Oppressive Taxation and Its Remedy

NOTHING has been done relative to amending the law of taxation in Massachusetts, and nothing is likely to he accomplished, because the friends of reform do not act together. If citizens of influence in this State, who are deeply, vitally interested in obtaining a better system, would stir themselves so far as to mature some distinct plan, and then carry it to the legislature, there is abundant reason for believing that they would succeed in securing its adoption. Too much must not be expected at first, nor must too much be asked; but there are signs which indicate that public opinion is ripe for the correction of some at least of the grosser of the abuses which now exist. There are, in particular, three features of the present law which are peculiarly obnoxious, and which arouse almost universal discontent : the first is taxation of mortgages; the second is taxation of the stock of foreign corporations; the third is the arbitrary method of assessing real estate. A former paper was devoted to showing the iniquity and absurdity of taxing mortgages. That undoubtedly is the first grievance to be redressed. An act to exempt them is the first measure to be urged. Railroad and other corporate bonds are mortgages, and to tax them is as absurd, though not so oppressive, as to tax common mortgages. Yet the taxation of foreign stock is even more glaringly unjust, though it does not press quite so heavily upon the body of the people. A statement of the case is all that can be necessary, it is so very clear. Massachusetts corporations are taxed under a general law. The total value of the shares of each is found, taking them at the market price. The value of all real estate and machinery, which is locally assessed, is then deducted. Upon the amount thus obtained a tax is imposed at the average rate in use in the State for that year, and the sum so assessed is paid by the treasurer of the company directly to the treasurer of the commonwealth. The individual stockholder is exempt. This method is both simple and cheap, and on the whole it is just and satisfactory in its workings. Foreign stock is treated very differently. Corporations existing in other States are of course taxed at home, yet a citizen of Massachusetts who owns their stock is assessed here at full rates upon the market value of his shares, just as if his property were otherwise exempt. It would be an exactly analogous case if Boston undertook to assess stockholders of Massachusetts corporations on their shares, after the State had collected its tax from the companies. The double levy is palpable. During tlie last ten years much money, belonging largely to poor people, has been invested in Western railroads. Most of these roads are not paying, and one reason of their prostration is unfriendly legislation. Notwithstanding, however, that the life is being taxed out of them at home, the stock is assessed again here. Many investors have little other property, and this extra burden has caused severe suffering. Even on the ground that taxes are the price of protection, this impost is absurd, for Massachusetts cannot and does not protect the roads against the grangers. Next to the exemption of mortgages, exemption of foreign stock should be urged upon the legislature.¹

NOTHING has been done relative to amending the law of taxation in Massachusetts, and nothing is likely to he accomplished, because the friends of reform do not act together. If citizens of influence in this State, who are deeply, vitally interested in obtaining a better system, would stir themselves so far as to mature some distinct plan, and then carry it to the legislature, there is abundant reason for believing that they would succeed in securing its adoption. Too much must not be expected at first, nor must too much be asked; but there are signs which indicate that public opinion is ripe for the correction of some at least of the grosser of the abuses which now exist. There are, in particular, three features of the present law which are peculiarly obnoxious, and which arouse almost universal discontent : the first is taxation of mortgages; the second is taxation of the stock of foreign corporations; the third is the arbitrary method of assessing real estate. A former paper was devoted to showing the iniquity and absurdity of taxing mortgages. That undoubtedly is the first grievance to be redressed. An act to exempt them is the first measure to be urged. Railroad and other corporate bonds are mortgages, and to tax them is as absurd, though not so oppressive, as to tax common mortgages. Yet the taxation of foreign stock is even more glaringly unjust, though it does not press quite so heavily upon the body of the people. A statement of the case is all that can be necessary, it is so very clear. Massachusetts corporations are taxed under a general law. The total value of the shares of each is found, taking them at the market price. The value of all real estate and machinery, which is locally assessed, is then deducted. Upon the amount thus obtained a tax is imposed at the average rate in use in the State for that year, and the sum so assessed is paid by the treasurer of the company directly to the treasurer of the commonwealth. The individual stockholder is exempt. This method is both simple and cheap, and on the whole it is just and satisfactory in its workings. Foreign stock is treated very differently. Corporations existing in other States are of course taxed at home, yet a citizen of Massachusetts who owns their stock is assessed here at full rates upon the market value of his shares, just as if his property were otherwise exempt. It would be an exactly analogous case if Boston undertook to assess stockholders of Massachusetts corporations on their shares, after the State had collected its tax from the companies. The double levy is palpable. During tlie last ten years much money, belonging largely to poor people, has been invested in Western railroads. Most of these roads are not paying, and one reason of their prostration is unfriendly legislation. Notwithstanding, however, that the life is being taxed out of them at home, the stock is assessed again here. Many investors have little other property, and this extra burden has caused severe suffering. Even on the ground that taxes are the price of protection, this impost is absurd, for Massachusetts cannot and does not protect the roads against the grangers. Next to the exemption of mortgages, exemption of foreign stock should be urged upon the legislature.²

