CORNELL UNIVERSITY LIBRARY 3 1924 084 202 534 QJorn? 11 ICatu ^rljool IGtbtarg REPORT OF THE PPP TAX COMMISSION, TO THE GENERAL ASSEMBLY, JANUARY, 1888. COMMISSIONERS: JOHN P. POB, President. CHARLES M. ARMSTRONG, Secretary. RICHARD E. ELY, Ph. D. JAMES ALFRED PEARCE, JAMES McSHERRT, BALTIMORE : 1' !: I N T E D BY KING HHOTHEBS, 123 E. Baltimore Street. 1838. !{rrvi i w ~p> tz&vs, CONTENTS. Act of Assembly creating the Commission. Report Supplementary Report by Br. Ely PAGE 3 7 93 appendix. Proposed Legislation: Article 81, Code P. 6. L., "Revenue and Taxes P . i Article 56, Code P. G. L., "Licenses." cix Sketch of Tax Legislation in Maryland cxxii Mr. Pearce's Dissent to Section 22, Article 81 clxxxiii Taxation in the Counties, (Letters, Tables, &c). . . . clxxxiv Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924084202534 CHAPTEE 488. AN ACT to create a commission to inquire into and ascertain facts concerning the subject of Taxation and to make a report to the next General Assembly of Maryland. Whereas, it is complained that taxation is unequal ; that much property required by law to be taxed escapes; that some persons are made to contribute an undue and oppressive proportion to the public revenue; that State, county and municipal taxes as at present imposed put onerous burdens upon the people; that the existing system of taxation often works injustice; and that the attempt to enforce it strictly, materially injures and threatens to destroy the industrial and commercial inter- ests of the State ; and "Whereas, it is claimed that some of the States have made changes in their systems of taxation which have proven in their operations satisfactory to the taxpayers without detriment to the revenues of the States; and Whereas, the subject of taxation is extensive and in- tricate, and the public and private interests involved therein are great, making it important that in dealing therewith thorough investigation, full information and mature deliberation should be had; therefore, Section 1. Be it enacted by the General Assembly of Maryland, That the Governor of the State shall immedi- ately after the passage of this Act appoint four persons who, together with a fifth, to be elected by themselves, as hereinafter provided, and who shall be their secretary shall constitute a Commission to be called "The Maryland Tax Commission;" said Commissioners shall hold office- for two years from the date of their appointment, and except said secretary, shall serve without compensation; the Governor may at any time remove any of said com- missioners for neglect of duty or misconduct in office. Sec. 2. And he it enacted, That it shall be the duty of said Commission to thoroughly investigate the systems of State, county and municipal taxation in force in this State, including direct and indirect taxation, license, taxes, valuations and assessments, and collections, and all other matters pertaining to the subject of taxation; and they shall especially inquire into and ascertain the prac- tical operations and effects of said systems, and how far the same work inequality, hardship or injustice, and the cause thereof, and how far, if at all, taxes are unduly burdensome to the people of this State; they shall also inquire into the systems of State, county and municipal taxation in force in other States, especially in all such States as have introduced new methods or considerable changes, and shall ascertain the operation and effects thereof, and particularly how far the same are satisfac- tory to the people of such States, and efficient in raising the revenue therefor. Sec. 3. And be it enacted, That said four Commissioners- to be appointed by the Governor, as hereinbefore provi- ded, shall immediately after their appointment, elect a suitable person to be the secretary of said Commission •. said secretary shall become and be, by virtue of his elec- tion, a member of the said Commission; he shall receive a salary of fifteen hundred dollars per annum, payable in equal monthly instalments of one hundred and twenty- five dollars each; and it shall be his duty to ascertain from the proper public officers and other sources in this and the several States, all the matters and tacts required by the preceding section to be investigated and inquired of by the said Commission, and upon receipt of any letters or writings containing any information relating to. the subjects to be considered by the Commission, he shall im- mediately transmit, by mail or otherwise, copies of the same to the other Commissioners; and all information re- ceived by him upon said subjects he shall immediately communicate to them; he shall have access to the tax departments of this State and the counties and cities thereof; and all public officers shall give him all needed information; he shall conduct the correspondence of the said Commission, do all the clerical work thereof, and under its direction prepare its reports, and he shall be at .all times in readiness to perform any work which the Commission may direct. Sec. 4. And be it enacted. That said Commission shall present to the next General Assembly a full, detailed and accurate report of all the matters and facts which they are by this Act required to inquire into, ascertain and con- sider, together with their recommendations, it being hereby declared that the principal object of this Act is to provide complete and accurate information for the use of the next General Assembly. Sec. 5. And be it enacted, That the said Commission shall have authority to summon and examine witnesses, and require the production of books and papers. Sec. 6. And be it further enacted, That the sum of twenty-five hundred dollars a year, for two years, or so much thereof as may be necessary, be and the same is hereby appropriated to pay the salary of said secretary, and the expenses of the Commission. Sec. 7. And be it further enacted, That this Act shall take effect from the date of its passage. Approved April 7, 1886. Office of Maryland Tax Commission, 12 East Fayette Street. Baltimore, January 20, 1888. To the Honorable The General Assembly of Maryland : The Act which created this Commission, recited in the preamble the fact of the existence of complaint concern- ing unequal taxation; the escape of property legally sub- ject to assessment; of the oppressiveness and injustice of the existing system, and of peril to the industrial and commercial interests of the State, if it is strictly enforced; and also the allegation that better systems exist in other States ; and the Legislature, while abstaining from endor- sing these complaints, provided for their investigation by this Commission, making it our duty to inquire into and report upon the systems of State, county and municipal taxation in force in this commonwealth, and especially pointing out for our examination the subjects recited in the preamble as matters of complaint, and the new methods said to be in operation in other States. In pursuance of this duty, we have considered the exist- ing system of taxation in Maryland, and have to report that, as compared with the systems of direct taxation on property in force in other States, the Maryland methods have some advantages which it is well worth the while of our Legislature to understand before undertaking to make changes. One marked advantage of the system of assess- ment in Maryland, is that the assessors are not elected by IK IE PO ET. Office of Maryland Tax Commission, 12 East Fayette Stbbbt. Baltimore, January 20, 1888. To the Honorable The General Assembly of Maryland : The Act which created this Commission, recited in the preamble the fact of the existence of complaint concern- ing unequal taxation; the escape of property legally sub- ject to assessment; of the oppressiveness and injustice of the existing system, and of peril to the industrial and commercial interests of the State, if it is strictly enforced; and also the allegation that better systems exist in other States ; and the Legislature, while abstaining from endor- sing these complaints, provided for their investigation by this Commission, making it our duty to inquire into and report upon the systems of State, county and municipal taxation in force in this commonwealth, and especially pointing out for our examination the subjects recited in the preamble as matters of complaint, and the new methods said to be in operation in other States. In pursuance of this duty, we have considered the exist- ing system of taxation in Maryland, and have to report that, as compared with the systems of direct taxation on property in force in other States, the Maryland methods have some advantages which it is well worth the while of our Legislature to understand before undertaking to make changes. One marked advantage of the system of assess- ment in Maryland, is that the assessors are not elected by 8 the people, but hold their offices by appointment of the Governor, the county commissioners or the municipal authorities. 1 This fact, as far as it is practicable to do so, has pre- served the assessor from the fear of removal from office in the event of the faithful performance of his duty, which is a constant terror to assessors who hold their office by elec- tion. As a rule, the assessors in the Northern and North- western States are elected by the people whose property they must value for taxation, and it is a constant subject of comment and complaint in those States, that the asses- sors stand in terror of their influential constituents, and that those who wish to escape taxation know only too well how to work upon the assessor's fears. Another advantage of our system is that assessments are made by county officers, and not by the officers of petty sub- divisions of counties, thus avoiding local jealousies between different parts of the same county, which has resulted else- where in a constant effort, on the part of township and similar officers, to reduce the assessments of their locali- ties, so as to reduce their share of the county taxes. This difficulty is frequently mentioned in official documents, and the reports of various tax commissions abound in complaints concerning it. The Illinois Commission con- sidered this latter difficulty so serious in their State, that they recommended that the office of township assessor be abolished, and county assessors substituted therefor; and to meet the first-mentioned difficulty, they recommended that assessors be ineligible for re-election. Nor is there competition between the different counties of our State, as to the amount of State taxes paid by 1 For a number of years the Governor has appointed the assessors whenever a general assessment took place. Formerly they were appointed by the Legis- lature in the Acts of Assembly which provided for the general assessments. The assessors who value property in the interim between the general assess- ments, are the county collectors in the counties, who are appointed by the county commissioners, and assessors appointed by the municipal authorities in Baltimore city. 9 them, and consequently no effort on the part of those in -charge of the assessment, to reduce the basis in their own counties, in order to escape a part of the State tax. Another advantage of our plan is, that the same basis is used for State and county taxation ; or in other words, that there is only one assessment made by one set of assessors, and all State and county taxes are imposed upon the basis created by that assessment. Since county and State taxes must be levied upon the same basis, no county can reduce its -assessments without reducing its local resources. Another reason for the absence of competition between our coun- ties, seems to us to be that our law does not require the State taxes to be assessed by State officers in given sums of so many dollars, or so many thousand dollars, upon each county, but simply requires that the State tax of 18f cents shall be imposed upon every hundred dollars of property, as valued by the local assessors; and this rate is assessed upon the property of each individual by county -or city officers, so that the people do not feel that there is any question of inequality between one county and an- other, but the question only arises as between individuals. The obvious objection to our system, as compared with ■others, is that we have no provision for periodical assess- ments, but general assessments of property have been had -only at such times as the Legislature has judged them to be necessary, and made provision therefor by special Act •of Assembly. These Acts of Assembly and the resulting assessments have been made at long and uncertain inter- vals — the shortest interval which has occurred in the present century having been ten years, between 1866 and 1876; the next shortest was eleven years, between 1841 .and 1852. This results in the escape of considerable per- sonal property from assessment and taxation. We ffnd at the present time great anxiety among the holders of intan- gible personal property to prevent a new assessment, which they apprehend would result in bringing within the 10 reach of taxation, twelve years' accumulations of untaxed" property. 1 The complaint that much property, required by law to- be taxed, escapes, is a just one. As already mentioned, much intangible personal property escapes. Much has been said and written in the last few years in; advocacy of the release of personal property, or at least of intangible personal property, from taxation. The var- ious grounds alleged therefor, being the impossibility of" finding the whole or any considerable part of such prop- erty and actually subjecting it to the tax required by law to be imposed upon it; the character of the property being such as to admit of ready concealment from the assessor, and the consciences of the vast majority of humanity permitting (as is alleged) concealment, false- hood and perjury in order to evade the tax, thus subjecting the conscientious and helpless, as widows and orphans whose property is readily ascertainable, because exposed to the assessor through the records of the probate Courts,, to full taxation upon such property, while affording the-, unscrupulous and cunning man the fullest exemption. It has been repeatedly suggested that arbitrary methods of indirection be substituted for a direct tax ou personalty, in the hope that a man's worth in personal property will be fully and fairly reached; one of the favorite plans being to take the rent value of a man's residence as pre- sumptive evidence of the income derived from his person- alty. The professed object of these plans has been to subject personal property generally to taxation, and to withdraw from the citizen the constantly recurring temp- tation to perjury. There is one answer to these suggestions, which it seems to the majority of this commission is conclusive in so far as the State of Maryland is concerned; that is, that under the fundamental law of our State, if taxes aver 1 The last general assessment took place in 1876, now about twelve years ago- 11 imposed upon property at all, it must be upon all property,, real and personal, tangible and intangible, alike; the only question being, what does the citizen own, and that ques- tion being answered, the Bill of Eights requires that he contribute to the expenses of the Goverment accordingly. 1 But it seems to us also worth while to call attention to the fact that the classes of property to which the above- objections to the taxation of personalty can apply, are in this State comparatively few, and the amounts therefore by no means equal to the large mass of personal property in the State which can be valued and assessed for tax- ation whenever a reasonably diligent effort is made to do so. Visible and tangible personal property can always be found and valued. Among the most valuable classes of personal property are the capital stock in Maryland corporations and the bonds or evidences of indebtedness of such corporations, and of the State ; as to these there can be, and so far as State taxes are concerned, is, no difficulty in discovering and valuing them and collectings the taxes thereon, because our system requires the corpo- ration to pay the tax on the shares of the stock owned by the share-holders and a bond-holders tax upon its bonds. There has been considerable difficulty in the collection, of local taxes upon the bonds of domestic corporations, because a similar provision of law has not existed as to local taxes on the bonds of corporations. This we pro- pose to remedy by one of the amendments suggested by this. Commission. The exemption of mortgages from taxation removes another large class of property from the above objection. Judgments, which are subject to taxation un- der our laws, being matter of public record, cannot be withdrawn from the reach of the assessor. The practical 1 "Every person in the State or person holding property therein, ought to contribute his proportion of public taxes for the support of the Governments according to his actual worth in real or personal property.'' 15th Art. Dec" of Rights. Our Court of Appeals have held that this article "is intended to. prevent an arbitrary taxation of property according to kind and quality, without regard to value, and that under it all taxation laid on property must be uniform and equal." State vs. N. C. Ry. Co., 44 Md. 131. 12 result is that the only classes of personal property open to the criticisms in question are the stock and bonds of non-resident or foreign corporations and the public secur- ities of other States and municipalities, promissory notes and other individual securities, book accounts and other simple contract debts. For reasons explained elsewhere we have proposed to exempt the book accounts of mer- chants from taxation, which will still further narrow these limits. It would hardly be the part of prudence to strike from our taxable basis the large amount represented by the above mentioned classes of personal property, which are now entirely within the reach of the assessor, without any sufficient assurance that the proposed substitutes will ■effect the desired end. We appreciate the force of all that has been said about the difficulty of enforcing a tax upon certain classes of personal property. We believe that the situation would oe very much improved in that respect if all the States would adopt the Maryland system of collecting taxes on stock and bonds through the corporations which issue them, and would not attempt to tax such property in the bands of the individual holder, and especially if the •States would abandon the effort to tax such securities in non-resident corporations. Unfortunately the Supreme Court of the United States has held that the State in which a corporation is located, cannot collect from it out of the interest due to a non-resident holder of its bonds, a tax upon such bonds, because the situs of such property follows the person of its owner. 1 It can hardly be proper for the State to abandon the taxation of personal property, because some of its citi- zens threaten to commit perjury rather than assume a portion of the public burdens which their fellows are 1 R. R v. Pennsylvania, 15 Wall. 323. Kirttand e. Hotchkiss, 100 U. S. 491. 13 bearing. And another and very potent objection to the* proposal to substitute indirect measures for direct taxa- tion of personal property, is that the systems proposed have not been put in operation so as to prove their effectiveness. In every State in the Union, direct taxes- are imposed upon all classes of property, real and person- al, either for State or local proposes; and the State of Pennsylvania which has been frequently pointed to as an illustration of the practicability of releasing personal property from taxation, because she subjected real estate to the greater part of the public burdens, by making it the object of local taxation, and reserved personalty, so far as. it was taxed at all, for State revenue, has lately put in operation more vigorous measures for the enforcement of taxes on personal property, alleging as a reason there- for the injustice and injury suffered by the holders of real estate and the farming population; and personal property is now taxed in that State for both State and county purposes, except that all mortgages and other evidences of debt, articles of agreement or accounts bear- ing interest, and all public loans, are exempted from local taxation. 1 But a still more serious, and even more justifiable cause of complaint in the matters of inequality and escape from 1 Mr. T. K. Worthington in his able historical sketch of the finances of Pennsylvania, published by the American Economic Association, May, 1887, says, (page 99) : "When real estate was exempted from taxation for State purposes in 1867, it was intended that it should bear all the burdens of local taxation. The figures given above show how weighty the local burdens have- become. Real estate in Philadelphia bears a burden of taxation nearly twice as large as that borne by all the personal property in the State. It is evident that at least some equalization is necessary. The Act of June 30th, 1885, is not as effective as is desirable, but when it comes to be better understood, the results- will probably be more satisfactory. By this legislation the rate on personal property for State purposes was reduced from four to three mills on the dollar," (30 cents on the hundred dollars,) "and mortgages and all other evi- dences of debt, and all articles of agreement, or accounts bearing interest, and all public loans, are exempted from all taxation, except for State purposes." See also report of the Auditor Gen. of Pennsylvania, and Revenue Acts of June 30th, 1885, and June 7th, 1879. 14 taxation, is that the corporations of this State pay but a small part of what should be their contribution to the public revenue; particularly the railroad corporations, which, as will hereafter appear, actually pay no State taxes at all upon their property, and but an inadequate local tax. But this subject will be further considered under the head of "New Sources of Revenue." It was also made our duty to inquire "how far, if at all, taxes are unduly burdensome to the people of this State." We are fortunate in having a low tax rate as compared with the most of our sister States, and our local tax rates, measured by the same rule, are not excessive. But when- ever taxes, which should be paid by one are imposed upon another, they become, immediately, unduly burdensome, and we find that in our State the taxes which should be paid by corporations are imposed upon the people of the State, because the corporations do not pay their shares of the taxes, and the necessary income of the State has to be made up from individual citizens. But' another fact is very obvious, which is, that owing to the depression of agricultural interests, our taxes upon property, compara- tively moderate as our rate is, are oppressive to our farmers; and by reason of the severe competition with other commercial centers, our merchants are exposed to injury under the existing laws, which require them to be taxed both upon the value of their stocks of merchandise .and upon their book accounts. As his stock in trade is eonstanty shifting, and book accounts are of uncertain value, and as most merchants both buy and sell on credit such a tax is liable to increase a merchant's assessment for taxes several times beyond his actual worth. A nier- •chant with an actual capital of five thousand dollars may have ten thousand dollars worth of goods, and ten thousand dollars due him for goods already sold and delivered. To tax him upon the full amount of his stock and also of his book accounts, would be to assess hiin for twenty thousand dollars, which would probably consume all of 15 his profits; or if he undertook to sell his stock at such prices as would enable him to pay taxes at that rate, besides his other expenses, he could not compete with the merchants in other cities, and his trade would go to Phila- delphia or New York. A gentleman in mercantile business in the city of Balti- more called some time since on one of the members of this commission and said to him : "I do not think I am now paying taxes on as much stock as I should. I began busi- ness in a small way and was assessed five thousand dollars for my stock of goods. I have prospered and don't feel that it is right for me to pay only that sum now. I intend to appear before the Appeal Tax Court and increase my assessment." The commissioner asked him, " what were you assessed ou -book accounts ? " He replied, "nothing," and was surprised to learn they were assessable. Owing to the fact that we have had no general assess- ment since 1876, most of our merchants are not assessed for any considerable amounts on their book accounts. The commissioner stated this fact to him and said : "If you go to the Appeal Tax Court you are liable to be questioned about and assessed upon your book accounts as well as your stock of goods." The gentleman replied: "I can't stand that. I do business upon a narrow margin of profit and must compete with others in the same line of trade in Baltimore as well as other cities; my stock will average, perhaps, twenty thousand dollars; if I have to pay taxes on that and on twenty to thirty thousand dollars of book accounts besides, I will be put at a disadvantage which may disable me from selling goods, because my competitors do not pay any such taxes as those." The State and city taxes at the rates established for that jear would have amounted to $377.50 on his stock of goods. If his book accounts had been taxed it would have increased the amount of his taxes to about $750.00 to $950.00. He was constantly collecting the bills due him from his customers .and as constantly paying the larger part of the money so collected to the manufacturers and dealers from whom he 16 bought. To have taxed him both upon the stock upon his shelves and the accounts upon his books would have been to make him pay taxes on all the debts he owed and all the indebtedness due him. The gentleman was a man of high character and great conscientiousness and he had the nerve to appear before the Appeal Tax Court and have his assessment increased ; but as his appearance was entirely voluntary, and not, as is usually the case, under compulsion, the judges merely heard what he had to say about his stock and increased his assessment to twenty thousand dollars. We do not propose to allow the taxpayer to deduct his indebtedness from his assessment for taxes, but we do sug- gest that the average stock carried by a merchant during the year shall be taken to represent his actual worth, on the ground that to tax his book accounts also is double tax- ation. If a man chooses to buy on credit we believe that he should be taxed upon the full value of what he has bought,, but if he has both bought and sold on credit we don't think it is just to tax him upon all he owes to others and all that is due to him. What we have just said with reference td the burden- someness of taxation points out what, in our judgment, are- dangers to the material interests of the State — that is, that the agricultural and mercantile interests are liable to be injured by being overburdened for the benefit of corpora- tions. We will have more to say on this subject while discussing the taxation of corporations. New Sources of Revenue. As a rule the present laws provide for taxing all classes of property and all commer- cial means of profit which belong to, or may be engaged in by individuals. It is not possible to find much, if any- thing, which belongs to a private citizen, not already re- quired by law to be a regular source of revenue to the public treasury. There has been some inequality in the 17 enforcement of the requirements of law, and some amend- ments are necessary to make them operate more equitably. These are provided in the bill proposed by this Commission to amend and re-enact article 81 of the Code. But one of the especial objects of the creation of this Commission was to lighten, if possible, the burdens of those who are paying taxes on the full value of all they have, by placing a part of the load on some legitimate subjects of taxation not now carrying their share. The first question is: "Do any such subjects exist?" This will appear by investigation and comparison. It is re- quired that all the property of the private citizen be valued and taxed. The assessor can readily ascertain its value. What proportion do taxes on his property bear to those of the great corporations? The individual pays a State tax of 18£ cents on the assessed value of each $100, and a local rate varying from fifty cents on the hundred in Carroll county, to a dollar and sixty cents in Baltimore city, and if he is engaged in any commercial pursuit, he pays a State license tax for the privilege of carrying on his busi- ness in the State. The State tax on steam railroads is one-half of one per cent, on their gross receipts in the State.' Is this equal to 18f cents per hundred ? It is not. Investigation into the actual worth of the great railroad corporations in this State shows that they pay in State taxes about one- half what a private citizen would pay on property of the same value. The actual worth of a railroad corporation is not to be ascertained by an assessor's valuation of the track and rolling stock. The use of these may yield a profit out of all proportion to their cost. The most valuable thing a railroad company has, is the franchise for carrying on busi- ness as a common carrier. This is not included in any valuation of the track and rolling stock. Every private citizen engaged in business, is required to pay a license 18 for the privilege of following a pursuit open to anyone who chooses to pay the tax, while the railroads are not taxed at all on a privilege which they hold only by special license of grant from the State, which is in the nature of a monopoly, 1 and which is created by the exercise of the right of eminent domain, one of the sovereign attributes of the State. The worth of the property and privileges (of course including franchises in the latter term,) which are held and valued alone for the purpose of making a profit in a gain- ful pursuit, is best estimated by their productive capacity. The capital stock of a corporation is sometimes spoken of as representing its value, and standing for all its property and assets. Whether this is true or not depends on the circumstances of the particular case. There are very few railroad corporations of which it is correct, because the value of a large part of the property of most railroad com- panies is represented by their bonds. If all the money ex- pended for the road has been raised by the issue of stock, and the company owes no debts, the stock may be said to represent the value of a road and all its assets; but if part of the means for constructing, equipping and improv- ing it has been derived from loans, then those loans repre- sent so much of the value of the road, and the stock rep- 1 All a railroad's local business maybe strictly called monopoly, since no one can possibly compete for it. Traffic between large centers connected by com- peting lines may Btill be called in a more limited sense a monopoly, because only tbe limited few who have legislative grants or franchises, and own costly equipment, can engage in it. [Since the above was written, Prof. Ely has called attention to a passage in Dr. James' article on the Federal Regulation of Railways, published by the American Economic Association, July, 1887; in which Dr. James states that in the very nature of things, competition over most of the lines of railway is abso- lutely impossible, since two lines could not be built parallel from every station to every other, and it is therefore, only in a very few places where competition has an opportunity to show itself. " 'On the first day of January, 1887, there were, according to the Chief of Bureau of Statistics, 33,604 railroad stations in the United Stales, of which 2,778 were junction points, i. e., are points where there are more than one railroad, leaving 30,916 stations where there is but one rail- road.' Speech of Senator Cullom, January 17, 1887: When we consider that many of these junction points were on roads not having even a terminus in common, it is evident that the field of competition is relatively small."] 19 resents the full value of the property, assets and privileges of the company less the amount of indebtedness due by it. The market value of the shares of stock in a railroad com- pany does not depend alone on the actual value of what the company owns, but is affected by the further considera- tion of how much of that value belongs to the holders of the company's bonds. If the construction and equipment of a railroad cost two million dollars, one million of which was obtained by the issue of a million' dollars' worth of stock, and the other million was obtained as a loan on the bonds of the company, then the bonds of that road will rep- resent one million dollars of its value, and the stock the balance of the value of the road. If the same company has spent a million dollars additional for betterments, con- nections, terminal facilities, or any other purposes, and has obtained the money therefor by loans, then the in- debtedness of the road will represent two million dollars of its value, and the stock the balance, whatever that may be. Of course the value of the stock will depend upon how much the actual' value of the company's property, franchi- ses and assets exceeds the amount of its indebtedness. The State of Connecticut imposes all its railroad taxes upon this theory. The special Commission on Taxation, created by the General Assembly of that State in 1884, and which reported in 1887, describes- the system in a few words, as follows: "The present system assumes, with certain minor modifications, that the market value of the stock and bonds and floating debt of a railroad company repre- sents the taxable value of the property itself, and that a tax of one per cent, upon that property is practically the average rate that it would pay if assessed bit by bit in each town that the line passes through." "A system of taxation of gross receipts, grading the rate somewhat according to earning capacity of the company, was once advocated by our own railroad Commissioners, (though they have since modified their indorsement of it,) and is still approved by those of some other States. But 20 your Commission has unanimously reached a conclusion that without a change of system we may yet effect what- ever improvement is needed in the working- of the law." 1 The statute iu question, after providing for the valua- tion of stock, bonds and floating indebtedness, adds: "And the valuation so made and corrected by said board shall be the measure of value of such railroad, its rights, franchises and property in this State for the purposes of taxation; and this same shall be in lieu of all other taxes on its franchises, funded and floating debt and railroad property in this State." Thus it appears that the local as well as the State taxes are assessed and collected through the State officers. The Illinois Revenue Commission which reported in 1886, used the following lauguage concerning the taxa- tion of railroads: "To railroad property the ordinary rules of valuation have little application; the true crite- rion of their valne and the best basis for their taxation are found in their receipts. After a careful study of railroad statistics, especially of those pertaining to our own State, as given in the report of the Railroad and Warehouse Commissioners, and much attention and thought given to the subject of the average proportion between the gross receipts, the expenditures and the capitalized value of the railroads, we deduce this conclusion : That a rate of taxation equal to the average rate throughout the State imposed upon five times the amount of gross receipts of an Illinois road, or upon the Illinois portion of the gross receipts of an interstate road, would be just ' and more flexible than the arbitrary percentage; provided, however,, that such rate of taxation should not exceed five per cen- tum of said gross receipts. We have proposed that method, it is simple, bears lighter than the present mode on 1 Report of the special Commission on the subject of taxation submitted to the General Assembly of the State of Connecticut, January session, 1887. 21 the weak roads and heavier on the prosperous ones, and takes the assessment of that great property out of the range of caprice or corruption. The mode of thus assess- ing railroad property may be further illustrated and com- mended by considerations following: The railroad companies returned the amount of their gross receipts for Illinois business at fifty-six million dollars; multiplying this amonnt by five, gives two hun- dred and eighty million as the fair taxable value of all the roads in the State. On this sum the net earnings, re- turned at twenty million, amounts to seven per cent. The proposition of the Commission then amounts to this — seven dollars of net earnings shall be considered the equivalent of one hundred dollars capital. Seven per cent is very near the average return for money loaned in this State; it is somethiug less than the average income from investment in bank shares, something more than is realized by investments in favored securities yielding regular and prompt returns with little danger of depreda- tion." 1 The system proposed by the Illinois Commission con- templated that no taxes should be levied by the State on real or personal property owned by individuals, but the revenues from the taxation of such property were to be abandoned to the counties and local bodies, and the State revenue to be derived from taxes on corporations which were to be in turn exempted from local taxation. In Mississippi a license-privilege tax is imposed by the State on all railroads. The statute fixes the sum per mile required of each road, which varies from twenty-five dol- lars per mile on the Mobile and Northwestern Eailroad Company to one hundred and twenty-five dollars per mile on the Mobile and Ohio and other companies. The license tax imposed by the Act of 1884 was increased twenty-five J Report of Illinois Revenue Commission, page "x," 1886. 22 per cent, by the Act of 1886. This tax is in lieu of all State and county taxes, and two-thirds of the receipts are dis- tributed to the respective counties through which the sev- eral roads run, in proportion to the number of miles of road in each county ; but cities and incorporated towns- may impose the same rate of tax on railroad property within their limits as is levied upon all other property for municipal purposes. Honorable Geo. M. Govan, secretary of State of Missis- sippi, says, in response to an inquiry from this Commission; " The railroad tax works well ; it brings a good income into the State. Of course the railroad companies object to it, but they pay it promptly." The reports of the railroad companies operating in this State seem to attest the correctness of the theory advanced by the Illinois Commission. Take for example the Balti- more and Ohio ; this road is selected as the first illustration because it is the great railroad corporation of this State. Of course its charter and contract exemptions from taxa- tion place it in a different situation, legally, from the companies entirely subject to taxation. The aggregate earnings of the Baltimore and Ohio for the year ending Sep. 30, 1886, were stated in the report of the president and directors as $18,422,437.19. 1 . The net earnings were reported as $6,386,692.78 — 'that is, the earnings of the road were more than six millions greater than its operating expenses. The gross earnings multiplied by five, equal $92,112,185.95, which is upwards of twelve million less than the valuation of the assets of the road by its own officers, 2 which leaves abundant room for such a reasonable deduction of the company's estimate of its own worth as later events indicate to be proper. 1 See Sixteenth Annual Report of the President and Directors to the stock- holders of the Baltimore and Ohio railroad for the year ending Sep. 30, 1886. 8 See Report, page 18. 23 Taking as an approximate estimate two thousand miles of road as the total from which the above gross receipts were earned, and assuming that one-sixth of the total length was in the State of Maryland, which is a fair estimate, we allow one-sixth as the gross receipts of the Maryland part of the road, which is a small proportion in view of the fact that the company's great coal traffic between the Western Mary- land coal-fields and eastern ports passes over the Maryland part of the road, and that a part of all its receipts from its passenger-carrying business to and from both the city of Baltimore and Washington city is to be credited to that part of the road which is in Maryland, and we have $3,070,- 406.19 as the Maryland gross receipts. This multiplied by five produces a capital value of $15,352,030.99 ; this capital value at the State tax rate of eighteen and three-quarter cents per hundred dollars would produce $28,785.06, which is the amount the individual would have to pay in State taxes if he owned property of the same value. 1 The difference between the proportion of the public burden borne by individual citizens and the Baltimore and Ohio Kailroad Company, in that year, was nearly one- third in favor of the corporation, which paid in 1886 a State tax of $20,388.53, besides which every individual taxpayer paid local taxes which were much heavier than the State tax, while the corporation paid no local tax; this pf course was dne to its irrepealable exemptions. The above is too low an estimate of the full gross receipts in Maryland, and therefore too low an estimate of the capital value of the road in Maryland, as appears from the fact that the gross receipts tax of one-half of one per cent., paid by the company for the year ending September 30, 1886, amounted to $20,388.53, which indicates that the Maryland gross earnings were $4,077,706, which, according to the theory of the Illinois Commission, would represent a capital value of $20,388,530, which, at the State tax rate 1 In addition to this there would be, of course, county and municipal taxes. 24 of eighteen and three-quarter cents, would yield $38,228.51; so that the railroad really pays but little more than half of what an individual citizen would have to pay on prop- erty of the same value. By the table on page (4) of the Baltimore and Ohio report for 1886, the net earnings in that year, of the main stem and branches there mentioned, were $4,- 026,365.96. About four-ninths of the miles of road included in that table are in Maryland; four-ninths of the net proceeds would be $1,789,495, or between eleven and twelve per cent, on $15,352,030.99, the cap- ital value of the road in Maryland, according to the first of the above estimates. 1 Or, taking the second or cor- rect estimate, the business of the road yielded a net pro- ceed of eight and three-quarter per cent, on the capital value of $20,388,530. This showing will allow some shrinkage before it comes down to the point named by the Illinois Commission, that is, seven per cent. Safe invest- ments in stocks and bonds will not yield six per cent, in this State, and if such an investment bears interest at six per cent, upon its face value, it can only be bought at a premium. Five per cent, is a good return on large sums safely invested. Out of this the holder must pay his taxes, which, in the city of Baltimore, amount to one dollar seventy-eight and three-quarter cents per hundred, or more than one-quarter of six per cent, interest, if he is so for- tunate as to receive that rate of interest, reducing the net amount which he realizes to a little more than four and one-tenth per cent.; or if his investment yields but five per cent., then, after paying the tax, he has a little more than three and one-tenth per cent. net. But the railroad makes eight and three-quarter per cent, after paying all the taxes levied upon it. And for the privilege of carrying on this lucrative and favored busi- 1 But to this should be added $36,388.50, paid in 1886 for taxes, which sum was deducted in ascertaining the net earnings. 25 ness, the railroad company pays no license fee or privilege tax whatever, while the merchant, beside paying the regu- lar rate of State and local taxes on all the goods on his shelves, the accounts on his books, and all credits due and property belonging to him, must besides pay a license tax for the privilege of carrying on his business, which is neither a favored pursuit or in the nature of an exclu- sive privilege or monopoly; and some of our large mer- chants are glad to make the ruling rate of interest, that is six per cent, on the capital invested in their business. If a private citizen owned property in this State from which he derived an annual profit of $1,809,833.52 (which is the net earning of the Baltimore and Ohio in this State before deducting taxes,) he would be assessed for the larger capital sum above mentioned, that is, $20,388,540, .and would have to pay 38,228.51 in State taxes; that is, about two and oue-eighth per cent, of his income, to which would be added of course a much heavier municipal or ■county tax. The taxes paid by the railroad company .amount to but one and one-seventh per cent, ofthejiet revenue which it makes in Maryland. 1 Let us now consider the case of the Xothern Central Bailway, another exempted road. This company paid the ■State in 1886, 5,051.07, the amount of tax chargeable to it under its legislative contract of 1880. This indicates that the gross receipts of the road in Maryland were $1,01*0,214, which, multiplied by five gives a capital value •of 5,051,070. The State tax rate upon this capital value would yield §9,470.75. This road, like the Baltimore and Ohio, is wholly exempt from local taxation on any part of its railroad property and franchises; nor are any taxes paid on the stock of either. As the gross receipts in Maryland amounted to $1,010,214, they constitute between one-fifth and one-sixth, or about 'Of course it pays no local or other taxes whatever, being exempted under the legislative contract of 1878, which will be more fully considered hereafter. 26 two-elevenths of the total gross receipts of the road for that year, which according to its report were $3,474,(317.32,. which being multiplied by Ave makes $27,373,086.60.! The net earnings of the whole road for 1886 were $1,931,949.42; that is, a little over seven per cent, net profit on the capital value which produced those net earnings. This would make the proportion of the profits- on the Maryland part of the capital something more than $353,000.00; so that the taxes paid by the Northern Cen- tral Kail way to the State of Maryland amount to less than one and a half per cent, of the net- profit of the road's- business for the year, aside from its investments upon which it received interest or dividends. On property valued at the same capital sum and yielding the same clear profit, a private citizen would have to pay not less than two and two-thirds per cent, of his profits. I say not less than this amount because in all probability if he derived an income of three hundred and fifty three thous- and dollars per annum from his property, it would be valued for taxation at a greater sum than that estimated above for the Maryland capital of the Northern Central Kailway. But this represents only a part of the discrep- ancy between the proportion of the public burden borne by this corporation as compared with the individual citizen. The Maryland part of the road lies in Baltimore county and Baltimore city; assuming nine -tenths to be the pro- portion of the Maryland capital in Baltimore county, and one-tenth the proportion in Baltimore city, which is a large proportion for the county, because the offices of the company are located in the city, we have a capital value in Baltimore county of $4,545,963, which at the Baltimore county tax rate of sixty cents on the hundred dollars, would produce a revenue to Baltimore county of $27,275.78.. 'This does not include its receipts from interest and dividends but simply- and alone its earnings as a common carrier. 27 The property uot included in the company's exemption is assessed at $17,180, upon which the tax is $103.08, which added to the above would make $27,378.86, which would be the county taxes on property of the same value in the hands of farmers and mechanics in Baltimore county. The capital value in Baltimore city would be $505,107, which at the Baltimore city tax rate of $1.70* per $100, would produce $8,586.82, to which should be added the tax on the present assessment of property other than railroad property owned in Baltimore city, which is not included in the above estimate, amounting to $69,893;. which at $1.70 per $100, would produce $1,188.18, which would make $9,775 in city taxes. So that the local taxes would amount to $37,153.86; adding to this sum the State taxes at eighteen and three-quarter cents, we have a total of $46,624.61, as the fair tax on the company if it was compelled to pay at the same rate the people arc. While we have seen in fact, it pays local taxes amounting to only $1,291.26, and a State tax of $5,051.07— $6,342.33 in all — which is about $40,282.28 less than its fair share.. Upon a similar estimate the Baltimore and Ohio should pay about $188,000 for local taxes. As this road runs through Pennsylvania as well as Maryland, it affords us an opportunity to compare the Pennsylvania system with our own. But while doing so it must be borne in mind that the comparison can only be a partial one, since the Northern Central is in Maryland an exempted road. The Pennsylvania taxes upon corporations consist in the gross receipts tax and what is called the tax on corpor- ation stock; the former is eight-tenths of one per cent, on the gross receipts; the tax on corporation stock is one-half of a mill on the capital stock for each one per cent, divi- 1 This was the rate in 1886. 28 dend declared. If no dividend is declared or the dividend does not amount to six per cent, upon the par value of the stock, the tax is three mills upon each dollar, (that is, thirty cents on the hundred dollars,) of a valuation of the capital stock, returned under oath by the officers of the corporation to the Auditor-General, and subject to correc- tion by the Auditor-General and State Treasurer. 1 Any profit added to the sinking fund of a company is, for the purposes of this tax, treated as dividends divided among the shareholders. The Northern Central Railway paid to the State of Pennsylvania in 1886, on account of this tax, $19,217.39, which represents dividends to the amount of $384,347.80. The company paid that year an eight per cent, dividend, amounting in all to $520,000, and the tax was 5 per cent, on the Pennsylvania portion of the dividend. The com- pany also paid to the State of Pennsylvania in 1886, $27,282.64, for the gross receipts tax. This sum represents gross receipts to the amount of $3,460,333, which multi- plied by five makes the capital value of the road in Penn- sylvania $17,051,650. The net proceeds of the business of the road, aside from the interest and dividends which it derives from investments owned by it, being, as has been already stated, seven per cent, of the capital value, we have as the net earnings of the company in Pennsylvania, |!1,193,615.50. The tax which the company pays to the State of Pennsylvania on its gross receipts alone, amounts 1 Mr. T. K. Wortbington in his historical sketch of the finances of Pennsyl- vania, published in the series of the American Economic Association, describes this tax and illustrates it, as follows : "If a company has a capital stock of a million dollars, it pays an anuual tax of three thousand dollars under this law, until its dividends are more than six per cent., then an additional five hun- dred dollars for every one per cent, of dividend. If a company has more than ■one kind of stock, such as common and preferred, and on one of these a six per cent, or larger dividend is paid, the tax on that part of the stock which pays six per cent, or more, is at the rate of half a mill on the dollar," (that is, fifty cents on the hundred dollars,) " and that part of the stock which pays mo, dividend, or less than six per cent., is taxed three mills on the dollar.'' 