917 was 
 $10,457,685. This division is in charge of the State hos- 
 pital commission, formerly known as the State lunacy 
 commission, which in 1889 superseded the State com- 
 sioner in lunacy, which office was created in 1873. 
 
 The charitable division is in charge of the State 
 charitable institutions. There are at present nineteen 
 State charitable institutions. The State board of 
 charities was created in 1867. In 1915 there were 91,019 
 persons in institutions receiving public money and 
 under the supervision of the State board of charities. 
 Of this number 7,118 were in county almshouses, 7,208 
 in city and town almshouse institutions, 37,094 in 
 homes for children, and 9,529 in hospitals. 
 
 Very early in the history of the New York colony 
 the poor came in for attention. The Colonial Assem- 
 bly on November 1, 1683, passed an act relative to the 
 poor as follows : 
 4 
 
98 Taxation in New Yokk 
 
 " Whereas it is the Custome and practice of his 
 Maties Realm of England, and all the adjacent Col- 
 lonyes in America, That Every respective Citty, 
 Towne, parish and precint doth care and provide for 
 the poor who doe inhabit in their respective precints 
 aforesaid, Therefore it is Enacted by the authority 
 aforesaid. That for the Time to come the respective 
 Comiconers of Every County, Citty, towne. Parish, 
 Precint aforesaid, shall make provision for the main- 
 tenance and Support of their poor respectively." 
 
 In 1758 New York City purchased Bedloe's Island 
 for a pest house. In 1798 one-third of the duties col- 
 lected upon goods sold at auction was set apart for 
 the relief of the foreign poor in New York City. 
 
 The appropriation for the charitable division in 1917 
 was $4,466,012. 
 
 The protective division relates to public buildings, 
 ptiblic lands, Indian affairs, maintenance of monu- 
 ments, parks, reservations, historic buildings, water 
 supply, and forestry. The appropriation for this 
 division in 1917 was $3,117,990. 
 
 The conservation commission was created in 1911 by 
 the consolidation of the forest, fish and game commis- 
 sion and the State water supply commission. A fish 
 commission was organized in this State in 1868 to 
 propagate fish by establishing fish hatcheries. A forest 
 commission was organized in 1885 to care for the newly 
 acquired State lands in the Adirondacks and Catskills, 
 In 1895 these two commissions were consolidated into 
 the fisheries, game and forest commission, and in 1903 
 it was reorganized under the name of forest, fish and 
 game commission. In 1905 the State water supply 
 commission was created. This latter commission was 
 organized to exercise supervision over the course 
 adopted by the municipalities and local divisions in 
 acquiring control over the water supply of the State. 
 Every municipality was required to submit plans to the 
 commission and have them approved by it before they 
 
State Expenditures 99 
 
 were allowed to take over a new source of water 
 supply. 
 
 The conservation commission has charge of the 
 State's forest preserve, which consisted in 1915 of 
 1,493,660 acres in the Adirondacks and 114,282 acres 
 in the Catskills. The State is gradually acquiring more 
 land in these two sections and the Adirondack Park 
 will some day consist of 3,313,564 acres and the Cats- 
 kill Park of 576,120 acres. This land is to be forever 
 reserved for the free use of all people for their health 
 and pleasure, and as forest land necessary to the pres- 
 ervation not only of the head waters of the chief 
 rivers of the State, but also of the future timber 
 supply. 
 
 The constructive division includes the expenses of 
 the offices of the State engineer and surveyor, superin- 
 tendent of public works, State architect, and highway 
 department. The appropriation for this division in 
 1917 was $7,733,719. 
 
 The department of public works has charge of the 
 State canal system. Canal commissioners were created . 
 by the first act of the Legislature in 1816 authorizing 
 the construction of the Erie Canal. By an amendment 
 to the constitution in 1876 canal commissioners were 
 abolished and a State superintendent of public works 
 substituted in their place. 
 
 The office of surveyor general existed under the gov- 
 ernment of the colony of New Netherland and was 
 continued during the English occupation. There was 
 also a surveyor of the king's woods from 1698 to 1777. 
 Most of the lands of the State were parceled out for 
 sale and settlement by rude chain and compass surveys, 
 made under the authority of the owners of the various 
 grants. The object was simply to measure and mark 
 in the cheapest manner the boundaries of lots offered 
 to the incoming settlers. The first map of the State 
 was made by putting together the results of these 
 special surveys. Its errors and deficiencies were such 
 
100 Taxation in New Yokk 
 
 that Governor DeWitt Clinton, in his message to the 
 Legislature in 1827, urged the necessity of ' * an authen- 
 tic and official map of the State." Nothing was done 
 until 1876, when following a report of a committee of 
 the American Geographical Society to the effect that 
 there had never been an official survey of the State 
 and that the maps published by private parties were 
 grossly erroneous, the Legislature appointed a com- 
 mission to make an accurate trigonometrical and topo- 
 graphical survey of the State. This commission made 
 its final report in 1887, but the work was not then fin- 
 ished. The United States geological survey began a 
 topographical map of New York in 1892 and in 1916 
 the work was four-fifths completed. When this survey 
 is finished there will then be an accurate map of the 
 State. 
 
 The constitution of 1846 changed the title of sur- 
 veyor general to engineer and surveyor and made the 
 office eligible only to a practical engineer. This was 
 largely owing to the difficulties the State was then 
 experiencing in the construction and management of 
 its canal system. Previous to 1883 w^hen the railroad 
 commission was created, the railroads were required 
 to report the condition of their affairs to the engineer 
 and surveyor. This office is not as important as for- 
 merly as it no longer has supervision over the rail- 
 roads of the State, neither does it have any surveying 
 to do. 
 
 The highway department w^as created in 1909. In 
 the early days the State furthered the improvement of 
 roads by granting charters to turnpike companies and 
 to bridge companies. These were allowed to charge 
 tolls to keep the roads and bridges in repair. As the 
 charters of these companies expired, the roads and 
 bridges became the property of the State generally by 
 purchase. There are still four toll bridges in the 
 State. The last toll gate disappeared in 1915. 
 
 The care and maintenance of public highways were 
 
State EkxFENMOTUKES " ' ' ' 101 
 
 left entirely to the local subdivisions. As a result the 
 roads in the country were generally in a very poor 
 condition. The extended use of the automobile caused 
 a demand for better roads and also that the State 
 should assist the localities in the construction and 
 maintenance of public highways. The year 1898 marked 
 a new era. That year an act was passed providing for 
 the construction of macadam roads by the State author- 
 ities and the cost was to be apportioned among the 
 State, counties and towns; the State to pay fifty per 
 cent., the counties thirty-five per cent., and the towns 
 fifteen per cent. 
 
 Then came the money system which was designed to 
 encourage the abandonment of the antiquated way of 
 working out the highway tax. Under this act the State 
 paid to each town which abandoned the labor system, 
 and paid its highway tax in cash, a sum equal to 
 twenty-five per cent., of the tax levied. Finally the 
 labor system was abolished entirely in 1908 and all 
 towns were compelled to come under the money system. 
 
 For a few years the engineer and surveyor was 
 given supervisory power over the expenditures of 
 money, and the town officials were required to render 
 accounts to him for all highway funds raised in the 
 town, or donated to it by the State. His work of this 
 character ceased in 1909 when the highway depart- 
 ment was created. 
 
 In 1905 the people voted a bond issue of fifty million 
 dollars, the proceeds of which were to be used in pay- 
 ing the State's share of the expense of improving roads. 
 These bonds were payable in fifty years. In 1912 the 
 people voted another bond issue of fifty million dollars. 
 
 The present system of public highways consists as 
 follows: (1) the' State highways, consisting of thru 
 routes running across the State, aggregating 3,514 
 miles, which are to be improved solely at the expense 
 of the State; (2) the county highways, consisting of 
 main roads, aggregating 8,380 miles, which are to be 
 
102 I'AXATiOZS' IN Mew Yokk 
 
 improved at the joint expense of the State, county and 
 town in the proportion of fifty per cent, of the expense 
 to be borne by the State, thirty-five per cent, of the 
 expense to be borne by the county, and fifteen per cent, 
 of the expense to be borne by the town; (3) the town 
 roads, embracing all the remaining roads, aggregating 
 about 77,000 miles, these are maintained and repaired 
 as earth roads at the expense of the towns plus the aid 
 received from the State. 
 
 Our severe northern winters raise havoc with the 
 concrete roads which are being built. Some of the 
 roads are worn out before they are paid for. The con- 
 crete roads are so hard that horses slip and fall upon 
 them. As these concrete roads are for the benefit of 
 automobilists there ought to be a dirt road at the side 
 for the horses to travel on. 
 
 The work of the department of public works, engi- 
 neer and surveyor, and highway department are sim- 
 ilar and to a certain extent overlap each other and it 
 would seem that these three departments should be con- 
 solidated into one and accomplish this work with 
 greater efficiency. 
 
 The general division includes the banking depart- 
 ment and the insurance department. The appropria- 
 tion for this division n 1917 was $1,186,432. 
 
 In 1829 three bank commissioners were to be ap- 
 pointed, whose duties were to visit the banks of the 
 State, examine their condition, and report annually to 
 the Legislature the result of their investigations. One 
 of these bank commissioners was to be appointed by the 
 governor and senate, while the other two commissioners 
 were to be appointed by the banks themselves. These 
 bank commissioners were abolished in 1843 and the 
 banks directed to report to the State controller. In 
 1851 the office of superintendent of banks was created, 
 who has supervision over the banks of the State. 
 
 The office of superintendent of insurance was created 
 in 1860. Before that time supervisory powers over 
 
State Expenditures 103 
 
 insurance companies was exercised by the State con- 
 troller. 
 
 While the expenses of these two departments are 
 made directly out of the State treasury, the treasury 
 is subsequently reimbursed by means of assessment 
 levied on the various banks and insurance companies 
 under the control of the two departments. The same 
 system was in vogue with the railroads when they were 
 under the supervision of the railroad commission, but 
 when the public service law was enacted in 1907 it 
 prohibited any further assessment against railroads 
 for the support of a State commission. The same rule 
 should apply to banking and insurance companies. 
 
 In Illinois the department of trade and commerce 
 has supervision over insurance companies, public serv- 
 ice companies, grain inspection, and weights and 
 measures. In this State the two public service com- 
 missions, the insurance department, and the banking 
 department could be consolidated into one depart- 
 ment with a single person at the head of it to be elected 
 by the people. 
 
 The debt of the State in 1917 was $236,309,660, 
 divided as follows: canal debt, $148,000,660; highway 
 debt, $80,000,000; Palisades interstate park debt, 
 $5,000,000; forest preserve fund, $2,500,000; and Sara- 
 toga Springs reservation, $809,000. In 1917 the 
 State's sinking funds amounted to $48,689,828. 
 
 Bather than issue long term bonds which require 
 the establisHiment. of a sinking) fund to retire the 
 bonds when due, it would be bettor to issue serial 
 bonds part of which would bo retired each year. Then 
 a sinking fund would not be required. AMiile serial 
 bonds might not obtain as ready a sale as long term 
 bonds yet it would result in a great saving and con- 
 venience to the State. The State constitution should 
 be amended to allow the issuance of serial bonds. 
 
 By a vote of the people November 4, 1884, the ton 
 per cent, debt limit was adopted as a constitutional 
 
104 Taxation in New York 
 
 amendment. This prevents counties or cities from 
 incurring an indebtedness in excess of ten per cent, 
 of their assessed valuation of real estate. It is in- 
 tended to prevent extravagant expenditures which 
 would lead to bankruptcy. The constitution has since 
 been amended to exempt indebtedness incurred by 
 cities for a water supply and in the case of New York 
 City indebtedness incurred for any rapid transit or 
 dock investment is exempted. There is no constitu- 
 tional restriction on the State's indebtedness. 
 
CHAPTER VIII 
 NEW ACTIVITIES OF THE STATE 
 
 In 1911 Governor John Alden Dix in his annual 
 message to the Legislature stated the following: 
 
 ** The total power used in manufacturing in New 
 York State in 1905 Avas 1,643,000 horsepower, of 
 which 850,000 horsepower was produced by steam. 
 To produce this 850,000 horsepower with coal thru- 
 out the year costs $85,000,000. To produce 850,000 
 horsepower by water and distribute it electrically 
 would cost twenty-five million dollars per annum, thus 
 saving sixty million dollars per annum. These figures 
 interpreted mean that we are contributing sixty million 
 dollars per year to other states for the purchase 
 of coal. This amount could be saved annually 
 to the State by taking advantage o^ our own 
 resources. Rivers, like other resources of nature, 
 must be adapted to man's uses in order to reach 
 anything like a reasonable degree of efficiency. 
 Every river in the State exhibits such irregularity 
 of flow in its natural state that the water power which 
 may be developed economically from the present 
 minimum flow is far below the average which can be 
 obtained by means of scientific regulation. We should 
 take advantage of these industrial benefits so as to 
 increase the plants along our systems of waterways. 
 In this way there would be increased prevention of 
 damage by floods, and there would be increased gen- 
 eral wealth and health of the people. The accomplish- 
 ment of this great project should not be delayed if we 
 are to maintain this Commonwealth as the Empire 
 State." 
 
 If some action had been taken at that time the 
 fuelless Mondays during the winter of 1918 would 
 not have compelled all manufacturing plants in New 
 
 [1051 
 
106 Taxation in New York 
 
 York State to close. The State conservation commis- 
 sion states that New York has more water power 
 than any other state in the Union. They state that 
 with a regulated flow of the rivers there is available 
 2,659,410 horsepower within the State of which only 
 697,119 horsepower has so far been developed. This 
 is allowing for 540,000 horsepower from Niagara 
 Falls where under the existing treaty twenty thousand 
 cubic feet per second is at present allowed. By the 
 abrogation of this treaty 4,580,000 horsepower could 
 be obtained from these falls according to the State 
 conservation commission. 
 
 The difference between maximum and minimum 
 flow of most of our streams when stated in figures is 
 startling to the layman. The Hudson, which is more 
 or less typical of the streams of the State, has a 
 maximum recorded daily discharge of one hundred 
 times its least daily flow. The Genesee, which is much 
 more flashy, has a maximum daily discharge about 
 four hundred times the minimum daily flow. The 
 yearly discharge of some of the rivers in a wet year 
 is nearly double the yearly flow of a dry year. On a 
 great many streams as much as three-fourths of the 
 volume of yearly flow usually runs off in the spring 
 and early summer months. 
 
 Over a large portion of the State the greater part 
 of the annual precipitation occurs in the winter and 
 spring months. Considerable water is temporarily 
 stored in the snow banks and is usually reduced to the 
 equivalent of rain simultaneously with the customary 
 heavy rainfall of the early spring months. It is quite 
 common for millions of cubic feet of water to run over 
 the falls and dams in the streams during these spring 
 freshet periods which, if it could be stored until the 
 drier summer and fall months, would be of wonderful 
 utility in not only maintaining a higher rate of flow 
 in those dry months, but also doing away largely with 
 
New Activities of the State 107 
 
 the damage and inconvenience incident to the sudden 
 run off of flood waters in their natural condition. 
 These conditions point to the necessity for large 
 water storage reservoirs as the only practical means 
 of accomplishing any considerable degree of regula- 
 tion. 
 
 The construction of water storage reservoirs for 
 impounding flood waters will be beneficial in the 
 following ways : 
 
 The equalization of stream flow by storing the water 
 during wet seasons and using the same to increase the 
 volume of the stream thru dry seasons; 
 
 A consequent large increase in the power value of 
 the stream, due to augmenting the low water flow, and 
 thus doubling or trebling the dependable flow for 
 power purposes; 
 
 A consequent decrease in the height of freshets, 
 thereby reducing the great pecuniary damages caused 
 by the periodic recurrence of floods; 
 
 By increasing the low water flow of polluted streams 
 a dilution would result which would improve the sani- 
 tary conditions of the stream; 
 
 Navigation would be benefited by a higher stage of 
 water on the lower reaches of the rivers; 
 
 The extension of transportation facilities, often to 
 an important and desirable extent, by navigation on 
 the proposed reservoirs ; 
 
 The lowlands of the river valleys could be made 
 more tenable, and their agricultural products 
 increased by reducing the contingency of floods; 
 
 The perpetual submergence of extensive tracts of 
 swamp lands, which are now unsightly and a menace 
 to health, would be possible ; 
 
 The creation of extensive lakes with beautiful 
 shores offering desirable locations for permanent 
 homes and great attractions to summer visitors seek- 
 ing recreation; and 
 
 Inestimable indirect benefit to the State due to the 
 
108 Taxation in New York 
 
 stimulation of industrial enterprises, the increase in 
 number and prosperity of the people, and the creation 
 of taxable wealth by the progressive development of 
 water power. 
 
 The State conservation commission has made 
 extensive surveys of the most important rivers and 
 basins which might be used to form reservoirs to fur- 
 nish additional water power for the industries of the 
 State. 
 
 The Sacandaga project is to construct a dam at 
 Conkling-ville on the Sacandaga river to create a stor- 
 age reservoir of twenty-nine billion cubic feet capac- 
 ity and to convert thirty miles of the present river 
 valley into an artificial lake of the same size as Lake 
 George. The cost of this reservoir would probably be 
 from five to six million dollars. Another project is 
 to construct a storage reservoir on the Schroon River 
 of sixteen billion cubic feet capacity. 
 
 The arguments presented by the State conservation 
 commission in favor of the State's undertaking this 
 work are as follows: First, the project involves the 
 flooding of thousands of acres of land, and to be suc- 
 cessfully executed the power of eminent domain 
 would have to be invoked. Eminent domain is the 
 right the State has of taking private property for 
 public use on paying its value. Private property can- 
 not be taken for private use. However, railroads and 
 canals are considered public necessities and the State 
 allows the power of eminent domain to be exercised 
 for their construction. The constitution would have 
 to be amended to allow private enterprise to develop 
 water power thru the exercise of the power of eminent 
 domain. 
 
 Second. Development by the State ensures the 
 fullest possible utilization of the power possibilities of 
 each stream, whereas development by uncontrolled 
 private enterprise often involves waste of resources. 
 Private capital, seeking the greatest possible imme- 
 
New Activities of the State 109 
 
 diate return on the investment, naturally confines its 
 attention to the most concenrated portion of a given 
 fall. The less precipitous portions of the fall above and 
 below, involving a large unit outlay in development, are 
 consequently apt to be neglected, and in too many 
 cases permanently wasted, because no other en'ter- 
 prise is likely to undertake their development after- 
 ward, even if the rights of the company already on 
 the spot would permit this to be done. 
 
 Third. State supervision is needed to insure the 
 safety of the construction and maintenance of the 
 dams. No catastrophe similar to the Johnstown 
 flood of May 31, 1889, is desired in this State, when six 
 thousand persons lost their lives thru the bursting 
 of a huge dam at the head of the Conemaugh River 
 which had originally been constructed for the old 
 Pennsylvania Canal but afterward became the 
 property of a fishing club and no attention had been 
 paid to its stability. Human life is too valuable to be 
 endangered by poorly constructed reservoirs. 
 
 Fourth. The State has greater financial strength 
 and can borrow funds at a lower rate of interest than 
 private companies. One of the reasons why the City 
 of New York in 1913 entered into the dual subway 
 system was that the municipality could borrow money 
 for the construction of the subways at a lower rate of 
 interest than private companies could. Thus the 
 State with its greater power and scope and with finan- 
 cial resources enabling it to defer the return on its 
 investment could undertake the construction of the 
 more extensive works necessary to develop the full 
 extent of the falls of our rivers and streams. It is 
 clear that the State is the only authority with sufficient 
 power to insure the complete development of each 
 and every stream so that every foot pound of energy 
 represented by its falling power may be given up 
 when necessary to the service of man. 
 
110 Taxation in New Yoek 
 
 Fifth. Which is perhaps the most important argu- 
 ment presented, is that State action will insure the 
 equal participation of all citizens in this form of 
 natural wealth, which is particularly the heritage of 
 the whole people. The prime inclusive reason for the 
 exercise of State authority over the control of stream 
 flow for power development is that under modern 
 social and economic conditions this step is necessary 
 to ensure the equal participation of all citizens in this 
 form of natural wealth. It appears that from all 
 points of view the State is the proper authority to 
 undertake and carry out the conservation of its own 
 water resources. 
 
 As the supply of coal in this country is becoming 
 scarcer and the Encyclopedia Americana states that 
 at the present rate of consumption per year the supply 
 of anthracite coal in this country will be exhausted in 
 fifty years, will it not be necessary in time to use the 
 State's vast water power now going to waste to heat 
 electrically the homes of the people ? Other prominent 
 scientists estimate that our coal supply will be 
 exhausted in less time than fifty years. The opinion 
 expressed by the Encyclopedia Americana was pre- 
 pared by Samuel Sanford, a Harvard graduate, who 
 made a careful study of the coal situation in this 
 country. For a number of years he w^as connected 
 with the United States Geological Survey and also with 
 the United States Bureau of Mines. The question 
 arises, is there water power enough to heat electrically 
 the three million homes in New York State? Accord- 
 ing to the United States fuel administration there w^as 
 consumed in New York State for the coal year ending 
 March 31, 1917, twenty million tons of anthracite coal, 
 of which fourteen million tons Avere of domestic sizes 
 and six million tons were of steam sizes. The domestic 
 sizes were probably used for domestic purpose^ and 
 the steam sizes were probably used for industrial 
 purposes. The United States fuel administration 
 
New Activities of the State 111 
 
 state that thej^ are unable to report the amount of 
 bituminous coal consumed in New York State. 
 
 The problem now is whether the two to seven mil- 
 lion horsepower available from the water develop- 
 ment of the State is sufficient to heat the three million 
 homes electrical^ the coldest day of the year. This 
 two to seven million horsepower is available every day 
 of the year, while the twenty millions tons of anthra- 
 cite coal is the amount consumed in the whole 365 days 
 of the year and there is no way of determining the 
 amount consumed on the coldest day of the year. 
 
 In transfarming the horsepower of electricity to 
 heat there is absolutely no waste, while in transform- 
 ing coal to horsepower only sixteen to twentj^ per 
 cent, of the heat is obtained. Comparison of the horse- 
 power of electricity and the horsepower of coal is not 
 a true test. Again in our modern heating furnaces 
 at least twenty per cent, of the heat goes up the 
 chimney and is lost. In order to obtain combustion 
 part of the gases are never consumed and so the full 
 heat value of the coal is never obtained. There is also a 
 great waste of coal in every home. 
 
 Perhaps the best comparison is by stating the num- 
 ber of British thermal units in the coal consumed and 
 in the maximum water power of the State. A British 
 thermal unit is the quantity of heat required to raise 
 the temperature of a pound of water one degree 
 Farnheit in temperature. On an average one pound 
 of coal is equivalent to thirteen thousand British ther- 
 mal units. Assuming that of the fourteen million 
 tons of domestic sizes of coal that two million tons are 
 used for cooking and for other purposes and that 
 twenty per cent, of the remaining twelve million tons 
 is lost thru the heat going up the chimney there 
 still remains over nine million tons from which heat is 
 obtained. Again assuming that fires for heating pur- 
 poses are started in the homes the fifteenth of Sep- 
 
112 Taxation in New York 
 
 tember and continue until the fifteenth of May, a 
 heating period of two hundred and forty-two days, an 
 average of forty thousand tons of coal a day are con- 
 sumed to heat the three million homes of New York 
 State. This sum expressed in pounds and multiplied 
 by thirteen thousand gives over one trillion British 
 thermal units as contained in coal used for heating 
 purposes. 
 
 Again one horsepower is equivalent to two thousand 
 five hundred and forty-five British thermal units. 
 Taking seven million horsepower as the maximum 
 amount obtainable from the water development of the 
 State and multiplying this sum by two thousand five 
 hundred and forty-five and then multiplying this 
 product by twenty-four and a little over four hundred 
 billion British thermal units are produced as the 
 extent of heat obtainable by electricity from the water 
 power of the State for the coldest day of the year. 
 Apparently then but two-fifths of the heat necessary 
 to heat the three million homes of New York State can 
 be obtained from the water power of the common- 
 wealth. Even tho it is impossible to heat all the 
 homes electrically from the water power of the State 
 now going to waste, yet the time may come when the 
 State will be obliged to develop its water power for 
 manufacturing and heating purposes. 
 
 Governor Charles Seymour Whitman in his annual 
 message to the Legislature in January, 1918, spoke of 
 the prevailing scarcity of nitrogen for fertilizers 
 which could be alleviated by water power develop- 
 ment. He said: '' Nitrogen, so necessary to the 
 farmer, now costs him thirty-five cents a pound in 
 nitrate of soda, while in Norway nitrogen is produced 
 by hydro-electric power at a cost of seven cents a 
 pound." The government does not yet appreciate its 
 responsibilities in this all important situation of the 
 fertilizer problem and the American public remains 
 in ignorance of the pressing exigency. It is every- 
 
New Activities of the State 113 
 
 body's duty to assist in shaping a course of effective 
 action. 
 
 The elements of which the soil is most quickly 
 depleted are phosphorus, nitrogen and potassium and 
 obtaining an adequate supply of these three substances 
 is most necessary in order to prevent the production 
 of food from falling down. To the farmer such fer- 
 tilizers are as necessary as food to eat is to the ordi- 
 nary citizen. Nitrogen can be manufactured from the 
 atmosphere, but air reduction of nitrogen is in its 
 infancy in this country. The unused water power could 
 well be harnessed to the manufacture of nitrogen from 
 the atmosphere. 
 
 Air contains about eighty per cent, of nitrogen. The 
 inventor of the electro-chemical process for manu- 
 facturing nitrate fertilizers and other chemical pro- 
 ductions from the air was Professor Birkeland, a 
 Norwegian. This process is to pass air thru an 
 enormous electrical flame of about seventy-five inches 
 in width which heats the air to a very high tempera- 
 ture, and the gases are then cooled and passed over 
 lime in water, resulting in calcium nitrate, which is 
 sold in granular form like salt. 
 
 The conservation of the soil is unquestionably one 
 of the most important, as well as the most neglected, 
 phases of the conservation movement in the State of 
 New York. The published map of the United States 
 geological survey show nearly three hundred thousand 
 acres of swamp land in the State, all of which is too 
 wet for cultivation. The largest area of swamp land 
 lies in Oswego County, consisting of over forty-six 
 thousand acres. The importance of reclaiming and 
 improving this vast area of swamp land thruout the 
 State cannot be overestimated. 
 
 Provision for a pure and adequate supply of water 
 for domestic purposes for all its inhabitants is one of 
 the first duties of the sovereign State. Thru its 
 
114 Taxation in New York 
 
 important effect upon public health alone, the general 
 use of pure water is a matter of the greatest importance 
 to every man, woman and child regardless of local 
 divisions of government or groupings of citizens. It 
 must be conceded that the value of water for potable 
 and domestic purposes cannot be estimated in dollars 
 and cents, constituting as it does a necessity of life for 
 which no substitute exists. Its money value is repre- 
 sented by whatever it costs to obtain the supply, be 
 that much or little. The State conservation commis- 
 sion asserts that one hundred gallons per capita per 
 day is enough water for all the usual needs of a munic- 
 ipality. Their 1914 annual report to the Legislature 
 gave five cities of the State which exceeded this amount 
 of which Kingston led with a daily consumption of 
 water per capita of two hundred and thirty gallons. 
 With our present population of ten million people 
 a daily consumption of one hundred gallons of water a 
 day by each citizen would mean a daily consumption 
 of one billion gallons of water. Instead of leaving 
 each locality to provide its own water should not the 
 State provide water for all its people? 
 
 In Massachusetts the Metropolitan Water Board, 
 which is a State body, supplies with water the cities 
 of Boston, Chelsea, Everett, Maiden, Medf ord, Newton 
 and Somerville. 
 
 The proper distribution of food products from the 
 producer to the consumer is a matter of growing 
 importance. Can this be done better by the State or 
 by co-operative associations among the farmers them- 
 selves? The consumer pays enormously high prices 
 for all his food products while the producer receives 
 for his hard labor about one-third of the selling price 
 of each article. Something is fundamentally wrong 
 when two-thirds of the selling price of food products 
 go into other hands instead of to the producer. The 
 result is a lack of intensive farming and a diminished 
 supply of food. If the people of the State are to con- 
 
New Activities of the State 115 
 
 tinue to eat they must see that justice is done the 
 farmer who produces his food. 
 
 In California the California Fruit Grrowers' Asso- 
 ciation, which integrates the marketing of upwards of 
 seventy per cent, of the California citrus crop, is the 
 most conspicuous example of success in a large scale 
 organization of a co-operative plan. Eight thousand 
 growers make up the membership of one hundred and 
 seventeen local associations. These are grouped into 
 seventeen district exchanges which coalesce to form 
 the central exchange. 
 
 There is a great waste in this State from not utilizing 
 the sewage of our cities and villages. The earth's sur- 
 face consists of but a thin layer of fertile soil over the 
 rock which constitutes our planetary existence. In 
 some places this soil is deeper than in other places, 
 while in places the rock itself is upon the surface. But 
 everywhere the soil is becoming poorer and poorer 
 because man is continually takng off and seldom 
 putting anything back to continue its fertility. Accord- 
 ing to the census of 1845 New York State raised that 
 year 2,897,062 pounds of flax. To-day New York State 
 raises practically no flax at all. Flax requires a very 
 rich soil, and the soil in this State has become too poor 
 to grow flax at the present time. From flax is made 
 linseed oil used to paint with, and as yet no substitute 
 for linseed oil for painting purposes has been 
 discovered. 
 
 The State council of farms and markets estimates 
 that the sewage wasted by cities of the State amounts 
 to nearly ten dollars per capita per annum. But 
 the Metropolitan sewage commission in their 1914 
 report states that the manurial value of sewage 
 amounts to only $1.25 per capita per year. But if this 
 sewage could be put back upon the land to increase its 
 fertility instead of being cast into the streams to pol- 
 
116 Taxation in New York 
 
 lute their waters and finally be washed out to sea, there 
 would be a great saving. 
 
 How dramatically Victor Hugo exclaims in his ' ' Les 
 Miserables," that Paris casts twenty-five million francs 
 annually into the sea : He says : 
 
 ' ' All the human and animal manure which the world 
 loses, if returned to the land instead of being thrown 
 into the sea, w^ould suffice to nourish the world. 
 
 The very substance of the people is borne away, here 
 drop by drop, and there in streams, by the wretched 
 vomiting of the sewer of our sewers into the rivers, and 
 the gigantic vomiting of our rivers into the ocean. 
 . . . This has two results, — the earth impoverished 
 and the water poisoned." 
 
 Following the agitation of Victor Hugo and others 
 the City of Paris began in 1867 irrigation upon a small 
 scale on a small experimental plot at Clichy. This 
 proved so successful that in 1869 the city extended its 
 sewage disposal to lands at Gennevilliers. About one 
 hundred and eighty-five million gallons of sewage per 
 day are returned to fertilize the land by the City of 
 Paris at the present time. 
 
 The City of Berlin in Germany was not long in 
 imitating Paris in its disposal of sewage and at present 
 the sewage farms about Berlin comprise about forty- 
 three thouisand and four hundred acres in extent. 
 Berlin is divided into twelve parts for the purpose of 
 sewage with a central collecting station at the lowest 
 point in each. From this lowest point the sewage is 
 pumped to farm lands which lie at a distance to the 
 north and south of the city. About one-half of the 
 fresh vegetables consumed in the City of Berlin are 
 said to be derived from the sewage farms. 
 
New Activities of the State 117 
 
 According to the annual report of the New York 
 State Insurance Department for the year ending 
 December 31, 1917, the fire and marine insurance com- 
 panies doing business in this State collected in 
 premiums $532,644,324, but paid out in fire losses 
 only $244,254,233. There is something fundamentally 
 wrong when the people have to pay double for what 
 they are receiving. Anyone taking the time to study the 
 annual reports of the insurance department can soon 
 acquaint themselves with the large dividends and also 
 stock dividends being paid by insurance companies. 
 The 1914 annual report of Rufus M. Potts, insurance 
 superintendent of the State of Illinois, discussed the 
 subject very exhaustively. He says that there is no 
 other business of similar magnitude in the United 
 States which enjoys such enormous profits as the fire 
 insurance business. This is what Superintendent Potts 
 says in part about excessive profits : 
 
 '■ ' The profit in 1913 of the Hartford Fire Insurance 
 Company was the enormous figure of 119.3 per cent., 
 of the Continental 92.7 per cent., of the German Ameri- 
 can 86.7 per cent., of the American 67.6 per cent., of the 
 Boston 54.5 per cent., of the Buffalo German 72.7 per 
 cent. To more specifically illustrate these profits I 
 will take for an example the Continental Insurance 
 Company. This company has a capital stock of two 
 million dollars, and in 1913 declared a dividend of one 
 million dollars, or fifty per cent. During the past 
 five years, 1909 to 1913, inclusive, this company has 
 declared dividends amounting to $5,200,252, or at the 
 rate of over one million per 3^ear. In addition to this, 
 it has increased its assets, the property of its stock- 
 holders, over five million three hundred thousand dol- 
 lars; also at the rate of over one million per year, or 
 the equivalent of another fifty per cent di\4dend each 
 3^ear. The income upon this stock, therefore, has been 
 over one hundred per cent per year for the past five 
 years. ' ' 
 
118 Taxation in New Yoek 
 
 Fires are misfortunes, and it is in violation of all 
 ethics and rules of public policy that institutions should 
 not only profit from, but build up and control a business 
 for profit only, based solely upon the misfortunes of our 
 people. That our citizens are bearing an excessive 
 burden and are sorely oppressed by the present system 
 of fire insurance must be admitted by all. Fire insur- 
 ance is essentially a tax for the purpose of spreading 
 the loss caused by fire to certain unfortunate individu- 
 als among the members of the whole community and 
 so lessening the burden of each. Public fire insurance, 
 either by the state, province, canton, city or commune 
 was the original and long the only form of fire insur- 
 ance in most European countries, and this state insur- 
 ance still flourishes vigorously in those countries, 
 altho mutual- and stock company insurance is now 
 found in all. When we realize that the American 
 people are paying for fire losses at the rate of $2.50 
 per capita, w^hile in most European countries the rate 
 is twenty-five to thirty cents per capita, we must con- 
 clude that a change of some kind is needed. 
 
 Fire insurance under modern commercial conditions 
 is practically compulsory. This comes from the fact 
 that most mercantile, manufacturing and other busi- 
 ness is done on credit. Credit will not be extended to 
 a merchant, manufacturer, or business man, unless his 
 stock of goods, merchandise in transit, or articles in 
 the process of manufacture are fully covered by insur- 
 ance. Neither can loans be secured on real estate un- 
 less all buildings are fully insured. The insurance 
 business is of direct personal interest to every citizen 
 of the State of New York. 
 
 The question arises what has all these activities to 
 do with taxation and the answer is that everything the 
 States does has to be done eventually thru taxation. 
 Taxation is not an isolated subject remote and discon- 
 nected from all the other activities of the State. On 
 the contrary it is intimately related to and bound ud 
 
New Activities of the State 119 
 
 with every activity of government. What is it going 
 to cost and where is the money coming from are always 
 first questions. The great problem is always to have 
 the cost equitably distributed among the people of the 
 State according to their ability to pay. The feeling 
 that there is going to be inequity in the distribution of 
 the cost defeats many good projects and the feeling 
 that they are not going to pay the cost but someone 
 else is going to pay it for them causes many to advo- 
 cate foolish and wasteful expenditures of money by 
 the government. Probably in no other domain of 
 governmental activity is there so much injustice and 
 inequity as there is in taxation. 
 
 The laissez-faire school of economists will tell us that 
 these things are not the function of government. Per- 
 haps they are not. But eventually our coal supply will 
 be exhausted and if the government does not provide 
 a way for the heating of the State's three million 
 homes, who will? Whatever can be done better pri- 
 vately should be done that way. But it is sometimes 
 difficult to define just what the function of the govern- 
 ment is. 
 
CHAPTER IX 
 TAXING MANUFACTURING COMPANIES 
 
 When the corporation tax law was first passed in 
 1880, manufacturing- companies were exempted on the 
 ground that it would drive industry out of the State. 
 After a period of thirty-seven years New York has at 
 last in 1917 imposed a State tax on manufacturing 
 companies. 
 
 The act of 1917 imposes a State tax of three per 
 cent on the net earnings of manufacturing and mercan- 
 tile companies, but exempts them from a local tax on 
 their personal property and also exempts them from 
 a local tax on their machinery and equipment. The 
 total receipts from this new tax for the first year of its 
 operation was $14,769,275, two-thirds of which was 
 reserved by the State government and the remaining 
 one-third returned to the localities to aid in supporting 
 the local government. All of the receipts from the tax 
 on manufacturing and mercantile companies should 
 go to the localities as it supersedes a former tax 
 imposed by the localities. 
 
 The former corporation taxes imposed a tax on 
 capital stock and gross earnings. This act imposes 
 a tax on net earnings of manufacturing and mercantile 
 companies. Here is a departure from the previously 
 established rule of the State. 
 
 In 1801 the Legislature exempted from taxation for 
 a term of five years the lands, buildings, improvements, 
 premises and appurtenances, called and known by the 
 name of the Hamilton Manufacturing Society, and 
 everything appertaining in and to the carr>nng on the 
 manufacture of glass, together with the buildings of 
 the workmen about the same. In 1817 the Legislature 
 enacted that all cotton, woolen and linen manufactories 
 in the State should be exempted from taxation. The 
 
 [120] 
 
Taxing Manufacturing Companies 121 
 
 courts afterwards held that this act was repealed by 
 the general tax law passed in 1823. 
 
 Altho manufacturing had a much tardier develop- 
 ment in New York than in Pennsyvania and the New 
 England states, yet by the census of 1830 this state 
 had assumed the priority among the American com- 
 monwealths in manufacturing. But it was not until 
 1870 that the manufactured products of the State 
 exceeded in value the agricultural products. Accord- 
 ing to the census of 1840 there were in New York State 
 at that time 455,954 persons employed in agriculture 
 and 173,193 persons employed in manufactures. The 
 1914 United States census bulletin on manufactures 
 gives the present number of wage earners employed 
 in manufactures in the State to be 1,057,857 and the 
 value of the manufactured products to be $3,814,661,- 
 114. There are six times as many people employed in 
 manufactories in the State to-day as there were seventy 
 years ago, but the number employed in agriculture 
 has decreased materially. 
 
 In the early days much of the manufacturing was 
 done in the homes. New York's textile products in 
 1810 were as follows: 
 
 Cotton goods made in families 216,013 yards 
 
 Woolen goods made in families 3,257,812 yards 
 
 Linen goods made in families 5,372,645 yards 
 
 Fulling mills, 427 in number 1,811,005 yards 
 
 Domestic manufactures continued to increase until 
 1825 when fifteen million yards of cloth were made in 
 homes. After that it began to decrease, and in 1855 
 only 928,675 yards of cloth were made in homes. 
 
 New York was eminently fitted by both situation and 
 natural resources to become a great industrial and 
 commercial state. Economical traiisportation and 
 cheap power furnished by railroads, watemvays and 
 canals made possible the growth of manufacturing 
 centers and these in turn increased the volume of traffic 
 
122 Taxation in New York 
 
 to be transported. Possessing a great commercial 
 center in New York City, the people of the State have 
 not lacked for capital to develop their industries and 
 the tide of immigation which passes thru the metropo- 
 lis has furnished an abundant suppy of labor. These 
 advantages of New York as a manufacturing state are 
 continuous and cumulative ; and in looking toward the 
 future development there must be added its proximity 
 to the coal fields of Pennsylvania, and also the abund- 
 ant supply of water power which, when transmitted 
 into electrical energy can run all the factories of the 
 commonwealth and furnish adequate transportation 
 facilities. 
 
 Bishop, in his " History of American Manufac- 
 tures," gives as an additional reason for the growth of 
 manufacturing in New York State that this common- 
 wealth was one of the most progressive of the states in 
 encouraging the owners of capital, especially the hold- 
 ers of small amounts of wealth, to unite their savings 
 and invest them in business under a corporation law 
 that secured to them limited liability and other 
 advantages. 
 
 According to the 1914 United States census bulletin 
 on manufactures the clothing industry is the leading 
 manufacturing industry of the State, having 189,763 
 wage earners, and the value of the manufactured pro- 
 ducts being $583,942,333. The next industry is that of 
 printing and publishing with 64,020 wage earners, and 
 the value of the manufactured products being $257,- 
 268,671. The textile industry comes third with 91,041 
 wage earners and manufactured products to the value 
 of $194,730,543. Our foundry and machine shop 
 products, slaughtering and meat packing, liquors, 
 tobacco manufacture, lumber and timber products 
 follow in the order named. 
 
 There is a great diversity in New lYork's manufac- 
 tures. Of the one hundred and eighty-nine thousand 
 wage earners employed in the clothing industry one 
 
Taxing Manufacturing Companies 123 
 
 hundred and seventy thousand are employed in New 
 York City. That the clothing industry is largely cen- 
 tered in New York City is due principally to the vast 
 immigration entering the metropolis and resulting in 
 cheap labor. Some of this clothing is made in sweat 
 shops. The clothing industry of this State forms 56.8 
 per cent of the total value of products for this industry 
 for the whole United States. Of the sixty-four thou- 
 sand wage earners employed in the printing and pub- 
 lishing industry fifty-one thousand are employed in 
 New York City. Being the largest city in the land 
 accounts for many newspapers, magazines, periodicals 
 and books published there, which have a circulation 
 all over the country. The printing and publishing 
 industry of this State forms 28.5 per cent of the total 
 value of products for this industry in the whole United 
 States. 
 
 Some of the products in which New York State ranks 
 first in the manufacture of, are the following : Hosiery 
 and knit goods; carpets and rugs; tobacco manufac- 
 tures; malt liquors; electrical machinerj^, apparatus 
 and supplies; millinery and lace goods; paper and 
 wood pulp; illuminating and heating gas; furniture; 
 men's furnishing goods; copper, tin and sheet iron 
 products; chemicals; photographic apparatus and 
 materials; pianos, organs and materials; paints and 
 varnish ; fur goods ; etc. 
 
 New York City is the industrial metropolis of the 
 United States, holding first place in the value of all 
 manufactured products. In 1914 the value of New 
 York City's manufactured products exceeded that of 
 any state of the Union, except Pennsylvania. Glovers- 
 ville and Johnstown are the seat of the glove industry. 
 More than half of the gloves, mittens and gauntlets 
 manufactured in the United States in 1914 were made 
 in this State. The production of chemicals by the use 
 of electricity has had a marked effect on the develop- 
 ment of the industry in New York State in recent 
 
124 Taxation in New Yoek 
 
 years. Niagara Falls is the seat of the chemical indus- 
 try. Troy is the seat of the collar and cuff industry 
 and Schenectady leads in the manufacture of electrical 
 machinery, apparatus and supplies. 
 
 The preponderance of manufactures is in the cities 
 as 85.5 per cent of the wage earners employed in manu- 
 facturing industries .are located in cities having a 
 jDopulation of ten thousand or over. Better and cheaper 
 shipping facilities account for the location of manufac- 
 turing in the cities. Among the adult wage earners in 
 manufacturing industries in this commonwealth in 
 1914, there were 740,881 males and 308,554 females. 
 The industries which gave employment to the greatest 
 number of women were clothing, textiles, men's fur- 
 nishing goods and tobacco. Female wage earners pre- 
 dominate in Troy where 51.8 per cent of those employed 
 were females. Glens Falls and Amsterdam show the 
 next largest proportion of female wage earners. 
 
 Of all industries of modern civilization, manufac- 
 turing receives the most favors from society. Neither 
 agriculture, mining, lumbering, shipping, or any other 
 industry is treated so leniently. Communities vie with 
 each other to secure manufacturing plants. All sorts 
 of inducements are offered, such as free sites, low 
 taxation, abundant labor, cheap shipping facilities, and 
 the like. After manufacturing plants have located in 
 the city or to^^^l they are treated with the utmost con- 
 sideration for fear they may move elsewhere. It is 
 felt that the prosperity of the city or town in a large 
 measure depends upon the prosperity of its manufac- 
 turing plants. When as sometimes happens a large 
 manufacturing plant is the principal industry of the 
 town, such a community is helpless to deal justly with 
 an industrial corporation more powerful than the 
 municipality itself. 
 