NOTHING has been done relative to amending the law of taxation in Massachusetts, and nothing is likely to he accomplished, because the friends of reform do not act together. If citizens of influence in this State, who are deeply, vitally interested in obtaining a better system, would stir themselves so far as to mature some distinct plan, and then carry it to the legislature, there is abundant reason for believing that they would succeed in securing its adoption. Too much must not be expected at first, nor must too much be asked; but there are signs which indicate that public opinion is ripe for the correction of some at least of the grosser of the abuses which now exist. There are, in particular, three features of the present law which are peculiarly obnoxious, and which arouse almost universal discontent : the first is taxation of mortgages; the second is taxation of the stock of foreign corporations; the third is the arbitrary method of assessing real estate. A former paper was devoted to showing the iniquity and absurdity of taxing mortgages. That undoubtedly is the first grievance to be redressed. An act to exempt them is the first measure to be urged. Railroad and other corporate bonds are mortgages, and to tax them is as absurd, though not so oppressive, as to tax common mortgages. Yet the taxation of foreign stock is even more glaringly unjust, though it does not press quite so heavily upon the body of the people. A statement of the case is all that can be necessary, it is so very clear. Massachusetts corporations are taxed under a general law. The total value of the shares of each is found, taking them at the market price. The value of all real estate and machinery, which is locally assessed, is then deducted. Upon the amount thus obtained a tax is imposed at the average rate in use in the State for that year, and the sum so assessed is paid by the treasurer of the company directly to the treasurer of the commonwealth. The individual stockholder is exempt. This method is both simple and cheap, and on the whole it is just and satisfactory in its workings. Foreign stock is treated very differently. Corporations existing in other States are of course taxed at home, yet a citizen of Massachusetts who owns their stock is assessed here at full rates upon the market value of his shares, just as if his property were otherwise exempt. It would be an exactly analogous case if Boston undertook to assess stockholders of Massachusetts corporations on their shares, after the State had collected its tax from the companies. The double levy is palpable. During tlie last ten years much money, belonging largely to poor people, has been invested in Western railroads. Most of these roads are not paying, and one reason of their prostration is unfriendly legislation. Notwithstanding, however, that the life is being taxed out of them at home, the stock is assessed again here. Many investors have little other property, and this extra burden has caused severe suffering. Even on the ground that taxes are the price of protection, this impost is absurd, for Massachusetts cannot and does not protect the roads against the grangers. Next to the exemption of mortgages, exemption of foreign stock should be urged upon the legislature.³

The method of assessing real estate is the third grievance. A citizen is now at the mercy of the assessor. His property may have any unjust valuation put upon it, but practically be can get no redress. There can be no reason why in this particular case a citizen should tic denied a trial by jury. A man aggrieved by an assessment for betterments can demand a jury, and the system works admirably. A man aggrieved by an assessment for taxes ought to enjoy the same privilege.

With these changes the system would still leave much to be desired, but it would be an immense improvement on what we have now; and they are quite as much as it is possible to obtain.