29 to more than two and a quarter per cent, of this profit, while the sum of the taxes on the gross receipts and cor- poration stock, taken together, amounts to nearly four per cent, of the net earnings in Pennsylvania — which, com- pared with the one and a half per cent, paid to this State on net earnings in Maryland, is as eight to three in favor of Pennsylvania. It is true the road pays no municipal or county taxes on its road-bed and fixtures in Pennsylvania, nor does it pay any local taxes whatever on its railroad property in Mary- land, nor are any taxes paid by Maryland owners of its capital stock on their holdings. In the Philadelphia, Wilmington and Baltimore railroad we have a corporation which will serve a better purpose as an illustration, than either of the former roads, because it enjoys no exemption from taxation, State or local. The only existing provision on its behalf in relation to taxation being that provision of the charter of the old Delaware and Maryland railroad, which provides that it shall only be taxed at the same rate with other property in the State, and which applies only to that portion of the road between the Susquehanna river and the Delaware line. The gross receipts tax paid by this road to the State of Maryland in 1886, was $5,320.89, representing gross re- ceipts in Maryland to the extent of $1,064,178, or a capi- tal value of $5,320,890. The State tax paid on this capi- tal value is at the rate of ten cents on the hundred dollars; while property of the same value in the hands of the people would be taxed at the rate of 18J cents on $100, and would pay $9,976.67. The total gross earnings of the Philadelphia, Wilming- ton and Baltimore road in 1886, were $4,297,290.85, which indicates a capital value of $21,486,454.25. The net earn- ings of the company in its business as a common carrier,. 30 . B. & 0. R. R. Co., 6 Gill, 292. State «. B. & R R. Co., 48 Md. 71. 47 hands of the individual stock-holders was thus held to extend to the franchises and property, including real estate, held by the corporation in its capacity as a legal entity. But the exemption of the Baltimore and Ohio Bailroad rovision of the Constitution of Maryland, which prescribes that the only ■direct tax shall be one on the value of all real and per- sonal property, appear as an antiquated constitutional enactment. It shows that in this matter, Maryland has lagged far behind the general economic development." Our present system then must be rejected as not answering the requirements of practical morality. It is thought necessary at every step to re-enforce it with oaths of citizens and administrative officers, and there is nothing 58 which so blunts the conscience as the frequent oaths in- our political life. They are rattled off at lightning speed' by clerks, are taken as a matter of form, and finally lose- all sanctity. Can a religious person, who thinks the nation under Divine government, regard this incessant and careless appeal to Deity with indifference? Can he ex- pect that we will continue to be blessed with divine favor,, unless we amend our conduct in this respect ? There can scarcely be a doubt in the mind of any, I think, in regard to actual facts with respect to oaths. Hon. David A. Wells uses the following language on the subject, in his report as Special Tax Commissioner, to the Legislature of ISTew York: "Oaths as a matter of restraint or as a guarantee of truth in respect to official statements have, in a great measure, ceased to be effectual; or in other words, perjury, direct or constructive, has become so common as to almost cease to occasion notice." This is stated to be the "all but unanimous testimony ox officials who have of late had extensive experience in the administration of both the national and State revenue laws." It is not difficult to find confirmation of this view. The truth-telling habit and truth-loving spirit may be said to characterize the American people in a high degree, but it is doubtful if anywhere an official oath signifies less. It is because it is so common. In my opinion oaths should be resorted to rarely and then should be surrounded with such solemnity in the methods of administration as to impress upon all their true nature. While a resident of Germany I was much struck with the fact that oaths were often refused when it was supposed that the temptation to perjury was too strong, and that in general they were less common there. I believe the effects most salutary. How- ever, I do not profess to speak on this matter "as one having authority." This is a subject which ought to receive careful attention from some experienced and phil- osophical jurisprudent. 59 Our system of taxation tends to bring the morality of the community down to the level of its most unscrupulous- members, and that in this way : No devise known to man can enable the assessor to get at certain classes of personal property in the hands of the cunning and unscrupulous.. They make false returns and their neighbors know it ; the entire community, in fact, knows that men of large means are not bearing their fair share of taxation ; they feel that it is iniquity to place upon them burdens which properly belong to others, and so they, too, make inadequate returns,, and still the voice of conscience with meauingless quibbles. The remarks of the West Virginia Tax Commission on this- point state the case fairly as it presents itself to the aver- age man. "All persons will understand that they must compensate the men who are employed by them to admin- ister the affairs of government, and every fair-minded man is very willing to contribute his proper share. But it is- natural that a citizen should be unwilling to pay an amount greater than his just proportion; a man is nat- urally discontented when he feels that he is paying a tax which ought to be paid by somebody else; we are reason- ably aggrieved when we are forced to carry that part of a load which belongs properly to our neighbors." The truth is, the ordinary man simply declares that he will not do it, and thus it is that the tax-dodging which begins- with the unscrupulous few, extends and becomes general- Another aspect of this case is presented by the facts of competition in business. Those who escape the payment of a fair share of business taxes have an advantage in bus- iness which enables them to undersell their competitors,. and when a business man sees ruin staring him in the face- because his dishonest neighbor makes false returns and pays taxes on only a fractional part of his property, the temptation to do likewise is almost irresistible, except for moral heroes, and moral heroism cannot be made the basis- of governmental action. This fact of sharp competition must be kept in mind, and in Maryland we must remem- 60 l>er that the competition of people outside of Maryland, especially of business men of ISTew York and Philadelphia, is keenly felt. We must be careful not to handicap our own people in the race of competition. The Principles on which a New System of Tax- ation should be Based. One who would frame a rational system of taxation, will endeavor to find taxes which cannot well be dodged, and will avoid a tax like our personal property tax, which is regressive, increasing the relative burden as strength to bear it decreases. What shall be proposed in view of all these circum- stances? We want taxes which have stood the test of experience, and which are in accord with the spirit of the times. Taxes of this sort must be sustained by obvious principles of common sense, and must bear upon all in such manner as to require, as nearly as may be, equal sacrifice from all. Equality of sacrifice is the aim which we ought to keep before us in the construction of a system of taxation. This principle is fundamental, and as the nature of taxation is generally so little understood, I will quote at some length the lucid remarks of John Stuart Mill on this subject: 1 "For what reason ought equality to be the rule in the matter of taxation? For the reason that it ought to be so in all affairs of government. As a government ought to make no distinction of persous or classes in the strength of their claims on it, whatever sacrifices it requires from them should be made to bear as nearly as possible, with the same pressure upon all, which it must be observed, is the mode by which least sacrifice is occasioned on the whole. If any one bears less than his fair share of the Principles of Political Economy by J. 8. Mill, Bk. V, chap. II, sec. 3. 61 burden, some other person must suffer more than his- share, and the alleviation to the one is not, on the aver- age, so great a good to him as the increased pressure upon the other is an evil. Equality of taxation, therefore, as a maxim of politics, means equality of sacrifice. It means apportioning the contribution of each person to- wards the expenses of government, so that he shall feel neither more nor less inconvenience from his share of th& payment than every other person experiences from his. This standard, like other standards of perfection, cannot be completely realized, but the first object in every prac- tical discussion should be to know what perfection is. "There are persons, however, who are not content with the general principles of justice as a basis to ground a rule of finance upon, but must have something, as they think„ more specifically appropriate to the subject. What best pleases them is, to regard the taxes paid by each member of the community as an equivalent for value received, in the shape of service to himself; and they prefer to rest th& justice of making each contribute in proportion to his. means, upon the ground, that he who has twice as much property to be protected, receives, on an accurate calcula- tion, twice as much protection, and ought, on the principle of bargain and sale, to pay twice as much for it. * * * But in the first place, it is not admissible that the protec- tion of persons and that of property are the sole purposes of government. The ends of government are as compre- hensive as those of the social union. They consist of all the good and all the immunity from evil, which the exis- tence of government can be made either directly or indi- rectly to bestow. In the second place the practice of set- ting definite values on things essentially indefinite, and making these a ground of practical conclusions, is pecu- liarly fertile in false views of social questions. It cannot be admitted, that to be protected in the ownership of ten times as much property, is to be ten times as much pro- tected. Neither can it be truly said that the protection of 62 £1000 costs the State ten times as much as that of £100 a year, rather than twice as much or exactly as much. The same judges, soldiers, sailors, who protect the one protect the other; and the larger income does not neces- sarily, though it may sometimes, require even more police- men. Whether the labor and expense of the protection, or the feelings of the protected person, or any other defi- nite thing be made the standard, there is no such propor- tion as the one supposed, nor any other definable propor- tion. If we wanted to estimate the degrees of benefit which different persons derive from the protection of government we should have to consider who would suffer most if that protection was withdrawn ; to which question, if any an- swer could be made, it must be, that those would suffer most who were weakest in mind and body, either by nature or by position. Indeed, such persons would almost infal- libly be slaves. If there were any justice, therefore, in the theory of justice now under consideration, those who are least capable of helping or defending themselves, being those to whom the protection of the government is the most indispensable, ought to pay the greatest share of its price; the reverse of the true idea of distributive justice, which consists not in imitating but in redressing the ine- qualities of nature. Government must be regarded as so pre-eminently a concern of all, that to determine who are the most interested in it is of no real importance. If a person or class of persons receive so small a share of the benefit as makes it necessary to raise the question, there is something else than taxation which is amiss, and the thing to be done is to remedy the defect, instead of recog- nizing it and making it a ground for demanding less taxes. As in a case of voluntary subscriptions for a pur- pose in which all are interested, all are thought to have done their part fairly when each has contributed according to his means, that is, has' made an equal sacrifice for the common object; in like manner should this be the princi- ple of compulsory contributions; and it is surperfluons to 63 look for a more ingenious or recondite ground to rest the principle upon." A second established canon of taxation is that taxation should be certain in its amount, in the time of payment, and in the manner of payment. Any uncertainty in these par- ticulars aggravates the inevitable evils of taxation, and •offers opportunity for oppression and favoritism on the one hand, for corruption on the other. Nothing should without good reason be left to the discretion of the tax .assessors or tax gatherers, as the temptation to misuse of power is excessive. A third canon of taxation prescribes the convenience of the taxpayers as a matter of cardinal importance. The burdens of taxation are thus really lightened. One of the strongest of all practical arguments in favor of indirect taxation is, that the taxpayer is enabled to pay his taxes in small sums from time to time in his purchase of com- modities at his convenience. Direct taxation is so far preferable to indirect taxation when considered from the standpoint of justice and the public weal, that it should, so far as public opinion and public morality will warrant, be substituted for it. Direct taxation should therefore be so contrived as to incorporate, as far as practicable, the peculiar advantages of indirect taxation. Sufficient attention has never been given to this topic. Taxes on landlords should be collected at a time when they usually receive their rents, if there is any local custom in this respect. Taxes on far- mers or planters ought to be made payable when they are accustomed to receive their annual cash returns on their produce. People whose income comes in gradually by the week or month will find it much easier to meet their • obligations to the public treasury, if allowed to pay their taxes in quarterly installments. The last of the classical four canons of taxation concerns .the economy of administration and prescribes that taxes 64 should take out aud keep out of the pockets of the people as little as possible over and above what goes into the public treasury. Simple as are these four canons of taxa- tion, they have always been violated in the past in one or more particulars, and the violation has involved an injury to the public weal not easily calculable. As another fundamental principle I would lay it down> that as few things as possible should be taxed, and that in the selection of objects for taxation great care should be taken to reduce interference with business and professional pursuits to a minimum. It is because they interfere with business, injure the small man in making a greater capital necessary to engage in business, and in raising profits on business conducted on a vast scale at the expense of more modest establishments, that indirect taxes foster monopo- lies and are so injurious to the masses. It was by their means that the monopoly in the manufacture of matches- was built up in the United States, and that the great bulk of the business of manufacturing tobacco for consumption! was concentrated in a few hands. It is further due to in- direct taxes that it is difficult to import commodities from abroad, except in large quantities, and that this sort of business is also concentrated so much as it is. It is not extremely difficult to frame a system of taxation for American States and their cities and the other political units iDto which they are subdivided, if the various prin- ciples which have been elaborated be kept in mind. A system of taxation which seems to me suitable for us in Maryland will be sketched. Taxation of Real Estate. The basis of every system of taxation must be the taxa- tion of real estate, aud that for several obvious reasons : First, in all ages past, real estate has been the chief source of wealth, and great fortunes and special privileges have been derived from its possession. The foundation of an 65 visions for their control are very inadequate, and a revision of the whole body of our laws relating to corporations, seems to us to be a matter which should have the early and careful attention of our State government. But of course our duties are concerned with them only so far as the question of their taxation goes. Application of Jfew Revenues. — One of the questions which suggested itself to us has been whether the revenues proposed to be derived from these new sources shall be applied wholly to State purposes or be distributed among the counties after deducting a proportion for the State. We believe that these taxes should go to the State treasury and be used exclusively for State purposes. This would enable the State to reduce its State rate and thus be a general benefit to the people of , the whole State. It will probably be objected that the counties in which rail- roads lie or corporations are located are entitled to the benefit of any tax on the franchise or business of corpora- tions within their limits. The recommendation we have made that the counties continue to levy local taxes as at present upon the property of railroads and other corpora- tions, it seems to us, gives the counties in which the prop- erty of the corporations is located all the special local revenue they can fairly claim as against the other counties of the State. The corporations obtain their corporate privileges by a grant from the State and not from local bodies, and their business is not wholly drawn from the counties in which they are located. For instance, freight is brought from St. Mary's and Calvert counties by water to Baltimore city, from whence it is shipped over the Phil- adelphia, Wilmington and Baltimore railroad to Philadel- phia or New York ; and insurance companies in Baltimore city have business all over the State. There are also other reasons which weigh with us in considering this point. State taxes were imposed on all property in every part of the State to aid in constructing works of internal improve- ment. The counties in which these works are located have 66 realized all the advantages which come from the present of such improvements, while counties remote from then have not been benefited at all. Calvert county was sub jected to the same rate of taxation as Baltimore county t( aid the construction of the Northern Central railway (ther called the Baltimore and Susquehanna), but Baltimore county and Baltimore city have derived all the public benefit from the taxes paid by Calvert county for thai purpose, while there is not a mile of railroad in operatior. within the limits of Calvert county. And a still more cogenl reason is that the people of all the counties of this State have contributed to the treasury of the State each year foi two generations past, according to their worth in real and personal property, the larger part of the taxes which should have been paid by the great corporations, and it is, there- fore, only just that all the people of the State shall partici- pate in the proposed relief. Article Eighty-One. — To make the results of our wort more practical we have carefully revised article 81 of the Code, title, Revenue and Taxes, and present the proposed article in full in the appendix to this report. Stock in Non-Resident Corporations — In our amended draft we have embodied in section 2, a clause looking toward what seems to us a more equitable practice with reference to the taxation of shares of stock in non-resident corpora tions. The corporation being the creature of the State and usually deriving its opportunities for revenue from the place where it is located, and as it is much more practicable for the State, within which such place is, to compel a ful disclosure of the shares of capital stock and to collect thi taxes thereon, and as the share in the hands of the stock holder really represents only a right to share in the manage ment and participate in the profits of the corporation, ane as the capital of which that share is deemed to represent i part, is really located at the situs of the corporation, wi believe that according to sound policy as well as souni principle, the stock of corporations should be taxed wher the corporation is located. But as we would not put the stocl 67 of our Maryland corporations at a disadvantage with those of other States by refraining from taxing the stock of all non-resident corporations, while we tax the stock of our own, thus subjecting the non-resident holders of stock in Maryland corporations to double taxation in case they are required to return such stock and pay taxes on it at the place of their residence, we propose to refrain from levying taxes on stock in the corporations of such States as do not impose a tax upon the stock of our corporations in the hands of residents of their.State; still providing, however, for the protection of the stock of Maryland corporations in the markets of other States, by requiring that if the tax rate in such other States as do not tax the stock of Mary- land corporations are lower than our tax rates, the differ- ence shall be levied upon the shares of stock of corpora- tions of such States in the hands of our citizens. We do not wish to make the State of Maryland a better market for the stock of non-resident corporations than for the stock of home corporations. We hope such a provision will bring this subject to the at- tention of other States in such a practical way as to sug- gest similar action on their part, and finally result in a general policy of inter-state comity throughout the Union, which, by taxing stock through the instrumentality of re- turns and payment by the corporation itself, will take a large mass of property out of the list of invisible and in- tangible property, and, by that much, reduce the general difficulty and loss of State revenue from such property. Our present Maryland system of taxing stock in domes- tic corporations ought to commend itself throughout the country as both fair to the tax payer and as insuring the payment of taxes. We regret that the decisions of the United States Supreme Court, already referred to in this report, prevent a similar amendment with reference to the bonds of non-resident corporations, to that we have pro- posed concerning their stock. 1 1 The decisions in question hold that the bonds of corporations, which are anere choses in action, and only confer a right to sue, have no situs independent 68 The Subject of Exemptions has been one of consider able discussion in the Commission, with the result that j majority of the Commissioners have agreed upon the fol lowing recommendations with reference to the amend ment of section 4: That the exemption of Churct property be limited to houses or buildings used ex clusively for public worship, or to the furniture con- tained therein, and the ground necessary for the uses thereof, not exceeding ten feet on either side of such houses or buildings. We believe the general sentimenl of the community is against the taxation of houses of worship, and it is a sentiment with which we naturally sympathize. But there is much to be said on the other side of the subject. The principal arguments which have been urged in favor of taxation of Church property, are, that to exempt such property from taxation, makes it necessary to impose a higher rate on the other property in the community, and therefore is a tax for the support of religious worship, and compels a contribution from the community generally for that purpose, which is repugnant to the spirit of our constitution; and that it is also in the nature of a tax for denominational purposes, because the Church property of some denominations is more costly, and occupies more ground than that of others, while it sometimes happens that owners of the most valuable church property are not, at the same time, the largest taxpayers, and do not constitute a majority of the community. For instance, the members of the Society of Friends are usually prosperous and often wealthy, and in some localities, constitute a large por- portion of the community. But they are conscientious- ly opposed to handsome or costly Church edifices. The same is true of the German Baptist Brethren, com- monly called Dunkards. Their Methodist or Episcopal neighbors, residing in the same locality, may, and fre- quently do, possess less wealth, and are sometimes of the domicile of the owner, and cannot be taxed except at the place of his residence. " State tax on foreign held bonds— R. R. vs. Pennsylvania, 15 Wal- lace, 323 ; Kirtland vs. Hotchkiss, 100 United States, 491." 69 fewer in numbers, but they are likely to have more costly •churches. All pay the same rate of State and county tax •on their private property. Those rates are higher be- cause of the exemption of church property. Is it right to make the Quaker help pay for ecclesiastical style and •display for the gratification of others, when he does not have it in his own house of worship, and is conscientiously •opposed to it anywhere? Is this religious liberty, and is it in accordance with the 36th Article of our Decla- ration of Eights ? which says : * * * " nor ought any person to be compelled to frequent, or maintain, ■or contribute, unless on contract, to maintain any place •of worship, or any ministry." It is also the policy of our Constitution, as declared in Article 38 of the Bill of Eights, to discourage tbe accumulation of large amounts of property in the hands of religious bodies. An exemption from taxation favors such an accumulation, .and actually has that result. Under the existing law, all grounds appurtenant to houses of worship, which are not yielding a revenue, are treated by the Assessors as ex- empted. Therefore, a large lot of ground can be pur- chased in Baltimore city, a church or chapel built upon one corner of it, and the whole lot held free of taxes; and therefore free of expense until the surrounding property has been improved, and the value of the church's vacant lot greatly enhanced. Church members who entertain the proper and laudable desire to. gratify their taste, or minis- ter to their comfort by means of handsome or costly church property, should do so at their own expense; and it cannot be claimed that religious bodies have any right to enhance their wealth by participating in the increased value of land, which results from the improvement of the neighborhood, 1 without paying the State and county the same taxes paid by others for the benefits of government, which render them secure in the possession of their land. (Church property, it is urged, benefits the community gen- 1 As to the church, this would be called an unearned increment. 70 erally by improving public morality and tending to produce peace and order, thereby promoting good government. Rev. Francis Waylaud in his work on Political Econ- omy (page 403) says: "It cannot be proved that the Chris- tian religion needs the support of the civil government, since it has existed and flourished when entirely deprived of this support, And if it be said that every man derives benefit from religious services, inasmuch as these services- improve the moral and intellectual character of his neigh- bors, and hence, that every man ought to pay for their maintenauce, the argument may be easily met as follows : It is granted that every man is benefited by the regular administration of the ordinances of religion, but this is not the reason for which these ordinances are established. Men unite with their neighbors to procure religious instruction for their own benefit, and not for the benefit of others. If it happen accidentally, that others are benefited, it doesn't follow that they are obliged to pay for this benefit. If my neighbor erect a building for his own profit on his own land, and thus improve my property, I am not obliged to unite in defraying the expenses of his building. I am en- titled gratutiously to this- accidental advantage. I think the same principle applies to the case in question.'' * * "All that religious societies have a right to ask of the civil government, is the'same privileges for transacting their own affairs which the societies of every other sort possess." In 1874 the General Assembly of Rhode Island appoint- ed a special committee on the subject of property liable to and exempt from taxation. This committee reported at the January session of 1875. On page 7 of that report we find the following: "Bishop Clark took the ground that churches were of so much public benefit, that it is just to exempt them from taxation. It might be irregular, but there was no unfairness. This is the very question at issue. On this point alone hangs the whole subject. Is- it just, is it equitable to tax the people for religious^mstruc- tionl" Tl The same report prints a paper submitted to the com- mittee by one of the persons who appeared before it, which seeks to put the matter in concrete form; it is as follows: "Messrs. A, B and 0, become possessed of all the real es- tate in the town of D, Ehode Island. Mr. B, runs a theatre, Mr. 0, a faro bank, Mr. A, a church. The whole real es- tate of the town is valued at $150,000, on which is assessed an annual tax of one per cent, amounting to $1,500 in the aggregate. $500 of this is bestowed upon Mr. A, iu con- sideration that his calling is more conducive to the moral and religious people than is that of B and C. To this ar- rangment B and enter their protest, on the alleged con- stitutional ground that the town has no right to appropri- ate any part of the money paid by them for the mainte- nance of any form or mode of religious worship whatever. On turning to the fundamental law of the State, it is dis- covered that B and C's objection is valid. To obviate the difficulty, the citizen voters of the town of D, (a majority of whom attend Mr. A's church,) vote that hereafter no money shall be bestowed by the town on Mr. A, as a bonus for the support of religious worship. "It is further voted that no tax shall hereafter be levied on Mr. A's real estate; and it is further voted and resolved that the tax heretofore charged by the assessors of taxes to the real estate of Mr. A, shall hereafter be annually assessed against the estates of B and O, so that the treas- ury of the town shall not suffer any diminution of its funds through the exemption of Mr. A's real estate from tax- ation." (See above report, page 6.) California taxes church property, and the practice com- mends itself to the people, so that, though the question of exempting it has been often agitated, those favoring ex- emption have never been able to repeal the law. Under the General Assessment Act of 1876, all land attached to church edifices was taxed, except that covered by the building; this resulted in much inconvenience and 72 annoyance incident to the assessment and taxation of the necessary means of entrance and exit about the church, apart from the ground covered by it. We have believed it judicious to go so far as to recom- mend the taxation of parsonages and all other church property except the house of worship itself and the ground necessary for the uses thereof, which we have thought it best, in view of the above mentioned construction now placed by the assessors upon the law, and similar possible abuses, to limit to ten feet on either side of the building. The same arguments used above with reference to church property will apply to educational, literary, benevolent and similar institutions. We do not believe the State should contribute to the support of such institutions unless they are absolutely controlled by it. We provide at the pub- lic expense a system of public schools for the children in the State. Why should any one who chooses to start a private educational enterprise and have the same incorporated, be entitled to have the property thereof exempted from taxation? It is claimed that such institutions confer a public benefit, in consideration of which they should have such an exemption. A grocery also confers a public bene- fit upon its neighborhood, but the public confer an equal benefit upon the grocer by paying him a remunerative price for all they obtain from him. So also a private educational institution receives from its patrons a full return for the services conferred by the payment of tuition fees. The State maintains charitable and benevolent in- stitutions. Of course, these are not taxed, they are property of the State ; their management is under its control and they are presumably carried on for the benefit of the whole people. Why should individual or other enterprises of a charitable or benevolent nature, but not subject to the control or supervision of the State, have an involuntary contribution collected from all the tax payers of the State 73 by compulsion, and sometimes even by the forcible meas- ures applied for the collection of the public revenues ? 1 If private citizens desire to make noble and munificent •donations for the benefit of their fellow-men, why should they not make their gifts wholly their own, instead of demanding that all their fellow-citizens of the State shall be compelled to contribute to their charity through the medium of taxation ? Moreover, as these private benevo- lences are not under the control of the (State, it is not practicable to enquire into or pass upon their meritori- ousness. They all profess to have good ends in view, and upon making the profession all alike are exempted without any investigation as to whether they really effect those ends. In fact, some of these which are exempted are not general in their character by any means, but their beneficence is confined to a limited circle. Take for in- stance the Free Masons. Their temple in Baltimore city is exempted from taxation, except as to the part from which they derive a revenue. This exemption is on the ground that they are a benevolent institution, but their benevolence is confined to the members of their own Order- Ancient and honorable as this Order is, and commanding our respect and admiration, as it does, we yet feel con- strained to say that we do not think it right to levy a tax upon all the people of this State for the benefit of the members of this Order. We desire to say just here that the Order of Masons is used only as an illustration of what is true of a number of other orders and societies, and not with a view to singling it out for animadversion. One of the most difficult questions with which we have had to deal is that of the exemption of mortgages. The matter was taken up with the best disposition on the part of at least several of the commissioners, to subject this class of property to taxation. It seemed to them unfair that the 1 See a like case — Municipal appropriations to private institutions. Brown to. M. & C. C, 45 Md., 310. 74 holder of a mortgage should derive his income therefrom without any deduction for taxes, while holders of other property must pay a considerable proportion of their net incomes into the' public treasury. But after inquiry, dis- cussion and prolonged reflection, we have come reluctantly to the conclusion that it is not judicious for us to recom- mend any change of the existing law upon this subject. Our reasons therefor, are that a great deal of property in this State is mortgaged, and those citizens who have given mortgages, are laboring at serious inconvenience and dis- advantage to save their property from sale under the hammer. To impose a tax on mortgages would be to re- duce the income of the mortgagee on an average from about one-sixth to one-third. In other words, out of six per cent, interest on his loan, he would realize four or five per cent., according to the tax rate of the county or city where the money was loaned. The facility with which money is now invested, and especially the constant inducements offered by associations organized for the purpose of placing loans- on western land where eight per cent, or more can be real- ized, will serve as an incentive to the mortgagee, whose income is reduced by taxation, to demand the payment of his loan at maturity, instead of renewing it, in order that he may invest it elsewhere. The result of a general calling in of the loans would be disastrous in the extreme to our farmers who are now laboring under the disadvantage of reduced values of land, small prices for crops, and other adverse circumstances. A great deal of laud was mortgaged some years ago when times were better with our farmers and land brought higher prices; now the mortgagors have all they can do to meet their interest, and if called upon to- pay the principal, would find it impossible to do so, and would be ruined by the sale of their property at a time when it would probably bring less than the mortgage and the costs. These considerations have been earnestly pressed upon us by representatives of agricultural interests on the- Eastern Shore. We are informed that before mortgages were exempt from taxation it was impossible in these. 75 counties to borrow money except from persons residing ins the county, and the amount of capital for loan on mortgages was not equal in any county to the needs of the people. After mortgages were exempted, capitalists in money centers loaned money freely in these counties, assigning as their reason for doing so, that as long as they could realize six per cent, net on their money they would rather lend it on farm land nearer home than to send it to the distant west at eight per cent. These considerations are all of more importance to the residents of the counties than to the people of* Baltimore city, where, by reason of the number of capitalists who desire safe investments for their money which would be directly under their eye, loans could be- more readily obtained. But all the foregoing argument proceeds upon the sup- position that a method could be devised by which the tax could be actually collected out of the lender's interest and would not be shifted to the borrower. It is our deliberate conclusion that no such provision can be enforced. The universal experience of those who are familiar with the lending of money, is that our usury laws are constantly evaded with impunity. The relative positions of the lender and the borrower enable the lender to exact what he will r and compel the borrower to submit, the mandate of the law to the contrary notwithstanding. We could not ex- pect that a law prohibiting the mortgagee from shifting the tax to the mortgagor could be any better enforced than is the usury lay. If, as some propose, the mortgagor is al- lowed a credit upon the assessment of his land, of the amount of the mortgage loan, if the tax on the mortgage was paid at all, he would not be benefited, because the mortgagee would shift it to his shoulders. ISTor would the State be benefited by this arrangement, because its revenues would not be at all increased. The only dif- ferences that could arise to her would be that, if she must look directly to the mortgagee for the tax, (instead of col- lecting it from the mortgagor, and leaving him to deduct 76 it from his interest, which would make the shifting of the tax that much easier,) its collection would become that much more difficult and uncertain. A difficulty in this matter is the provisions of the 15th article of the Bill of Eights which appear to be violated by the exemption of mortgages. The Legislature seems to have justified the exemption of mortgages on the ground that to tax both them and the land, was double taxation. In another sense, perhaps, than that just referred to, the tax was double, for it was always shifted to the mortgagor, so that he paid taxes not only on his land but also on the money he borrowed on it. AVe are fortified in our indisposition to recommend the taxation of mortgages by the fact that the General Assem- bly was sufficiently satisfied of the constitutionality of the law exempting them to adopt it, and has repeatedly re- fused to repeal it, though urged to do so upon constitu- tional grounds; and further, because the legal presumption is always in favor of the existing status. 1 Our reasons for the other amendment proposed to Sec- tion 4, i. e., that which excepts book accounts from assess- ment, have been explained in the preceding part of this report. 'One of the arguments presented in the effort to meet the technical objection .growing out of the construction of the Bill of Rights is as follows : A mort- gage conveys the legal title to the mortgagee. To tax the full value of the land in the hands of the mortgagor and also the full value of the mortgagee's interest in his hands, is to impose a double tax, which is contrary to this very article. The answer which can be made to this argument is that the terms of the Bill of Rights forbid the double taxation of persons and not of property. ("Every person * * * ought to contribute his proportion of public taxes * * * according to his actual worth." Article 15, B. R.) To this is replied that the further effect of the imposition of taxes on mortgages is to actually impose a double tax upon the mortgagor, because the mortgagee inevitably compels the morgagor to pay the tax on the mortgage; so that in fact the re- sult is a double tax upon the person; and, while the tax is not double by the terms of the law, it is so as a consequence of it; and hence the result of an at- tempt to gratify this provision of the Bill of Rights is to violate its spirit by imposing a double tax upon persons. 77 Before leaving the subject of exemptions we desire to say that we do not approve of any proposition to allow a taxpayer to deduct his indebtedness from the valuation of his property in fixing his assessment. The argument that a man's actual worth in real or personal property, is the value of his property less his indebtedness, and therefore he should not be taxed for more under Article 15, of the Bill of Eights, it seems to us is not a good one. That Article has existed ever since Maryland ceased to be a Province,, and became a sovereign State, and from the beginning, taxes have been laid upon the whole of the citizens' property without reference to what he owed. And it seems to us that a man should pay taxes upon the full value of all he owns, whether or not he has borrowed money in order to acquire or retain it. He possesses, occupies, uses and exercises dominion over it and expects the same protection and con- sideration from the State for it, as if he owed nothing upon it, and he ought to make to the State the same return for it. But the principal objection to allowing such a credit is found in the experience of those States which do so, where the practical result has been, to a large extent, to withdraw personal property from taxation. 1 It opens the door to and invites all sorts of unjustifiable subterfuges, the creation of pretended indebtedness, the perpetuation of notes and obligations long after they have been paid; and it is even stated that in some of the counties of New York there is an ardent desire and active competi- tion upon the part of owners of personal property to become sureties upon the official bonds of county officers, in which case they return the whole penalty of the bond as a part of their indebtedness. The result has been immense loss to the State revenues and the demoralization of the people by presenting to them additional facilities to defraud the State. The evils of this system are-very vividly portrayed by Messrs. Wells, Mapes and Dodge, in their celebrated 1 In the States where this practice prevails, indebtedness is allowed to be deducted from the taxpayer's assessment of personalty, but not of real estate.. 78 report to the general assembly of New York, and have been referred to many times in other publications. We would deplore the introduction of such a system into Maryland. Annual Assessments— In order that changes in the •ownership and fluctuations in the value of personal prop- erty may be followed with corresponding changes in its valuation and assessment for taxation, we have recom- mended that it be valued annually. We are aware that this provision will be very obnoxious to the owners of such property as now escapes taxation, and we realize that it will entail some inconvenience upon all property-holders. But in view of the injustice done those who must pay fully, because their property is all in sight of the assessor or because they are honest enough not to attempt conceal- ment, the recommendation will be recognized as right. It has been urged that annual assessments of personalty, and es- pecially that the requirement that the property-holder make a return of his property, debauches the people by giving occasion for frequent perjury. That argument amounts to about this — that there are some persons now escaping tax- ation by the concealment of their property, and thus prac- ticing dishonesty toward the State by withholding what is due it, and toward their more honest or less astute fellow citizens, who by means of a higher tax rate must pay out of their pockets the taxes due by those who escape, and that if you undertake to require these dishonest persons to state what property they own in order that they may be taxed for it, they will add the guilt of falsehood or perjury to that of dishonesty, rather than do so. It has been nearly twelve years since there was a general assessment in this State, and that fact alone would seem to indicate that an assessment is absolutely necessary; but with such long intervals between assessments it is impracticable when one is made to have the work done skillfully. There is no one familiar with valuations of property for taxation ; hence, when the assessment is completed it is liable to be 79 very imperfect arui unequal. An annual assessment of per- sonalty will keep the assessing officers familiar with their work. The Baltimore Tax Commission urged the necessity of a permanent body of trained assessors in that city. State Tax Commissioner Woolford in his last report to the General Assembly said : " By changes in business and con- sequent changes in the possession of personal property, a great deal of such property is lost every year to the basis of assessment, as the new owners seldom appear to have themselves charged, while the former owners either become irresponsible, or, if responsible, invariably apply for a credit for the amount with which tbey have parted. Until we can have some method by which the assessment of per- sonalty can be reviewed every year by trained assessors and the work systematically done, this will always be a source of loss to the basis of taxation." 2 "The employment of permanent assessors, skilled in arriving at true estimates of value, to review and correct the assessments, under the direction of the County Com- missioners and Appeal Tax Court, and subject to their adop- tion and approval, will be found to be the most certain way of arriving at and maintaining equal and fair assess- ments." 2 We have recommended that real estate be valued in the counties once in six years, and in Baltimore city once in three years. In view of the fact that it is almost impossible to dis- sociate in the mind, the value of farming land per acre from the value of improvements upon it, we have omitted in our draft of Article 81, the requirement that agricul- tural land shall be valued separately from the improve- ments upon it, retaining the rule, however, as to town and city property. 1 Report of State Tax Commissioner, 1885, page VII. '' Id., page 12. 80 We have provided for the annual assessments of person- alty, both in the counties and in Baltimore city, believing that this is the only method of reaching that class ol property. 1 This recommendation includes an annual return of such property ; and to make such returns uniform, the proposed Statute provides a schedule to be used throughout the State. By resorting to all practicable methods of val- uing and assessing personalty without a return from the owner, we have narrowed as far as possible the classes of property which depend upon this method of assessment, until it includes only visible and tangible personal prop- erty, (chattels), the public securities of other States and nations, bonds and stock of non-resident corporations, in- dividual securities and debts and mortgages on property outside of the State of Maryland. We have also provided for the return and valuation of all exempted property so that the people may be informed as to what is not paying taxes. We find there is a dis- position in some quarters to criticise any recommendation which requires a return from the taxpayer. But this is not a new feature in Maryland assessments, for every assessment law ever passed in this State has required a full return under oath, from every property-holder, of all his taxable property ; therefore our recommendation is no innovation. The agitation against such returns is usually due to the large holders of personal property now escaping" taxation, who, anxious to perpetuate their unjust exemp- tions, clamor against any proposition likely to put them on an equal footing with their fellow citizens, by compell- ing them to assume their share of the public burdens; and when such measures are proposed, they seek to render 1 As to the urgent necessity for periodical assessments, see the earnest and practical facts and arguments contained in the communications from Hon. Philip D. Laird, of Montgomery county; from the County Commissioners of Caroline county, and from Mr. Gr. J. Meekins, Treasurer of Dorchester county, printed in the appendix to this report. 81 them obnoxious and arouse public sentiment against them by alleging that they are inquisitorial, impracticable and onerously minute, and that they are foreign usages, inconsistent with the spirit of our Maryland institutions. By these allegations they hope to enlist in support of their wrongful immunity, the very persons to whose shoulders they are shifting their burdens; as it were, inducing their over-burdened fellows to cry out against the diminution of their undue load. Let the owners of real estate, farm stock and other visible personal property, stock and bonds of Maryland corporations, and similar property now carrying the whole of the public expenses, see to it that those who unfairly .escape, are compelled to shoulder their own part of the load, by applying to them the only method possible under our Maryland constitution, which has also been the Mary- land practice ever since the foundation of the State. Most laws requiring the return of a schedule also require that it be verified by the oath of the party making the return, and subject him to the penalty for perjury in case he makes a false return. In view of the inconvenience which would be imposed upon persons residing in the country, by re- quiring them to go, perhaps for a considerable distance, to an officer authorized to administer oaths, and also in view of the present tendency to diminish the number of oaths, we propose that the person making the return be merely required to sign the same, and be held responsible for a wilfully false return, and punished by imprisonment in the penitentiary for not more than ten years nor less than one year. The minimum penalty upon conviction for perjury is five years. The Illinois Revenue Com mission, which re- ported in 1886, recommended the substitution of the sig- nature for the oath of the person making the return. 1 Every person should be held strictly answerable for any wilful falsification, otherwise a man without correct moral 1 Report of the Illinois Revenue Commission, 1886, page 8. 