 Few realize the tremendous growth in manufactur- 
 ing the world over in the last fifty years. In the United 
 States in the last half of the nineteenth century while 
 the population increased threefold, the manufactured 
 
Taxing Manufactuking Companies 125 
 
 products increased from $1,019,000,000 in 1850 to $13,- 
 039,000,000 in 1900. Said Carroll D. WrigM: *' It is 
 incontrovertible that the present manufacturing and 
 mechanical plant of the United States is greater — far 
 greater — than is needed to supply the demand; yet it 
 is constantly being enlarged, and there is no way of 
 preventing the enlargement." 
 
 The same thing has been happening in Europe. In 
 the last half of the nineteenth century the population 
 of Europe increased fifty per cent, while its manufac- 
 tures increased two hundred per cent. Part of the 
 increasing surplus is absorbed by the rising standard 
 of living, but such a rise, which involves a change of 
 national habits, is slow, as is also the growth of the 
 population. On the other hand the multiplying of 
 machinery or its increased effectiveness not unfre- 
 quently doubles the output of a given product in a 
 single decade. In France in a period of fifteen years 
 from 1891 to 1906 the increase of machinery can be 
 judged from the fact that the horsepower of its engines 
 increased over six hundred per cent while the popula- 
 tion of the country remained practically stationary. 
 
 Thus machine made products in the four greatest 
 manufacturing countries of the world, England, Ger- 
 many, France and the United States, are increasing 
 much faster than their home consumption. This means 
 enlarged markets abroad. Is it a mere coincidence or 
 a logical sequence that at the same time this tremen- 
 dous increase in manufactures has been taking place 
 there has also been going on by these four great indus- 
 trial nations colonial expansion and the building of 
 battleships. There must be a colonial output for the 
 product of machinery which is forever grinding its 
 increasing grist. And then, of course, there must be a 
 nay\^ capable of protecting the oversea commerce, a 
 commerce which is essential to the very life of the 
 nation. Does this explain in part the mad race which 
 manufacturing nations have been running in naval 
 construction? 
 
126 Taxation in New Yoek 
 
 Wherever manufactured products go, a desire will 
 be awakened on the part of the people to manufacture 
 for themselves. First they will manufacture to supply 
 the home demand, but when that is supplied and their 
 machine products keep on increasing two or three times 
 as fast as home consumption, what will happen ? There 
 are many who think the underlying cause of the recent 
 world war is an economic struggle for the markets 
 of the world. 
 
 A table prepared by the New York State tax com- 
 mission in 1916 showed that public service corporations 
 of the State were paying five and six-tenths per cent. 
 of their earnings in taxes, while manufacturing cor- 
 porations of the State were paying only one-half of 
 one per cent, of their earnings in taxes. If statistics 
 concerning the farmers of the State could be obtained 
 it would probably show that they were paying the 
 highest percentage of their earnings in taxes than any 
 industry. In California the 1906 State tax report gave 
 the results of a careful investigation of the relative 
 tax burdens borne by manufacturers and agriculture 
 in that state, which showed that manufactures paid 
 .34 per cent, or one-third of one per cent, of its gross 
 product in taxes, while agriculture paid 6.86 per cent, 
 of its gross product in taxes. As the manufactures of 
 New York far exceed those of California in value the 
 disparity in this State must be much greater. Further- 
 more in California 88.7 per cent, of the total value of 
 agriculture is invested in land and buildings, only 11.3 
 per cent, being invested in personalty. On the other 
 hand 27.9 per cent, of the total value of manufactures is 
 invested in land and buildings, while 72.1 per cent, 
 is invested in personalty. This same ratio probably 
 obtains thruout the country — most of agriculture is 
 real estate, while most of manufactures is personalty. 
 
 Why this discrimination in taxation? It must be 
 frankly admitted that it has been the policj^ of the 
 American commonwealths to favor the manufacturing 
 industry, as compared with other forms of wealth. 
 
Taxing Manufactuking Companies 127 
 
 This policy has taken the form, not only of what is 
 equivalent to a lower rate of taxation, but also in many 
 cases of an absolute exemption from taxation. The 
 policy of the states has been directed toward accom- 
 plishing for the industries within the state somewhat 
 the same protection that has been afforded by the Fed- 
 eral government thru the means of the protective tariff 
 for American industries in general. In each case the 
 purpose of the policy has been to offer special advan- 
 tages to the manufacturers as opposed to their com- 
 petitors in other governmental districts. 
 
 The introduction and development of manufacturing 
 industries in our communities has followed somewhat 
 the same course as that followed by transportation in 
 the middle of the nineteenth century. Just as counties, 
 cities, towns and villages vied with one another in 
 offering bonuses and other special privileges to the 
 railroads for the purpose of inducing the railroads to 
 come thru their localities, so have states and towns 
 competed with one another in attracting capital of 
 manufactures. The time came, however, in the devel- 
 opment of the railroads when the communities saw 
 that they had gone too far, and that public policy 
 demanded a more conservative course. In this State a 
 constitutional amendment in 1874 prohibited the sub- 
 divisions of the State from granting any more public 
 aid to railroads. In the development of manufactures 
 the question is now being raised if the communities 
 have not gone much farther than was necessary in 
 extending special privileges to the manufacturing 
 industry. It is interesting to note that when the rail- 
 roads were under the supervision of the State engineer 
 and surveyor a report of this official to the Legislature 
 in 1858 contained a map of the State showing the rail- 
 roads constructed at that time, those under construc- 
 tion, and those projected, and according to this map 
 apparently ever}^ hamlet in the State was going to have 
 a railroad. Of course most of these railroads were 
 nothing but paper railroads and were never con- 
 
128 Taxation in New York 
 
 structed, but it illustrates the railroad craze of that 
 period. Then it was felt that the prosperity of each 
 community depended upon its having a railroad ; while 
 to-day the remark is so often heard, ' ' What this town 
 needs is more factories." "What does the State at 
 large benefit by having one community coax factories 
 away from some other community? The gain of one 
 community is simply the loss of another community. 
 
 The present inequality in the matter of taxation as 
 between the manufacturing industry and other indus- 
 tries is very great. It is improbable that the people 
 ever intended that the discrepancy as between the taxa- 
 tion of the various forms of wealth should extend to 
 the present extreme. Whenever the people in general 
 have been made acquainted with the facts there has 
 resulted a strong movement for the readjustment of 
 the tax burden. 
 
 The reason why the policy of favoring manufac- 
 tures has been so generally accepted by the American 
 states is not difficult to learn. Business interests in 
 any community are benefitted by the development of 
 manufactures. The construction of new plants, with 
 the attendant increase in the laborers employed in 
 those plants, adds to the profits of the merchants of 
 the community. As a large number of the influential 
 citizens in any community that control the policy of 
 the community are interested financially in real estate 
 and mercantile business, they have naturally been very 
 eager to offer privileges that would attract the 
 investment of capital. 
 
 So each community feels, therefore, that its pros- 
 perity depends upon the prosperity of its manufactur- 
 ing plants. This refers to the community as a separate 
 entity. But when all the communities of the State are 
 grouped together does not their prosperity depend 
 upon the prosperity of all the industries of the State? 
 If there are inequalities in the tax burden as between 
 the different industries, and the agricultural industry 
 is subject to more than its share of the tax burden, are 
 
Taxing Manufacturing Companies 129 
 
 not those communities affected adversely? Or is it 
 not just as important to the communities of the State 
 that the agricultural and other industries should be 
 prosperous as well as that the manufacturing industry 
 should be prosperous. 
 
 At the State tax association's first conference held 
 at Utica in 1911 John D. Kernan of Utica voiced these 
 sentiments in his paper, *' Taxation of manufacturing 
 corporations in New York State," when he said, " Ten 
 thousand more people employed in manufacturing 
 industries in Utica would add fifty thousand to the 
 population; to provide them with homes, stores, sup- 
 plies and necessaries and recreation would so expand 
 city real estate growth and values as to more widely 
 distribute and thereby greatly lighten the burden of 
 real estate taxes. Every farmer in Oneida County 
 would benefit by raising and selling more produce to 
 meet a larger demand and land would be consequently 
 in greater demand and of more value, as in Oneida 
 County so would it be thruout the State. ' ' 
 
 If every community was to act on this principle that 
 they existed only to induce manufacturing industries to 
 locate in their midst, where would the system end and 
 what would become of the surplus of manufactured 
 goods made? 
 
 Heretofore manufacturing corporations have been 
 assessed locally on their personal property under 
 Section 12 of the tax law, which has been unamended 
 since 1857. Now they are exempt from this local per- 
 sonal assessment. How inadequately they were 
 assessed for personal property was pointed out by the 
 1915 joint legislative committee on taxation which 
 made quite a thoro investigation concerning the assess- 
 ment of maimfacturing companies in this State. A 
 list of twenty-four manufacturing companies whose 
 taxable personalty amounted to $90,522,733 were 
 shown to be assessed $3,339,800. Many other manu- 
 5 
 
130 Taxation in New York 
 
 facturing companies were shown to be very much 
 underassessed. 
 
 Will the manufacturing industry go elsewhere since 
 New York State has imposed a State tax upon manu- 
 facturing corporations? According to the 1914 United 
 States census bulletin on manufactures the taxes paid 
 by manufactures in New York State was $56,218,108. 
 This includes taxes of all kinds, both federal and state. 
 Two industries are very highly taxed by the federal 
 government, that is the tobacco and liquor industries. 
 New York ranks first in the tobacco and malt liquor 
 industries. The taxes paid by these two industries 
 amounted to $30,159,751. Eliminating these two indus- 
 tries and the manufacturing industries of New York 
 State paid seven-tenths of one per cent of their capital 
 investment in taxes. Twenty-two other states of the 
 Union with the tobacco and malt liquor industries 
 eliminated paid a higher percentage of their capital 
 investment in taxes as follows: Kentucky, five and 
 one-half per cent. ; Indiana, four and one-tenth per 
 cent. ; Louisiana, three and one-fifth per cent. ; Illinois, 
 two and one-half per cent. ; Maryland and Nebraska, 
 two and two-fifths per cent. ; Mississippi, one and two- 
 fifths per cent. ; West Virginia, one and three-tenths 
 per cent.; Tennessee, one and one-fifth per cent.; 
 Massachusetts and Nevada, one and one-tenth per 
 cent.; Arizona, New Hampshire, Ohio and Wisconsin, 
 one per cent.; Montana, Virginia and Washington, 
 nine-tenths of one per cent. ; and Florida, Idaho, Kan- 
 sas and Oklahoma, eight-tenths of one per cent. This 
 shows that many other states are not as lenient in their 
 taxation of manufactures as is New York. So if manu- 
 facturing industries are to leave this State, where will 
 they go 1 
 
 The total capital investment in manufactures in 
 New York State in 1914 was $3,334,277,526, while the 
 total w^ealth of the State in 1912 was $25,011,105,223. 
 The capital investment in manufactures was thirteen 
 per cent, of the total wealth. In 1917 the total revenue 
 
Taxing Manufacturing Companies 131 
 
 receipts of the State were $390,336,374, and of this 
 amount the manufactures paid $17,823,582, or four 
 per cent. So that while the manufacturing industry 
 possesses thirteen per cent, of the total wealth of the 
 State, it pays in taxes for the support of the State and 
 local government only four per cent, of the total 
 revenue receipts. Assuming that the ability of the 
 various classes of wealth to pay taxes is roughly meas- 
 ured by their capital investment, the manufacturing 
 industry should pay thirteen per cent, of the total 
 revenue receipts. 
 
 The folly of an artificial stimulus to any industry is 
 well illustrated by the results of bounty fed sugar in 
 Europe. At the beginning of the nineteenth century, 
 the West Indies provided England with ninety-one per 
 cent, of her total sugar requirements. The^ Germany 
 with its beet sugar began to compete with cane grow- 
 ing countries and by means of direct and differential 
 subsidies practically ousted producers of cane from 
 British markets. At the close of the nineteenth cen- 
 tury Germany was providing Great Britain with three- 
 fourths of its total sugar supply and the West Indies 
 was contributing less than one-tenth. In 1899 Joseph 
 Chamberlain emphasized the need of saving the West 
 Indian cane industry from extinction. The bounty 
 system on beet sugar as practised by Germany was 
 imitated by Russia, Austria, France and Holland. 
 
 By paying an export bounty on beet sugar German 
 sugar was selling cheaper in England than it was at 
 home. The purpose was to destroy the cane sugar 
 industry Avhich had no such artificial stimulus to keep 
 it alive. Now that the recent world war has taken away 
 the artificial stimulus to the beet sugar industry, the 
 cane sugar industry has revived and is again supplying 
 England with its sugar. What must be the feelings of 
 the German people to think that after taxing them- 
 selves for so many years to develop the beet sugar 
 Industry of their country to realize that this artificial 
 stimulus cannot put any industry on a firm basis? 
 
CHAPTER X 
 THE CONDITION OF NEW YORK CITY 
 
 In 1917 New York City's budget was $211,114,136, 
 of which amount $176,842,500 was raised by direct tax 
 on property. The property on which this tax was 
 raised consisted of $8,254,549,000 real estate and $419,- 
 156,315 personal property, so that real estate had to 
 pay ninety- five per cent, of the tax. 
 
 In 1899 the date of the formation of Greater New 
 York, its budget was $95,209,959, so that there has 
 been an increase in eighteen years of one hundred and 
 twenty-one per cent. If New York City's budget in 
 the next eighteen years continues to increase at the 
 same rate of one hundred and twenty-one per cent., 
 then in 1935 it will amount to $466,562,242. 
 
 As New York City's real estate is already overbur- 
 dened in paying ninety-five per cent, of the tax of the 
 present budget, what is going to happen when it mU 
 be called to pay practically all of a budget of 
 $466,562,242? 
 
 As a part of the Dutch colony of New Netherland 
 the city's revenues nearly all came from customs and 
 excises. The Federal government took away the city's 
 revenues from customs. Mayor Fernando Wood in a 
 message to the Common Council on January 7, 1861, 
 said: ''Why should not New York City instead of 
 supporting by her contributions in revenue two-thirds 
 of the expenses of the United States, become, also, 
 equally independent? As a free city, with a nominal 
 duty on imports, her local government could be sup- 
 ported without taxation upon her people. . . . Thus 
 we could live free from taxes, and have cheap goods 
 nearly duty free." 
 
 When New York City collected its own excises prior 
 to the passage of the State excise law of 1896 it col- 
 lected $1,758,548 the last year the old law was in 
 
 [132] 
 
The Condition of New York City 133 
 
 operation. The first year the new law was in operation 
 there was collected from excises in New York City the 
 sum of $7,317,026 of which the city received $4,878,- 
 017, so that the municipality received over twice as 
 much when the State collected the excises as it did 
 when the collection was left to each locality. But New 
 York City was not overloaded with such a tremendous 
 budget twenty-two years ago as it is to-day. 
 
 In 1918 New York City's bonded indebtedness was 
 $1,469,448,477. In 1886 Governor David Bennett 
 Hill sent a special message to the Legislature calling 
 attention to the fact that New York City had exceeded 
 its constitutional debt limit by over six million dollars. 
 In this special message Governor Hill commented on 
 the ncAv constitutional amendment limiting the bonded 
 indebtedness of a municipality to ten per cent, of the 
 assessed valuation of real estate in these words : *' That 
 the evil sought to be guarded against by it was the 
 imposition upon future generations of taxpayers of 
 the payment for the expenditures of to-day." Since 
 then water bonds issued since Januarv ], 1904, and 
 revenue producing bonds for docks and rapid transit 
 have been exempted from the constitutional provision 
 requiring that the bonded indebtedness of a municipal- 
 ity shall not exceed ten per cent, of the assessed valua- 
 tion of real estate. On January 1, 1918, City Controller 
 Charles L. Craig reported the constitutional debt incur- 
 ring power of the City of New York within the debt 
 limit to be $50,270,1 55. That is the city could still 
 borrow fifty million dollars before it exceeded the 
 constitutional d('l)t limit of ten per cent, of the assessed 
 valuation of real estate. Still there is considerable 
 dispute as to the margin of New York City's debt 
 incurring capacity and there are many who contend 
 that the nnmioipality has already exeeeded the con- 
 stitutional limit. 
 
 However this vast indebtedness will have to be paid 
 sometime and it will have to be paid by the real estate 
 owners of Greater 'New York. Unless the city secures 
 
134 Taxation in New York 
 
 new sources of revenue it will be forced in a few years 
 to call upon the State for assistance. The attempt to 
 secure legislation in 1918 limiting the tax rate upon 
 real estate to seventeen and one-half mills strikingly 
 illustrates the plight of real estate owners in the 
 metropolis. Statistics presented to the joint legislative 
 committee appointed in 1915 for the investigation of 
 the finances of the City of New York showed that in 
 1915 the bonded indebtedness of Boston was eighty- 
 four million dollars, of Philadelphia one hundred mil- 
 lion dollars, of Chicago twenty-six million dollars, of 
 Saint Louis twenty-two million dollars, and of Balti- 
 more sixty million dollars. The bonded indebtedness 
 of New York City is over four times the combined 
 indebtedness of these five cities, altho its population is 
 much less than their combined population. 
 
 In New York City's 1917 budget the largest item was 
 for debt service, amounting to $69,744,568, or thirty- 
 three per cent, of the total budget. The next largest 
 item was for education, $44,210,209. Protection of 
 life and property in which is included police and fire 
 departments, come third with $32,304,063. Health 
 and sanitation come fourth with $17,405,290. While 
 it is easier to get into debt than it is to get out of it, it 
 is unfortunate that such a large percentage of the tax- 
 payers ' money must go to pay off old debts. The inter- 
 est alone on the city's debt amounted to $43,284,252. 
 If the city had followed the pay as you go plan 
 such an immense debt would not have accumulated. 
 No generation will ever build anything it does not 
 want for its immediate use. The contention that 
 future generations should pay for any benefits they 
 receive is questionable for the reason that they had no 
 voice in the matter and if they had had the privilege 
 of choosing they might have chosen something alto- 
 gether different. It is an easy way of shifting off on 
 to the future something present generations should 
 pay for themselves. 
 
The Condition of New York City 135 
 
 It is characteristic of the American people that they 
 are so willing to let posterity or future generations 
 help pay our debts, but they are not so willing to con- 
 serve our natural resources for posterity or future 
 generations. The soil of the East was once virgin soil, 
 rich in fertility and productive of immense crops, but 
 the American farmer kept taking off and putting prac- 
 tically nothing back until he had robbed the soil of all 
 its fertility and then he emigrated to the West to 
 repeat the same procedure upon the rich, fertile lands 
 of the prairies. Our lumber forests were once said to 
 be inexhaustible, but the American lumberman has 
 nearly exhausted them now. These illustrations 
 could be multiplied over and over again. When the 
 suggestion is made that something ought to be saved 
 for posterity, the answer is glibly made " let poster- 
 ity take care of itself." Yet these same people \Wth 
 their glib answer shove off on to posterity all of 
 their debts which they possibly can. Anyone can see 
 how unfair and unjust the whole thing is. 
 
 The city has spent a great deal of money on its 
 docks. Its bonded debt for docks amounted to $104,- 
 977,141 on December 31, 1917. In 1917 after deducting 
 the cost of maintenance the city received in revenue 
 from its waterfront property for dock and slip rent 
 and wharfage the sum of $5,477,275. This is hardly 
 enough to pay interest charges on the bonded debt for 
 dock purposes. 
 
 The first city wharf was established in 1658. This 
 dock appears to have adjoined the great bridge across 
 the Heere Gracht or Grand Canal. The Dutch West 
 India Company allowed the city magistrates to collect 
 eight stivers per last (about two tons) for loading or 
 unloading from this wharf or dock. In 1870 the city 
 department of docks and ferries was organized and 
 since then the city has instituted a progressive policy 
 for the development of its docks and ferries. During 
 the last decade over ninety-five acres have been 
 reclaimed on the Hudson River and a bulkhead wall 
 
136 Taxation in New York 
 
 twelve miles long has been constructed together with a 
 marginal street one hundred and eighty feet in width. 
 By thus improving the dockage facilities afforded com- 
 merce is attracted to the port and this contributes in 
 no small degree to the growth and development of the 
 metropolis. 
 
 For the fiscal year ending June 30, 1917, fifty and 
 thirty-two hundredths per cent, of the imports into the 
 United States entered thru the port of New York. 
 This is a gradual decrease year by year since 1900 when 
 sixty-three and twenty-one hundredths per cent, of the 
 imports into the United States entered thru the port 
 of New York. The greatest gains during this period 
 of time have been with the Pacific Coast ports where 
 imports have increased from six and ninety-three hun- 
 dredths per cent, in 1900 to thirteen and forty-nine 
 hundredths per cent, in 1917. 
 
 Exports thru the port of New York have increased 
 from thirty-seven and twenty one hundredths per cent, 
 in 1900 to fifty-three and eighty-two hundredths per 
 cent, in 1916, when they decreased to forty-eight and 
 fifty-six hundredths per cent, in 1917. There was 
 a decrease of ninety-two million dollars in the value 
 of imports entering the port of New York for 1918 
 as compared with 1917 and a decrease of four hundred 
 and thirty-one million dollars in the value of exports 
 leaving the port of New York for 1918 as compared 
 with 1917. These figures would indicate that the 
 Pacific Coast ports are becoming the favorite route 
 for merchandise bound to or departing from the 
 United Staters. Probably the recent world war has 
 something to do with New York City's loss of com- 
 merce. If New York is to continue its commercial 
 supremacy it will need to supply the best of dockage 
 facilities. 
 
 There is a constant demand by steamship companies 
 for piers. The inability of the city to supply them is 
 a loss in commerce to the city. The various railroads 
 occupy fifty-three city owned piers in New York and 
 
The Condition of New York City 137 
 
 also occupy fifty-two privately owned piers. This 
 inappropriate use of the waterfront by the railroads 
 constantly interferes with a proper development of the 
 port of New York. The occupation of so much of the 
 Manliattan waterfront by the railroads tends to 
 increase the rental value of every foot. This competi- 
 tion for the waterfront makes high charges for Manhat- 
 tan docks and piers. These charges are a burden on 
 shipping and makes it costly for steamship companies 
 to do business at the port of New York. In time this 
 will produce results detrimental to the port and drive 
 away from New York City much of the ocean borne 
 traffic. 
 
 As a solution there should be a terminal railroad 
 connecting and co-ordinating all the railroads which 
 enter the port of New York and reaching all the com- 
 mercial and industrial sections. The piers should be 
 reconstructed so that cars can be run on them. They 
 should also be constructed of ample capacity to store 
 full ship cargoes even if it should become necessary to 
 build warehouses over them. There is a congestion of 
 freight on the piers at present. Cold storage should 
 be provided on the piers to preserve the food products, 
 large quantities of which go to waste for want of 
 prompt delivery. At present merchants in the metrop- 
 olis buy goods from manufacturers, have them sent to 
 New York City and cart them to their Avarehouses, only 
 to cart them back again after they are sold, perhaps to 
 the same station on the piers at which they receive 
 them. Some plan should be devised whereby a mer- 
 chant could store his goods in a warehouse at any sta- 
 tion on the piers until they are sold and then ship them 
 over any railroad without any trucking. 
 
 William J. Wilgus, engineer of the Ncav York Cen- 
 tral Lines, testified before a commission inv(»stigating 
 New York's West Side situation that eighty per cent, 
 of the railroad freiglit is trucked thru the streets of 
 New York Citv. Over tAventv million dollars animallv 
 
138 Taxation in New York 
 
 is spent in trucking freight in the metropolis. Many 
 of the railroad freight stations are located along the 
 west shore of Manhattan. While this is the most con- 
 venient to the railroads, it is the least convenient and 
 the most costly to a large percentage of the shippers 
 and consignees of freight. 
 
 A terminal railroad should extend south along the 
 west side of Manhattan to Cortlandt Street, then to the 
 East River and along the East Eiver north to 155th 
 Street. Freight tunnels should connect this terminal 
 railroad with New Jersey, Brooklyn and Queens. The 
 reconstruction of the city piers and the building of a 
 freight terminal railroad will be a costly enterprise and 
 if the city cannot finance such an undertaking owing 
 to the constitutional debt limit then the State should 
 do it; for the prosperity of the Empire State is inti- 
 mately interwoven with the prosperity of the City of 
 New York. 
 
 At present half of the imports and nearly half of the 
 exports of the United States pass thru the port of New 
 York. 
 
 New York City^s bonded debt December 31, 1917, for 
 ferry purposes, acquisition of land, construction of 
 boats and terminals was $17,986,452. The municipal 
 ferries are losing propositions. The Long Island ferry 
 to Brooklyn was in colonial days one of the chief 
 sources of municipal revenue. In 1699 it Avas let for 
 seven years to Rip Van Dam at £165 per annum, he 
 being the highest bidder. The rates of ferriage estab- 
 lished at this time were as follows : 
 
 Single persons, eight stivers in wampum or a silver 
 two pence. 
 
 Persons in company, half price. 
 
 After sunset, double ferriage. 
 
 Cattle, single, one shilling. 
 
 Cattle, in company, nine pence, &c. 
 
 Soon after this Brooklyn made pretensions to some 
 right of ferriage and applied to the Governor, the Earl 
 
The Condition of New York City 139 
 
 of Bellomont, for a ferry grant; but the City of New 
 York filed a remonstrance stating that for over seventy 
 years New York had enjoyed the right of the ferry. In 
 consequence of this remonstrance Brooklyn failed to 
 obtain a ferry grant. 
 
 The city's bondet debt December 31, 1917, for water 
 supply amounted to $223,142,572. It is interesting to 
 trace the development of New York's water supply. 
 Before 1652 when there were no public wells, the inhab- 
 itants of New Amsterdam were supplied by private 
 wells within their own inclosures, but it was generally 
 the custom for several neighboring families to join in 
 the expense of constructing a well which was used in 
 common by them all. It was not until 1750 that pumps 
 came into use. Then public wells and pumps were 
 constructed wliich were usually located in the middle 
 of streets. But the water most esteemed was that from 
 what was called the Tea Water Pump, which was in 
 Orange, near Chatham Street. The water from this 
 pump was of superior quality, and was taken from it 
 into hogsheads on carts, and from them delivered to 
 the inhabitants in various parts of the city for a 
 specific price. 
 
 In 1774 the city adopted the plan proposed by Chris- 
 topher Colles and commenced the construction of a 
 reservoir and other works on the east line of Broadway 
 between Pearl and White Streets for the purpose of 
 supplying the city with water. This was completed in 
 1775, but in consequence of the Revolutionary War and 
 the occupation of the city by the British, the water- 
 works were abandoned. In April 1799 the Manhattan 
 Company was incorporated by the Legislature to sup- 
 ply New York City with pure and wholesome water. 
 This company sunk a large well at the comer of Duane 
 and Cross Streets. Aftemvards this company con- 
 structed a reservoir in Chambers Street and by means 
 of bored wooden logs laid underground distributed 
 water thruout the city. Its service was never satis- 
 
140 Taxation in New York 
 
 factor}^ and from time to time there was much agitation 
 for a municipal water system. But it was not until 
 after there had been a severe epidemic of cholera in 
 New York City in 1834 that action was finally taken. 
 
 How deplorable the condition was in New York is 
 evidenced by the following taken from the report filed 
 February 16, 1835, by the commissioners who were 
 appointed relative to the supplying the City of New 
 York with pure and wholesome water : 
 
 " That the most of the water from our wells and 
 pumps receives the drainage of numerous sinks and 
 cesspools, which filtrate thru the earth and poison 
 the springs causing the water to be brackish, must be 
 admitted ; and that it contains much earth and foreign 
 matter held in solution is proved by the analysis of 
 George Chilton, chemist, who showed that a gallon of 
 water from the well of the Manhattan Company in 
 Reed Street yielded 125 grains of solid matter and 
 the same quantity of water from their well in Bleecker 
 Street yielded 20 grains. The constant use of this fluid, 
 therefore, must be more or less injurious to health, and 
 is as likely to have been one of the causes of cholera in 
 New York last year. Why is it that the City of Phila- 
 delphia experienced so little of this disease while it 
 raged with so much violence with us? The only way 
 we can account for this difference in the health of the 
 tw^o cities is, that Philadelphia is supplied with abund- 
 ance of pure and wholesome water, not only for 
 drinking and culinary purposes, but for bathing and 
 for washing the streets of the whole city, while New 
 York is entirely destitute of the means for effecting 
 any of these purposes. . . . No disagreeablei odor 
 assails the persons who pass thru the streets of Phila- 
 delphia; everything calculated to annoy the senses is 
 swept away by the running stream ; but in New York a 
 person coming in the city from the pure air of the 
 country is compelled to hold his breath, or make use 
 of some perfume to break off the disagreeable smell 
 arising from the streets." 
 
The Condition of New York City 141 
 
 After showing that the average rate for water 
 charged by the Manhattan Company in New York 
 City was $9.63 per family per annum, while in Phila- 
 delphia where the mnuicipality owned the waterworks 
 the average rate charged for water w^as $6 per family 
 per annum; this commission recommended that the 
 city install a municipal waterworks, obtaining a supply 
 of water from Garretson's Mill on the Croton River. 
 In April 1835 the people of New York City by a vote 
 of 17,330 to 5,963 decided to construct an aqueduct 
 from Garretson's Mill on the Croton River to supply 
 the city \\ith water and on the Fourth of July 1842 
 water from the Croton River was introduced into the 
 distributing reservoir on Murray Hill. The work w^as 
 not finallv completed until 1849 when it had cost the 
 city $11,729,228. 
 
 Within a generation the original Croton works were 
 outgrown. Additional impounding reservoirs were con- 
 structed upon branches of the Croton River from time 
 to time. A new Croton aqueduct was constructed in 
 1890. Brooklyn did not develop a public water supply 
 system until 1859. The sources of supply were 
 obtained principally by means of groups of wells and 
 pumping stations and afterwards supplemented by two 
 large infiltration galleries. In Queens and Riclmiond 
 private water companies supplied these two boros with 
 water. 
 
 After tlu' consolidation of New York and Brooklyn 
 in 1898 the need of more water became apparent and 
 in 1899 the Ramaf)o Water Comjiany made a ]iro])o- 
 sition for supplying Greater New York witli water. 
 This company proposed to obt<ain water from the 
 Ramapo River and the Catskill ^Mountains. New York 
 had already had one experience of obtaining its water 
 from a private company and had no inclination to go 
 back to its troubles of the days of the Manhattan Com- 
 pany. By a vote of the people on November 8, 1904, 
 the State constitution was amended removing capital 
 
142 Taxation in New York 
 
 expenditures for waterworks from the municipal debt 
 limit. Then in 1905 the Legislature granted the City 
 of New York permission to acquire lands for the 
 construction of reservoirs, dams, aqueducts, filters, etc. 
 for an additional supply of pure and wholesome water. 
 It was decided to obtain water from the Catskill 
 Mountains and work was commenced February 23, 
 1907. 'The first delivery of Catskill water into dis- 
 tribution pipes of Greater New York occurred 
 December 27, 1915. Up to October 1917 the sum of 
 one hundred thirty-nine million dollars had been 
 expended on the Catskill system. In October 1917 
 New York City was using 615 million gallons of water 
 daily. As the city continues to grow its water supply 
 problems will recur for solution from time to time. 
 
 In 1917 New York City paid $2,976,698 for lighting 
 its streets. No attempt was made to light the streets 
 by public authority until the year 1762 when posts and 
 lamps were purchased. Before that time the occupants 
 of every tenth house were required to hang out a lan- 
 tern upon a pole. In 1770 J. Stoutenburg was paid 
 $760 for supplying oil and lighting the city lamps. 
 In 1823 the city contracted with the New York Gas 
 Light Company to light certain parts of the city 
 with gas. 
 
 The city's bonded debt for bridges on December 31, 
 1917, was $111,230,066. The city is the owner of forty- 
 five bridges. There- are nine bridges over the Harlem 
 River, the first one wais built by Frederick Phillipse 
 in 1693 and was named ' ' Kings' Bridge. ' ' This bridge 
 was of much importance during the Revolutionary 
 War. Over it Washington's defeated and disheartened 
 army retreated in September 1776 and over it again 
 Washington 's army crossed in November 1783 to take 
 possession of New York City upon its evacuation by 
 the British. 
 
 There are four bridges over the East River, three 
 suspension bridges and one cantilever bridge. This 
 
The Condition of New York City 143 
 
 cantilever bridge, the Queensboro Bridge, is the second 
 longest bridge in the world, its total leng-th being 7,449 
 feet. Construction on the Brooklyn Bridge was com- 
 menced January 3, 1870, and the bridge was opened 
 for traffic May 24, 1883. Its cost including land and 
 construction was over twenty-four million dollars. 
 
 The city's bonded debt for parks on December 31, 
 1917, was $55,906,355. New York has over eight 
 thousand acres of land in parks and these parks are 
 valued at over eight hundred million dollars. Public 
 opinion is awakened to a sense of the importance of 
 open spaces for air and exercise as a necessary sanitary 
 provision for the inhabitants of all large tow^ns and the 
 extension of rational enjoyment is now regarded as a 
 great preventive of crime and vice. 
 
 The first park space in the City of New York was 
 that now called Bowling Green Park. In 1732 this plot 
 of ground was leased by citizens for plajdng the game 
 of bowls. In 1786 Bowling Green was first laid out as 
 a park. At that time it was the center of the fashiona- 
 ble residential district. A defensive line of works with 
 cannon mounted behind them and known as " The 
 Battery " was in the early days built along the edge 
 of water facing a ledge of rocks stretched across the 
 southern part of Manhattan. About 1723 steps were 
 taken to fill in to the present water line, but many 
 years passed before this was actually accomplished. 
 This became Battery Park which the State ceded to 
 the City of New York in 1789. Where the present City 
 Hall Park is now located was in the latter half of the 
 seventeenth century knowm as " The Common Lands," 
 and it was used for the grazing of cattle. What was 
 laid out as a Potter's Field in 1794 has become Madison 
 Square Park. 
 
 Eighteen thousand persons signed a jDetition to the 
 Legislature asking for a central park in New York City 
 and in July 1853 the Legislature authorized the laying 
 out of what is now Central Park. Over seven thousand 
 
144 Taxation in New York 
 
 city lots were taken for this park and the owners were 
 awarded compensation to the amount of a little over 
 five million dollars. Central Park has an area of 843 
 acres and is located in the heart of Manhattan Island. 
 Prospect Park, Brooklyn, was authorized by the Legis- 
 lature in April, 1860. There are historical associations 
 connected with this park, as in it was the scene of the 
 fierce battle fought August 27, 1776, which resulted in 
 the capture of New York by the British. 
 
 It requires eternal vigilance on the part of public 
 spirited citizens to preserve the city's parks as breath- 
 ing spots. Again and again there are attempts made 
 to convert them to other uses. In the seventies there 
 w^as a determined plan, then alleged to be a necessity, 
 to turn Battery Park over to the elevated railroads, 
 to be covered with tracks for the use and storage of 
 cars. It was only by hard and persistent work that 
 this plan was defeated. So many citizens were anxious 
 for rapid transit which at that time meant elevated 
 railroads that they were willing to sacrifice Battery 
 Park for the attainment of this need. Yet looking back 
 over the lapse of forty years it is very fortunate that 
 Battery Park w^as preserved for its present uses. 
 
 The city's bonded debt December 31, 1917, for rapid 
 transit was $199,450,888. City growth demands rapid 
 and certain means of travel between different sections 
 and the general center. For purposes of commerce the 
 people of a great business center are far more effective 
 when they have the means to go to and fro as the 
 occasion demands, with the least possible loss of time 
 and the least inconvenience and fatigue. 
 
 Early travel was largely by boat. When the cow 
 trails about the island became more passable so as to 
 be designated as roads there was considerable travel 
 on horseback. In the latter part of the eighteenth 
 century stages and omnibus lines served the popula- 
 tion. The first horse car line was the New York and 
 Harlem Railroad which was opened for operation 
 
The Condition of New York City 145 
 
 November 26, 1832. On that date the first street car 
 in the world slowly crawled up Fourth Avenue from 
 Prince Street to Fourteenth Street. 
 
 As the lower part of Manhattan was becoming con- 
 gested an agitation was started for rapid transit. 
 Rapid transit meant elevated railroads during that 
 period, and in 1870 a small section of an elevated rail- 
 road was erected in Greenwich Street. Surface cable 
 cars were introduced in 1884, but they soon gave way to 
 electric street cars. Horse cars were superseded by 
 electricity. The last horse car in New York City made 
 its last trip on July 26, 1917. The reason why horse 
 cars lingered so long in New York City after they had 
 disappeared from other parts of the country was that 
 in the Boro of Manhattan no overhead trolley wires 
 were allowed. The cost of installing underground 
 troUey wires being about ten times the cost of installing 
 overhead trolley wires the traction companies were 
 slow in replacing their horse cars with electricity. 
 
 The rapid growth of the outlying sections and the 
 congestion in the business part of the city called loudly 
 for a better system of rapid transit. The first subway 
 was opened for travel October 27, 1904. The city paid 
 for the entire cost of this subway. In 1913 the city 
 entered into contracts with the Interborough Rapid 
 Transit Company and the Brooklyn Rapid Transit 
 Company to build a number of subways. The principal 
 features of these contracts were as follows : The Inter- 
 borough Rapid Transit Company was to contribute 
 fifty-eight million dollars towards the construction of 
 certain subways if their cost amounted to one hundred 
 and sixteen million dollars and the city to contribute 
 the other fifty-eight million dollars. If the cost of con- 
 struction exceeded one hundred and sixteen million 
 dollars the city was to pay the balance. The Brooklyn 
 Rapid Transit Company was to contribute thirteen 
 million five hundred thousand dollars towards the con- 
 struction of certain subwavs if their cost amounted to 
 
146 Taxation in New York 
 
 twenty-seven million dollars and the city to contribute 
 the other thirteen million five hundred thousand dol- 
 lars. If the cost of construction exceeded twenty- 
 seven million dollars the city was to pay the balance. 
 
 When completed these companies are to operate the 
 subway under a fifty year lease and the companies to 
 receive six per cent, each 3'ear on their investment and 
 also one-half of the net earnings if there are any, but 
 if there are any deficits from operation the city alone 
 has to meet it. At present these new subways are 
 being operated at a loss. At the time these contracts 
 were the best obtainable and on account of the con- 
 gestion in traffic something had to be done by the city ; 
 but the dual subway system should be made self-sup- 
 porting if possible. For five cents one can ride in the 
 dual subway from Atlantic Avenue in Brooklyn under 
 the East River to Manhattan and thru Manhattan to 
 the Bronx, and thru the Bronx in the Broadway branch 
 to 242d Street or Van Cortlandt Park, a distance of 
 nearly seventeen miles in an hour's time without the 
 change of cars. This is hardly fair to the taxpayers of 
 the metropolis. The users of the subways should pay 
 enough in fares to provide for their operation. 
 
 In time the elevated railroad structures mil all be 
 taken down. These roads upon stilts are unsightly, 
 full of dangers, and highly inconvenient to those who 
 climb up to stations well lifted above streets. The 
 dwellers along the lines of the elevated railroads are 
 also subject to much discomfort. Again there are 
 many objections to the use of the streets by surface 
 street railroads, such as that they are noisy to a degree, 
 that they greatly inconvenience ordinary traffic, and 
 that in each and every year they maim and kill many 
 victims. 
 
 The city's bonded debt December 31, 1917, for schools 
 and sites was $121,331,056. There are 551 public 
 schools in Greater New York and in 1917 they had an 
 enrollment of 895,522 students. Sixty-five per cent, of 
 
The Condition of New York City 147 
 
 the children between the ages of five and eighteen are 
 enrolled in the city's public schools. Still there is a 
 great lack of sufficient accommodations. Practically 
 all of the city's high schools are double session schools. 
 According to the last report of William H. Maxwell, 
 city superintendent of schools, whenever double ses- 
 sions are introduced in a school the school began to 
 show deterioration. There is a great need of more 
 public school buildings in New York City. 
 
 The city's bonded debt December 31, 1917, for 
 libraries and sites was $12,202,767. The first public 
 library in New York City was known as the corpora- 
 tion library and was opened in 1729. It consisted of 
 1,642 books presented to the City of New York by the 
 English Society for the Propagation of the Gospel in 
 Foreign Parts. This was the same society which es- 
 tablished and supported English schools in the New 
 York colony. 
 
 At present the library needs of Greater New York 
 are attended to by three separate and distinct library 
 corporations, — the New York Public Library in the 
 boros of Bronx, Manhattan and Richmond; the Brook- 
 l\m Public Library in Brooklyn ; and the Queens Boro 
 Public Library in Queens. There are forty-six 
 branches attached to the New York Public Library, 
 thirty-three branches to the Brooklyn Public Library 
 and twenty branches to the Queens Boro Public 
 Library. 
 
 The city's bonded debt December 31, 1917, for public 
 buildings, such as fire, health, courts, police, correc- 
 tions, etc., was $109,146,172. As a Dutch settlement a 
 fine of twenty-five guilders was imposed for neglect to 
 sweep a chimney in case it caught fire. About 1658 fire 
 ladders, hooks and buckets wore ]iurcliased and the 
 inhabitants were taxed for their support according to 
 the number of their fireplaces. It was not until 1737 
 that a city fire department was organized and twenty- 
 five members enrolled, who, in consideration of their 
 
148 Taxation in New York 
 
 services, were excused from performing military duty 
 or from serving as constables, jurors, or surveyors of 
 highways. At present there are 4,400 members of the 
 regular fire department and 2,800 members of the 
 volunteer force. The volunteer firemen are confined 
 to Queens and Richmond. A recent number of the 
 municipal year book states that incendiarism destroys 
 annually in New York City about four million dollars 
 worth of property. One-fourth of the fires in Greater 
 New York, it is estimated, are due to arson. Fire- 
 making has been developed into one of the most lucra- 
 tive, and least risky, occupations pursued by certain 
 classes of the population. 
 
 The police department of Greater New York con- 
 sists of over ten thousand policemen. In the early 
 days there was a watch system in use for the night and 
 the employment of marshals in the daytime. In 1764 
 a whipping post, stocks, cage and pillory were erected 
 in front of the jail, the location where the hall of 
 records now stands. A slave market was erected in 
 1709 at the foot of Wall Street, where all negroes who 
 were to be hired or sold, stood in readiness for bidders. 
 
 Greater New York has recently acquired an expen- 
 sive site for a new court house and civic center just 
 north of the municipal building. The original area was 
 acquired at a cost of about six million dollars and the 
 additional area at five million dollars, so that the 
 carrying charges and incidental expenses incurred 
 bring the total cost up to fifteen million dollars. This 
 tract of land is in a deplorable condition consisting of 
 the ruins of buildings torn down. Unless something is 
 done towards the utilization of this tract by the erec- 
 tion of a new city building it will be an extravagance 
 and waste of the municipality's money. 
 
 The city's first municipal building was presented 
 to the city fathers by the Dutch West India Company 
 in 1655 and was the cause of trouble even at that early 
 date as the following resolution of the schout, burgo- 
 meesters and schepens shows : 
 
The Condition of New York Citv 149 
 
 " Whereas the Lords Patrooiis of this Province 
 have been generously jjleased to grant the City liaJl 
 to this City, therefore early measures must be taken 
 to repair and line the said house with boai'ds — and 
 whereas it is much encumbered by a (juantity of salt 
 deposited therein by Cornelius Schut, and otherwise 
 cannot be conveniently entered before it be emptied of 
 certain goods and lodgers; Therefore their Lordships 
 are of opinion that Cornelius Schut be seasonably 
 notified by the Messenger, that he provide himself a 
 storehouse for his salt, and those who lodge therein 
 with other lodgings, so that the City Hall be not wholly 
 ruined by the salt, nor occupied by others." 
 