Assuming, then, that this is the legislation to be sought, the main difficulty to be met. would be the deficit in the revenue which would be caused by the exemption of such large classes of property. The first problem to be solved is how that deficit can be filled. To begin with, however, it is necessary to ascertain its probable amount, and as no statistics exist, this is not an easy task. All that can be done is to rely on the estimates of the best authorities.

Mr. William Minot, Jr., and the Boston assessors seem to agree that about #50,000,000 represents the value of the mortgages taxed by the city. The valnation of Boston is about four tenths of the state valuation; hence it may be assumed pretty confidently that there are in the neighborhood of $125,000,000 of this class of property subject to municipal taxation in Massachusetts. This estimate exactly agrees with one made by Mr. Gleason, tax commissioner. The savings-banks hold mortgages to the amount of $110,241,038, upon which they are taxed by the commonwealth. Were mortgages exempted, they would undoubtedly urge a reduction of the present rate at which their deposits are taxed, on the ground that, as their range of investments is limited, to tax them at the established percentage on deposits which must he invested in untaxed securities would be an unjust discrimination. Conceding for the present the justice of such a demand, and that the savings-bank tax would yield less than it does now by a sum equal to three quarters of one per cent, on $110,241,038, the loss of revenue would be as follows: —

To the State by reduction of savings-

bank tax . . $871,807

To the city of Boston . (100,000

To all other municipalities 900,000

Total loss from exemption of mortgages .... • @2,371,807

What the loss would be from the exemption of foreign stock cannot be even approximately arrived at with any degree of confidence. There nre no statistics nor any records from which a judgment, can be formed. The larger part escapes assessment from the impossibility of tracing it to its owner, as Mr. Minot has shown. Mortgages are placed upon record, and can be traced. What loss would ensue would fall entirely upon municipalities, and it is pretty safe to assume that the value of (he property withdrawn from actual assessment would not be more than half so large as the value withdrawn by the exemption of mortgages. On this basis,

Boston would lose a revenue of . $300,000

All other municipalities , . 450,000

Total toss from exemption of foreign stock ...... @750,000

Tlie total deficit in revenue from these exemptions would be, in round numbers, 83,200,000. There can be little doubt that these figures are sufficiently liberal, because since the estimates on which they are based were made there has been a large shrinkage in values.

There are three ways of meeting this deficit: first, the rates may be raised on the property which remains subject to assessment; second, new taxes may be devised; third, the government may retrench.

The true method is that of retrenchment. The whole amount might readily be saved without impairing the efficiency of any branch of the public service. Though this assertion will hardly be disputed, it may be worth while to give a few examples of how money is wasted.

The yearly session of the legislature costs 8257,000. The State would he better governed with biennial sessions, thus saving SI25,000 a year. In 1876 New York maintained 21,424 of the best militia in the world lor S275,000, or at the rate of SI 2.84 per man. hast year it cost Massachusetts Si54,274 to keep up its wretchedly ineffective force of 4225 men, or S3G.50 per man. On the New York basis, S55,000 would be a liberal appropriation. Sheer incompetence therefore costs the State $100,000 a year in this department alone. The old state-prison was in good condition. There was no substantial objection made to it except that the warden happened to dislike the site. The new prison is in a most unfortunate situation, at a very inconvenient distance from Boston; it is so badly built that convicts, constantly escape, and it cost $857,543. The money might just as well have gone into the gutter.

It is said that the Danvers Hospital was for the benefit of Boston. However that may be, Boston does not use it. On the contrary, the city now talks of building one expressly for its own patients. There lire a great many lunatic asylums in Massachusetts, considering tlie size of the State; a new one has just been built at Worcester, at an expense of $1,059,338. An asylum is no more needed at Danvers than it is in the moon, but it has cost $1,500,000. The balance sheet of the South Boston flats is an interesting docu-

ment:—

Cost of flats . . • $235,696

Cost of filling flats . , . 723,088

Actual cost to date .... $963,784

Appropriation for last year . . 200,000

Outstanding claims on file . . 250,000

$1,413,784

A portion of this property is let to the New York and New England Railroad for $6000 a year. But before it could be let it had to be “ planked,” at an expense of $50,000. Planking lasts about seven years. The total return, therefore, under a seven years’ lease, will be a bill of $8000. The Iloosac Tunnel can never benefit tlie State one dollar; still, it cost $18,000,000. the annual interest on which, at six per cent., is $1,080,000. The reason for building it was that it cost too much to haul freight over tlie grades of the Boston and Albany Railroad. A bounty of $80,000 a year might have paid for the extra hauling over the Berkshire Hills, which (although government bounties are very bad things) would certainly be cheaper than the tunnel expedient. Meanwhile the legislature does not seem to care whether it returns an income or not. These are a very few of the items which go to swell the state expenditure. There are man)' more of the same character.