6 82 principles would be able to defraud his neighbors and th State, because lie would not be restrained by the fear o punishment. Of course all persons owning property mus be compelled to return a schedule, or the proposed periodi cal assessment would fail to effect the ends we seek. It i to the interest of a majority of the community to demam the strict enforcement of the proposed penalties agains those who fail to make a return. The penalty proposed b; section 17 is that the assessors' valuation of the propert; of any person who does not make a return shall be in creased to the extent of ten per cent.; of course thereb; increasing his taxes that much, unless he can show to th County Treasurer a just excuse tor his omission. It wouh not do to permit one man to refrain from making a return while his more conscientious neighbors did so, and nothing but an effective penalty can compel a person to do his dutj if he is disinclined to perform it. 1 Especial pains have been taken to provide a system fo] the counties which, while operating effectively, will no: entail an unreasonable expense. Believing that the custody and disbursement of th< county monies should, be in the hands of one financia officer, we have recommended that each county have £ county treasurer, and as the work of county assessors should be under the general direction of one central head our draft makes the County Treasurer also the chairmai of the Board' of County Assessors. To remove the asses sing officers as far as practicable from the temptation t( show favoritism, through fear that they will be antago nized it candidates for re-election, we have provided tha the assessors be appointed by the County Treasurer, ant the County Treasurer by the Board of County Commis sioners, except in those counties where the County Treas urer is now elected by the people. Another reason foi 1 As to the necessity for requiring returns from tax-payers, see appendix, let ter of Mr. George J. Meekius, Treasurer of Dorchester County. 83 the appointment of the assessors by the County Treasurer is that they ought to be held immediately responsible to a superior officer having the oversight and control of their work. With the same object in view, it is provided that the County Treasurer shall have power to remove any .assessor from office at any time. To get the advantage •of local knowledge, an assessor is to be appointed from ■each election district, and to obtain uniformity aud equal- ity throughout the county, the valuations made by every assessor are to be returned by him to the Board of County Commissioners, which is to consider and pass upon all assessments iu the county ; thus counteracting what might be a natural tendency on the part of some assessors to favor the residents of their districts by making lower val- uations than are made iu the other districts. As the ouly means of securing equal valuations is to require all prop- erty to be valued at the full amount of its worth, it is made the duty of the County Treasurer to call the atten- tion of the assessors specially to the fact that they must so value it. The time of assessment is fixed in that period of the year when the people of the counties have most leisure. At the same time of the year the County Treasurer is likely to be less occupied with the duties of the treasurer- ship, and so better able to give his attention to the work of valuation. The County Assessors are required to return their valuations to the office of the County Treasurer, who must separate the taxable from the non-taxable property. After he has done this he must return them to the County Commissioners by a time which, after affording the owners of property ample opportunity for appeal, will enable the Commissioners to make up the county levy between the expiration of the time allowed for appeal aud the first of July. The provisions with reference to valuations in Balti- more city are similar to those recommended by the Balti- 84 more Tax Commission, in their report to the Mayor and City Council, January 9th, 1886. We have made some minor changes intended to make the provisions there re- commended conform to our general recommendations in this report, the most important change being, perhaps, that which excepts the book accounts of merchants from the provision requiring a return of all property. We have also recommended that taxes be payable in Baltimore city in equal half yearly instalments, on the loth days of July and January, respectively. We name the 15th rather than the 1st of these months, because by reason of the payment of monthly salaries and half yearly dividends, interest, &c, on or about the first days of those months, it will be more convenient for people to pay their taxes a few days later. For an explanation of the recommenda- tions concerning assessments and collections in Baltimore city, we refer to the above-mentioned report of the Balti- more City Commission, pages 22 to 31. The reasons given on pages 27 to 31, for the abolition of discounts a* a mode of promoting the prompt collection of taxes, alsa apply to our present recommendation concerning the counties, embodied in section 115 of the draft of article eighty-one. By the same section, we make taxes due in the counties on the first day of October, being informed that that day is a more convenient time for payment than the first of September. In consideration of the fact that the appointment of a County Treasurer would reduce the work of the collectors by transferring to the treasurer the duty of making all payments for the counties, we have recommended that the maximum commission which may be allowed to connty collectors, be fixed at three instead of five per cent., thus enabling the county to apply the two per cent, thus saved toward the payment of the County Treasurer for his services in that capacity, pro- posing two and a half per cent, as the limit of the Com- missions which may be allowed to him, which, together with the compensation to be allowed him as chairman of the Board of County Assessors, and his compensation as 85 clerk to the County Commissioners, should enable the counties to secure the services of their most efficient citizens. The time for the payment of taxes by corpora- tions has been changed to tbe 1st day of October, to correspond with the date fixed for payment by individuals. In many of the counties of this State it is the practice to levy taxes for the payment of the great bulk ot the county expenses after those expenses had been incurred. With reference to this subject, Hon. Philip D. Laird, of Montgomery county, writes as follows : " * * * for the counties, too, I think the levies should be made in advance upon estimates. Those who work for the county always expect to be kept out of their money from six to twelve months, and charge accordingly. Ten per cent, of the county levy could be saved by levying in advance ; pro- vided, the laws for the enforcement of collection were so changed as to meet the demands as they arose." The very complete tables of the basis of taxation and the items of the levy in Montgomery county since 1875, fur- nished us by the kindness of Mr. Laird and published in the appendix, show what an extremely small proportion of the levy is collected by the county before it is spent. By section 99 we propose a gradual chauge of this sys- tem in the counties where it prevails, so that at the end of ten years all the counties in the State may be upon a cash basis. Of course, it would not be judicious to increase the levies largely in one year for this purpose, but a reas- onable addition to the levy each year for ten years, with the aim of getting the county's money into the treasury by the time her obligations are due, would produce the result without adding appreciably to the burdens of the taxpayers. In section 112 it is required that the county collectors shall report to and settle with the treasurer on the first Mon- day in each month. This will bring the money collected 86 promptly into the treasury, and will also enable any om to ascertain whether over-due taxes are standing agains any property, and thus facilitate the examinations of titl< and protect the purchasers of property. 1 Savings Banks We are informed that the provisioi which permits savings banks to fix by agreement with th< county commissioners or Appeal Tax Court the amount o: deposits, upon which they shall pay county or municipal taxes without resorting to the individual depositor, is prac- tically a dead letter and not availed of, but the savings banks make to city and county officers the same return ol their taxable deposits as they are required to make to the State officers, and pay the local taxes thereon. As the provi- sion is capable of abuse, we have omitted it and substituted therefor a provision requiring them to make return to the local officers and pay the taxes. The question of the ex- emption of such portions of deposits in the savings banks as are now taxable, or of a plan by which their taxes could be reduced, iu view of the fact that they only allow three per cent, to their depositors, and that the large majority of their depositors are said to be persons in needy circum- stances, has been presented to and discussed by us. But we learn that most of the deposits are invested in non-tax- able securities, and that in some instances scarcely one- fourth of the deposits are actually taxed, because the banks are permitted to deduct both non-taxable investments and deposits of $100 and less, from the amounts upon which they pay taxes. That being the case, the depositors pay taxes upon about twenty-five dollars in the hundred of the money they have in bank. If the bank pays taxes upon one- half the deposits, the depositors are subjected to about one- half of the tax rates paid by others ; thus, they are taxed for fifty dollars where the deposit is a hundred dollars. We have not been able to learn that any savings bank in Baltimore city pays taxes upon as much as one-half of 1 See appendix — above letter of Mr. Laird. 87 its deposits, and do not believe that any does. As the de- positors get but three per cent, interest, it would seem to pot them upon a footing with the rest of the community? to tax them upon one-half of their deposits. Their situation appears to be better than that, and we hardly feel that we would be justified in giving them a greater advantage over other members of the community. A poor man who has a large family, and cannot save because he must spend all for their support, is liable to be taxed to the full value of his furniture which he must provide for the necessary uses of his household, and which, by reason of the size of his family, may necessarily exceed $100 in value, so that he has no exemption, while his neighbor with a small family, or no family at all, has less than a hundred dollars worth of furniture, and therefore pays no taxes on his furniture, but has three hundred dollars in the savings bank, 1 upon one-fourth of which only he pays taxes. (Because three- fourths of the banks' deposits are invested in exempted securities, or are deposits of less than a hundred dollars). We believe that habits of economy and saving should be encouraged, but are disposed to think that depositors in savings banks have now all the advantages they can fairly be allowed, in view of the situation of the rest of the com- munity. We do not approve of any proposition to impose a fran- chise tax upon savings banks, because our savings banks are not stock companies. Nor is any profit derived from them by any one except the depositors. For the most part the officers serve without pay ; the only persons re- ceiving compensation being the clerical force, whose whole time is consumed in the service of the bank. Hence it will appear that the only value in the franchise is to the depositors, and the smallness of the profit indicates that it is not a proper subject for taxation as a special privi- 1 We are informed that three hundred dollars is about the average amount of the accounts of the depositors in our savings banks. 88 lege. With oue exception, our savings institutions pay their depositors but three per cent, interest. It is not desirable to do anything tending to destroy or cripple these valuable instruments in their work of promoting habits of frugality and saving among the poorer members of the community. We think that very nearly, if not all, of their share of the public burdens rest upon them now. The regular State and county tax rate imposed upon half of a deposit yielding three per cent., is equal to the same tax upon the whole amount of the same deposit if it yielded six per cent. Sections 202 to 210, relating to the valuation of stock in Maryland corporations, and the collection of taxes thereon, contain the present law, making only some slight verbal alterations. If the recommendations of this Commission relating to the imposition of a license gross receipts tax on railroads, and the taxation of their property for State and county purposes are adopted, the reference contained in Section 209, to the gross receipts tax on railroads, should be stricken out, and the following inserted : " But shares of stock in railroads doing business in this State, are excepted from the provisions of this Section, and all real and per- sonal property belonging to such railroads, shall be sub- ject to State, county and municipal taxation in this State the same as property belonging to individuals, and the shares of stock of such companies shall not be subject to taxation in this State." And Sections 213 to 222 inclusive, should be stricken out. Traders' License — The unfair adjustment of traders' license rates so that they bear with undue severity upon the smaller trader is a manifest injustice. The tax is one and one-fifth per cent, or more on a stock of a thousand dollars or less ; and as the value of the stock increases, the proportion of the license tax decreases step by step to one 89 per cent, on fifteen hundred dollars, to a little more than two-thirds of oue per cent, on $2,500, to a little more than a half of one per cent, on $4,000; one-half of one per cent on $6,000, and so on, down to less than one- third of one per cent, on $40,000; and as the sum increases above that point the rate grows more rapidly smaller. This subject is mentioned in the communications from the County Com- missioners of Caroline county and Talbot county, printed in the appendix to this report. We have given some consideration to the question of a change in these rates, but in the limited time we have been able to bestow on this branch of the subject, we have not agreed upon a recommendation. A considerable increase of the license tax on our large dealers, such, for instance, as the fixing of a uniform rate of one per cent, upon the stock of all dealers, so as to equalize the large with the small, would expose them to serious injury because of the practice which prevails in New York City of omitting to ■enforce the tax laws generally, against the merchants of that place, with a view to taking thither the trade of other cities by the resulting advantage which will enable their merchants to under sell those of rival cities, if such trade- rivals require their merchants to bear very heavy burdens of taxation. On the other hand, if we undertake to fix a low rate, such as one-fourth or one-third of one per cent., so as to reduce the taxes of the small dealers to the same per cent, as that paid by the larger, there is a danger of a serious diminution of the State's revenue, about one-tenth of which is derived from traders' licenses. There must be some method of dealing fairly with this subject, but we have not been able to get the full and detailed information which would lead us to feel prepared to handle the question intelligently- We therefore, simply report it as one of the facts which, in accordance with the requirements of the law, we return to the General Assembly. Local Administration. — We have had occasion to ob- serve in the course of our investigations, that the interests 90 and the needs of the local sub-divisions of the State seen to have out-grown, in some directions, the political ma chinery provided for the administration of county am municipal affairs. Improved methods of aduiinistratioi adequate to the growth, developement and conditions o modern society should be provided for our local bodies. The happiness and prosperity of our people are priuei pally dependent upon their immediate surroundings ; and in view of this fact, too great care cannot be taken to pro- vide them with efficient instruments of government for tht regulation of their local concerns. Many of our statutes upon these subjects have too much the appearance of being the outcome of chance, or the hasty and ill-considered measures adopted to provide for the present necessities ol some particular time or case. There should be in the pro- visions regulating local administration more uniformity, more system and more deliberate anticipation of, and pro- visions for, the necessities of the future. Dr. Ely's Report — We have heard with much interest the suggestions contained in the Supplementary Report presented by Dr. Ely. In some of them we heartily unite. But we have considered it our duty to make a report solely with reference to that which is practicable under our own fundamental law, and to suggest measures which have been subjected to the test of experience in American com- munities. * We concur in Dr. Ely's recommendations concerning what he terms in his report " natural monopolies," and especially in his suggestion that certain franchises. shall be sold at auction for terms of fifteen years. In this matter we find another evidence of the necessity of improved local administration. We also approve the plan proposed by him for regulat- ing the sale of intoxicating liquors, and requiring that those engaged in it make larger contributions to the public revenues. <>1 In these two reports are presented to the people of the- State the only alternatives open to their choice if they de- sire to secure fairer and more effective taxation. One of these consists in the adoption of methods suited to effect the diligent and honest enforcement of our existing con- stitution. We have endeavored to provide measures adapted to this end. The other alternative is to abolish our constitutional provisions upon the subject, abandon our entire system of taxation and venture the experiment of wholly new methods, with the hope of producing better results. We consider it fortunate that Dr. Ely has been willing to devote the necessary time and labor to the prep- aration of a report which will present the latter view of the subject. In the hope that the facts and recommendations con- tained in this report will effect the ends intended by the Act which created the Commission and prove of substan- tial service to our fellow citizens, we respectfully submit them to your Honorable Body. John P. Poe. James Alfred Pearce. Charles M. Armstrong. Mr. James MoSherry was a member of this Commission at the time of its- organization. He was subsequently elected chief judge of the sixth judicial district. Since his election he has not participated in the proceedings of the Commission, and, therefore, his name is not attached the report. SUPPLEMENTARY REPORT TAXATION^ JMLj&.ttYT-iJL3SnD, EICHAED T. ELY. SUPPLEMENTARY REPORT. Johns Hopkins University, Baltimore, January 20, 1888. To the Honorable The General Assembly of Maryland : As a member of tbe Maryland Tax Commission, I re- spectfully submit the following report on the subject of State and local taxation. I call my report a "Supplemen- tary Report" rather than a minority report, because I wish to bring it out clearly that I do not desire to antagonize all that the remaining members of the Commission have re- commended. The two reports which are submitted to you, however, are written from two quite different standpoints. The report of my colleagues takes the constitution as it stands and asks, what can we do to improve our system of taxation under the existing constitution ; while I hold that a,ny system formed under the present constitution must necessarily be radically defective, and consequently I can- not see my way to affix my signature to the report which the majority have prepared. Nevertheless much attention has been given by me as well as the other members to the main report, and many suggestions found in that, harmon- ize with my special report and seem to me compatible with a good system of taxation. Parts of the report of my colleagues I wish to be understood as indorsing as thor- oughly as if I had signed it. Which these parts are, will become apparent upon the perusal of both reports. 96 The main report simply aims to carry out the constitu- tion as it exists, and it seems to ine that only one of two courses is open to the present Legislature, namely, either to adopt the main features of that report in obedi- ence to our fundamental law, or to recommend to the people a change in the fundamental law with a view to the establishment of a rational system of taxation. Our Present System of Taxation. Our present system of State and local taxation is unsat- isfactory. This is recognized universally, and it is on this account that the present Commission was appointed. What our existing system of taxation is, is well enough known,, and is in fact so simple in its main features that it can be stated in a single sentence. The fundamental idea in it is this: Everybody should contribute to the support of gov- ernment in proportion to capacity, and capacity is deter- mined by one uniform tax on the assessed value of all property, of every description whatsoever. This is the main feature of our existing system of taxa- tion in the State of Maryland, and in the various political units embraced within the State; yet there are other im- portant taxes and some other sources of revenue. Licen- ses, especially on traders and oyster houses, yield a con- siderable sum to the State; taxes on commissions of ex- ecutors and administrators, on collateral inheritances, and on gross receipts of railroad companies, are items of note in the Comptroller's statement of receipts into the treasury of the State ; while dividends on stocks are by no means insignificant. The budgets of the cities are similar to those of the State. Baltimore receives large sums from licenses, from rent of property, from dividends, from the special tax on gross revenues of street railways; but in the case of the local political units, like the State, the leading feature is the one uniform tax on the assessed value of all real and personal property, excluding of course that ex- empted by special legislation or constitutional provision. 97 Origin of Our System of Taxation. This system of taxation originated at an early period, and has, at one time or another, doubtless been in vogue in nearly every civilized nation. It has, however, been abandoned in all countries except the United States, as antiquated; in several of our commonwealths, a ten- dency to change our system of taxation is already manifest ; and everywhere dissatisfaction with it is so marked that there is constant inquiry for better financial methods, and special commissions are frequently appointed to investi- gate the subject of taxation. The reason for this con- dition of things becomes evident upon reflection. When our present rule of one uniform tax on all property was introduced, the wealth of the country consisted almost exclusively of real property, and of such personal prop- erty as would come under the head of visible, tangible, chattels — property which could not readily be concealed. Cattle, horses and farming implements of one kind and another comprised a large portion of the personal prop- erty. It was very easy to assess to each man all his prop- erty, and to tax all in proportion to ability to pay taxes. This was then easier for landed property than now, as owing to its comparatively small value and uniformity, it answered practical purposes fairly well to divide it into a few classes and to tax each at one uniform rate. This method of taxation obtained in Ohio from the year 1800 to 1825, inclusive. Land was divided into three elasses, according to "quality," and there were three rates of taxation per 100 acres; one for laud of the first quality, another for land of the second quality, and still another for land of the third quality. These rates in 1800 were $0.85, $0.60, and $0.25 per 100 acres, according to quality. The rates in 1825 were $1.50, $1.12£, and $0.75, respec- tively. During this period the highest rates are found in the year 1816, when they were $3.75, $3.00, and $2.00, respectively. 98 The history of Connecticut illustrates an analogous but somewhat different method. It was the practice in that commonwealth, from the earliest colonial times until the adoption of the State Constitution in 1819, to follow the plan still in vogue everywhere in Europe, and also in the city of Quebec, Canada, of basing taxation, not on the selling value of property, but upon its probable net reve- nue. We tax property now in our American Common- wealths on the selling value of property; but the Euro- pean system and the old Connecticut system was to esti- mate income itself, directly. It was also the practice in Connecticut to estimate the annual income of those pur- suing any trade or occupation, and to tax them accord- ingly. The plan is described in the following words of the Eeport of the Special Tax Commission of Connecticut, made in January, 1887 : x "Those pursuing any trade or profession were assessed! on an estimate of their annual gains. Ileal estate was rated, not according to its value, but in proportion to the annual income, which, on the average, it was deemed likely to produce. Lauds as distinguished from buildings were put in the list at a fixed rate for each kind, pre- scribed by statute. The best meadow-land went in at $2.50 an acre; plough-land at $1.67; pasture at $1.34;. wood-lots at 34 cents, etc.; not because those sums are deemed to be the value of the lands, but because they were thought to represent the average income they would produce. Houses and other buildings were likewise listed at fixed sums, determined by their size, materials, number of fire places, etc., but all described by the statute itself, and beyond the control of the assessors. Under such a system there was little opportunity for evading taxation. The acreage of each farm, the general character of each lot, and the dimensions, use, etc., of each building, were readily ascertained, and the law then fixed the rate of assessment." Pages 9 and 10. 99 A somewhat similar system obtained in New Hamp- shire in early days. Specific taxes were imposed on polls, slaves, horses and neat cattle, and on land; orchards were taxed one shilling an acre, "accounting an acre so much as would produce ten barrels of cider." Arable land was taxed eight pence an acre, and an acre was regarded as a sufficient quantity to produce twenty-five bushels of grain; pasture land was taxed three pence an acre, and the quantity sufficient to summer a cow was to be considered four acres. 1 One member of our commission, Mr. James Alfred Pearce, tells me that in Kent County, land is still divided into three classes, and that a fixed valuation is placed on each acre within a given class. I am unable to say whether this obtains elsewhere in Maryland or not. It appears, however, to be customary in Kent County, and also in other parts of the State, to return horses and cattle at a certain definite valuation for each, regardless of actual selling value. The illustrations given are sufficient to show early methods of assessment. These obtained at one time or another nearly everywhere in Western Europe and in America, but it is needless to multiply examples in this place. The reason why these methods were abandoned are sufficiently evident. They were adapted only to a primitive condition of society. When the classes of wealth became more numerous, and when the differences in value between articles of the same class became more important, when one acre of land was often worth ten or twenty times, or even fifty times as much as another situated in same Commonwealth, there could not fail to arise a demand for a system of taxation which would adjust the burdens of the Government more accurately and make them bear upon each individual more nearly in 1 Report of Hon. George T. Sawyer, Chairman of Tax Commissioners, to the Legislature, June, 1876. 100 proportion to his ability. It seems that our present system of taxation arose with this in view, and in our older Amer- ican Commonwealths, very generally, early in the present century; while the newer States simply copied the institu- tions of the older. Dissatisfaction Early Manifest. The existing method of assessing and taxing property, was better adapted to the first half of the nineteenth ceu- tury than to the second half, for property could then generally be found. Early in this century it should be remembered there were comparatively few banks; 1 there was not a single railroad company, and of course none of that mass of easily concealed property based on railways, such as stocks and bonds; there was not a telegraph or telephone company, nor were there any traces of that property which consists of their evidences of indebted- ness ; there was not one gas company; and the manufac- turing corporations of our day had scarcely begun to exist. Is not this sufficient to show the difference between the requirements of a rational system of taxation in the one period and in the other? Nevertheless, it appears, as so often happens, that while the end sought was commendable, and this end was the re- alization of democratic principles in taxation, the means used for the accomplishment of that end were inadequate. Dissatisfaction was soon manifest on account of inequal- ties in the adjustment of the burdens of taxation, and attempts were made to remedy this. This dissatisfaction has increased without interruption up to the present time, and every year renders our existing methods of assessing property and of taxing it, more intolerable. The endeavors to improve upon actual methods have been frequent and are daily increasing in 1 When Hamilton wrote his report on the proposed U. S. Bank, in 1790 there were but three in the United States. Id 101 frequency, but they usually prove fruitless or render a bad matter worse, because those who make them have failed to go to the root of the evil, which is the system itself. The truth is, the existing system is so radically bad, that the more you improve it the worse it becomes. This lies in the nature of things, and nothing any Legis- lature can do, can alter this condition of things. Experi- ence and reason alike teach this, and in my opinion place it beyond controversy for all those who bave eyes to see what is passing about them every day of their lives. There was comparatively little personal property in existence one hundred years ago. Only in the present ■century has that species of property, at first gradually, then very rapidly, assumed the enormous proportions to which we are now accustomed. This growth has accom- panied the development of cities, which are the home of invisible personal property. Where the population is ■chiefly rural, there can be comparatively little personal property, and a large part of what does exist is visible and easily found. When our first census was taken in 1790, about one in thirty of our population was a resident of a city, but since then the urban population has steadily gained on the rural population, until now one-fourth of the population is urban. The following table, taken from the last census report on population, shows the movement of population towards the cities from 1790 to 1880: Inhabitants of the cities in Date. each 100 of the total population. 1790 3.3 1800 3.9 1810 4.9 1820 ■. 4.9 1830 6.7 1840 8.5 1850 12.5 1860 16.1 1870 20.9 1880 22.5 102 There is every reason to expect a continued concentra- tion of population in cities, and a rational scheme of tax- ation will keep this movement in view. Until 1826, in Ohio, it was found necessary to tax only real estate for'State purposes. "Funds for county pur- poses were derived from a poll-tax, and a tax upon horses,, mules and cattle, to which was added by legislative ap- propriation, a percentage from one-fifth to one-half, vary- ing with the several years, from the taxes levied upon real estate." 1 The tax laws passed in 1825 and 1831, show how much more diversified property was becoming. These acts enumerate for taxation, lands and town lots, including buildings, horses, cattle, pleasure carriages over one hun- dred dollars in value, merchants' and brokers' capital, money at interest, all grist and saw mills, all manufacture* of iron, glass, paper, clocks and nails, all distilleries, brew- eries, tanneries, all iron, brass and copper foundries. The laws of West Virginia show a similar development- All property is now taxed, but previous to the going into effect of the Constitution of 1852, there was no tax on invisible property in Virginia, except a small one on dividends and interest. 2 Personal property has increased relatively more rapidly than real property, until now it is regarded as its equal in value in most of our American Common wealths. This would seem, however, to be a low estimate, if we may re- gard the estimate of an English writer on finance, in re- gard to England, as at all trustworthy, for as early as 1869 1 he estimated the value of personal property in England at douhle that of real property. 1 Auditor of State's Report, 1885, page 49. ' See West Virginia Tax Commission Minority Report, by Joseph Bell, 1884 page 21. 103 The Nature of the Difficulty. The reason why our present system of taxation doe* not operate satisfactorily can be stated in a word: although it is on the face of it fair and simple, it is found in prac- tice to be an impracticable theory, for a large portion of property escapes taxation, and that the property of those best able to bear the burdens of government, namely, the wealthy residents of cities. On the one hand, it is impos- sible to find this property, and to force men to make returns under oath, results invariably in perjury and demoralization, without discovery of property; on the other hand, federal laws over which our States and munici- palities have no control, enable many to escape taxation by investments, often temporary, in federal bonds, exempt from taxation. Personal property is sometimes discovered in its en- tirety, but it is then nearly always the property of the comparatively helpless, namely, widows and orphans, whose possessions are a matter of public record. Less often a burden is imposed upon the conscientious. Thus,. I happen to know of one wealthy town of a few thousand inhabitants, where three men of conscientious convictions with regard to a man's duty to the commonwealth, pay taxes on their personalty, although they have as good an opportunity to escape as others. This state of things naturally produces dissatisfaction on the part of farmers, and other hard working people, who feel that person- alty ought to bear a share of the burden of taxation. On this account they suggest various things, like taxation of mortgages and a more vigorous search for hidden property. Their aim, as I have said, is commendable,, but to attempt to reach the desired goal by direct means, under existing laws, or any laws which do not imply a change- of the system of taxation, is as Utopian as the dream of the most radical socialist. If we desire to accomplish a purpose we must use means adequate to the end in view. 10resent unjust burdens upon real estate would be greatly alleviated." The State assessors in their report for 1886 substantiate the foregoing with these remarks : " The condition of the present assessment of the real and personal property of the State is correctly indicated by the comparison we have instituted with former years. The comparison points to the remarkable fact that there has been an average yearly increase in the aggregate valu- 132 ation of the realty for the purpose of taxation, and, with an occasional exception, a yearly decrease in the aggregate of the personal." <'The assessed valuation of real estate in 1875 was $1,960,352,703 The assessed valuation in 1885 was 2,762,348,218 Increase in ten years $801,995,515 The assessed valuation of personal property in 1875 was $407,427,339 Assessed valuation in 1885 was 332,383,239 Decrease in ten years 75,044,160 The assessed valuation of real estate in 1884 was $2,669,173,011 Assessed value in 1885 was 2,762,348,218 Increase in 1885 $92,175,207 The assessed valuation of personal property in 1884 was $345,418,361 Assessed value in 1885 was 332,383,239 Decrease in 1885 $13,035,122 Aggregate increase of real and personal in 1885 $79,140,085 Aggregate Tax Paid by the Seal and Personal, respectively, in 1875 and 1885, and the bate Per Cent. Paid by the Real and Personal in said Years. The amount of State tax levied f r all purposes in 1875 was $14,206,680.11. The rate of State tax for the above year was six mills on each dollar of valuation. 133 The aggregate sum of said tax paid by the realty in said year was $11,762,116. Paid by the personal, $2,444,564.61. The amount of State tax levied for all purposes in 1884 -was $7,762,572.78. The rate of State tax on each dollar of valuation was 2 23-40 mills. The aggregate sum of said tax paid by the realty in said year was $6,873,120.50. Paid by the personal, $889,452.28. Rate per cent, paid by real estate in 1875 was was 82 79-100. Bate per cent, paid in 1885 was 88 53-100. Rate per cent, paid by the personal in 1875 was 17 .21-100. Rate per cent, paid in 1884 was 11 47-100. If the above statement had included the year 1871, when the assessed valuation of the personal aggregated $452,- 607,732 (the largest amount that has been spread upon our assessment rolls), it would appear that the personal paid over twenty per cent, of the total State tax in said year. Now it is generally conceded that the personal property ihas proportionately increased with the real, and that it is not Sustaining its just proportion of taxation. We there- fore suggest remedial legislation. Estimated Aggregates of the Personal Property Owned in the State Liable to Assesment and Taxation. •Capital surplus and undivided profits of the National banks $ 116,458,000 ■Capital surplus and undivided profits of State bonds 34,443,289 Oapital invested in manufacturing, 1880, as per census 514,246,575 Amount carried forward $ 665,147,864 134 Amount brought forward $ 665,147,864 Value of live stock and farming imple- ments, census of 1880 160,461,024 Capital in mercantile interests, estimated . 750,000,000* Capital invested in bonds and mortgages, estimated 500,000,000 Capital invested in jewelry, paintings, stat- uary, household furniture, etc., not ex- empt 10,000,000 $ 2,085,608,888 "It is a reasonable assumption that the above amount, represents a fractional part of the personal of our tax- payers, and that the total sum liable to assessment and taxation fully equals the aggregate assessment of the real estate of 1884. At all events, the above estimates substan- tially indicate that the personal sustains but a small per- centage of the burdens of government, and that the laws relating to the assessment thereof are loosely executed or defective. • "statement of the assessed valuation of personal Property in Other States. "In 1 880 the assessed valuation of personal property in the State of Massachusetts was $473,596,730, aggregating $151,128,018 more than the valuation of the personal in the State of New York in that year. "In the above named year, the assessment of said prop- erty in the State of Ohio was $440,682,803, aggregating $118,214,091 more than the assessment of the personal in 'New York in said year. "In Ohio, the personal paid about forty-two per cent. o£ the State tax. In Massachusetts, it paid about forty-two- and sixty-one one-hundredths per cent. In Indiana, with' a personal valuation- of $189,131,892, it paid about thirty- 135 five per cent. In Illinois, with a personal valuation of $211,175,341, it paid about thirty-seven per cent., while the Empire State, embracing the city of New York,, wherein is concentrated and owned a large share of the wealth of the nation, the personal paid in the aforesaid year of 1880, about fourteen per cent, of the State tax, and in the year 1884, only eleven and forty-seven one hun- dredths of said tax. "Bearing on the question of personal taxation, the New York Times of July 7th, 1885, says: 'There is scarcely a doubt that the wealth held in this city in the forms classed as personal property greatly exceeds that held in real es- tate.' * * * 'There is no doubt that twenty-five men in this city could be named, whose wealth in personal prop- erty alone exceeds the entire valuation of that class of property as shown on the assessment rolls.' "Now, if the above statement is correct, viz., that the personal property held in New York City greatly exceeds- that held in real estate, the following statement of the as- sessed valuation of the real and personal in that city, in 1884, suggests that a mere trifle of the personal property of its citizens is spread upon its assessment rolls, for the purpose of State or local taxation. Assessed valuation of the real estate in New York City in 1884, was $1,119,- 761,597. Assessed valuation of personal property in 1884 r was $181,504,533. The New York Tribune of' July 18, 1885, says * * * 'The wealth of New York City is exceeded by the valuations of only four States in the "Union — New York, Massachusetts, Ohio and Pennsylvania/ "Statement Showing- the Amount of State Taxes- Paid BY THE BBAL AND PERSONAL OP THE SEV- ERAL Counties in 1884, That Embrace the Prin- cipal Cities of the State. The county and city of New York paid State tax as- aforesaid, as follows: 136 On its assessed valuation of real, $3,072,104.54. On its assessed valuation of personal, $508,681.22. The real estate paid of said tax, 83 44-100 per cent. The personal paid, 16 56-100 per cent. The county of Kings, including the city of Brooklyn, paid State tax as follows : On real estate, $731,031.45. On personal property, $34,392.69. The personal paid of said tax, 4 69-100 per cent. The real paid, 95 31-100 per cent. i The county of Monroe, including the city of Rochester, paid said tax as follows: The real estate paid, $165,232.95. -«~s/ The personal paid, $8,791.35. The real paid of said tax, 94 68-100 per cent. The personal paid, 5 32-100 per cent. The county of Albany, including the city of Albany, paid State tax as follows: On its assessed realty, $183,529.64. On its assessed personal, $19,463.45. The real paid of said tax, 89 40- 100 per cent. The personal paid, 10 60-100 per cent. Erie county, including the city of Buffalo, paid Statetax .as follows: On assessed realty, $228,750.43. On assessed personal, $27,521.78. The real paid of said tax, 87 97-100 per cent. The personal paid, 12 3-100 per cent." It is not then surprising that the Hon. Alfred O. Ohapin, Comptroller of New York State, advocates a new system of taxation, and speaks of the present system as "the an- tiquated system now prevailing." Sew Hampshire. Hon. George T. Sawyer, as chairman of a Special Tax Commission, made a report to the Legislature of New 137 Hampshire in 1876 in which he estimates that from one- half to one-third of the personal property in that State sub- ject by law to taxation escapes, and he recommends rad- ical changes in the tax laws. Connecticut. The following remarks are quoted from the report of the Special Tax Commission, made in 1887: "A comparison of the grand lists of the State from 1864 to 1885 as given in the table appended to this report,, will show that the proportion of those intangible securities to other taxable property has steadily declined from year to year. In 1.855 it was nearly ten per cent, of the whole ; in 1865 about seven and one-half per cent.; in 1875, a little over five per cent.; and in 1885 about three and three- fourths per cent. Yet, during the generation covered by these statistics, the amount of State, railroad and munici- pal bonds, and of Western mortgage loans, has very greatly increased, and our citizens have invested large sums in them in almost or quite every town in the State. Why then do so few put them into the tax list ? The terms of the law are plain, and the penalties for its infringement are probably as stringent as the people will bear. Many attempts have been made from early times, to create more effectual ones, but with little success. * * * The truth is that no system of tax laws can ever reach directly the great mass of intangible property. It is not to be seen, and its possession if not voluntarily disclosed, can, in most cases, be only the subject of conjecture. * * * Such considerations as these, coupled with the results of an in- vestigation of now nearly three years into the practical working of our tax system, have brought us to the conclu- sion that all the items of intangible property ought to be struck out of the list. As the law stands it may be a bur- den upon the conscience of many, but it is a burden on the property of the few ; not because there are few who ought to pay, but because there are few who can be made to pay. Bonds and notes belonging to estates of deceased 138 -persons or infants, are generally traced through the Pro- bate Eecords and brought into the tax list, but those held by an individual, are, for the most part, concealed from the knowledge of the assessors; nor do they, in most towns, make much effort to ascertain their existence. The result is that a few towns, a few estates, and a few persons of a high sense of honesty, bear the entire weight of the tax. Such has been the universal result of similar laws else- where." 1 Maryland. The defective assessment of personal property in Mary- land is a matter so familiar to our citizens that it needs no lengthy treatment here. The Appeal Tax Court of Baltimore, estimated in 1881, that fifty millions of dollars were in this city invested in United States bonds or other government securities, in addition to those used in banking. !Nbw, these bonds can be openly manipulated in such manner as to render a large share of the personal property of Baltimore untaxa- ble. They can pass from hand to hand, and debts can be created on them. It is customary for corporations and wealthy individuals to invest in bonds temporarily, to avoid taxation. One of the questions propounded to the Appeal Tax Court of Baltimore, by the Tax Commission of 1881, was this: "To what extent do you succeed in reaching in- vestments made by residents of this State, in private securities of any kind 1 ?" The answer was: "We utterly fail in reaching private securities of every description. Here and there only have they been returned by some conscientious holder." The City Collector was asked this question by the same Commission: "Does your experi- ence enable you to suggest any effective way of collecting 1 Report of the Special Committee of Connecticut on the Subject of Taxation, January session, 1887. Pages 23, 26, 27. 