 The city's bonded debt December 31, 1917, for 
 streets, highways and trunk sewers was $156,119,009. 
 The first street paved in New York City was Brouwer 
 Straate, now Stone Street, which was paved with cobble 
 stones in 1657. Thirty-nine years later a contract was 
 made for cleaning the streets at thirty pounds sterling 
 per annum ; a work which had hitherto been done by the 
 citizens themselves, every man being required to keep 
 the street clean before his own door. It was not until 
 1793 that street numbers were instituted. At present 
 the city has over two thousand miles of paved streets. 
 
 High power and high speed automobiles eat u]) the 
 streets for general use, increase the cost of police ]^ro- 
 tection and subject pedestrians and ordinary vehicular 
 traffic to expensive perils. This new means of loco- 
 motioji should be made to en i-ry the full burden of its 
 cost. 
 
 The city has 1,873 miles of sewers. The first sewer 
 was constructed in 1703 in Broad Street from the 
 corner of ^fr. TicBoytcaux to the u])per W(>11 by ^[rs. 
 Vt\n Vleck's, a distance of eleven hundred and fifty- 
 eight feet at a cost of fifteen shillings ])er foot. This 
 first sewer was built of wood, but in 1745 it was rebuilt 
 with stone. A petition of the inha])itants of Broad and 
 Beaver Streets in 17(55 stated that the drains leadiuLf 
 
150 Taxation in New York 
 
 into this sewer from the various houses were decayed 
 and useless, and asked that new drains be constructed. 
 
 Following the installation of the municipal water 
 supply furnished the city from the Croton watershed 
 in 1842 improved plumbing and greater sanitary con- 
 veniences were extensively introduced and the effect 
 of this is seen in the greater care given in the con- 
 struction of sewers dating from that time. In 1849 
 there were sixty-nine miles of sewers in the city. 
 Before that time the sewers and drains of New York 
 City had been built without any definite plans, the 
 larger and more important by the street commissioner 
 and the smaller ones by the property owners to drain 
 their lots. 
 
 Greater New York is the largest seaport which has 
 no definite policy with respect to sewage disposal. The 
 present method of discharging sewage into the harbor 
 along the water front is unsatisfactory; it creates 
 nuisances along the water front; it pollutes the public 
 bathing establishments; it surrounds the city's recrea- 
 tion piers and the slips and docks where steamers sail 
 for foreign and domestic ports with disagreeable 
 odors; and it produces unsanitary conditions in the 
 vicinity of market places where vegetables, fruits and 
 other infectable food products are exposed for sale, 
 and where, as a matter of course, flies, rats and other 
 infection spreading vermin abound. 
 
 At present 335,600,000 gallons of sewage are emptied 
 daily into the East and Harlem rivers, 164,200,000 gal- 
 lons into the Hudson River, and 104,100,000 gallons 
 into Upper New York Bay. It is estimated that 
 New York's sewerage system has cost over twenty-six 
 million dollars, but many of the old sewers were poorly 
 built and some are in danger of collapse. There is a 
 possibility that the sewers of Manhattan will have to be 
 rebuilt. The 1014 report of the Metropolitan sewage 
 commission states that fifty-five miles of the existing 
 sewers of Manhattan island are seriously out of repair. 
 The objections to the reconstruction of the sewers lie 
 
The Condition of New York City 151 
 
 in the expense and inconvenience which the reconstruc- 
 tion would directly and indirectly entail upon the pub- 
 lic. The plumbing of over one hundred and fifty 
 thousand houses would require to be altered so that the 
 proper sewer connection could be made. 
 
 The city's pension system needs overhauling. City 
 Controller William A. Prendergast testified before the 
 1915 joint legislative committee for the investigation 
 of the finances of the City of New York that under 
 existing law the police force now or heretofore in serv- 
 ice ^^^ll according to actuarial computation draw more 
 than two hundred and seventy-five million dollars from 
 the city treasury, while firemen, teachers, and other 
 branches of service will be entitled to amounts only 
 less staggering. If the policy of pension is not to fall 
 of its own weight it must be revised on a uniform basis 
 \vithin the limits of the city's resources. In 1915 the 
 receipts into the police, firemen and teacher's funds 
 amounted to $4,535,734, while the disbursements that 
 same year were $4,707,561. That means that nearly 
 two hundred thousand dollars more each year is going 
 out of these funds than is coming in. It is only proper 
 that these faithful servants of the city be provided for 
 in their old age, but disaster appears to be coming to 
 these funds in the near future. 
 
 New York City has experienced great embarrass- 
 ment and loss in its finances from the custom of keep- 
 ing a large amount of short time commercial paper on 
 the market. The city in August 1914 had outstanding 
 of such paper twenty-five million dollars in corporate 
 stock notes, issued in anticipation of bond issues, and 
 seventy-three million dollars of short time paper 
 chargeable to current revenues issued in anticipation 
 of taxes. Seventy-seven million dollars of this paper 
 was held in Europe. On account of the crisis resulting 
 from the war the city w^as compelled to borrow of the 
 banks of New York City one hundred million dollars 
 to meet this paper and current expenses and to charge 
 
153 Taxation in New Yoek 
 
 off a loss of more than four million dollars in expenses, 
 commissions and interest. In 1907 the city was caught 
 in the same way and in each case the city administra- 
 tion regarded itself fortunate in escaping a worse pre- 
 dicament from a default on the city's commercial 
 paper. 
 
 The issuing of short term paper in anticipation of 
 taxes simply means that the city is spending iDorrowed 
 money for its current expenses. By collecting taxes 
 in advance this can be avoided. The annual interest 
 charge for these loans has averaged three and a half 
 million dollars. The total amount paid in interest on 
 these loans in the last ten years has amounted to 
 $36,470,837. 
 
 When New York City had to borrow one hundred 
 million dollars from the New York City banks in 1914 
 the loan was as embarrassing to the commercial world 
 as to the city. The Stock Exchange was closed, credit 
 was greatly restricted, and a panic was feared. With- 
 out warning, the financial institutions of the metropolis 
 were confronted mth the necessity of loaning the city 
 this large sum, of which more than seventy-seven mil- 
 lion dollars had to be paid abroad in gold or exchange. 
 This loan had to be met to save the credit of the city. 
 If the city had defaulted, its credit would have suf- 
 fered for an indefinite period. 
 
 The syndicate which financed this loan imposed as a 
 condition of its negotiation the adoption of the pay as 
 you go policy and the City's Board of Estimate on 
 September 11, 1914, adopted a resolution to that effect, 
 the principal features of which are as follows : The cost 
 of all improvements of the revenue producing class, 
 such as rapid transit, docks, railway and water 
 terminals and water supply, to be defrayed by the 
 issue of fifty year municipal bonds as heretofore; but 
 the cost of all permanent improvements, other than 
 those of the revenue producing class, to be gradually 
 until 1918 to be entirely included each year in the 
 
The Condition of New York City 153 
 
 annual budget of the city. If this sound policy is 
 adhered to by future administrations it will save the 
 city from a great deal of extravagance and waste. The 
 pay as you go policy is a scientific and proper way of 
 financing public improvements. 
 
 The 1915 joint legislative committee on taxation 
 reported that real estate in New York City was already 
 overtaxed and that its value was in danger of being 
 seriously impaired. An investigation of a group of 
 eleven parcels of real estate showed that it paid thirty 
 per cent, of net income in taxes. Another group of 
 seven percels of real estate paid forty-one per cent, of 
 net income in taxes. Alfred E. Marling, who was 
 chairman of Mayor John Purroy Mitchel's 1914 com- 
 mittee to recommend a Avay of securing new sources of 
 revenue for the payment of the cost of New York's 
 City government, testified that based on his thirty- 
 eight years' experience as a real estate broker, 
 appraiser and manager in New York City real estate 
 in Greater New York was down on its back and could 
 not stand any more burden. If increased taxes were 
 to be imposed the result would be trouble and distress 
 of all sorts. To the poor property owner it would 
 practically mean confiscation. 
 
 The aggregate direct taxes levied and collected in 
 New York State in 1917 for all purposes was $289,- 
 069,646. Of this amount real estate paid $277,506,860 
 or ninety-six per cent. The total revenue receipts in 
 1917 for all purposes, both State and local, Miiich 
 includes direct taxes and all sources of revenue from 
 indirect sources, was $390,336,374. Thus real estate 
 contributed over seventy per cent, of all the expenses of 
 the cost of State and local government. No one dis- 
 putes the fact that there is as much personal property 
 in the State as real estate, in fact State Tax Conmiis- 
 sioner John Jacob Merrill testif>nng at the legislative 
 hearing in the winter of 1918 upon the bill to have a 
 fixed tax rate of seventeen mills upon real estate in 
 New York City stated that there Avas three times as 
 
154 Taxation in New York 
 
 much personal property in the State as there was real 
 estate. It seems incredible that with all the new 
 systems of taxation designed to reach personalty such 
 as inheritance taxes, mortgage taxes, stock transfer 
 taxes, corporation taxes, liquor taxes, secured debt 
 taxes, and motor vehicle taxes, that it is impossible to 
 make personal property pay more than three-tenths 
 of the expense of the cost of State and local 
 government. 
 
 It is this placing the burden on real estate that is 
 working such a great hardship to New York City, and 
 until some way is discovered of making personal 
 property pay its just share or one-half of the expense, 
 the condition in New York City is bound to grow 
 worse. The author feels a peculiar interest in the wel- 
 fare of New York City. His great grandfather served 
 in the American army during the Revolutionary War 
 and in 1776 was in Washington's forces that were 
 trying to protect New York City from the British. 
 Thirty-eight years later during the War of 1812 his 
 grandfather responded to the call of Governor Daniel 
 D. Tompkins for volunteers to protect New York 
 City, when after capturing and burning the City of 
 Washington it was feared the British intended to 
 attack New York City. For several months these vol- 
 unteers served in and about the metropolis. 
 
 There were those who advised the author to 
 designate this chapter, The Plight of New York City. 
 By this they meant that conditions in New York City 
 were desperate. Of course they are desperate. There 
 are many stupendous problems to be solved and 
 immense sums of money to be raised. But the author 
 is optimistic enough to believe that when an equitable 
 system of taxation is arrived at whereby real estate 
 will not have to pay all the cost of the new improve- 
 ments New York City will have new docks and a freight 
 terminal railroad, proper rapid transit facilities, san- 
 itary sewage disposal, adequate school accommoda- 
 tions, plenty of park spaces, and many other needed 
 
The Condition of New York City 155 
 
 improvements. These problems can be solved by the 
 best citizens of the city counselling together and this 
 comiselling should take place in the Board of Alder- 
 men. The best citizens of the city should be members 
 of the Board of Aldermen. No bureaucratic commis- 
 sion can solve these problems. 
 
 Fifty-two per cent, of the inhabitants of the State 
 reside in the City of New York. But the people of the 
 whole State should know New York City's problems 
 and b}^ knowing render assistance in the solving of 
 them. In the past there has been ignorance and indif- 
 ference regarding the problems peculiar to the country 
 sections by the city people and problems peculiar to the 
 city sections by the country people. Each section 
 should co-operate with the other and this can only be 
 done by studying and learning of each other's needs 
 and necessities. 
 
CHAPTER XI 
 ASSESSMENT AND EQUALIZATION 
 
 Article 2 of the tax law provides the method of 
 assessment of property in this State by local assessors. 
 Section 6 of the tax law prescribes that all property, 
 both real and personal, shall be assessed at full value. 
 What this value is has not been defined by statute, but 
 the courts have held it to be the amount of money the 
 property would sell for at a fair, free, and well adver- 
 tised sale. How is the assessor to know the full value 
 of property of which there may have been no sale in a 
 great many years ? Even when there are sales how is 
 the assessor to know the selling price? While some of 
 the other states do. New York has not since Colonial 
 days required the individual taxpayer to disclose the 
 amount of his property to the assessor. This requires 
 the assessor to ascertain the value of the property the 
 best way he can. There are constantly being published 
 quotations of the value of stocks, bonds, grain, produce 
 and the like; but no quotations of the value of real 
 estate. The State tax association at its second State 
 conference held at Buffalo in January 1912 recom- 
 mended that legislation be secured providing that 
 before a deed of sale could be recorded it would be 
 necessary to notify the assessor of the selling price of 
 the property, such notification to be considered confi- 
 dential by the assessor, but to be considered by him 
 in making his assessment. It has been impossible as 
 yet to secure any such legislation. 
 
 The only legislation in this State requiring the 
 individual taxpayer to report the value of his property 
 to the assessor applied only to Orange County and was 
 passed by the Colonial Assembly January 27, 1770. It 
 read as follows : 
 
 [156] 
 
Assessment and Equalization 157 
 
 '' Whereas the ascertaining the Quotas of propor- 
 tions of each respective Precinct in the County of 
 Orange towards the Taxes, Rates, and Contingent 
 County Charges to be assessed and raised upon the 
 said County, hath hitherto been attended with great 
 Difficulty and Uncertainty; and given Occasion for 
 Disputes and Discontent, for preventing whereof for 
 the future 
 
 Be It Further Enacted that every Person subject 
 to such Tax or Charge, shall at all Times when required 
 b};- the Assessors of the Precint wherein he resides, or 
 either of them give him or them a view of all the 
 improved Land in his Occupation and a just Account 
 of all the Horses Cattle and Chattels which are his 
 Property, and ought to be subject to such Tax or 
 Charge, and if any Person shall secret or conceal from 
 the Assessors any Part of his improved Land, Horses, 
 Cattle or Chattels, which ought to have been subject to 
 such Tax or Charge he shall forfeit for every such 
 Concealment four Times the Amount or Value of the 
 Tax which ought to have been assessed." 
 
 From personal property the owner is allowed to have 
 his just debts deducted. In some states the taxpayer 
 is permitted to deduct only certain debts from credits ; 
 in other states all debts may be deducted from credits. 
 But in New York State debts are not deducted from 
 credits, but from all personalty. The question of 
 debt deduction, whether limited to credits or not, adds 
 to the difficulty of property assessment. 
 
 Between the first of January and the first of July 
 local assessors are to ascertain by diligent inquiry all 
 the property and the names of all the persons taxable 
 in their respective tax districts. A law passed by the 
 Colonial Assembly March 19, 1774, provided that 
 assessors were to make an assessment by proceeding 
 from house to house thruout the whole county and 
 making out a true and exact list of all names of the 
 freeholders and inhabitants and setting down against 
 the name of every such person the value of his or her 
 
158 Taxation in New York 
 
 estate, real and personal, as nigh as they can discover 
 the same to be. The present tax law does not say any- 
 thing about this going from house to house each year 
 by local assessors, for in some tax districts where there 
 are thousands of separate real estate assessments, it 
 is an utter impossibility for the local assessor to make 
 any such personal inspection in the time allotted by 
 law. New York has always insisted on an annual 
 assessment. In 1912 according to the United States 
 census bulletin, taxation and revenue systems of State 
 and local governments, thirty-two states had an annual 
 assessment of real estate, six states had a biennial 
 assessment of real estate, eight states had a quadren- 
 nial assessment of real estate, one state assessed land 
 every five years, and one state had an assessment only 
 by special act of the Legislature. 
 
 The 1914 annual report of the Wisconsin State Tax 
 Commission presented the following reasons for a 
 quadrennial assessment of property: 
 
 *' Other states have abandoned annual assessments 
 of real estate as profitless and as inviting careless- 
 ness in assessing. An assessment once in four years 
 would tend to more care on the part of the asses- 
 sor as w^ell as watchfulness on the part of the taxpaA^er. 
 The expense incurred in making annual assessments is 
 not warranted by the service rendered. The frequency 
 of assessment of itself is an invitation to copy the 
 former assessment roll. This is but natural. The 
 assessor reasons that no material change can have 
 taken place in so short a time. This habit is especially 
 observable where the assessor succeeds himself." 
 
 As far as practicable assessors should make an 
 examination of the property they assess, otherA\dse 
 their assessment is little less than guess work. When 
 we realize the inadequate pay most assessors receive 
 in country districts we must conclude that their assess- 
 ments must be largely guess work. In 1915 the 
 assessors of a town of this State where the land assess- 
 
Assessment and Equalization 159 
 
 ment was 15,611 acres and the amount of the assess- 
 ment was $263,965 ; two of the assessors had their bills 
 cut by the town board from thirty dollars to eighteen 
 dollars, while the third assessor had his bill cut from 
 thirty-three dollars to twenty dollars. Under such cir- 
 cumstances what incentive is there for an assessor to 
 make a house to house inspection of the property in 
 the town! The average pay of assessors in the country 
 towns thruout the State is less than one hundred dol- 
 lars a year. The pay of assessors is two dollars a day, 
 altho town boards may increase it to three dollars. 
 
 In this State every town has three assessors who are 
 elected by the people. The office of assessor is a dif- 
 ficult position to fill. Not only is the pay in most 
 sections inadequate, but the assessor is subject to com- 
 plaints and oftentimes abuse from dissatisfied tax- 
 payers. Persons who are qualified to act as assessors 
 manage to escape this duty and as a result generally 
 unqualified persons are selected. That it has always 
 been difficult to secure people to serve as assessors is 
 shown by the general tax law enacted in 1823 which 
 provided that any persons refusing to perform the 
 duties entrusted to them upon being elected as 
 assessors except thru sickness or absence from the 
 town or ward were liable to a fine of fifty dollars. 
 
 Considerable agitation has been going on in recent 
 years to abolish the office of assessor for each town 
 and in its place have a county assessor, who shall either 
 be elected b}^ the people or appointed by the State Tax 
 Commission, and this county assessor to have power to 
 appoint a sufficient number of trained men as deputies, 
 who would make all the assessments in the county out- 
 side of the cities. The census bulletin, taxation and 
 revenue systems of State and local governments for 
 the year 1912, gave seventeen states of the Union 
 having county assessors. These are all southern and 
 western states where the New England idea of town 
 government did not take root. A county being a much 
 larger unit than the town, the county assessor will not 
 
160 Taxation in New York 
 
 be liable to local influences in making an assessment. 
 But an assessor should thoroly know the property he 
 assesses, and this is impossible if the assessing unit is 
 too large. 
 
 The origin of assessor in this State appears to be 
 clouded in mystery. The Duke of York's Laws promul- 
 gated in the New York Colony in 1665 provides that the 
 constable and at least five of the eight overseers who 
 constitute the governing body of each town shall have 
 power for the assessing of rates. 
 
 An act passed by the Colonial Assembly November 1, 
 1683, provided that annually there should be elected a 
 certain number out of each city, town and county 
 thruout the colony who shall have full power and 
 authority to make an assessment or certain rate within 
 their respective cities, towns and counties annually. 
 This is the first mention of assessors in New York. 
 According to an act passed by the Colonial Assembly 
 September 29, 1691, there were several manors and 
 jurisdictions within the respective counties which 
 refuse or neglect to elect assessors and collectors, and 
 in these cases assessors and collectors were to be 
 appointed. 
 
 The act of 1691 stated that " Whereas the frontiers 
 at Albany is in imminent danger to be lost, being daily 
 threatened to be invaded by the French the sum of 
 1500£ was to be raised by tax for the raising and pay- 
 ing one hundred and fifty men for the defence and rein- 
 forcement of Albany for six months. " In this case the 
 mayors and aldermen of the cities of Albany and New 
 York and the justices of the peace of the several coun- 
 ties were to order the assessors and collectors for the 
 several cities, towns and manors in their jurisdiction to 
 assess and collect the public rates for the defraying the 
 public and necessary charges of this tax. The 1500£ 
 was apportioned by the Colonial Assembly among the 
 different tax districts as follows: City of New York 
 300£, City and county of Albany 135£, county of West- 
 
Assessment and Equalization 161 
 
 Chester 105£, county of Richmond 90£, county of Ulster 
 and Dutchess county 187£ and 10 shillings, county of 
 Suffolk 262£ and 10 shillings, county of Kings 195£, 
 county of Queens 195£ county of Orange ll£ and 55 
 shillings, county of Dukes 18£ and 15 shillings. 
 
 How unpopular taxation was at this early date can 
 he inferred from the following clause of this same act 
 of 1691 : " Furthermore if any person or persons who 
 shall be chosen assessors or collectors shall deny, neg- 
 lect or unequally and partially assess or refuse to make 
 such assessment as required by this act or shall deny, 
 neglect or refuse to collect any sum or sums of money, 
 then the justices of the j^eace of the cities and counties 
 where such offenders dwell shall commit such assessors 
 or collectors to the common Goale, there to remain 
 without bail till they shall make fine and ransom to 
 their majesties for such contempt." 
 
 An act passed by the Colonial Assembly June 19, 
 1703, provided for the election of a supervisor, two 
 assessors and one collector in every town on the first 
 Tuesday in April. 
 
 In 1693 there was an act passed by the Colonial As- 
 sembly establishing the Church of England ministry in 
 the City of New York and in the counties of Queens, 
 Kichmond and Westchester and raising a maintenance 
 for this ministry by taxation annually as follows: New 
 York 100£, Queens 120£, Richmond 40£, and AVest- 
 chester 100£. The vestrymen were given the power to 
 assess the inhabitants and levy this tax. Many of the 
 other taxes in New York City during this period were 
 assessed and levied by the vestrymen. An act passed 
 by the Colonial Assembly November 29, 1745, provided 
 that the inhabitants of the City of New York should 
 elect two vestrymen for each ward at an election to be 
 held the second Tn(>sday in January of each year and 
 that these vestrymen were to meet together and agree 
 among themselves in what iirojiortion or rule the real 
 
 6 
 
162 Taxation in New York 
 
 aiia xxirioiial estates should be taxed mider the penalty 
 of ojb iur each neglect or default. 
 
 Even as late as 1758 when the sum of 1200£ was to 
 be raised in New York City on real estate and jjersonal 
 property for finishing the new Gaol, purchasing Bed- 
 loe 's Island for a pest house, defraying the unavoidable 
 charges of the corporation, together with the heavy 
 burden of firewood, candles and other necessaries for 
 his Majesties troops quartered in the city, the tax was 
 to be added to the sum to be raised for the minister 
 and the poor of the city and was to be rated and 
 assessed by the vestrymen of the city. The further 
 fact that the vestrymen were required to take an oath 
 to assess equally and impartially and the wording of 
 this oath that the vestrymen were to execute the duty 
 of assessors would indicate that New York City did 
 not have assessors at this early period, but that the 
 vestrj-men of the city acted as assessors. 
 
 But there were assessors in Ulster County in 1764 
 for an act of the Colonial Assembly passed October 20, 
 1764, directed that the assessors of each town, manor 
 and precinct in the county were to assemble together 
 and agree upon a certain rule or plan to calculate the 
 true value of the real and personal estates in the 
 county. 
 
 According to an act of the Colonial Assembly passed 
 January 27, 1770, assessors in Orange County were to 
 receive the following compensation: Assessors of the 
 Precinct of Cornwall six shillings per day when actu- 
 ally employed and assessors of the Precincts of Haver- 
 straw and Oraugetown four shillings per day when 
 actually employed. Why the assessors of the Precinct 
 of Cornwall should receive two shillings more per day 
 than the assessors of the Precincts of Haverstraw and 
 Orangetown is hard to understand. 
 
 The present tax statutes defines real estate, enumer- 
 ating in a lengthy description according to its position 
 and use forty types of property liable for taxation as 
 real estate. Tt then defines personal property, giving 
 
Assessment and Equalization 163 
 
 ten types of property liable for taxation as personal 
 property. Most otner states tirst deline real estate in 
 tlieir tax statutes and then denne personal property 
 as all other property not enumerated as real estate. 
 ±n 60 uoing noining escapes being- liable for taxation. 
 New York has not followed this custom, and for some 
 reason in enumerating the ten types of property liable 
 for taxation as personal property good-will has not 
 been included in the enumeration. The courts have 
 held therefore that good-will is not taxable. 
 
 The 1915 joint legislative committee on taxation as- 
 certained in their investigation of many large corpora- 
 tions that good-will very frequently represented large 
 earning power and therefore large ability to pay taxes. 
 In most other states good-will is taxable. In many cor- 
 l)orations their balance sheets show good-will to be 
 their capitalization of that part of the earning power 
 which is not derived from tangible assets. That i)art 
 of good-will which includes patents and copyrights of 
 course is not taxable legally under the general prop- 
 erty tax. But the remainder of good-will not included 
 in patents and copyrights often represents a verj' large 
 amount of the earning power of the corporation. Some 
 corporations after apportioning to their tangible assets 
 a part of their income at a reasonable rate of interest, 
 capitalize the remainder of their income and designate 
 it as good-will. It is becoming the custom with many 
 corporations to write off good-will. This does not 
 destroy the earning capacity of the corporation, but 
 only covers it up in a different form. In eitlier case, 
 the best taxpaying ability of the corporation is repre- 
 sented by this intang-ible asset. 
 
 Various ty])es of corporations ai'e dealt with very 
 unfairly by this system. A corporation, the nature of 
 whos(^ Inisiness requires a heavy investment in tangible 
 })ersonalty, is subject to a very heavy tax. But a coi*- 
 po ration, the nature of wliose business re<|uires a very 
 small investment in tangible assets, escapes witli 
 almost no tax. 
 
164 Taxation in New York 
 
 The 1915 joint legislative committee on taxation 
 compiled a list of thirty-five important domestic cor- 
 porations having a large earning capacity as compared 
 ^vitll their tangible assets. This list showed these 
 thirty-five corporations as having an aggregate good- 
 will valued at $287,651,371, while the total aggregate 
 assets of these corporations amounted to $497,327,898, 
 and the capital stock amounted to $405,569,070. The 
 aggregate good-will was 70.9 per cent, of the capital 
 stock outstanding and 57.8 per cent, of the total assets. 
 All this good-will is not taxable under the New York 
 statute. 
 
 The line of demarcation between real estate and per- 
 sonal property is something hard to define. The courts 
 have held that when the apples are on the tree they are 
 real estate, but as soon as they fall to the ground they 
 become personal property. In like maimer grain 
 standing in the field is real estate, but when it is cut 
 down it becomes personal property. Professor Selig- 
 man in his " Essays on Taxation " speaks of the inge- 
 nious definition of a special franchise by the Legisla- 
 ture in 1899 whereby personal property designated 
 special franchises is called real estate. A franchise in 
 general, if it be any kind of property, is personal 
 property. By calling personal property real estate 
 does not make it real estate. 
 
 The assessors in making their ass^essment shall use 
 an assessment roll, the form of which is presci-ibcd by 
 the State tax commission. In 1911 the Legislature 
 amended section twenty-one of the tax law and said 
 how this assessment roll should be prepared. It de- 
 clared that the assessment roll should consist of three 
 parts; part one for the assessment of real estate, to 
 consist of seven columns; part two for the assessment 
 of personal property, to consist of seven columns; and 
 part three for the assessment of special franchises, to 
 consist of six columns. What was to be entered in 
 each of these twentv columns was stated bv the Legis- 
 
Assessment axd Equalization 165 
 
 latiire. In cities the assessment roll was to have an 
 additional column in part one, the assessment of real 
 estate, in ^A'hich was to be set down the value of the 
 land exclusive of buildings thereon. As amended the 
 section Avas found tt) be too inelastic to meet local 
 requirements and so in 1914 the Legislature conferred 
 on the State tax commission the power of prescribing 
 the form of the assessment roll. 
 
 A tax map should be used in each tax district. Ac- 
 curate, equitable and scientific assessments cannot be 
 made without an accurate map as a base. Tax maps 
 will enable a taxpayer to compare his assessment with 
 his neighbor's. It is the difficulty that now attends 
 such comparison Avhich creates most of the feeling of 
 injustice and antagonism. The objection to paying 
 taxes is greatly minimized when each taxpayer feels 
 that his neighbors are subjected to the same burdens 
 equitably distributed. 
 
 In 1911 the Legislature enacted section thirty of the 
 tax law providing that assessors may use tax maps in 
 making their assessments. Some cities were using 
 tax maps already. The State tax association at its 
 second State conference in 1912 urged that the use of 
 tax maps be made mandator}^ upon local assessors. 
 However, the Legislature has not as yet done more 
 than make their use permissible. The tools of the 
 assessor are his map, field book and assessment roll. 
 
 The Somers unit system of realty valuation, origin- 
 ated by William A. Somers in 1896 at Saint Paul, Min- 
 nesota, is used by the assessors of nriny cities thrnout 
 the country. In New York City the Hoffman-Neill 
 rule is used for the measurement of depths of insido 
 lots. According to this rule the efficiency of corner 
 valuation is left to the judgment of the assessors, and 
 not to any unit of valuation as determined by the 
 Somers svstem. 
 
166 
 
 Taxation in New York 
 
 The Hoffman-Neill rule is a table showing the per- 
 centage of value for various depths of the unit, which 
 is a 100-foot lot as follows : 
 
 Feet 
 
 Per cent 
 
 1 Feet 
 
 Per cent 
 
 Feet 
 
 Per cent 
 
 1 
 
 .0676 
 .1014 
 
 22 
 
 23 
 
 ,4123 
 .4232 
 
 53 
 
 6899 
 
 2 
 
 54 
 
 .6975 
 
 3 
 
 . 1286 
 
 24 
 
 .4339 
 
 55 
 
 .7051 
 
 4 
 
 . 1520 
 
 25 
 
 .4444 
 
 56 
 
 .7126 
 
 5 
 
 .1732 
 
 26 
 
 .4548 
 
 57 
 
 .7201 
 
 6 
 
 .1929 
 
 27 
 
 .4650 
 
 58 
 
 .7275 
 
 7 
 
 .2112 
 
 28 
 
 .4751 
 
 59 
 
 .7348 
 
 8 
 
 .2282 
 .2443 
 
 29 
 
 30 
 
 .4850 
 .4947 
 
 60 
 
 61 
 
 .7420 
 
 9 
 
 .7492 
 
 10 
 
 .2598 
 
 50 
 
 .6667 
 
 98 
 
 .9882 
 
 20 
 
 .3899 
 .4012 
 
 51 
 
 52 
 
 .6745 
 .6822 
 
 99 
 
 100 
 
 .9941 
 
 21 
 
 1.000 
 
 Having determined the value of the one-foot front- 
 age, the assessor, with the help of the above table, is 
 able to ascertain the value of the entire lot. The fol- 
 lowing is a description of a land value map when 
 completed : 
 
 An outline map of the city is used, subdivided into 
 such areas as may be convenient. On each side of each 
 street, for each block, the unit value of the normalunit 
 is entered. Thus the relation of value on one street 
 ^\^tll values on another street is at once apparent. 
 Points showing high value will grade off towards the 
 points showing low values^ and everywhere the values 
 on one street will interlock with the valu(»s on the next 
 street in a Avay that can be seen, understood, and ex- 
 plained. Accuracy and pi-ecision will be introduced 
 into an assessment. The disturbing influences of 
 abnormally high or abnormallv low sales will be 
 minimized, and the assessor will be doing what he 
 ought to do; namely, exercising his judgment in assess- 
 ing all lots within a given area in their relative values 
 to one another. 
 
Assessment and Equalization 167 
 
 The most difficult problem that the assessor encoun- 
 ters under this system is the valuation of corner lots. 
 It is obvious that a corner lot has more value than an 
 inside lot. There is no standard under the Hoffman- 
 Neill rule, however, as to how much greater the value 
 is. The consensus of opinion appears to be that cor- 
 ner influence varies according to the use to which the 
 property is put, being greatest in retail business dis- 
 tricts, and smallest in suburban residence districts. 
 While this system of valuation may seem mechanical, 
 yet its accuracy is surmised that in New York City 
 most purchases and sales of property are based on the 
 same scale or rule which the assessor uses. 
 
 The date and first ap]ih cation of the principles em- 
 bodied in the Hoffman-Neill rule appears to be clouded 
 iTi mystery. While they are generally ascribed to 
 Judge Murray Hoffman of the Superior Court of the 
 City of New York, yet Judge Hoffman in his book, 
 *' Digest of the Charters, Statutes and Ordinances of 
 and relating to the Corporation of the City of New 
 York," published in 1869, says that this rule was first 
 adopted by Vice Chancellor William T. McCoun, Mr. 
 Bolton, late Master in Chancery, and John Slidell. 
 William T. McCoun was Vice Chancellor from ^farch 
 16, 1831, to May 12, 1946. Apparently thus rule must 
 have been developed during this period. At first the 
 rule was simply that the ordinary city lot fifty feet 
 deep was worth two-thirds as much as an adjoining lot 
 one hundred feet deep. From this simple ])rinciple 
 Henry Harmon Neill, real estate editor of the New 
 York Evening Mail, worked out an elaborate table. 
 
 The Somers system of valuation is based on the 
 same principle, namely, that there is a mathematical 
 relation botween the values of the diffei-ent eitv sites 
 affected by the same influences, but having a somewhat 
 different method of computation of this relation ship. 
 In this svsfem a scheme of valuing corner and alley 
 lots, and also the value of other irregular an<l excep- 
 tional shartes and sizes of land has been worked out. 
 
168 Taxation in New York 
 
 111 the Somers s^^stem the first procedure is to ascer- 
 tain the value of the unit foot. What Mr. Somers calls 
 the unit foot is a frontage of ground one foot Avide and 
 one hundred feet deep, located in the central section of 
 a block at a distance from any street corner or other 
 influence that might affect its value. To appraise this 
 unit foot persons with a knowledge of city conditions 
 and of realty values are called in. The Somers system 
 thus invites publicity and public interest. Mr. Somers 
 says that there always exists in every city a community 
 opinion that a certain street is best for business and a 
 consequent idea that land fronting thereon is the most 
 valuable. From this most valuable street other streets 
 of less value are compared, there being a well defined 
 opinion that propertv on the less valuable street is less 
 valuable just in proportion as the street is less valu- 
 able, and the comparison will reach out from the cen- 
 ter or best portion of the municipality and embrace the 
 entire city. 
 
 Anyone can see the advantages of a systematized 
 method of assessment as compared with the haphazarci 
 guesswork prevailing in so manv communities. Scien- 
 tific, exoert valuation bv either the Hoffman-Neill rule 
 or the Somers system will exert a wholesome influence 
 on the community socially. One result will be the 
 awakening of discussion and interest among the nrop- 
 ertv owners, who under the Somers svstem will be 
 called upon to appraise the unit foot. The economic 
 influences of the standardization of the value of real 
 estate ur»on contracting loans and upon realty invest- 
 ments will also be advantageous. 
 
 CITY ASSESSMENTS 
 
 The lot and block svstem is the best plan for map- 
 ping in cities. This consists of an actual map, based 
 on an actual surve^'. on which certain areas are desig- 
 nated as blocks and which are given a fixed unchange- 
 able number. On such a map a block should be bounded 
 by street lines. 
 
Assessment and Equalization 169 
 
 Witliin the block the map will be further subdivided 
 according to the individual ownership of parcels. As 
 lots are bought and sold, they may be united or sub- 
 divided and when any change of this kind occurs, the 
 map should be changed by some competent surveyor to 
 conform to the new lines of ownership and the date of 
 such change noted on the map. 
 
 Within each block, all the lots should be numbered 
 consecutively, beginning with the number one for each 
 block and continuing around the four sides of the block. 
 
 It ^\ill be found convenient to so number the lots as 
 to leave vacant numbers for new lots if there is a pros- 
 pect of subdivision among the existing lots at the time 
 the first numbering is made. 
 
 In 19] 1 the Legislature enacted that there should be 
 a separate assessment of land improvements in all the 
 cities of the State. This method of assessment forces 
 the assessor to recognize the economic fact that the 
 value of a building is simply the difference between the 
 value of the ]iarcel of land with the building and what 
 the same parcel Avould be worth if the building were 
 removed. The difference betM'een the two methods is 
 slight when the improvements are new or perfectly 
 adapted to the location, but in the case of old structures 
 or those which are no longer suitable to the sites this 
 method is supei'ior. 
 
 The building must be suitable to the site. A resi- 
 dence standing in the midst of business buildings, far 
 from the usual residence neighborhood, Avill have small 
 selling value. It mav be in the best of repair and 
 admirablv designed for residential purposes, but its 
 value will be practicallv nil, because it is unsuited to 
 the citv. Every city has many instances where the 
 transition from 7-(>sidence to business uses has taken 
 all value from some buildin<rs. To assess such build 
 ings on the basis of construction cost or on their actual 
 conditions as dwellings would be a great injustice to 
 the o^\^lers. 
 
 It is much more (lifTieuK to establi.^h standards for 
 
170 Taxatioi^ in New Yoek 
 
 assessing buildings than for assessing land. The 
 assessor should have some formula, sufficiently flexible, 
 by which to appraise the building. The cost of con- 
 struction for a new building, of the type of the building 
 under consideration, can be worked out. This is not 
 a difificnlt problem; real estate men and builders can 
 readily supply the assessors with this information. 
 From such information he can construct a table, made 
 up of definite types of buildings of definite size and 
 construction. If this table is sufficiently worked out, it 
 may be made to include all types of buildings coming 
 'wathin his jurisdiction. 
 
 This however does not allow for depreciation. It is 
 difficult to work out tables of depreciation based upon 
 age that are really satisfactory or accurate. An 
 assessor can be sure of his land values. But when he 
 assesses buildings by the use of building factors, the 
 result in each case should be tested by his judgment of 
 the additional selling value .which the building gives 
 to the lot on which it stands. If the total of land value 
 and building value as thus assessed exceeds the actual 
 selling value, the assessor should go over his figures 
 and reduce his building factor. Otherwise he will not 
 make a proper allowance for deterioration or inade- 
 quacy of the improvement to the site. 
 
 COUNTRY ASSESSMENTS 
 
 The problem of fixing a standard of value is pre- 
 sented to the country assessor just as to the city 
 assessor, but it is not the same problem. In cities 
 frontage is the chief element of value in lots. But 
 frontage is of small relative importance in the country. 
 To assess two lots in a city, of equal frontage, but of 
 different depths, by square foot rule would produce 
 gross inequality. In the country to assess two farms 
 of equal area and fertility, but Avith unequal frontage 
 on the highway, by a front foot rule, would in turn 
 produce gross inequality. Superficial area or acreage 
 must be the rule for assessment in the countrv. 
 
Assessment and Equalization 171 
 
 The country assessor does not have to determine a 
 normal unit of area as does the city assessor. The acre 
 is the commonly accepted unit. But he has the same 
 j^robiem as the city assessor of establishing the value 
 of his unit at different points in his district. 
 
 LAND VALUE MAPS FOR COUNTRY ASSESSORS 
 
 On each road the value of an acre of each class of 
 land, into which the land in his district is divided for 
 purposes of assessment, should be determined. From 
 such unit values the value of the acreage in each farm 
 can be determined, making due allowance for rock, 
 gully, hillside, etc. The country assessor can enter on 
 the maps at appropriate points the values which he 
 has determined upon as the normal value per acre of 
 land of the different classes of land. Then by looking 
 over the maps as a whole he can readily see whether he 
 has made sufficient allowance in these acreage values 
 for differences of location, topography, transportation 
 facilities, improved highways, and other advantages or 
 disadvantages. 
 
 The assessment of buildings in the country does not 
 present problems differing from assessment of build- 
 ings in the city, and the country assessor can use the 
 same rules as the city assessor. He will have fewer 
 types to deal with, and the problem should be easier 
 for that reason. 
 
 In the 932 towns of the Stnte the assessors are 
 required bv law to tentatively complete their assess- 
 ments b\' the first of August. They are to conspicuously 
 post in three or more public places in the town a 
 notice stating that they have completed the assess- 
 ment roll, that it is on file with one of their number 
 open for inspection and that on the third Tuesdav in 
 August any person aggrieved with the assessment may 
 appear before the assessors and file a statement under 
 oath specifying the respect in which the assessment 
 complained of is incorrect. The assessors shall after- 
 
172 Taxation in New York 
 
 wards fix the value of the property of tlie complainant 
 and for that purpose may increase or diminish the 
 assessment thereof. 
 
 In the cities the procedure is practically the same as 
 in the towns except that in the cities tlie dates vary 
 owing to the fact that there is no uniformity among 
 the cities as to the closing of the fiscal tear. 
 
 When the assessment roll is finally completed the 
 assessors shall take the f ollo^\ing oath : 
 
 " We, the undersigned, do severally depose and 
 swear that we have set down in the foregoing assess- 
 ment roll all the real estate situated in the tax dis- 
 trict in which we are assessors, according to our best 
 information ; and that, with the exception of those cases 
 in which the value of the said real estate has been 
 changed by reason of proof produced before us, we 
 have estimated the value of the said real estate at the 
 sum which a majority of the assessors have decided to 
 be the full value thereof; and, also, that the said assess- 
 ment roll contains a true statement of the aggregate 
 amount of the taxable personal estate of each and every 
 person named in such roll over and above the amount 
 of debts due from such persons, respectively, and 
 excluding such stocks as are otherwise taxable, and 
 such other propertv as is exempt by law from taxation, 
 at the full value thereof, according to our best .I'ndg- 
 ment and belief," 
 
 Tt is interesting to trace tlie evolution of the assess- 
 ors' oath down from colonial days. Tn 1691 assessors 
 were to take this oath: ''Well, trub' oqnally and 
 impartiallv in due r>ror)ortion as it shall appear to 
 them according to their best understanding to Assesse 
 and rate the Inhabitants residonts and Freeholders of 
 the respective places for Avhich they shall be Chosen 
 Assessors." 
 
 In 1721 the vestrymen of the Citv of New York and 
 the counties of Queens, Richmond and Westchester 
 were to tak(> the following oath: '' You do Sware on 
 
Assessment and Equalization 173 
 
 the holy Evangelist that you and every of you Shall 
 ^vel and truly Execute the Duty of an Assessor and 
 Equally and Impartially Assess the Severall Freehold- 
 ers and Inhabitants according to the Value of their 
 Respective Estates in an Equal proportion in every 
 of your Respective City Counties and precints for 
 which you are Chose Vestry Men and According to 
 your best Skill and Knowledge therein you shall Spare 
 Noe Person for favour or affection or grieve any Per- 
 son for hatred or 111 will so help you God." 
 
 In 1764 the assessors of the City of Albany had to 
 subscribe to the following oath: '' I A. B., do Swear 
 upon the Holy Evangelists of Almighty God that I 
 will Well and trulj', Equally, and Impartially, and in 
 due Proportion according to the best of my Skill and 
 understanding assess all the Whole Estates, Real and 
 Personal of all the freeholders Inhabitants, Residents 
 and Sojourners within the Citv of Albanv so help me 
 God." 
 
 Many similar oaths for assessors are to be found in 
 this colonial period and it is no wonder people refused 
 to serve as assessors and that justices of the peace 
 had to commit to jail those refusing thus to serve. 
 
 On or before the fifteenth of September the assess- 
 ors in the to-\\Tis shall make two copies of the assess- 
 ment roll and file one in the office of the town clerk. On 
 the first day of December the town clerk shall deliver 
 the assessment roll to the supervisor of the tax district 
 embraced therein. At the annual meeting of the board 
 of supervisors of each county, the assessment rolls of 
 the several tax districts in the county shall be examined 
 by the supervisors and any manifest clerical oi- other 
 errors in the assessment rolls shall be corrected by 
 them. The supervisors shall also ascertain if the asess- 
 ments in all the tax districts of the county have been 
 made by the assessors at full value as required by sec- 
 tion six of the tax law. If the assessments in any town 
 or city have not been made at full value, then the board 
 
174 Taxation in New York 
 
 of supervisors shall equalize the assessments for the 
 whole county according to the rule prescribed in 
 Section 50 of the tax law. As the State board of equali- 
 zation in equalizing between counties for the levying 
 of State taxes must follow this same rule laid down in 
 section fifty of the tax law, it is worthy of description. 
 