But if the commonwealth is extrava gaut, what can be said of Boston ? The Common and Public Garden alone cost $43,000 a year. For the repairs, improvements, care, cleaning, and sundry expenses of its real estate in Cambridge, Boston, and on the Bussey Farm, Harvard College paid $13,603 in 1876-77.

The estimated cost of the new Latin and High School building is $365,000. The great addition to Harvard College librarv, which is fire-proof, is capable of bolding 300,000 volumes, is built of granite and shelved throughout, with its fittings and furniture, besides a new steam-heating apparatus for tlie old library as well as the new, cost $90,000. The fine new recitation hall at Cambridge is estimated at $99,000. Trinity Church is the most splendid building in Boston; it is built upon a foundation of five thousand piles. To buy and drive the piles, to build the ehureli and chapel, to decorate the church and put in the pews, cost, in round numbers, $385,000.

Last year Boston spent $700,000 quite unnecessarily on the sinking fund, mostly in buying up immature bonds, at an expe.nse of $10,000. The present courthouse could be altered so as to give sufficient accommodation for business for many years to come. Nothing will serve but to buy land and have a new one. A portion of the drainage of Boston is defective, but the means taken to remedy it a,re little short of a public calamity. An enormous system of sewers lias been devised which would be ample for London. Not only these sewers are to work by steam pumps but they will not accomplish the object of cleansing Charles River, for they do not carry off the drainage of Cambridge and Somerville. Apart, however, from their possible utility when finished, they are altogether out of proportion to present needs. The growth of Boston cannot be counted upon. It certainly will not grow if overtaxed. What was needed was the cheapest draining which would keep the city pure for the next ten or fifteen years. The interest on the money thus saved would have more than paid for a superb sewer for a city of one million people by the time it was needed. What this stupendous drain will finally cost no man can tell. i he first appropriation is for $3,540,000. 'I’lie city can certainly get on without a park, — or at least a large park, — and as certainly it cannot afford one. Yet the Back Bay swamp .•done, upon which the new park is some day to stand, has costalready $295,000.

The list could he indefinitely extended, but it would he useless. The State and the municipalities are wasteful and extravagant to an alarming degree. They might reduce their expenditure $3,000,000 if public affairs were administered with even tolerable economy. Far from doing harm, nothing could he BO healthy. The cost of government should be regarded in a liberal spirit, but the pressure of taxation is now so great that sharp economy is of the highest moment. Unfortunately, however, there is no probability that this method of meeting the deficiency would be even thought of. The only matter of practical importance is to find the easiest method of providing the funds to fill the gaP-

Mr. Minot has suggested that local taxes should be levied exclusively upon real estate. The theory of the diffusion of taxes has been so ably explained, both by him and by Hon. David A. Wells, that any further discussion here would he out of place. Unquestionably they are entirely correct in the principles they lay down. Yet itis not clear that at present it would be wise to attempt so radical a change in existing methods. In taxation the habits of the people and the ease and convenience of the taxpayer are considerations of the first importance.