139 taxes ou personal property?" He replied: "The collec- tion of taxes on personal property is attended with so many and such insurmountable difficulties, that I am at a loss what suggestion to make looking to a more effective ■collection." It may be further remarked that the same tendency to Teduce rhe relative assessment as the wealth of the tax- payer increases, is found in Maryland as well as in other ■States. It is seen even in the case of real estate, although the evil is, I think, not so marked with us as it is elswhere. Nevertheless, a house worth two, three, four or five thousand, will in Baltimore, at any rate, be assessed for nearly its true selling value, and sometimes for more, while a house worth from thirty to eighty thousand or more, will probably not be assessed for over two-thirds its value, the owners arguing, and with some plausibility, that it could not be sold for what it cost. It may be doubted, however, whether the Legislature intended those whose means enables them to build houses so expensive ■that there is no market for them, to bear a smaller rela- tive burden than others. Testimony of this sort might be extended indefinitely, and from all parts of the country. I might quote the tes- timony of a taxpayer of Charleston, S. 0., one of the largest taxpayers in the State, who told me that only a fractional part of personalty was reached, and that it was impossible to carry out the law with regard to that kind of property, as the tax would absorb so large a proportion of the income. This gentleman stated that he paid only on part of his personalty, but that the tax department was only too glad to get what he was willing to pay. I might refer to the published lists of taxpayers in Brooklyn and New York City, and call attention to the ridiculous assess- ment of personalty standing against names known far and wide for large wealth. I might call attention to a single •«state whose representatives acknowledged a taxable per- 140 sonalty of thirty-three millions, but refused to pay on more than eight millions, under threats of withdrawing their property from the reach of the tax gatherer in the city. But this is entirely needless. The actual experience of our various American States and cities affords ample illustra- tion. We must now turn from actual experience and ask whether there are any reasons in the nature of things- which make experience what it is. It is not enough to show that a thing never has been done, to induce a rational man to desist from efforts to accomplish it, for we all know that brilliant success has often waited on him who refused to he convinced by a thousand failures. It is necessary to show that a thing cannot in all probability be done. The Testimony of Reason. It should first be remembered in any treatment of the subject of taxation, that any single American Common- wealth like Maryland is not an industrial unit, but simply a part of a larger whole — the United States. Even the United States in its economic affairs is not by any means entirely independent, but it must often have reference to proceedings of other governments if it would act wisely. Still, the United States, taken together as one country, may fairly be regarded as an industrial unit, and in matters of direct taxation it need not inquire very minutely into the in- dustrial situation in foreign lands. A single State is in an essentially different position, and may be well-nigh ruined by a failure to take into consideration inter-state rela tions There is a species of property which floats about from place to place with ease, or we may say that property of this sort is endowed with a high degree of mobility. This is the ease, for example, with money for investment in mortgages or other securities. Now, the remuneration for property of this sort is to a large extent independent of the laws of the State of Maryland. If in our State it is op- pressed, it will leave us for other regions, where it is more favorably treated. We may like this or not, but as men of 141 sense we cannot wisely shut our eyes to the fact. It has even been laid down as a maxim of taxation that only those things should be taxed which cannot leave us; and those who advocate this rule of action do not have in view the special interests of holders of such property, but the general welfare. I would not wish to be understood as ad- vocating this maxim without any qualification, but it ap- pears to me clear that the Legislature should always keep in mind' the distinction between property which can, and property which cannot, leave us. From the time of Turgot and Adam Smith to the pres- ent, political economists have not ceased to warn people to be careful not to drive capital abroad by taxing it, and they have often gone too far in this direction in their tim- idity, and at times indeed appear to have given too much heed to what amounted to little more than blustering threats on the part of tax dodgers. Nevertheless, no practi- cal man can fail to move carefully in this matter. When those who do not like American institutions talk about taking their capital away from the United States, an amused smile of incredulity may be a sufficient reply. Where will they go! Where else will their capital be so well protected, and at the same time yield so large a net return after defraying the burden of taxation? When we are concerned, however, with a single State like Mary- land, the case is essentially different. Capital of any high degree of mobility does, as a matter of fact, readily flow from State to State, and this inter-state movement of float- ing capital was never so easy as it is to-day. Special com- panies have been formed to encourage this movement, and it is to-day often practically as easy through their assis- tance to invest money in a mortgage a thousand miles from one's home as in a mortgage on land in one's own county. The normal returns on floating capital are then deter- mined by general conditions in the United States, and 10 142 over these we liave comparatively little control. If our tax laws operate to depress the returns on floating capital far below what we may regard as their normal level, a portion, and a considerable portion of our capital will leave us to our own detriment. The result will be that the farmer will find a poorer home market for his produce, on account of diminished wealth in the State, while his lands will fall in value, and the working man will likewise suffer from fewer opportunities for profitable employment of his services. The money lender will take his transportable commodity away from us, and instead of placing upon him a fair share of the public burdens, we will simply injure those who would borrow. . It is important to consider this well. A. is a young man who wishes to acquire a home by savings from a not too generous income. Is he benefited by laws which make it difficult for him to borrow money with which to build a house or purchase a bit of land? If the money-lender were walled up within the boundaries of Maryland, it might be that this young man could regard with indifference, pro- jects for taxing the desired loan; but as he is only one of many possible borrowers throughout the length and breadth of the land, I do not see how he can escape loss by any ab- normal burden placed upon the lender of capital. Mort- gages are exempt from taxation in the State of Maryland. Does any one think that money could be had on mort- gages in the city of Baltimore, for five per cent., if they were taxed as other property is taxed, namely, $1.78| on $100 ? Turning this matter over in my mind, and look- ing at it from every possible standpoint, I fail to see how this exemption of mortgages is a special favor conferred on money-lenders. It is an exemption which makes the flow of capital to us easier, and the benefits are thus dif- fused throughout the community. I am aware that this is a point which has been much discussed among the farmers of Maryland, and that many 143 of them have criticized the exemption with a good deal •of severity. I protest that no one has a friendlier feeling for the farmers of Maryland than I; nor do I need to be told anything about the burdens which rest upon the farmer, and the hardships which he must undergo. No one has a more active sympathy with the trials of the farmer, for I know all about them by personal experience, having lived the first eighteen years of my life on a farm, and having had for a time its exclusive management. Nevertheless, I cannot see how the farmer is to gain any- thing by special taxes on mortgages or floating capital. His desire to see the burdens of government distributed .among the people in proportion to their ability to bear them, is just, but he must obtain his end by other means. Money invested in mortgages as well as other capital of ;a high degree of mobility, is taxable by law in most States of the American Union, but as a matter of fact it nearly everywhere escapes taxation. Now the returns on this kind of capital, especially in the form of interest, are ad- Justed to this practical exemption. This is seen in the fact that it has actually happened that the tax rate has in places exceeded the current rate of interest, 1 which could 1 A striking case of oppression narrated in the second report of the New York Tax Commission in these words serves as an illustration of this fact : "The following curious instance of hardship in taxing mortgages actually oc- curred in one of the counties of Central New York within the last six years. A worthy farmer and hia wife finding themselves becoming incapacitated through age from taking personal care of their little farm, sold it for $5,000, and allowed the purchase money to remain in the form of a mortgage, with the expectation of living on the interest paid annually by the purchaser from the profits of the farm. The town being very small, the fact of the sale and the consideration became known to everyone, and assessors were compelled, in op" .position to their usual practice, to tax the old man to the full amount of the mortgage, as personal property. But the year in which this was done hap- pened to be a year in which the town, anxious to avoid a draft of men for the . army, to which the old man was not liable, put up the rate of taxation to more than the legal rate of interest, in order to provide sufficient money to purchase . recruits. The result was that the poor old man and his wife found that not ■only was their income from the mortgage swept away by the tax collector, but ithey were even obliged to go out for clay's work, in order to pay a balance of 144 not happen if a man expected to be taxed. Otherwise, he would be planning to pay for the privilege of lending some one money. Nearly everywhere the rate of interest on good securities in American cities is so low and the tax rate so high that if a man paid the taxes legally due front him his income would be far lower in proportion to his means than those who make other investments. This fact in itself, discloses the actual practice with sufficient plain- ness. A man turns over various kinds of investments in his. mind and balances them againt one another in this fash- ion: "Real estate yields so much gross, taxes, repairs and insurance deducted, I have so much net. Money placed out on interest will yield, let us say, five per cent., but it is practically exempt from taxation. I will, therefore, lend the money to A. which he desires." Is it not sufficiently evident that the rate of interest on investments would necessarily rise if these were taxed? The vital practical point in the discussion is this: the benefits of a practical exemption of any sort of floating capital are fully diffused among the people only when it is legal. A lender in Baltimore is content with good five per cent, mortgages, because he knows that they cannot be taxed. If they were legally taxable as in other States, he would want six where he now takes five. He would say: "probably the mortgage will not be taxed but it is uncertain and I must have something for the risk I run."" Often, indeed, the risk is transferred to the borrower by making him agree to pay any taxes. The case with other floating, invisible capital, difficult of discovery, is similar. So long as it is taxable by law, no special inducement is offered to it to come to Maryland, and we nevertheless taxation and provide means of Bupport, and this, too, while the identical farm for which the mortgage was given was taxed at one-fifth its true value, and other investments of other citizens of an invisible and intangible character un- doubtedly escaped taxation altogether. And this we call equality in taxation." 145 get little from the tax. If, however, we proclaim to the world that certain sorts of floating capital are in Mary- land not taxable but that their exemption is a part of our tax system, we derive the greatest possible amount of gain from an exemption of that which is for the most part after all beyond our control, and the benefits of the exemption are thus most widely diffused. We remove all premium on risk and tell all owners of capital, of the specified kinds, that without perjury or dishonesty of any kind, they may make investments in the State of Maryland. The competition among lenders must thereby be increased, and the rate of interest must fall correspondingly. We are benefited thereby because we need this species of property. The experience of a village in another State, which arae within my knowledge, illustrates the extent to which the rate of interest on mortgages is beyond the con- trol of any local authorities. The rate of interest was regulated by law, and the rate was high enough for money lent in good security, provided it was not taxed, and as a rule in the State, it was not. It so happened, however, that honest and intelligent assessors succeeded in finding personalty in this village, but the result was that it became difficult to borrow money, and the com- paratively poor who wanted loans were more injured than the comparatively rich who had money to lend. 'Our experience in Baltimore is instructive. Our pres- ent diligent Tax Collector, on entering office, very prop- erly felt that his oath amounted to something, and that he must enforce the laws as he found them. He conse- quently began a vigorous search for personal property, to the apparent consternation of many worthy citizens. It was discovered, however, that the returns on capital of that sort, which I have described as capital of a high degree of mobility, had been adjusted to its practical immunity from taxation, and that they were so small that the tax rate was felt as an excessive load for taxpayers to 146 carry. Dissatisfaction with what was regarded as prac- tical injustice was so pronounced that it became necessary to announce to taxpayers that those who made honest and" voluntary returns of personal property of this description,, would be dealt with fairly; in other words they would be- taxed only on part of their property, the law to the con- trary notwithstanding. This was the best a practical man could do under our tax laws. Some money put out at interest or invested in taxable bonds, yielded four per cent, or less, which niade- the tax rate of |1.78f nearly equal to an income tax of forty-five per cent. — truly exorbitant ! In the majority report of this Commission, one of its- members relates the experience of a conscientious client who wished the valuation of his personalty increased from $5,000 to $20,000. When told that his book accounts were also taxable he declared that he could not stand that,, owing to the severity of competition with those not thus. taxed ; and he did not go before the Appeal Tax Court until he received assurance that inquiry would not be- made into his book accounts in consideration of his con- scientious and voluntary discharge of his duty as a citizen- Every one will feel instinctively that it was only fair and proper for the Appeal Tax Court to act as it did in this- manner ; that any other course would have been mean as* well as disadvantageous to the city, in refusing to take- what they could get. Yet it was not law. This is the point. Do we want laws which we cannot enforce and which, by the necessities of the ca'se, educate men to regard an oath, calling upon the Almighty to witness its sanctity,, as something light and trivial ? In the second place we are not independent in matters- of taxation in Maryland, because we are subject to Federal laws, over which we, as a State, have no control. Federal evidences of indebtedness are not taxable by our States,. and under • our existing system it is impossible to avoid 147 their use for purposes of evading taxation; and the facility with which they can be used for these purposes is an im- portant element in determining their market value. It is difficult to see how the Federal Government can tolerate local taxation of its evidences of indebtedness, for if it does so a hostile State might destroy their value by taxation, and thus by indirect methods successfully dispute its sov- ereignty. At any rate, we have in this matter a fact not likely to be changed, and any rational system of taxation for an American Commonwealth will be framed with due reference to Federal laws and institutions ; and its nature will be such that the exemption of Federal property from taxation will not enable the cunning and unscrupulous to escape their fair share of State taxation. We must next remark that oar system of taxation car- ries with it, as an essential part of its very nature, tempta- tions which to the ordinary man are irresistible, and thus needlessly demoralizing. A wise people will always en- deavor to frame institutions so in accord with the facts of human nature that the temptation to lawlessness may be reduced to its lowest terms. " Lead us not into tempta- tion " is as wise a prayer for a State or a nation as for au individual. Experience shows that the ordinary man wants to do what is right in the main and to discharge his duties to the Commonwealth, but the ordinary man is not a moral hero. He will resist temptation to a certain point, but when the pressure becomes too strong, he yields. To deny this is to assert that environment has no influence on char- acter, and to claim that it makes no difference where a child is brought up, among thieves and prostitutes in the slums of a city, or among wholesome surroundings in an upright and Christian family ! an absurdity which needs no refutation. Now, practical men in framing laws and political institutions will act with due reference to the fact of human nature. 148 There is a tendency on the part of the unthinking to draw the conclusion from the imperfections of human na- ture that it makes no difference what laws and institutions we have until men are improved. This is a mistake. The imperfections of man set a limit beyond which improve- ment cannot go, but we can always legitimately ask the question, have we yet reached that limit? The old State banking system with frequent failures and depreciated bank notes of local circulation, and all its many other iniquities and inconveniences, doubtless seemed to our fathers, fifty years ago, as due to the imperfections of individuals, but we now perceive that taking men as we find them, it is possible to construct a banking system devoid of the most glaring of these evils. Thus we have likewise witnessed many improvements in administrative methods, based simply on a proper appreciation of the facts of existing human nature. Accounts in State, municipal and federal government, are more and more being so kept as to re- move temptation to wrong-doing, by rendering it difficult and only possible by conspiracy on the part of several; and the results have been so satisfactory that in view of recent exposures of embezzlement, fraud, and inefficiency in private business concerns, a prominent newspaper was moved to ask the question, whether it was desirable after all to introduce business methods into politics; whether political methods might uot be better introduced into private business. This couplet is frequently repeated : " Whoever hopes a faultless tax to see, Hopes what ne'er was, is not, and ne'er shall be." This is true, but it is unwarrantable to draw from this the conclusion that existing methods of taxation cannot be improved. Between the practical workings of various sys- tems of taxation in various lands and in various parts of the same land, we observe a wide diversity, and a still wider diversity between various taxes in a given system. 149 Some work, comparatively speaking, will appeal to the in- tuitive feelings of justice in the community, allow business to proceed without obstruction, in its natural channels, grow in favor with age, and are attended in their adminis- tration with little demoralization, imposing upon taxpayers and tax officials no undue temptation to fraud and perjury. Other taxes, on the other hand, are a constant source of irritation and annoyance, are attended with growing de- moralization and perjury, obstruct business, foster monopo- lies, work injustice as between tax-payers, placing upon one the burden of another and failing to adjust burdens so .as to fall upon each with equal weight, and finally, some taxes grow in disfavor the longer they last. It is our part then, while discarding Utopian ideas of absolute perfection, to search diligently for the relatively best in taxation. It is further a matter of fact that many of the problems which now vex us, have elsewhere already found their solution. Baron von Reitzenstein, a man of large prac- tical experience, and a recognized authority on taxation in reviewing the report of the Baltimore Tax Commission, made in 1886, in the Archiv fur das Finanzwesen, uses these words: "The nature of these proposals discloses a con- •dition of things which, in comparison with what exists in most European States, must be called primitive. They are nearly all concerned with questions of policy and of administrative methods, which, among us, long ago, found their solution. Especially does the provision of the Constitution of Maryland, which prescribes that the only direct tax shall be one on the value of all real and per- sonal property, appear as an antiquated constitutional ■enactment. It shows that in this matter, Maryland has lagged far behind the general economic development." Our present system then must be rejected as not answering the requirements of practical morality. It is thought necessary at every step to re-enforce it with oaths «of citizens and administrative officers, and there is nothing 150 which so bluuts the conscience as the frequent oaths ia our political life. They are rattled off at lightning speed' by clerks, are taken as a matter of form, and finally lose' all sanctity. Can a religious person, who thinks the nation under Divine government, regard this incessant and careless appeal to Deity with indifference? Can he ex- pect that we will continue to be blessed with divine favor, unless we amend our conduct in this respect ? There can scarcely be a doubt in the mind of any, 1 think, in regard to actual facts with respect to oaths. Hon. David A. Wells uses the following language on the subject, in his report as Special Tax Commissioner, to the Legislature of ISTew York: "Oaths as a matter of restraint or as a guarantee of truth in respect to official statements have, in a great measure, ceased to be effectual; or in other words, perjury, direct or constructive, has become so common as to almost cease to occasion notice." This is stated to be the "all but unanimous testimony ox officials who have of late bad extensive experience in the administration of both the national and State revenue laws." It is not difficult to find confirmation of this view. The truth-telling habit and truth-loving spirit may be said to characterize the American people in a high degree, but it is doubtful if anywhere an official oath signifies less. It is because it is so common. In my opinion oaths should be resorted to rarely and then should be surrounded with such solemnity in the methods of administration as to impress upon all their true nature. While a resident of Germany I was much struck with the fact that oaths were often refused when it was supposed that the temptation to perjury was too strong, and that in general they were less common there. I believe the effects most salutary. How- ever, I do not profess to speak on this matter "as one having authority." This is a subject which ought to- receive careful attention from some experienced and phil- osophical jurisprudent. 151 Onr system of taxation tends to bring the morality of the community down to the level of its most unscrupulous members, and that in this way : No devise known to man can enable the assessor to get at certain classes of personal property in the hands of the cunning and unscrupulous. They make false returns and their neighbors know it; the entire community, in fact, knows that men of large means are not bearing their fair share of taxation ; they feel that it is iniquity to place upon them burdens which properly belong to others, and so they, too, make inadequate returns, and still the voice of conscience with meaning-less quibbles. The remarks of the West Virginia Tax Commission on this point state the case fairly as it presents itself to the aver- age man. "All persons will understand that they must compensate the men who are employed by them to admin- ister the affairs of government, and every fair-minded man is very willing to contribute his proper share. But it is- natural that a citizen should be unwilling to pay an amount greater than his just proportion; a man is nat- urally discontented when he feels that he is paying a tax which ought to be paid by somebody else; we are reason- ably aggrieved when we are forced to carry that part of a load which belongs properly to our neighbors." The- truth is, the ordinary man simply declares that he will not do it, and thus it is that the tax-dodging which begins with the unscrupulous few, extends and becomes general. Another aspect of this case is presented by the facts of competition in business. Those who escape the payment of a fair share of business taxes have an advantage in bus- iness which enables them to undersell their competitors,, and when a business man sees ruin staring him in the face- because his dishonest neighbor makes false returns and pays taxes on only a fractional part of his property, the temptation to do likewise is almost irresistible, except for moral heroes, and moral heroism cannot be made the basis of governmental action. This fact of sharp competition must be kept in mind, and in Maryland we must remem- 152 her that the competition of people outside of Maryland, especially of business men of New York and Philadelphia, is keenly felt. We must be careful not to handicap our own people in the race of competition. The Principles on which a New System of Tax- ation should be Based. One who would frame a rational system of taxation, will endeavor to find taxes which cannot well be dodged, and will avoid a tax like our personal property tax, which is regressive, increasing the relative burden as strength to bear it decreases. What shall be proposed in view of all these circum- stances? We want taxes which have stood the test of experience, and which are in accord with the spirit of the times. Taxes of this sort must be sustained by obvious principles of common sense, and must bear upon all in such manner as to require, as nearly as may be, equal sacrifice from all. Equality of sacrifice is the aim which "we ought to keep before us in the construction of a •system of taxation. This principle is fundamental, and as the nature of taxation is generally so little understood, I will quote at some length the lucid remarks of John Stuart Mill on this subject: 1 "For what reason ought equality to be the rule in the matter of taxation? For the reason that it ought to be so in all affairs of government. As a government ought to make no distinction of persons or classes in the strength of their claims on it, whatever sacrifices it requires from them should be made to bear as nearly as possible, with the same pressure upon all, which it must be observed, is the mode by which least sacrifice is occasioned on the whole. If any one bears less than his fair share of the 'Principles of Political Economy by J. S. Mill, Bk. V, chap. II, sec. 2. 153 burden, some other person must suffer more than his share, and the alleviation to the one is not, on the aver- age, so great a good to him as the increased pressure upon the other is an evil. Equality of taxation, therefore,, as a maxim of politics, means equality of sacrifice. It means apportioning the contribution of each person to- wards the expenses of government, so that he shall feel neither more nor less inconvenience from his share of the payment than every other person experiences from his. This standard, like other standards of perfection, cannot be completely realized, but the first object in every prac- tical discussion should be to know what perfection is. "There are persons, however, who are not content with the general principles of justice as a basis to ground a rule of finance upon, but must have something, as they think, more specifically appropriate to the subject. What best pleases them is, to regard the taxes paid by each member of the community as an equivalent for value received, in the shape of service to himself; and they prefer to rest the justice of making each contribute in proportion to his means, upon the ground, that he who has twice as much property to be protected, receives, on an accurate calcula- tion, twice as much protection, and ought, on the principle of bargain and sale, to pay twice as much for it. * * * But in the first place, it is not admissible that the protec- tion of persons and that of property are the sole purposes of government. The ends of government are as compre- hensive as those of the social union. They consist of all the good and all the immunity from evil, which the exis- tence of government can be made either directly or indi- rectly to bestow. In the second place the practice of set- ting definite values on things essentially indefinite, and making these a ground of practical conclusions, is pecu- liarly fertile in false views of social questions. It cannot be admitted, that to be protected in the ownership often times as much property, is to be ten times as much pro- tected. Neither can it be truly said that the protection of 154 £1000 costs the State ten times as much as that of £100 a year, rather than twice as much or exactly as much. The same judges, soldiers, sailors, who protect the one protect the other; aud the larger income does not neces- sarily, though it may sometimes, require even more police- men. Whether the labor and expense of the protection, or the feelings of the protected person, or any other defi- nite thing be made the standard, there is no such propor- tion as the one supposed, nor any other definable propor- tion. If we wanted to estimate the degrees of benefit which different persons derive from the protection of government we should have to consider who would suffer most if that protection was withdrawn ; to which question, if any an- swer could be made, it must be, that those would suffer most who were weakest in mind and body, either by nature or by position. Indeed, such persons would almost infal- libly be slaves. If there were any justice, therefore, in the theory of justice now under consideration, those who are least capable of helping or defending themselves, being those to whom the protection of the government is the most indispensable, ought to pay the greatest share of its price; the reverse of the true idea of distributive justice, which consists not in imitating but in redressing the ine- qualities of nature. Government must be regarded as so pre-eminently a concern of all, that to determine who are the most interested in it is of no real importance. If a person or class of persons receive so small a share of the benefit as makes it necessary to raise the question, there is something else than taxation which is amiss, and the thing to be done is to remedy the defect, instead of recog- nizing it and making it a ground for demanding less taxes. As in a case of voluntary subscriptions for a pur- pose in which all are interested, all are thought to have done their part fairly when each has contributed according to his means, that is, has made an equal sacrifice for the common object; in like manner should this be the princi- ple of compulsory contributions; and it is surperfluous to 155 look for a more ingenious or recondite ground to rest the principle upon." A second established canon of taxation is that taxation should be certain in its amount, in the time of payment, and in the manner of payment. Any uncertainty in these par- ticulars aggravates the inevitable evils of taxation, and offers opportunity for oppression and favoritism on the one hand, for corruption on the other. Nothing should without good reason be left to the discretion of the tax assessors or tax gatherers, as the temptation to misuse of power is excessive. A third* canon of taxation prescribes the convenience of the taxpayers as a matter of cardinal importance. The bui'dens of taxation are thus really lightened. One of the strongest of all practical arguments in favor of indirect taxation is, that the taxpayer is enabled to pay his taxes in small sums from time to time in his purchase of com- modities at his convenience. Direct taxation is so far preferable to indirect taxation when considered from the standpoint of justice and the public weal, that it should, so far as public opinion and public morality will warrant, be substituted for it. Direct taxation should therefore be so contrived as to incorporate, as far as practicable, the peculiar advantages of indirect taxation. Sufficient attention has never been given to this topic. Taxes on landlords should be collected at a time when they usually receive their rents, if there is any local custom in this respect. Taxes on far- mers or planters ought to be made payable when they are accustomed to receive their annual cash returns on their produce. People whose income comes in gradually by the week or month will find it much easier to meet their obligations to the public treasury, if allowed to pay their taxes in quarterly installments. The last of the classical four canons of taxation concerns .the economy of administration and prescribes that taxes 156 should take out and keep out of the pockets of the people as little as possible over and above what goes into the public treasury. Simple as are these four canons of taxa- tion, they have always been violated in the past in one or more particulars, and the violation has involved an injury to the public weal not easily calculable. As another fundamental principle I would lay it down that as few things as possible should be taxed, and that in the selection of objects for taxation great care should be taken to reduce interference with business and professional pursuits to a minimum. It is because they interfere with business, injure the small man in making a greater capital necessary to engage in business, and in raising profits on business conducted on a vast scale at the expense of more modest establishments, that indirect taxes foster monopo- lies and are so injurious to the masses. It was by their means that the monopoly in the manufacture of matches was built up in the United States, and that the great bulk of the business of manufacturing tobacco for consumption', was concentrated in a few hands. It is further due to in- direct taxes that it is difficult to import commodities from abroad, except in large quantities, and that this sort of business is also concentrated so much as it is. ■• It is not extremely difficult to frame a system of taxation ; for American States and their cities and the other political,;, units into which they are subdivided, if the various prin- ciples which have been elaborated be kept in mind. A system of taxation which seems to me suitable for us in Maryland will be sketched. Taxation of Real Estate. The basis of every system of taxation must be the taxa- tion of real estate, and that for several obvious reasons: First, in all ages past, real estate has been the chief source of wealth, and great fortunes and. special privileges have been derived from its possession. The foundation of an 157 aristocratic class lias ever been large landed possessions. Land and its improvements have then been the chief part of all historical systems of taxation, because, until a com- paratively recent period, there has been little else to tax. 1 The taxation of land has then become part and par- cel of the legal and economic traditions of all modern nations, and we have adjusted ourselves to this fact. It has been said by a French writer, with whom the founders of this republic were not entirely unfamiliar — Canard, I mean — " that every old tax is a good tax, and every new tax is a bad one." The kernel of truth in this highly exaggerated principle will be found specially appli- cable to the taxation of land. When the tax on the value of land is liable to compara- tively slight variation, and is something which can be cal- culated upon as a fixed and unalterable fact, it partakes of the nature of a charge upon the land, and to this extent it may be said to amount simply to partial public ownership. A farmer owns, let us say, one hundred acres of ground pur- chased for $10,000, but a mortgage for $5,000 rests on it because he was able to pay only half of the purchase money. He feels the burden of taxation and groans under it, yet he should reflect that he would be no better off if his land had never been taxed, for in that case he would have been obliged to pay so much more for it, and instead of being $5,000 in debt, he would owe, perhaps $7,000. I recently purchased a house, and in deciding how much I was willing to pay, I took into consideration the taxes. If the house had been exempted from taxation, I would have been asked more for it and would have been willing to give proportionately more. How then, can I say that I am really bearing any burden at all? I simply pay the public an- 1 " During the greater part of the world's history the rent of land has been the chief source of saving. A good deal is saved from rent in England now, and in the rest of the world probably more is saved from it than from profits on capital." Marshall's Economics of Industry, p. 39. 11 158 nually for its claim on my property, and if this claim should be released, it would be equivalent to a present to me. Of course, if the rate of taxation is raised, it amounts to this, that the claim on my property is raised and the value of the part owned by the public increases. The more invariable and permanent taxes are, the larger the extent to which the above principle can be applied. Other forms of wealth, which we call personal, have in- creased very rapidly during the past fifty years, but real estate constitutes so considerable a portion of all property that it is out of question to think of framing a tax system without making the land tax the basis of it all. The farmer must remember that his real estate alone is not involved, but also city real estate, which is increasing in value with such enormous rapidity, and making so many rich without labor. Apart from this, land is visible, easily valued and per- manent in its location, and these qualities render it specially suitable for taxation. The following reasons have also been given for a tax on real estate, more par- ticularly on land: Land derives an increased value from public security and from public works, and taxes are expended chiefly for these two purposes. This is so true with reference to public improvements that many of our growing cities have become embarrassed by expenditures made at the solicitation of land owners, particularly on occasion of "booms," and not, as popularly imagined, by the money-less rabble. An instance recently occurred in Buffalo, where large expenditures were forced upon the people by real estate owners, and agaiust the protest of at least some of the workingmen. A second reason, is that the tax may be considered as a return to the community for the rights which it has surrendered in what was once common property. Although the admonition is less necessary here than elsewhere, all assessors should be by law especially directed lo9 to assess to the last dollar of its true value all real estate lield for speculative purposes. There is a common and in- iquitous practice, which I observed elsewhere, of undervalu- ing lanil, held for a rise and not used at all or used only for some unnatural purpose, as when city lots are utilized as cow-pastures. Such land is occasionally actually valued as farm land. Thus men without a stroke of work, and even while obstructing the natural growth of cities, see their property steadily increase in value, and this is solely ■due to the industry and thrift of their fellows. An aggra- vated case of this sort was reported to me as existing in ■Cleveland, and I was told that the assessed value of land was increased in Savannah, Georgia, the moment it was improved. Much of the property in that city appears to be assessed at sixty per cent, of its actual selling value, but unimproved property is assessed for a smaller relative amount, and thus a premium put on speculation. One gentleman told me that four lots which had recently been sold for $4,200 were assessed for only $1,100, and that a lot next to one he had improved was assessed for only $1,300, whereas it could not be bought for less than $3,500. This gentleman had bought a lot for $900 of the city. Its valuation for taxation was shortly increased to $1,500, and as soon as he put up a house on it, the valuation of the lot was raised to $1,900. Such practices appear to discourage improvements, and instances are reported where farmers would improve farms and houses were it not that they fear an increased assessment. Taxation should be so administered as not to appear to be a penalty for improve- ments and a discouragement to the enterprising. To exempt improvements from taxation for a period of three years is not without precedent, and an exemption for a short period, say one year, or possibly two, is a matter worthy of the consideration of the Legislature, although I -am not prepared to recommend such^a, measure at present. I siinplyjwish to call attention to it. 160 Exemption of Real Estate from State Taxation. The second feature of my scheme of taxation is the ex- emption of real estate from all State taxes, and for this exemption there are several cogent reasons, all based oq actual experience of States and counties situated in this respect much as Maryland is. First, we have to observe the difficulties which every- where attend the assessment of real estate for State purposes. It cannot be assessed by a single board of assessors, for the area is too vast. Its assessment must be committed to local authorities, and sooner or later a rivalry breaks out between them in the under valuation of real property, each locality striving to reduce its share of State taxes at the expense of other parts of the State, This struggle results in inequality and injustice, for real estate will be assessed twice, three times or even four times as high in one part of the State as in another. Reference has been made to this matter in Ohio, and I know of no State in the Union where such inequalties do not exist. If the opinion of the other members of the Commission — and they are better qualified to form one than I — is entirely correct, that these inequalities as- between the various counties of Maryland are not wilful, the fruit of design and cupidity, the fact of the inequalties is not thereby altered; and there is no reason to suppose that we in Maryland can hope to escape permanently the experience of other States, if we follow their methods. An attempt to remedy this evil has frequently been made, and the favorite device is a State Board of Equalization, with power to raise or lower the valuation of any county. Perhaps the best constructed Board of Equalization is found in New York, where three of its members are traveling State assessors, who endeavor by personal inspection to arrive at just conclusions and' to make each county pay its proper share of taxes. After all, at its best, a Board of Equalization is a bungling 161 affair, and never perforins its work satisfactorily. The best they can ever do is shrewd guess-work, as their task transcends human powers. As a matter of fact, there is, however, comparatively little difficulty in the valuation of the various pieces of real property within a county, and there is no reason in the nature of things why all should not be assessed and taxed at an approximately uniform valuation; provided, you have the proper kind of administrative machinery, .and new valuations at least as often as once in three years. The reason for the difference between county and State, in this respect^ is obvious. The valuation of all real property within a county, may be placed under one supervision, and by frequent meetings of the various assessors in the office of their chief and comparison of methods and results, with the right of any taxpayer to be heard before the board -of assessors, and with the right of appeal in certain cases, it is possible to assess each one at about the same rate, so that if one piece of property is assessed at 50 per oent. of its true value, all other property within the county may likewise be assessed at 50 per cent, of its true value. The only proper method is manifestly to assess at its true selling value in open market, but not at forced sale ; but if one piece of property is assessed below its true value, all other property ought to be assessed below its true value in the same proportion, and so long as there is no State tax on realty, it makes comparatively little difference. If the assessed valuation is low, the rate must be correspond- ingly higher. On the other hand, if valuation is raised, the rate may be lowered, as actually happened in Balti- more in 1836, when the assessed valuation of all property was raised from $3,787,762 to $42,931,960, and the rate was lowered from $4.77| per $100 to $0,661. All the immense and increasing difficulty which Boards of Equalization encounter, is obviated by dropping the tax on real property for State purposes, and the burdens resting on realty are thereby lightened. 162 A Fnrtlier Reason for Separating the Sources of Stater Revenue from tlie Sources of .Local Revenue. Another reason why it is well to separate the source of State revenue from the source of local revenue and reserve- real estate for local purposes, is because the expenses of the local political units are increasing more rapidly than th& expenses of central State governments. We hear much about centralization in these days, and when a few, often from unprincipled motives, start a cry of alarm like this,,, the mass of men join in it thoughtlessly, just as all the sheep of a flock jump over an imaginary obstruction be- cause the bell-wether has been foolish enough to set the- example. The truth is, the functions of the local sub-divisions of the States have for years increased more rapidly than those- of the States, and this has naturally been accomplished by more rapid increase of local than State expenses. Paving and lighting of streets must be done better than formerly,, charities are expanded, measures for the prevention of disease by boards of health with large powers, and other sanitary municipal provisions, are in their present magni- tude comparatively new ; public parks and other arrange- ments for recreation and beautification entail enormous expenditures, and the origin of our enormously expensive- free public school systems is within the memory of the livings This movement is not something merely national, but is- world^wide and inevitable. There is every reason for the- careful observer of the drift of things to expect a continuance of this movement. To take a single item : public school? expenditures are likely to increase enormously and ought to increase enormously. Changes in industry have rendered the old-fashioned apprenticeship system antiquated, an in- stitution burdensome alike to employer and employe, and as things actually are, of comparatively little use. More and more must the masses look to the school for prepare tion for actual life, and it is to be hoped that many of u* will live to see the time when industrial training will be inr 163 troduced in all our schools, and rendered compulsory, so that every boy and every girl may gain a knowledge of useful arts. This will in the end be highly remunerative, for the true wealth of a country resides in its men and wo- men. Can any one doubt that the immense wealth of a city like Boston is devoid of connection with its large ex- penditures for public schools? When our people understand this they will demand that teachers' present pitiably small salaries be raised so that the occupation of a teacher may rank with any profession, and that school facilities be ex- tended. It is safe to say that we ought to spend twice what we do for schools, and that the wealth, and conse- quently the taxable basis of Maryland would thereby be increased, and render the expenditure most profitable. A few statistics will bring before the reader vividly the nature of this world-wide movement. It is said that the best governed great city in the world is Berlin, and it is certain that even the breath of suspicion has never touched the integrity of its administration. Nevertheless, while population doubled from 1861 to 1876 expenditures in- creased four-fold. The expenditures of Paris increased from 7,500,000 francs in 1799 to 253,663,340 francs in 1883, and the per capita, expenditure over six-fold. While the expenses of the State of Baden increased about 41 per cent, from 1860 to 1871 the expenditures of the local political units, called Gemeinden, increased 81 per cent. In Prussia, while the State expenses from 1849 to 1867 were increasing a little over 25 per cent, the expenses of the local political units increased over 130 per cent. These illustrations might be extended indefinitely, but it is need- less. In the United States there is some evidence that both extremes — the local political units and the Federal Government — are increasing in importance, while the sig- nificance of the States is dwindling. In New York State between 1862 and 1 866 the State tax increased 168 per cent., the county tax 208 per cent., and the town tax 350 per cent. In Ohio, while the State tax from 1826 to 1886 in- 164 creased about forty-six times, the tax for local purposes in- creased over a hundred times. For the entire United States, according to the census of 1880, the expenses of the State governments were only 16.61 per cent, of all the money raised in the States for public purposes, and the older and more highly developed parts of the country clearly exhibited relatively smallest expenditures for State purposes, and relatively the largest for local purposes. Without going into the matter further it must be suf- ficiently evident that a rational system of taxation, framed with a view to future developments, will be chiefly solici- tous about the wants of the local political units, and I, therefore, recommend, in consideration of these facts and other facts already mentioned, that real estate be exempted from all taxation for State purposes. So far as I am able to judge, this recommendation harmonizes with the con- clusions of the ablest students of finance and is in keeping with a tendency already evident in the United States. Delaware, Pennsylvania and Vermont levy no State tax on real estate, while Wisconsin and other States fol- lowing her method of taxing railways, either exempt real estate from taxation for State purposes, or con- template such action in the near future. A Plan Whereby the Increasing Value of Real Estate in Cities May be .Secured by the Public. A custom which obtains in Savannah is suggestive. It appears that the city is extended only after all the land in the proposed new part has been acquired by the city. This is bought by the acre, as it manifestly cannot be sold as lots until it has been laid out. After improvements have been made the land is sold in lots at auction, and the city realizes a profit on the transaction, which accrues to the benefit of the taxpayers. Lots were formerly sold and only interest on the amount bid was required; in other words, unalterable but redeemable ground rents for the city were established, and to-day the owners of some of 165 .the most valuable lots in the city, sold long ago, pay $20 to $30 a year into the municipal treasury. There are some evident defects in the plan. Ground rents for twenty-five years with power to revise theni at the •expiration of the period or to put these lots up at auction, the purchaser to acquire improvements at an appraised ■valuation, would have saved for the community the incre- ment in value due to the diligence and thrift of the com- munity. This is an easy and practicable plan, and in many cities if it had been applied at a sufficiently early date, would have obviated the necessity of taxation, and thus have given an immense impetus to commerce and manufactures. The diminution in the number of the idle •classes would be a benefit, and the fewer opportunities for speculation would turn more to the old-fashioned methods «of getting a living by hard work. I would recommend that where opportunity offers, this plan be followed in the cities of Maryland. If Maryland were' a new western State, I should recommend that the Legislature pass a law or that constitutional provision be made to the effect that no new street be laid out by any municipality through land which it did not own; this land to be acquired as agricultural land and to be leased, as demand might arise, at auction, in periods of twenty-five years, to be released at the expiration of the period ; the lessee, if a new person, to acquire improvements at an ap- praised valuation. It is probably too late in Maryland for ^any so radical and thoroughgoing reform. Natural Monopolies. It is a great problem to know how to provide for grow- ing municipal expenditure; yet nature herself seems to have made provision therefor in those pursuits which may be classed as natural monopolies, and necessarily use local public property. A natural monopoly is a business which is such by its own inherent properties. While it may be occa- 166 sionally engaged in a struggle with a rival to determine- the terms of combination, or the condition of a truce, as ia a division of territory, it is not like other businesses subject to the steady, constant pressure of competition. Tire prin- cipal natural monopolies with which municipalities and other local political units are concerned, are streets, bridges,, ferries, gas works, electric lighting works, water works,. and street car lines. The following characteristics of mo- nopolies, quoted from a recent writer on this topic, will help to show why they must be monopolies. "1. What they supply is a necessary. "2. They occupy peculiarly favored spots or lines of land. "3. The article or convenience they supply is used at. the place where, and in connection with, the plant or ma- chinery by which it is supplied. " 4. This*article or convenience can in general be largely,, if not indefinitely increased, without proportionate increase in plant and capital. "5. Certainty and harmonious arrangement, which can only be obtained by unity, are paramount considerations."' The reason for monopolies may be stated in other words. What they supply can be supplied by one person much cheaper than by two or three. If two gas companies, with a capital of $1,000,000 each, operating in a single- city, just pay expenses, by combination, although the* capital will be doubled, the reduction in expenses will be such that a profit will result therefrom; added to this is the more complete control of price. It is therefore no ac- cident that we have never secured permanent competition in gas supply in Baltimore, with all our attempts. We never can secure it, should we try a thousand times. So- it is with all natural monopolies. It is best, therefore, to» recognize this fact and act upon it. 167 It is farther to be remarked, that when natural monopo- lies charge for services, in contradistinction from free pub- lic monopolies, like streets, and are guaranteed a free field,, their profits constantly rise with the growth of the city. The Public Gas Works of Berlin, in Germany, illustrate this. They supply gas for less than $1 a thousand, and yet have become so remunerative that the profits there- from defray 18 per cent, of the expenses of the municipal government. American cities have had somewhat similar experiences. Richmond and Danville, Virginia, and Wheeling, West Virginia, may be mentioned as examples. In Wheeling, gas is sold for 90 cents a thousand. The corruption in connection with the gas trust in Philadel- phia, which has become so notorious, has somewhat obscured the real nature of the question. Yet it may be doubted whether private corporations in other cities, which might be named, have had a less corrupting and debasing political effect. At any rate, the people of Philadelphia wisely determined, after the expiration of the trust, to re- tain public ownership of gas works, and it is said that the profits on them during the past year exceeded expecta- tions by one million dollars. I have several recommen- dations to make in view of these facts. I recommend that the Legislature hereafter refuse to» grant a charter to any private corporation to supply any municipal corporation in the State with gas, or water, or electric light, but that such undertakings shall always be public ; further, that municipalities be encouraged to pur- chase existing private gas works when favorable op- portunity to do so occurs. If, however, charters are granted, they should be sold at auction for a limited period, with reserved right as hereinafter described. A few municipalities manage their own street-car lines,, but the time is hardly ripe for that with us. I recommend that the Maryland Legislature pass a law somewhat simi- lar to that of New York State, but modified in such man- 168 mer as to secure to the public to a larger extent the bene- fits of future increments of value. I recommend that all .street-car franchises be sold at public auction, to be duly advertised in newspapers in Baltimore, Philadelphia, New York and Boston, and that the sale be for fifteen years, to the one who will give the largest percentage of gross receipts — never net receipts, for in such cases, by some kind of hocus pocus, net receipts tend to a minimum. At the expiration •of fifteen years the right should be. reserved to the local .authority " to purchase the undertaking compulsorily on the terms of paying to the company the then value of all land, buildings and plant belonging to the company at their market value, having regard to their condition and their suitability to the purpose of the undertaking, but ■without any addition for compulsory purchase, good will or future profits." 