 "The board of supervisors of each county in this 
 State, at its annual meeting shall examine the assess- 
 ment rolls of the several tax districts in the county, for 
 the purx30se of ascertaining whether the valuations in 
 one tax district bear a just relation to the valuations 
 in all the tax districts in the county; and the board 
 may increase or diminish the aggregate valuations 
 of real estate in any tax district in accordance with the 
 f olloAving equalization rule : First, the ratio or per- 
 centage w^hich the assessed value of the real property 
 in each district bears to its full value shall be estab- 
 lished by the board upon proper inquiry and inves- 
 tigation conducted by it and shall be stated in a reso- 
 lution by the board after such inquiry and investiga- 
 tion. Second, from such ratio or percentage values, 
 the board shall determine the aggregate full value of 
 all real property of each tax district by dividing the 
 assessed value thereof by the ratio or percentage valne 
 as ascertained and fixed for that district. Third, the 
 average rate of assessment of the real property in the 
 county shall then be determined by dividing the aggre- 
 gate assessed value of the real property in all the tax 
 districts by the aggregate full valne thereof as ascer- 
 tained in the manner aforesaid. Fourth, the true 
 equalized value for each tax district shall then be 
 determined by multiplying the full value of such real 
 property in that tax district by the average rate of 
 assessment for the county. Fifth, deduct from or add 
 to the assessed value of the several tax districts the 
 difference between the assessed value and the equalized 
 value as so ascertained so that the amount which the 
 respective tax districts are increased or diminished 
 
Assessment and Equalization 175 
 
 from the assessed value will be shown, and the total 
 assessed value for the comity will not be increased or 
 diminished. Any written or documentary evidence 
 upon which the percentage for the several tax districts 
 are determined by the board shall be preserved and an 
 abstract of the same published with the table of rates 
 in the proceedings of the board of supervisors. 
 
 Anyone can notice the incongruity in these sections 
 of the tax law. First, according to Section 6 of the 
 tax law, assessors are to assess property at full value, 
 and according to Section 38 of the tax law, assessors 
 are to make an oath that they have assessed prop- 
 erty at full value; but Section 50 of the tax law 
 takes it for granted that assessors have not assessed 
 property at full value, and authorizes boards of super- 
 visors to equalize real estate assessments. If property 
 had been assessed at full value there would be nothing 
 to equalize. 
 
 The State controller notifies boards of supervisors 
 of the amount of money each county shall le\'^^ for 
 State taxes, armory taxes, and court and stenographers 
 taxes. The board of supervisors in each county shall 
 make up the budget for that county which amount they 
 shall levy as county taxes; and they shall also make 
 up the budget for each town, which amount they shall 
 levy^ as town taxes. In some counties the boards of 
 suprevisors also levy the city taxes. They now ascer- 
 tain the aggregate taxes for each tax district of the 
 county which for towns is the sum of the State taxes, 
 armory taxes, court and stenogra]ihers taxes, county 
 taxes and town taxes. They next ascertain the tax rate 
 for each tax district of the county. Then taking each 
 assessment roll the board of su])ervisors compute the 
 tax for each individual, corporation or piece of prop- 
 erty assessed tlieroin, and in a separate column in such 
 assessment roll opposite to the sums set do^\^^ as the 
 valuation of real and personal property they place the 
 sum to be paid as a tax thereon. Such assessment roll 
 
176 Taxation in New York 
 
 shall, when the warrant under the seal of the county, 
 signed by the chairman and clerk of the board of super- 
 visors, is annexed thereto, become the tax roll of the 
 tax district. This warrant commands the tax collector 
 of each tax district to collect from the several persons 
 or corporations named in the said tax roll the several 
 sums mentioned in the last column thereof, opposite 
 their respective names. 
 
 Any person or corporation aggrieved at their assess- 
 ment may within thirty days after the warrant under 
 the seal of the county signed by the chairman and 
 clerk of the board of supervisors is annexed to the tax 
 roll, apply to a justice of the supreme court for a writ 
 of certiorari to review the assessment. The justice of 
 the supreme court may then review the assessment and 
 if he deems it too high, reduce the same to whatever he 
 thinks is a true valuation. 
 
 Many are unfamiliar with what the special taxes 
 called armory taxes, and court and stenographers 
 taxes, really are. Suffice it to say that down to 1912 
 the support and maintenance of the armories was a 
 county charge and were included in the county taxes. 
 In that year a State armory commission was created 
 to have charge of the armories and the expense was not 
 assumed by the State and inclnded in the State taxes, 
 but was made a special tax and levied against the 
 counties. This special tax known as armory taxes is 
 confusing to the people Avho do not understand what 
 it really is. It should be abolished, and this expense 
 be included in either State taxes or comity taxes. 
 
 The condition is still worse in Avhat are known as 
 court and stenographers taxes. The salaries of the 
 justices of the supreme court are |)aid directly Iw the 
 State and are inclnded in State taxes; but the salaries 
 of the stenographers and other court attendants are 
 not paid by the State, but are made a special tax called 
 court and stenographers taxes and levied against the 
 counties. Can anything be more nonsensical? Special 
 
Assessment and Equalization 177 
 
 taxes are confusing ; and no tax skould ever be levied 
 of which the people do not understand its nature. 
 
 Upon receiving the tax roll and warrant command- 
 ing him to collect the taxes named therein, the collector 
 shall conspicuously post in five places in the tax dis- 
 trict a notice specifying one or more convenient places 
 in such tax district where he will attend from nine 
 •o'clock in the forenoon until four o'clock in the after- 
 noon, at least three days, and if in a city, at least five 
 days, in each week for thirty days. The collector shall 
 attend accordingly, and any person may pay his taxes 
 to such collector at the time and place so designated. 
 In a city, the notice in addition to being posted shall 
 be published once in every week, for two weeks succes- 
 sively, in a newspaper published in such city. Rail- 
 road, telegraph, telephone, electric light, and gas com- 
 panies are allowed to pay their taxes to the county 
 treasurer, and not to the tax collector. 
 
 Each collector shall immediately upon the expiration 
 of his warrant make and deliver to the county treasurer 
 an account of unj^aid taxes, upon the tax roll annexed 
 to his warrant, which he shall not have been able to 
 collect, verified by his affidavit, that the sums men- 
 tioned therein remain unpaid, and that he has not, 
 upon diligent inquiry, been able to discover any per- 
 sonal property out of w^hich the same could be col- 
 lected by levy and sale. If a collector of a city he 
 shall turn over the moneys collected to the county 
 treasurer; but if a collector of a town he shall turn 
 over to the county treasurer only the remainder of the 
 moneys collected, after paying to the su]iervisor all the 
 moneys levied therein for the support of highways and 
 "bridges, moneys to be expended by overseers of the 
 poor for the support of the poor, and moneys to defray 
 any town expenses or charges. 
 
 Outside of the forest preserve the county treasurer 
 shall sell property for unpaid taxes. In the forest pre- 
 serve the State controller shall sell ))ro]ierty for unpaid 
 taxes. 
 
178 Taxation in New York 
 
 Considerable agitation has been going on during the 
 last decade to give the State tax commission power to 
 order a reassessment of property when they have rea- 
 son to believe that the assessment in any tax district 
 shows undervaluations, inequality, omissions or irreg- 
 ularities sufficient to make it inequitable as between 
 owners of real property taxable within the tax dis- 
 trict or as between the tax district and other tax 
 district in a county. The State tax commission has 
 repeatedly asked the Legislature for this power in 
 their annual reports to the Legislature, and the State 
 tax association has recommended that this power be 
 granted to the State tax commission, but as yet the 
 Legislature of this State has refused to grant any 
 such power. Li 1905 the Wisconsin Legislature 
 granted such power to the State tax commission of 
 that State. 
 
 In 1915 the New York Legislature enacted section 
 173-A of the tax law which prescribes that the State 
 tax commission may apply to a justice of the supreme 
 court for a reassessment of property, but in the cases 
 thus brought the justice of the supreme court has 
 refused to order a reassessment. In regard to the 
 assessment of property the New York State tax com- 
 mission has advisory jjowers only, for altho it may 
 advise assessors how to assess property the assessors 
 can do very much as they please. No longer as was 
 the case in colonial days can assessors be committed to 
 jail by justices of the peace for refusing to make 
 assessments or for unequally or partially making 
 assessments. 
 
 A'illage taxes and school taxes are not levied by the 
 board of supervisors. The village trustees levy the 
 village taxes and the school ti'ustees levy the school 
 taxes. The town assessment roll prei)ared by the town 
 assessors is generally used for the levying of these 
 taxes altho both the village trustees and the school 
 trustees make clianges according as there have been 
 
Assessment and Equalization 179 
 
 changes in the property since the assessment roll was 
 prepared. A great convenience to the taxpayer would 
 be a simplification of these taxes, so that there might 
 be one assessment and one levy. This could be accom- 
 plished by having thi; board of supervisors levy all 
 taxes, including State, armory, court and stenogra- 
 phers, county, town, village, and school taxes. The 
 multiplicity of these taxes is a source of annoyance to 
 taxpayers, both corporations and individuals. 
 
 In equalizing real estate assessments the board of 
 supervisors of each county are to ascertain the ratio 
 or percentage which the assessed value of the real 
 estate in each district bears to its full value. Section 
 50 of the tax law states that they are to do this upon 
 proper inquiry and investigation. The best way to do 
 this is to obtain the sales of real estate in each tax 
 district for a period of five years and then by com- 
 paring these sales with the assessment of the sam(^ 
 property determine whether the property is assessed 
 at full value or not. 
 
 By using a five year period it is possible to obviate 
 errors resulting from an unusual condition of the 
 market in any year. Thus a larger number of sales are 
 secured as well as a greater variety of assessments 
 and the aggregate of all sales made compared witli the 
 aggregate assessments ordinarily >ields a safe 
 average. 
 
 A normal sale in etTect represents the testimony of 
 both purchaser and seller as to the value of the 
 property conveyed. The one parts witli his money and 
 the other with his ]n*opertv on the basis of the con- 
 sideration paid. When such witnesses are multiplied 
 many times they furnish tlie surest test of pi'ojx'rty. 
 
 It is a sad commentary on our system of taxation 
 that real estate has to bear practically all the expense 
 of government while personal properly escapes. If a 
 careful survey of the State was made it would be 
 ascertained that there was more ix-rsonal pi-ojierty 
 
180 Taxation in New Yoek 
 
 than real estate. State Tax Commissioiier John Jacob 
 Merrill" testified before a legislative committee in the 
 winter of 1918 that there were three times as much 
 I^ersonal propert}^ in the State as there was real 
 estate. 
 
 In 1899 the Legislature enacted what is known as the 
 special franchise tax law. This provided that public 
 service corporations using the public streets should 
 be assessed by the State tax commission. No rule or 
 method was prescribed by the Legislature as to how 
 this assessment was to be made except that the intangi- 
 ble rights or franchises of these corporations which is 
 personal property should be added to the tangible 
 property of the corporations existing in the public 
 streets and all of it called real estate. If the Legisla- 
 ture can so easily change personal property to real 
 estate then by legislative fiat black can be made white 
 by simply calling it so. 
 
 No other state in the Union has adopted a special 
 franchise tax law and its operation in this State has 
 entailed a vast amount of litigation. In 1903 Goveri.or 
 Benjamin Barker Odell m his annual message to the 
 Legislature condemned the law as follows: " The 
 special franchise tax law, which is still the subject of 
 litigation seems to me thru the feAv years that it has 
 been in operation to have demonstrated that it is 
 inequitable, and a source of annoyance and constant 
 litigation." On January 1, 1918, therp was still 
 $1,572,503,783 special franchise assessments in litiga- 
 tion and some of these assessments extended as far 
 back as 1900 the first year special franchise assess- 
 ments were made. 
 
 The common procedure seems to be for corporations 
 to take out writs of certiorari as soon as special frnn- 
 chise assessments are made and these cases drag along 
 for years in the courts and when finally settled are 
 compromised sometimes as low as fiftv per cent, of the 
 assessment. Thus as a revenue producer the law has 
 been a failure. 
 
Assessment and ElQrALizAxioN 181 
 
 A much better plan would be to have the State tax 
 commission assess all the property of public service 
 cor2)oratioiis both in tlie streets and outside of the 
 streets. According to the 1912 census bulletin, '' Taxa- 
 tion and revenue systems of State and local govern- 
 ments," thirty-six states of the Union liatl some or all 
 of their public service corporations assessed by some 
 State board instead of by local assessors. New 
 York is far behind most of the other states in this 
 respect. 
 
 It would be unfair to close this chapter without pay- 
 ing tribute to those men who have ])erformed tlie office 
 of assessors for nearly two hundred years in New 
 York as a colony and State. However faulty and 
 imperfect their work has been, it has been the work 
 that has brought to the treasury the money that has 
 kept the government going. They have been inade- 
 quately paid and they have had to bear the abuse of 
 their fellow men, yet without the work of the assessors 
 there would have been no money to su]iport education, 
 carry on internal improvements, equip soldiers, pay 
 salaries of government officials, and provide charita- 
 ble aid to the indigent and disabled. High officials of 
 State are accustomed to sneer at country assessors, but 
 country assessors have in the past and are still per- 
 forming a vital functior. in the complex system of our 
 ii'ovci-nmcnt. 
 
CHAPTER XII 
 EXEMPTIONS 
 
 In 1917 the real estate exemptions in New York 
 State amounted to $2,747,673,448. The total amount of 
 property assessed in 1917 including both real estate 
 and personal property was $13,054,319,369. This would 
 indicate that seventeen per cent, of all the property in 
 the State was exempted from taxation. But while the 
 assessed property in the State has increased twenty- 
 nine per cent, in the last ten years, the exempt property 
 has increased sixty-six per cent, in the same length of 
 time. If the exempt property in the State continues to 
 increase faster than the assessed property there may 
 come a time when some legislation will be necessary 
 to check this rapid and continuous increase. In 1901 
 an amendment to the State constitution was adopted 
 by the people prohibiting special laws exempting 
 property from taxation. 
 
 No citizen should be exempt from the duty of con- 
 tributing to the support of the State on personal or 
 class considerations. In France, pre\dous to the 
 French Eevolution of 1789, all taxes were imposed 
 upon the third estate, the clergy and nobility being 
 exempt. To-day tax exemptions must apply to some 
 condition or quality of property, and not to individuals 
 or classes. Tax exemptions should rest upon one of 
 three considerations. First, the State should not tax 
 itself. Second, property which is believed to assist 
 the State in the fulfillment of its public functions 
 should be exempt from taxation. Third, the State 
 should not tax capital regarded as essential for extend- 
 ing the source of future income. 
 
 There is little to be said concerning the first con- 
 sideration that the State should not tax itself. There 
 is no reason why it should tax itself, nor could such 
 
 ri82] 
 
Exemptions 183 
 
 a procedure influence in any way its real financial 
 standing. The apparent income might, it is true, be 
 increased by this means, but the real income would in 
 no manner be affected. All governmental property, 
 such as federal, state, county, city, town, village and 
 school, should be exempt from taxation. 
 
 But all governmental property is not exempt from 
 taxation in this State. Lands belonging to the State 
 in the forest preserve are taxable for local purposes. 
 When New York first began to purchase land in the 
 Adirondack and Catskill Mountains in 1883, a hard- 
 ship would be entailed upon localities in supporting 
 their local goverimient if a large percentage of the 
 property in such localities were to be exempted from 
 taxation. The Legislature at that time recognized the 
 justice of this and provided that such State property 
 should contiime to support the local government. How- 
 ever, the amount such State property can be assessed 
 at is determined by the State controller. 
 
 In 1911 the Legislature enacted that State property 
 located in Rockland County should be subject to taxa- 
 tion. This act appears to be directed at Letchworth 
 Village at Thiells, which is a charitable institution. 
 For school purposes some of the State property located 
 in Clinton, Dutchess, Oneida, Orange, Rockland, 
 Ulster and Westchester counties is subject to taxation. 
 
 Municipal property located outside of the municipal- 
 ity is taxable. New York City's waterworks property 
 located in the Catskill watershed is taxable, and while 
 there is agitation to have such property exempted, jus- 
 tice requires that it bear its share of the burden of the 
 support of the government of the locality where it is 
 located. 
 
 "WHien we come to the salaries of public officers the 
 rule that the State should not tax itself does not apply. 
 The federal income tax law of 1861 and 1013 recognized 
 no difference between the salaries of federal officers 
 and the earnings or the profits of the business man as 
 
184 Taxation in New Yoek 
 
 a basis for imposing the tax; and this law follows the- 
 practice of European states. The reason for making, 
 a distinction between public property and the salaries 
 of public officials lies wholly upon the surface. The 
 receipts from an income tax is for the use of the pub- 
 lic and discharges its duty to the public by being used 
 for a public purpose; the salary of an official on the 
 other hand, is for his private expenditure as a citizen. 
 Altho a public officer's salary is compensation for a 
 public service, yet this fact does not change its private 
 character. The same as the fee of a doctor or lawyer, 
 or the profits of a merchant or manufacturer, it con- 
 stitutes a fund for domestic expenditures. 
 
 There is a peculiar relation between the federal gov- 
 ernment and the state governments. The courts have 
 assumed that neither grade of government should be 
 jeopardized by any act of the other. Each is sovereign 
 within its own jurisdiction, and the integrity of the 
 Union as constituted demands the continued exer- 
 cise by each grade of government of all powers and 
 privileges with which it has been intrusted. Thus from 
 reasoning along this premise, it has been held that the 
 salaries of officials paid by one grade of government 
 cannot be taxed by the other, since in view of Chief 
 Justice John Marshall's celebrated decision of McCul- 
 loch versus the State of Maryland, that the power to 
 tax is the power to destroy, this would give to either 
 government the power to destroy the agencies by which 
 the other is alone capable of performing its public 
 duties or of continuing its active existence. For this 
 reason the federal income tax exempts officers and 
 employes of' the State government and its political 
 subdivisioiis. A State income tax would exempt fed- 
 eral officers and employes. 
 
 It is customary for states to exempt from taxation 
 the bonds which they issue, the exemption being made 
 a part of the contract between themselves and the 
 public creditors. There has been much criticism as to 
 
Exemptions 185 
 
 the propriety of this. The defence of this exemption 
 lies ill the fact that a bond which guarantees perpetual 
 exemption from taxation will bear a much higher price 
 than a bond' subject to the uncertainties of subse- 
 quent taxation, and usually when the government 
 issues bonds it is in pressing need of funds, and so it 
 is deemed wise to draw the contract in such a manner 
 that the bonds will sell for the highest jjossible price. 
 
 The second consideration is that property which is 
 believed to assist the State in the fulfilment of its 
 public functions should be exempt from taxation. In 
 matters of taxation the legislator is obliged to rec- 
 ognize the actual condition of public opinion. Whether 
 this public opinion rests upon a satisfactory basis or 
 not the fact of its existence controls the judgment of 
 the legislator who desires a system of taxation that 
 will work smoothly and efficiently. So the deep seated 
 prejudices of the peoi^le for or against any particular 
 suggestion will ever remain an important considera- 
 tion in the drafting of tax laws. 
 
 So the property of corporations or associations 
 which are engaged in religious, educational, charitable, 
 benevolent, scientific, patriotic, or historical pur- 
 poses" are deemed worthy of being exempt from taxa- 
 tion. But there should be this limitation that only the 
 property actually used for these purposes should be 
 exempt, Avhile any property these coi'porations or asso- 
 ciations use to secure a revenue from should be sub- 
 ject to taxation. 
 
 The tliird consideration is that the State should not 
 tax capital regarded as essential for extending the 
 source of future income. The State is not limited to 
 the getting of revenue, but it is obliged to get revenue 
 in such a manner that the source from which it is 
 dei-ived shall never be exhausted. The legislator must 
 hold in mind the needs of the future as well as of the 
 present, and should employ the taxing power in such a 
 manner as not to dry up the springs of present revenue 
 
186 Taxation in New York 
 
 or to hinder the development of an enlarged supply. 
 The life of the State is conceived to be eternal. As a 
 matter of history, states do come to an end, that is they 
 are born, they grow, they decay, and they die. An 
 individual must recognize the fact of death and adjust 
 his affairs accordingly. But with the State it is dif- 
 ferent, and they Avho manage its affairs should do so 
 in view that its interests endure in perpetuity. There 
 should be no commutation of the patrimony of the State 
 into extraordinary income for a few years. A sound 
 system of taxation will not impair the patrimony of 
 the State. 
 
 In this State land planted with trees for forestry 
 purposes is exempt from taxation for a period of 
 thirty-five years. Six other states exempt from taxa- 
 tion land planted with trees for forestry purposes with 
 varying periods from ten to thirty years. Thirteen 
 states exempt mechanic's tools from taxation; seven 
 states exempt growing crops ; nine states exempt irri- 
 gating ditches and canals wholly or in part ; and one 
 state exempts the materials to be used in shipbuilding. 
 These exemptions can only be defended on the ground 
 that they are essential for extending the source of the 
 State's future income. 
 
 No state has been so liberal in granting exemptions 
 from taxation as has New York. The earliest exemp- 
 tions seem to have been for clergymen. In an act 
 passed March 2, 1779, for raising a tax to be applied 
 towards the public exigencies of the State, ministers of 
 the gospel were not to be taxed for their respective sal- 
 aries. Again in an act passed March 25, 1783, for rais- 
 ing by tax £42,100 ministers of the gospel were not to 
 be taxed for their salaries. 
 
 An act of the Legislature passed November 20, 
 1781, exempted from taxation the inhabitants of the 
 Town of Rochester, Ulster County, whose buildings 
 and crops had been destroyed by a late incursion of 
 the enemy. This was the only exemption from taxa- 
 
Exemptions 187 
 
 tion oil account of an Indian massacre during the Revo- 
 lutionary War. This massacre occurred August 12, 
 1781, and the band of Tories and Indians was led by a 
 Tory by the name of Caldwell, and an Indian by the 
 name of Shanks Ben. The old stone fort at Wawars- 
 ing bore the brunt of the attack and the whole of the 
 upper Rondout valley was that August Sabbath 
 destroyed in flames. 
 
 An act of the Legislature passed Februaiy 13, 1789, 
 exempted from taxation sheep to the number of fifty. 
 Only excess sheep over fifty in number belonging to 
 any one person were to be taxed. 
 
 An act of the Legislature passed April 8, 1796, 
 exempted from taxation for a period of five years the 
 Albany glass factory and everything appertaining in 
 and to the carrying on the said facton^ together with 
 the buildings of the workmen about the same. When 
 this. exem])tion expired in 1801 it was renewed by the 
 Legislature for another period of five years to the 
 successor of the Albany glass factory, the Hamilton 
 manufacturing society. 
 
 The first general exemption law was enacted by the 
 Legislature March 30, 1799. It read as follows: 
 
 " That no house or land belonging to the Ignited 
 States, or to the people of this State, nor any church 
 oi- place of public worship, or any personal iiro])erty 
 belonging to any ordained minister of the gospel, nor 
 any college or an incorporated academy, nor any 
 school house, court house, gaol, alms house or ])ro|)«'rty 
 belonging to any incorporated library, shall l)e taxed 
 by virtue of this act. ' ' 
 
 Also: *'And the said assessors shall also ascertain 
 according to the best evidence they can obtain and set 
 down in sucli list the value of the residue of tlie per- 
 sonal estate of every person residing in such division 
 or assessment district exclusive of their farming uten- 
 sils, arms and accoutrements for s(»rving in the militia, 
 tools and implements of their respective trades and 
 
188 Taxation in New York 
 
 professions, ships and vessels and their cargo em- 
 ployed in trade and commerce out of this State, articles 
 of the produce of any of the United States, and pur- 
 chased for exportation or sale." 
 
 (xradually year after year new exemptions have been 
 created until to-day they cover almost every institution 
 or class of property which may alleviate the physical 
 comfort, appease the moral hunger or add to the men- 
 tal satisfaction of man from the cradle to the grave. 
 
 In 1917 the exemptions for clergymen amounted to 
 $1,829,474. The exemption of 1799, which referred 
 only to personal property, was in 1801 extended to 
 include both real estate and personal property, but the 
 exemption was limited to $1,500. It was made to 
 include priests as well as ministers of the gospel. As 
 no other state in the Union exempts clergymen from 
 taxation, it is difficult to say on what grounds such an 
 exemption is justified. Why are not teachers, doctors 
 and writers entitled to a like exemption? 
 
 There is a possibility that the Legislature in grant- 
 ing an exemption to clergymen in 1799 was influenced 
 by the fact that the act of 1693 by the Colonial Assem- 
 bly establishing the Church of England ministry in 
 the City of Ncav York and the Counties of Queens, 
 Eichmond and Westchester and providing that the 
 clergA^men of this church should be paid by taxation 
 had been abrogated in 1784. Section 39 of the consti- 
 tution of 1777 read as follows : 
 
 '' The ministers of the gospel are, by their profes- 
 sion, dedicated to the service of God and the cure of 
 souls, and ought not to be diverted from the great duty 
 of their function ; therefore no minister of the gospel, 
 or priest of any denomination whatsoever, shall at any 
 time hereafter, under any pretense or description 
 whatsoever, be eligible to or capable of holding any 
 civil or military office within this State." 
 
 This was in force until abrogated by the constitution 
 of 1846. Thus as clergymen were unable to hold office 
 
Exemptions 189 
 
 and the salaries of a large portion of them were no 
 longer paid by taxation the legislators may have con- 
 cluded to give clergymen a $1,500 exemj^tion as a 
 recompense. 
 
 In 1917 the exemptions for cemeteries amounted to 
 $72,441,891. Cemeteries are exempted in every state 
 in the Union, yet it was not until 1875 that New York 
 exempted all cemeteries from taxation. There were 
 many special acts exempting separate cemeteries be- 
 fore this date, some of which were the Buffalo burial 
 ground in 1834, Greenwood Cemetery in 1838, Pitts- 
 ford Cemetery in 1843 and Westfield Cemetery in 
 1846. Many cemeteries are stock corporations which 
 pay di\ndends to stockholders and it is manifestly un- 
 fair that such cemeteries should be exempt from taxa- 
 tion. That we have a fitting respect for our dead is 
 evidenced by the many beautiful and well kept ceme- 
 teries thruout the State. 
 
 In 1917 the exemptions for parsonages amounted to 
 $7,091,465. It was not until 1892 that parsonages were 
 exempted from taxation, and then only to the amount 
 of two thousand dollars. This limitation is practically 
 a dead lett( r as assessors generally exempt parsonages 
 to the full extent whether the value is ten thousand 
 dollars or more. Nineteen other states exempt par- 
 sonages from taxation wholly or in part. A partial 
 exemption increases the difficulties of assessors. Par- 
 sonages should be wliolly exempt or not at all. 
 
 In 1840 the Legislature passed a law authorizing the 
 taxation and sale of Indian lands without any reserva- 
 tion of the rights of the Indian occupants. The courts 
 held this law unconstitutional and void bv virtue of 
 the treaty the United States had entered into with 
 the Indians. The statute enacted by the Legislature in 
 1841 authorizing the sale of Indian lands for taxes, but 
 providing that such sale should not affect the Indian 
 right of occupancy, was held by the courts to be valid 
 as against the obje.'tion that it conflicts with the treat- 
 
190 Taxation in New York 
 
 ies of the United States guaranteeing the Indians 
 free use and enjoyment of their lands, since it 
 operated only against the pre-emption rights of white 
 purchasers. The first law exempting Indian reserva- 
 tions from taxation was passed in 1859, which referred 
 only to the Seneca Indians on the Cattaraugus reserva- 
 tion. In 1875 it was extended to the Tonawanda In- 
 dians on the Tonawanda reservation, and in 1896 it 
 was made to include all Indians on reservations in the 
 State. No law w^as necessary to exempt Indians from 
 taxation as their treaty with the United States govern- 
 ment exempted them from taxation. The exemptions 
 for Indian reservations in 1917 amounted to $914,140. 
 
 In 1859 agricultural societies having lands perma- 
 nently used for show grounds are first made exempt 
 from taxation. Nineteen other states exempt agricul- 
 tural societies from taxation. The intention of this 
 is to encourage agriculture, but it is doubtful if it does 
 to any appreciable extent. Most agricultural socie- 
 ties at their annual fairs resort to racing, pageants, 
 parades and other amusements in order to draw large 
 crowds and their exhibitions of live stock, fruits and 
 vegetables becomes a minor consideration. Even then 
 these agricultural societies barely exist and one by one 
 they are going out of existence. In time this exem])tion, 
 which amounted to $1,057,650 in 1917, will disappear. 
 
 In 1857 the Legislature exempted from taxation 
 deposits in savings banks and the accunmlations in 
 life insurance companies so far as the accumulations 
 were held for the exclusive benefit of the assured. If 
 there is to be any justification of this exeni))tion it must 
 come under the class: The State should not tax capital 
 regarded as essential for extending the source of future 
 income. Some states tax deposits in savings banks. 
 
 The first exemjotion for a hospital occurred in 1875. 
 It exempted the real and ])ersonal property of th<» 
 Society of the New York TTospital. a cl)avitnl)l(' corpo- 
 ration fi'om which no revenue was derived. It was 
 
Exemptions 191 
 
 not until 1893 that all hospitals in the State received 
 exemption from taxation. The justification for this 
 exem23tion must come under the second class : Proj)erty 
 which is believed to assist the State in the fulfilment of 
 its public functions should be exempt from taxation. 
 In 1917 the hospital exemptions in the State amounted 
 to $99,721,445, and included general hospitals and dis- 
 pensaries, hospitals for the insane, tuberculosis hos- 
 pitals, hospitals for contagious diseases, hospitals for 
 convalescents, maternity hospitals, hospitals for chil- 
 dren, and hospitals for special diseases. All kinds of 
 human ills are covered by this list. 
 
 A special act of the Legislature in 1886 exempted 
 Warner's Observatory of Rochester from taxation. 
 This was before there was a general exemption of 
 property used for scientific purposes. Ten years later 
 property used for scientific purposes received a gen- 
 eral exemption. 
 
 Military duty early came in for attention in the tax 
 laws of the State and in 1854 the following military 
 exemptions were passed by the Legislature : 
 
 "All general and staff officers, all field officers, and 
 all commissioned and non-commissioned officers, musi- 
 cians and privates of the military forces of the State, 
 shall be exempt from jury duty during the time they 
 shall perform military duty, and from the pa^Tnent of 
 highway taxes, not exceeding six days in any one year; 
 and every such person not assessed for highway taxes 
 shall be entitled to a deduction in the assessment of 
 his real and personal property, to the amount of five hun- 
 dred dollars; and every person who shall have served 
 seven A'ears, and shall have been lionorably discharged, 
 as required by this section, sliall forever after, so long 
 as he remains a citizen of this State, be exempt from 
 two days' highway taxes in each year ; and if a resident 
 of any city of this State, he shall forever be entitled to 
 a deduction in the assessment of liis real and personal 
 property, to the amount of five hundred dollars each 
 year the exemption and deduction liereni provided for 
 
192 Taxation in New Yobk 
 
 to be allowed only on the production, to the assessor or 
 assessors of the town or ward in which he resides, of 
 a certificate from the commanding officer of the regi- 
 ment in which he last served." 
 
 The next year the Legislature amended this act by 
 allowing an exemption of five hundred dollars in assess- 
 ment of property to every officer, non-commissioned 
 officer, musician and private actually and faithfully 
 serving in such division ; but to those in any troop of 
 cavalry or company of light artillery an exemption of 
 one thousand dollars was granted. Why were cavalry- 
 men and artillerymen granted a double exemption over 
 infantrymen ? 
 
 In 1870 the uniform, arms, and equipments, required 
 by law or regiilations, of every officer, non-commis- 
 sioned officer, musician and private of the national 
 guard was exempted by the Legislature from all suits, 
 distresses, executions or sales for debts, or for the 
 payment of taxes ; and every mounted officer, and every 
 member of a troop of cavalry or battery of artillery, 
 who owned a suitable horse necessary for his use as 
 such officer or member was granted a like exemption. 
 This was the year the general training was abolished 
 of all citizens not members of the national guard one 
 day each year on the first Monday in September. This 
 exemption may have been prompted on the part of the 
 legislators by a desire to induce citizens to join the 
 national guard. 
 
 However in 1875 all these military exemptions were 
 repealed. Being a time of profound peace and a feel- 
 ing in the minds of the vast majority that there would 
 never be another war, all distinctions between the 
 military and civilian were thought best to be done 
 away with. 
 
 One cannot but be impressed by the numerous peti- 
 tions sent to the Legislature year after year to have 
 firemen exempted from taxation in the days when the 
 cities did not have paid fire departments. There was 
 somcthino: heroic about tlie brave firemen wlio fought 
 
Exemptions 193 
 
 the flames without pay or recompense and it was 
 thought that these volunteer tiremen should receive 
 extra consideration. But from early colonial days 
 when the citizens of New Amsterdam were subject to 
 a fine of twenty-five gTiilders for neglect to sweep a 
 chimney in case it caught fire, so it is felt that most 
 fires are the result of carelessness. Perhaps on this 
 account or because paid fire departments became the 
 rule in most cities, only two municipalities of the State, 
 Cortland and Watertowni, have by special act of the 
 Legislature exempted firemen from taxation to the 
 amount of five hundred dollars. In 1879 the Legis- 
 lature granted to incorporated villages the right to 
 exempt members of fire companies from taxation to 
 the amount of five hundred dollars, but this could only 
 be done by a vote of the legal electors of such incor- 
 porated village. 
 
 That volunteer firemen are held in high esteem by 
 their fellow citizens is evidenced by the act of the 
 Legislature in 1891 when the real property of any 
 incorporated association of present or former volun- 
 teer firemen, actually and exclusively used and occu- 
 pied by such corporation, and not exceeding in assessed 
 value the sum of fifteen thousand dollars was exempted 
 from taxation. At present this refers only to a fire- 
 men's home at Hudson, where aged and disabled fire- 
 men are cared for. 
 
 The Legislature was particularly lenient with turn- 
 pike, bridge and canal companies. An act of 1827 
 exempted these companies from taxation when their 
 net income did not exceed five per cent, of their capital 
 stock. This act was amended in 1854 so that turnpike 
 companies were exempt from taxation until the annual 
 receipts from tolls over necessary repairs and a suit- 
 able reserve fund exceeded seven per cent, on the 
 first cost of the road. There are still a few private 
 bridge companies, but turnpike companies have dis- 
 appeared from the State. The onlv private canal 
 7 
 
1&4 Taxation in New York 
 
 company was the Delaware and Hudson Canal, which 
 was abandoned in 1899. These all helped in the early 
 development of the State and perhaps the Legislature 
 was justified in granting them exemptions. 
 
 The Legislature was particularly liberal in the early 
 days to the manufacturing industry. On February 18, 
 1817, it exempted all cotton, woolen and linen manufac- 
 turing companies in the State as follows : 
 
 ' * That from and after the passing of this act, all the 
 buildings, machinery and the manufactured articles in 
 the hands of the manufacturer, of any cotton, woolen or 
 linen manufactory erected within this State, or here- 
 after to be erected shall be exempted from taxation 
 within this State ; and that all manufacturers employed 
 in any cotton, woolen or linen manufactory, shall be 
 and hereby are exempted from all militia duty, except 
 in cases of invasion or insurrection, or when the coun- 
 try shall be in danger of invasion, and from serving as 
 jurors, in all suits to be brought for the recovery of 
 debts to the value of twenty-five dollars or under." 
 
 This law was repealed in 1823. 
 
 In 1823 houses of industry were exempted from taxa- 
 tion. Then in 1829 literary and charitable institutions 
 became exempt for the first time. But in 1893 the 
 doors were opened wide for nearly every kind of insti- 
 tution when subdivision seven of section four of the 
 tax law was made to read in part as follows : 
 
 '' The real property of a corporation or association 
 organized exclusively for the moral or mental improve- 
 ment of men and women, or for religious, charitable, 
 missionary, hospital, educational, patriotic, historical 
 or cemetery purposes shall be exempt from taxation." 
 This was not broad enough to suit the exemption peo- 
 ple so in 1896 it was amended to include bible, tract, 
 benevolent, infirmary, scientific, literary, library, and 
 societies for the enforcement of laws relating to 
 children and animals. 
 
 In 1884 co-operative life and casualty insurance com- 
 panies were exempted from taxation. There is no 
 
Exemptions 195 
 
 justification for such an exemption. It is only one 
 more of an already too long list. 
 
 In 1879 historical societies were authorized to have 
 and hold for the purpose of inclosure, preservation and 
 the erection of monuments, but under no circumstances 
 for the purposes of business, the sites of old forts and 
 battles, not to exceed six acres in one locality, and 
 when such sites have been so appropriated and 
 improved and used for such purposes only, they were to 
 be exempted from taxation. No exemptions are being 
 made in the State under this special law of 1879. It 
 was passed nearly one hundred years after the close 
 of the Revolutionary War when there was being mani- 
 fest a reawakened interest in battlefields and forts con- 
 nected with the Revolutionary War. A private asso- 
 ciation was striving to erect a suitable monument to 
 commemorate the Battle of Saratoga by private sub- 
 scription. While the monument has been erected it 
 was found to be too much for the private association 
 and the work was finally completed by the State. 
 
 It was not until 1881 that all new bonds issued by 
 counties, cities, towns and villages were exempted from 
 taxation. As explained on a previous page when the 
 government issues bonds it is usually in pressing need 
 of funds and so by exempting the bonds from taxation 
 they sell more readily and will also bring a higher 
 price. It was not until Chapter 97 of the laAvs of 
 1917 was enacted that school bonds received an 
 exemption from taxation. This chapter reads as fol- 
 lows : ** Bonds of this State or any civil division thereof 
 are exempt from taxation.^' Scliool bonds are issued 
 principally for the construction of now school build- 
 ings and there ought to be every encouragement to the 
 replacement of outworn structures by modern up-to- 
 date school buildings. There ought not to have been a 
 wait of thirty-six years before school bonds received 
 the same exemption accorded to other governmental 
 bonds. 
 
 When the Court of Appeals decided in 1876 in the 
 Pacific Mail Steamship Company case that domestic 
 
196 Taxation in New Yoek 
 
 vessels registered in the State were taxable even tho 
 the vessels themselves were outside of the State the 
 Legislature was appealed to and in 1881 it exempted 
 for a period of fifteen years such vessels and also the 
 capital stock, franchises and earnings of corporations 
 or associations operating such vessels. In 1892 this 
 exemption was extended for a further period of thirty 
 years. This exemption will expire in 1922. Before its 
 expiration it will probably be extended for another 
 period of time. What justification is there for such an 
 exemption 1 
 
 It was not until 1897 that property purchased with 
 pension money was exempted by statute from taxation. 
 This act of the Legislature was caused by a decision 
 of the Court of Appeals in 1890 exempting property 
 purchased with pension money from taxation on the 
 ground that it was exempt from execution. This is not 
 a total exemption, for such property is to be assessed . 
 for highway and school purposes. That this property 
 is taxed for some purposes and exempted for other pur- 
 poses causes confusion and trouble. It should be 
 entirely exempted or else taxed for all purposes. The 
 exemption coming so late in the history of the State has 
 been of service only to veterans of the Civil War. In 
 the early days when people were imprisoned for debt 
 the veterans of the Eevolutionary War were thankful 
 to have an exemption passed by the Legislature which 
 prevented their imprisonment for debt. If there ever 
 was a worthy exemption this act passed by the Legisla- 
 ture in 1830 preventing the imprisonment for debt of 
 those who fought for American independence certainly 
 was one. 
 
 Anyone studying the history of these various exemp- 
 tions cannot but be impressed with the fact that there 
 has been a great abuse in the granting of exemptions 
 in this State. These countless exemptions add to the 
 burden of taxation to those who are bearing the 
 expenses of government. In the future there should be 
 no extension of exemptions to any other classes. 
 
CHAPTER XIII 
 SPECIAL ASSESSMENTS 
 
 Special assessments are general proportional con- 
 tributions of wealth levied against real estate and col- 
 lected from its owners and occupants to defray the 
 costs of specified public improvements made, or of 
 specified public services undertaken, in the interest of 
 the general public. Instead of making the general pub- 
 lic pay for these improvements and services the cost is 
 placed upon the already overburdened real estate 
 owners. 
 
 Special assessments, like taxes, are levied and col- 
 lected under the sovereign powers of the State, gen- 
 erally called taxing and police powers, but under very 
 different conditions and subject to the application of 
 widely different principles as may be noted from the 
 following comparisons based upon court decisions : 
 
 Taxes upon property are levied for the purpose of 
 raising revenue for meeting the general costs of gov- 
 ernment, for providing for all general public needs, and 
 for other governmental purposes ; and the only benefit 
 which taxpayers receive is as members of organized 
 society. The individual taxpayer is therefore poorer 
 in a sense by reason of the payment. Special assess- 
 ments are levied only for the purpose of providing for 
 specified general public needs, and in theory at least 
 they are supposed not to leave the property owners 
 who pay their assessments any poorer, on account of 
 so-called benefits conferred upon them by the improve- 
 ments or by the services for which the assessments are 
 levied. 
 
 Taxes may be levied upon personal as well as real 
 estate, and upon person, business, occupation, fran- 
 chise, privilege, and right ; but special assessments are 
 levied upon real estate alone. 
 
 [1071 
 
198 Taxation in New Yoek 
 
 A tax is levied on the whole, or with reference to the 
 whole, of a known political subdivision, as a state, 
 county, city, town, or school district, or of some special 
 subdivision thereof or some special class of property 
 therein, while a special assessment is levied on the 
 property situated in a district created for the express 
 purpose of a levy, and possessing no other function or 
 even existence than to include the thing upon which the 
 levy is made. 
 
 Certain properties may be specifically exempted 
 from property taxes on account of their public charac- 
 ter or from considerations of public policy, but no 
 property is thus exempt from special assessments. 
 
 Taxes are a continuing burden of recurrent charges 
 which must be collected at stated short intervals, while 
 special assessments are exceptional both as to time and 
 locality. 
 
 The method of special assessments was first intro- 
 duced in the Dutch colony of New Netherland in 1657 
 for the paving of Brouwer Straate, now Stone Street, 
 which was the first street paved in New Amsterdam. 
 On petition of the owners who agreed to pay the cost, 
 the work was done by two overseers appointed by the 
 city, who were authorized to assess proportionally for 
 the expense incurred each house standing in the afore- 
 said street. Taxation was of a rather voluntary char- 
 acter in New Netherland in the early days and this 
 first application of special assessments worked fairly 
 well. The second application of special assessments in 
 the colony was not so successful. About 165i9 it was 
 decided to plank the sides of the Heere Gracht or Grand 
 Canal and in 1660 the means of payment for this public 
 improvement costing 2,792 florins was the cause of not 
 a little embarrassment. The city authorities decided to 
 assess the abutting lots at the rate of forty florins per 
 rod. In this case there had been no petition of the 
 property owners offering to bear the expense, indeed, 
 they were apparently not even warned that it would be 
 
Special Assessments 199 
 
 laid upon tliem. Accordingly there was a great outcry 
 when the attempt was made to collect the assessment. 
 Poor Hendrick Willemsen, the baker, whose assessment 
 of 214 florins and 17 stivers was the highest of all, 
 declared that he had not only received no benefit from 
 the work, but had actually lost a lot of valuable stone 
 which had been undermined. He vowed he would not 
 pay and only after he had been conveyed to the prison 
 chamber for an hour or two was he frightened into 
 agreeing to contribute the amount due in four install- 
 ments. The privilege of defraying their assessments 
 in installments was later given to all who chose to ask 
 for it. 
 
 How^ever unjust the system of special assessments 
 was it continued to grow and was often used during the 
 English occupation down to the time of the Revolution- 
 ary War. Pennsylvania appears to have been the only 
 other colony which made use of special assessments 
 during this early period. The system has spread thru- 
 out the country so that to-day New Hampshire is the 
 only state in which no special assessments are levied 
 for public improvements. 
 
 New York as a state has never levied any special 
 assessments. When the Erie Canal was about to be 
 undertaken it was proposed that the counties adjoining 
 the canal should bear part of the expense thru direct 
 taxation as it was contended that these counties would 
 receive the most benefit. The matter was several times 
 brought up in the Legislature, but nothing ever was 
 done about it, and so the first attempt of the State- 
 government to ley\' a special assessment failed. 
 