In these particulars the general laws under which the corporation and bank tax is collected have many advantages. They are economical, just, and popular. But whether or not their sphere should he enlarged opens up the whole question of the wisdom of the policy adopted toward the savings-banks and the mutual insurance companies; and of the wisdom of that policy there is room for graver doubt each day. Savings-banks were originally established as a charity toward the laboring class. They received sums too small to he invested elsewhere, earned by people ignorant of the care of money. The interest offered upon deposits was low, hut the weeurit) was supposed to be perfect: as perfect as the promise of the government to pay its bonds; as perfect as in human affairs security can he. No enlightened State would tax such institutions. While they were restricted to this function they deserved to enjoy entire exemption. In process of time, however, the whole system changed. Savings-banks have long outgrown the limits of their legitimate business. After the war, when taxes increased, their partial immunity made them desirable places of investment for capital. They grew apace, and they became greedy. In 1862 there were ninetythree banks; in 1875 there wore one hundred and eighty. In 1850 the average to each account was SI“4.57; in 1862 it was S202.50; in 1875 it was $330.05. In the four years of depression, from 1873 to 1877, the deposits swelled from $202,195,343 to $244,596,614, and the average deposit from $303 to $330. In 1865 the rate of dividends was 4.75 per cent.; in 1875 it was 6.15; increase, 1.4 per cent. In those ten years the loans on mortgage increased from $15,534,568 to $120,171,268, or six hundred and seventy per cent. Probably in 1860 there were few depositors who did not belong to the class for whose benefit this charity was established. In 1876 the Labor Bureau stated that “ the day-wage class deposited 44.8 per cent, of the whole amount placed in the savings-banks; it represented 57.7 per cent, of the whole number of depositors. Of the deposits under $300 at one time, the wage laborers deposited fifty-eight per cent, of the amount; of those above $300 atone time, 36.4 percent, of the amount. The salaried, professional, and so-called capitalist classes made up the remaining percentages.” (Labor Report, 1876, page 341.) The whole amount of deposits is $244,596,614. Of this, therefore, the laboring class own $109,579,283; while $135,017,330 are owned by persons who have no right to enjoy this privilege, and who use the banks principally as a speculation and as a means of avoiding taxation. That they have been so used is due solely to their having to pay only about half the tax with which other property is burdened. The result has been disastrous to all concerned. The rush of capital into the banks created competition among them. They became ambitious to make large dividends; they tempted depositors by unusual interest; they were eager for investments at high profits. In 1876, $119,466,579, or as nearly as may be one half of the -whole Amount of deposits, were loaned at seven oer cent, and over. They speculated kirgely, and they speculated in real estate, which of all ventures is the most hazardous. Dazzled by the rates offered, they lent great sums upon property which in sober truth was worthless. At length the rotten fabric gave way. Banks of discount passed through their ordeal unshaken, but last winter the savings-banks fell with a crash. In agonized panic they besieged the legislature, and implored protection. To the lasting disgrace of Massachusetts protection was given them by the enactment of the notorious stay law, which can be properly described by no word but infamous. That law is as flagrant a breach of faith as was ever sanctioned by a legislature. It overshadows the Western granger legislation. The supreme court may possibly hold the act to be constitutional, but the stain upon the commonwealth must remain. As charitable institutions for the encouragement of thrift among working men and women, and while their name was a guaranty that perfect confidence might be reposed in the rigid good faith with which they kept their contracts, it was right that savings-banks should he exempted from taxation. As public trustees who receive and manage money with a view to profit, they are no more entitled to exemption than railroads or factories. The general welfare, on the contrary, demands that they should not be shown especial favor. Private trustees are not exempted; neither should public trustees be exempted. The one absolutely essential element in the management of trust property is that it should not be used for any speculative purpose whatever. But under the existing law strong inducements are held out to speculators, in the first place, to invest in savings-banks; and, afterward, to try to use them for them own ends. And further still, a just taxation of savings-banks as they now exist, and the exemption of mortgages, would put workingmen who are depositors and workingmen who are land owners on an equality. That subject has been already discussed, but now once more it must be urged that the policy which tends to put the owners of the soil at a disadvantage with any other class of citizens must be disastrous to a republic. Savings banks are admirable as places for temporary investment, but are mischievous when they permanently engross t‘lie savings of the poor. The safety of the State requires that workingmen should own their own homes.