1 If the city should not choose to exercise this right, the sale of the franchise at public auction under similar condi- tions should then be rendered compulsory, the purchaser, if not the existing company, but another, to purchase all the property of the previous company at an appraised val- uation, as in the case of the purchase by the city, and under similar conditions. This method determines the actual value of the franchise which ought to go to the public to whom alone it is due, and still leaves profit on capital actually invested to the street-car companies. If a line is worth but little it will bring little; if much, it will bring much. A somewhat similar plan is followed in New Orleans ;as well as in New York, and the enormous profits on street-car lines can be seen in the fact that franchises have been sold in New York for thirty-five and forty per cent, of gross revenues. 1 This quotation contains the provision of the English Act, and is quoted from " The State in its Relation to Trade," by J. H. Farrer, page 92. 169 The charter of the Baltimore City Eailway Company expires in 1889, and the Act of Incorporation drawn up hy a far-seeing man, contemplated the enjoyment of fu- ture unearned increments of yalue by the public. The- terms of the Act of Incorporation contain this provision: 1 "Provided, that the said Mayor and City Council shall have the privilege, within two years after the expiration, of fifteen years from the date of the passage of said ordi- nance, 2 to purchase and buy out the said corporation, and all its property and franchises, whether conceded by the ordinance aforesaid, or granted by this Act, for and at a fair and equitable consideration, or value; and in case of a disagreement as to the said value and consideration, the Mayor and City Council aforesaid shall appoint one referee, and the corporation hereby created shall appoint another referee, who, in event of disagreement, shall appoint an umpire, the decision of whom shall be final, as to the price to be paid as aforesaid; and provided further,. that if the said Mayor and City Council of Baltimore shall decline or neglect to give notice to the said corporation of their intention to make said purchase within the aforesaid two years, then the grants and privileges held and en- joyed by said corporation shall continue to belong to it for fifteen years longer from the expiration of said origi- nal fifteen years, subject to all the terms and conditions- imposed and recognized by this Act, aud continuable thereafter in like mannner, from time to time, as aforesaid^ upon the said terms and conditions." I recommend that the Mayor and City Council make use of this provision and sell the franchise for fifteen years, to the highest bidder, on conditions already men- tioned. The special tax was originally twenty per cent, of gross revenues, and it has been gradually reduced to nine per cent, of gross revenues. At the same time stock of the- 1 See Maryland Code, Supplement, Vol I, A. A. 1863, chapter 71, Feb. 13. 2 1859. 170 par value of twenty-five has risen to seventy-two to seventy-five, and pays twelve per cent, dividends. It is -stated, however^ that over eighteen dollars a share was never actually paid in, which would make the dividends nearly seventeen per cent. While every one is glad that the corporation has prospered, there is no reason why the use of the public streets — the property of the public- should longer be granted without adequate compensation. I estimate that the franchise at public auction, duly ad- vertised, would produce at least twenty-five per cent, of .gross revenues, and this would relieve to that extent the business men of Baltimore from their load of taxation. This is a far more rational and a far juster plan than the present one which imposes the same tax on all street rail- way franchises, whether worth much or little. The in- terests of all are thus united, and all work together for tax reduction. Each franchise should be treated sepa- rately and sold for what it is worth, and then a weak line will see no reason for helping a powerful one to escape its proper tax. Modified Prohibition. The sentiment in favor of restricting the liquor traffic is in our Southern States daily increasing in strength, and some of our best-known and most respected public men have pronounced in favor of total prohibition. This senti- ment has been the natural outgrowth of the actual con- dition of affairs, for the liquor saloon is seen to be the bane of politics as well as a curse to our industrial and domestic life. While public sentiment will not warrant prohibition in all parts of Maryland, it is evidently time to proceed to place restraints upon the liquor traffic. I recommend that the number of places where liquor may be sold be limited to one to two thousand of the popu- lation in incorporated cities, and to one to fifteen hundred -of the population in those parts of counties outside of in- 171 •corporated cities ; that the municipalities and counties be -divided into liquor districts accordingly, and that the right to sell liquor in each be sold at public auction to the highest bidder, under heavy penalties lor violation of Sunday law and laws relating to sale of liquor to minors, and to other matters which, for the public good, may be included within liquor laws. The prohibitionists in their orgau admit that a diminished number of saloons diminishes the liquor traffic, aud experience of other countries seems to confirm rthis Why cannot then all good people unite on such a measure which would at the same time yield a large rev- enue? The right to prohibit the sale of liquor by popular vote in any municipality or county could aud should be -coupled with this. Techinical Details and Administrative Machines. With the recommendations of the Commission in regard to the manner of assessing and collecting taxes in municipalities as well as in the counties and State, I agree in the main. It is urged that people living outside of cities receive the bidk of their income once a year on the -sale of farm produce, and that it is really more convenient for all concerned that they should pay all their taxes at •one time. If there is nothing to be accomplished by allowing them to pay in installments, it is best not to -change the law in that respect. I would prefer, however, •quarterly payments of taxes in municipalities, to assimi- late direct to indirect taxation as nearly as possible in point of convenience. Quarterly payments are allowed in Savan- nah, and the superintendent of police, General Anderson, told me that the people found them a great convenience. Probably no man ought to be in a better position to pass an opinion on the workings of a law like this in its effects on the people of moderate or slender means, than a -superintendent of police. At the same time Major Hardie, the head of the tax department, told me that it -occasioned him no inconvenience aud required no extra •clerk hire, as the labor was simply distributed more evenly 172 throughout the year. He said, indeed, that there was a, positive advantage in the system, as, on account of th» installment plan there was less difficulty in collection. In Quebec, Canada, people are allowed to pay part of their taxes at a time, and similar testimony was offered re- garding the great convenience this method offered to the masses. I was indeed told that the poorer people in Quebec gave the tax officials less trouble and were less in arrears than their wealthier fellow-citizens. The system of quarterly payment is general in German cities, and appears to be very advantageous, and I am sure that re- publican America ought not to be less considerate in her dealings with the people than imperial Germany. People of slender means in Baltimore regard it as a hardship that they are forced to pay all their taxes at one time, and pitiful cases are related of the effect of this plan. Rumors reach me of strong opposition to this change at the city hall on the part of clerks in the tax departments.. Now while no one is more appreciative of the diligence and integrity of many of the public servants of the people of Baltimore, I cannot close my eyes to the inevitable oppo- sition on the part of a large portion of the office-holding class to whatever disturbs the routine of their work, nor can I persuade myself that the wishes of the tax depart- ment should take precedence of the wishes of the taxpay- ers. If the number of employes is insufficient, then a larger force should be engaged, and a very few extra clerks would be sufficient. I must then adhere to the rec- ommendation of the Baltimore Commission's report of 1886, that payment of taxes in quarterly installments be allowed in Baltimore, and this plan I would recommend for other cities. Miscellaneous Kinds of Personal Property. I would recommend that all unenumerated kinds of per- sonal property be not taxed, and under this head I would include mortgages, promissory notes, book accounts, simple contract debts, and other private securities. Those kinds- 173 of persona] property which usually escape, and which are paid for the most part only by the unfortunate and ex- tremely conscientious, I would exempt altogether from tax- ation. Thus the cunning and unscrupulous would not be placed at an advantage over their worthier or less favored fellow-citizens..- The reports of the financial officers of the State, so far as I have observed, are not so made that it is possible to tell precisely how much is derived from each species of pro- perty, but the Appeal Tax Court has already been quoted in this report to the effect that the amount received from the property which I would exempt altogether, is in Balti- more, comparatively small, even if not insignificant. 1 It is safe to say that the amount of such property outside of Baltimore, taxed, must be still smaller, as the city is the chief home of this kind of property. It is not necessary to add much to what has already been said on this subject. However, the question is often asked, is it not better to reach even twenty-five to forty per cent, of such property than to let it all escape, and are not the burdens of real estate lessened by so much ? I unhesitat- ingly reply, no ! First, it is not better to do injustice to the conscientious and helpless. A person need not be even a believer in re- vealed religion to expect that a nation or State will be prospered in proportion as its institutions are based on righteousness. This is the lesson of all history. Second, while the loss will be only small to the taxpayer, on account of the small returns, according to all testimony, of the property in'question — for not all personal property, hut only the items mentioned are involved — the gain from legal exemption would be great. The entire system of taxation would be simplified and the labor of its adminis- tration lessened. Now, any one who makes any invest- ments in one of these kinds of personal property in question, 1 The proportion of property of this sort taxed in Connecticut to the entire taxable basis in 1885, was only three and three-fourths per cent. 174 knows that he will probably escape taxation, but on ac- count of uncertainty, he is obliged to ask a small premium to compensate for risk. I want to borrow money on a promissory note. Well, the lender could let me have it, we will say, for five per cent., if he were certain that he would not be taxed on money lent, but as the tax assessor may possibly find him out, he says : " I must have one per cent, extra on account of risk. You must pay me six per cent." Thus I come back to my former point. This species of property is practically exempt, as it is, in most cases, but the benefits of the exemption are fully diffused only in case the exemption is legal. This is not something merely theoretical, but something with which every experienced banker is familiar. Why do Federal bonds sell for so high a premium as to produce less than two per cent, on money actually invested? Why do Maryland bonds at 3.65 find ready takers? It is because of tax exemption. Thus not the money lender chiefly, but the taxpayers receive the benefits of this exemption. A business man, who appeared before the Maryland Tax Commission, claimed that pur- chasers of State bonds paid the highest tax ;. that the tax was deducted in advance from interest paid. Can any one dispute this proposition successfully? If we legally ex- empt this property of a high degree of mobility, we simply promote its tendency to flow in to us in Maryland, and on account of the greater supply, we can obtain its use for a smaller percentage. The case of real estate is, in this re- spect, it is manifest, entirely different, and so is the case of the most of the property which it is proposed to tax. Diffusion of the Benefits of Exemptions. The diffusion of the benefits of exemption from taxa- tion can perhaps best be seen by a concrete illustration. Anyone who in Baltimore, walks from Baltimore street in a northerly direction out St. Paul street or Oalvert street, beyond the boundary of the city into the county, will no- tice a large number of houses newly constructed or in pro- cess of construction, and which are offered for sale or 175 rent at far lower prices than such comfortable houses can be obtained for in any other great city in the American Union. It is not too much to say that a house in this sec- tion of the city, which can be obtained for $25 a month — a pleasant, well-situated house — could not be obtained in anyotber city of the size of Baltimore in the United States for less than $50 a month. Now, why is it that so much building is going on and that houses are so cheap ? If any one thinks that the exemption of mortgages from taxation is not connected with it, a conversation with a practical builder or banker will probably disabuse him of this idea. As a matter of fact, savings banks would not and could not put their money into such improvements in Maryland if they were taxed. This is what they do now, but if mortgages were taxed, money now spent in Mary- land would go to the West, just as thirty millions of dollars have recently left the State of ~New Hampshire. Who then gets the benefits of this exemption? They are diffused widely through the community. The working-man does, for he has more abundant opportunities for labor, and the taxation of mortgages would be a blow which he would feel. In addition to this, to tax mortgages, would tend to raise his rent. The real-estate man derives a ben- efit, as he does from every improvement, for it raises the value of his land. The farmer is also benefited in a better home market for his produce. The merchant is benefited in larger sales. If the money-lender is benefited at all, his advantage is not greater than that of other members of the community. State Revenues. It has already been stated repeatedly in this report that the farmers of Maryland and other hardworking people are right in their feeling that all men of means should con- tribute to the support of government in proportion to their ability. It is a just grievance, that many who can amply afford to bear a part of the burdens of government do not participate in them, while they do derive inestimable benefits from the existence of government. There is one 176 way, and only one, to remedy that evil, and that is, by an income tax, which requires calm and judicial examination, undisturbed by the hue and cry raised by tax dodgers or even by the prejudiced. First. It is universally, or almost universally, admitted that no tax is so just, provided it can be assessed fairly and collected without difficulty. More nearly -than any other tax does it answer the requirements of that canon of taxation which prescribes equality of sacrifice. Further- more, it is of moment that the income tax does not make it more difficult for a poor man to begin business or to continue business. 1 Its social effects, on the contrary, are beneficial, because it places a heavy load only on strong shoulders. Even for men of large means engaged in busi- ness it is a tax to be strongly recommended, for such men will in some years make little or nothing, or even lose money. Now, our property tax is merciless ; it exacts a» much iu a year when a business man is struggling to keep his head above water as in a year of rare prosperity ; whereas the income tax exacts much only when much can be given without financial embarrassment. If it were practicable to substitute an income tax for the whole of the property tax it would save many a man from bankruptcy. I will repeat, with some modification, in this connection, words I used in my special report as member of the Baltimore Tax Com- mission : It is the fairest tax ever devised ; it places a heavy bur- den when and where there is strength to bear it, and 1 This is one objection to our entire license system, to which reference has been made in the report signed by my colleagues. Our license system pro- motes pauperism as it increases the difficulty which a man has in engaging in business. It is as bad as a poll-tax, which civilized people regard with increas- ing abhorrence. Both are regressive, increasing burdens, as ability to .bear them decreases. Licenses like many of ours remind me of taxation in the time of feudalism, when only those were taxed who were too weak 10 resist. Those who are prosperous find specific licenses a small burden, and those who are just entering a business career are too weak to resist successfully. Licenses thus encourage monopoly, and are undemocratic. Of course, the case of licenses for natural monopolies, and corporations is essentially different, and in the who wrote the review of the Baltimore Tax Commission's report, called attention to precisely these features in our personal property tax, as noteworthy. He said it was like the examination made in his country of the estate of de- cedents in the probate Court. It is said that it produces perjury, but existing taxes are still more demoralizing. It is said that it is difficult to assess it fairly. It is incomparably more difficult to assess a personal prop- erty tax fairly. It is so much easier to assess an income tax that assessors sometimes first assess a man's income, and then, on the basis of that estimate, his probable per- sonal property. This plan is sometimes followed in the City Hall in Baltimore. It is, indeed, on this account that a part of the prejudice against the income tax exists. I do not intend to express any condemnation of men of large means as a class, but you will find among them, as in all classes of society, unscrupulous persons. Now, these found the income tax a less easy tax to evade than the personal property tax, and precisely on that account they raised a hue and cry, which by reason of their control over influential newspapers, attracted undue attention. In the case of the federal income tax, its very excellence was turned against it. A chief objection to it was, that it accomplished precisely what it was intended to accomplish. J8o one pretends that the publication of the valuation of a man's personal property will injure him in any way 17U or destroy his credit; that was alleged with reference to the income tax. Why the difference? Because the one was more nearly accurate than the other. ISTo one attaches any importance to the publication in the newspapers, of personal estates taxed in New York and Brooklyn, but importance was attached to the income tax returns. A further indication of the fact that a general personal property tax is tolerated only because laws and consti- tutional provisions are not enforced, is seen in the fate which usually overtakes reports of Tax Commissions. Some people feel dissatisfied on account of undue and unequal taxation and instigate the appointment of a Tax Commission. As a rule the force of tradition and preju- dice is such that no radical changes are recommended, but laws are recommended which simply aim to enforce the existing system. The reports are then, with or without due form and ceremony, buried and a sleep the sleep from which there is no awakening. A Special Tax Commission made a report to the South Carolina Legislature on taxation in 1886, which had no other design in the world than to enforce the law, and this is what a disgusted advocate of the Tax Commission's rec- ommendations wrote me in regard to their bill: It was killed. in the Senate before one-fourth of it had been discussed. This was done because it was said that their suggestions were too inquisitorial, etc. The igno- rance of legislators generally was never more gross and patent than in this instance, for it is a fact that every one of these so-called 'suggestions' of the Commission (upon which the Senate was induced to kill the bill) were 'original suggestions' taken verbatim from the existing tax law ! The bill of course never reached the House of Representatives, and was not discussed by that body." It has been said that our Baltimore Tax Cmmission report was killed even before the State Tax Commission 180 was appointed, by the pressure from business men. Now, for this they can scarcely be blamed severely, for to enforce the law would have injured the city generally. Perhaps it can at most be said that they should either have favored the enforcement of law or have agitated for its repeal. Now, we have in the personal property tax, a tax which grows in disfavor, as it year by year becomes more and more unsuitable for our industrial situation. In the in- come tax, on the contrary, we have a tax which is conge- nial to the spirit of democracy, and which tends to become more general as the masses acquire power, a tax which wherever it has been honestly tried, is administered with increasing ease and justice, and which grows uninter- ruptedly in popular favor. The present income tax in England was introduced as a "war measure" at the time of the Crimean war, but as time went on and it was learned how to assess it with a constantly increasing approxima- tion to perfect justice, it was finally decided to keep it as a permanent part of the English financial system. The experience of republican Switzerland appears to be equally favorable to the income tax. Our federal income excited animosity on several ac- counts. First, an income tax is more suitable for a State than a federal government. Second, designing men purposely made it rediculous, so as to render its abolition easier; and the law was always full of needless imperfections in its details. 1 Third, it met with special disfavor in Maryland, it is probable, because it was levied to carry on a war which was not popular. 1 Before the final stage of absurdity was reached, it worked after all far better than many would have us believe, and it answered the demands of economical administration, for it was the cheapest tax to collect among all the federal taxes with the single exception of the taxes on national banks, which cost nothing to collect. It did not cost over two per cent., while the general average cost of collection was between three and four. 181 I therefore recommend an income tax for State purposes, because, while it is suitable for neither a municipality nor a federal government, it can be assessed and collected with comparative ease in a State, and because, while it is not perfection, it comes nearer to it than do most forms of taxation. There are various methods of assessing an income tax. One is self-assessment, another is assessment on part of officials with the right of a taxpayer to protest and show that his income is less than it has been assessed. It is not clear what heed should be given in these days of publicity to the objection against publicity of income. How can that be worse for a man's credit than our various mercantile agencies, with their estimates of the credit of every business man? Practically, where the income tax •exists, this matter seems to occasion little difficulty. It has also been suggested that it would be a good thing to make people disclose their incomes, as it would remove the temptation to many to pretend to be richer than they are, and to spend money which they cannot afford. However, if it is desired to avoid publication of incomes there would seem to be no reason why this should not be done. Sometimes it is stated on personal property blanks that the returns will not be given to the public. A similar arrangement might be made with reference to returns of income tax, and, probably, a combination of the self-assess- ment plan and the assessment by tax officials would work best. As a guarantee to the public the Georgia plan of laying returns of income tax before the grand juries of each county and municipality might be adopted, not with any view to the institution of criminal proceedings, but for the purpose of revision. The other members of the Commission report various new sources of revenue and suggest plans whereby corpo- rations can be made to contribute their just proportion of the public burdens. With these plans I am, in the main, 182 in accord. I shall also suggest other sources of revenue. The income tax, in my opinion, should be a variable tax on all incomes in excess of $600, but only on the excess in every case. The income tax should be high enough each year to meet all deficiencies from other sources. I estimate that it need never exceed one per cent., which is hardly more than equal to a tax of one-twelfth of one per cent, on property. In the year 1866 Maryland paid to the Federal Government over $1,700,000 in income tax, or nearly enough to meet all the expenses of our State government at present. Of this sum over $800,000 was the return from the five per cent, tax, which would be $160,000 for each one per cent. ; but, as in the arithmetic of taxation, two and two sometimes make only one, so it may be expected that in the case of an income tax, if you reduce the rate the returns will not diminish in the same proportion. It is then safe to calculate that a one per cent, tax on those in- comes would yield one-third as much as a five per cent, tax, or $267,000. The sum of $987,534.41 was the proceeds of a ten per cent, tax on incomes over $5,000. A one per cent, tax would probably have yielded one-fifth as much, or about $195,500. The two sums added equal $462,500. The $500 was not deducted in each case. On the other hand, wealth and population have increased, * and there is not the bitter opposition against the State government which existed in many minds against the federal government. I therefore estimate that a one per cent, income tax at the present time could safely be relied upon to yield $500,000, which would be ample, with other revenues, to meet the deficiency due to the exemption of real estate from all State taxation. 1 Population has increased over one-third, and there is reason to believe that the number of those with taxable incomes has increased in like proportion. One of the most astonishing tilings about a city like Baltimore at the present time is the vast number of families living in great comfort. One can walk through miles of streets on which reside families with incomes varying from $1,500 to $10,000 or more. Other facts all point to a large increase in the number of families with incomes in excess of $600. 183 An income tax must be assessed on all income regard- less of source, even if that source has already been taxed. Taxes may be divided into taxes on property or things,, and taxes on incomes. A tax on property is a tax on things. Apiece of land as such, must pay a certain tax, a sort of first claim on its revenues, regardless of owner- ship by A., B., or 0. An income tax is strictly a personal tax. It asks how much income has this man ? It is re- gardless of any particular source, but includes all sources. Business expenditures and taxes are excluded from in- come, but personal expenses as for rent, food, clothing, etc., are included, because it is for these purposes that in- come exists. If a man occupies his own home, its esti- mated annual value is part of his income. Let us see how this would affect the farmer. Let us say a man has a farm worth $10,000 in Maryland. If it yields $1,400 a year, that is doing well. If his taxes- are one per cent., that would be $100 a year, of which $18.75 would be for State purposes. This latter sum would fall away under the scheme of taxation here elabo- rated, and an income tax of $8.00 would take its place,, for this is one per cent, on the excess of income over $600. The farmer would save the difference between $18.75 and $8.00 or $10.75, which would be paid by the effect of the income tax on those who are now inadequately taxed. But this is not all. The system of taxation elaborated, including recommendations of the other Commissioners not inconsistent herewith, might be expected to reduce local burdens, and I hope, on an average by about one- fifth. The farmer would then save an additional $16 on a total of $26, reducing his taxation from $100 per annum to $74 per annum. Inheritance Tax. An inheritance tax is generally regarded as a proper accompaniment of an income tax, and when moderate 184 in amount is a just tax, which can always be assessed fairly and collected without difficulty or considerable ex- pense. As the income tax contemplates an exemption of $600 it is proper that the direct inheritance tax should exempt a sum, which at five per cent, interest will produce $600, or $12,000. I recommend therefore that all direct inheri- tances exceeding $12,000 be taxed on the excess over said sum at the uniform rate of one per cent, and that the pro- ceeds of said tax be turned over to the local political units, to the relief of real estate. Although I am not prepared to recommend it at pres- ent, it would be in accord with the principles of Jefferson- ian democracy, and also with the teachings of some of the best modern thinkers on economic and social topics, to grade the tax, making it two per cent, on estates from $100,000 to $200,000; three per cent, on estates from $200-, 000 to $400,000; four per cent, on estates from $400,000 to $800,000; five per cent, on estates from $800,000 to $1,600,000; and so on, the tax reaching ten per cent, in case of estates of $50,000,000, and the progression terminating therewith. It would seem desirable that the higher rates should in each case be charged only on the excess above the sum taxed at the lower rate. Thus, if the tax is two per cent, on estates from $100,000 to $200,000, and three per cent on estates from $200,000 to $400,000, the three per cent, should be charged only on $200,000, while $100,000 should be taxed two per cent., and $88,000 one per cent. This tax could embarass no one, being only $10 on $1,000, and in case of an estate of $20,000, equalling only $80, as ouly $8,000 of the excess over $12,000 would be taxed. It answers the requirements of every canon of taxation. One of the principles which controlled the action of Jef- ferson and other founders of this republic, was to abolish 185 hereditary distinctions and privileges, and to force each one to rely on his own exertions for his own fortune, desiring to give to all as nearly as practicable an equal start in the race of life. It has also been urged by others that one of the most dangerous tendencies of our times, is the increasing ag- gregation of wealth in a few hands. This scheme is a slight corrective, which is in harmony with the spirit of our institutions. Other far more radical measures have been proposed by conservative men. A committee of the Illinois Bar Asso- ciation recently reported favorably 1 on a proposition to limit absolutely the amount any one child may inherit to $500,000, and the amount anyone else may inherit from a single estate, to $100,000. In their report they say: "There never was a time in the history of the world when the power of money in skilful hands was so great as the pres- ent; or when the use of that power was made so conspic- uous. The new forces at its command are augmenting it with wonderful rapidity. Already the sceptre has passed from the sword to the counting-house. The fact that one individual may monopolize hundreds of millions of the wealth of the nation and pass it at last by will to another with all its possibilities, is a growing source of uneasiness among all classes of society." I will express no opinion on this quotation, but simply remark that rightly or wrongly, it was precisely this sort of thing which the founders of our republic tried to prevent in America. 2 With the inheritance tax it is proper to connect measures for the better control of income tax returns. A suitable 1 January, 1886. 2 The limitation of the right of persons to dispose of property by will, is ably advocated by Judge E. A. Thomas, of Pennsylvania, in the Forum, for Decem- ber, 1886. 186 provision is a law laying a penalty on the estates of dece- dents who have manifestly made false returns, equal to five times the estimated amount of income tax fraudulently withheld at the time of the last payment of the income tax. The collateral inheritance tax on all sums in excess of .$12,000 might with propriety be raised to five per cent., the rate in New York and Pennsylvania. Business Tax. Business should as a rule be left as free in its movements as possible, and in view of sharp inter-state competition, felt more in Maryland than in many other places, the burden •of taxation should be made as light as possible. Our com- merce and our manufactures should be fostered, and on ac- count of exemptions in rival ports our shipping deserves special consideration, for it will leave us otherwise. Eegis- tered vessels engaged in foreign trade might, it would seem, with propriety be exempt from all taxation on their value, and be taxed only on earnings, as is the case with this shipping in Rhode Island and New York, and as was recom- mended in Connecticut by the Tax Commission's report of 1887. Vessels engaged in coastwise trade appear to re- quire less aid, as they are not subjected to foreign competi- tion, but care should be taken not to burden them too heavily. Perhaps some plan for taxing them on earnings might also be devised. It is to be observed that in New York City and elsewhere, although the laws impose taxa- tion upon business, the actual practice does not. The last message of Hon. A. S. Hewitt to the New York City Council, dated January 10, 1888, deals with the subjects of taxation, and is important for us in three respects. First, it reiterates what has been said about the injustice of our system of taxation. "The estates of widows and orphans and wards in chancery, pay the full amount of taxation required by law, although in most cases it can be least afforded, while 'bloated' capitalists either entirely escape taxation or compromise for a very 187 inadequate sum". This condition of affairs is scandalous." Second, it advocates exemption of personalty in order to build up the business of New York. It says: "We are now the center of exchanges in the Western Continent, but in a few years we should be the clearing house for the commerce of the globe." Business men of Maryland should understand that there is a deliberate attempt to draw business to New York by low taxation. Third, it is plainly stated that all attempts to enforce the system thoroughly in New York have been practically abandoned, all law to the contrary notwithstanding. In speaking of complaints about inadequate assessments of personal property which were made with full knowledge of their inadequacy, Mr. Hewitt says: "Under ordinary circum- stances it would have been my duty ou being satisfied of these facts, to have removed the commissioners complained of from office. But I could not shut my eyes to the fact that the existing laws had never been executed, and there was no difference of opinion among those who had studied the question, that they never can be executed as they stand in this city." Yet our business men must compete with merchants in adjoining States even for retail trade. The value of real estate depends upon the condition of business, and unless business flourishes the laboring population cannot find employment. 1 The city of Montreal lays a tax on business, which is a percentage on rent, and it works very satisfactorily. The percentage is fourteen per cent, and merchandise is exempt. Intangible personal property is also exempt, and the system seems to give very general satisfaction. Real estate owners do not complain because they realize that it helps to bring business, and that that raises the value of their property. I recommend, therefore, that a tax of ten per cent, be laid on the annual rental value of all stores, offices, manu- facturing establishments, and other places of business, and 1 " The trade of a district may be seriously imperilled if it has to bear dispro. portional rates." — Fawcett. 188 that merchandise, plant, and furniture of these places be exempt from all other taxation ; further, that four-fifths of the proceeds of this tax be turned over to the counties and municipalities, and one-fifth to the State. Wholesale liquor dealers should be taxed $1,000 license and twenty per cent, on the rental value of their places of business. If so heroic a measure as the absolute limitation of the number of places where liquor is retailed be not adopted, the high license system might be adopted, and the license fixed at $500 each, with twenty per cent, of annual rental value in addition. The right of local option should also be coupled with this high license scheme. Many advo- cates of temperance reform object to high license, but it does not seem to me that their objections would necessarily hold with respect to what I have called "modified prohi- bition." Taxation of Steam Railroads. The plan recommended by the other members of the Commission is perhaps as good as any, which is in entire harmony with our existing system of taxation, and de- serves the careful consideration of the Legislature. If it is decided, however, to inaugurate a new system, experience points to the Wisconsin method as preferable. The roads are thereby exempt from local taxation, and a license fee for the operation of railroads is charged, varying according to gross earnings per- mile. 1 The license fees are expected 1 The license fees in Wisconsin are as follows : " 1. Four per centum of the gross earnings of all railroads except those operated on pile and pontoon, or pontoon bridges, whose gross earnings equal or exceed three thousand dollars per mile per annum of operated railroad. 2. Five dollars per mile of operated railroad of all railroads whose gross earnings exceed one thousind five hundred dollars per mile per annum, and are less than three thousand dollars per mile per annum of operated road, and in addition two per centum of their gross earnings in excess of fifteen hundred dollars per mile per annum. 3. Five dollars per mile of operated road by all companies whose gross- earnings are less than fifteen hundred dollars per mile per annum. 4. Two per centum of tin' gross earnings of all railroads which are operated upon pile or pontoon bridges, which gross earnings shall be returned as to such parts thereof as are within the State. One-half of such license fee shall be paid at the time the license so issue8> Stnd one-half on or before the tenth day of August in each year." In some other States the license fees are said to be higher. ^_J_ 189 to defray the entire expenses of the State government, and this plan is being followed elsewhere and everywhere with the same satisfactory results. It is simpler than the assessment by local authorities as well as State authorities, and the railroads are almost too powerful to be handled by local authorities who are likely to be worsted in their con- tests with vast corporations. Savings Ranks. I recommend to the special consideration of the Legisla- ture, savings banks, which ought to be fostered in every proper way as preventives of pauperism and crime, and as agents of civilization, elevating the people, rendering them truly independent and increasing the wealth of the community. Most of the capital they accumulate would either be idle, stored away in old chests or stock- ings in secret hiding places, or would not exist at all, but would have been wasted, were it not for savings banks. Very few savings banks exist in the South, and their en- couragement is much needed. Nearly all of their deposits are made by helpless or ignorant people not in a position to take care of themselves. The president of the largest savings bank in Baltimore, which has sixteen millions of deposits, estimates that this is the case with ninety per cent, of their deposits. Over sixty per cent, of the depos- itors are females. Two dangers should be avoided with special care. One is their suppression by taxation, the other is the removal of their capital from Maryland investments to the West by high taxation. We could ill afford to have thirty millions and more of capital leave us, and yet it would not be difficult to take it away from Maryland. It must be remembered that they are benevolent insti- tutions, their officers, as a rule, serving without pay. Their entire exemption has been urged by their presi- dents on the ground of public policy. It has also been pro- posed to capitalize the interest they pay on such deposits over $100 each, as are not covered by non-taxable securi- ties, at six per cent., and to tax this at the usual rate. 13 190 Whichever plan is pursued it would be perfectly proper, in view of this special favor, to exact of their directors more stringent safeguards than now legally exist for depositors, to make failure as remote a contingency as possible, for the failure of a savings bank is a terrible calamity, and any one who brings it about by culpable negligence, speculation or dishonesty, richly deserves the penitentiary. I say "more stringent safeguards than now legally exist," because, as a matter of fact, there is reason 'to believe that our savings banks have adopted adequate safeguards voluntarily. It is precisely at such a time when there is no reason for ap- prehension, that laws governing savings banks should be made so strict in regard to publication of reports and other safeguards as to do all that law can do to render them absolutely reliable. Educational and Benevolent Institutions. I am obliged to withhold my assent from the recommen- dation of my colleagues in the Tax Commission, looking to the taxation of the incorporated property of schools, colleges and universities. Nothing yields so large a return to the taxpayer as this exemption. If the State of Mary- land herself had provided her youth with a complete sys- tem of schools like Michigan, beginning with the common schools, and by suitable gradation extending up to the magnificent University of Michigan, it might perhaps be proper, like California, to tax private institutions, but that would cost Maryland at least $500,000 per annum, and this sum is now saved to the people of the State. Until the State of Maryland resolves to provide her own youth with com- plete instruction in public institutions, it is poor policy to tax those who attempt to supply this deficiency, and thereby confer an inestimable benefit upon the Commonwealths, Washington and Jefferson, both emphasized repeatedly in their various public and private writings the importance of educational institutions of the highest character as essential to the welfare of the people and the maintenance 191 of free and enlightened institutions. Washington never «eased to urge upon his countrymen the advantages of a great national university and for the establishment of one, he made a donation of his shares in the Potomac Com- pany. In a letter dated March 16, 1795, he uses these words in speaking of his proposed national university: "The time is therefore come, when a plan of universal education ought to be adopted in the United States. Not only do the exigencies of public and private life demand it, but, if it should ever be apprehended, that prejudice would be entertained in one part of the Union against another, an efficacious remedy will be, to assemble the youth of every part under such circumstances as will by the freedom of intercourse and collision of sentiment give to their minds the direction of truth, philanthropy, and neutral conciliation." Washington's Farewell Address contains these wise words which the people of Maryland cannot make a mistake in laying to heart: "Promote then as an object of primary importance, institutions for the general diffusion of knowledge. In proportion as the structure of a government gives force to public opinion, it is essential that public opinion should be enlightened." Jefferson advocated in Virginia the establishment of a complete system of instruction, from common school to uni- versity, holding rightly — for all experience teaches it — that common schools must be but poor and indifferent, unless stimulated and elevated bj r the presence and assistance of superior institutions. Like Washington he exerted him- self more actively in favor of the university than for any other part of his educational system. In a report to the General Assembly of Virginia, on the subject of Educa- tion, signed by others, but which derived its inspiration from Jefferson — if indeed he did not actually write it — these words are found: "In free States, where the government is founded upon, and is the organ of the public will, it is indispensably necessary that that will should be enlightened." Passing over the con- 192 templated University of Virginia, it is further remarked: "the advantages that will result from the establishment of such an institution are incalculable. At present a great proportion of our youth are sent out of the State, and some- times out of the United States, for the acquisition of science in general, or with a view to a proficiency in some of the learned professions. Large sums of money are thus annually sent away. * * * The young men of our country thus, by leaving their own State before their judg- ments are formed, will frequently acquire elsewhere habits and opinions uncongenial with those of their fellow citi- zens. Estranged by absence from the customs and prin- ciples of their parents and of their ancestors, they return to some degree aliens to their native land. Every enlight- ened statesman must consider the education of the youth of a country as intimately and inseparably connected with its high prosperity. It is a high and solemn duty, which the government is bound by every consideration of patriotism and interest to discharge." Thus was the University of Virginia established, and to-day the State pays $40,000 a year in taxes for its maintenance. The university, which by the munificence of Johns Hop- kins was established in Baltimore, more nearly corres- ponds to the ideas of Washington and Jefferson than any other in the United States. It brings together American youth from every section and unites them in feelings of a common patriotism. No other institution has done so much to keep our youth in their own country for the high- est education, and to prevent that estrangement from their native land, so lamented by Jefferson in his day. The highest instruction is never remunerative in the narrow sense of that word, though it in the end pays as nothing else does. The fees from the students of the Johns Hop- kins University have not covered in the past one-tenth of its expenses. To tax this institution would cripple its use- fulness, for it lends a hand to gifted but poor young men, destined on account of this timely aid to attain greatness 193 and become benefactors of their kind. Is it indeed de- sired by the Legislature that our highest institutions of learning should be rendered so expensive as to exclude all but the wealthy? Is this worthy of Maryland! Is this the spirit of democracy which is our boast? Some snobs would be glad to see all favors to poor students abolished, and the tuition fees trebled, but do the hard-working people of Maryland desire this? Does Maryland desire the uuen vi- able notoriety of being the only State in the Union, neither to provide a university for its youth nor to allow others to do it without being subject to taxation? A hospital might also be managed as a money-making institution, but that was never the intention of the trus- tees of the Hopkins Hospital so soon to be opened. Shall the benefits of that institution also be restricted to those who count their money by the hundred thousand? This would be conduct worthy of those who regard our public school system as ranking with "free soup houses." These two institutions are mentioned first, because I am most familiar with these ; but the other philanthropic institutions for which Maryland is famed would likewise be crushed by taxation, for they were never designed to make money. There is the Pratt Library, 1 the Peabody Institute, and the new College for Girls, which our Meth- odist fellow-citizens are establishing. All these institutions bring youth to Maryland, and their families often come with them. Our advantages make our State a favorite place of residence for people of North and South, and to tax those institutions which are our pride aud our glory would not only be a humiliating spectacle ; it would drive from us many millions of dollars annually and would in- crease the burden of taxation by lessening tlie taxable basis. No part of the community would escape the loss, and many who minister to the wants of those attracted to Maryland by our advantages would be completely ruined. 