 At first special assessments were levied under the 
 police power of the municipality. The property o"v\Tier 
 was required to grade or drain his lot or to lay a side- 
 walk in front of it, and in case of failure to do so, the 
 work was done by the municipal authorities who caused 
 the expense to be assessed upon the party benefitted. 
 The application of this theory wns limited in its scope. 
 As special assessments were pushed forward into new 
 
200 Taxation in New York 
 
 directions, a broader basis than the police power 
 became necessary for its support. This was the power 
 of eminent domain, which was developed out of the 
 process of opening new streets. It was said that every 
 new thorofare greatly enhanced the value of the 
 abutting property. Under the power of eminent 
 domain compensation is made for the injury inflicted 
 when private property is taken for public use ; but in 
 special assessments the contention was advanced that 
 the property owner was not damaged, but in fact was 
 benefitted. This theory of justifying special assess- 
 ments on the ground of eminent domain soon 
 encountered insurmountable obstacles. How was it to 
 be justified when no real estate was taken such as grad- 
 ing, paving, parking, etc. The whole system of special 
 assessments was on the verge of destruction when a 
 court decision in 1851 swept away all these attempted 
 justifications and decided that special assessments were 
 a constitutional exercise of the taxing power. In that 
 decision Judge Charles H. Ruggles said : 
 
 " The people have not ordained that taxation shall 
 be general so as to embrace all persons or all taxable 
 persons within the State or within any district or ter- 
 ritorial division of the State ; nor that it shall or shall 
 not be numerically equal as in the case of a capitation 
 tax; nor that it must be in the ratio of the value of 
 each man's land, or of his goods, or of both combined; 
 nor that a tax must be co-extensive with the district or 
 upon all the property in a district which has the char- 
 acter of and is known to the law as a local sovereignty ; 
 nor have they ordained or forbidden that a tax shall be 
 apportioned according to the benefit which each tax- 
 payer is supposed to receive from the object on which 
 the tax is expended. In all these particulars the power 
 of taxation is unrestrained." 
 
 Special assessments did not become established in 
 this State without vigorous opposition. When the con- 
 stitutional convention of 1846 met there was an element 
 among the delegates hostile to the system of special 
 
Special Assessments 201 
 
 assessments. A proposition was advanced which if 
 incorporated into the constitution would have made an 
 end to special assessments then and there. It read as 
 follows : 
 
 '' No assessment for any improvement in any city or 
 village shall be laid otherwise than by general tax upon 
 the taxable property of such city or village, levied and 
 collected with an annual tax for other expenses." 
 
 The advocates of this proposition contended that 
 special assessments for any public improvement were 
 unsound in principle because it substituted an arbitrary 
 instead of a fixed rule of taxation. They insisted that 
 special assessments were taxation, and taxation to be 
 just should be equal. No public improvements they 
 said could be made without being of special advan- 
 tage to some locality ; consequently the assumption that 
 there is, in particular instances, a special local benefit 
 is false. But this proposition Avas defeated in the 
 convention and special assessments received a new 
 lease of life. The only explanation that can be given 
 for this defeat was the desire to shift on to someone 
 else the burden of supporting local government. It is 
 reasonably certain that if the real estate people of the 
 cities and villages had been well organized at this time 
 special assessments would have received its death blow. 
 However, all honor is due to the delegates who made 
 this heroic but losing fight. 
 
 While the courts have assisted in upholding and 
 extending special assessments the system was severely 
 condemned by Chief Justice Sanford Elias Church of 
 the Court of Appeals in 1877 in a dissenting opinion in 
 the case of William A. Guest against the City of 
 Brooklyn in which Judge Church spoke as follows : 
 
 ''The few are poAverless against the legislative 
 encroachments of the many. . . . The majoritv are 
 never baclavard in consenting to, and even demanding 
 improvements which they may enjoy without expense 
 to themselves. The inevitable consequence is, to induce 
 
202 Taxation in New York 
 
 improvements in advance of public necessity, to cause 
 extravagent expenditures, fraudulent practices and 
 ruinous taxation. The system operates unequally and 
 unjustly, and leads to oppression and confiscation. It 
 is difficult to discover in it a single redeeming feature 
 which ought to commend it to public favor. . 
 Among the manifold evils complained of in municipal 
 administration, there is no one, in my judgment, calling 
 more loudly for reform than this arbitrary system of 
 special assessments." 
 
 Judge Church also said the right to make a public 
 street or avenue is based upon a public necessity and 
 the public should pay for it. 
 
 Much of Judge Church's criticism was true of New 
 York City during the Tweed regime or its immediate 
 successors. The City of New York had levied $9,071,- 
 406 in special assessments in 1869 when the city's 
 expenditures were $13,045,614 and $9,772,509 in special 
 assessments in 1870 when the city's expenditures were 
 $13,869,643. Public works had been carried on upon 
 a scale of audacious extravagance, and in sections of 
 the city where they were not at the time justified. 
 Streets had been laid out and improved principally 
 to give fat jobs to favorite contractors, and great 
 avenues had been constructed to provide fine drives 
 for the pleasure and convenience of other people 
 rather than the abutting property owners. Something 
 of the same kind had happened during this period in 
 Brooklyn. The City had been induced to undertake 
 extravagant and wholly unnecessary public works at 
 the expense of the parties specially interested. Streets 
 were opened and paved thru the supposed suburban 
 districts, which as yet were nothing more than 
 unbroken meadows. The expectation that these 
 improvements would at once transform unoccupied 
 tracts of land into desirable residence property was 
 doomed to disappointment. Instead the property 
 diminished in value; the interest charges and arrears 
 
Special Assessments 203 
 
 upon the deferred installments kept mounting liigher 
 and liigher, and often frequently exceeded in value 
 the property assessed, so that it made it to the interest 
 of the property owners to release all title of ownersliip 
 rather than to pay their special assessments. 
 
 A special report of the City Controller of Brooklyn 
 in 1880 on '' Arrearages for Assessments for General 
 and Special Improvements" went into this subject in 
 quite some detail. In utter disregard of the law 
 which prohibited the levying of special assessments 
 beyond one-half of the value of the property benefitted, 
 as many as eight separate and distinct levies had been 
 made upon the same lots. In some instances one 
 special assessment would have been practical confisca- 
 tion. The controller cited instances where lots valued 
 at $200, $400 and $500 were subject to special assess- 
 ments of $884, $1072 and $3871, respectively. Con- 
 tractors and some city officials became rich thru this 
 abuse of the special assessment s^^stem while property 
 owners and the city became poor. At the beginning of 
 1880 there was a deficit of $2,645,227 from special 
 assessments in the City of Brooklyn!. In New York 
 City during the same year there was a deficit of 
 $8,457,847. 
 
 When Central Park in New York City was laid out 
 following an authorization of the Legislature in July, 
 1853, over seven thousand city lots were taken for this 
 purpose and the owners of these city lots were awarded 
 compensation to the amount of a little over five million 
 dollars. But the property abutting on this new park 
 was thought to have been benefitted by the establish- 
 ment of Central Park and so it was made subject to a 
 special assessment of $1,657,590. This special assess- 
 ment appears not to have created much hostility, but 
 sixty years later when the dual subway system was 
 about to be constructed in Greater New York and the 
 rapid transit law of New York City had been amended 
 in 1911 to make use of special assessments for the con- 
 
204 Taxation in New York 
 
 struction of subways there was too much opposition on 
 the part of the abutting property owners to attempt to 
 build these subways by the system of special assess- 
 ments. The abutting property owners contended that 
 they would be injured and not benefitted by the con- 
 struction of these subways. Their contention was that 
 the outlying sections would receive the benefit and not 
 the property adjacent to the subways. 
 
 The operation of special assessments generally 
 extend to such local improvements as opening, laying 
 out, grading, paving and repaving, planking and curb- 
 ing streets, constructing sewers, bettering waterways, 
 and dredging rivers.. The application of special assess- 
 ments raises difficult questions. It is obvious that the 
 determination of the proportional benefits enjoyed by 
 contiguous property on the one hand and by the gen- 
 eral public on the other, or the apportionment of the 
 benefits as between the property owners in the district, 
 cannot be determined with precision and can at best be 
 only approximate. In fact they are only guessed at- 
 Thus in the case of a park which is open to the general 
 public, what rule can determine the limits of the dis- 
 trict upon which the cost of the opening the park shall 
 be charged I Thus while in the case of a sewer the ter- 
 ritory drained may be a natural benefitted district, 
 what rule can determine with any degree of accuracy 
 what part of the benefits from a street improvement 
 inures to the proprety fronting the street, what part to 
 the property on intersecting streets, and what part to 
 the general public using the street? It not infrequently 
 happens that the cost of a paved street is wholly out of 
 proportion to the value of the abutting property, and 
 the improvement is demanded solely for the con- 
 venience of the public. 
 
 It is customary for the board of assessors to deter- 
 mine both the area of the assessment district and the 
 extent of the benefits within the area. For their guide 
 in determining the area, the law lays down the rule 
 
Special Assessments 205 
 
 that it should include all lands and premises deemed to 
 be benefitted. Within the assessment district the 
 charge is apportioned according to the individual bene- 
 fit subject to the limitation that the charge does not 
 exceed the benefit. This is the procedure which the 
 letter of the law seems to prescribe. The board of 
 assessors, however, read the statute more liberally. 
 What they in fact do, is this. Where the district as 
 determined includes only such property as abuts upon 
 the improvement in question thej^ divide the cost among 
 those chargeable in the ratio of the frontage of the 
 property assessed. Should the district include lands 
 not within this rule, the various parcels are laid off 
 into strips or zones in accordance with their compara- 
 tive proximity to the work. The board proceeds upon 
 the theory that the degree of benefit varies inversely 
 with the distance from the line of the improvement. 
 The abutting property is then assessed at so much per 
 front foot or per square foot, the next nearest zone at a 
 less rate and the other zones proportionately. 
 
 Formerly the abutting property owners were sub- 
 ject in advance to the special assessments before the 
 improvements were made. Frequently the first assess- 
 ment was not sufficient to complete the improvement 
 and there would be a reassessment. This always 
 created dissension, so that it is now customary for the 
 municipality to make the improvement first and levy 
 the assessment afterwards. Also the abutting prop- 
 erty owners are allowed to pay their special assess- 
 ments in installments, generally ten installments or 
 one each year. 
 
 To show that there is no uniformity in the systerp of 
 special assessments among the different municipalities 
 of the State of New York the following is taken from 
 the 1917 United States census bulletin, '' Specified 
 Sources of Municipal Eevenue " : 
 
 For opening streets, Albany, Binghamton, Buffalo, 
 Mount Vernon, Niagara Falls, Eochester, Schenectady, 
 
206 Taxation in New York 
 
 Syracuse and Utica assess the entire cost against the 
 property supposed to be benefitted; New York City 
 about ninety-three per cent. ; Poughkeepsie about 
 ninety per cent. ; New Rochelle all costs in excess of 
 five thousand dollars; Amsterdam, seventy-five per 
 cent. ; and Troy, fifty per cent. 
 
 Why is it that in ten cities the abutting property 
 owners are supposed to receive all the benefits arising 
 from the opening of new streets, while in five other 
 cities the abutting property owners are supposed to 
 receive varying benefits which in one city is only one- 
 half? 
 
 For paving streets, Albany, Buffalo, Jamestown, 
 Niagara Falls, Rochester, Schenectady and Syracuse 
 assess against abutting property the entire cost ; New 
 York City about ninety-three per cent. ; Mount Vernon, 
 New Rochelle and Utica, sixty-six and two-thirds per 
 cent.; Poughkeepsie, sixty per cent.; Troy, fifty per 
 cent.; and Elmira, twenty per cent. 
 
 By what logic are these varying benefits determined? 
 In some cities snow removal, sidewalk cleaning and 
 oiling streets are done by special assessments, while 
 in other cities these same services are paid for by gen- 
 eral taxation. The whole system of special assess- 
 ments is illogical, unequal and unjust. 
 
 Closely related to the levying of special assessments 
 is one form of the procedure which is designated by 
 the term excess condemnation. For the opening of 
 new streets, widening of old streets or the creation of 
 parks excess condemnation is far preferable to special 
 assessments. 
 
 In 1812 the Legislature granted the City of New York 
 in its street and park opening act the right to take 
 more land than is needed by excess condemnation and 
 then the sale of the surplus land by the municipality. 
 In 1850 the Court of Appeals held that surplus land 
 could not be taken by a rminicipality without the 
 owner's consent. Thus excess condemnation in this 
 State came to an untimely end. 
 
Special Assessments 207 
 
 Sixty-one years later New York held a constitu- 
 tional referendum on excess condemnation and altlio 
 the proposed amendment was defeated in 1911, two 
 years later the people adopted such an amendment per- 
 mitting excess condemnation. In 1915 the Legislature 
 passed a law empowering the City of New .York to 
 exercise this power. 
 
 There are three main reasons for granting to the 
 city power to condemn more land than is needed for 
 the actual improvement with power to sell or lease the 
 surplus. These reasons are : 
 
 (a) Control of land adjacent to improvements. 
 
 (b) Re-plotting of remnants and irregular building 
 lots. 
 
 (c) Saving in expense to the municipality thru sale 
 of abutting property at increased values due to the 
 improvement. 
 
 CONTROL OF LAND ADJACENT TO IMPROVEMENTS 
 
 American cities have been hampered in effective 
 city plan development and in creating dignified and 
 artistic public places by the free and unrestricted use 
 of abutting property by private owners. Many of our 
 finest squares and parlrways are lined with stables, 
 billboards, shops, factories, gas tanks, saloons. There 
 is no orderly architectural arrangement. Residences, 
 shop, stores, factories crowd one another close. This 
 condition has decreased property values and the attrac- 
 tiveness of public places. It is to the advantage of the 
 private owners as well as to that of the city that neigh- 
 borhoods should not be allowed to run down, that our 
 public places be surrounded by buildings in keeping 
 with the improvement. 
 
 The city should have the power to sell or lease the 
 excess land subject to suitable restrictions. The con- 
 venience and enjoyment of the community should take 
 precedence of the whim of the private owner. We 
 have but to look at our bridge api^roaches, our small 
 
208 Taxation in New York 
 
 parks, our public squares and places to realize that 
 successful city planning requires the control of adja- 
 cent property. 
 
 Where the city is compelled to take a considerable 
 portion of a lot or building it has to pay practically 
 the cost of the entire parcel and would do better to 
 acquire the fee of the whole plot and secure the benefit 
 from the increased value of the remainder. Excess 
 condemnation relieves the land owners from the 
 burdens of special assessments, but accelerates the 
 city's growth and prosperity by insuring the quick 
 and sure development of its thorofares. The advantage 
 of control over the character and use of the buildings 
 fronting on an improvement also justifies excess con- 
 demnation. By placing suitable restrictions when 
 reselling the surplus land, the city will secure harmony 
 in the architectural treatment of streets. 
 
 RE'PLOTTINQ OF REMNANTS AND IRREGULAR 
 BUILDING LOTS 
 
 New York City furnishes several horrible examples 
 in cutting new streets thru sections already built up 
 without excess condemnation. Delancey Street in 
 Manhattan and Flatbush Avenue Extension in Brook- 
 lyn have both been held back in development and in the 
 increased value which the improvement promised, by 
 the small, irregular, odd-shaped building plots which 
 were left. These are in many cases unsuited to proper 
 building unless united with adjoining properties held 
 by other owners. The public loses in tax value and 
 sightliness and the private owner is injured because 
 his lot is not available for suitable development. 
 
 A glance at the land maps of any city showing the 
 lot lines after new streets have been cut thru, is proof 
 conclusive of loss and waste under the old system. 
 Excess condemnation would leave the city free to rear- 
 range and subdivide the land fronting the improvement 
 into plots of the size and shape best suited to the pro- 
 posed development. 
 
Special Assessments 209 
 
 SAVING OF EXPENSE TO THE CITY THRU SALE OF 
 ABUTTING PROPERTY AT INCREASED VALUE 
 DUE TO THE IMPROVEMENTS 
 
 While the necessity for excess condemnation rests 
 mainly upon the control of adjacent land and the 
 replotting of remnants, a substantial saving of dollars 
 and cents will result in some instances. It must not 
 be assumed that excess condemnation will in all cases 
 bring revenue to the city or reduce the cost of public 
 improvements. Sometimes excess condemnation is 
 justified for social purposes alone, but often financial 
 gain to the city will also result. It is equitable that the 
 increased value if there is any which arises solely from 
 the enterprise of the community in constructing a 
 boulevard or park or public square should go to the 
 city and not to those who are fortunate enough to own 
 property in the path of the improvement. If the cost 
 of public improvements is reduced the city will be bet- 
 ter able to continue its efforts for a rational and con- 
 venient city plan without too great a financial burden. 
 
 To illustrate how difficult it is to widen a street under 
 the system of special assessments a single illustration 
 of Rivington Street in Brooklyn will suffice. In 1905 
 this street was widened from a fifty foot street to a 
 eighty foot street. The cost of this was $1,989,890 and 
 one-quarter of the cost of the Avidening of the street was 
 at first assessed upon the local property owners. But 
 the local property owners protested so strongly that 
 the Legislature cancelled the assessment and the cost of 
 the entire proceeding was paid by the city. Many city 
 streets are too narrow and should be widened. But it 
 is almost impossible to widen them by the system of 
 special assessments. By using excess condemnation a 
 better system of widening streets is adopted. 
 
 The constitutional amendment adopted by the State 
 of New York in 1913 limits excess condemnation to 
 streets and parks. Ohio adopted a constitutional 
 amendment in 1912 permitting excess condemnation 
 
210 Taxation in New York 
 
 and in this state excess condemnation is not restricted 
 to any enumerated list of public improvements. 
 
 Excess condemnation is of American origin. Eng- 
 land did not adopt it until 1845, France until 1850, 
 Italy until 1865, and Belgium until 1867. In these 
 countries it has been used largely for slum demolition. 
 
 In 1866 the City of Glasgow in Scotland acquired 
 eighty-eight acres of unsanitary area in the very heart 
 of the city which containel fifty-one thousand persons. 
 Thirty new streets were laid out and twenty-six old 
 ones were widened. A large park was also plotted. 
 The improvement did not demand the destruction of 
 all buildings. The better ones were not torn down but 
 thinned. Sites were sold to private builders at very 
 low prices, and finally in 1899 the city began to build 
 dwellings on its own responsibility. The purchase and 
 improvement of lands and buildings have cost the city 
 ten million dollars, and the new buildings constructed 
 by the city have involved a further expenditure of two 
 million dollars. 
 
 In 1875 the City of Birmingham in England under- 
 took a scheme embracing an area of ninety-three acres 
 and a population of 16,596 persons. Twelve hundred 
 houses were torn down. The remaining houses were 
 repaired and put into a sanitary condition by pro- 
 viding systems of sewage and water supply. A great 
 thorofare, Corporation Street, was laid out thru the 
 unsanitary area- The total gross cost of the improve- 
 ment was $6,720,000 and this was reduced by a recoup- 
 ment of $3,970,000 for buildin glots and dwellings sold 
 by the city. 
 
 Between 1876 and 1912 London cleared ninety-seven 
 acres in thirty-five schemes displacing 45,437 persons. 
 Of these 44,891 were re-housed. The gross cost of the 
 operations, $16,769,580, was reduced by a recoupment 
 of $4,616,375. 
 
 Whether demolitions have really relieved overcrowd- 
 ing in congested districts is subject to the gravest 
 
Special Assessments 211 
 
 doubt. Usually the persons dispossessed from the 
 slum area moved into neighboring buildings on the 
 outskirts of the cleared area and filled these buildings 
 to overcrowding. When the improvement had been 
 completed, and new structures erected on the demol- 
 ished area, the dishoused tenants have frequently not 
 returned to their former homes, the increased rents of 
 the new premises acting as a deterrent. Thus in 
 attempting to raze plague spots the local authorities 
 have often created new slums contiguous to the old 
 slums. 
 
CHAPTER XIV 
 THE FALLACY OF THE SINGLE TAX 
 
 Contrary to general belief the doctrine of raising all 
 revenue for public purposes by a tax on land did not 
 originate with Henry George, the author of * ' Progress 
 and Poverty." This doctrine was first fully conceived 
 and formulated in the eighteenth century by a French 
 school called the Physiocrats. Henry George himself 
 recognized this and dedicated his book, *' Protection 
 and Free Trade," '* To the memory of those illustrious 
 Frenchmen of a century ago, Quesnay, Turgot, Mira- 
 beau, Condorcet, Dupont, and their fellows, who in the 
 night of despotism foresaw the glories of the coming 
 day." 
 
 Indirect taxation had reached its height in Europe 
 during the seventeenth and eighteenth centuries. 
 There were taxes on window lights. Taxes on chim- 
 neys. Taxes on salt. Everything imaginable was 
 taxed. As a reaction against this system of indirect 
 taxation there sprang up in France a school of thinkers 
 who taught that land is the only source of new wealth 
 and therefore the cultivation of the soil is the only 
 really productive industry. Agriculture yields, in 
 addition to the returns on labor and capital, a net 
 product which is called rent. Since no new wealth can 
 come from any other source all taxes must of necessity 
 come out of rent. If placed on other things, they would 
 be simply shifted to the owner of the land. All revenues 
 should therefore be raised by a single tax on the rent 
 of land. 
 
 This school of thinkers did not contend that private 
 ownership of land is immoral as is maintained by 
 Henry George, but they believed that whatever entered 
 as an element of cost in the manufacturing process, 
 whether it be taxes, wages, or material, must come out 
 
 [2121 
 
The Fallacy of the Single Tax 213 
 
 of the net product of agriculture. They advocated 
 the proposal that the government should take all it 
 needed for its support at the beginning and thus relieve 
 manufactures and commerce from all subsequent 
 demands. They assumed that the source of payment 
 was the same in either case, and to do away with all 
 the excise duties and business taxes, the substitution 
 of a single tax on land appealed to them on account of 
 its simplicity and certainty. 
 
 Voltaire turned his caustic pen upon this system of 
 a single tax on land and wrote his celebrated essay 
 called '* The Man of Forty Crowns." A French peas- 
 ant, who toils laboriously amid conditions of unspeak- 
 able distress, succeeds in getting from the soil a prod- 
 uct equivalent to forty croAvns. When the tax gatherer 
 comes along, he finds that the peasant can manage to 
 keep body and soul together on twenty crowns and so 
 takes away for the expenses of the government the 
 other twenty crowns. An acquaintance of the peasant 
 now comes along in his six-horse chariot. Originally 
 he had been poor, but recently he had been left a for- 
 tune of four hundred thousand crowns a year in money 
 and securities. He employs six lackeys and each 
 receive many times the peasant's income. His butler 
 gets two thousand crowns salary and steals twenty 
 thousand. As he stops to talk with the peasant he is 
 asked,'* You pay of course half your income, or two 
 hundred thousand crowns to the government." '* You 
 are joking, my friend," answered he, " I am no landed 
 proprietor like you. The tax gatherer would be an 
 imbecile to assess me; for everything T have comes 
 ultimately from the land,, and somebody has paid the 
 tax already. To make me pay would be intolerable 
 double taxation. Ta-ta, my friend; you just pay your 
 single tax, enjoy in peace your clear income of twenty 
 crowns; serve your country well, and come once in a 
 while to take dinner with my lackey. Yes, yes, the 
 single tax, it is a glorious thing." 
 
214 Taxation in New York 
 
 To Henry George belongs the credit of fully work- 
 ing out the single tax philosophy in its economic and 
 social aspects and of stating the theory in an effective 
 form. His book, "Progress and Poverty," was finished 
 in 1879. The single tax of Henry George has been 
 advocated with fervor and devotion not merely as a 
 business proposition, but as a faith, a religion, a pious 
 conviction. A cult can always find disciples without 
 number. According to Henry George and the single 
 taxers the single tax is not merely a tax, but a plan 
 of reorganization of society with a primary view of 
 securing a more equal distribution of wealth and only 
 incidentally of raising revenues for the government. 
 Anti-poverty societies were organized, s^o confident 
 were his followers that the single tax would abolish 
 poverty. 
 
 The single tax on land precludes all other means of 
 raising revenue for the support of the government and 
 so custom tariffs must be abolished. Henry George 
 was a free trader and his followers to be consistent 
 must also be free traders. Income taxes must be abol- 
 ished and all the other indirect forms of raising 
 revenue discarded, 
 
 Henry George claims that man is a land animal and 
 therefore cannot live without the use of the land, and 
 that the land should belong to all of the people because 
 of man being a land animal ; that man can no more live 
 without the use of the land than he can live without air 
 and water. Therefore land should be free as air and 
 water. All will agree that man is a land animal, and 
 that he can not subsist without the products of the soil 
 any more than he could live without free access of air 
 and the use of water. But that is no argument against 
 the private ownership of land. Mr. George says that 
 the man who owns the land under our present system 
 virtually ovms those who must occupy land. He fails 
 to recognize that man is a social as well as a land 
 animal, and that social conditions are as necessary for 
 
The Fallacy of the Single Tax 215 
 
 man in a state of society a& the use of the land or the 
 air and the water. 
 
 For the sake of illustration we will suppose that land 
 is the hub of the wheel of society. Man must draw his 
 support from the land ; that in his undeveloped state — 
 in his tribal state, land was practically the only 
 essential to his well-being; but when the division of 
 labor was first adopted, then social progress com- 
 menced. It was when man evoluted to that state of 
 intelligence where he saw that a division of labor was 
 better for his well-being, that the fisherman said to the 
 rude boat-builder, " You build the boats and I will 
 fish; "and these two said to a third, '' You till the soil 
 while one builds the boat and another fishes. ' ' 
 
 This division of labor continued to grow as man 
 progressed intellectually and socially. The growth has 
 been long and continuous, and each and every new 
 invention has added to the wants of man, and has there- 
 fore become a necessity in the state of society that he 
 now exists in. The greater the wants of society 
 become the greater becomes the division of labor. 
 
 While land is the hub of the wheel of society, the 
 various articles of wearing apparel, the many thousand 
 articles of value, that are desired by the individuals of 
 society, form the other portions of the wheel. Trans- 
 portation facilities, telephone and telegraph systems, 
 machinery of all description that is to-day used, great 
 manufacturing plants, banks, in fact the whole super- 
 structure of society are the spokes, the felloes and tire 
 of the wheel. Man in a state of society is just as 
 dependent on these numerous other factors which have 
 been designated the spokes, the felloes and tire of the 
 wheel, as he is on land, the hub of the wheel. In a state 
 of savagery the hub, or the land, would sup]^ly the 
 wants of man, but not in a state of development. So 
 there are many thousand lines of pursuits of trade and 
 combinations of various interests that may be pro- 
 moted by individuals, tliat can be of more liarm to 
 society than any possible monopoly of land. 
 
216 Taxation in New Yoek 
 
 Altho Henry George and his followers assert that 
 there is a land monopoly in this country, yet as a 
 matter of fact there is no monopoly of land. The 
 majority of people who own land are perfectly willing 
 to let it go for a fair consideration. At the hearings 
 held before Mayor John Purroy Mitchel's committee 
 of twenty-seven appointed to consider new sources of 
 revenue for New York City the single taxers made 
 much of a " Not for Sale " sign on Astor estate 
 property in the Bronx. But it afterwards developed at 
 these hearings that this sign had been put there by an 
 auctioneer who had a large auction sale of three 
 hundred lots adjoining the Astor land. Yet notwith- 
 standing the sign a number of lots were sold from the 
 Astor estate and buildings erected thereon. Louis V. 
 Bright, President of the Lawyers' Title and Trust 
 Company, also testified at these hearings that to his 
 personal knowledge the Astor estate had sold a great 
 deal of land in New York City within the last fifteen 
 years. 
 
 That the adoption of the single tax on land values 
 would in any way prevent poverty is utterly fallacious. 
 If you divide the land in the United States and give 
 each individual their portion, it would not be twenty- 
 five years until conditions would be about the same 
 as they are to-day. Those who wanted to experiment 
 and were not satisfied with the tilling of the soil would 
 sell their land. One would Avant to go into a grocery 
 store or perhaps he would want to go into the automo- 
 bile business. Another would want to sell his land 
 and go into the city Avhere he could wear fine clothes 
 and make a good appearance, at least while his money 
 would last. Others would want to convert their land 
 into money and travel, they would want to see the 
 sights of the cities and perhaps of foreign countries; 
 and so on, until each and every one satisfied to the 
 extent of their ability so to do, their curiosity, their 
 peculiar desires, their peculiar ideas, etc. Most of 
 them would prove a failure in the enterprise in which 
 
The Fallacy of the Single Tax 217 
 
 they embarked. Ninety per cent of the business enter- 
 prises undertaken prove failures. So in the end these 
 people would not be the possessors of the soil. They 
 would have spent their money. Ninety per cent, of 
 their undertakings have failed, therefore they Avould 
 be in what is called the working classes. This would 
 be the process of working back to the present state of 
 affairs. 
 
 Is it not folly to argue as the single taxer does — 
 that improvidence, bad judgment, ill health, intemper- 
 ance, stupidity, ignorance, laziness, dishonesty, bad 
 management, physical and intellectual delinquency, 
 lack of foresight and other imperfections of mind and 
 body, can be overcome and righted by an act of legis- 
 lation? All these physical and mental ailments just 
 recited play their part in the unequal distribution of 
 wealth; they play their part and are responsible for 
 the many sad conditions that exist in society. The 
 single taxers would have you believe that all of these 
 ills are traceable to and have their being in the private 
 ownership of land. 
 
 We must expect to have a like variation in the pos- 
 session of property as long as we have such various 
 stages of intellectuality. Whatever legislation that is 
 enacted seeking to restrict the advancement of one 
 because others are unfortunate and cannot keep up 
 mth those who are in the advance, would have a 
 tendency to hold all down alike, and therefore would 
 destroy all ambition to advance. The lower down in 
 the scale of humanity you go, the nearer you come to an 
 equality. Everyone would like to see the ills of society 
 abolished were it possible. Yet even here we should 
 not allow our emotion and our sympathy to distort and 
 warp our judgment. The law of the survival of the 
 fittest holds good in all mineral, vegetable and animal 
 creation. 
 
 Henry George endeavored to figure out a system 
 that would make all men equal. But in so doing he 
 
218 Taxation in New York 
 
 failed to recognize that the great inequalities, both 
 social and financial, are very largely due to the dif- 
 ferences between individuals, and not that the pos- 
 sessor of vast wealth is wiser or has more brains than 
 those who have no possession whatever, for such is not 
 the case. Philosophers are seldom rich men, neither 
 are the professors of our universities. The great 
 thinkers of our age are not rich men. These men have 
 used their talents for the acquisition of knowledge. Is 
 it not clear that no process of taxation, and especially 
 that of single tax, which would confiscate all private 
 property in land, thereby destroying the very founda- 
 tion upon which civilization has advanced, can never 
 bring about the extirpation of pauperism and the 
 equalization of the distribution of wealth? 
 
 Single taxers contend that tenancy will be reduced 
 by the application of the single tax to land values, but 
 it is obvious that this system will abolish private owner- 
 ship of land and make of all the people mere tenants 
 of the government. Let us quote from ' ' The A. B. C. 
 of Single Tax," written by Charles B. Fillebrown of 
 Boston. * ' What is the ethical basis of the single tax? " 
 ' ' The common right of all citizens to profit by values 
 of land which are a creation of the community." 
 '' Does this right mean the nationalization of land?" 
 '' No, it means rather the socialization of economic 
 rent." *' What is meant by the term socialization of 
 economic rent?" ''Gross ground rent — the annual 
 site value of land, i. e., what land is worth annually for 
 use per annum if offered in the open market." 
 
 Let us translate the above into a concrete example. 
 If a tract of land which brings in a net return of five 
 hundred dollars a year, which according to Mr. Fille- 
 brown is the economic rent or gross ground rent or 
 annual site value of the tract of land, and society or 
 the government takes this five hundred dollars, how 
 much interest has the individual property owner left 
 in that tract of land? True, he still has the deed or 
 
The Fallacy of the Single Tax 219 
 
 title, but what good is it, measured in dollars? The 
 individual property owner's interest in that tract of 
 land is going to decrase just in proportion as the 
 government's interests appear in the form of taxes, 
 which is the plan proposed by the single taxers to take 
 the eiconomic rent. Will this not destroy private 
 ownership of land and transform a nation of land 
 owners to a nation of land tenants 1 
 
 It is hard to believe that a nation of land tenants 
 would be for the best interests of our country. There 
 is an old saying that '' Rent a man a garden and he 
 will turn it into a desert, but give a man a desert and he 
 will make of it a garden." In every quarter of the 
 globe where land tenantry has held sway but little or 
 no progress has been made. Private oM^nership of land 
 marks the first step in social, moral and mental 
 progress. It is the first mile post on the great highway 
 of civilization. The pioneers who came into this State 
 in the early days when it was one great wilderness, 
 who cleared the land of the timber and underbrush, who 
 built roads and bridges, who suffered all sorts of hard- 
 ships and privations from the Indians and elements; 
 did they do this to become a race of tenants or a race 
 of land owners ? There must be an incentive, a reward, 
 to cause people to undergo these things and that incen- 
 tive was that as a result of their labors they would o\\ti 
 something, own some land. There is nothing con- 
 tributing to the uplift of humanity, the encouragement 
 of thrift, and the moulding of a vigorous personality 
 comparable with the ownership of a home. 
 
 There has been a wonderful development of our 
 country and we are justly proud of it, but without this 
 private ownership of land there would have been no 
 such development. The tenant, a mere renter, having 
 no interest in the land, other than what his wages 
 would amount to, would never have done what these 
 pioneer land owners did to make our State great. 
 Tenantry discourages individuality, and any law, rule 
 or custom, adopted by a community, state or nation. 
 
220 Taxation in New York 
 
 that will materially affect individual unf oldment, must 
 in time bear evidence of deterioration in that com- 
 munity, state or nation. New York has had one 
 experience with a tenantry that resulted in the anti- 
 rent troubles of the forties of the nineteenth century, 
 and it would be very foolish indeed, to repeat that 
 experience upon a scale of greater magnitude. 
 
 Henry George and his school of followers assert that 
 a single tax on land or land values as they designate 
 it cannot be shifted, but must be paid by the land 
 owner. In this they are at variance with another school 
 of land taxers led by Isaac Sherman, who contend 
 that a single tax on land would be shifted from the land 
 owner to the consumer and so be diffused thruout the 
 community. The concensus of opinion favors the 
 Henry George theory that a single tax on land or land 
 values would stay put and could not be shifted. 
 
 The single taxers state that a single tax on land 
 values would increase production. What the land 
 needs to increase production is more fertilizers and 
 not more taxes. The farmers will agree with this last 
 statement. 
 
 The single taxers say that land values are com- 
 munity made values and what the community has made 
 the community is entitled to and these should not go 
 to the private land owner. But value is a social and 
 not an individual phenomenon. Admitting that bare 
 land receives its value thru its social environment, we 
 must also admit that the same social environment 
 increases the demand for other commodities and so 
 brings about an increase in value. Take a newspaper 
 for instance. When published in a desert it is worth 
 nothing; when published in a town it is worth some- 
 thing; but when published in a city it receives it maxi- 
 mum value. Is not a milk route more valuable in a city 
 than in a village 1 The greater the demand for land 
 the greater its value, but the same is true of everything 
 else. How much value has a house in an out of the 
 
The Fallacy of the Single Tax 221 
 
 way place where there is no demand for it I But the 
 same house placed in a city where there is a demand 
 for houses would have considerable value. 
 
 But land values do not always or necessarily 
 increase. The single taxers pick out isolated instances 
 and tell us that twenty, thirty or forty years ago Mr. 
 So and So bought a piece of land for a song, a town 
 or city grew up around it, and now he is immensely 
 wealthy from an increased value of his land which the 
 community has created. But where there is one case 
 of this kind there are hundreds if not thousands of 
 cases where people have purchased land with the 
 expectation of a rise in value, but it has not risen in 
 value and after paying taxes and special assessments 
 for a period of years they have lost and not made on 
 their investments. 
 
 When the Rapid Transit Commission of New York 
 City was taking testimony in March 1895, one of -the 
 witnesses spoke of several long avenues lined with the 
 graves of property owners. What did he mean? Simply 
 that ten, twenty or thirty years before people had 
 invested their money in land along these streets in 
 hopes of a rise in value, just as others invest their 
 money in bonds or stocks or any kind of securities. The 
 land value did not rise; they remained stationary or 
 even decreased in value. Some of these investors were 
 ruined by the accumulated taxes and special assess- 
 ments upon their non-productive property. 
 
 Cyrus C. Miller, former President of the Bronx, in 
 testifying before Mayor John Purroy MitchoPs com- 
 mittee of twenty-seven appointed in 1914 to investigate 
 new sources of city revenue, gave an illustration of a 
 lot m Tremont Avenue in the Bronx, which the owner 
 bought in 1872 for $5,000. In 1912 it was sold for 
 $30,000. On the face of it one would say the owner had 
 made $25,000. But at the time of the sale the unpaid 
 taxes and special assessments amounted to $14,000. 
 What other sums he paid for taxes, special assessments 
 
222 Taxation in New York 
 
 and repairs is unknown, but supposing them to have 
 been only $14,000 and remembering that his original 
 investment of $5,000 with interest for forty years 
 amounted to $35,000 it is readily seen that this land 
 owner lost at least $19,000, for his total investment 
 amounted to $49,000 and the lot sold for $30,000. 
 
 History tells us that Peter Minuit, the first director 
 general of the Dutch West India Companj^, paid to 
 the Indians in 1626, the sum of sixty guilders or about 
 twenty-four dollars for the land on Manliattan Island. 
 In 1913 the assessed value of this land was $3,155,389,- 
 410, but when we figure that this same twenty-four dol- 
 lars if put out at the prevailing rates of interest since 
 1626, would amount to $12,884,901,824 in round num- 
 bers, we must conclude that the unearned increment 
 in land is not one-third of the interest on capital. 
 
 Land made the Astor millions shout the single tax- 
 ers. But James Parton in his " Life of John Jacob 
 Astor," published in 1865, says that John Jacob Astor 
 was a very wealthy man before he invested any money 
 whatever in real estate. He made his fortune in the 
 fur business according to Mr. Parton, who describes 
 its accumulation as follows : 
 
 ''At that day the fur trade was exceedingly profit- 
 able, as well as of vast extent. It is estimated that 
 about the year 1800 the number of peltries annually 
 furnished to commerce was about six millions, varying 
 in value from fifteen cents to five hundred dollars. 
 When every respectable man in Europe and America 
 wore a beaver skin upon his head, or a part of one, 
 and when a good beaver skin could be bought in west- 
 ern New York for a dollar's worth of trash, and could 
 be sold in London for twenty-five English shillings, 
 and when these twenty-five English shillings could be 
 invested in English cloth and cutlery, and sold in New 
 York for forty shillings, it may be imagined that fur 
 trading was a very good business. John Jacob Astor 
 had his share of the cream of it, and that was the prin- 
 cipal source of his fortune." 
 
The Fallacy of the Single Tax 223 
 
 Mr. Parton also says that John Jacob Astor had 
 great faith in the future of the United States govern- 
 ment and that during the War of 1812 when other 
 wealthy people were either hesitating or refusing, he 
 invested his money very largely in government bonds, 
 thus aiding the government in raising money for the 
 prosecution of the war. The single taxers never refer 
 to this act of patriotism on the part of John Jacob 
 Astor, but try to lead people to believe that his buying 
 and owning real estate was a very dishonorable thing. 
 Yet when John Jacob Astor died in 1848 he left $400,- 
 
 000 for the founding of the Astor Library in New York 
 City. 
 
 The single taxers say that land is the gift of God, 
 but that everything else is the production of man's 
 labor. Let us analyz'e this statement. Take, for exam- 
 ple, the workman fashioning a chair. The wood has not 
 been produced by him; it is the gift of nature. The 
 tools that he uses are the result of the contributions of 
 others, the house in which he works, the clothes he 
 wears, the food he eats, and all of these are necessary 
 in civilized society to the making of a chair, are the 
 results of the contributions of the community. The 
 chairmaker 's safety from robbery and pillage — nay 
 his very existence — is dependent on the ceaseless 
 co-operation of the society about him. How can it be 
 said, in the face of all this, that his owm individual 
 labor wholly creates anything? If it be maintained 
 that he pays for his tools, his clothing and his protec- 
 tion, it may be answered that the land owner also pays 
 for his land. 
 
 Is it not clear that nothing is wholly the result of 
 unaided individual labor. No one has a right to say: 
 This belongs absolutely and completely to me, because 
 
 1 alone have produced it. The socialists <are more 
 logical than the single taxers, for they deny the right 
 of the individual to own property of any kind, whether 
 it be land or any other kind of property. The differ- 
 
224 Taxation in New Yokk 
 
 ence between property in land and property in other 
 things is simply one of degree and not of kind. 
 
 The single taxers contend that the adoption of this 
 system would prevent speculation in land. But it may 
 be asked, is speculation in land any worse than specu- 
 lation in stocks, grain, produce, or the numerous other 
 things speculated in by man? No economist would 
 to-day venture to deny that speculation has its legiti- 
 mate uses, and that the stock and produce exchanges of 
 the present day play an indispensable part in the 
 economy of our complex industrial society. Land 
 speculation is but a small part of man's activities in 
 the field of speculation. Man's life and all his activi- 
 ties from the cradle to the grave are speculative. The 
 groceryman is a speculator. He buys groceries and 
 then tries to sell them to the consumer at an advance 
 over what he paid for them. He has not produced 
 anything, yet the groceryman is a necessary factor in 
 our civilization. Anyone who takes great chances is a 
 speculator. Columbus was a speculator, so too was 
 Washington, Grant, Lee, and in fact all our great men. 
 Then why condemn the land speculator. The land 
 speculator takes chances that no other man takes. 
 Many of them sweat blood figuratively speaking by 
 reason of the chances that they have taken. Some- 
 times they put in drains and sewers and fix up streets 
 and then build houses for the purpose of renting them 
 or selling them. They ' ' hock ' ' everything they have. 
 They seldom own a cent. Afterwards they often find 
 that the loan is called in and they are wiped out. 
 
 Leonidas and his brave band of three hundred 
 defended the Pass of Thermopylae against the mad 
 rush of the Persian army. They took great chances 
 and they lost, and their speculative exploits are immor- 
 talized in history. But the land speculators who take 
 great chances and also lose out are soon forgotten. 
 Thirty years ago Pratt and Logan, two land speculat- 
 ors of Albany if you choose to call them that, developed 
 a section of the city known as the Pine Hills. They 
 
The Fallacy of the Single Tax 225 
 
 bought land, graded and paved streets, and built 
 houses. They took great chances and they lost all 
 they had. But to-day Al'bany owes its finest residen- 
 tional section to the speculation of Pratt and Logan. 
 
 The single taxers assert that the adoption of this 
 system will force idle land held for speculative pur- 
 poses in our large cities into the market. They would 
 have us believe that there are a vast number of vacant 
 lots and unoccupied land in every city that ought to be 
 developed, but from which the owners are getting rich 
 paying taxes and special assessments and receiving no 
 income from whatever. It may safely be affirmed that 
 south of Forty-second Street in the City of New York 
 — the home of the major part of the tenement house 
 population — not one-fiftieth part of one per cent, of 
 the building lots lie idle, and of these, some lots are 
 occupied as coal yards, and some adjoining factories 
 or large establishments are used for storage purposes. 
 According to the 1917 annual report of the department 
 of taxes and assessments of New York City there were 
 93,383 separate parcels of real estate assessed in the 
 Boro of Manhattan and of this number only seven per 
 cent, were vacant. 
 
 Land owners cannot afford to let their land lie idle 
 in our cities. Statistics show that unless a vacant lot 
 doubles in value in five years ' time the owner is a loser 
 thru the payment of taxes and special assessments and 
 the interest on his money invested in the lot. The lot 
 is lying idle simply because it is not ripe for develop- 
 ment. 
 