If savings-banks for the poor exclusively are thought desirable, they should be so conducted that the risk would be reduced to a minimum, with a correspondingly low rate of interest. Such institutions might be supplied by some system like that in use in Great Britain. Certain post-offices are designated throughout the kingdom to receive deposits of not less than one shilling for transmission to the central office in London. The money received is invested in the public funds. The depositor may apply to any post-office savings-bank for his money, which he must be paid, with interest, within ten days. These banks have been very successful, and apparently supply a want among the people. Between 1862 and 1875 their number increased from 2535 to 52G0. In 1875 the amount of deposits was £26,127,967; the deposits made in 1875 amounted to £8,783,852; the whole number of deposits was 3,132,433. The average amount of each deposit was £2 16 1, and the average size of the accounts with interest was £14 3 5-L The interest paid by the post-office is only 2.5 per cent. The ordinary savings banks pay three per cent. Such institutions would*of course be untaxed.

Were a similar system adopted here, the advantages would be immense. Boor men who looked for safety before all other considerations could find it, while at the same time the strongest popular motive would be given for defending the national credit. On the other hand, those who had confidence in the management of any ordinary savings-bank could invest their earnings as they do now. There would be a certain degree of risk, but they would be compensated for that by higher interest. They would be taxed like other people.

If these considerations are entitled to weight, the conclusion to be drawn from them is obvious. Savings-banks should \>e taxed under a general law as they are now, but at a rate which would put them on an equality with other corporations. Such a rate might very easily be determined each year, regard being had, of course, to the fact that their range of investments is limited by law, if under such a change of policy it should be thought necessary to limit them narrowly. As about half their deposits are in mortgages and government bonds, bolb of which would be exempted, and as their present rate is about half wliat other property pays, it would be probable that the revenue derived from them under a fair adjustment would not vary very much from what it is now.

The case of mutual insurance companies, especially life insurance companies, is still stronger. The tax commissioners of Massachusetts, in their report of 1875, page 175, thus explain the situation: “No tax is assessed upon these companies by the State except a specific imposition intended to cover the expense of the state valuation of their policies. The only taxes to which they are subjected are those upon their real estate and national bank-stock, and incidentally upon their investments in Massachusetts corporations; and these, as compared with the total value of their assets, are of inconsiderable value.”

The gross assets of the mutual life insurance companies arc $26,162,858; their real estate is valued at $2,073,130; assets loss real estate, $24,089,728. Under the head of Taxes and Fees in the annual report a total payment is given of $39,875. How much of this is “ taxes ” and liow much “fees ” does not appear, but for present purposes it may be all credited to taxes. The tax on their real estate alone, at $12 on the $1000, comes to $24,87 7, leaving a balance* of $15,000 for all other taxes. At savings-bank rates the tax on $24,000,000 would be $180,000; at the average state rate, $308,160. Mutual fire insurance companies have gross assets of $4,741,182. They pay $16,063 in taxes. At savings-bank rates they would pay $35,558; at the average rate, $60,876.

Were life insurance companies pressed for means and conducting a precarious ousiness, there might he some reason for this exemption. But the public has only too much reason to condemn their management. They notoriously charge their policy-holders exorbitant rates; they are wasteful in their expenditure, and throw away large sums of money upon costly buildings which do not and which cannot yield any adequate return. Worst of all, they are constantly disputing just claims upon the most frivolous pretexts. Under such circumstances there can be no reason why they should not bear their share of the public burdens. The only solid objection to such a course is that the companies have made their existing contracts upon the basis of the present law, and that the imposition of a tax might make performance impossible. Vested rights, of course, must be protected; hut without doubt a tax might be devised which would secure a considerable increase of revenue without doing injustice to policy-holders.