1 This could hardly be taxed, for it is legally regarded as a public institution, toeing supported by annual appropriations which the city was induced to make by Mr. Pratt's donation of over $800,000 to the city. 194 Constitutional Changes. I recommend that that provision of the constitution which forbids all participation of the State treasury in in- ternal improvements be submitted to the people for repeal, and that in place thereof it be provided that internal im- provements be undertaken only after an Act of the Legis- lature authorizing them be approved by the people by a majority vote. The people of the State can no longer afford to treat themselves as children ; they can as well afford to trust themselves as the people of a city, and un- less they do it, the State will continue to dwindle in im- portance between the Federal Government on the on& hand and municipal and private corporations on the other. Without borrowing powers and a larger degree of liberty in general the people of the State can never resist success- fully vast corporations. Every constitutional enactment is a restriction upon the liberty of action, and these should be few and simple, indicating the main lines of legislation and preventing rash action. Where corruption may b& feared provision should be made for approval by popular vote to make legislative action valid. This has special reference to the Chesapeake and Ohio Canal. There seems to be need of some one to do for Maryland with reference to that canal what the great democratic statesman, Horatio Seymour, of New York, did for the Erie ; namely, settle the question at once and for- ever in favor of State ownership and make the tolls as low as possible, if they cannot be abolished, as in New York State. A canal cannot be expected to derive a profit from tolls any more thau highways ought to be expected to yield a profit. Yet to the people at large the enterprise is profit- able in reducing freight rates and in carrying freight, for the time of the canal has not yet passed, and it is eminently suitable for certain kinds of freight. This is pertinent to the subject of taxation, for thereby we may hope that the- 195 industries of the State will increase in prosperity, the tax- able basis be raised, and the rate of taxation lowered. It is idle to talk about taking the canal "out of politics," if that means turning it over to private parties. To turn it over to private parties is equivalent to handing it over to a railroad corporation for destruction of its value to the injury of the people of Maryland. This has happened time and time again in our various States. Canals can exist only as State enterprises. England put her canals "out of politics," and now it is a live question there to know how to get the canals out of railway corporations. If, to put the 0. & O. canal out of politics means earnestly to at- tack the problem of good administration, and to prevent its manipulation for party ends, then certainly it ought to be taken out of politics, and this is perfectly practicable by regulating conditions of appointment, tenure of office, and dismissal from office. Business men, through their Cham- ber of Commerce and Merchants' and Manufacturers' As- sociations, and farmers through some of their associations, might be authorized to elect most of the directors, the Gov- ernor to appoint one, and all appointments to be for six years, one third retiring each two years. Some such ar- rangement as this, with rules drawn upon business princi- ples to govern them in their relations to employees, would forever take the C. & O. "out of politics," in the bad sense of the word. It is perfectly practicable, because it is a thing which has been done elsewhere. Here is a grand opportunity for the right man to render distinguished ser- vice to Maryland. As soon as the question is once settled in favor of State ownership of the C. & O. canal, its business will improve immensely. Ohio has passed through the same experi- ence, and the Governor reports on the subject, as follows in his annual message dated January 4, 1887, after showing from the report of the Board of Public Works a gain of 196 $30,559.73, as compared with their report of the preceding year: "This gratifying result is due very largely to the hope that has been revived in all who are interested in the canals, that they are not to be abandoned or allowed to fall into decay and disuse. They constitute a valuable public property. The State should not dispose of any part of them. On the contrary, it should be made dis- tinctly the policy of the State to improve and uphold them. When this becomes well understood the result ivill be that business upon and along them ivill he revived ; new boats will he built and their great benefits will be made each year more apparent." A canal ought to be entirely public property, and it is said that for a very moderate sum the t-'laims on the C. & O. canal, which are prior to the claims of the State, could be purchased. If it would take a million and a-half to can- cel all those claims, a long time four per cent, loan would cost us only a little over $60,000 a year and would be offset by increased valuation of property. After all, how small the sum is, is seen in the fact that more than the en- tire capital required was raised by the federal income tax in Maryland in one year without impoverishing anyone. It is ridiculous to add up the sums which have been spent in all the years past on the canal, as if they were lost. It has been returned already to the people. Baltimore has spent millions upon millions on her streets, and ex- pects to spend millions more, and has not received and does not desire to receive a single cent in direct returns. These expenditures, from which the returns come indirectly in a contented and prosperous community, are the most profitable which it falls to the lot of a community to make. Some able jurists and careful economists think it was a great mistake in the American people to allow their great steam highways to become private property. However that may be, it is the least tnat can be demanded that as a 197 partial check on the tremendous power thus given into private hands to oppress the public, other highways, canals included, should belong to the public and be controlled by its agents acting under civil service rules, drawn up on business principles. Furthermore these highways ought to be, wherever possible, free from tolls. As long as this report is, an abstract must be made from a letter by Horatio Seymour, dated October 9, 1882, in favor of the amendment to the Constitution of New York, which, finally passed and approved, authorized expenditures for the New York canals and made them free. "It has been my duty in the course of my life to investigate the value of our canals. As a member of the Legislature, as chairman of the Canal Committee, and in messages, I have made frequent reports and statements with regard to them. I have no interest in their preserva- tion, except my anxiety to promote the welfare of all parts of the State, and the sympathy I feel for the boat- men, who are struggling for a livelihood against railroads. No class of men have served the public more than they have by keeping down charges. I remember the discuss- ions with regard to canals, when the Erie and Champlain canals were made, and the joyous celebrations when they were completed, and their wonderful influence upon the commercial prosperity of the State. Fears were felt that their costs would increase taxation in the sections of New York remote from their channels. The result was the reverse of this. They gave such growth to the cities along their lines that taxation upon other sections was reduced. * * * In 1842, the question about our canal policy engaged the public attention more than any other topic, and was the main subject of discussion in our Legislature. I then became convinced that the revenue they produced was of very little importance, compared with the impor- tance of cutting down the cost of carrying our products to the markets of the world. I therefore did what I could to 198 aid the people of Northern and Southern New York, in getting canals made through those sections of the State. * * * The spirit which prompts opposition to the amendment is best expressed by words which import, that if the counties which desire free canals wish to have them made so, let them pay the cost. If this feeling is mani- fest, to what end will it lead? It will be said, in return, if such counties wish to have their schools supported, 'let them pay the costs,' if they desire that their members of the Legislature or their judiciary should receive their salaries, let them pay the costs! This will throw upon such counties a great sum of taxation, many times more in amount than their share of making free canals. I deplore a result which would go so far to impair the honor and interests of New York. ##**####*** "When we break down the protection our public works give us, we do not know how far the same influence may put up charges upon our commerce which will bring dis- tress upon all classes and upon all interests. "We are to bear in mind that the directors of railroads are the agents and trustees of stockholders of their corporations, and must respond to their wishes, which are apt to be unrea- sonable and unwise. * * * Oanals are not made for the sake of the tolls or taxation which they may draw from the people; on the contrary, they are designed for the com- mon benefit of all parts of the State, and to add to the profits of farmers, mechanics, and other producers, by cut- ting down the cost of getting their products to the markets- of the world. Another fact should be stated, which shows how harshly the Constitution deals with its own canals and with the boatmen who toil upon them. If, in consequence of a break in its banks, or of a desire on the part of com- peting routes to destroy them and the persons who own or navigate boats, their receipts should be reduced for a single year below the cost of maintaining ihem, the Con- stitution will not let the Legislature vote a single dollar to make up such deficiency, no matter how small it may be. 199 This hostile and menacing attitude of our State towards; canals and boatmen prevents the building of vessels and their use. It has lessened the receipts for tolls, for men will not engage in a business where they are liable to be ruined by an accident or by the designs of rich competitors. These will find it profitable to carry at losing rates for one year, if they can destroy forever the boatmen or the canals which keep down their own rates for carrying the products of our own people. When they have destroyed their com- petition they can ever after put up their own charges to suit their own interest. If relief is sought from such ac- tion, their agents must be sent into the lobby and excite suspicion, which may be unjust, that members are corrupted. When these suspicions become general they will lead to disastrous results. I am truly, etc., Hokatio Seymour." Horatio Seymour was more than a party politician. He was a man wha loved his country more than any party and he died lamented by men of all political opinions, and among those things for. which his name will honorably be remembered will be his position in the canal question. It has been suggested that the counties through which the canal passes, might without constitutional change acquire the Chesapeake and Ohio Canal and improve it. It would seem that all parts of the State, like all parts of New York, ought to be benefited by a wise canal policy. Possibly some counties should make extra contributions as those persons do who derive most from streets in cities. A "Union for the Improvement of Canals of the State of New York," with headquarters in New York City has been formed. Maryland might well follow this example. I further recommend that the Legislature submit to the people for repeal, Article 15, Declaration of Eights, which 200 forces upon us our inflexible system of taxation. It is no safeguard, but simply restricts the people in their efforts to secure justice. Conclusion. What has been submitted in this report is nothing merely theoretical, but an improved system of taxation, every part of which has been tested by experience, every part of which is in harmony with the principles of true democracy. It is simple and easily enforced, and if to any it appears com- plex, it is only by reason of novelty. The more carefully it is examined, the more thoroughly I am convinced, will it meet with approval. It aims to distribute the burdens of government according to ability to bear them, to sim- plify administration, and to encourage business by giving it as good opportunities in Maryland as elsewhere. * We have in our American commonwealths far better opportunity to establish a satisfactory system of taxation than exists in any European State, where tradition, special privileges, and old customs impose fetters on the freedom of movement, and there is no reason why Maryland should not strike out boldly and be the State to lead all others in the reform of taxation. EICHAKD T. ELY. APPENDIX -A. BILL TO REPEAL AUsTD ZR,IE-:Elsr.A.C!T ARTICLE 81, OF THE CODE P. G. L. REVENUE AND TAXES. -A- BILL Entitled An Act to repeal Article eighty-one of the Code op Public General Laws op the State op Mary- land, ENTITLED "REVENUE AND TAXES," AND TO RE-ENACT THE SAME WITH AMENDMENTS. Section 1. Be it enacted by tlie General Assembly of Maryland, That Article eighty-one of the Code of Pub- lic General Laws, entitled "Revenue and Taxes," as repealed and re-enacted by the Act of eighteen hundred and seventy-four, chapter four hundred and eighty-three, and all amendments thereto, be and the same are hereby repealed; provided, that said repeal shall not affect or impair any right, vested or acquired and existing at the time of said repeal, under said article, or any section thereof; nor shall it impair, discharge or release any «ontract, obligation, duty, liability or penalty whatsoever now existing ; but all suits and actions pending, and all prosecutions for penalties, crimes or misdemeanors under said article, including all civil and criminal proceedings whatsoever, shall be prosecuted and proceeded with to final determination, and judgment entered therein as if said article had not been repealed. Sec. 2. And be it enacted, That all acts and parts of acts heretofore passed, inconsistent with the provisions of this article as re-enacted, be and the same are hereby repealed. Sec. 3. And be it further enacted, That said article «ighty-one, be and the same is hereby amended and re- dacted, so as to read as follows : IV 1. All State and county taxes, and all municipal taxes, shall be levied upon the assessments made agreeably to the provisions of this article. 2. All interests, shares or proportions owned by resi- dents of this State in all ships or other vessels registered in a port of Maryland, whether such ships or other ves- sels be in or out of port, are and shall be subject to- valuation and assessment to the respective owners thereof in the county or city, in this State, in which such owner* shall respectively reside ; all real property in this State belonging to any bank incorporated under the laws of this State, or of any other State, or to any national bank located in this State, or to any company or corporation incorporated by or under the laws of this State, or of any other State, or under the laws of the United States, or of any territory, or to any joint stock company doing busi- ness in this State, is and shall be subject to valuation, assessment and levy of taxes thereon for State, county and muncipal purposes by the county commissioners of the respective counties in which such real property is situated, or by the appeal tax court of Baltimore city, if such real property is located in said city, as the property of such bank, company, corporation or joiut stock com- pany; and such bank, company, corporation or joint stock company shall pay the taxes thereon so assessed and levied. All shares in any joint stock company, and all shares of stock in any bank, incorporated under the laws of this State, or in any national bank located in this State, or in any corporation incorporated under the laws of this State, other than railroad companies working their re- spective railroads by steam-power, not exempted from taxation by irrepealable contract with this State, are and shall be subject to valuation and assessment to the owners- thereof in the county or city in this State in which such owners may respectively reside, in the manner provided for by the laws of this State; and the taxable values of such shares shall be ascertained and finally determined, and the taxes thereon levied and collected in each year, under the regulations hereinafter prescribed, or as the same may be hereafter provided by law; all shares of stock, or shares in any bank, other than a national bank, or in any company or corporation incorporated by or located in and doing business in any other State, or in ■any territory or country, owned by residents of this State, shall be valued and assessed to the respective owners thereof in the manner prescribed by this article ; provided, that if any such share or shares in such corpo- ration or company incorporated by or located and doing business in any other State, territory or country are sub- jected to and pay State, county or city taxes in such State, territory or country, then State, or county or city taxes, as the case may be, shall not be imposed thereon in this State ; that is, if State taxes are collected on such share or shares in such other State, territory or country, then State taxes shall not be collected in this State ; and if ■county or city taxes are collected on such share or shares in such other State, territory or country, then county or •city taxes shall not be collected in this State ; but if the rate of State tax or of county or city taxes, respectively, paid in such other State, territory or country is lower than the rate of State tax in this State or lower than the local rate of tax in the county or city in this State in which such share or shares may be listed, then the difference shall be assessed and collected in this State; provided that such share or shares shall in no wise be exempted from State or local taxes in this State if the State, terri- tory or country by which the corporation or company issuing such stock is incorporated or in which it is located and does business, imposes a like tax on any share or shares in any corporation or company incorporated by or located and doing business in this State; and it shall be the duty of the State tax commissioner to ascertain what other States impose such taxes, and what are the State, «ounty and city rates in the States which do not impose such taxes; and he shall certify the facts so ascertained by him to the eounty commissioners of the several VI counties and to the appeal tax court of Baltimore city; all bonds, made or issued by any State, owned by resi- dents of this State; all bonds, made or issued by any territory or by any corporation, belonging to residents of this State; all investments in private securities of every kind and description belonging'to residents of this State;. the real property located in this State, and the personal property owned by any corporation incorporated by thifr State, not having a capital divided into shares, or having shares of capital stock which are wholly or in part ex- empted from taxation by this State ; when the said real or personal property so owned by said corporation is not protected from taxation by the exemption of said shares of stock from taxation ; and all other property of every kind, nature and description within this State shall be valued to the respective owners thereof in the manner prescribed by this article, and shall be assessed and taxed as the property of such respective owners, according to- such prescribed methods of valuation, except as provided in section four of this article. 3. All certificates of indebtedness or evidences of debts in whatever form, made or issued by any State, territory, county, public corporation or foreigu country, shall be subject to valuation and assessment to the owners thereof, in the county or city in which such owners may respec- tively reside. 4. The provisions of sections two and three of this article shall not apply to any bonds, stock, or evidence of debt issued by the United States, or to any property belonging to the United States, or to this State, or to any county, or incorporated city or town in this State, nor to houses or buildings used exclusively for public worship, or to the furniture contained therein, or to the grounds appurtenant thereto and necessary for the uses thereof, not exceeding ten feet on either side of such houses or buildings; nor shall the provisions of said sections apply to graveyards, cemeteries or cemetery companies which do not accumu- vii late profits for any purpose except the maintenance or improvement of such cemeteries or graveyards as ceme- teries or graveyards ; nor to burying grounds set apart for the use of any family, or belonging to any church or con- gregation, or to the crop or produce of any land in this State in the hauds of the producer or his agent ; or to the provisions kept for the use and consumption of the family of the person to whom the same shall belong; or to the working tools of mechanics and manufacturers, moved or worked exclusively by hand ; or to wearing apparel of any description ; or to fish while in the possession of the fishermen employed in catching, salting and packing the same, or while in the possession of their agents unsold ; nor to the property, real or personal, of any corporation incorporated by this State and having a capital stock divided into shares, when said shares only are subject to taxation under the laws of this State; nor to any shares of stock in any corporation when said shares of stock are ex- empted by irrepealable contract with this State from tax- ation under the laws thereof; nor to any property of any corporation whose shares of capital stock are exempted from taxation, when said property is protected from tax- ation by the exemption of said shares from taxation ; nor to the shares of stock of railroad companies worked by steam, incorporated by or under the laws of this State, which are subject to State taxation upon their gross receipts with- in this State, and to county and municipal taxation upon their respective real and personal taxable properties in the respective counties and cities of this State in which such respective properties are located ; nor to the book accounts or bills receivable or evidences of debt given for such accounts, of any person engaged in commercial business, who is taxed upon the fair average value of his stock of goods, wares and merchandise; and every person engaged in commercial business shall be taxed upon the fair average value of his stock in such business during the year preceding the assessment upon which such tax is levied; nor to the value of such portions of the shares Vlll of homestead or building associations as may be repre- sented by mortgages upon real or leasehold property within this State, when such real or leasehold estate so mortgaged is subject to taxation under the laws of this State ; nor to such mortgages, when the real or leasehold estate so mortgaged is subject to taxation under the laws of this State ; nor to the mortgages upon property wholly within the State ; nor to the mortgage debts secured there- by ; but each and every one of said exemptions from taxa- tion shall be strictly construed. 5. No person who is not assessed to the sum of at least one hundred dollars, shall be required to pay any tax. VALUATIONS. 6. The word property, wherever used in this article, shall be construed to include every thing, right and in- terest, capable of being owned, or capable of having a money value, or which may be bought or sold ; and the terms real property and real estate, wherever used in this article, shall be construed to include all freehold estates in land, together with all things permanently affixed thereto; and the terms personal property and per- sonal estate, wherever used in this article, shall be censtrued to include all property except real estate. 7. All property shall be valued at its full cash value, without looking to a forced sale. All property permanently located in any county of this State, or in the city of Baltimore, shall be valued and assessed to the owner thereof in the assessment district in which said property is so located. All personal property belonging to a resident of this State shall be valued to the owner thereof, in the assess- ment district in which said owner may reside, except goods and chattels permanently located in any city or county of this State, which shall be valued and assessed in the city or county in which they are so located. IX In valuing real estate in any county in this State, except in a city in such county, the assessors shall specify, as far as may be practicable, the name or names of the tracts or parcels of land so valued, and the number of acres or quantity of land in each, and the value per acre. They shall separately value the improvement upon the respective tracts or. parcels of real estate in the cities and villages in the said several counties. In valuing any lot or parcel of ground in the city of Baltimore, or in any city in any county, the assessors «hall specify, as nearly as possible the precise location of each lot or parcel of ground, giving, as nearly as practi- cable, the number of front feet in each lot or parcel of ground, and the depth of each lot or parcel of ground, the street or streets on which it bounds, and the value of -each lot or parcel of ground; and they shall value sepa- rately the improvements upon each lot or parcel of : ground in such city. • When any building so valued is located upon any street and designated by a number, such number and the name of such street shall always be given. In valuing stock or shares in any bank, company, asso- ciation or corporation incorporated by or located and •doing business in any other State, territory or country, the number of such shares or shares of stock owned by the ■owner to whom the same are valued, shall be stated, together with the respective values of each. In valuing the bonds, certificates or evidences of indebtedness of •companies or corporations incorporated by or located and doing business in any other State, territory or country, the number of such securities owned by the owner to whom the same are valued shall be stated, together with the respective values of each. In valuing all individual bonds, and securities, and all other investments, and all other personal property, the assessor shall briefly state the nature thereof, and the respective values of each kind of said property belonging to each person assessed . The deposits in savings banks, the bonds, certificates- op evidences of debt of incorporated institutions or com- panies of this State, and the stock in such corporations the public debt of the State of Maryland, for State taxes and the stock loans of the city of Baltimore for State and* city purposes, shall be valued and assessed as directed in sections one hundred and fifty-three, one hundred and' fifty-four, two hundred and one, two hundred and two,, two hundred and three, two hundred and four, two hun- dred and nine, two hundred and ten, two hundred and eleven, two hundred and twelve, one hundred and fifty- six, one hundred and fifty-seven, one hundred and fifty- eight, one hundred and fifty-nine, and one hundred and: sixty-one of this article. VALUATION OF PERSONA I/TY. 8. The county treasurer of each county in this State- shall be chairman of the board* of assessors of his; county. He shall, before the first day of December in each and every year, appoint an assessor for each col- lection district in his county. But if the county be not divided into collectiou districts, then the county com- missioners shall divide it into as many assessment dis- tricts as they may deem necessary; and the county treasurer shall, before the first day in December in each, year, appoint an assessor for each such district. The^ county treasurer shall have full authority to remove any assessor appointed by him. Every assessor appointed by the county treasurer shall hold office for one year from the date of his appointment, unless sooner removed by the treasurer ; but in case of any vacancy occurring by death, resignation, removal or other cause, the treas- urer shall fill such vacancy by appointment for the unex- pired term. The assessors for the several districts of each county, together with the county treasurer, shall constitute the- board of assessors for the county. The county treasurer XI shall call said board together, in the month of December in each year, upon such day as he shall select, when he shall read to them sections two, three, six, seven, ten, twelve, thirteen, fourteen, fifteen, sixteen, seventeen and eighteen of this article, and such other laws or parts of laws as may relate to the duties of their office, and shall instruct them concerning their duties, and shall espec- ially caution them that they must value property at its full cash value, without looking to a forced sale ; and they shall consult together concerning their said duties. 9. Every assessor appointed by the county treasurer shall receive three dollars per day for every day of actual service performed by him as assessor; and before he enters upon the duties of the said office, he shall take th& following oath or affirmation before the county treasurer,, who shall have authority to administer the same : I, do swear (or solemnly, sincerely and truly declare and affirm) that I will, to th& best of my skill and judgment, and without partiality or favor, execute the duties of the office of assessor of (naming the district for which he is appointed,) for the year, (naming the year,) according to the laws of the State ; and said treasurer shall keep a record of all such- oaths and affirmations. 10. The county treasurers of the several counties, and the assessors under their direction, shall annually assess all personal property in their respective counties, or be- longing to residents thereof, except the property men- tioned in section thirteen of this article as not required to be returned by the owner. 11. The county treasurer shall cause to be published^ once a week, for three weeks, during the month of Jan- uary in each year, in some newspaper or newspapers, not more than two, published in the county, or if there be no newspaper published in the county, then in some Xll newspaper or newspapers, not exceeding two, circulating in the county, a notice to every person of and over the age of twenty-one years, to return the schedule provided in section thirteen of this article, duly filled and signed, to the assessor of his district, on or before the first day •of February next ensuing; and every such notice shall set forth the postoffice address of the assessors of the several districts in the county ; and the county treasurer shall cause to be printed and delivered to his assessors by the first day of January in every year, as many copies as may be requisite of the blank form of schedule set forth in section thirteen of this article. 12. It shall be the duty of every such assessor to send by mail, before the tenth day of January in each year, to every person whose name appears on the tax books of his district, and to every person in his district, so far as he may know or ascertain them, a copy of the form of schedule provided in section thirteen of this article; and every such form shall have distinctly written or printed upon it the name and postoffice address of the assessor to whom it is to be returned. 13. It shall be the duty of every person, of or over the age of twenty-one years, residing in any county of this State, and of every person of or over said age who owns any personal property permanently located in any county of this State, though he does not reside therein, to return to the assessor of his district a copy of the schedule Tiereinafter provided, duly filled and signed, on or before the first day of February in each and every year ; and every person returning such schedule shall fully and particularly set forth therein all personal property owned, held or possessed by him at twelve o'clock noon on the fifteenth day of January in the year for which such return is made, except leasehold property, deposits in any savings bank, institution or corporation in this Mate, which receives deposits and allows interest, and shares of stock in corporations incorporated by or XI 11 located and doing business in the State of Maryland,, bonds, certificates or evidences of indebtedness of incor- porated institutions or companies of this State, and the book accounts, or bills receivable, or evidences of debt given for such accounts, of persons engaged in commer- cial business who are taxed upon the fair average value- of the stock carried by them during the year ; and such persons shall set forth the fair average value of the stock carried by them during the year, and not the value of the stock on hand on the said fifteenth day of Jan- uary; but shares of stock in all Maryland railroad cor- porations or companies worked by steam shall be re- turned, and all property exempt from taxation shall be- returned. Every partnership concern, trustee, administrator, guar- dian, committee of a lunatic, and every agent of any person not residing or being at that time in the county, and every person having any manner of title to, or having possession of, holding or claiming in any manner anything required to be returned in said schedule, shall be within the provisions of this section and comply with the same. Whenever property is owned, held or possessed by more than one person as administrator, executor, trustee- or in any other representative capacity, any one of them, may make, sign and return the schedule thereof. Every schedule of co-partnership property shall be signed by at least one of the members of the partnership. Every person knowingly signing any schedule contain- ing any wilfully false statement shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be sentenced to undergo confinement in the penitentiary for not less than one year nor more than ten years. The form of schedule prepared and furnished by the county treasurers shall contain a notice, and said notice and schedule shall be in form and manner as follows,, to wit : XIV Office of County Tbeasurbr, County. January 18 Take notice of and read with care section thirteen of Article 81, Code of Public General Laws, as set forth below, •as it becomes, together with this notice and the instructions at ■the bottom of page 8, a part of your statement. Return your schedule to the assessor ( P. 0. ) ■before the first day of February. The failure to return your ■schedule will render you liable to the penalty of an increase of ten per cent., or if toilful, fifty per cent, upon the valuation of your personal property hereafter to be made by the assessors. 13. It shall be the duty of every person, of or over the age of twenty-one years, residing in any county of this State, and of every person of or over said age who owns any personal property permanently located in any county -of this State, though he does not reside therein, to return to the assessor of his district a copy of the schedule hereinafter provided, duly filled and signed, on or before the first day of February in each and every year; and every person returning such schedule shall fully and particularly set forth therein all personal property owned, held or possessed by him at twelve o'clock noon •on the fifteenth day of January in the year for which such return is made, except leasehold property, deposits in any savings bank, institution or corporation in this State, which receives deposits and allows interest, and shares of stock in corporations incorporated by or located and doing business in the State of Maryland, bonds, certificates or evidences of indebtedness of incor- porated institutions or companies of this State, and the book accounts, or bills receivable, or evidences of debt given for such accounts, of persons engaged in commer- cial bnsiness who are taxed upon the fair average value of the stock carried by them during the year ; and such persons shall set forth the fair average value of the stock carried by them during the year, and not the value XV of the stock on hand on the said fifteenth day of Jan- uary; but shares of stock in all Maryland railroad cor- porations or companies worked by steam shall be re- turned, and all property exempt from taxation shall be -returned. . Every partnership concern, trustee, administrator, guar- dian, committee of a lunatic, and every agent of any person not residing or being at that time in the county, and every person having any manner of title to, or having possession of, holding or claiming in any manner anything required to be returned in said schedule, shall be within the provisions of this section and comply with the same. Whenever property is owned, held or possessed by more than one person as administrator, executor, trustee •or in any other representative capacity, any one of them may make, sign and return the schedule thereof. Every schedule of co-partnership property shall be signed by at least one of the members of the partnership. Every person knowingly signing any schedule contain- ing any wilfully false statement shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be ■sentenced to undergo confinement in the penitentiary for not less than one year nor more than ten years. XVI This Statement is not open to public inspection. All property must be valued at its full cash value, without reference to a forced sale. Property exempt, or claimed to be exempt, as well as prop- erty not exempt, must be returned. Statement of all property mentioned on page 1, as required to be returned herein, owned |by, or in possession, or under control, at twelve o'clock noon, on the fifteenth day of January, 18 , (>) of , (*) residing at , and having place of business at 'If no property of the Kind named in a liead or question is held, write tfo word "NONE." Leave no blank, except Assessors' Valuation, unfilled. Onumber of Articles. Sets or Suits. Suits of Furniture All other articles of house hold Furniture Books, Maps and Charts . . . Pictures, Statuary, and all articles of interior decora tion Jewelry Plate and plated ware China and other ware Clocks Watches — gold or silver Musical Instruments— name kind Sewing Machines Fire Arms Fixtures and Furniture of offiVes, counting rooms stores, saloons and other places of business Value. Where Located and Whether Permanently. Valuation. Machinery and Implements of trade or business, in- cluding engines, boilers, shafting, &c Average value of stocks of goods, warts and mer- chandise in any business in which ( 9 ) have been en- gaged during the year ending this day. ( J ) INSTRUCTIONS FOR FILLING THE ABOVE SCHEDULE. 1. The Assessors may at any time require a schedule of property held on the above, or any other day. 2. State in full, name and residence of the person or persons making the schedule, and the capacity in which the return is made— whether as owner, administrator, trustee or otherwise, and if such person is not owner, for whom he holds the property returned: if no place of business, fill blank with the word none. 3. Only one or the other of these two columns need be filled, as the property may be indi- vidual articles or sets. 9. Insert word " I," " we," " me," or " us," as the case may be. *. Designate the general kind and state the number, as one of dry goods, two of hardware, 4c. XV11 SCHEDULE— Continued. NUMBER OF Articles. Sets or Suits. and fishing Nets, seines tackle. ( 5 ).. Horses, mules, asses, colts.... Cattle Goats and kids Sheep and lambs Hogs and pigs Poultry Harness, bridles, saddles, robes, horse and carriage blankets Wagons, carriages, carts and other vehicles Grain and hay Wine — gallons Liquors of all kinds — gallons Coal, wood, coke and other fuel. ( 5 ) Lumber. ( s ) Steamers, ships, hulks, dredg- ing machines, boats and vessels and water craft of all kinds, with their furni- ture, stores and appurte- nances,and all shares or in- terests in vessels or water craft of any kind. ( 6 ) Where Located and Whether Permanently, Valuation. Shares of Stock in all Railroad Corporations or Companies, worked by Steam, in- corporated by or located and doing business in the State of Maryland. Number of Shares. Name of Corporation or Company. VALUE. Face of each. Market of each. Valuation. 5. Not to be mentioned here when included and returned in stock of merchandise. C. State kind and name of vessel or craft, and interest owned or held. 2 XV111 Public Securities, including the Bonds of all Nations, (as well as of the United States,) and of all States, Counties, Cities and Towns, except Stock issued by the State of Maryland. 1 Number of such Bonds or Securities. Name of State, Nation, City, County ok Town. Face of Each. Market of Each, Bonds of Railroads and other Corporations, and Scrip of Insurance and other Companies, and all Evidences of Indebtedness of Pri- vate Corporations, except those incorporated by or located and doing business in the State of Maryland. 1 Number of such Bonds, &c. Name of Corporation. Face of Each. Market of Each, Shares in all Incorporated Companies, 1 except those incorporated by or located and doing business in the State of Maryland. 8 Number of such Shares. Name of Corporation. VALUE. Face of Each. Market of Each. Cash on hand or in bank at twelve o'clock noon on the First Monday in September, including |L checks payable that day, and drafts %,nd notes due and payable that day Money owing to 9 including all judgments, decrees, bonds, promissory notes, money at interest, (whether on time or call,) book accounts and debts of every kind, (except book accounts, and bills receivable or obligations to secure such accounts, due ( 9 ) in commercial business, ( 9 ) stock being valued at its fair, averege value.) whether matured or not, except such as have been hereinbefore al ready described Amount. Valurtion. 7. To be returned whether in possession of owner oj held by or pledged to another as collateral 8. These excepted because assessed by State Tax commissioner. 9. Insert word " I," " we/' " me," or " us," as the case may be." XIX PATENTS AND OOPT BIGHTS. Other personal property which has not been enumerated in this sched- ule, except leasehold property and shares of stock in, or bonds, cer- tificates or evidences of indebtedness of corporation, incorpo- rated by, or located and doing business in the State of Maryland, and deposits in savings banks in this State. Number of Value. Whebe Located. Total value of property required to be returned herein Value. Assessors' Valuation. Special Questions: 1. On the fifteenth day of January, 18 , was there personal estate belonging to or standing in the name of any of your minor children ? If yea, who is the guardian •of such child or children ? 2. At the same date did you singly or jointly with another or others, hold any personal property for any per- son, persons or corporation, either as executor, adminis- trator, trustee, guardian, committee of a lunatic, or in any XX other capacity? If yea, have you returned a schedule thereof? 10 3. At the same date, was any personal property other that the items above returned held for you by any per- son, persons or corparation, as trustee or otherwise ? If yea, give name and address of such person, persons or corporation. The, above is a statement of all the personal property of every kind and description, either within or without the State of Maryland, owned or held by 9 , at twelve- o'clock noon, on the fifteenth day of January, in the year , except leasehold property and shares of stock in and bonds, certificates or evidences of indebtedness of corporations incorporated by or located and doing business in the State of Maryland, and book accounts and bills receivable, or obligations given for such accounts due 9 , in commercial business and deposits in Maryland savings banks ; but including shares of stock in such railroad corporations worked by steam, and including property exempt from taxation, and any stock of goods returned is at its average value for the year;. and 9 have not, in any manner whatsoever, trans- ferred or disposed of auy property, right or interest for the purpose of avoiding any assessment upon or taxation thereof, or of making this statement 9 hav& valued the same at what 9 believed its full cash value, without reference to a forced sale, and the values of the several items hereof have been computed in the lawful current money of the United States ; and all statements contained in this schedule are full, correct and true. 'Insert word "I," "we," "me" or "us," as the case may be. 10 Property held for another should not be included in the same schedule- with the property of the person making the return, but must be returned separately. 11 The place for signature, which makes all the items and answers, and the- concluding declaration, together with and as explained by the first page, and these instructions, the statement of the signer. XXI Partnership schedules shall be in the form hereinbefore provided, except that a notice of the manner of filling the same, and the full style and title of the partnership shall be set forth, and the name and residence of every mem- ber of the firm shall be stated, in addition to the other matter at the head of the schedule, as follows, to wit : The full firm title, and the name and residence of each partner, must be stated. a co-partnership, engaged in the business of at and consisting of the following persons and no others : residing at 14. No person shall be in any wise excused for any failure to comply with the provisions of section thirteen because he received no form of schedule from the asses- sors, but in such case he shall procure a form and return his schedule in due time. 15. Between the first day of February and the first day of May, in each year, the assessor of each district in every •county of this State shall, under the direction of the •county treasurer; as far as practicable view all goods and ■chattels in his district, and shall diligently investigate and inquire, and by personal inspection and all lawful means inform himself of all property therein or belonging to residents thereof, and mentioned in section thirteen as required to be returned, and he shall value the same at its full eash value without looking to a forced sale; and ■when he is valuing the property of any person who has returned the schedule required by section thirteen he shall take such schedule with him and set down his val- XXU uations of the property returned therein in the proper column opposite the valuation thereof by the owner, or person returning such schedule ; and he shall make all valuations upon his own judgment, and shall not be con- cluded by the valuations made by the owner or person returning the schedule. 16. Every assessor shall have power to administer oaths or take affirmations, and shall require every person questioned by him to answer under oath or affirmation, any question concerning the amount, character, location, value, tenure or proprietorship of any property owned by himself or any other person ; and any person who shall re- fuse to answer any such question, when asked by an as- sessor in the course of his official duty, or any person who- shall refuse to be sworn or to affirm, when required by the- assessor in the course of his official duty, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine not exceeding three hundred dollars,, or by imprisonment in the county jail for not more than six months, or both, in the discretion of the court. 17. After valuing the property of such persons as have- not returned a schedule as required by section thirteen of this article, the said assessor shall add ten per cent. to> the total value of such of said property as is taxable, of which said addition it shall be the duty of the assessor imposing such per centum to give notice to the person so- failing to make the return ; provided, that the county treasurer shall have power, for good cause shown, to re- mit such penalty at any time before the fifteenth day of May next following, to any person applying for such re- mission, who shall at the same time make a full return. 18. While engaged in making valuations the said as- sessors in each county, shall meet as a board of assessor* at the office of the county treasurer one day in every twx> weeks, when each assessor shall return all valuations completed by him since the last previous meeting of thft xxm board ; and all such valuations shall be passed upon by- said board, which shall have full power to review, alter and equalize all valuations ; and the valuations of the assessors shall be finally made by a majority of said board, in its sessions; provided, that if said board can- not complete its work in its said bi-weekly sessions, it may be called together by the county treasurer and sit for that purpose between the first and tenth days of May. 19. Before the valuations of the board of assessors shall have been returned to the county commissioners, as hereinafter provided, all final valuations made by said board shall be examined by the county treasurer, who shall deduct from the total valuation of the property of each person whose property has been valued, the said board's valuation of any exempted property which may have been included in said total valuation of such per- son's property, and shall indorse upon the account of each person's property the items so deducted from his account, and the said board's valuation of such items ; and he shall note thereon the total valuation of the taxable property of such person. 20. The county treasurer of each county shall, not later than the fifteenth day of May, in each year, return the valuations of the board of assessors to the county commissioners, noting at the same time those who have failed to return a schedule as required by section thir- teen, and the fact that the sum of ten per centum has been added to the value of the taxable property of every such person, as fixed by the said board, except where such penalty has been remitted by the said treasurer; and such valuations shall remain in the office of the county commissioners for twenty days, open to the in- spection of persons interested in them. 21. Between the fifteenth day of May and the fifth day of June, in each year, any person interested in any prop- XXIV erty returned for taxation by the county treasurer to the office of the county commissioners, may appeal from the valuation of the board of assessors to the county commis- sioners, who shall hear and decide all such appeals, and may affirm or alter the valuations appealed from, as they shall judge fair, just and according to law. All appeals shall be heard and disposed of before the tenth day of June in the same year. 22. The county commissioners may not remit the ten per cent, required by section seventeen to be added where any person fails to return a schedule, except as to any- such part as they may abate of the valuation upon which it is imposed; but if, upon investigation, and after giving opportunity for hearing to any one who has failed to make a return, and the ten per centum penalty for which failure has not been remitted by the county treasurer, the said commissioners believe that such omission was wilful and intentional, and with the intent to evade the pay- ment of taxes, they shall add, in their discretion, not more than fifty per centum nor less than twenty-five per centum to the valuation of the taxable property which he should have returned. 23. The county commissioners shall have power to summon before them, and examine under oath or upon affirmation, any person whom they may desire to examine concerning his own property, or that of any other person. 24. The county treasurer of each county shall receive for his services as chairman of the board of assessors, and for all the services required of him as an assessor, such annual compensation as the county commissioners shall allow, not exceeding three hundred dollars per annum, which shall be in addition to such compensation as may be allowed him as treasurer and as clerk to the county commissioners; and his said salary, provided for by this section, shall be fixed by the said commissioners XXV before the first day of January of the year for which it is allowed. 25. The compensation of the said assessors, and all the •expenses of the said valuations, shall be paid by the respective counties ; and the county commissioners of each •county shall each year levy in advance upon the taxable property in their respective counties, a sufficient sum to pay the same. VAtUATIOtfS OF REAL ESTATE. 26. All real and leasehold property in the counties of this State shall be valued every sixth year, beginning with the year eighteen hundred and eighty-nine. All such valuations shall be made according to the directions provided for valuation of real estate in sections six and seven of this article; and all such property, whether it belongs to natural persons or corporations, including property exempted from taxation, shall be valued. 27. The valuations required by section twenty-six hereof, shall be made by the assessors appointed by the ■county treasurers of the several counties as provided in section eight of this artrcle. When the county treasurer calls his assessors together in the month of December, as required by section eight of this article, in the year •eighteen hundred and eighty-eight, and in each sixth year thereafter, he shall, in addition to the instructions required of him by said section, read them section twenty-eight of this article, and explain to them their ■duties under the law as assessors of real estate. 