 As an illustration we will suppose that at an inter- 
 section of two streets in one of our cities A, B, and C 
 own corner lots. A erects a building on liis lot, but 
 B, C, and D do not. Now the single taxers tell us that 
 B, C, and D's lots increase in value because A has 
 developed his lot. They say this system discourages 
 the man of thrift and enterprise, and offers encourage- 
 ment to the land hog and dog-in-the-manger individuals 
 
 8 
 
226 Taxation in New Yoek 
 
 who will not act nor allow others to act. Carrying the 
 illustration further we find that A has had difficulty in 
 securing tenants for his building at various times and 
 this was not due from asking too high a rental, for he 
 has based his rental at six per cent, on the building. It 
 can readily be seen therefore that if B, C, and D had 
 erected buildings upon their lots there could not all 
 of these buildings been rented. As a matter of fact 
 buildings are always a little ahead of the demand. 
 The fact that B, C, and D have not erected buildings 
 upon their lots have helped A to keep his building 
 rented. More than that B, C, and D have helped to pay 
 the cost of the street grades, sidewalks, watermains, 
 sewers and many other things that it is necessary for 
 A to have in order to keep his building rented. In 
 addition they are paying their general property taxes, 
 which pays for the fire and police protection which A's 
 building enjoys. B, C, and D may live in varions sec- 
 tions of the country but they are sending their hard 
 earnings to this city to pay these special assessments 
 and general taxes, which adds to the city's blood of 
 commerce, making for greater commercial activity, 
 which in turn adds to the rental value of A's building. 
 A city cannot grow faster than its trade and commer- 
 cial relations w^ill justify. The single taxers would 
 have us believe that we have but to build houses in a 
 city and they w^ill be occupied at once. As the popula- 
 tion of a city increases more buildings will be required. 
 But you cannot increase the popula,tion of a city by 
 simply building houses. 
 
 The single taxers contend that the adoption of this 
 system will be of great benefit to the tenement house 
 population of the large cities. It is supposed that if 
 the tax on improvements, that is on houses, is abolished, 
 the vacant lots mil be built over as if by magic, rents 
 will fall, the wages of the workmen will rise, and a 
 period of general prosperity will be ushered in. 
 
 In the first place where is all this additional capital 
 coming from which is to be invested in houses? There 
 
The Fallacy of the Single Tax 227 
 
 is no fund floating about in the air wliieh can be 
 brought to earth simply by the imposition of the single 
 tax. The amounts to be laid out in houses must be 
 taken from the capital now invested in some other form 
 of productive enterprise. The amount of loanable capi- 
 tal in the money market at any one time is definitely 
 fixed. Even deposits in banks are already invested, 
 for the most part, in mortgages or in corporate securi- 
 ties; that is they are already utilized for productive 
 purposes. What is put into new houses will, there- 
 fore, simply be so much taken away from other pro- 
 ductive employments. 
 
 How are the wages of the workmen to be increased 
 by the single tax? "Wages can be increased only thru 
 an increase in capital or thru an increase of the effi- 
 ciency of the laborer. Taxation in itself cannot accom- 
 plish either of these results. The single tax can have 
 no influence on the wages of labor. The whole fair 
 dream of economic felicity thus resolves itself into 
 mere mist, into mere nothingness. 
 
 The single taxers contend that the adoption of this 
 system will prevent the great accretions of wealth by a 
 few individuals. Who are the rich men of the world 
 to-day? How has by far the greater part of our indi- 
 vidual fortunes been acquired? The usual cause is 
 some fortuitous conjecture of events, some chance 
 happening due to no one's labor, but to a tuni in the 
 wheel of fortune — call it speculation, call it luck, call 
 it by any name we will. How have most of the for- 
 tunes in Wall Street been made? Who is responsible 
 for the increased value of investments? AVho can say 
 that the successful manager of the ring, the comer, the 
 pool and the trust has made his money thru his own 
 industry? If it be claimed tliat the fortunate investor 
 deserves his fortune because of his sagacity and fore- 
 sight, why deny these attributes to the land owner? 
 Most of the large fovtuiies are due to the iiicnlculabh^ 
 turns in the wh»^el of fortune, and the so-called 
 
228 Taxation in New York 
 
 unearned increment of land values forms only a small 
 share of these total gains. 
 
 The single tax on land values would utterly ruin the 
 farmers. The single taxers assure the farmers that 
 they would be benefited by the adoption of this system 
 and a speech made by Thomas L. Johnson in 1905 when 
 he was a candidate for governor of Ohio, is a sample of 
 what the single taxers tell the farmers. A venerable 
 farmer with long white whiskers arose and said: " I 
 have a suspicion from what I have read in the papers, 
 that you desire to place all taxes on land. Is this 
 correct?" 
 
 Altho the vest majority of farmers do not wear 
 whiskers, yet for illustration the single taxers must 
 always have a venerable farmer with long white whisk- 
 ers. The substance of Thomas L. Johnson's answer 
 was this : That under the present system the farmers 
 of the country are paying fifty per cent, of the taxes, 
 but have but five per cent, of the values. The other 
 ninety-five per cent, of the values are possessed by the 
 valuable coal lands, the iron, silver, gold, copper, and 
 other valuable mines, the water privileges, the rail- 
 roads, and their rights of w^ay and terminals, including 
 street railroads, telephones, and telegraphs; all the 
 gas and electric lighting rights of way; and all the 
 city lots. When these are compelled to pay their pro- 
 portion the farmers mil pay less than they do now. 
 
 Let us analyze the above statement. Take the mines 
 first. The mine once under exploitation can show an 
 income only by the extinguishment of its capital. An 
 iron mine at Burden in Columbia County, New York, 
 has not been operated since 1893. It once produced good 
 ore, but it has been worked out. All mines must sooner 
 or later become worked out. Governor Emmet D. 
 Boyle 'of Nevada, speaking at the ninth annual con- 
 ference of the National Tax Association held at San 
 Francisco in 1915, said that mine taxation was a very 
 vexatious question. No part of the assessors' duty 
 was as difficult as the assessing of mines. He thought 
 
The Fallacy of the Single Tax 229 
 
 the mines of Nevada were paying more than their 
 share of the burden of taxation. 
 
 Scientists are agreed that our coal lands are rapidly 
 becoming exhausted. The water privileges of New 
 York State are largely owned by the State itself. In 
 regard to steam railroads the only statistics available 
 is the annual report of the State engineer and sur- 
 veyor for 1882 when the railroads were under the 
 supervision of that officer. It is unfortunate that no 
 State department is at present collecting these statist 
 tics. For the year ending September 30, 1882, the New 
 York Central and Hudson River Railroad Company, 
 the largest railroad in the State, reported their land 
 cost to be $14,974,644, while they reported the total cost 
 of their road and equipment to be $112,756,935. Thus 
 the cost of land was but one-eighth of the total cost of 
 the road and equipment. Under the system of a single 
 tax on land values their passenger and freight stations 
 would be exempt from taxation. Their rolling stock, 
 including locomotives, passenger and freight cars 
 would be exempt from taxation. Their engine and 
 car houses and machine shops would be exempt from 
 taxation. Their superstructures, including rails and 
 ties, would be exempt from taxation. Even the bridges, 
 grading and masonry would be exempt from taxation. 
 Only the bare land would be taxable. Seven-eighths 
 of this railroad's property would be exempt and only 
 one-eighth would be taxable. Since 1882 the Grand 
 Central Terminal in New York City has been con- 
 structed costing millions of dollars and many expen- 
 sive stations have been constructed in other cities. 
 To-day one-eighth is too high for the proportion the 
 land value bears to the total value. A study of the 
 other steam railroads of the State would probably dis- 
 close like conditions. 
 
 Street railroads would be exempt from taxation 
 entirely under the system of a single tax on land values 
 for the land used by them in running their cars belong 
 to the municipalities. The same is true of the gas 
 
230 Taxation in New York 
 
 and electric light companies. Telephone and telegraph 
 companies generally extend thru the public streets and 
 highways and so could not be taxed for land which 
 they did not own. 
 
 Finally city lots would be taxed under the system of 
 a single tax on land values, but they are taxed already 
 for all they will sell for and in many cases far beyond 
 their selling value. Seven-elevenths of the farmers' 
 wealth consisted of his land as the 1910 United States 
 consus bulletin on agriculture for New York State 
 shows. This bulletin gives the value of the farmers' 
 land in New York State to be $707,747,828 and the 
 value of his buildings to be $476,998,001. As the greater 
 part of the farmers' wealth consists of the bare land it 
 can readily be seen how injurious the single tax on 
 land values would be to him. Contrary to the impres- 
 sion created by the single taxers that rich people are 
 buying up the land and that tenant farmers in New 
 York State are increasing under the present system of 
 taxation, this census bulletin shows that tenant farm- 
 ers in New York State are decreasing. It states that 
 during the past decade from 1900 to 1910 the number 
 of tenant farms in the State had fallen from 54,203 to 
 44,872, a decrease of 9,331, or seventeen per cent. 
 
 No wonder the farmers realize that the single tax 
 on land values will ruin them. This system of taxation 
 would result in the destruction of the one class above 
 all others upon which our prosperity rests — the class 
 of independent small farmers. 
 
 The system of the single tax on land values is 
 opposed to social justice and the equality of taxation. 
 Why is the man who has invested his hard earnings in 
 land to be exposed to the danger of having part or all 
 of his property taken away from him? When he 
 invested his money in land it was on the basis of the 
 accepted policy of social justice, that private property 
 in land was to be treated like private property in other 
 things. The vast majority of land owners are modest 
 and numberless men in modest circumstances. Why 
 
The Fallacy of the Single Tax 23i 
 
 should the selling value of their land be so diminished 
 by an act of government that a part or all of their 
 property is confiscated? Does it not run counter to 
 our very ideas of social justice and of equahty of 
 taxation? Of course, those who hold that there are no 
 vested rights in land would brush aside this argument, 
 but the common sense of most people is not yet ready 
 to go to the length of accepting the bald proposition 
 that the State has a right to take away a man's prop- 
 erty mthout compensation. 
 
 The single tax is a proposal hundreds of years old, 
 exploded every time it has been studied seriously, and 
 now kept alive chiefly by funds contributed by enemies 
 of true tax reform. 
 
CHAPTER XV 
 UNTAXING BUILDINGS 
 
 Of late years there has been quite an agitation for 
 the exemption of improvements partly or wholly from 
 taxation. This means the untaxing of buildings. The 
 agitation has been ingeniously managed so as to iden- 
 tify it in the popular mind with a project for lowering 
 rents. The Society for Lowering Eents in New York 
 City Ixas had introduced into the Legislature for sev- 
 eral years bills to reduce the tax rate on improvements 
 in New York City to one-half the tax rate on land. The 
 single taxers have warmly seconded the movement as 
 a step towards the single tax and the Progressive 
 Party during its short rise and fall endorsed the pro- 
 ject in its platform. Many social workers have 
 espoused the cause thinking it would eliminate the 
 slums of our cities. 
 
 It is a very interesting proposition. It shows with 
 what ease an attempt can be made to simplify complex 
 problems. To the earnest investigator the matter is 
 much more serious. It has long been recognized that of 
 all the problems in economics that of the incidence and 
 effects of taxation is one of the most subtle and diffi- 
 cult. A change in the methods of taxation, far from 
 being so simple a matter as the advocates of halving 
 the tax rate on buildings imagine, is in reality a sub- 
 ject which calls for the most careful analysis and for 
 the most accurate knowledge of economic law. 
 
 The two shibboleths of this agitation are lower rents 
 and prevention of congestion. It is well known that 
 the backbone of this movement is the small but active 
 band of single taxers whose ultimate aim is to levy 
 taxes on bare land values. In order, however, not to 
 affright the public, the scheme is here introduced in the 
 guise of a sIoav, gradual reduction of the tax on build- 
 
 [232] 
 
Untaxing Buildings 233 
 
 ings. To the extent that the change is only partial, 
 the effects, whetlier favorable or unfavorable, will be 
 slight. In order, however, to recognize the tendency 
 of the measure and to realize its full import, we must 
 study the efi'ects of the change as a totality, and then 
 subsequently make allowance for the degree in which 
 the partial adoption of the scheme falls short of the 
 whole. 
 
 The first question to be answered is, will house rents 
 be lowered, and if so to what extent? 
 
 The theory is that if the tax were taken off of build- 
 ings more houses w^ould be built and the increased 
 supply of houses would lower rents. Furthermore it 
 is contended that the exemption of improvements from 
 taxation would lead to a continuous activity, and that 
 the resulting demand for capital would continually 
 raise wages, induce prosperity, and increase popu- 
 lation. 
 
 Granting that more houses will be built, will the 
 effect be a permanent or merely a temporary one ? It is 
 often said that houses are like anything else; reduce 
 the price and you increase the consum])tion. But this 
 statement fails to consider a marked difference between 
 houses and other things. The demand for most com- 
 modities is elastic and will increase almost without 
 limit, provided the price falls low enough. On the 
 other hand the demand for houses is limited. If the 
 price of clothes falls considerably, people will buy 
 more clothes or better clothes, and the further the 
 price falls the more clothes they will buy. But the 
 demand for houses is strictly limited by the extent of 
 the population. More houses will not mean more 
 tenants. 
 
 It is (piitc true that in every large city there is a 
 small percentage of the population composed of people 
 wlio do not live in rooms of their own, but who are 
 boarders or knlgers with other peo])le. If more houses 
 arc built and rents fall, these people who have hitherto 
 been unable to occupy apartments of their own will 
 
234 Taxation in New York 
 
 indeed be put in a position to do so. But after the 
 slack has been taken up, and after all the boarders and 
 lodgers are housed in apartments of their own, what 
 will happen! To build more houses would simply mean 
 to build vacant houses. 
 
 Is it not true, therefore, that as soon as the interval 
 has elapsed — one, two or three years, sufficient for 
 the building of the additional houses, — the new equili- 
 brium between housing and population will have been 
 reached, and that there will be no further demand for 
 new buildings, except that which comes from ordinary 
 growth of the population ? This dema,nd existed before 
 the change in taxation and it will persist after the 
 change. Where then will be the continuous demand 
 for new houses, for new capital, and for more labor? 
 The only effect of a sudden exemption of houses from 
 taxation \vill mean a building boom which will be over- 
 done and which will inevitably be followed by a col- 
 lapse, by a pricking of the bubble, with the ultimate 
 result that only the normal number of houses wnll 
 thereafter be built every year. 
 
 The advocates of this system have told us about the 
 wonderful effects of the exemption of buildings in 
 Vancouver and other cities of Western Canada. In 
 Vancouver immediately after the complete exemption 
 of buildings from taxation in 1910 there was a great 
 building boom. The building permits in Vancouver in 
 1910 amounted to $13,150,365. In 1911 they amounted 
 to $17,652,642 and in 1912 they amounted to $19,388,- 
 322. This was the maximum and then they began to 
 decrease very fast. In 1916 they amounted to only 
 $2,412,889. Everyone knows that the influence of taxa- 
 tion is subordinate to the wider and more important 
 influences of general economic development and that 
 neither the boom nor the collapse can be ascribed to 
 taxation alone. The single taxers tell us that this 
 collapse in the building boom is due to the great world 
 war, but even before the war the building permits in 
 Vancouver had decreased to $10,424,447 in 1913. 
 
Untaxing Buildings 235 
 
 Most houses are built nowadays on building loans 
 and the amount of the loan, as well as the rate of 
 interest, is in a certain jDroportion to the value of the 
 land, if the increased tax on the land diminishes its 
 value, either less money can be borrowed or a higher 
 rate of interest will have to be paid, and in either case 
 there will be an impediment to the erection of new 
 houses. Let the selling value of the land be taken 
 away for any reason from the man who borrowed 
 money or made a loan for the erection of a building, 
 and the loaning companj^ would increase the rate of 
 interest on the mortgage because then they would be 
 lending entirely on the security of the building. In- 
 cluded in this mortgage loan would have to be a certain 
 sum for the deterioration of the building so that it 
 would cost the builder more for the money. This would 
 increase the price of the building and would also 
 increase the operating cost. Therefore, the tenant 
 would have to pay rent based on the increased operat- 
 ing cost in order to give the builder back his money and 
 that would mean the tenant would have to pay a higher 
 rent. 
 
 Real estate owners under present conditions depend 
 on expected increases in the value of their land to 
 offset the depreciatioii in their buildings, and there- 
 fore depreciation is not now included in rents. The 
 exemption of buildings from taxation Avould depreciate 
 land values. Thei'efore landowners woukl be compelled 
 to add depreciation to the rentals charged their ten- 
 ants. Depreciation is a legitimate part of tlie cost of 
 furnisliing building accommodation. 
 
 In May 1913 the Stein Bill became a law in Pennsyl- 
 vania, which ])i-ovided for the gradual reduction of the 
 tax on buildings in the second class cities of that State. 
 It applies to Pittsburg and Scranton only. In 1918 
 Thomas J. TTawkings, the chief assessor of Pittsburg, 
 reported that the effect of this law in Pittsburg had 
 not reduced rents nor had it increased the building of 
 
236 Taxation in New York 
 
 more houses. Its only effect so far had been to increase 
 the city tax rate. He thought that sooner or later the 
 law would be repealed. In Scranton according to the 
 city soUcitor the results of the law are not yet appar- 
 ent owing to the gradual reduction of the rate at which 
 buildings are taxed. Thus after a five years' trial in 
 these two cities the benefits claimed for the untaxing 
 of buildings have proved visionary in character. 
 
 In 1914 Professor Robert Murray Haig of Columbia 
 University was sent to Western Canada by Mayor 
 John Purroy Mitchell's committee of twenty-seven 
 appointed to investigate new sources of city revenue 
 for New York City. It was Professor Haig's duty to 
 make a thoro study of the workings of the exemption 
 of improvements from taxation in the municipalities of 
 Alberta, British Columbia, Manitoba, and Saskatch- 
 ewan. In his report concerning rents he testified that 
 the whole situation there had been abnormal. About 
 1910 there had been a sudden spurt of growth of the 
 cities of Western Canada so that it had been impossi- 
 ble to supply the demand for houses and business 
 quarters. It is said that four thousand people lived in 
 tents in Edmonton, in the Province of Alberta, thru 
 the winter of 1912. Rentals are proverbially unstable 
 and susceptible to influence. A few houseless tenants 
 or a few tenantless houses can do much to demoralize 
 rents. The law of supply and demand regulates the 
 price of rents. 
 
 Rents will not go down unless more houses are built 
 and to build more houses requires more capital. As 
 building operations are generally financed by a system 
 of loans from savings banks, insurance companies, or 
 loan associations, by which money is advanced during 
 construction, it is extremely doubtful if in the face of 
 falling land values these organiz^ations would care to 
 loan their money on real estate mortgages. The natural 
 tendency of capital will be to avoid real estate invest- 
 ments if equities are to be destroyed. This would so 
 
Untaxing Buildings 237 
 
 far to counteract the incentive to erect new buildings 
 caused by the total or partial removal of taxes on 
 buildings. 
 
 Builders who put up buildings for rent are compelled 
 by the competition of other buildings to put up a cer- 
 tain kind of building for the people who are able to pay 
 twenty dollars a month, a little different one for those 
 who can pay thirty dollars a month, and so on. It is 
 difficult to see how the housing conditions will be bet- 
 tered one bit by the untaxing of buildings. 
 
 Have wages been increased in those cities where 
 improvements have been exempted from taxation? A 
 prominent labor leader of Vancouver, British Colum- 
 bia, expressed himself in regard to this matter to Pro- 
 fessor Haig as follows : 
 
 ' ' The tax has certainly not operated to improve the 
 condition of the workingman. It has not increased 
 wages. There has been a great deal of building, but 
 the building activity has attracted so many working- 
 men that an over-supply of labor has resulted. Car- 
 penters still receive the same wages which they 
 received in 1907 in spite of the fact that the cost of 
 living has meanwhile increased enormously. Such 
 workingmen as have tried to take advantage of the 
 single tax now find that the little houses which they 
 have built have become millstones about their necks. 
 With the collapse of the building boom the opportunity 
 to work has been taken away and it is impossible for 
 the men to make the payments on their houses. This 
 is partly their own fault in that many of them assumed 
 heavier obligations than they could rationally expect 
 to carry. Many workingmen, for instance, have bought 
 extra lots for speculative purposes. The single tax 
 had the effect of temporarily expediting building 
 operations. This gave an impression of prosperity 
 which was false and this reacted to cause an over-valu- 
 ation of land. This high price of land has reacted to 
 the disadvantage of the city in its attempts to secure 
 
238 Taxation in New York 
 
 the location of industries. The really wise man was 
 the one who got rid of his real estate before this dull 
 season began." 
 
 Professor Haig was unable to find any labor leaders 
 in any of the cities of WesternC anada who thought the 
 workingmen had been benefited by this new system of 
 taxation. 
 
 Who would receive the most benefit from the exemp- 
 tion of improvements from taxation, the poor man or 
 the rich man"? F. C. Wade of Vancouver, British Col- 
 umbia, one of the leading lawyers of Western Canada 
 and who was one of the Canadian commissioners at 
 the conference between the United States and Canada 
 over the Alaskan boundary question, has given the 
 result of an investigation he made in 1914 in regard 
 to the building permits issued in the City of Vancouver 
 during the year 1913, dividing them into (first) room- 
 ing houses, (second) factory and warehouses, (third) 
 offices and stores, and (fourth) private houses; and 
 then ascertaining the amounts expending on each class 
 of building. His analysis is summarized as follows : 
 The poorer classes were responsible for one-eighteenth 
 of the improvements and the owners of the more expen- 
 sive buildings for seventeen-eighteenths of the improve- 
 ments. The system of totally exempting buildings 
 from taxation has been in vogue in Vancouver since 
 1910 and the grand aggregate of improvements 
 exempted for three years or to the beginning of 1914 
 amounted to $419,056,525. Out of this grand aggregate 
 the poorer man secured exemption 'on $23,280,918, 
 while the exemption of the wealthy classes amoimted to 
 $395,775,607. Mr. Wade says: '' This system of taxa- 
 tion is called the poor man's boon! We hear nothing 
 about the rich man's boon!" 
 
 What about the prosperity argument advanced in 
 favor of exempting improvements from taxation? 
 Professor Haig mentions a barrister of Vancouver, 
 British Columbia, whose ability is unquestioned, as 
 
Untaxing Buildings 239 
 
 saying; " The single taxers in Vancouver used to 
 appeal to tlie prosxJerity argument in supjDort of the 
 policy in this city. They do not do that any more. ' ' 
 
 Beginning just before the outbreak of the great 
 world war and continuing to the ^jresent, Western 
 Canada has had very hard times. The single taxers 
 assert that this depression is due to the war and not 
 to the new system of taxation. 
 
 The population of these cities of "Western Canada is 
 also decreasing, it reached its high water mark in 
 1912 and since then it has been steadily falling. In 
 1912 the population of Vancouver, British Columbia, 
 was 122,100, but in 1916 it had decreased to 95,922, a 
 decrease of 26,178, or more than one-fifth. 
 
 Bank clearings in these cities of Western Canada 
 have also decreased. For the year 1912 the bank clear- 
 ings in Saskatoon, Saskatchewan, amounted to $115,- 
 898,477, but the next year they dropped to $96,034,723 
 and they have been steadily decreasing each year since 
 then. Vancouver, British Columbia, had bank clear- 
 ings of $645,118,887 in 1912, but in 1913 its bank clear- 
 ings amounted to $606,899,710. The gross revenue of 
 postal receipts in these cities have also shown a 
 falling off. 
 
 Passing now to the second shibboleth of this agita- 
 tion, that it will prevent congestion, a little study of 
 this question will show that instead of preventing con- 
 gestion it will cause greater congestion than now exists 
 in our cities. Is it not plain that if buildings are 
 exempted from taxation the owners of sky scrapers 
 vnW receive more benefit than the owners of small 
 private houses. There will manifestly be every induce- 
 ment to prospective builders to enlarge their profits 
 by increasing the height of l)uil(lings. The consequence 
 of this will be a great increase in the density per acre, 
 with all the resulting discomforts and dangers in the 
 streets and consequent need of spending still more 
 money for parks and ojx'ii spaces. 
 
240 Taxation in New Yoek 
 
 The tendency of an increased tax on land values must 
 always be a more intensive utilization of the land. This 
 will mean a more compactly built city than at present. 
 It will mean no open spaces, it will mean no gardens 
 around the houses; it mil mean house next to house 
 and apartment by apartment; it will mean in short a 
 repetition of all the worst evils of the slums spread 
 thruout the entire city. Land speculation may have 
 its abuses, but this evil at least it avoids. An unbuilt 
 lot may seem in some respects a waste, but at least it 
 affords fresh air and sunlight and grateful space. 
 
 Yet in spite of these facts the advocates of untaxing 
 buildings assert that it will prevent congestion. They 
 say that if thru more intensive development of the 
 most valuable parcels of land more business should be 
 transacted or more people have their dwellings on an 
 acre than at present that this would not be congestion 
 but instead that it would be organization on the basis of 
 the greatest economy. And as to the limitation of gar- 
 den space which would result from the intensive devel- 
 opment of a city's center they say that gardens do not 
 belong there anyhow. Gardens they say would 
 undoubtedly stick to the fringe of the city. 
 
 It is interesting to note what F. C. Wade of Van- 
 couver, British Columbia, thinks of this view. He 
 says: '' One of the great advantages claimed for the 
 exemption of improvements is that it ensures a com- 
 pact city. It is the proud boast of the building inspec- 
 tor of Vancouver that per square mile of area Van- 
 couver leads every city on the continent of America 
 for compactness. It is in order now for some one to 
 point with approval to the huddled condition of Lon- 
 don before the fire, or to hold up the most crowded 
 quarters of Canton, China, as a model to the world." 
 
 Call it compactness or congestion or whatever you 
 will, ought not this fact alone be enough to condemn 
 the system? The taxes on gardens, lawns and open 
 spaces become prohibitory. Everything must be built 
 
Untaxing Buildings 241 
 
 up. Every open gap must be closed. We must have 
 a compact city. Rather than expand our area let us 
 build two hundred feet in the air and immure our 
 families, particularly our children, in apartment blocks 
 and deprive them as far as possible of every beautiful 
 and healthful natural surrounding. At the same time 
 we are likely to have some trouble in escaping from 
 the conclusion that a crowded city is a standing invita- 
 tion to fire and a menace to the health and enjoyment 
 of its i^opulation. 
 
 A recent pamphlet prepared by the tenement house 
 committee of the charity organization society says: 
 '' Don't rent dark rooms. Fresh air and light in every 
 room are better than medicine. Plants can not grow 
 in the dark, neither can children. A dark room is a 
 consumption factory. Gas bills and medicine bills soon 
 equal the difference in rent between good, light rooms 
 and dark, unhealthy ones." It is imperative that, so 
 far as possible, we give the workers an opportunity to 
 live in homes instead of four-story tenements, and to 
 let their children run in yards and fields instead of the 
 paved court and crowded street. There should be fit 
 housing for the toiler, and American cities must give 
 serious attention to this problem. 
 
 What is a house? It is the prime element of national 
 growth. It is the soil whence springs that eagerness in 
 the heart of every man for a home of his OAvn. It is, 
 after all, the physical attribute of life upon the posses- 
 sion or retention of which most of our energy is 
 directed. Because of these things, it is the backbone of 
 the nation. By the quality of its appearance, its con- 
 venience, its durability, one may infallibly determine 
 the real degree of a nation's prosperity and civiliza- 
 tion. 
 
 In the great and wonderful epic of America we have 
 been thrilled with the first coming of tlie pioneer. As 
 he took his way westward into the depths of the wilder- 
 ness we have journeyed with him, breathless, in the 
 great adventure. We have tingled with joy over the 
 
242 Taxation in New York 
 
 picture of the rude home, the family fireside, the wel- 
 coming hearth-fire, and the sheltering roof-tree. 
 
 Home ownership, where the small dwelling is the 
 miit, forces a better type of citizenship because the 
 citizen cannot escape the consequences when things go 
 wrong. Neighborhood evils affect the value of his 
 proj)erty and for such reason, if not for the morals of 
 his family, the owner will exert himself. It is almost 
 repeating a truism to say that the most conserving 
 and conservative force acting to hold man to the reten- 
 tion of the best in civilization is the little patch of 
 ground with the hut upon it that he calls his own. 
 
 Any agency w^hich helps poor people or people in 
 modest circumstances to obtain homes of their own 
 deserve the highest words of commendation. For that 
 reason savings banks and loan associations cannot be 
 praised too highly. They help to make a better 
 citizenship. 
 
 In regard to the housing problem it is generally 
 accepted that not more than twenty per cent of the 
 family income should go for rent. Yet according to 
 John Nolan in his address, ''Industrial Housing," 
 delivered before the Fifth National Housing Confer- 
 ence in 1916, the simplest acceptable standard of 
 American home, whether single cottage in \allage or 
 suburb, or wholesome apartment in a large city, costs 
 on an average from $1,800 to $2,000 per family, includ- 
 ing land and improvements. This means on a basis of 
 moderate commercial profit (five or six per cent), a 
 rent of fifteen dollars a month at the least. More than 
 half of all the worldng-men in the United States receive 
 less than fifteen dollars a week. Here appears to be a 
 stone wall preventing decent housing in our cities. 
 
 By changing the excess condemnation amendment to 
 the State constitution adopted by the people in 1913 
 communities could buy land and build houses for work- 
 ing people either in the city itself or in garden suburbs. 
 It could rent them and remain a landlord, or it could 
 sell them to the tenants on a system of long term, easy 
 
UxTAxixG Buildings 243 
 
 payments. The credit of the community can secure 
 capital at a lower rate of interest than can private 
 associations. 
 
 All private philantropic and co-operative housing 
 associations that help city people to live in sanitary 
 houses at moderate rentals should be encouraged. 
 Before passing mention should be made of the City and 
 Suburban Homes Company of New ,York City which 
 owns and manages model tenements housing fifteen 
 thousand people in the Boro of Manliattan. This 
 company was organized in 1896 and was founded as a 
 sort of business charity to give tenement housing at 
 no more profit than four per cent, to its stockholders. 
 With the low dividend paid on the company's capital — 
 less than the return in interest on its mortgaged prop- 
 erty — this has meant giving better quarters to ten- 
 ants for less money. The action of this company is in 
 refreshing contrast to the assertions of the single tax- 
 ers Avho continually assert that the average landlord 
 charges the highest rent he can get. And the only 
 reason landlords do not charge more say the single 
 taxers is that they cannot find anybody able and will- 
 ing to pa}^ more. 
 
 The pathetic instances of single family dwellings 
 sandwiched between buildings of ninety feet and one 
 hundred and fifty feet appeal to one who knows w^hat 
 sacrifice of value has resulted and what miserable 
 conditions of human habitation exist. Such skyscrap- 
 ers have stolen the little dwelling's light and air. And 
 yet under the untaxing of buildings that little dwelliiig 
 house would have to pay the same taxes as the tall sky 
 scrapers on each side of it. Any sixty foot street that 
 may be fully developed with nine stoiy apartments 
 ninety feet high is unfit for human habitation, and 
 exercises a like influence upon the adjoining parallel 
 street. An angle of forty-five degrees produced by 
 the rule of once the width of the stre^^t is insufficient to 
 give sunlight in short winter days to the lower stories. 
 
244 Taxation in New Yoek 
 
 Thirty years ago the steel frame was invented. Thirty 
 years before that the elevator had been invented. These 
 two inventions have done much to create the evil of 
 high buildings. 
 
 In all the southern part of Manhattan Island there 
 are now a large number of very lofty buildings. The 
 first building that went up of that time, twenty or 
 thirty stories, or the old ones eighteen to twenty stories 
 high, paid very well because it was not only using the 
 land that the owner of the building owned but was 
 using a large part of the land that his owners owned, 
 and it made a profit out of stolen goods. Even the 
 single taxers are forced to concede the injustice done 
 the small building sandwiched between two tall sky- 
 scrapers, but they argue that this condition must be 
 corrected by a zoning system for each city. 
 
 A tenement house is built in the middle of nice, 
 single-family detached residences. Half the value of 
 the houses within a few hundred feet of that tenement 
 house is gone over night. Men want to sell and go 
 away. House values still further decline, presently 
 the houses are torn down to give way to other tene- 
 ment houses of like kind. All this is a dreadful eco- 
 nomic waste, because whenever buildings are sacrificed 
 before their usefulness is at an end it is a loss to the 
 community as a whole as well as to the owner. 
 
 When one man builds a house that is unsuitable as to 
 height, he forces his neighbors to do the same or suffer 
 great loss. These neighbors will probably suffer great 
 loss any^vay, but at the time they think they might win 
 out if they follow his example. Cases sometimes occur 
 where a single factory'^ invades a residence street for 
 some more or less accidental reason and no others see 
 any advantage in following. A slump in land values 
 result, because the locality is no longer pleasant or 
 healthful to live in, and houses have to be put to uses to 
 which they are ill adapted, or changed over or left 
 vacant, to the loss of the owners and the community. 
 
Untaxing Buildings 245 
 
 New York City adopted a building zone plan July 
 25, 1916. The zone plan creates the business center, the 
 manufacturing section, the residential district, and 
 many other local differences. When zoning a city the 
 municipality should be studied street by street and 
 block by block. • It is only fair that each owner should 
 contribute to the light and air of the block. The pur- 
 pose of zoning is to secure to each section of the city 
 as much light, air, safety from fire and relief from con- 
 gestion, with all its attendant evils, as is consistent 
 with the most beneficial use of the land. 
 
 Under the zone plan trade and industry are entirely 
 excluded from the residental districts. The undoubted 
 fact that the intrusion in a residence block of the 
 garage, factory or other business building means a 
 decline in rental and property values, is not based 
 solely or even largely on sentimental considerations, 
 but almost wholly in considerations of health, safety, 
 comfort and convenience. Quiet and freedom from the 
 distraction incident to trade, industry and attendant 
 street traffic are essential to a wholesome home 
 environment. Especially in the crowded sections the 
 streets must be used as breathing spaces for the moth- 
 ers and play spaces for the children. The traffic in a 
 residential block incident to a few business or indus- 
 trial buildings may make the street a very unsafe place 
 for the children who play therein. This helps in the 
 congested districts to thwart the play instinct. Ernest 
 K. Coulter, for many years clerk of the Children's 
 Court of Manhattan, has testified that he had found 
 by investigation that this thwarting of the play instinct 
 was responsible for at least forty per cent, of the 
 delinquency cases coming before the Children's Court. 
 
 There is in every city a greater difference in the 
 degree of concentration in its different sections. In 
 the business center, for instance, where contacts must 
 be quick and frequent, people must be closer together 
 than in residential section where life may be quieter 
 
246 Taxation in New York 
 
 and more comfortable. Manifestly regulation of the 
 intensity of building cannot be the same for the two 
 sections. The city's natural tendency must be aided 
 and protected. A section of a city suitable for resi- 
 dence, for instance, is often ruined for that purpose 
 by the intrusion of factories, with their smoke, noise 
 and odors ; and, if a high class residence section, even 
 by the coming of business. When industry or business 
 is best suited to a district, and land will sell higher for 
 such purposes than any other, the locality is bound to 
 be transferred, and nothing can be done, or should be 
 attempted, to prevent it. 
 
 The transportation question is most intimately 
 related to housing. Transit conveniences of an inferior 
 grade or too dear for the working classes to afford, 
 help to cause congestion in our cities. Every city 
 should take some action so as to provide suburban 
 transit ahead of the city's present needs. When a 
 transportation company extends its existing line into 
 territory from which no adequate returns can be 
 obtained, it should be encouraged as far as possible. 
 
 It is only fair to state that New York City's building 
 zone plan had the hearty co-operation of the real estate . 
 owners of Greater New York. The single taxers would 
 have us believe that the opposite was the case. In 1917 
 there were 103,718 apartment or tenement houses in 
 Greater New York containing 982,876 apartments. 
 There are three divisions of apartment houses — ele- 
 vator apartments, walk ups with steam, and cold water 
 flats. 
 
 A short history of the movement for the exemption 
 of improvements from taxation in the municipalities 
 of Western Canada, to which so many references have 
 already been made, is quite appropriate in this chapter. 
 The British North American Act of 1867 constituting 
 the Dominion of Canada took away from the different 
 provinces the right to levy customs and excise duties. 
 But in return for these concessions on the part of the 
 
Untaxing Buildings 247 
 
 provinces a system of subventions was evolved which 
 provided for the transfer annually of considerable 
 sums from the Dominion to the various provincial 
 treasuries. These sums are so substantial as to make 
 the problem of provisional financing much more simple 
 than it otherwise would be. This in turn has operated 
 to encourage the separation of the sources of provin- 
 cial and local revenues, which has proceeded to a 
 point of great completeness. This is the cause of the 
 ease with which radical legislation is adopted is that 
 the action of one community does not directly affect 
 other cities. Where a tax base is used to supply only 
 one municipality it may, of course, be changed much 
 more readily than when a number of municipalities 
 depend upon it for their revenues. 
 
 In Manitoba and Saskatchewan no provincial 
 revenues are raised thru land taxes. Alberta raises 
 but little money from direct taxes on property. 
 British Columbia depends upon ordinary forms of 
 taxation for only a very small part of its total revenues. 
 Its principal receipts are the income from timber 
 royalties and licenses, land sales, taxes upon incoming 
 Chinese, and subventions from the Dominion govern- 
 ment. The municipalities and tow^ns of Western 
 Canada are therefore left free to raise their revenues 
 in any way they see fit and to experiment as much as 
 they like with taxation nostrums. 
 
 The question arises, how did these cities come to 
 adopt the partial or total exemption of improvements 
 from taxation? During the last twenty years there 
 has been an unusual development in Western Canada. 
 Great wheat fields were being opened up and by skill- 
 ful immigration propaganda new settlers were flocking 
 in from all parts of the world. The Hudson 's Bay Com- 
 pany, which once dominated this whole region, did not 
 look with favor upon this development for it meant a 
 lessening of the company's influence and profits. Con' 
 sequently the Hudson's Ba^' Company often hindered 
 
248 Taxation in New York 
 
 the growth of these new communities. Particularly 
 was tjiis so in the city of Edmonton, the capital of 
 Alberta, where until 1912 the Hudson's Bay Company 
 held a large tract of land in the very heart of the city 
 and only used it as a pasturage for a herd of cattle. 
 Therefore in 1904 Edmonton was the first city of West- 
 ern Canada to entirely exempt improvements from tax- 
 ation and make the taxable base to consist wholly of 
 land. This was done largely in an effort to shift the 
 burden of taxation to the Hudson's Bay Company and 
 other non-resident owners of land. In 1909 Winnipeg, 
 Manitoba, exempted buildings one-third so that they 
 are only assessed for two-thirds of their value. The 
 same year Calgary, Alberta, entirely exempted 
 improvements from taxation. In 1910 Vancouver, 
 British Columbia, abolished all taxation of improve- 
 ments, and finally in 1911 Regina and Saskatoon, Sas- 
 katchewan, did likewise. 
 
 For a few years while the boom lasted all these cities 
 experienced great prosperity. But beginning in 1913 
 and extending to the present all of Western Canada 
 has been experiencing very hard times. The single 
 taxers assert that the war alone is the cause of this 
 business depression and that the new system of taxa- 
 tion is not at all responsible. However, a most obvious, 
 noticeable effect is a change in the attitude of the peo- 
 ple themselves toward the system. The harmonious 
 hymn of praise, which formerly arose from Winnipeg 
 to Vancouver, is no longer heard. The owner of real 
 estate is not now interested in the claim that the system 
 makes it easier for him to build. It would be economic 
 suicide for him to build under existing conditions. 
 What he is concerned with is where he can find the 
 money to pay the taxes on his holdings. The difficulties 
 attending the collection of taxes have been so great as 
 to cause very serious concern to the municipal authori- 
 ties. The arrears of taxes are growing larger each 
 year. There is no way to compel the owner of vacant 
 
Untaxing Buildings 249 
 
 land to carry his land, and as the tax on land values 
 has been pushed beyond the limits of its fiscal capacity 
 many land owners are simply throwing up their prop- 
 erty and the municipalities are acquiring vacant land 
 which they cannot sell. 
 
 In Vancouver, British Columbia, tax arrears which 
 were only $510,106 in 1912 when the period of pros- 
 perity had reached its height, have increased to $5,038,- 
 537 in 1917. This is nearly a million dollars more than 
 the total tax levy for 1917, which that year amounted 
 to $4,369,000. 
 
 There is no doubt that sooner or later all these cities 
 of Western Canada will return to the system of taxing 
 improvements as well as land. Whatever the various 
 indirect social effects of the system are, the fiscal diffi- 
 culties are now so acute as to demand all of the 
 attention. 
 
CHAPTER XVI 
 UNEARNED INCREMENT 
 
 As commonly understood unearned increment is anj- 
 surplus value accruing to an individual not by virtue 
 of sacrifice or exertion on his part, but by virtue of 
 his property right to a commodity. 
 
 So much stress is being laid at present upon the 
 unearned increment of land that one would be led to 
 believe fabulous fortunes are being made thereby. 
 
 The unearned increment tax on land was first 
 imposed in the German colony of Kiauchau in China 
 in 1898. Admiral Otto von Dederich, the German 
 commander in charge at the time the imperial govern- 
 ment took control of this Asiatic possession, was much 
 concerned regarding land speculators, who in other 
 Asiatic colonies had bought up land from the natives 
 at very small sums and then held it for sale to Euro- 
 peans at extremely high prices. As the home govern- 
 ment was contemplating spending large sums in erect- 
 ing government buildings, factories, railroad stations, 
 and constructing harbors. Admiral von Dederich fore- 
 saw a great rise in land values, and he considered it 
 desirable for the German government to purchase a 
 large part of the land and then sell it to intending pur- 
 chasers as might be needed. The very day of occu- 
 pancy, November 14, 1897, he issued a proclamation 
 forbidding any transfer of land without the authoriza- 
 tion of the government. It afterwards turned out to 
 be impracticable for the government to purchase the 
 land itself, and so Admiral von Dederich contented 
 himself with obtaining from the native land owners an 
 option on the land at prices existing at the time of the 
 occupation. 
 
 Admiral von Dederich suggested in an official memo- 
 rial to the home government in April, 1898, that no 
 
 [250] 
 
Unearned Increment 251 
 
 future transfer of land should be permitted without the 
 authorization of the government, and also that the 
 government was to partici2>ate in the profits. He knew 
 that the land was bound to increase in value because 
 of the prospective outlay by the government. The 
 famous land ordinance of 1898 carried out the ideas of 
 Admiral von Dederich. It was provided by this land 
 ordinance that whenever any plot of land in the colony 
 of Kiauchau was sold, one-third of the increase in its 
 value, after deducting any improvements in or on the 
 land made by the owner, should be paid to the govern- 
 ment. This was called the direct increment tax. In 
 case the land was not sold, it was to be valued every 
 twenty-five years, and one-third of any increase in the 
 value was similarly to be paid to the government. 
 
 As a practical means of preventing land speculation 
 this unearned increment tax was a success, but as a 
 revenue measure it did not yield much tax, the greatest 
 revenue being secured in 1906 when the sum of $2,103 
 was secured. In 1908 it yielded nothing. 
 
 The experiment at Kiauchau, China, at once attracted 
 the attention of the land reformers in Germany. The 
 imperial government was petitioned by the German 
 Land Reform League to extend the principal of the 
 unearned increment tax to the other German colonies. 
 The success of the unearned increment tax was empha- 
 sized at the Colonial Congress held in Berlin in 1902. 
 As a result of the discussion in this congress the possi- 
 bility of applying the unearned increment tax on land 
 within Germany itself began to be discussed in the 
 press. 
 