Besides these sources of income there are various excises which might be used in Massachusetts with advantage. The best known instance is the Moffett tax upon the sale of liquor in bar-rooms, which is in use in Virginia. The official figures are not yet published, but it is stated in the daily papers that this tax has yielded upwards of $800,000 to the State during the last twelve months. If these figures are correct there can be little doubt that it would yield considerably over $1,000,000 in Massachusetts, for not only is Massachusetts much more populous and wealthy than Virginia, but the enforcement of a tax that depends upon police supervision is far easier in a small and densely peopled than in a large and thinly settled territory. Calculated upon this basis there would be no alarming deficit following the exemption of mortgages and foreign stock. For some time, at least, the yield of the savings-bank tax would not be materially impaired, and therefore the State would probably not suffer immediate inconvenience; while a reasonable increase of the \ate now paid by the various trust companies could be relied upon to fill, partially at least, any deficit which might arise later. At the outset it was calculated that municipalities raised about $2,250,000 a year by taxing mortgages and foreign stock. The direct state tax is now $1,000,000. By means of the Moffett excise the commonwealth eonkl pretty certainly more than make good this revenue. Therefore the direct tax could be remitted altogether. The very moderate sum of $250,000 might be collected from the mutual insurance companies, which would bring the total revenue provided for up to $1,250,000. There remains but $1,000,000 outstanding. A former paper was devoted to showing the mistake of severe taxation for the speedy payment of public debts. It was proved that Boston alone last year paid nearly $700,000 more for this purpose than the law requires, or than was necessary to redeem her bonds as they fell due. By a fair reduction in this item of expenditure the remaining $1,000,000 of deficit could be more than covered, and still allow’ for the maintenance of handsome sinking funds. Nor does there seem to be any sound reason for disputing the wisdom of such an economy.

By these means, apparently, Massachusetts might rid herself of two of her most ruinous and vexatious taxes, without materially raising the rate upon real property, without injustice, and without necessitating any considerable reduction in the actual outlay of government. Nothing will be done, however, unless public attention is directed to this class of questions. Citizens of influence and intelligence owe it to themselves and to their State to unite upon some scheme of tax reform, and to take means to bring that scheme before the people. So long as these questions are left to be tossed about at random in the legislature there can be no change for the better; indeed, the longer such a state of things lasts, the less likely any solid improvement becomes. The people grow callous to the discussion, and are taught to regard it only as the agitation of visionaries, — as akin to the interminable woman-suffrage wrangle, to which no human creature listens. When this stage is reached the battle is lost. And yet success is vital to the prosperity of the commonwealth. T hose are no dreams of visionaries, but hard facts involving dollars and cents. Taxation is viewed by the people in a narrow light; they do not see its relation to their daily life. By discrimination, that is by taxing the same class of property at different rates, as mortgaged land is now taxed more than other land, and the stock of foreign companies is taxed more than the stock of domestic companies, certain people may be made to bear more than their share of the cost of government; but such impositions are in no sense taxes, they are confiscations. Under a just system, where all property of the same class bears the same load, no man can gain exemption. What he evades on the one hand he pays on the other. Exemption of the savings-bank means higher rates for the factory. What the laborer gains on his deposit of earnings he may lose many times over in wages. '1 he sum which any citizen directly pays to the government is nothing, even to him, in comparison with the effect which a good or a bad system of taxation has upon the prosperity of the whole community. The poorest laborer is as keenly interested as the greatest capitalist. A wise impost may occasion him inconvenience, and even suffering at times, by taking from him money he can ill afford to pay; but in escaping this payment he may cause a tax to be levied which will ruin the factory in which he works, or which will sweep from the ocean the fleet in which he sails. Bv no one has the great principle on which taxation should be imposed been stated more lucidly than by Mr. Gladstone, when, as chancellor of the exchequer, he made his famous speech upon the tariff in 1SG0: “ But I do not hesitate to say that it is a mistake to suppose that the best mode of giving benefit to the laboring classes is simply to operate on the articles consumed by them. If you want to do them the maximum of good, you should rather operate on the articles which give them the maximum of employment. What is it that has brought about the great change in their position of late years? Not that you have legislated here and there, taking off one penny or two pence in the pound of some article consumed by the laboring classes. This is good so far as it goes, but it is not this which has been mainly operative in bettering their condition as it has been bettered during the last ten or fifteen years. It is that you have set more free the general course of trade; it is that you have put in action the process that gives them the widest field and the highest rate of remuneration for their labor. ... It is the price their labor thus brings, not the price of cheapened commodities, that forms the main benefit they receive. That is the principle of sound political economy applicable io commercial legislation, and that is the principle on which we will to-night invite you to proceed.”

Brooks Adams.