28. Between the first day of February and the first -day of May in the year eighteen hundred and eighty- nine, and between said days in each sixth year thereafter, «ach of said assessors shall, under the direction of the XXVI county treasurer of his county, as far as practicable, view all real and leasehold estate in his district, and shall dili- gently investigate and inquire, and by personal inspection and all lawful means inform himself of all such property, the true value thereof, and the name of the owner ; and he- shall value the same at its full cash value without looking to a forced sale ; and while making such valuations he shall have all the powers and authority conferred by section sixteen of this article upon assessors of personalty;, and any person refusing to answer any proper question asked by such assessor of real estate, in the course of his duty, or refusing to be sworn or to affirm when so re- quired by him in the course of his duty, shall be deemed guilty of a misdemeanor and shall be punished as pro- vided in said section sixteen. 29. At the meetings of the board of assessors provided for in section eighteen of this article, the said assessors shall in each of said sixth years make full returns of their said valuations of real and leasehold estate in like manner as they are required by said section eighteen to- make returns of their valuations of personalty ; and the said board shall have as to valuations of real and lease- hold estate the same powers and duties of review, altera- tion, equalization and valuation as is by said section- eighteen conferred upon them as to valuations of person- alty, and shall be allowed the same time therefor; and the county treasurer of each county shall also perform as- to valuations of real and leasehold estate the duty re- quired of him by section nineteen of this article, and he shall return the said valuation of real and leasehold estate to the county commissioners at the same time he returns the assessors' valuations of personalty for the same year ; and'said valuations of real and leasehold prop- erty shall remain in the office of the county commissioners- open to inspection by any person interested in them, for the same period as provided in section twenty as to valu- ations of personalty ; a nd every person interested shall have the same right of appeal, and the county commission ers shall have the same authority and be under the same> XXV11 obligation to hear and decide such appeals as is provided in sections twenty-one and twenty-three of this article. If during the progress of any valuation of real estate- the county treasurer of any county shall become convinced that his assessors cannot perform the work of such valua- tion in addition to making the usual annual valuation of persona] property, then he may appoint such additional assessor or assessors for that year, as may be necessary, not more than one additional for each assessment or collection district, and shall assign to them such part of the work of the assessors for that year as he shall see- proper, and they shall have all the powers and authority,, be subject to the same provisions of law and receive the same compensation per day as the assessors of real and personal property. 30. The provisions of sections nine and twenty-five of this article shall be deemed to apply to valuations of real' property as well as valuations of personalty ; provided,, that no assessor shall receive more than one per diem for any one day. BALTIMORE CITY. City Assessors. 31. There shall be appointed in the city of Baltimore- in the same manner as other city officers are appointed, sixteen discreet and competent persons, to be called city assessors, whose duty it shall be to value all property in the city, or belonging to residents thereof, except prop- erty mentioned in section thirty-eight as excepted' from valuation by them. The said assessors shall 8 be appointed without regard to politics, and shall each receive a salary of fifteen hundred dollars per annum. They shall take the oath provided by ordinance, and* give bond for the faithful discharge of their duties, as other city officers. Immediately after the appoint- ment of said assessors the Mayor shall designate one of them to be chairman of the board of assessors, and the- XXV111 person so appointed chairman shall continue to act in said capacity until the expiration of his term of office as assessor, unless sooner removed from the chairmanship by the Mayor. Whenever there is a vacancy in the •chairmanship of the board of assessors, the Mayor shall appoint one of the assessors to be chairman of the board. 32. In the year eighteen hundred and eighty-eight, sixteen city assessors shall be appointed, four of whom shall remain in office and serve for one year, four for two years, four for three years and four for four years, accounting, as to all of them, from the first day of March, 1888; which several terms of service shall be determined by lot at their first meeting. 33. In the month of February, in each succeeding year there shall be appointed four city assessors, in the place of those whose term of office shall expire upon the first •day of March in such year; and the said assessors ap- pointed as prescribed by this section, shall continue in office for four years. 34. Whenever any vacancy shall occur in the office of •city assessor, by death, disqualification, resignation, removal or otherwise, such vacancy shall be filled by appointment for the unexpired term which shall have become vacant. 35. As soon as may be in the year eighteen hundred and eighty-eight, and thereafter annually in the month •of February, there shall be appointed, in the same manner as other city officers are appointed, a clerk to the •city assessors, who shall receive a salary of fifteen hundred dollars per annum. Said clerk shall attend •daily at the office of said assessors, and he shall keep the minutes of their meetings; he shall also carefully pre- serve the records of the said office ; receive all papers required to be delivered at or deposited in the same; XXIX index and keep in proper order all papersand books required to be kept open to public inspection therein ; transmit to the clerk of the Appeal Tax Court a copy of all valuation* made by the city assessors immediately upon the same becoming final ; and on or before the twenty-fifth day of February, in each and every year, he shall deliver to th& clerk of the Appeal Tax Court copies of all valuations then remaining in the office of the city assessors, whether or not the same have become final ; and upon any appeal being taken from any valuation made by the city asses- sors to the Appeal Tax Court, he shall immediately deliver to the clerk of said Court all schedules, valua- tions and other papers which relate alone to the case in which such appeal is taken, and copies of such parts of all other papers as relate thereto, and he shall perform such other duties as properly pertain to his office. And r if the mayor shall deem it necessary, then in the same manner, and at the same time with the appointment of said clerk to the city assessors, there shall be appointed an assistant clerk to the city assessors, who shall receive a salary of twelve hundred dollars -per annum, and whose duty it shall be to assist the said clerk to the city asses- sors in the discharge of the duties of his office by per- forming such part of the work thereof as the said city assessors may direct. 36. The city assessors shall assemble in meeting at least once a week, for the transaction of general business, and especially for the hearing of any appeals that may be brought before them by persons dissatisfied with valua- tions made by any of them, as hereinafter provided. 37. The city assessors, in meeting assembled, shall have power to provide and establish rules and regulations^ for the conduct of such meetings, for the making of valu- ations by the respective assessors, and for the time,, place and manner of hearing appeals ; and to requre the attendance of witnesses, and the production of books and papers. Any person who, after having been duly notified. XXX to appear as a witness, or produce any books or papers, before the said assessors, in meeting assemblee, shall refuse or fail so to do, shall, unless excused by the city .assessors, forfeit and pay a fine of not less than five nor more than fifty dollars, which shall be collected as other .fines and penalties are now or may hereafter be collected in the city of Baltimore. Valuations in Baltimore City. 38. All real and leasehold property in the city of Balti- more, and all goods and chattels permanently located therein, though belonging to a person or persons residing elsewhere, and all personal property, wherever located, •of any person residing in the city, for any part of the year, and whether or not the owner claims to be a resi- dent of the city, excepting only goods and chattels per- manently located elsewhere, and property by law required to be valued by the State tax commissioner, deposits in any savings bank, institution or corporation in this State, which receives deposits and allows interest, bonds, certifi- •cates or evidences of indebtedness of incorporated insti- tutions or companies of this State, or the book accounts, or bills receivable or evidences of debt given for such accounts, of persons engaged in commercial business, who are taxed upon the fair average value of the stock carried by them during the year, shall be valued and assessed by the city assessors ; and property exempted by law from taxation shall be valued and returned the same as property not exempt. 39. Every owner of any personal property, which may have been valued and assessed in the city of Baltimore, who may claim that the same is not subject to taxation therein, may apply to the appeal tax court within thirty days after the expiration of the year for which such assessment was made, and upon proof that during said year he actually and bona fide resided more than six xnonths in some one given place, elsewhere than in said XXXI •city, said assessment shall be abated as to so much of said property as he shall prove to have been assessed for taxes at such place, for said year ; provided, that this section shall not apply to goods and chattels permanently located in Baltimore city. 40. The city assessors shall have power to value, at any time during the year, any property, real or personal, save .as excepted by section thirty-eight, and it shall be their ■duty to value any property which may have escaped the regular valuation for any year ; and they shall also have power at any time, to require any person who, for any reason, failed to file his schedule, as required by section forty-seven of this article, to file the same, duly filled :and sworn to; and it shall be their duty so to do in all such cases which shall come to their knowledge. And neither sections forty-one, forty-seven nor fifty-four hereof, shall be construed as limiting the power or duty •of. said assessors in these respects. Real and Leasehold Property in Baltimore City. 41. Between the first day of April and the first day of September in the year eighteen hundred and eighty-nine, the city assessors shall value all real and leasehold property in the first, second, third, fourth, fifth and sixth wards. Between the first day of April and the first day of September, in the year following, the said asses- sors shall value all real and leasehold property in the seventh, eighth, ninth, tenth, eleventh, twelfth and thirteenth wards. And between the first day of April and the first day of September, in the year thereaMer, the said assessors shall value all real and leasehold prop- erty in the fourteenth, fifteenth, sixteenth, seventeenth, •eighteenth, nineteenth and twentieth wards. And, be- tween the said days in the fourth year from the year first above mentioned, the said assessors shall again value the property which they are hereinbefore required to value in said first mentioned year ; and so in the fifth and XXX11 sixth years, they shall again value the said property valued in the second and third years respectively ; and so they shall continue in the same manner, each year re- valuing the real and leasehold property valued the third previously. But whenever there may have been a con- siderable appreciation in the value of any real or lease- hold property, the said assessors shall immediately value the same, and they shall forthwith give notice of such re-valuation to the owner of such property; and the owner of any property so re-valued because of apprecia- tion in value, who may be dissatisfied with any such re-valuation, may appeal therefrom to the appeal tax court; provided, such appeal be taken within twenty days from the time of re-valuation ; and in case of any depreciation, by fire or other cause, the said assessor* shall have power, upon the application of the owner, to make such abatement as they may deem just, and such owner shall have the right to appeal from the decision of said assessors upon such an application, to the appeal' tax court; provided such appeal be taken withiu twenty days from the date of such decision by the said assessors. 42. In valuing real or leasehold property, the city assessors shall value each lot or parcel of ground sepa- rately ; and in their return thereof they shall describe each lot by its location, naming the street or streeets npon which it binds, or if it binds upon no street, but upon an alley or alleys, then such alley or alleys shall be named, also the number of front feet and depth of such lot; and they shall value improvements separately from, the ground upon which they stand, and in addition to thewlescription of such ground, the street number of the improvement shall be given. Personal Property in Baltimore City. 43. The board of police commissioners shall cause the police officers of the city of Baltimore, during the first week in September in each and every year, to deliver at every house in the city, one of the notices and schedules XXX111 described in section forty-seven of this article for each person, of or over the age of twenty-one years, residing therein ; and at every store, office, shop and other place of business, one of the forms of partnership schedules described in said section forty-seven; and copies of said notices and schedules shall be annually furnished to said police commissioners by the city librarian in ample time for such distribution ; and at the same time the said board of police commissioners shall cause the said police officers to take a census of all persons residing in the city. Said census shall set forth the name, age, (whether adult or minor,) residence, occupation and place of busi- ness of the person described, and the place or places of his residence for one year prior to the taking thereof. 44. It shall be the duty of every person inquired of by the police in the course of taking the census provided for in the preceding section, to state fully, so far as known to him, the name, age, residence, occupation and place of business of every one at, abiding or sojourning in the house in which such person lives. Every person who shall refuse to give such information, shall forfeit and pay a sum not less than five or more than fifty dollars. And it shall be the duty of every officer to whom such information is refused, to report the facts to the board of police commissioners, who shall immediately inform the mayor, whose duty it shall be to instruct the city solicitor to enforce the provisions of this section by suit. 45. By the ninth day of September in every year, the board of police commissioners shall forward to the clerk of the city assessors the originals of said census, as re- turned by the police officers to said board. 46. It shall be the duty of the city assessors to cause to be published, daily, for twenty days before the fifteenth day of September in each and every year, in not less than three newspapers published in the city of Baltimore, a notice to every person of and over the age of twenty- 3 XXXIV one years to file the schedule provided in section forty- seven hereof, duly filled and sworn to, in the office of the clerk of the city assessors on or before the said fifteenth day of September. 47. It shall be the duty of every person of and over the age of twenty-one years, to file in the office of the city- assessors a list or schedule, such as is herein provided, duly filled and sworn to, on or before the fifteenth day of September, in each and every year; and every person returning such schedule shall fully and particularly set forth therein all personal property owned, held or pos- sessed by him at twelve o'clock noon on the first Monday in September, in the year for which such return is made, except leasehold property, shares of stock in and bonds, certificates and evidences of indebtedness of corporations incorporated by or located and doing business in the State of Maryland, deposits in savings banks or institu- tions within this State receiving deposits and allowing interest thereon, the book accounts, and bills receivable or obligations to secure such accounts, of any person en- gaged in commercial business who is taxed upon the aver- age value of his stock; but shares of stock in all railroads worked by steam, whether within or without this State, shall be set forth, and every person engaged in commercial business shall return the fair average value of the stock carried by him during the year ending on said fifteenth day of September. Every partnership concern, trustee, ad- ministrator, executor, guardian, committee of a lunatic,and every agent of any person not residing or being at that time in the city, and every person having any manner of title to, or having possession of, holding or claiming in any manner anything required to be returned in the schedule herein- after described, shall be within the provisions of this section and comply with the same. Whenever property is owned, held or possessed by more than one person, as administrator, executor, trustee, or in any other repre- sentative capacity, any one of them may make and return the schedule thereof. Every schedule of co-part- XXXV mership property shall be signed and sworn to by at least •one member of the partnership. And every wilfully ialse statement contained in any such schedule shall be •deemed perjury, and the person making the same shall, upon conviction thereof, be punished as provided by law. The form of schedule, prepared and furnished by the city, shall contain a notice to taxpayers, and said notice and schedule shall be in form and manner as follows, to wit : OFFICE OF CITY ASSESSORS, City Hall, Baltimore, Sept. , 18 "JUST" Take Notice of and read with care section forty-seven of Article eighty-one of the Code P. O. L., as set forth beloio, as it 'becomes, together with th>$ notice and the Instructions at the bottom of page 2, a part of your sworn statement. Return your schedule to this office, in the manner and at the time, therein required, fail- ure to return a schedule will subject you to the penalty of an increase of fifty per cent, upon the valuation of your personal property here- after to be made by the City Assessors. 47! It shall be the duty of every person of and over the age of twenty-one years, to file in the office of the city assessors a list or schedule, such as is herein provided, duly filled and sworn to, on or before the fifteenth day of September, in each and every year ; and every person returning such schedule shall fully and particularly set forth therein all personal property owned, held or pos- sessed by him at twelve o'clock noon on the first Monday in September, in the year for which such return is made, ■except leasehold property, shares of stock in and bonds , certificates and evidences of indebtedness of corporations incorporated by or located and doing business in the State of Maryland, deposits in savings banks or insti- tutions within this State receiving deposits and allowing interest thereon, the book accounts, and bills receivable or XXXVI obligations to secure such accounts, of any person en- gaged in commercial business who is taxed upon the av- erage value of his stock / but shares of stock in all rail- roads worked by steam, whether within or without this State, shall be set forth, and every person engaged in com- mercial business shall return the fair average value of the stock carried by him during the year ending on said fif- teenth day of September. Every partnership concern, trus- tee, administrator, executor, guardian, committee of a luna- tic, and every agent of any person not residing or being at that time in the city, and every.person having any manner of title to, or having possession of, holding or claiming in any manner anything required to be returned in the- schedule hereinafter described, shall be within the pro- visions of this section and comply with the same. Whenever property is owned, held or possessed by more- than one person as administrator, executor, trustee, or in. any other representative capacity, any one of them may- make and return the schedule thereof. Every schedule of copartnership property shall be signed and sworn to- by at least one member of the partnership. And every wilfully false statement contained in any such schedule- shall be deemed perjury, and the person making the same shall, upon conviction thereof, be punished as pro- vided by law. XXXV11 This Statement is not open to public inspection. All property must be valued'at its full cash value, without reference to a forced sale. Property exempt, or claimed to be exempt, as well as prop- erty not exempt, must be returned. Statement of all property mentioned on page 1, as required to be returned tierein, owned by, or in possession, or under control, at twelve o'clock noon, on ithe first Monday in September, 18 , (') of , ( 2 ) residing at No. St., and having place of business at No. St. " If no property of the Kind named, in a head or question is held, write the w>ord "WOlfE." Leave no blank, except Assessors' Valuation, unfilled. Onumbee of Articles. ISets or Suits. Suite of Furniture All other articles of house- hold Furniture Books, Maps and Charts . . .' Pictures, Statuary, and all articles of interior decora- tion Jewelry Plate and plated ware China and other ware Clocks Watches — gold or silver . . Musical Instruments — name kind Sewing Machines Fire Arms Fixtures and Furniture of offices, counting rooms stores, saloons, and other places of business.... . . . Machinery and Implements of trade or business, in- cluding engines, boilers, shafting, &c Average value of stocks of goods, wares and mer- chandise in any business in which ( 9 ) have been en- gaged during the year ending this day. ( 4 ) Where Located and Whether Permanently. Assessors' Valuation. INSTRUCTIONS FOE FILLING THE ABOVE SCHEDULE. 1. The city Assessors may at any time require a schedule of property held on the above, or any •other day. 2. State in full, name and residence of the person or persons making the schedule, and the •capacity in which the return is made— whether as owner, administrator, trustee or otherwise, and if such person is not owner, for whom he holds the property returned; if no place of business, fill blank with the word none.- 3. Only one or the other of these two columns need be filled, as the property may be indi- vidual articles or sets. 9. Insert word "I," "we," "me," or "us," as the case may be. 4 Designate the general kind and state the number, as one of dry goods, two of hardware, &o. XXXV111 SCHEDULE— Conti nued. KUMBER of Articles. Sets or Suits. Nets, seines and fishing tackle. ( 5 ) Horses, mules, asses, colts.... Cattle Goats and kids Sheep and lambs Hogs and pigs Poultry Harness, bridles, saddles, robes, horse and carriage blankets ; Wagons, carriages, carts and other vehicles Grain and hay Wine — gallons Liquors of all kinds — gallons Coal, wood, coke and other fuel. ( s ) Lumber. ( 5 ) Steamers,ships, hulks, dredg- ing machines, boats and vessels and water craft of all kinds, with their furni- ture, stores and appurte- nances, and all shares or in- terests in vessels or water craft of any kind. ( 6 ) Value. Where Located and Whether Permanently. Valuatioh. Shares of Stock in all Railroad Corporations or Companies, worked by Steam, in- corporated by or located and doing business in the State of Maryland. Number of Shares. Name of Corporation or Company. ' Face of each. Market of each. Valuation.. 5. Not to be mentioned here when included and returned in stock of merchandise. 6. State kind and name of vessel or craft, and interest owned or held. XXXIX Public Securities, including the Bonds of all Nations, (as well as of the United States,) and of all States, Counties, Cities and Towns, except Stock issued by the State of Maryland. 1 Number of such BodcIs or Securities. Name of State, Nation, County or Town. City, Face of Each. Market of Each, Bonds of Railroads and other Corporations, and Scrip of Insurance and other Companies, and all Evidences of Indebtedness of Pri- vate Corporations, except those incorporated by or located and doing business in the State of Maryland. 1 Number of such Bonds, &c. Namk of Corporation. VALUE. Face of Each. Market of Each. Shares in all Incorporated Companies, 1 except those incorporated by or located and doing business in the State of Maryland. 8 Number of such Shares. Xaiie of Corporation. VALUE. Face of Each. Market of Each. Cash on hand or in bank at twelve o'clock noon on the First Monday in September, including checks payable that day, and drafts and notes due and payable that day Money owing to 9 including all judgments, decrees, bonds, promissory notes, money at interest, (whether on time or call,) book accounts and debts of every kind, (except book accounts, and bills receivable or obligations to secure such accounts, due (') in commercial business, (') stock being valued at its fair, averege value,) whether matured or not, except such as have been hereinbefore already described Amount. Assessors' Valuation. 7. To be returned whether in possession of owner or held by or pledged to another as collateral 8. These excepted because assessed by State Tax commissioner. 9. Insert word ,f I," " we," " me," or " us," as the case may be." xl PATENTS AND COPT HIGHTS. VALUE. Valuation. Other persona] property which has not been enumerated or excepted in this schedule. Total value of property required to be returned herein. Value. Special Questions: 1. On the first Monday in September, 18 , was there personal estate belonging to or standing in the name of any of your minor children ? If yea, who is the guardian of such child or children ? 2. At the same date did you singly or jointly with another or others, hold any personal property for any per- son, persons or corporation, either as executor, adminis- trator, trustee, guardian, committee of a lunatic, or in any xli other capacity ? If yea, have you returned a schedule thereof ? I0 3. At the same date, was any personal property other that the items above returned held for you by any per- son, persons or corparation, as trustee or otherwise ? If yea, give name and address of such person, persons or corporation. The above is a statement of all the personal property of every kind and description, either within or without the State of Maryland, owned or held by 9 , at twelve -o'clock noon, on the first Monday in September, in the year , except leasehold property and •shares of stock in and bonds, certificates or evidences of indebtedness of corporations incorporated by or located and doing business in the State of Maryland, and book accounts and bills receivable, and obligations to secure such accounts due 9 ,in commercial business and deposits in Maryland savings banks ; but including shares of stock in such railroad corporations worked by steam, and including property exempt from taxation, and any stock •of goods returned is at its average value for the year; and 9 have not, in any manner whatsoever, trans- ferred or disposed of any property, right or interest for the purpose of avoiding any assessment upon or taxation thereof, or of making this statement 9 have valued the same at what 9 believed its full cash value> without reference to a forced sale, and the values of the several items hereof have been computed in the lawful current money of the United States; and all statements contained in this schedule are full, correct and true. 'Insert word "I," "we," "me" or "us," as the rase may be. 10 Property held for another should not be included in the same schedule with the property of the person making the return, but must be returned separately. 11 The place for signature, which makes all the items and answers, and the •concluding declaration, together with and as explained by the first page, and 'these instructions, the statement of the signer. xlii On this day of the person whose signature is above written appeared ancfi made oath, 12 affirmation, in due form of law, that the- statement subscribed by him is true, full and correct. Before me " Partnership schedules shall be in the form hereinbefore- provided, except that a notice of the manner of filling the- same, and the full style and title of the partnership shall be set forth, and the name and residence of every mem- ber of the firm shall be stated, in addition to the other- matter at the head of the schedule, as follows, to wit : The full firm title, and the name and residence of each partner, must be stated. a co-partnership, engaged in the business of at No. street, and consisting of the following persons and no others : residing at 15 Strike out word " oath ' 8 or " affirmation," as the case may be. 11 The oath or affimation may be made before any justice of the peace for the- city of Baltimore, or before any city assessor of Baltimore ; or, if made out or the city of Baltimore, before any notary public. xliii 4S. No one shall be in anywise excused for any failure- to comply with the provisions of section forty-seveni hereof, because no notice or form of schedule was left with him, or at his residence. 49. Whenever any person shall have failed to file his schedule in the office of the clerk of the city assessors, according to the provisions of section forty-seven hereof, then the city assessors shall pass an order requiring hinx to file said schedule within such reasonable time as the- said city assessors shall therein specify, and shall cause him to be personally notified of said order, and that upon failure to comply therewith, he will be subject to the penalty prescribed in section fifty-one hereof; and h& shall be deemed to have had personal notice when a copy of said order and notice has been left at his usual place- of abode. 50. If such person, upon complying with said order,, does not, in the judgment of the city assessors, show sufficient cause for his failure to file his schedule as re- quired by section forty-seven hereof, then the fact shall he noted in the minutes of said assessors, and, after his property, other than real estate and chattels real, shall have been valued as hereinafter provided, the said asses- sors shall add to said valuation not less than two nor- more than twenty per cent, in their discretion. 51. Whenever any person shall refuse or fail to file his- schedule after having been notified, as provided in sec- tion forty-nine hereof, then after his property shall havo been valued by the city assessors as hereinafter provided, the said assessors shall add fifty per cent, to such valua- tion, and the gross valuation thus arrived at shall be his- assessraent for the year, and shall not be abated on ap- peal. 52. If any person shall, for two years in succession, refuse or fail to file a schedule in compliance with the xliv provisions of either section forty-seven or section forty- nine hereof, then the city assessors may, for the second of said years, add one hundred per cent, to the valuation of his personal property other than chattels real, made for .said year by said assessors ; and so the said assessors may •continue in each consecutive year, during which any person shall fail to comply with the provisions of said sections, to increase or add to the valuation of his said property, making such increase, each year, fifty per cent, greater than the year previous. 53. Between the fifteenth day of September and the first day of February, in each and every year, the city assessors shall view all goods and chattels in'the city, and shall diligently investigate and inquire, and by personal inspection and all lawful means, inform themselves of all personal property therein, or belonging to residents thereof ; and they shall value the same according to the provisions of sections seven and thirty-eight hereof. Said valuations shall be made in the manner prescribed in sections fifty-four and fifty-seven hereof, and shall all be completed not later than said first day of February. 54. Every city assessor shall, when valuing the per- sonal property of any person who has filed the schedule required by section forty-seven hereof, take with him :such schedule; and he shall set down his valuations of the property mentioned therein in the proper column opposite the valuations thereof by the owner, or person filing such schedule; and in valuing the same, the asses- sor shall do so upon his own judgment, and shall not be •concluded by the valuations made by the owner, or per- son returning the schedule. 55. The city assessors shall have power to administer ■oaths or affirmations, and may require any person to answer under oath, or affirmation, any question concern- ing the amount, character, value, location, tenure or proprietorship of the property owned by himself or any xlv other person, asked by any assessor in the course of his; official duty; and every person who shall refuse to- answer any such question, or to be sworn or to affirm, when required by a city assessor in tbe course of his- duty, shall be deemed guilty of a misdemeanor, and upon conviction thereof be punished by a fine not exceeding- three hundred dollars, or by imprisonment in the city jail for not more than six months, or both, in the discretion of the court. 56. Whenever any assessor shall find in the district assigned to him, any personal property belonging to any person residing in any district assigned to any other assessor in the city, he shall value the same and report his valuation thereof to the assessor in whose district the owner -resides; and said last mentioned assessor shalL make the proper return thereof. Appeals. 57. The city assessors, in making valuations of prop- erty, whether real or personal, shall do so, ward by ward, in regular order, taking up each ward in order, accord- ing to its number, and completing, as far as practicable, their work therein, before beginning to make valuations- in another ward. Before the assessors begin their work in any ward, the chairman of the city assessors shall divide such ward into assessment districts, and shall assign the several assessors to the respective districts, as- far as practicable, sending them two by two together; and he may at any time change said assessment districts; and the said chairman shall have the general control and direction of the work of the assessors. Whenever the said assessors shall have completed, as far as practicable,, their valuations in any ward, such valuations shall re- main in the office of said assessors, open to inspection by any person interested therein, and no one else, for twenty days from the time of such completion ; and at the time of the said completion of the valuations in any ward, the said assessors shall cause to be published, in not less than three daily newspapers published in this city, a notice xlvi that the valuations of property (specifying whether real and leasehold or personal) in such ward are open to such inspection in the office of the city assessors, and setting, forth the period within which appeals will be received. 58. Any person interested in any property valued by any city assessor, shall have the right to appeal from such valuation to the city assessors in meeting assembled, at any time within the twenty days during which said valuation remains in the office of said assessor, as provi- ded in the preceding section; and any person dissatisfied with the decision of the said assessors in meeting assem- bled, upon his appeal to them, may appeal therefrom to the appeal tax court at any time within ten days after such decision is made, and the decision of said court shall be final; provided, that in case any appeal, whether to the city assessors or appeal tax court, shall not have been heard and decided before the taxes or any instalment of taxes assessed upon the valuation appealed from have be- come due, the pendency of such appeal shall not post- pone the payment of such taxes, but they shall be paid; provided, that such payment shall not prejudice the right of the person appealing to further prosecute his appeal; and in case he should thereafter be allowed a deduction upon the said valuation, the excess of taxes theretofore paid thereon shall be credited to him on account of any taxes he may then owe, or the first which may thereafter become due. Final Valuations and Assessment*. 59. All valuation of property from which no appeal shall have been taken within twenty days after the com- pletion of valuations in the ward in which such property belongs, as mentioned in section fifty-seven of this article, shall be final. 60. All valuations made by individual assessors shall be subject to correction by the city assessors in meeting .assembled, upon their own motion; and all such valua- xlvii tions of real and leasehold property shall pass before and such cases of vacancies of other city officers; and the members of said board shall receive such compensation as the mayor and city council shall provide to be paicl by the city. 84. The persons appointed to compose said appeal tax court and the said assessors shall, before they enter upon the performance of their duties, take an oath before the mayor of Baltimore city that they will well and faithfully perform the duties required by law, with- out favor, affection or partiality. 85. Whenever any person shall make application for an allowance or deduction on account of the sale, trans- fer, alienation, loss or removal of any property, or the- collection or payment of any public or private security for money, the county commissioners or appeal tax court shall interrogate him on oath in reference theretoy lv and the disposal of the same, and especially inquire of him to whom the same has been sold or transferred, and the amount of the purchase money or the money col- lected, and how the same has been invested. 86. They shall also interrogate said person on oath in reference to any acquisitions or investments made by him, and not already assessed, and the amount of all such acquisitions and investments shall be added to his assessable property, and if he refuses to answer, no allowance or deduction shall be made on his assessment; they shall also have power to summon before them any person whom they may know or be credibly informed has acquired new property, or whose account of taxable property in'ay in their judgment require- revision and correction, and examine such person on oath touching the same; and any person so summoned, and refusing to appear, or to be sworn, or to answer touching said account or property, shall be liable to prosecution there- for, and upon conviction before a justice of the peace, shall be fined not exceeding fifty dollars for each offence. 87. Every person who shall remove to any county or city from the county or city in which his property has been assessed, or from any other place without the State, and whose personal property has not been assessed for the county or city to which he has removed, or any other person whose property or spme part thereof has not been . assessed, shall, when required by the collector of the county in which his personal property or the personal property under his care or management doth lie, or by the appeal tax court for the city of Baltimore, give to such collector or appeal tax court, a full and particular account of his personal property in said county or city, and of all the personal property in his possession or under his care and management, liable to be assessed, and which before that time shall not have been assessed in the said county or city, and the name of the person to whom it belongs. lvi 88. If any person shall, when required by a collector or by the appeal tax court, or after ten days' notice, ne- glect to render the account required in the last preceding section, he shall forfeit a sum not exceeding one thousand dollars ; and the collector or appeal court shall, on his or their own knowledge, and on the best information he or they can obtain, value the property of such person to the utmost sum he or they believe the same to be worth in cash; and in his or their return of said valuation, he or they shall certify the said refusal or neglect, and the county commissioners or appeal tax court shall assess such person according to the sum so returned, and the same shall be collected as the assessment. 89. Whenever any person shall apply to the county commissioners or appeal tax court for allowance or deduc- tion on account of the removals of property from one county to another, the county commissioners or said court to whom the application shall be made, shall ascertain of the party applying, to what place within the State the property has been removed, and shall inform the proper authorities of the place to which the property is removed, of the fact of such removal. 90. The county commissioners of the several counties of this State, and the mayor and city council of Baltimore city, are hereby directed to levy the State taxes annually, to be collected according to law. and to be appropriated as follows : A tax of five and one-half cents on each one hundred dollars, to meet the interest and to create a sinking fund for the redemption of the defense or bounty loans; a tax of three-fourths of one cent on each one hundred dollars, to meet the iuterest and create a sinking fund for the redemption of the deaf and dumb asylum loan ; a tax of one cent on each one hundred dollars, to meet the interest and create a sinking fund for the re- demption of the Maryland hospital loan ; a tax of ten cents on each one hundred dollars, to aid in support of the public schools, to be distributed according to law, lvii among the several counties and the city of Baltimore ; and =a tax of one and one-half cents on each one hundred dol- lars, to meet the interest and create a sinking fund for the redemption of the treasury relief loan — making an aggregate of eighteen cents and three-fourths of a cent ■on each one hundred dollars; and the comptroller of the treasury shall levy the same State taxes on the shares of -capital stock of all banks, State and national, and other incorporated institutions and companies of this State, the shares of whose capital stock are liable, by law, to assess- ment and taxation, and upon all other property, the State "taxes upon which are required to be paid directly to the State treasurer. 91. The county commissioners and appeal tax court :shall direct their clerk to enter and record in a book or books to be provided for the purpose, an accurate and fair account of all property of every sort within their ■county or city, and the valuation thereof, and an alpha- betical list of the owners thereof properly arranged ac- cording to the election districts in the several counties, and according to the several wards in the city of Balti- more, which any person may inspect without fee or reward. 92. The said clerks shall transmit to the comptroller annually, within thirty days after the annual levy of taxes for the State, a return of the assessments of property in each county and the city of Baltimore, showing the amount thereof, and the amount placed in the hands of each collector of such county or city; and for neglecting or refusing to perform this duty, the clerk so neglecting or refusing shall be subject to presentment, and upon conviction thereof in the circuit court for the county or the criminal court of Baltimore, to a penalty of one hun- dred dollars for the use of the State. 93. The State's attorney of the county or city shall give information of such neglect, or refusal to the grand jury -of the county or city, upon being advised thereof by the •comptroller. lviii 94. It shall be the duty of the county commissioners of the several counties, and mayor and city council of the- city of Baltimore, annually, on or before the third Tues- day of April, to impose the State taxes prescribed by law;. and if the county commissioners of any county, or the- mayor and city council of the city of Baltimore, shall fail to impose the said taxes before the first day of July in any year, the clerk of the said county commissioners, or register of the city of Baltimore, as the case may be, shall tjive notice thereof to the governor, within twenty days after such failure, and thereupon the governor shall appoint a tax board of three persons in the county or city so failing, a majority of whom shall have power to act, and whose duty it shall be forthwith to levy said taxes and place the same in the hands of the collectors of the tax for such county or city. 95. In appointing such boards, the governor shall not- be restricted to any particular county, but may take them, from any part of the State. 96. The clerk of the county commissioners, or of the- appeal tax court, or register of the city of Baltimore, shall lay before the said boards the returns of the said asses- sors, with all corrections made thereto; and if any clerk, or register shall fail to comply with the provisions of this- or the preceding section, he shall be liable to indictment therefor, and upon conviction shall be fined not exceed- ing one thousaud dollars. 97. The members of said board shall each receive the- sum of three dollars for each day they may be engaged in the discharge of their duties, not exceeding twenty days, to be levied by them on the county or city for which they may be appointed, and collected for their use by the collector of State taxes thereof. 98. The clerks of the county commissioners, and the- register of the city of Baltimore, shall, immediately after- lix the imposition of a tax for the use of the State, transmit hy mail to the comptroller, a certificate stating that such tax was imposed, and the date of the imposition thereof,, the amount of the assessable property liable thereto, and the name or names of the collector or collectors thereof, with a copy of his or their bond or bonds, together with, their post-office address. 99. The county commissioners of every county in which- all the county expenses are not now levied for in ad- vance, shall, from year to year, gradually increase the- sum levied upon estimate in advance, as far as may be making such increase reasonable and moderate each year, until all county expenses shall be levied for in advance not later than the year eighteen hundred and ninety- eight, when all county taxes shall be levied in advance- of the expenditures to which they are intended to be- applied; but in cases of urgent necessity, arising from flood, fire, accident or other emergency which could not have been reasonably foreseen, or provided for by levy in advance, and which exceeds the limits of such reason- able contingent fund as may have been provided by the- commissioners, the county commissioners shall have full power to incur the necessary expenses of such cases and provide for the same in the next county levy. 100. The county commissioners in the several counties,, and the mayor and city council of Baltimore, shall, on or before the third Tuesday in April, in each year, or as soon thereafter as may be, appoint a collector or collectors of their respective counties, and one collector for Baltimore city, for the collection of all State taxes levied, or to be- levied for the current year; and it shall not be lawful for the local authorities of the said counties to provide any fixed, annual, or other stated compensation, for the col- lection of State taxes ; nor shall the county commis- sioners provide a salary of any kind, or any other com- pensation, to the said collectors, for their services in col- lecting the State and county taxes, otherwise than by a lx per centum on the amount of their collections, as contem- plated in this article. And the county commissioners in the several counties, except in the counties where pro- vision is now made by law for the election of a county treasurer, shall, in the month of June in each year, appoint a county treasurer of their respective counties ; and the county commissioners shall not provide a salary of any kind, or any other compensation, to the said county treasurers, for their services in said capacity, otherwise than by a per centum on the amount of money received and disbursed by them for the county, except in counties where a county treasurer is already provided with a salary by law. 101. Every collector of county taxes, before he acts as •such, shall give bond to the State of Maryland in penalty •of double the amount of such taxes to be collected by him, with good and sufficient securities, to be approved by the orphans' court; and the collector of city taxes an the city of Baltimore, before he acts as such, .-shall give bond in such penalty as may be prescribed by the ordinances of the mayor and city council, to be approved by the m'ayor and presidents of both branches •of the city council, or any two of them, the mayor being one, with the condition that if the above bound shall well and faithfully execute his office, and shall account for and pay to the county treasurer or to the mayor and city council of the city of Baltimore, if in said -city, or their order, the several sums of money which he .shall receive for the county or city, as the case may be, or be answerable for by law, at such time as the law shall direct, then the said obligation to be void, other- wise to be and remain in full force and virtue in law; and every collector of State taxes appointed by the county commissioners, shall also give a separate bond to the State of Maryland in a penalty double the amount of the tax to be collected by him, with good and sufficient securities to be approved by the governor, with the con- dition that if the above bound shall well and faith- lxi fully execute his office, and shall account for to the comp- troller, and pay to the treasurer of the State the several sums of money which he shall receive for the State, or be answerable for by law, at such times as the law shall direct, then the said obligation to be void, otherwise to remain in full force and effect. Every county treasurer, before- he acts as such, shall give bond to the State of Maryland in penalty of double the amount of county taxes to be- received and disbursed by him, with good and sufficient securities to be approved by the orphans' court, with the- condition that if the above bound shall well and faith- fully execute his office, and shall account for and pay to the county commissioners or their order, the several sums of money which he shall receive or be answerable for by law, at such times as the law shall direct, then the- said obligation to be void, otherwise to be and remain in full force and virtue in law. ■ 102. Every collector of State taxes in the city of Balti- more, before he acts as such, shall give a bond to the State of Maryland in a penalty of seventy T flve thousand dollars, to be approved by the governor, with the condi- tion that if the above bound shall well and faith- fully execute his office, and shall account with the comp- troller for, and pay to the treasurer of the State, the several sums of money which he shall receive for the State, or be answerable for by law at such times as the law shall direct, then such obligation to be void, other- wise to remain in full force and virtue in law; the said collector's bonds, when approved by the county commis- sioners, shall be recorded in the office of the clerk of the circuit court of the respective counties ; when approved by the proper authorities in the city of Baltimore, shall be recorded in the office of the clerk of the superior court of Baltimore city, aQd when approved by the gov- ernor, shall be filed in the office of the comptroller of the treasury. 