 The German situation was peculiar. Its cities were 
 growing with a rapidity exceeded perhaps nowhere in 
 the world, and there was accordingly great opportunity 
 for land speculation. In Germany the land tax was not 
 assessed on the selling value of the land, as in the 
 United States, but on the assumed produce or yield. 
 As the calculation of the estimated yield of the land 
 used for agricultural purposes was revised only at long 
 
252 Taxation in New Yoek 
 
 intervals, every fifteen years in Prussia, the result was 
 to offer every inducement to land speculators to keep 
 land out of use on the outskirts of the rapidly growing 
 towns. This condition does not exist in New York 
 State where there is an annual assessment of land. 
 While land on the outskirts of the German cities had 
 tremendously increased in value, yet according to its 
 assumed produce or yield it was still being assessed as 
 so-called potato land. These circumstances tended to 
 keep the land idle as long as possible, and as a conse- 
 quence brought about in German towns of moderate 
 size a housing problem such as was found nowhere else 
 in the civilized world. 
 
 The first German city to introduce the unearned 
 increment tax on land was Frankfort, which initiated 
 the system in 1904. Cologne adopted the system in 
 1905, and Essen in 1906. The system soon spread 
 thruout the empire and by 1910 the unearned incre- 
 ment tax on land was found in about f ort^^-five hundred 
 cities and towns, including about one-fourth of the 
 entire population of the countrj^ While the tax varied 
 in its details in the different municipalities, the funda- 
 mental principles were everywhere similar. All these 
 sepaiate taxes were abolished, as the imperial gov- 
 ernment enacted an unearned increment tax on land in 
 February, 1911. This law replaced all former state 
 and municipal taxes of the same kind. Under this law 
 fifteen per cent, of the tax went to the empire, forty 
 per cent, to the locality, and the remaining ten per cent, 
 being reserved by each state to cover the cost of 
 collection. 
 
 The unearned increment tax on land in Germany is 
 imposed only when there is a transfer of any property 
 interest in real estate on the increase of value which 
 occurs without the activity of the owner. There are 
 numerous exemptions and the unearned increment is 
 defined as being the difference between the purchase 
 price and the selling price. The rate of the tax depends 
 on the percentage of the unearned increment to the 
 
Unearned Increment 253 
 
 purchase price of the property plus the cost of improve- 
 ments and other additions. Thus if the increment of 
 value is ten per cent, the tax is ten per cent, of the 
 increment. 
 
 After two year's experience with this law the 
 imperial government relinquishes its quota of the 
 unearned increment tax in 1913, leaving the total levy 
 to the local and state governments. The yield proved 
 much less than was expected, the imperial govern- 
 ment receiving 10,069,340 marks ($2,396,502.92) the 
 first year and 20,021,897 marks ($4,765,211.49) the 
 second year the law was in operation. 
 
 In 1909 an unearned increment tax law was enacted 
 in England. As in Germany, land in England was not 
 taxed on its selling value as is done in the United 
 States, but upon its rental value. In England there are 
 many large estates utilized for purposes of pleasure 
 and these have no rental value. Land that was vacant 
 was frequently not taxed at all. The English land 
 owners were in a position very different from the 
 American land owners. 
 
 Only increment value of land over ten per cent, is 
 taxable, and the tax at the rate of twenty per cent, is 
 payable as follows : Upon the sale of land or any 
 interest therein ; upon a lease of land for a period of 
 more than fourteen years ; upon the passing of land to a 
 new owner by death ; and every fifteen years upon land 
 which does not change hands. In computing this tax 
 the original site value is first determined and what- 
 ever increase has taken place over this original site 
 value becomes the taxable unearned increment. The 
 difficulty of obtaining the original site value of all land 
 in England is of stupendous magnitude. Some estates 
 have remained in one family for hundreds of years. 
 The valuation books and maps of land prepared by 
 the government rival the famous Domesday book of 
 the eleventh century. At first the yield from these 
 unearned increment taxes have been small, altho in 
 time they are expected to yield a substantial revenue. 
 
254 Taxation in New York 
 
 All of the revenue collected goes to the state and not 
 to the locality. 
 
 The system of land taxation in the United States is 
 superior to that found abroad. Whether our system 
 is the result of accident or has been caused by economic 
 conditions, it is based on the capital or selling value of 
 land and not upon its rental value. If this system of 
 assessing land at its capital or selling value had been 
 developed in Grermany and England it is doubtful if 
 any unearned increment tax would ever have been 
 imposed in those countries. Eeal estate under th^ 
 Feudal system existing in Europe was rarely bought 
 and sold, so that practically the only method of ascer- 
 taining the value of the land was by taking account of 
 its rents. 
 
 The first unearned increment tax adopted by any 
 taxing authority on this continent was that adopted by 
 the Province of Alberta in the Dominion of Canada on 
 October 25, 1913. The idea was obtained from the 
 famous Lloyd-George Budget of 1909, which imposed 
 the unearned increment tax in England. In Alberta 
 five per cent, of the increases in land values are appro- 
 priated by the provincial treasury. The law is so 
 drawn that only in rare instances is the rate applied 
 to other than urban lands. This means that farm 
 lands are practically exempt from the unearned incre- 
 ment tax. In this respect it differs widely from the 
 unearned increment tax of England, which was im- 
 posed largely to reach the large estates of the nobility, 
 whose holdings are mostly in the country districts. 
 
 At the time the unearned increment tax was imposed 
 in Alberta there was an unusual development in West- 
 ern Canada. There Avas a rush of settlers to this new 
 region, villages and cities were springing up over 
 night, and nearly everyone was speculating in build- 
 ing lots which were advancing rapidly in priee. Even 
 the common workingman bought a building lot on 
 speculation making a part pa^Tnent on the purchase 
 price and hoped in a very short time to sell it again at 
 
Uneaened Increment 255 
 
 double what he paid for it. Everyone seemed to be 
 growing rich in this mad game of speculation, and the 
 provincial government of Alberta felt that it was 
 entitled to a share of the profits which it would obtain 
 thru an unearned increment tax. But a widespread 
 depression set in soon after the enactment of this law, 
 so that the yield so far has been very small. The 
 amount collected in 1917 amounted to only $62,902. 
 Professor Haig mentions people who paid $1,000 for a 
 building lot during the boom times who couldn 't obtain 
 $500 for their lot now. It can readily be seen that 
 wdth land decreasing in value instead of increasing 
 there can not be much revenue secured from an 
 unearned increment tax. C. R. Mitchell, the provin- 
 cial treasurer of Alberta, reported in 1918 that the 
 principal reason why the yield from the unearned 
 increment tax had been so small was that the assess- 
 ment of 1913 was taken as the basis from which the 
 unearned increment was to be calculated and as the 
 assessment of 1913 was the highest on record there had 
 been few sales of land at an increase over the assess- 
 ment of 1913. The original act of 1913 has since been 
 amended so that where property is sold at a less sum 
 than the 1913 assessment, and again resold at an 
 advance in price over the last sale, the province col- 
 lects a percentage of the increment notwithstanding 
 the fact that these two sales took place for a considera- 
 tion below the 1913 assessment. No other province of 
 Canada has followed the lead of Alberta in imposing 
 an unearned increment tax. 
 
 The single taxers are loudly calling for an unearned 
 increment tax in this country and even Mayor William 
 Jay Gaynor's commission appointed in 1910 to con- 
 sider new sources of revenue advocated such a tax for 
 the City of New York. In the short sketch just given 
 of the history of the unearned increment tax in other 
 countries one outstanding fact is plainly visible, and 
 that is that the revenue produced is insignificant. 
 
256 Taxation in New York 
 
 Another objection to this tax worth considering is that 
 it will increase the problems, perplexities and temp- 
 tations, of which the assessor is the victim. The deter- 
 mination of the unearned increment in land values is a 
 very difficult matter. It is work of a highly technical 
 nature and will require an expensive corps of work- 
 ers. When it is realized that the revenue received will 
 be very small one might well ask, will it pay? 
 
 There are so many mouth-filling phrases being used 
 concerning unearned increment and community made 
 land values that it is well to stop and analyze just what 
 is meant. The single taxers assert that when land 
 increases in value the community has made that 
 increase and the community is entitled to the increase 
 thru some form of tax:ation. But political economists 
 tell us that what makes value is demand. If people 
 should spend their time making things for which there 
 is no demand these things would be valueless. The 
 reason land is more valuable in the city than in the 
 country is that there is more demand for land in the 
 city than in the country. Land is more valuable in 
 some sections of the city than in other sections because 
 there is more demand for land in those sections. The 
 more demand there is for land the more valuable will 
 it become. While the owner of the land has not created 
 the demand neither has the owner of any other com- 
 modity created the demand for that commodity. 
 
 A farmer raises potatoes. In ordinary years he 
 receives one dollar a bushel for his potatoes which is a 
 fair return for his capital and labor. But an extraor- 
 dinary year occurs when his neighbors' potato crops 
 are failures but his crop of potatoes is as large as 
 usual. Theie is now an enormous demand for his 
 potatoes which demand he did not create and he sells 
 his potatoes for five dollars a bushel. His capital 
 investment was no more, neither was his labor any 
 more than in previous years. But his potatoes have 
 increased tremendously in value on account of the 
 
Unearned Increment 257 
 
 great demand. Can it be said that he has earned that 
 increase or has not a large part of that increase been 
 unearned? If one dollar a bushel was a fair return for 
 his capital and labor in previous years then four dol- 
 lars of the present value of a bushel of potatoes is 
 unearned increment. 
 
 Adolphus Busch, founder of the Anheuser-Busch 
 Brewery at Saint Louis, Missouri, died in 1913 leaving 
 an estate valued at from seventy to one hundred mil- 
 lion dollars. For a number of years he had been draw- 
 ing a very large salary and when he died he left this 
 great property value. How can a man in the short 
 time of fifty years leave accumulated values of such 
 millions? Is there not an unearned increment in the 
 case of Mr. Busch 's accumulations'? Certainly there 
 is. Mr. Busch did not earn it, and if he did not earn it, 
 it must be unearned, or if earned those who earned it 
 did not get it. 
 
 Andrew Carnegie disposed of the Carnegie Steel 
 Company to the late J. Pierrepont Morgan for five 
 hundred million dollars. How much of that vast sum 
 was the product of Mr. Carnegie's industry, and how 
 much of it was community made value or unearned 
 increment? How much of the fortunes of the Roths- 
 childs, the Rockefellers, the Vanderbilts, the Harri- 
 mans and hundreds of others are community made or 
 unearned increments? Only a few years ago Henry 
 Ford was a poor machinist. To-day he has amassed a 
 fortune of many millions of dollars as a manufacturer 
 of automobiles besides receiving a very large yearly 
 salary. Has Henry Ford earned this vast fortune in 
 addition to the yearly salary lie has received? Are we 
 to permit these great property values to escape an 
 increment tax and place such a tax upon the increment 
 in land? 
 
 The advocates of an unearned increment tax on land 
 values overlook all community made values save one. 
 They spare the millionaires and billionaires, who have 
 
 9 
 
258 Taxation in New York 
 
 made the vast fortunes of the world in steel shares, oil 
 shares, railway securities, bank stocks and the hun- 
 dred other forms of investment and speculation on a 
 huge scale, and they seek to saddle all civic expense on 
 the landowners, who constitute a mere fraction of the 
 community, and whose profits are infinitesimal as 
 compared with those of the bigger interests. 
 
 Those who advocate the taxing of unearned incre- 
 ment in land, justify such action upon the ground that 
 such increment is the product of society, and society 
 should therefore take the values it has created. But 
 society plays a like part in all other forms of unearned 
 increment. "We are told that the increment in land is 
 of a different character from the other forms of 
 unearned increment mentioned. Yes, there is a differ- 
 ence. It is this : the dollars that the great millionaires 
 have to their credit in the various banks, or their 
 immense factories, or their stocks of goods on hand, 
 have been earned by individuals who have not received 
 what they have earned. While the increment in land 
 is not the product of individual efforts for which com- 
 pensation has not been given, there are far greater 
 reasons for taxing the unearned increment in indus- 
 trial enterprises, than in land. Why should the incre- 
 ment in land be taxed and increment in other forms 
 escape? 
 
 The only ground upon which the taxing of unearned 
 increment in land can be justified and the unearned 
 increment in other forms of Avealth be exempted is that 
 land should not be treated as property and that no 
 individual has a moral right to appropriate to himself 
 any part of the earth's surface to the exclusion of all 
 others. This lands us squarely upon the single tax 
 principle as advocated by Henry George in ''Progress 
 and Poverty," the source of the doctrine of the single 
 tax and from which all single taxers draw their inspira- 
 tion, Henry George says, '' private property in land 
 is a bold, bare, enormous wrong like that of cliattel 
 
Unearned Inceement 259 
 
 slavery." It is upon this principle that the taxation 
 of the unearned increment in land must stand or fall. 
 In 1915 according to the annual report of the depart- 
 ment of taxes and assessments the land value of the 
 land in New York City was $4,643,414,776, but two 
 years later according to the department of taxes and 
 assessments the land value of the land in New .York 
 City was $4,561,733,604. Here is a decrease in the land 
 value of over eighty million dollars in two years' time. 
 Where is the unearned increment in this case? 
 Undoubtedly in some sections of the city land has 
 increased in value, but it is equally true that in other 
 sections of the city land has decreased in value. Now 
 if in those sections of the city where land has increased 
 in value the city takes those increases because it is 
 unearned increment or community made value, will the 
 city in those sections where land has decreased in 
 value reimburse the landowners for such decrease, 
 because according to the same logical reasoning the 
 community must have decreased the landowner's land 
 and brought about unearned decrement. It is the 
 increase in land values the advocates of this system 
 are after; they are not concerned about the decrease 
 in land values. 
 
 In 1888 the City of Albany constructed a viaduct on 
 Hawk Street from Elk Street to Clinton Avenue, pass- 
 ing over a deep ravine in which extended Orange 
 Street and Sheridan Avenue. While this viaduct was 
 a great convenience to the city as a whole yet the prop- 
 erty underneath the viaduct in Orange Street and 
 Sheridan Avenue was damaged and decreased in value. 
 Still the city did not recompense these landowners for 
 the decreased value of their land. It is very plain that 
 the comnmnity made the decrease and not the land- 
 owners themselves. If there had been an increase in 
 land values the single taxers would have claimed the 
 increase belonged to the city. 
 
 The advocates of the taxation of unearned increment 
 in land values tell us that it will prevent land specula- 
 
260 Taxation in New York 
 
 tion. The man who speculates in steel stocks is 
 respected and counted a good citizen. The man who 
 speculates in railroad securities moves in the best of 
 society. But the man who speculates in land commits 
 a reprehensible act. He may take the risk of the com- 
 munity in opening up new tracts on the outskirts of the 
 city and building up the suburbs, but for him we must 
 have only words of censure. Speculation has its evils 
 and these should be condemned. But speculation also 
 has its good features. The farmer is the greatest specu- 
 lator of all. He takes the greatest chances and incurs 
 the most risks. When he sows his seed in the spring he 
 never knows what the future has in store for him. He 
 has to take great chances with droughts, hailstorms, 
 insect pests and numerous other obstacles. His crop 
 may be a total failure from no fault of his own. Yet 
 year after year he takes the same risks and we can not 
 but be thankful to him for his speculation with nature. 
 But for the farmer's speculation we would have no 
 food to eat or clothes to wear- 
 
 The taxation of the unearned increment in land 
 values is only another form of the system advocated by 
 the single taxers of setting certain classes of the coun- 
 try against certain other classes. They assert that the 
 single tax, exempting improvements from taxation, 
 and the taxation of the unearned increment in land 
 values, will untax industry, and be a great boon to the 
 manufacturer, to the merchant, and to the working- 
 man. If this is true it will mean the shifting of the tax 
 burden upon the real estate owners in the cities and the 
 farmers in the country. It would be class legislation of 
 the worst kind. So far but little progress has been 
 made in this propaganda. The manufacturer, the mer- 
 chant, and the workingman, are too patriotic to lend 
 their assistance to any such system of dishonor and 
 dishonesty. These classes are willing to bear their 
 share of the burden that will make this government the 
 best government on the face of the earth. 
 
CHAPTER XVII 
 
 INCOME TAXES 
 
 Income taxes have come into the forefront of public 
 discussion with comparative rapidity. Everywhere 
 there seems to be a trend toward income taxes. Eng- 
 land seems to have been the pioneer in the imposition 
 of income taxes. Its first income tax was imposed in 
 1799 as a war measure during the Napoleonic Wars 
 when there was a time of great stress. The Bank of 
 England had suspended specie payments, and a French 
 invasion under General Hoche seemed imminent. If 
 England was to continue a successful prosecution of 
 the war more revenue would have to be raised and it 
 was at this time that William Pitt the younger, the 
 prime minister of England, introduced his first income 
 tax measure. The taxpayers were divided into three 
 categories. In the first class were comprised the pre- 
 sumable wealthier taxpayers, who owned establish- 
 ments consisting of carriages, men servants, or horses. 
 The second class of taxpayers included those who, while 
 not keeping any such establishments, had been assessed 
 on their houses, windows, clocks or watches. The third 
 class comprised the presumably poorest individuals 
 who paid only on lodgings or shops. Different rates 
 were applied to the different classes of taxpayers. 
 The measure was imposed for only the duration of the 
 war, but even under these circumstances it aroused a 
 great deal of opposition. Some maintained that the 
 law was the offspring of Robespierre. At a public 
 meeting held in London to urge the repeal of the tax 
 one speaker s?aid that if the income tax was necessary 
 to save the country it would be better to have the coun- 
 try go than to endure the tax. Even Pitt was mobbed 
 on his passage to Saint Paul's. The measure was 
 called inquisitorial, tyrannical and unjust. It was only 
 
 [261] 
 
262 Taxation in New Yoek 
 
 by appealing to tlu^ patriotism of the country that Pitt 
 was able to secure its enactment. 
 
 When the Battle of Waterloo finally assured peace, 
 every one supposed that the government would now 
 abandon the income tax. Pitt was no longer at the 
 helm in England, and Lord Sidmouth, the new prime 
 minister, desired to continue the income taxes a few 
 years more on account of the immense national debt 
 incurred during the war and the enormous increase in 
 governmental expenditures. But Parliment would have 
 none of it and so on March 18, 1816, the income tax 
 law Avas repealed. 
 
 But the repeal of the income tax left a gap in the 
 revenues which it became necessary to make good by 
 imposing new taxes- The great mass of these new 
 revenues consisted of burdensome indirect taxes, and 
 before long England was gtoaning under a heavy load. 
 The situation Avas well portrayed by Sydney Smith in 
 an article in the '' Edinburg Review," when he said: 
 
 " Taxes upon every article which enters into the 
 mouth or covers the back or is placed under the foot. 
 Taxes upon everything which it is pleasant to see, hear, 
 feel, smell or taste. Taxes upon warmth, light and 
 locomotion. Taxes on everything on earth or under 
 the earth, on everything that comes from abroad or is 
 grown at home. Taxes on the raw material, taxes on 
 every fresh value that is added to it by the industry of 
 man. Taxes on the sauces which pamper man's appe- 
 tite an.d the drug w^hich restores him to health ; on the 
 ermine which decorates the judge, and the rope which 
 hangs the criminal; on the poor man's salt, and the 
 rich man's spice; on the brass nails of the coffin and 
 the ribbons of the bride. The schoolboy whips his 
 taxed top ; the beardless youth manages his taxed horse 
 with a taxed bridle, on a taxed road; and the dying 
 Englishman, pouring his medicine, which has paid 
 seven r)er cent., into a spoon which has paid fifteen per 
 cent., flings himself back upon a chintz bed which has 
 
Income Taxes 263 
 
 paid twenty-two per cent., and exj^ires in the arms of 
 an apothecary who has paid a license of one hundred 
 pounds for the privilege of putting him to death. His 
 whole property is then immediately taxed from two to 
 ten per cent., beside the probate judge's fees demanded 
 for burying him in the chancel ; his virtues are handed 
 down to posterity on taxed marble, and he will then be 
 gathered to his fathers to be taxed no more." 
 
 Even in spite of all these burdensome indirect taxes 
 the government was unable to make both ends meet 
 and on account of a growing deficit there was a con- 
 tinued agitation for the re-imposition of the income 
 tax laAv. At last in 1842 something had to be done and 
 so for a three-year period the income tax law was 
 re-imposed- It turned out to be more productive than 
 had been anticipated, and when the law expired in 1845 
 it was re-imposed for three years more. In 1848 it was 
 re-imposed for another three-year period, and finally 
 in 1851 the income tax became permanent in England. 
 In 1909 David Lloyd-George said: " The income tax, 
 imposed originally as a temporary expedient, is now 
 in reality the center and sheet anchor of our financial 
 system. ' ' 
 
 The fame of England's success wdth the income tax 
 spread to the continent of Europe. In 1873 the class 
 tax in Prussia was so amended as really to become an 
 income tax. Eighteen years later the old class tax 
 was entirely abolished and a permanent income tax 
 substituted. In Saxony the income tax had become the 
 chief tax in 1878. All the twenty-five states of Ger- 
 many, except Bavaria and the two Mecklenburgs, have 
 adopted the income tax. In 1864 Italy adopted the 
 income tax. But in France the opposition to the income 
 tax has been ver>^ determined and it was not until 1914 
 that it was finally adopted. This may seem singular 
 to many, but a short study of French history Avill dis- 
 close the reason. An income tax was about to be 
 adopted by the second republic established in 1848, 
 
264 Taxation in New York 
 
 but the overthrow of the second republic by Napoleon 
 III put a stop to income tax agitation in that country. 
 The third republic came into being in 1870 upon the 
 fall of Napoleon III. At first it was but a temporary 
 expedient because the Monarchists, split into two fac- 
 tions known as the Legitimists and Orleanists, and the 
 Bonapartists, could not agree among themselves as to 
 the form of government. The Republican leaders were 
 very cautious at first and desired to take no radical 
 action until the republic became firmly established- 
 The agitation for an income tax in France during the 
 third republic has been carried on largely by the 
 socialists and radicals. 
 
 When we come to our own country we find that an 
 income tax was discussed during the War of 1812 and 
 was recommended by Alexander James Dallas, the 
 secretary of the treasury, in January 1815. Had the 
 war lasted a few months longer there is every prob- 
 ability that an income tax would have been imposed, 
 but the conclusion of peace made any further resort 
 to internal taxes unnecessary. 
 
 With the outbreak of the Civil War in 1861 funds to 
 carry on the war became an imperative necessity and 
 upon the recommendation of Salmon Portland Chase, 
 the secretary of the treasury. Congress enacted a 
 national income tax law in 1862. It was amended in 
 1864 and then repealed in 1872. There was quite a 
 contest in Congress for the retention of the income 
 tax law, but as it was originally passed as a temporary 
 war measure, to be repealed with the conclusion of the 
 war, many senators and congressmen felt that they 
 would not be keeping faith with the people unless they 
 repealed the measure. The Civil War income tax act 
 imposed a tax of five per cent, on incomes over ten 
 thousand dollars, three per cent, on incomes from six 
 hundred to ten thousand dollars, and exempted all 
 incomes under six hundred dollars from taxation. As a 
 revenue producer it was a financial success and brought 
 
Income Taxes 265 
 
 into the United States treasury many millions of 
 dollars. 
 
 In 1894 Congress enacted a new income tax law 
 wherein all incomes under four thousand dollars were 
 to be exempt from taxation. This was a most liberal 
 exemption from the Civil War measure when only 
 incomes under six hundred dollars were exempt. In 
 1895 the Supreme Court of the United States declared 
 this income tax law unconstitutional because it was 
 not apportioned according to the rule of direct taxa- 
 tion. Attorney-General Richard Olney in his argu- 
 ment before the Supreme Court contended that income 
 taxes were not direct taxes but were indirect taxes and 
 so did not come under section four of Article I of the 
 United States constitution which says : ' ' No capita- 
 tion, or other direct, Tax shall be laid by Congress, 
 unless in Proportion to the Census or Enumeration 
 herein before to be taken. ' ' Whatever else may be said 
 in regard to the decision of the Supreme Court in 1895 
 it at least cleared up the ambiguity as to whether 
 income taxes were direct or indirect taxes- From now 
 on they must be understood as direct taxes. 
 
 An agitation now began to have the constitution 
 of the United States amended so that Congress could 
 enact an income tax whenever it saw fit. At last in 
 1913 the Legislatures of two-thirds of the states of the 
 Union had ratified what is now the sixteenth amend- 
 ment to the federal constitution which reads as 
 follows : 
 
 ** The Congress shall have power to lay and collect 
 taxes on incomes, from whatever source derived, with- 
 out apportionment among the several States, and with- 
 out regard to any census or enumeration." 
 
 Upon the adoption of this amendment Congress pro- 
 ceeded to impose another national income tax act which 
 is still in force. Under the present act the exemptions 
 are one thousand dollars for unmarried and two thou- 
 sand dollars for married persons. The rates are pro- 
 gressive and vary for different amounts of income. 
 
266 Taxation in New York 
 
 For the fiscal year ending June 30, 1918, tlie United 
 States government collected from this income tax act 
 in connection with the tax on excess profits the sum of 
 $839,378,067 in the State of New York. This vast sum 
 was collected with ease and precision. The question 
 now arises why should not the State of New York also 
 have an income tax act which could be made to pay all 
 the expenses of the State and local government? In 
 1917 the total revenue receipts for all purposes both 
 State and local which includes direct taxes and all 
 sources of revenue from indirect sources, was $390,- 
 338,374. But the national government collects in this 
 State over twice that amount from an income tax and 
 does it with less expense and trouble than the State and 
 local governments are spending in barely obtaining 
 sufficient revenue to keep them going. Would it not be 
 better for the State government to collect thru an 
 income tax sufficient revenue and then apportion it out 
 to the counties, cities, towns, villages, and school dis- 
 tricts? If the United States government can collect 
 over eight hundred million dollars in this State from 
 an income tax there is no reason why the State govern- 
 ment can not also collect over eight hundred million 
 dollars from an income tax. 
 
 But property has had to bear the burden of taxation 
 in this State so many years that many will consider 
 any attempt to exempt property and tax incomes as 
 revolutionary. Going back to the fathers we find that 
 John Jay, who wrote the State's first constitution in 
 1777, ex])ressed himself in regard to taxation as fol- 
 lows: " Whether taxation should extend only to prop- 
 erty, or only to income, are points on which opinions 
 have not been uniform. T am inclined to think that 
 both should not be taxed." According to this state- 
 ment John Jay believed that if the State taxed incomes 
 it should exempt property from taxation- And John 
 Jay WMS the originator of the State's fundamental 
 laws. 
 
Income Taxes 267 
 
 Senator John Sherman of Ohio in opposing in the 
 United States Senate in 1870 tlie repeal ol" the Civil 
 War national income tax act stated that property is 
 not a proper test of taxes. Is this not true '! This is a 
 government of persons, not a government of property. 
 We elect persons to office, not property. Property owes 
 no duty to pay taxes, but persons do. 
 
 The benefit theory of taxation has been well nigh 
 abandoned by all students of taxation. Under such a 
 theory people were supposed to pay taxes according to 
 the benefit or protection they received from the govern- 
 ment. Carrying this theory to its logical conclusion 
 the poor man should be taxed more than the rich man, 
 because he is less able than the rich man to protect him- 
 self. The poor man sends his children to a public 
 school, the rich man resorts to a private school; the 
 poor man depends for fire protection or sanitation 
 upon the efforts of government, the rich man avails 
 himself of the services of the best appliances and the 
 foremost experts ; the poor man, in the last instance, 
 resorts to poor relief or state pensions; the rich man 
 needs no such assistance. The benefit theory which 
 would practically result in placing greater burdens 
 ujjon the poor man than upon the rich man is defective 
 and unworthy of our supjiort. 
 
 An abandonment of the benefit theory was when the 
 State did away with the odious rate bills and made the 
 public schools of the State absolutely free to all chil- 
 dren between the ages of five and eighteen. When the 
 free school peoy)le were making their heroic fight dur- 
 ing the middle of the last century many people were 
 known to exclaim, ** Why should I pay school taxes to 
 educate someone else's children. I receive no benefit 
 from their education." The benefit theory still lingers 
 in our special assessments. But special assessments 
 should be al)olished. 
 
 The ])aym('iits made by the individual to the goveni- 
 nieiit are exceediiiglv divers in character. The s])ecial 
 
268 Taxation in New York 
 
 benefit of the government to the individual is, in most 
 cases, even not measureable; for the distinguishing 
 characteristic of modern civilization is the spread 
 thruout the community of the results of good govern- 
 ment which make for the common welfare. The state 
 is not a joint stock company where the members draw 
 dividends in the shape of benefits. Rather the state 
 is one large family where all are brethern and ani- 
 mated, if they are patriots, by the same ideals and by 
 the same fine sense of co-operation in the common 
 interest. 
 
 We pay taxes not because we get benefits from the 
 state, but because it is as much our duty to support the 
 state as to support ourselves or our family ; because, in 
 short, the state is an integral part of us. The duty of 
 supporting and protecting the state is born in us. That 
 is why we shoulder a musket and go to war when the 
 state needs our services. The state is as necessary to 
 the individual as the air he breathes. His every action 
 is conditioned by the fact of its existence. He does not 
 choose the state, but is born into it; it is interwoven 
 with the very fibers of his being, and in the last resort 
 of danger he is called upon to give to the state his very 
 life upon the battlefield. 
 
 Most of the actions of the government interest the 
 whole community and from which the individual 
 receives no benefit, except what accrues to him inci- 
 dentally as a member of the community. If the gov- 
 ernment undertakes a war, no one citizen is benefited 
 more than another. If the government spends money 
 for cleaning the streets, for erecting tribunals, or for 
 patrolling the city by police, it cannot be claimed that 
 any one individual receives a measurable, special bene- 
 fit; all are equally interested in good government. 
 When payment is made for these general expenditures 
 — and such payment is taxation — the principle of con- 
 tribution is no longer that of benefits or of give and 
 take, but of ability, faculty, capacity. 
 
Income Taxes 269 
 
 This brings us to the modern theory of taxation, the 
 ability theory — that is that every man must support 
 the government to the full extent, if need be, of his 
 ability to pay. Under this theory the individual does 
 not measure the benefits of state action to himself; 
 first, because these benefits are quantitatively unmeas- 
 urable and secondly, because such measurement implies 
 a decidedly erroneous conception of the relation of the 
 individual to the state. The benefit theory of taxation 
 is very plausible and its advocates reason that govern- 
 mcMit exists only for the protection of man and there- 
 fore man should contribute to the support of the gov- 
 ernment only according to the protection or benefit 
 which he receives from the government. But that is a 
 very narrow view of government which limits its activi- 
 ties only to the protection of man. Man is a social, 
 reasonable, and moral being and for these reasons is 
 fitted for society. Laws are the rules for regulating 
 the social actions of men and law cannot exist without 
 government. Therefore government exists to regulatQ 
 the intercourse of men with each other. The earliest 
 governments of which we have any knowledge were 
 patriarchal governments or family governments. Thus 
 our idea of government has come down to us from 
 primitive ages as one large family. Family life in its 
 broadest sense is something more than the protection 
 of its members. 
 
 Having accepted the ability theory of taxation, what 
 is the proper test of man's ability to pay taxes, his 
 property or his income? In primitive communities 
 property to a certain extent is a rough test of ability. 
 Every freeman is a proprietor, and all are supported 
 by the produce of the land. Comparative equality of 
 wealth gives comparative equality of opportimity. 
 But a change soon sets in. Society differentiates and 
 classes arise who support themselves not from their 
 property, but from their earnings. He who earns a 
 salary is just as able to pay towards the support of the 
 government as one who receives the same amount as 
 
270 Taxation in New York 
 
 interest on a principal or as profits on property. The 
 productiveness of property is another element in cal- 
 culating the owner's ability. Of two factory owners, 
 one may be running full time and making large profits ; 
 the other may be compelled to keep his factory closed, 
 earning nothing. Of two landowners, one may enjoy a 
 large product by employing improved processes; the 
 other, altho possessing equally as good and valuable 
 land, may suffer climatic reverses and produce far 
 less. Of two capitalists, one may be fortunate enough 
 to invest his property so as to obtain large proceeds : 
 the other may put an equal amount of property into an 
 enterprise which yields very little. Would it be cor- 
 rect to say that the ability to pa)' taxes in these cases 
 is the same for those possessing the same amount of 
 property! Has not the test of ability been shifted from 
 property to product, proceeds, earnings, or income? 
 
 The truth of this principle is faintly recognized in 
 the legislation of all countries one step removed from 
 the primitive tax system. Some of the medieval town 
 taxes illustrate its application where the earnings of 
 the artisans and tradesmen were taxable, as evidences 
 of their ability, side by side with the property of others. 
 So too, the various attempts of mediaeval states to tax 
 the proceeds or rent of land, the salaries of officials and 
 the products of individual exertion shows that ability 
 to pay taxes includes something more than the mere 
 possession of property. When we study the early 
 legislation of the American colonies we find the tax 
 law of 1634 in Massachusetts Bay provided for the 
 assessment of each man " according to his estate and 
 with consideration of all other his abilityes whatso- 
 ever." Other American colonies followed the example 
 of Massachusetts in striving to reach the taxpayer's 
 income as a test of his al)ility to sup])ort the govern- 
 ment. But in New York it never secured a foothold. 
 During the Dutch domination the tax system of the 
 colony was composed almost entii'ely of excises and 
 duties. When th(» Englisli obtained control the tax on 
 
Income Taxes 271 
 
 property was introduced, but without any additional 
 income tax as in some of the other colonies. 
 
 The advocates of a property tax assert that the 
 income from property is better able to support the 
 government than professional or individual earnings. 
 Again they assert that under an income tax system 
 unproductive property like jewelry, art collections, 
 unimproved lands, etc-, would be exempt and thus pay 
 nothing towards the support of the government. To 
 begin with there is an utter insignificance of this kind 
 of property as compared with the total national wealth. 
 The conversion of capital into unproductive wealth of 
 itself destroys the revenue, which is the only true fund 
 for the payment of taxes. No economist advocates the 
 payment of taxes from the capital account. Instead 
 taxes should always come from revenue, for if taxes 
 came from the capital account there would come a time 
 when the capital' account would be exhausted and 
 future sources of revenue to support the government 
 would be dried up. It is a maxim of taxation that the 
 government should so adjust its tax system as not to 
 dry up future sources of revenue. 
 
 It is not denied that if the capital invested in unpro- 
 ductive property had been invested in productive prop- 
 erty and if the tax was levied on the product, the 
 owner would pay a larger sum. But on the other hand, 
 his revenue would be still greater and his annual sur- 
 plus above the tax would constitute an ever increasing 
 productive fund. The individual's renunciation of 
 revenue diminishes pro tanto his tax paying ability. 
 
 The exemption of unimproved lands from taxation 
 is sure to arouse a hostile storm of criticism. The single 
 taxers try to make us believe that there are so many 
 vacant building lots in every city that are held out of 
 use by land speculators. The housing problem of our 
 cities deserves careful study and attention. It is a 
 lamentable fact that altho he can obtain assistance in 
 every way from savings ])anks and loan associations, 
 the individual rarely buys a building lot and erects a 
 
272 Taxation in New York 
 
 home of his own. The new houses in our cities aro 
 mainly erected by speculative builders who either sell 
 or rent. But for these speculative builders there would 
 be great congestion in every city. To the extent that 
 they relieve the housing situation — they are bene- 
 factors. They are not animated by any hmnanitarian 
 motives, but consider only prospective profits. Why 
 does not the ordinary individual erect his own house 
 instead of buying or renting one from the speculative 
 builder? The day may come when the municipality 
 will be obliged to erect houses and either sell or rent 
 them to its citizens. 
 
 It is interesting to note that the City Club of New 
 York City is advocating in 1918 a State housing com- 
 mission to investigate and report as to the best 
 methods of obtaining adequate and proper housing, 
 whether thru a system of State loans or otherwise. 
 
 The property tax was the first crude attempt to 
 attain a semblance of equity, and it at first responded 
 roughly to the demands of democratic justice. In a 
 community mainly agricultural, the property tax was 
 not unsuited to the social conditions, but as soon as 
 commercial and industrial considerations came to the 
 foreground in national or municipal life, the property 
 tax decayed, became a shadow of its former self and, 
 while professing to be a tax on all property, has turned 
 out to be a tax on real estate only. Personal property 
 is practically exempt from taxation. There is undoubt- 
 edly three times as much personal property in the 
 state of New York as there is real estate, yet for the 
 year 1917 real estate paid seventy per cent, of the 
 taxes and personal property paid but thirty per cent. 
 This fact alone proves how inequitable and unjust the 
 property tax is. Professor Edwin Robert Anderson 
 Seligman, acknowledged to be the greatest authority 
 on taxation in this country, thus speaks of the property 
 tax in his '' Essays in Taxation : " 
 
 '' The general property tax as actually administered 
 is beyond all doubt one of the worst taxes known in the 
 
Income Taxes , 273 
 
 civilized world. Because of its attempt to tax intangi- 
 ble as well as tangible things, it sins against the cardi- 
 nal rules of uniformity, of equality and of universality 
 of taxation, ... It presses hardest on those least 
 able to pay. It imposes double taxation on one man 
 and grants entire immunity to the next. In short, the 
 general property tax is so flagrantly inequitable, that 
 its retention can be explained only thru ignorance or 
 inertia. It is the cause of such crjdng injustice that its 
 alteration or its abolition must become the battle cry 
 of every statesman and reformer." 
 
 All the reports of the different state tax commissions 
 emphasize year after year the fact that personal prop- 
 erty is not paying its share of the burden of taxation. 
 But they fail to emphasize the other fact just as patent 
 to all observers that real estate is pajdng more than 
 its share of the burden of taxation. No one can deny 
 that if certain people do not pay their share of the 
 tax burden, then certain other people must be paying 
 more than their share of the tax burden. Who are 
 these people who are paying more than their share of 
 the tax burden? If statistics were gathered it would 
 probably be found to be the farmers in the country 
 and the real estate owners in the cities. 
 
 The advocates of income taxation contend that 
 under such a system of taxation i:)ersonal property 
 would not escape as it does now. That there is a 
 danger to our democratic form of government from 
 the fact that under our property taxation a small 
 minority of taxpayers are paying the taxes which are 
 imposed bj^ a large majority of non taxpayers. In 
 a democracy every citizen to be a good citizen should 
 be a taxpayer, and under income taxation every 
 citizen would be a taxpayer. Some of these non tax- 
 payers tell us that indirectly thoy are paying taxes 
 thru the rent they pay, the food and clotlies they buy, 
 and in other ways in which they spend their money; 
 but when asked to tell just how much during the past 
 
274 Taxation in New York 
 
 year they have paid towards the support of the gov- 
 ernment, they are unable to tell. Under a system of 
 income taxation they would know just how much 
 they are paying towards the support of the govern- 
 ment each year and would be interested in having 
 this money well spent- Income taxation would thereby 
 be productive of better government. 
 
 Wisconsin imposed a state income tax act in 1910 
 and it is giving good satisfaction and producing a 
 large amount of revenue. The old assertion that an 
 income tax is inquisitorial is losing its force. Corpora- 
 tions are now required to make many financial reports 
 to different governmental agencies. They do not com- 
 plain that the government is prying into their private 
 affairs. Individuals now have to make returns to the 
 United States government in regard to their income. 
 They cannot therefore object to making a like return 
 to the State government. 
 
 There is no doubt that a State income tax is coming. 
 The 1915 joint legislative committee on taxation after 
 a thoro investigation came to the conclusion that a 
 State income tax was the solution of New York's tax 
 problem. Economic conditions have everywhere 
 engendered a shifting of the basis of taxable ability, 
 and democracy has declared that the best criterion, on 
 the whole, is to be found in income. The develop- 
 ment is irresistible, and the income tax will come to 
 stay until some new criterion of ability approves itself 
 to the democracy of the future. 
 
 There has been too much of a failure to distinguish 
 between wealth and property, that is between things 
 and their signs. Wealth is an economic term, while 
 property is a legal expression. Evidences of owner- 
 ship are property, but it may not be wealth. Nearly 
 all credits are property, but they are not wealth in 
 the economic sense. A piece of land worth $1,000 and 
 a mortgage upon it for $600 do not aggregate $1,600 
 of wealth in the place where the land lies and in the 
 
Income Taxes 275 
 
 place where the mortgage is domiciled. The economic 
 fact is that the mortgagor and the mortgagee together 
 own land worth $1,000 and no more. 
 
 The resident of Biilfalo who purchases a bond of 
 a street railway comjjany in New York City has sepa- 
 rated his thousand dollars from Buffalo and it has 
 become part of a railway in New York City. x\ltho 
 he himself remains in Buffalo, his wealth has not 
 remained in Buffalo; yet he is liable to taxation in 
 Buffalo as if his wealth was still there. New ,York 
 City taxes the railway as it is part of the property of 
 the metropolis. But the resident of Buffalo, altho 
 he has parted with his cash, has received in exchange 
 something which brings him in an income. Under our 
 present property system of taxation this $1,000 of 
 wealth is liable to taxation twice as if it was $2,000; 
 but under an income system of taxation it would be 
 taxable but once. 
 
INDEX 
 
 Ability to pay theory of taxation: PAGE 
 
 Best expressed thru an income tax 269 
 
 Adjutant general: 
 
 In charge of the military affairs of the State 95 
 
 Agricultural societies : 
 
 Exempted from taxation in 1859 190 
 
 Agricultural village communities: 
 
 (Sprang up after the curtailment of the privileges of the West 
 
 India Company and- of the patroons 6 
 
 Aid to denominational schools : 
 
 Forbidden by constitution of 1894 53 
 
 Albany glass factory: 
 
 Exempted from taxation in 1796 187 
 
 Alberta, province of: 
 
 Unearned increment tax on land introduced in 1913 254 
 
 Ale: 
 
 Tariff act of 1787 imposed a duty of six pence 19 
 
 Almonds : 
 
 Tariff act of 1787 imposed a duty of one penny 19 
 
 Alspice : 
 
 Tariff act of 1787 imposed a duty of one penny 19 
 
 American geographical society: 
 
 Called attention in 1876 that mny)^ of the State were grossly 
 
 erroneous 100 
 
 Anchors : 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Anchovies : 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Anti-rent agitation : 
 
 Conducted by holders rf perpetual leases during the forties 
 
 of the nineteenth century 40 
 
 Assessment and equalization : 
 
 Chapter XI 156-181 
 
 Assessors : 
 
 Directions as to manner of making assessments in 1774 157 
 
 Were to assemble in Ulster County in 1764 and agree as to 
 rule for making assessments 162 
 
 Received two shillings more per day in Cornwall than in 
 Haverstraw and Orangetown in 1770 162 
 
 Oath taken by assessors of Albany in 1764 173 
 
 Tribute paid to the value of their work 181 
 
278 Index 
 
 Astor, John Jacob: Paok 
 
 Accumulated his fortune in the fur trade 222 
 
 Attorney general: 
 
 Existed in colonial period S'l 
 
 Auction duties: 
 
 Used for the construction of the Erie canal 46 
 
 Axes: 
 
 Tariff act of 1787 imposed a duty of twelve shillings 20 
 
 Axtell, William: 
 
 Member of the council of the colony of New York, attainted 
 
 in 1779 25 
 
 Bank of Ithaca: 
 
 Failure to work out highway tax in 1833 73 
 
 Barclay, Thomas H. : 
 
 Attainted in 1779 25 
 
 Barge canal act : 
 
 Voted by people in 1903 65 
 
 Battery park: 
 
 Ceded to New York City by the State in 1789 143 
 
 Bayard and McEves: 
 
 Donated 2,500 acres of land to aid in the construction of the 
 
 Erie canal 29 
 
 Bayard, Robert : 
 
 Attaintetl in 1779 25 
 
 Bayard, William: 
 
 Attainted in 1779 25 
 
 Beaver : 
 
 Export duty on 3 
 
 Bedloe's Island: 
 
 Purchased by New York City for a pest house in 1758 98 
 
 Beef: 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Beer: 
 
 Excise on 3 
 
 Tariff act of 1787 imposed a duty of six pence 19 
 
 Bellomont, Governor, the Earl of: 
 
 Application to, for a ferry grant from Brooklyn 138, 139 
 
 Bellows: 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Benefit theory of taxation: 
 
 Illustrated in the rate bill system of taxation for public 
 schools 267 
 
 Not a proper method of taxation 268 
 
 Would injure the poor man and benefit the rich man 267 
 
 Bergen. Delegate Tunis ft.: 
 
 Of constitutional convention of 1846 in regard to the Dutch 
 language 50 
 
Index 1^79 
 
 Berlin : p^OE 
 
 Utilizes sewage of the city upon the land 116 
 
 Beverwyck : 
 
 Traders at 6 
 
 Billop, Christopher H. : 
 
 Attainted in 1779 25 
 
 Birkeland, Professor: 
 
 Inventor of electro-chemical process for manufacturing nitrate 
 
 fertilizers 113 
 
 Birmingham, city of: 
 
 Demolished slum area thru excess condemnation 210 
 
 Bishop : 
 
 Author of history of American manufactures 122 
 
 Black River canal: 
 
 Authorized by the Legislature in 1836 30 
 
 Blank books: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Board of health: 
 
 Created in 1880 93 
 
 Boot legs : 
 
 Tariff act of 1787 imposed a duty of one shilling and six 
 
 pe"ce 20 
 
 Boots : 
 
 Tariff act of 1787 imposed a duty of one shilling and six pence. 20 
 Bounties : 
 
 Upon woolen cloth, broadcloth, salt, wild animals and sugar 
 
 beets 70. 71 
 
 Bowling Green park: 
 
 Created in 1786 I43 
 
 Boyd, John: 
 
 Loaned £1,500 by the State in 1705 27 
 
 Boyle, Governor Emmet D. : 
 
 Opinion concerning taxation of mines 228 
 
 Bridle bits: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings oq 
 
 Bridles: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings oq 
 
 Bright, John : 
 
 Expression as to the teachers' influence .(jj) 
 
 Bright, Louis V.: 
 
 Testimony as to Astor estate 216 
 
 British North American act of 1867: 
 
 Constituted Dominion of Canada 246 
 
280 Index 
 
 Broadcloth : Page 
 
 Bounty for manufacture of 70 
 
 Brooklyn Rapid Transit company: 
 
 Constructed subways in New York City in conjunction with 
 
 city 145 
 
 Brouwer Straate: 
 
 First street paved in New Amsterdam 149 
 
 Brushes : 
 
 Tariff act of 1 787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 buffalo burial groimd: 
 
 Exempted from taxation in 1834 189 
 
 Building zone plan : 
 
 Adopted by New York City. July' 25, 1916 245 
 
 Bulls: 
 
 To be assessed at fifteen dollars value by assessors in 179&. ... 16 
 Burgomeisters: 
 
 Fine for tardiness and absence 4 
 
 Busch, Adolphus: 
 
 Founder of the Anheuser-Busch brewery at Saint Louis 257 
 
 Butler, John: 
 
 Attainted in 1779 25 
 
 Butter : 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Caldwell, James: 
 
 Loaned £8,000 by State in 1795 27 
 
 Purchase of public lands from the State SD 
 
 California : 
 
 Fruit growers' excliange 115 
 
 Relative tax burdens of manufactures and agriculture in the 
 
 State in 1906 126 
 
 Canal tolls: 
 
 Abolished on canals in 1882 33 
 
 Abolished on railroads in 1851 33 
 
 Candles : 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Capers : 
 
 Tariff act of 1787 imposed a duty of .seven pounds and ten 
 
 shillings 20 
 
 Carnegie, Andrew: 
 
 Disposed of the Carnegie steel company 257 
 
 Novel theory concerning inheritance tax 81 
 
 Carriages : 
 
 Tariff act of 1787 imposed a duty of four to eight pounds. ... 20 
 
 To be assessed at fifty dollars value by assessors in 1799 16 
 
Index 281 
 
 Cayuga and Seneca canal: Page 
 
 Authorized by the Legislature in 1825 29 
 
 To be changed to a barge canal (i.) 
 
 Cemeteries : 
 
 Exempted from taxation in 1875 189 
 
 Central park: 
 
 Authorized by the Legislature in 1853 143 
 
 Champlain canal: 
 
 Construction began in 1817 .'50 
 
 Chariots and post chaises: 
 
 Taritr act of 1787 imposed a duty of fifteen pounds 20 
 
 To be assessed at seven hundred dollars value by assessors in 
 
 1799 10 
 
 Chase, Salmon Portland: 
 
 Secretary of the treasury . . .' 264 
 
 Chemung canal: 
 
 Abandoned in 1878 62 
 
 Authorized by the Legislature in 1829 29 
 
 Chenango canal : 
 
 Abandoned in 1 878 63 
 
 Authorized by the Legislature in 18S0 29, 30 
 
 China ware: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Chilton, George: 
 
 Analysis of New York City water in 1835 140 
 
 Church, Chief Justice Sanford Elias: 
 
 Denounced special assessments in 1877 201 
 
 City and suburban homes company of New York City: 
 
 Houses fifteen thousand people in the boro of Manhattan. . . . 243 
 Cheese : 
 
 Tariflf act of 1787 imposed a duty of four pence 19 
 
 Chocolate: 
 
 Tariff act of 1787 imposed a duty of three pence 19 
 
 City slaughter house: 
 
 Source of revenue in New Amsterdm 4 
 
 Civil service commission : 
 
 Conducts civil service examinations !M 
 
 Civil War: 
 
 Canal tolls increased enormously on account of the closing of 
 the southern ports 61 
 
 Cost of 67. cs 
 
 Claus, Daniel: 
 
 Attainted in 1779 25 
 
 Clergymen : 
 
 E.M-mpt.Ml from taxation 186. 1 88 
 
282 Index 
 
 Clermont, town of: Page 
 
 First legislative enactment in regard to a common school.... 49 
 Clinton, Governor DeWitt : 
 
 L'rged the necessity of an authentic and official map of the 
 
 State in 1827 100 
 
 Clinton, Governor George: 
 
 Mest^age to Legislature calling attention to importance of edu- 
 cation 49 
 
 Opposed to adoption of the United States constitution 23 
 
 Clinton, Sir Henry: 
 
 Attainted in 1779 25 
 
 Clocks : 
 
 Tariff act of 1787 imposed a duty of twenty shillings 20 
 
 To he assessed at forty dollars value by assessors in 1799. ... IG 
 Coaches : 
 
 Tariff act of 1787 imposed a duty of fifteen pounds 20 
 
 To be assessed at eight hundred dollars value by assessors in 
 
 1799 16 
 
 Coffee: 
 
 Tariff act of 1787 imposed a duty of one penny 19 
 
 Colden, Daniel: 
 
 Attained in 1779 25 
 
 CoUes, Christopher: 
 
 Proposed a plan for New York City's water supply \'VJ 
 
 Colonial assembly: 
 
 Established Church of England ministry in 1093 in the City 
 of New York and counties of Queens, Richmond and West- 
 chester 161 
 
 Established in 1683 9 
 
 Made distinction Ijetween tax rates on real estate and personal 
 property in 1778 18 
 
 Petition to the governor in regard to assessment of property. . 12 
 Colonial taxation: 
 
 Chapter 1 3-2(5 
 
 Colorerl men : 
 
 Suffrage requirements of Td 
 
 Commondage : 
 
 Land held in common in D\itch villages in New Netherland . . 0,7 
 Common school fund : 
 
 Created in 180.') from sale of State's public lands 55 
 
 Connecticut : 
 
 Discrimination against, in tariff act of 1878 21. 22 
 
 Conservation commission : 
 
 Created in 1911 98 
 
 Reports that New York has more water power than any other 
 state lOfi 
 
Index 283 
 
 Controller: Page 
 
 Financial officer of the State 91 
 
 Control of land adjacent to improvements: 
 
 A reason for excess condemnation 207 
 
 Cooper, William: 
 
 Purchaser of public lands from the State 39 
 
 Cordage : 
 
 Tariff act of 1787 imposed a duty of four shillings 19 
 
 Corporation taxes: 
 
 First imposed in 1880 74 
 
 Coulter, Ernest K. : 
 
 Testimony as to congested districts of a city 245 
 
 Council of appointment : 
 
 Instituted under constitution of 1777 90 
 
 Council of farms and markets: 
 
 Created in 1917 95 
 
 Council of revision: 
 
 Kevised all bills passed by the Legislature 90 
 
 Court fines: 
 
 Divided between city, officer, church and poor in New Amster- 
 dam 4 
 
 Court of Appeals: 
 
 Constituted by the constitution of 1846 92 
 
 Court of Claims: 
 
 Changed from Board of Claims in 1897 92 
 
 Cows : 
 
 To be assessed at four to ten dollars value bj- assessors in 
 
 1799 16 
 
 Craig, City Comptroller Charles L. : 
 
 Reported New York City's constitutional debt limit January 1. 
 
 1918 13.T 
 
 Crooked Lake canal : 
 
 Abandoned in 1877 62 
 
 Authorized by the Legislature in 1829 29 
 
 Croton aqueduct: 
 
 Constructed from Croton river to New York City 141 
 
 Cruger, John Harris, member* of the council of the Colony of New 
 York : 
 
 Attainted in 1779 25 
 
 C'urrants: 
 
 Tarriff Act of 1787 imposed a duty of one penny 19 
 
 Cuyler. Abraham C, Mayor of the city of Albany: 
 
 Attainted in 1779 25 
 
 Dallas, Alexander James: 
 
 Recommended income tax in 1815 264 
 
284 Index 
 
 DeLancey, James: Page 
 
 Attainted in 1779 25 
 
 (Jonliscated property in New York City sold 26 
 
 Del^ancey, Oliver, member of the council of the Colony of Xew 
 York: 
 
 Attainted in 1771) 25 
 
 Delaware and Hudson canal : 
 
 Abandoned in 1899 194 
 
 DePeyster, Johannes: 
 
 Contribution for putting New Amsterdam in a state of defense. 9 
 Dix. Governor Jolm Alden : 
 
 Recommendation as 'to use of the State's water power 105 
 
 Dogs: 
 
 Injurious to the sheep industry 71 
 
 Drugs : 
 
 Tariff Act of 1787 imposed a duty of five pounds 21 
 
 DuBois, Peter: 
 
 Attainted in 1779 25 
 
 Duer, Delegate John : 
 
 Of constitutional convention of 1821 in regard to lotteries. ... 42 
 Dutch West India Companj': 
 
 Presented New Amsterdam with its first city hall 148 
 
 Duties: 
 
 Table of amount of 8 
 
 Early sources of State revenue: 
 
 Chapter III 37-46 
 
 Earthern ware: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 ■shillings 20 
 
 Edwards, Delegate Ogden : 
 
 Of constitutional convcnlinn of 1S21 in regard to lotteries. ... 42 
 Elevated railroads: 
 
 Gross earnings tax first imposed in 1896 76 
 
 Encyclopedia Americana: 
 
 States that anthracite coal supply of country will be exhauslcd 
 
 in 50 years 110 
 
 Engineer and Surveyor: 
 
 Report of 1858 contained a railroad maj) of the State 127 
 
 England : 
 
 Unearned increment tax on land introduced in 1909 253 
 
 First country to adopt income taxation 261 
 
 English language: 
 
 To be taught in pulilic schools according to Act of 1795 50 
 
 Erie canal: 
 
 Construction began in 1817 28 
 
 Enlargement of, in 1835 30 
 
 To be changed to a barge canal 65 
 
Index 285 
 
 Eric railroad: Page 
 
 Borrowed $3,000,000 from vState for construction S2 
 
 Excess condemnation: 
 
 Is of American origin 210 
 
 Made constitutional by voters of the State in 1913 207 
 
 Excise department : 
 
 Created in 189tj 92 
 
 Excise: 
 
 Table of amount of 8 
 
 Exemptions : 
 
 Chapter XII 182-196 
 
 Farmers : 
 
 Would lie ruined by single tax on land values 228 
 
 Figs: 
 
 Tariir act of 1787 imposed a duty of one penny 19 
 
 Fillebrown, Charles B. : 
 
 Author of " The A. B. C. of Single Tax " 218 
 
 Firemen : 
 
 Exemptions in reference to 192. 193 
 
 Flagg, State Comptroller Azariah Cutting: 
 
 Report concerning State's borrowing capacity 34. o'i 
 
 Flax: 
 
 Amount raised in New York State in 1845 115 
 
 Flick. Alexander Clarence: 
 
 Estimate of amoimt realized from sale of confiscated loyalist 
 
 property 26 
 
 Flour : 
 
 Barrel of, could be transported from Cayuga to ^Montreal for 
 
 $1.50 in 1816 28 
 
 Flour of mustard: 
 
 TarilT act of 1787 imposed a duty of live pounds 21 
 
 Floyd. Richard: 
 
 Attainted in 1779' 2(i 
 
 Folliot, Richard, merchant of the city of New Vi.rk: 
 
 Attainted in 1 779 25 
 
 Ford. Henry: 
 
 Manufacturer of jiutDinobih's 257 
 
 Frying pans: 
 
 Tariir act of 1787 imposed a duty of live pounds 21 
 
 Fur trade: 
 
 Engaged in by first .settlers of \(>w Xetlierland (> 
 
 Gaynor, Mayor William Jay: 
 
 Criticized Mortgage Tax Law in I'tlO Sfi 
 
 General training day: 
 
 Aboli.shcd in 1S70 60 
 
28(J Index 
 
 (Jenesee Valley canal: Page 
 
 Abandoned in 1878 63 
 
 Authorized by the Legislature in 18;36 30 
 
 George, Henry : 
 
 Dedicated book, "Protection and Free Trade," to Physiocrats. 212 
 
 Stated that tramp came with the locomotive 10 
 
 German land reform league: 
 
 Advocated unearned increment tax on land 251 
 
 Gewerbesteuer : 
 
 Business taxes of Prussia 85 
 
 Glasgow, city of: 
 
 Demolished slum area thru excess condemnation 210 
 
 Glassware : 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Granger, Gideon : 
 
 Donated 1,000 acres of land to aid in the construction of the 
 
 Erie canal 29 
 
 Great remonstrance: 
 
 Complaint sent to Holland in 1649 by prominent inhabitants 
 
 of New Amsterdam 47 
 
 Greenwood cemetery: 
 
 Exempted from taxation in 1838 189 
 
 Groote borgerrecht: 
 
 Greater right of citizenship 5 
 
 Haig, Professor Robert Murray: 
 
 Heport concerning exemption of buildings from taxation in 
 
 Western Canada 236 
 
 Hair powder : 
 
 Tariff act of 1787 imposed a duty of four pence 19 
 
 Hamilton, Alexander: 
 
 Answered objections to taxation article of United States con- 
 stitution 23, 24 
 
 Hamilton manufacturing society: 
 
 Exempted from taxation for a period of five years in 1801 .... 120 
 Hats: 
 
 Tariff act of 1787 imposed a duty of seven pounds and Ion 
 
 shillings 21 
 
 Hawkins, Thomas J.: 
 
 Chief assessor of Pittsburg 235 
 
 Heere Gracht: 
 
 The grand canal of New Amsterdam 6. 135 
 
 Herkimer, John .Toost: 
 
 Attainted in 1779 25 
 
 Highway department: 
 
 Created in 1909 100 
 
Index 287 
 
 Hill, Governor David Bennett : Page 
 
 Message concerning New York City's constitutional debt limit. 133 
 Hoche, General: 
 
 Threatened invasion of England 261 
 
 Hoft'man, Judge Murray: 
 
 Name attached to Hoffman-Neill rule of realty valuation. ... 167 
 Holland Land Company: 
 
 Donated 100,623 acres of land to aid in the construction of 
 
 the Erie canal 29 
 
 Horn combs: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings • 20 
 
 Horse harness: 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Horses : 
 
 To be assessed at eight to thirty dollars value by assessors in 
 
 1799 16 
 
 Hospitals : 
 
 Exempted from taxation 190 
 
 Houses of industry: 
 
 Exempted from taxation in 182S' 194 
 
 Huddleston, William: 
 
 First English schoolmaster in New York colony 58 
 
 Hugo, Victor: 
 
 Advocated the distribution of sewage upon the land 116 
 
 Hunter, Governor Robert: 
 
 Proposal in regard to quit rents 7 
 
 Hurley, town of: 
 
 Division of commons among the freeholders by act of Legis- 
 lature in 1806 7 
 
 Imprisonment for debt: 
 
 Abolished in 1831 71 
 
 Income taxes: 
 
 Chapter XVIl 261-275 
 
 Indians: 
 
 Exempted from taxation 189 
 
 Treaties with 8 
 
 Indirect sources: 
 
 Revenue of New Netherland came almost exclusively f roin . . . 3 
 Industrial commission : 
 
 Came into being in 1915 93 
 
 Inglia, Margaret, wife of Reverend Charles Inglis: 
 
 Attainted in 1779 25 
 
 Inglis, Reverend Charles, rector of Trinity church. New York City: 
 
 Attainted in 1779 *. . 25 
 
288 Index 
 
 Inheritance taxes: Page 
 
 Developed out of probate duties 81 
 
 First imposed in 1885 79 
 
 Theory as to capitalized income tax 81 
 
 Insurance companies: 
 
 Taxed upon their gross premiums 76 
 
 Interborough Rapid Transit Company: 
 
 Constructed subways in New York City in conjunction with 
 
 city 145 
 
 Internal improvements: 
 
 Chapter II 27-36 
 
 Investment taxes: 
 
 A new name for secured debt taxes 87 
 
 Jay, John: 
 
 Opinion as to proper method of taxation 266 
 
 Jauncey, James, merchant of the city of New York: 
 
 Attainted in 1779. '. 25 
 
 Jessup, Ebenezer: 
 
 Attainted in 1779 25 
 
 Jessup, Edward: 
 
 Attainted in 1 779 25 
 
 Johnson, Guy: 
 
 Attainted in 1779 25 
 
 Johnson, Sir John : 
 
 Attainted in 1779 25 
 
 Johnson, Thomas L. : 
 
 Candidate for Governor of Ohio in 1905 228 
 
 Jones, Thomas, justice of the Supreme Court of the colony of 
 New York : 
 
 Attainted in 1779 25 
 
 Kane, John : 
 
 Attainted in 1779 25 
 
 Kempe, John Tabor, attorijey-general of ihc Colony of New York: 
 
 Attainted in 1779 25 
 
 Seized property of Johaniiis ?klu(ls as an escheat io Ihc crown 
 
 of Great Britain 50 
 
 Kernan, John D. : 
 
 Spoke at first State lax conference on the taxation of manu- 
 factures 129 
 
 Kiauchau. China: 
 
 First application of taxation of unearned increment of land. . 251 
 King. Road Commissioner Samuel: 
 
 Summoned Bank of Ithaca to work on highways in 1833 73, 
 
 Kings College: 
 
 Founded by the English administration 48 
 
 Kingston: 
 
 J-.eads in per capita consumption of water Ill 
 
Index 289 
 
 Kip, Hendrick: Page 
 
 Contribution for putting New Amsterdam in a state of defense. 8 
 Klignerecht, also calletl porterrecht : 
 
 Lesser right of citizenship •"> 
 
 Kissam, Daniel, the elder: 
 
 Attainted in 1779 25 
 
 Laissez-faire period of Xew York history: 
 
 Chapter IV fiO-72 
 
 Leake. Rol)ert : 
 
 Attainted in 1779 2.5 
 
 Leather : 
 
 Tariff act of 1787 imposed a duty of three and four pence. ... 19 
 Leonidas : 
 
 Defender of the Pass of Thermopyla; 224 
 
 Lincoln, Charles Zebina : 
 
 Stated that canals were a loss to the State of over .$34,000,000. ti.1 
 Linseed oil : 
 
 Tariff act of 1787 imposed a duty of eight pence 19 
 
 Light, water and power companies: 
 
 Taxed upon their earnings and dividends 76 
 
 Literary and charitable institutions : 
 
 Exempted from taxation in 1829 194 
 
 Liquors, distilled: 
 
 Tariff act of 1787 imposed a duty of four pence 18 
 
 Liquor taxes: 
 
 First imposed as a State tax in 1896 82 
 
 Lloyd. Henry, merchant of the State of Massachusetts Bay: 
 
 Attainted in 1779 26 
 
 Lloyd-George. David : 
 
 Characterization of income tax in England 263 
 
 London, city of: 
 
 Demolished shun area through excess condemnation 210 
 
 Lotteries: 
 
 A means of raising revenue for the State 40-42 
 
 Low. Isaac, merchant of the city of New York: 
 
 Attainted in 1779 2;i 
 
 Ludlow. Gabriel : 
 
 Attainted in 1779 2.') 
 
 Ludlow, George Duncan. .Tustice of the Supreme Court of the Colony 
 of New York: 
 
 Attainted in 1 779 ■2r> 
 
 Macomb's Purchase: 
 
 The largest sale of public land in the State 38 
 
 Madison Square park: 
 
 Formerly Potter's Field of New York City 14:^ 
 
 Malt : 
 
 Tariff act of 1787 imposed a duty of four pence 10 
 
 10 
 
290 Index 
 
 Maiilialtaii Company: Pagk 
 
 Supplied New York City with water from 1799 to 1842 l.'JO, 140 
 
 Manufacturing industry : 
 
 Value of its product surpassed tliat of agriculture in the State 
 
 by 1870 60 
 
 Marcy, Governor William Learned: 
 
 Messages to Legislature relating to payment of State debt . . 30, 31 
 Marling. Alfred E.: 
 
 Testified as to condition of Greater New York's real estate. . . 15« 
 Marsiiall, Chief Justice John: 
 
 Decision of MeCulloch versus Maryland 184 
 
 -Matthews, David, Mayor of the city of New Y^ork: 
 
 Attainted in 1779 25 
 
 Maxwell, William H.: 
 
 Report as to New Y'ork City's public schools 147 
 
 McAdam, William, merchant of the city of New York : 
 
 Attainted in 1779 25 
 
 McCoun, Vice Chancellor William T. : 
 
 First to use so-called Hoffman-Neill rule for realty valuation. 167 
 Megalopensis, Domine Johannes: 
 
 Contribution for putting New Amsterdam in a state of defense. 9 
 Merrill, State Tax Commissioner John Jacob: 
 
 Testified regarding amount of personal property in State.... 153 
 Merritt, William : 
 
 Lessee of Brooklyn ferry in 1682 6 
 
 Metropolitan sewage commission: 
 
 Estimate of manurial value of sewage 115 
 
 Report as to condition of New York City's sewers 150 
 
 Military tract: 
 
 Public lands in the center of the State to pay bounties to the 
 
 soldiers of the Revolutionary War 38 
 
 Militaiy training: 
 
 Known as general training day 08. 69 
 
 (Jovernor William Henry Seward referred to it in his message 
 
 of 1840 69 
 
 :\Iiller. Cyrus C: 
 
 Testimony as to sale of Bronx property 221 
 
 ^liiuiit, Peter: 
 
 I'urchased Manhattan Island from the Indians 222 
 
 Mitchell, C. R.: 
 
 Report as to operation of unearned increment tax on land in 
 
 All)erta 255 
 
 Molasses: 
 
 TariflF act of 1787 imposed a duty of one penny IS 
 
 Money system for working highways: 
 
 iVrmanentlv established in State in 1908 101 
 
Index l^'Ji 
 
 Morrison, Malcom: Page 
 
 Attainted in 1779 25 
 
 Morris, Mary, wife of Roger Morris: 
 
 Attainted in 1779 26 
 
 Morris, Koger, member of the council of the Colony of New York : 
 
 Attainted in 1779 25 
 
 Mortgage taxes: 
 
 First imposed in 1905 85 
 
 Morton, Governor Levi Parsons: 
 
 Recommendation in 1895 as to disposition of tlie Onondaga salt 
 
 springs 44 
 
 Motor vehicle taxes: 
 
 One-half of receipts go to State and one-half to localities. ... 88 
 Muirson, George: 
 
 Attainted in 1779 26 
 
 Mules : 
 
 To be asses.sed at $8 to $35 value by assessors in 1779 16 
 
 Murray, John, earl of Dunmore, formerly governor of the Colony of 
 New York: 
 
 Attainted in 1779 24 
 
 Mutts, Johannis: 
 
 Gave his lands for the establishment of a free school 59 
 
 National banks: 
 
 Taxed on their capital stock, surplus and luidivided profits. ... 77 
 National Guard: 
 
 Organized in 1861 OS 
 
 Neill, Henry Harmon : 
 
 W orked out table for Hoffman-Neill rule 167 
 
 New activities of the State: 
 
 Chapter VITI 105-1 1 9 
 
 New Amsterdam : 
 
 Revenues of 4 
 
 Traders at 5 
 
 New Castle, town of: 
 
 Broken dam to be repaired in 1677 9 
 
 New Jersey: 
 
 Discrimination a<:ains<. in Tarifl' Act of 1787 20. 21 
 
 New Netherland: 
 
 Colonial revenue of 3 
 
 Trade colony 6 
 
 New sources of State reventie: 
 
 Chapter VI 73-88 
 
 New York and Harlem Railroad : 
 
 \^■as (he first horse car line 144. 145 
 
 New York Central and Hudson River Railroad: 
 
 Land cost in 1882 . 229 
 
292 Index 
 
 New York Central Railroad: ' Page 
 
 Allowed to carry freight in 1836 33 
 
 New York Gas Light Company: 
 
 Furnished gas light to certain streets of New York City in 
 
 1823 142 
 
 New York Tax Reform Association: 
 
 Report as to interest rates as affected by mortgage tax law. . 86 
 New York State: 
 
 Under two governments during the Revolutionary War 17 
 
 Nolan, John: 
 
 Address concerning industrial housing 242 
 
 Odell, Governor Benjamin Barker: 
 
 Opinion expressed in message as to operation of special fran- 
 chise tax law 180 
 
 Ohio: 
 
 Wrested agricultural supremacy from New York in 1880 fiO 
 
 Olives: 
 
 Tariflf act of 1787 imjiosed a duty of seven poiuids and ten 
 
 shillings ' 20 
 
 Olney, Richard: 
 
 Argued constitutionality of income tax before Supreme Court. 26;) 
 Oneida Lake canal : 
 
 Abandoned in 1 887 62 
 
 Onondaga salt springs : 
 
 Acquired by the State in 170.") 42 
 
 Disposed of in 1898 44 
 
 Orange County: 
 
 Taxpayers required to furnish assessors with a just arrcunt nf 
 
 their property in 1770 1 ."lO. 1 .")7 
 
 Organization taxes on corporations: 
 
 First imposed in 1886 7.) 
 
 Oswego County : 
 
 Aren of swamp land largest in State 113 
 
 Oxen : 
 
 To be assessed at ^la value by assessors in 1790 16 
 
 Pacific Mail Steamship Company: 
 
 Case decided by Court of Appeals in 1876 105 
 
 Paris : 
 
 Began utilizing sewage upon the land in 1867 116 
 
 Parsonages : 
 
 Exempted from taxation in 1802 ISO 
 
 Parton. James: 
 
 Author of a " Life of John Jacob Astor " 222 
 
 Patroons: 
 
 Curtailment of the privileges of 6 
 
 Quit rents of g 
 
Index -9-^ 
 
 Peddleio" liceuse lax: i'AGii 
 
 Imposed in colonial days -lo 
 
 Pension property: 
 
 KxemjJled from taxation in IS'JU 190 
 
 Penwell, Lewis: 
 
 Estimate of the government's need of wool 71 
 
 Pepper : 
 
 Tarifl" act of 1787 imi^osed a duty of three pence ID 
 
 Personal property: 
 
 Fixed value of various classes of for taxation purposes as de- 
 termined by the Legislature in 1779 15 
 
 Three times as much in the State as there is real estate. . . .153. 15-1 
 Pewter ware: 
 
 Tarifl" act of 1787 imposed a duty of seven pounds and ten 
 
 shillings " 20 
 
 Phaetons or coaches : 
 
 To be assessed at $300 value by assessors in 1799 16 
 
 Phillipse, Frederick: 
 
 Attainted in 1779 25 
 
 Physiocrats : 
 
 French school of thinkers who favored a single tax on land. . . . 212 
 Pierson. Josiah G. : 
 
 Loaned £4.000 by State in 1795 27 
 
 Pittsford cemetery: 
 
 Exempted from taxation in 1843 189 
 
 Pitt, William: 
 
 Introduced income tax act in England 261 
 
 Place. John A.: 
 
 Report as canal auditor in 1882 63. 64 
 
 Pork: 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Porterrecht. also called klingnercht : 
 
 Lesser right of citizenship 5 
 
 Porter : 
 
 Tariff act of 1787 imposed a duty of si.x pence 19 
 
 Potts, Rufus M.: 
 
 Discussed fire insurance in 1914 annual report 117 
 
 Pratt and Logan: 
 
 Developed Pine Hills section of the City of Albany 224 
 
 Prendergast, City Comptroller William A.: 
 
 Testified as to Xew York City's pension system 151 
 
 Prospect park : 
 
 Scene of battle between British and Americans, August 27. 
 
 1776 144 
 
 Prunes: 
 
 TaritT ;i<i nf 1787 imposed a duly of one penny 19 
 
294 Index 
 
 Public education: Pagk 
 
 Chapter IV 47-59 
 
 Public school society of New York City: 
 
 Founded in 1805 for poor children of city 02 
 
 Public Service Commisfiions : 
 
 Organized in 1907 97 
 
 Quadrennial assessment of property: 
 
 Recommended by Wisconsin State Tax Commission 158 
 
 Queensboro bridge: 
 
 Second longest bridge in the world 143 
 
 Quills : 
 
 Tariff act of 1787 imposed a duty of seven pounds and ten 
 
 shillings 20 
 
 Quit rents: 
 
 Act relative to, passed in 1819 38 
 
 Never developed into a distinct land tax 7 
 
 Table of amount of S 
 
 Racing taxes: 
 
 Repealed in 1910 84 
 
 Raisins: 
 
 Tariff act of 1787 imposed a duty of eight pence 19 
 
 Rampo Water Company: 
 
 Proposed supplying Greater New York with water in 1899. ... 141 
 Rapalje, John: 
 
 Attainted in 1779 26 
 
 Rapid Transit Commission : 
 
 Testimony taken in 1895 221 
 
 Rate bill system: 
 
 In vogue in public schools until 1867 'I'^-r):^ 
 
 Benefit theory of taxation 267 
 
 Re-plotting of remnants and irregular building lots: 
 
 A reason for excess condemnation 208 
 
 Reserve militia: 
 
 Consisted of all male citizens between the ages of IS and 45 
 not members of the imiformed militia (iS 
 
 To participate in the general tra^ining day the first ^Monday of 
 
 September of each year . . '. 68 
 
 Robinson, Beverly: 
 
 Attainted in 1779 25 
 
 Robinson. Oovernor Lucius: 
 
 Recommendation for the abolishment of Ihe banking and insin- 
 
 ance departments 72 
 
 Robinson. Susannah, wife of Beverly Robinson: 
 
 Attainted in 1779 25 
 
 Rochester, town of: 
 
 Inhabitants exempted from taxation in 1781 on account of a 
 late incursion of the enemy 186. 187 
 
Index 295 
 
 Roelantsen, Adam: Page 
 
 First Dutch achoolmaster in New Amsterdam 47 
 
 Roosevelt, John and Nicholas : 
 
 Purchasers of public lands from the State :)!> 
 
 Ruggles, Judge Charles H. : 
 
 Decision upholding special assessments 20(1 
 
 Ruggles, Samuel B.: 
 
 Plan for enlargement of Erie canal 34 
 
 Saddles : 
 
 Tariff act of 1787 imposed a duty of ten shillings 20 
 
 Saddle trees: 
 
 Tariff act of 1787 imposed a duty of twelve shillings 20 
 
 Sale of public lands : 
 
 Amounted to about 50 per cent, of State revenue in (!arly days. :i7 
 
 Disposed of very lavishly , 39 
 
 Sales : 
 
 Represents the testimony of both purchaser and seller as to 
 
 value of property conveyed ." 170 
 
 Salt: 
 
 Bounty for exportation of Avithout the State 43 
 
 Tariff act of 1787 imposed a duty of six pence 19 
 
 Sanford, Samuel : 
 
 Made a careful study of the coal supply of this country 110 
 
 vSaving in expense to the municipality through sale of abutting 
 property at increased values due to the improvement : 
 
 A reason for excess condemnation 200 
 
 Savings banks: 
 
 Deposits in exempted from taxation in lSr)7 77. 190 
 
 Taxed on their surplus and undivided pi'ofits 77 
 
 School trustees: 
 
 Duties of prior to 1867 53. 54 
 
 Schepen : 
 
 Fine for tardiness and absence 4 
 
 Sshout : 
 
 Fine for tardiness and absence 4 
 
 Schut, Cornelius: 
 
 Used city hall as a .storehouse for salt 140 
 
 Scythes : 
 
 Tariff act of 1687 imposed a duty of twelve shillings 20 
 
 Seaman. Benjamin: 
 
 Attainted in 1770 25 
 
 Secretary of State: 
 
 Custodian of the State archives 91 
 
 Secured debt taxes: 
 
 First imposed in 1011 87 
 
'2[)6 Index 
 
 Seligman, Professor Edwin Robert Anderson: Paoe 
 
 Characterization of general property taxes 'J72, 2T,i 
 
 Definition of a f ranc-liise 78 
 
 Seward, Governor William Henry: 
 
 Message concerning militia system in 1S40 69 
 
 Seymour, Governor Horatio: 
 
 Recommended State care for the insane 97 
 
 Seymour. State Engineer and Surveyor Silas: 
 
 Report of 1883 that the canals must go (io 
 
 Sheep : 
 
 Exempted from taxation in 1789 187 
 
 Molested by dogs 71 
 
 Sherbrook, Miles, merchant of the city of New York: 
 
 Attainted in 1 779 25 
 
 Sherman, Isaac: 
 
 Favored a single tax on land 220 
 
 Sherman, Senator John: 
 
 Opposed repeal of federal income tax law in 1870 267 
 
 Shoes : 
 
 Tariff act of 1787 imposed a duty of six pence to one shilling. . 20 
 Shovels : 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Sidmouth, Lord: 
 
 Prime minister of England 202 
 
 Simmons, Delegate George A. : 
 
 Of constitutional convention of 1846 in regard to the English 
 
 language 50 
 
 Skeene, Andrew P. : 
 
 Attainted in 1779 25 
 
 Skeene, Philip: 
 
 Attainted in 1779 25 
 
 Slaves : 
 
 To l)e assessed at one hundred dollars value l)v assessors in 
 
 1779 IG 
 
 Sloops : 
 
 To be assessed at seven huiulicd and fifty dollars value by 
 
 assessors in 1779 16 
 
 Smith, Melancton : 
 
 Estimate of revenue received fioni (arilT ;ict of 1787 22. 23 
 
 Smith, Sydney : 
 
 Description of iMighnul's indirect system of taxation 262 
 
 Snuff: 
 
 Tariff act of 1787 imposed a duty of six pence 19 
 
 Snyder. \V. P.. aiiditor general of Pennsylvania: 
 
 Condition of Pennsvlvania from 1830 to 1853 r;4 
 
IXDEX 29 
 
 Soap: Pack 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Society for lowering rents: 
 
 Advocated luitaxing buildings 2:52 
 
 Society for the propagation of the gospel in foreign parts : 
 
 Established English schools iii the New York colony 48 
 
 Presented New York City with 1,642 books for its first library. 147 
 Somers, William A.: 
 
 Originator of a unit system of realty valuation 165 
 
 Special assessments: 
 
 Chapter XIII 107-211 
 
 Stallions: 
 
 To be assessed at three hundred dollars value by assessors in 
 
 1799 '. 16 
 
 State aid to railroads: 
 
 Solicited under pretext of developing the resources of the 
 
 State 32 
 
 State banks : 
 
 Taxed on their capital stock, surplus and undivided profits. ... 77 
 State expenditures: 
 
 Chapter VII 89-104 
 
 State's fiscal year: 
 
 Changes made as to time of 69 
 
 State tax rates: 
 
 Highest in history of State in 1872 66 
 
 Steamboat taxes: 
 
 To aid in the construction of the Erie canal 45 
 
 Steel : 
 
 Tariff act of 1787 imposed a duty of three farthings 19 
 
 Stirrup irons : 
 
 Tariff act of 1787 impo.sed a duty of seven pounds and ten 
 
 shillings 20 
 
 Slock transfer taxes: 
 
 First imposed in 1905 84 
 
 Stop and tax law: 
 
 Enacted in 1842 34 
 
 Stoutenburg. J. : 
 
 Supplied lighting to ^"ew York City in 1770 142 
 
 Suffrage : 
 
 Requirements of 70 
 
 Sugar beets: 
 
 Bounty to encourage production of sugar from 71 
 
 Sugar: 
 
 Tariff ad of 1787 imposed a duty of half pence to two pence. 19 
 Superiniendent of banks: 
 
 Created in 1851 102 
 
298 Index 
 
 Superintendent of insurance: Page 
 
 Created in 1800 102 
 
 Superintendent of State prisons: 
 
 Office created in 1876 m 
 
 Supreme court : 
 
 Constituted by colonial assembly in 1G91 '••2 
 
 Surface street railroads: 
 
 Gross earnings tax first imposed in 1S9G 76 
 
 Surveyor general : 
 
 Existed under the colony of New Netlierland it9 
 
 Surveyor of the king's woods: 
 
 Existed from 1698 to 1777 99 
 
 Swine : 
 
 To be assessed at three dollars value by assessors in 179!V 16 
 
 Tariff: 
 
 Act of 1784 exempted from duties goods and merchandise 
 imported into New York from any of the other original 
 thirteen states 18 
 
 Act of 1 787 1 8-21 
 
 Taxation : 
 
 First taxes in New Netherland were largely of a voluntary 
 
 nature 8 
 
 Tax department: 
 
 Continuation of State board of assessors 94 
 
 Taxing manufacturing companies: 
 
 Chapter IX 120-131 
 
 Tea: 
 
 TarilT act of 1787 imposed a duty of three to eight pence. ... 19 
 Tea water pump: 
 
 Its water most esteemed in New York City l.'?9 
 
 Telephone and telegraph companies: 
 
 Gross earnings tax first imposed in 1881 76 
 
 The condition of New York City: 
 
 Chapter X 1 :52-l T)") 
 
 The fallacy of the single tax : 
 
 Chapter XIV 212-2:?! 
 
 Throop, Governor Enos Thompson : 
 
 Message concerning imprisonment for debt in IS.'il 71 
 
 Tilden, Governor Samuel Jones: 
 
 Message in 187G recommending retrenchment in canal manage- 
 ment 64. 65 
 
 Tobacco : 
 
 Tariff act of 1787 imposed a duty of three pence 19 
 
 Toll gates : 
 
 Last one disappeared in State in 191;") Iflf) 
 
Index 290 
 
 Townsliip hiw for i)ul)lif sthonls: 1'agk 
 
 Enacted in 1917 56 
 
 Repealed in 1018 57 
 
 Transportation companies : 
 
 Gross earnings tax first imposed in 1880 7."). 76 
 
 Trust companies : 
 
 Taxed on their capital stock, surplus and undivided profits. ... 77 
 Tryon, William, late governor of the colony of New York: 
 
 Attainted in 1 779 24 
 
 Tsvine : 
 
 Tariff act of 1787 imposed a duty of five pounds 21 
 
 Ulster County: 
 
 New tax levy in 17G4 owing to defalcation of collector- 14 
 
 Unearned increment: 
 
 Chapter XVI 2.-)il-26n 
 
 Union College: 
 
 Received revenue from lotteries 41. 42 
 
 United States census: 
 
 To be used by assessors as a basis for assessing real estate in 
 
 1799 : 15 
 
 United States geological survey: 
 
 Began a topographical map of New York in 1892 100 
 
 United States surplus: 
 
 Distributed among the states in 1836 5.") 
 
 University of the State of New York: 
 
 Created in 1 784 95 
 
 Untaxed buildings: 
 
 Chapter -W 232-249 
 
 Vancouver : 
 
 Effects of exemption of buildings from taxation . . 234 
 
 Tax arrears 249 
 
 Van Dam, Rip: 
 
 Lessee of Brooklyn ferry in 1699 138 
 
 Van Steenwyck. Cornelius: 
 
 Contribution for putting Now Amsterdam in a state nf defense. 8 
 Van Tienhoven, Secretary Cornelius: 
 
 Contribution for putting New Amsterdam in a state of defence. 9 
 
 Revenue of Colony nf New Nethorland in l(5.'iO 3 
 
 Vestrymen : 
 
 Acted as assessors of property in New York City 1(51 
 
 Oath taken in 1721 on assessing property 172. 173 
 
 Voltaire: 
 
 Author of essay, "The Man of Forty Crown- '" 21' 
 
 von Dederich. .\dniiral Otto: 
 
 Instituted taxation of unearned increment of land in Kian 
 thau. China 2.'>0 
 
300 IXDEX 
 
 Voorlezer : Page 
 
 Reader in Dutch churches 47 
 
 Voor Sanger : 
 
 Precenter in Dutch churches 47 
 
 Wade, F. C. : 
 
 Analyzed building permits in Vancouver 238 
 
 Wallace. Alexander, merchant of the city of New York : 
 
 Attainted in 1779 2") 
 
 Wallace, Hugh, member of the council of the colony of New York: 
 
 Attainted in 1779 ■2:^ 
 
 Warner's observatory of Rochester: 
 
 Exempted from taxation in 1886 191 
 
 Washington, George: 
 
 Saw in 1783 the advantage of a water communication between 
 
 the Hudson River and the great lakes 28 
 
 Watches : 
 
 To be assessed at twelve to fifty dollars value by assessors in 
 
 1799 * 16 
 
 Watts, John, member of the council of the colony of New York : 
 
 Attainted in 1779 25 
 
 Westfield cemetery : 
 
 Exempted from taxation in 1 846 180 
 
 West India company: 
 
 Charter of 6 
 
 Wetherhead. John, merchant of the city of New York: 
 
 Attainted in 1779 25 
 
 White, Henry, member of the council of the colony of New York : 
 
 Attainted in 1779 25 
 
 White, Thomas, merchant of the city of New York : 
 
 Attainted in 1779 25 
 
 Whitman, Governor Charles Seymour: 
 
 Recommended production of nitrogen from the atmosphere. ... 112 
 Wickham, Parker : 
 
 Attainted in 1779 25 
 
 Wild animals: 
 
 Bounties for destruction of 70. 71 
 
 Wllgus, William J.: 
 
 Testimony as to amount of freight trucked in New York City. 137 
 Willcmsen, Hendrick: 
 
 Opposition to special assessment in 1659 199 
 
 Wine: 
 
 Excise on 3 
 
 TarifT act of 1787 imposed a duty of four to eight pence 18 
 
Index 301 
 
 Wisconsin: Page 
 
 Adopted a State income tax in 1910 274 
 
 State tax commission presented reasons for quadrennial assess- 
 ment of property .' 158 
 
 Woman suflTrage: 
 
 Adopted by amendment to constitution in 1917 70 
 
 Wood, ilayor Fernando: 
 
 Message to the common council of New York City in 1861 ... . 132 
 
 Wright, Carroll D. : 
 
 Comment on growth of manufacturing in the United States.. 125 
 
RETURN TO the circulation desk of any 
 
 University of California Library 
 
 or to the 
 
 NORTHERN REGIONAL LIBRARY FACILITY 
 BIdg. 400, Richmond Field Station 
 University of California 
 Richmond, CA 94804-4698 
 
 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS 
 2-month loans may be renewed by calling 
 
 (510)642-6753 
 1-year loans may be recharged by bringing books 
 
 to NRLF 
 Renev\/als and recharges may be made 4 days 
 
 prior to due date 
 
 DUE AS STAMPED BELOW 
 
 JUL 6 1 .996 
 
 20,000 (4/94) 
 
 I luw-i'j, '23