103. Every, collector of State taxes in the city of Balti- more shall make daily deposits of such sums of money as- lxii lie shall receive for State taxes, collected by him, less the amount of commission allowed him for the collection of the same, to the credit of the treasurer of the State of Maryland, in some bank in said city, which pays to the :State the bonus or school tax as provided by law to be designated by the said treasurer, and shall send to the treasurer a statement of the amount so deposited, within the first ten days of each month, with a certificate of the bank that the same is so deposited; and on failure to make such daily deposits, and to send such certificate, he shall, on proof thereof to the satisfaction of the gov- ernor, be liable to removal from office by the governor, and the comptroller shall immediately enter suit upon his bond. 104. The treasurer of the State may make weekly ex- amination of the books of the collector of State taxes in Baltimore city, whose books shall always be open to such inspection. 105. Every collector, before he acts as such, shall take the following oath : I, collector of do swear that I will well and truly execute the duties imposed upon me by law, and that I will justly and impartially value all property which I shall be authorized to value according to the best of my skill and judgment, and that I will not either directly or indirectly make any profit of the money collected by me by the use thereof in any manner whatever, which oath may be administered by the clerk of the circuit court for .the county, or the clerk of the superior court of said city, and a certificate thereof under seal shall be filed with the county commissioners, or register of the city of Baltimore, as the case may be. 106. If any collector shall fail to give bond as herein required, within twenty days after his appointment, the county commissioners or mayor and city council of Balti- more, as the case may be, shall immediately appoint an- other in his place, and shall continne after twenty days to lxiii make such appointment until a collector shall give bond «,s directed. 107. The clerks of the county commissioners and the register of the city of Baltimore, shall annually, on or before the first day of May, inform the governor whether there is in their several counties and the said city, a •collector or collectors of the State taxes, duly appointed in conformity with the provisions of this article, and •shall state whether a per centum of the said collections has been allowed said collectors for their services as •therein provided; and if so, to what extent. 108. If there be no collector of State taxes, qualified :and compensated in conformity with the foregoing pro- visions in any of the counties or in said city, by the fifteenth day of May in any year, the governor shall ap- ipoint from any part of the State, a collector or collectors for the said county or the said city, who shall give bond with sureties to be approved by the governor, which shall be in all respects on a footing with other State collectors' bonds as provided in this article ; and the said collector shall have all the powers of other collectors. 109. If any collector, appointed under the preceding section, shall fail to give bond within thirty days, the governor shall appoint another in his place, and so on after every interval of thirty days, until a collector shall qualify. 110. A separate collector may be appointed to collect the State taxes in any of the counties or the city of Bal- timore; and if so appointed, shall give bond as herein- before required. * 111. The clerk of the county commissioners in each •county and of the appeal tax court in the city of Balti- more, shall keep an accurate account of the assessment a JL nm "No. 10. If belonging to papists, per 100 acres, Two shillings ) ' This Act was to continue five years. It was extended by the Act of 1760, ch. 9, and finally expired November 26lh, 1763. CXX1X levied upon the persons in the province by " even and equal assessment," without reference to ability to pay, revenue enjoyed or property worth. It seemed there- fore to be iu the nature of a tribute paid for the privi- lege of existing. It is not difficult to understand the motives of the framers of the first State Constitution in Maryland, when they shaped what is now the 15th article of our Declaration of Eights. The light cast by the foregoing facts upon that article, should aid materially in arriving at a correct understanding of its meaning. What we understand to-day by a poll tax, is a small assessment, as of a dollar or two dollars per head, im- posed upon all male persons who have reached their majority. To one having this idea of a poll tax, the declaration that such a tax " is grievous and oppres- sive," sounds strangely. This was not the sense in which our fathers understood the expression. What they meant was to say that the burden of taxation ought to rest upon property, and that, according to its value, or, to speak more correctly, upon persons accord- ing to their property worth, and not in equal por- tions upon all the inhabitants of the State, entirely without refereuce to their ability to pay. The prac- tice they were denouncing was that of levying all taxes by the poll, and exempting property from taxation, which amounted to a tax on existance, or a tax on the privilege of being a human being, in- stead of requiring a contribution for the support of the State, measured by the ability of the citizens to contribute for that purpose. The language of the arti- cle indicates this. It does not say that a poll tax is grievous and oppressive, but " that the levying of taxes by the poll is grievous and oppressive, and ought to be prohibited," * * * thus indicating that taxes should be levied by some other measure than the mere fact that the person subjected to them is a human being — "that paupers ought not to be assessed for the support of the government," * * * thus evidently refer- cxxx ring to the fact that the persons of paupers had been assessed for the same amounts collected from the wealthy, without reference to respective ability to pay, no greater tax being paid by one than the other Then the article proceeds to declare what is the proper measure of every man's contribution to the State, fixing his ability to pay as established by his property worth, as the proper measure of his contribution, by declaring that "every person in the State, or person holding property therein, ought to contribute his pro- portion of the public taxes for the support of the gov- ernment, according to his actual worth in real or per- sonal property." The history of Maryland prior to the Eevolution i* the true key to this constitutional provision. It waa not a narrow and ill-considered, or an uncalled for measure, but a reasonable, prudent and proper enact- ment, calculated to protect the people from a return to the unjust system which had prevailed in the State for more than a century and a quarter. Very much could be said of this period, but in con- sideration of limited space, and of the more direct con- nection of the succeeding periods with the present system, this mention of the first period has been con- fined almost wholly to the presentation of a few points which suggest the reasons that originally prompted the adoption of article 15 of our Bill of Eights. Second Period. — The immediate successor to the pro- prietary government was the convention of June, 1774,. which consisted of deputies appointed at public meet- ings held in the several counties. These county meet- ings were spontaneous and afford an actual instance of a government set up by the voluntary association of the people. 1 The convention of the following year 2 framed a tem- porary government, the basis of which was the "Article* of Association," which were presented for signature to the 1 McMahon's History of Maryland. 'July, 1775. CXXX1 inhabitants of the several counties by persons specially- appointed for that purpose. The supreme power was vested in a Provincial Convention, which was limited only by its discretion. 1 The revenues of the temporary government consisted chiefly in the bills of credit issued under the resolutions of convention and in money raised by contribution. These contributions were called "vol- untary;" but, in view of the manner of soliciting them, it may be doubted whether they were in every instance and in all respects voluntary and cheerful donations. In every county, contribution or subscription lists were presented to the inhabitants. If any person declined to contribute, his name and his refusal were noted, and then consequences followed which, in those times, were more serious than a tax sale. In one county 2 the names of those refusing were directed to be recorded in per- petual memory of their principles; in others they were publicly declared by county resolutions, enemies to America, and as such published in the Maryland Gazette 3 reported to committee of observation* etc. 5 As the un- fortunates who were so injudicious as to allow them- selves to be returned delinquent, became the objects of distrust and aversion, and subjected themselves to the suspicion of toryism, with its grave consequences of ar- rest, banishment and confiscation, it will be readily be- lieved that these means were capable of being very nearly as effective as compulsory taxation. In 1777, the State having been organized in place of the tempor- ary government, entirely new systems of finance and taxation began The first law for the valuation and as- sessment of property was passed, 6 and with it came, for ' McMahon's History of Maryland, pages 416-416 '' Charles County. 3 Anne Arundle. * Baltimore County. 6 2 Seharf 's History of Maryland, pages 170-176. • February, 1777, ch. 21. The preamble to this act reads as follows : " Whereas the United States, and each of them, have been compelled, from the scarcity of gold and silver, to issue very large and considerable sums of money in bills of credit, as the only means to enable them to pros- ecute the present just and necessary war against Great Britain, in defense CXXX11 the first time, taxation upon property according to as- certained value. The object of this first tax law of the State was to raise money to aid Congress in carrying on the war against Great Britain, and it is recited in the act that Congress has resolved to borrow, on the faith and credit of the United States, a considerable sum of money to carry on the war, and it is necessary to estab- lish a fund for the punctual payment of interest, which can be done only by imposing such taxes as our present circumstances and exigency of affairs permit; and the act proceeds to impose a tax of 10 s. per £100, for that purpose. For the most part, the same system of taxation was in force and was administered by the same of- ficers and according to the same rules throughout this period. There were two State Treasurers, one for the Eastern and another for the Western Shore, who were appointed by the House of Delegates at their pleasure. 1 At differ- ent times, there were also an Auditor General, 2 an In- tendent of the Revenue, 3 Commissioners of the Loan Office, and an Agent 4 to enforce the claims of the State against delinquent County-Court clerks, sheriffs and collectors. Then, as now, there were no periodical, general (or universal) valuations. (Note: There never has been any periodical assessment in this State. The attempt to get an Act from the General Assembly of 1886, em- of their lives, liberties and property; and whereas the quantity thereof now in circulation greatly exceeds the present medium of commerce, and noth- ing can tend so much to promote and maintain its credit, as reducing the quantity thereof; and whereas Congress, on the faith and credit of the United States, have resolved to borrow a very considerable sum of money, for the purpose of carrying on the present war, and it is absolutely neces- sary to establish a fund for the punctual pajinent of the interest accruing on such loan, which can only be done by imposing such taxes as our pres- ent circumstances and the exigency of our affairs will admit." 1 Constitution 1776. Art. 13. •See May, 1781, ch. 17. * See Nov., 1781, ch. 27. Nov., 1782, ch. 27. Nov., 1784, ch. 70. ' See Nov., 1789, ch. 30; Nov., 1790, ch. 15 sec. 2; Nov., 1791, ch. 77; Nov., 1792, ch. 81; 1793, ch. 76; 1795, ch. 87; 1796, ch. 81 ; 1797, ch. 83; 1799, ch. 90 ; 1800, ch. 62, etc. CXXXI11 powering the city of Baltimore to establish such system, failed.) The A.ct of June, 1780, ch. 8, 1 ordered annual valuations for the five years next following; hut it did not provide any method for making such valuations and was superseded by the Acts of the next and succeeding years. When a general valuation was deemed expedient by the Legislature, a general as- sessment law was passed, providing for an imme- diate valuation, and, thereafter, for annual additions of new property and abatements for destruction, gales and like cases. The general assessment laws of that period were all very similar to each other and widely different in their methods from those of the Third, or present period. They were the acts, respec- tively, of February, 1777, ch. 21 ; November, 1779, ch. 35; October, 1780, ch. 25; November, 1781, ch. 4; Novem- ber, 1782, ch. 6; November, 1783, ch. 17; 1784, ch. 56; 1785, ch. 41 (for personalty); 1785, ch. 53 (for realty); November, 1792, ch. 71 ; 1797, ch. 89; 1803, ch. 92; Nov- ember, 1812, ch. 191. By each of these Acts, a board called the Commission- ers of the Tax was appointed for each county. These Commissioners were named in the several Acts, and con- tinued to serve until their functions were suspended by a new assessment act. 2 They received compensation and were compelled under penalty to accept and serve in the office, were five in number in each county, and had ■control and were virtually constituted a board of mana- gers of all matters relating to valuation, assessment and collection in their respective counties. They were re- quired to elect, immediately after their appointment, assessors, usually one or two for each Hundred, 3 or for assessment districts to be designated by the commis- sioners, 4 or for each election district, 5 to call them to- 1 Section 6. * Occasionally a special act of Assembly would appoint a new board of commissioners of the tax for a particular county. 'February, 1777, ch. 21, sec. 6. 4 1797, ch. 89, sec. 6. "Nov., 1812, ch. 191, sec 5. CXXX1V gether, read the law to them and instruct them in their duties. When the assessors completed their work, they made their return to the Commissioners of the Tax for their respective counties, who then acted as boards of appeal. During the years that intervened before another general assessment, the commissioners revised the assessment, adding new property, allowing abate- ments for property destroyed, lost or sold (for a long time there was no provision for abatement in case of decrease in value), appointing collectors, etc., etc. The State tax was levied, the county expenses were adjusted and allowed, and the levy for them was ascer- tained and made by the Levy Courts. The Commissioners of the Tax and the Levy Courts,, continued factors of great importance in the State until they were merged into the County Commissioners, which was done from time to time in the different counties. Equalization. — One of the marked characteristics of the legislation of this period is the constant effort to- equalize taxation. These provisions look to equaliza- tion as between individuals and localities, and extend not only to real estate, but also to certain kinds of per- sonal property, the value of which would not vary in different parts of the State, and which could be cor- rectly valued by weight, or other physical standards, according to fixed schedules embodied in the law. Th& clauses of personal property in question were silver plate, 1 bar and pig iron, 2 and slaves. 3 Instead of leav- ing silver ware to be valued according to the varying, and perhaps defective, judgment of a large number of assessors distributed through the different sections of 1 Nov., 1779, ch. 35, sec. 42 ; Nov., 1781, ch. 4, sec. 15 ; Nov., 1782, ch. 6,. sec. 13 ; Nov., 1783, ch. 17, sec. 14 ; 1784, ch. 56, sec. 15 ; 1785, ch. 41, sec. 16 - r Nov., 1792, ch. 71, sec. 24; 1797, ch. 89, sec. 17; 1803, ch. 92, sec. 17;. Nov., 1812, ch. 191, sec. 15. 8 Nov., 1781, ch. 4, sec. 15 ; Nov., 1779, ch. 35, sec. 13. 'Nov., 1779, ch. 35, sec. 12; Nov., 1781, ch. 4, sec. 15; Nov. 1782, ch. 6, sec. 18 ; Nov., 1783, ch. 17, sec. 14 ; 1784, ch. 56, sec. 15 ; Nov., 1785, ch. 41,. sec. 16; Nov. 1792, ch. 71, sec. 24; 1797, ch. 89, sec. 17; Nov. 1812, ch. 191, sec. 15. cxxxv the State, the assessment laws required the assessors to value it by weight at so much per ounce, and thus se- cured uniform valuation for all the silver ware in the State. Some of the acts contained a similar provision for crude iron. 1 Slaves were valued according to age and sex, at the rates set in the statutory schedules ; hut the assessors were to allow for infirmities and de- fects; and it was provided " that the said assessors shall be at liberty and are hereby directed to estimate male slaves, who are tradesmen, at such value as they may adjudge them to be worth regarding their respective trades and their proficiency therein." 2 The necessity of some regulation which would con- trol the assessors in the different counties in their val- uations of land, so as to prevent some counties from escaping their due share of the State tax by means of valuing their land at inadequate rates, was felt in Mary- land then, as it is in New York, Illinois and elsewhere 1 See note 2 on page cxxxiv. '' See note 3, page cxxxiv, for acts containing this provision. A. A. 1813, ch. 191 sec. 15, which is the same as the preceding acts in this respect, reads as follows : "And be it enacted, That the following species of personal property shall be valued at the respective sums following, to wit t Every male slave and female slave from eight to fourteen years of age, forty dollars current money ; and every male slave from fourteen to forty-five years of age, one hundred and twenty -five dollars like money; and every female slave from fourteen to thirty- six years of age, eighty dollars like money i male and female slaves under eight years of age, and male slaves above the age of forty-five years, and female slaves above the age of thirty-six years, to a true proportioned value to male and female slaves above or nnder those ages; and the assessors shall return in their certificate the number of negroes of each person above the said ages, with their valuation ; and if any slave shall not be perfect in his limbs or sight, or from the want of health, or any visible infirmity, shall bo rendered incapable to perform his usual and proper labour, the assessor shall make a reasonable and proper abatement for such cases, and shall note the same in his return ; and silver-plate one dollar like money per ounce ; and all other articles of personal property shall be left to the discretion and judgment of the several assessors, who shall estimate the same at a value in current money proportioned to the value of other personal property as regulated by this act ; Provided, That the said assessors shall be at liberty, and are hereby directed, to estimate male slaves who are tradesmen at such value as they may adjudge them to be worth, regarding their respective trades and their proficiency therein. cxxxvi •now. This was provided for in 1785 by a law 1 which nxed the average value per acre for each county, and required the commissioners of the tax to value the lands in their respective counties accordingly. The Act particularly specified the manner^of making the 1 1785, ch. 53. The preamble to this Act recites : " Whereas, this Gen- eral Assembly, being fully satisfied of the great inequality that has hith- erto taken place in the valuation of lands, between the several counties of this State, and impressed with the necessity of preventing the like injus- tice in. future, have determined to ascertain by law the average value by the acre, of the lands in the several counties in this State. " Be it enacted by the General Assembly of Maryland, That the average of land by the acre in the several counties, be as follows, to wit : " The fixed values were : Anne Ai-ud del 27s. Kent 33s. 9d. Baltimore 29s. 3d. Montgomery 24s. 9d. ■Calvert 24s. 9d. Prince Georges' 31s. 6d. Cecil 27s. Queen Anne's 27s. •Charles. 27s. St. Mary's 24s. 9d. Caroline 15s. 9d. Somerset 24s. 9d. Dorchester 24s. 9d. Talbot 27s. Frederick 27s. Washington 22s. 6d. Harford 27s. Worcester .20s. 3d. By Act of 1789, ch. 20, Washington county was divided, and "Allegany" ■county was erected. The general assessment law of 1792, (ch. 71, sees. 12, 13,) fixed the average value of lands in Allegany county at 4s. per acre, and in Washington county at 24s. per acre. This valuation was continued by the Acts of 1797 and 1803. The Act of 1812 adopts the average valuation ■of land fixed by the Act of 1785, except that it fixes the average value per acre in Allegany county at 50 cents, and in Washington county at $3.20. Section III of the Act of 1785 enacts " That the annual assessment for ■supplies be hereafter imposed on the several counties upon the amount of land in each county, ascertained as aforesaid, and the value of the personal property in the several counties, ascertained as shall be hereafter directed ■by law." It was directed "That Baltimore-town and its precincts, in Baltimore •county, shall be considered and taken as separate and distinct from the said ■county, and shall not be taken into the valuation of property in said county, and an annual assessment for supplies shall hereafter be imposed upon the said town, distinct and separate from the said county, upon the value of all the lots, * * &c, * * and real property in the said town, as ascertained by this Act, and the value of personal property in the said town, ascertained as shall hereafter be directed by law." By section V it was directed that the commissioners of the tax were first to ascertain the number of acres of taxable land in their respective coun- ties ; then they were to multiply the number of acres by the average value per acre, as fixed by this Act, thus ascertaining the total real estate basis of CXXXV11 assessment. The commissi' , s were first to ascertain the number of acres of taxable land in their county. This was to he multiplied by the average value per acre, fixed by the Act, thus fixing the " real property basis " for the county. All the land in the county was then to be valued at its real worth, and divided into taxation, as fixed by law for the county. Then they were to "esti- mate each tract or parcel of land, with any buildings thereon, as owned or claimed, at its present actual worth in ready current money, regarding- all circumstances and advantages of the land from situation or convenience- to market, and taking particular care that all land in their county, of equal quality and advantages of situation, be estimated by them at the same price ; and the said commissioners shall then arrange the several tracts or- parcels of land in their county into classes, according to the price at which' they have VfJucl each tract or parcel of la ad as aforesaid ; and the commis- sioners of the several counties (except Baltimore county) shall then deduct the value of the property in the towns in their county, from the amount, of the land in their county ; " (i. e., from the total real estate basis fixed as- above); "and shall afterward apportion the sum which remains of the amount of the lands after such deduction," (i. e., the residue of the total basis,) " upon the several tracts or parcels of land in their county, * * * in such manner that the whole lands in their county, in just proportion^ according to their relative value, make the sum which remains, of the whole lands in their county, after making the deduction aforesaid, and no- more." The commissioners of the tax in every county were required to return a' correct account of the property by them n=ic<>Tt»inprl and valued under the Act, to the clerk of the House of Delegates, who was to lay the same before the House on the second day of the next session of the General Assembly,, for the inspection of the members. — Sec. 15. It will be observed that under this Act, the Legislature was to cease to- levy a tax of so much per hundred pounds' or per hundred dollars' worth of property, directly upon the property of the people, as had been done by all former Acts since the organization of the State, and is now the practice ;, and instead, a fixed sum was assessed upon every county, which sum was proportioned to the taxable basis, as fixed under the law, and the commis- sioners of the tax of the several counties in turn assessed their counties r share of " the public tax," upon the property in the county. An effort at equalization between different sections had been made even prior to 1785. The assessment Act of 1779, ch. 35, sec. 10, fixed the highest and lowest valuations to be put up on the best and " worst" lands, respec- tively, over or under which the several assessors, who were appointed for each Hundred, should not go, " leaving the lands of intermediate quality to the skill and judgment of such assessors, who, in valuing the same, shall have regard to the rates hereafter fixed : that in tach and every county of this State, lands of the best quality shall be valued at four pounds, and lands of the worst quality at not less than five shillings, common money,, per acre." cxxxvm -classes according to value, and it was then to be legally- appraised, so to speak, by assigning to all the lands in the county their ratio of the total, legal basis "in just proportion according to their relative value." If there were any towns in the county, the sum of the actual value of the real and leasehold property therein, as fixed by the assessors, was to be deducted from the total legal basis before apportioning it to the land in the county, except Baltimore-town, which was not to be included in Baltimore county. This law continued in operation until 1841. After its passage, every gen- eral assessment law of that period (the second) expressly adopted it and directed its provisions for equalization to be observed. It is a remarkable fact that the principle of equaliza- tion, which was recognized and enforced by law for more than half a century, was laid aside when the general assessment law of 1841 ' went into operation, since which time there has been no attempt to equalize the valua- tions of visible personal property or land. Of late other States have adopted systems for equalizing the valuations of land, but we abandoned the principle forty- five years ago. The effort to do equal justice between individuals is especially noticeable in the provisions of law for the assessment of different estates in the same land to the respective owners. It was directed that land in which there were successive estates be valued at what it is worth, and the proportionate equitable valuations of the different estates assessed to the respective owners. 2 1 Cli. 23. " 1785, cu. 53, sec. 7. "The Commissioners in estimatiug estates and in- terests in lands shall observe the following rules, to wit: That all lands held or enjoyed immediately by tenants in fee-simple absolute or fee-simple conditional, or executory, or fee-tail, shall be wholly valued to such tenants; and where divers persons have particular estates or interests carved out of the same inheritance, as in dower or by courtesy, or for life or years, with reversions or remainders for life, in tail or fee-simple, a just computation thereof shall be made in proportion to the value of their particular interests CXXX1X Ground rents in Annapolis, Frederick, Baltimore and its two precincts, and other towns were required to be assessed to the lessors at the rate of £100 capital for every £8 rent, 1 and for greater and less sums in like proportion, while the lessee was to be assessed for ac- tual value of all improvements made since the leasing and with the " present " value of the land after deduct- ing £100 for every £8 of rent. Rented houses in towns, in all cases where the lease was for more than three years, were to be assessed to the lessor at £100 for every £16 of annual rent reserved, and to the lessee at the actual value after deducting the capitalized value as- sessed to the lessor. 2 •therein, so that added together they shall amount to the full value of such Jands, estimated agreeably to the directions of this Act and no more ; and the said Commissioners shall, in making their computation aforesaid, con- sider the tenancy in dower, by the courtesy or for life in possession or es. tate for fifteen years, without any valuable rent reserved, generally worth half the value of the fee-simple, but they may vary from this general rule as justice may require, considering the age and health of the tenant in dower, by the courtesy or for life, or the chance of the remainder or rever- sion, or the length of the term for years and the value of the rent reserved as the case may be ; and if the tenant or person holding a particular estate or interest shall pay the public the sum valued for the estate or interest of any landlord, remainderman or reversioner, the person so paying may retain the land in his possession until he is repaid, or may have action against the lesser, reversioner or remainderman, or his heir, executor, or administrator, for the sum he shall pay, as for money paid for his use, or may deduct the money so paid, or any part thereof, out of any rent re- served upon his tenancy; bnt where a valuable full rent is reserved so that the interest of the tenant cannot be considered as valuable, the landlord, or person entitled in fee-simple, or fee-tail to the land or property from which the rent issues, shall pay on the whole value of the lands, and the tenant in such case paying the public, may retain, deduct, or have his action, as aforesaid. See similar provisions. Nov., 1779, ch. 35, sec. 29, 30 and 32;' Nov., 1781, ch. 4, sec. 23-24; Nov., 1782, ch. 6, sec. 24; Nov. 1783, ch. 17, sec. 18 ; 1784, ch. 56, sec. 18* 1797, ch. 89, sec. 41; 1803, ch. 92, sec. 40-41; Nov., 1812, ch. 191, sec. 35-36. 'Nov., 1785, ch. 53, sec. 8; which was finally repealed by 1797, ch. 39, sec. 42. It was preceded by similar provisions in acts Nov., 1782, ch. 6, sec 24; Nov., 1783, ch. 17, sec. 18, etc. '' See references, note ante. Repealed at same time. Under the Act of 1782 the capitalized value of rented houses assessed to lessors was £100 for every £12 of rent. cxl Debtors were allowed to deduct from interest bearing- debts the amount of the tax on the principal .of the debt. 1 It will appear from the foregoing that the capitalists, lenders and landlords were strictly required to contrib- ute to the expenses of the government according to- their actual worth in real and personal property, so far as it could be ascertained by the State. The present of exempting thes% classes in some respects, and shift- ing what should be their burden on those of small means, and the borrowers and lessees, is of modern ori- gin, and constitutes one of the distinguishing features of the present period. The last general assessment act of the Second Period was that of 1812. 2 It is not to be supposed, however, that there were no valuations and assessments at all from that time until the third period in 1841. From time to time special acts were passed providing for valuation and assessment in a designated county or counties, as local conditions developed the need of it. The first of these acts was passed in 1816 and applied to Anne Arundle, Somerset and Talbot counties, the last in 1840 for Alleganey. 3 During these twenty-five years •Feb., 1777, ch. 22; Nov., 1781, ch. 4, sec. 63; Nov., 1783, eh. 17, sec. 38 ; Nov., 1782, ch. 6, sec. 51 ; 1784, ch. 56, sec. 42, etc. * Nov., 1812, ch. 191. 3 The following is believed to be a complete list of these local assessment acts. Those marked with an asterisk (*) expressly directed the assessment& ordered by them to be made according to the provisions of the Act of Nov- ember, 1812, ch. 191. For Anne Arundle, Dec, 1816, ch. 22;§ 1824, ch. 35;* 1832, ch. 139* Allegany, 1824, ch. 174;* 1832, ch. 278 ; 1838, ch. 215 ; 1839, ch. 48 % 1840, ch. 103. • Baltimore Co., 1817, ch. 142;* 1822, ch. 150; 1832, ch. 130* Baltimore City, 1817 * ch. 142; 1822, ch. 150; 1833, ch. 143.|| Caroline, 1821* ch. 83; 1831; ch. 82 and 213* Calvert, 1821, ch. 24;* 1827, ch. 55;* 1834, ch. 205* Carroll, 1836, ch. 64* (The county had just been organized). Cecil, 1817, ch. 41;* 1821, ch. 60;* 1826, ch. 20;* 1833, ch. 149. cxli about sixty such local assessment acts were passed. Sometimes new Commissioners of the Tax were ap- pointed to revise the valuations, but of tener the exist- Charles, 1819, ch. 131;* 1828, ch. 194;* 1836, ch. 6* Dorchester, 1819, ch. 131;* 1825, ch. 22;* 1831, ch. 253. Frederick, 1824, ch. 132;* 1834, ch. 22* Harford, 1820, ch. 11;* 1828, ch. 175;*° 1829, ch. 137.° Kent, 1821, ch. 146;* 1827, ch. 77;* 1834, ch. 329* Montgomery, 1819, ch. 177;* 1830, ch. 58* Prince George's, 1817, ch. 41;* 1824, ch. 32;* 1834, ch. 280; 1832, ch. 257 Queen Anne's, 1819, ch. 189;* 1823 , ch. 108* 1832, ch. 263* Saint Marv's, 1820, ch 3;* 1830, ch. 22;* 1834, ch. 320. Somerset, 1816, ch. 22;* 1822, ch. 75;* (See 1826, ch. 179.) 1829, ch. 106;* 1839, ch. 51. Talbot, 1816, ch. 22;* 1825, ch. 9; 1831, ch. 118° *1839, ch. 45* Worcester, 1818, ch. 152;* 1823, ch. 198;* 1831, ch. 36* Washington, 1819, ch. 113* (Moderator and Commissioners of Hagerstown to make a separate valuation for that town); 1826, ch. 27;* 1833, ch. 144. By act 1833 the Mayor and City Council were authorized to make new assessments whenever they deemed it expedient. The ordinance of 1834, No. 32 was accordingly passed, and eventually resulted in the most com- plete assessment ever made in the city up to that time. By these acts the Commissioners of the Tax were authorized to revalue if they deemed it expedient. The Act of 1834, ch. 320, for Saint Mary's County, is a, peculiarity in its way. I have not been able to find another just like it. It provides for a valuation of the land in that county, and recognizes the system for classi- fying land, then in force under the Act of 1785. The Levy Court, to which the powers of the Commissioners of the Tax had been transferred by the Act of 1830, ch. 22, were to appoint assessors who were to value all the land in the county according to the provisions of " this act." (It did not extend to personalty.) Seven classes of land were provided for, and to one of these classes every piece of land in the county was to be assigned by the assessors. The classes were as follows : 1st class of lands to be valued at $10 00 per acre. 2nd (( i 3rd it ( 4th " ' (i t 5th " ' U i 6th a i 7th it t 8 00 6 00 4 00 3 00 2 00 1 00 It was ordered that no land in the county should be valued at more than one-third its cash value. All subsequent levies in St. Mary's County were to be made upon the valuations fixed under this act. This act authorizes the Commissioners of the Tax to revalue if they deem it expedient. cxlii ing board were authorized to do so. In some instances the Commissioners of the Tax appointed by the Act of 1812 1 continued in office more than fifteen years, and conducted, during that time, three or more assessments. Almost without exception these local assessment Acts directed that the revaluations for which they provided, be made "agreeably" to the provisions of the Act of November, 1812, chapter 191. 2 By this means that Act continued in force, governing valuations and assess- ments, and direct taxation generally, from the time it went in operation in 1813, until superseded by the Act of 1841, chapter 23. Since the Act of 1812 was an assessment Act typical of its time, since into the sys- tem found in it, the legislation and experience in the matters of direct taxation from the beginning of State taxation in 1777, may be said to have crystalized, and since it in express terms required the valuation of land to be made according to the equalization law of 1785, it will be readily understood how the adoption of that Act, by the subsequent local acts preserved for so long a time the distinctive features of the State's origi- nal system of taxation. During that portion of the present century which preceded 1841, there were for the most part no direct taxes upon other land or property for State purposes. About the beginning of this century, there was such a tax, 3 but it soon ceased. The war of 1812 necessitated its renewal, but after a short time it was again suspended. In 1822, the revenue from licenses and other sources proving insufficient for the wants of the State, the General Assembly again laid an assessment upon the counties. In doing so it proceeds according to the Act of 1 785. 4 That is to say, instead of levying a uniform 1 Nov., 1812 cb. 191. "Some few prescribed the manner of making the assessment without reference to the Act of 1812. 3 See the Act of 1803, ch. 9S. "Ch. 53. cxliii ■direct tax of so many cents per hundred dollars on all the real and personal property in the State, the legisla- ture required the Levy Courts 1 of the respective coun- ties annually, during the continuance of the act, to levy on the assessable property of their counties, clear ■of the expense of collecting, the specified sums named in the Act, to be collected in the same manner and by the same collector or collectors as county charges; and the Levy Courts were required to take security of each •collector for the faithful collection and payment into the treasury, of the treasurer of the Eastern or Western Shore, of the taxes so levied. Thus the State assessed the sum of $30,367, upon the several counties in such proportions as were deemed proper, and left it be the local authorities of each county to assess the amount allotted to their county upon the property therein, under the Act of 1785. The highest amount assessed by this Act upon any one county was $9,734 on Balti- more county, which then included Baltimore city; the lowest was $450, on Caroline county. This Act was to «ontinue in force for three years from April first, 1822. It was, however, superseded by the Act of 1822, chapter 139, which doubled the amount assessed for the next year. 2 Otherwise it was substantially the same as the Act of 1821. Similar acts passed for the years 1824, 3 1825, 4 1826, 5 apportioned among the counties, sums which aggregated $60,557, $40,980, $20,180.45, respec- tively. The proportion assessed upon each county was the same during every one of the five years, except that the assessment on Talbot county was slightly in- creased by the Act of 1824 over that of 1823, while by 'The Levy Courts, as, elsewhere stated, continued all the time in active •operation for the purpose of adjusting county expenses and levying local •taxes. 2 1822, ch. 139, assessed $60,714 upon the counties. 8 1823, ch. 15. 4 1824, ch. 159. * 1825, ch. 141. cxliv the former Act the assessments on all the other coun- ties were decreased about one third. In 1823, 1 when the assessment was greatest, the sum apportioned to- Baltimore county was $19,468, and to Caroline county $900, being respectively the largest and smallest assess- ments for that year. When the assessment was lightest, in 1826, 2 th& amount allotted to Baltimore county was $5,103, and to Caroline County $320, being again the highest and lowest amounts in the list. After 1826, this species of taxation disappeared and was only known afterward in the special tax under the Act of 1831, chapter 281, and its supplements, for re- moving free negroes from the State. This Act required the Levy Courts or County Commissioners of the re- spective counties, to levy annually for that purpose the amounts named, which ranged from $150 in Caroline,, to $3,244.66 in Baltimore county. Manner of Valuing — The mode of valuing choses in possession, or visible personal property, has always been about the same. The owner is required to return it under oath, and it is viewed by the assessors, who value it at such sums, as in their discretion, they judge it to be worth. 3 The stock of corporations, and public and private securities, or evidences of indebtedness, were valued in the same manner until the Act of 1847,* made special provision for the capital stock and bonds of Maryland corporations, since which, various pro- visions have been made for the valuation of corpora- tion stock and bonds, as will appear from the later pages of this sketch. Other kinds of intangible per- 1 Under Act 1822, ch. 139. a Under Act 1825, ch. 141 3 Slaves were always required to be valued by the assessors, according to fixed schedules established by the law, which classified and fixed rate* upon them by age and sex. ♦Chapter 252. cxlv «onal property, as promissory notes, &c, continue to be valued as above described. Land has always been required to be valued by assessors at what they deemed it worth. Even under the old equalization Acts the estimate of the assessor always entered into the valuation of each piece of property. The mode of valuing has been so fully explained in the preceding pages that there is no occasion to treat further of the subject. In order to follow property as it changed hands, so that it might be always charged to the proper persons, an Act of 1832, 1 required executors and administrators to return an annual account to the county authorities tiuthorized to receive accounts of transfers, and a later Act 2 directed executors, administrators, sheriffs and all •other officers who made any sales to return the prop- erty sold, that it might be transferred on the books. Under the early Acts, the penalties for concealment x)f property from, or false statements to, the assessors •were quite severe. 3 Exemptions — Throughout the second period exemp- tions from taxation were few. They were usually the '1832, ch. 219. s 1834, ch. 109. 'The Act of 1781, ch. 4, sec. 17, directs the Commissioners of the tax to /double the assessors valuation of the property of every person who failed to return a particular account of his property as required by the Act, and "it was further provided, "if any person shall give in a partial account ol his property, with intent that the payment of the rate upon any property 'Omitted may be avoided, such person shall forfeit the value of the property «o omitted." cxlvi same as, or similar to, those allowed by the first Act of the period. 1 This Act exempted property of the State, of any church, county or parish, public or county school, pro- visions necessary for the use and consumption of the family for the year, and wearing apparel. Collection — The collection of the direct tax wa& originally placed under the control of the Commission- ers of the tax. The sheriff was the first collector. By the earlier Acts, the Commissioners of the tax, and 1 afterwards the levy courts, were authorized to appoint collectors, and usually were not limited in their dis- cretion ; but the ordinary practice was to appoint the- sheriff. The Act of 1777, 2 appointed the sheriff of each county, collector of the State tax in his county, and the Acts of several succeeding years, either appointed the sheriff directly, or suggested him to the commissioners.* The first direct taxes on property were paid in semi- annual instalments. 4 But, after the rate had decreased, in consequence of the termination of the war with Great Britain, the practice was discontinued, and the- entire tax for each year was required to be paid on or before the first day of October, of the year for which it ■Feby., 1777, ch. 21, sec. 1. By the time of the Act of Nov., 1812, ch_ 191, exemptions had been extended to colleges, crops and produce in the hands of the person whose land produced the same, plantation utensils and working tools ofmechanics and manufacturers, goods, wares and merchan- dise, and all homemade manufactures in the hands of the manufacturer, all ready money, grain and tobacco, and all licensed vessels. •Feby., 1777, ch. 21, sec. 27. s See Nov., 1779, ch. 35, sec. 34 ; Oct., 1780, ch. 25, sec. 28, which direct the Commissioners to appoint the "sheriff or Such other person as they may- judge ^proper and more sufficient, to be collector." Nov., 1783, which requires the Commissioners to appoint the sheriffs as collectors, 1784> ch. 56, sec. 19, &c. 'See Acts of 1777, 1779, 1780, 1781 and 1782. cxlvii was levied, in default of which, payment was ordered to be enforced immediately after that date. 1 The reason for the semi-annual payments may have been, in part, the amount of the tax, which, being high, could be more readily paid by the people in instalments than at one payment; but it is probable that the more potent considerations were the urgent needs of the State, which made it desirable to obtain part of the tax in the spring or early summer, and the fact that these taxes were payable partly in kind, and the bacon, grain, &c, were needed for the immediate use of the army, besides which, provisions would be likely to be in better condition and less liable to loss or waste when received twice a year, than if received but once a year and stored for future use. The urgent need of the State for money led to the offer of discounts in the first tax Acts passed. These discounts were by no means equal to the round deduc- tions now offered by Baltimore city, nor were they equal to the discount at present allowed for the prompt payment of State taxes. But the payment of taxes in advance of the time at which they were due, was con- sidered and treated as a loan to the State, for which interest, at the rate of six per cent, per annum, was allowed from the time of the advance of the money by the taxpayer, until it was due. 2 Indeed, the State sought in this way to obtain advances, not only on the taxes for the current year ; but to secure the advance of considerable sums of money to be credited upon the taxes of the persons advancing them from year to year thereafter, until satisfied. During the second period, payment of taxes was primarily enforced by distraint. Land could not be. ■See Acts of Nov., 1783, ch. 17 ; Nov., 1784, ch. 56, &c. "1777, ch. 31, sec. 29 ; Nov., 1779, ch. 135, sec. 51. cxlviii sold for taxes due upon it, if there was on it sufficient personalty to pay the tax upon distraint, or if the tax could be otherwise recovered. 1 If the tax could not be otherwise recovered, the Commissioners of the tax were authorized to sell and convey the land of the delinquent, after giving thirty days' notice. 2 Among the local laws of the period, was one which probably suggested some of the acts of later times. It provided for letting out the collection of taxes in the different districts of Baltimore county to the lowest bidder. 3 This law was only in force a couple of years. The pristine days of virtue and heroic patriotism were not free from official corruption. Indeed the rapacity and dishonesty of some of the sheriffs and other collectors, who oppressed and plundered the 1 "And be it enacted, That in all cases where the collector can find no effects on the land belonging 1o the party chargeable with the assessment sufficient to pay the same, if distressed, and the rate cannot be otherwise recovered, by reason of non residence or otherwise, it shall and may be law- ful for the commissioners of the tax in the county where such lands lie, after thirty days public notice, to cause so much of the said lands, or of the timber thereon to be sold at public auction, as may be necessary to pay the assessment," Nov. 1779, ch. 35, sec. 81. Oct. 1780, ch. 25, sec. — . Nov. 1781, ch. 14, sec. 25, Nov. 1782, ch. e, sec. 25. The act Nov. 1783, ch. 17, sec. 19, is the same except a slight change in language which considerably limits the authority to sell i. e., "if rate cannot be otherwise recovered by reason of the owner residing out of the State, or the collector not knowing in what county of this State the owner doth reside." the land may be sold. Nov. 1784, ch. 50, sec. 36, adds to the usual provision, the "commissioners or a major part of them, may convey the land so sold to the purchaser or his heirs." 5 To aid the enforcement of local taxes the act of 1797, ch. 90, provided, "That in all cases hereafter, where any lands in any county of this State may become charged for the payment of county taxes, and the collector of such county can find no personal property in the said county, liable for or chargeable with the payment of the same," he was to return a list of such land or lands to the commissioners of the tax, who were to advertise and sell it. 3 1838, ch. 301, repealed by 1841, ch. 207. cxlix people on the one hand and defrauded the State on the ■other, created much complaint and bitterness, and finally became the subject of special legislation. 1 License Taxes — License taxes began to be levied very early in the history of the State. In 1780, a law 2 ■entitled, "An Act to provide for sinking the quota re- quired by Congress, of this State, of the bills of credit emitted by Congress," after providing for the exchange ■of Continental bills of credit of the new issue for those •of the old, at the rate of one dollar of the new issue lor thirty-three and a third of the old, imposes a tax in cash or in kind on property ; a considerable list of import and export taxes; a marriage license tax of twenty-five shillings, and an annual ordinary license tax •of five pounds. 3 The licenses were issued, and the taxes •on them collected by the county clerks. These license taxes, or similar ones, have existed ever since. The Act of 1797, chapter 38, to secure the collection of the duties imposed upon marriage, directed that the Governor and Council furnish annually, blank forms of marriage licenses to the county clerks, who, at the end ■of the year, were to return those remaining on hand, and pay twenty-five shillings each for those not re- turned. Our present tax on billiard tables appears to have had its origin in the above-mentioned Act of 1780, which imposed on them an annual tax of £15. By a later Aet, 4 the tax was fixed at $50 per year, and made a license tax, and still later it was raised to $100 per year. 5 1 Oct., 1780, eh. 21. 'June, 1780, ch. 8. 3 By Act 1815, ch. 68, all parts of Acts requiring license for sale of strong fceer or cider, were repealed. 4 1798, ch. 113. « Dec., 1824, ch. 64. cl The brokers' license tax began about 1819, when ar> Act 1 to " increase ' the revenue of this State,' imposed a, tax of $500 per annum on every broker dealing in bank notes or lottery tickets, and required every, such broker to obtain a license from the Governor. By Acts of 1821/ and 1826, 3 the manner of issuing lottery licenses, and the rates for them, were changed. The former Act fixed the rate at $200 in Baltimore city, and $50 in the counties, and directed that the licenses be issued by the clerks of the counties, or the clerk of the Baltimore City Court. By the latter Act, the tax was changed to $500 in th3 city, and $200 elsewhere. The auctioneer's license was originated by the Act of 1827, chapter 111, which required the Governor and Council annually to appoint not more than twenty auc- tioneers in Baltimore city, and provided that every auctioneer in the city should pay to the treasurer of the Western Shore a license tax varying in amount according to the kind of auction business done, a gen- eral auctioneer being required to pay $50 per annum; an auctioneer of books, maps and prints, $150 ; of fur- niture, wearing apparel, lands, lots of grounds and tene- ments, servants, slaves, carriages and horses, books,, stationery, maps and prints, $300 ; horses and carriages- only, The State Treasurer was to issue the license. All per- sons, besides the twenty auctioneers so licensed, were forbidden to sell at public auction in Baltimore. The traders' license began with the A.ct of 1827, ch. 117. It was originally established at $12 per annum. Goods sold in the packages in which they were imported were expressly exempted by the original act. Retail 1 1818, ch. 210. Under this Act, every broker was required to give bond in the penal sum, of $30,000, to well and truly use, &c, the office, &c, of broker, &c, without fraud, collusion, &o. 2 Ch. 232. 8 Ch. 67. cli liquor dealers were required to pay $4.00 additional,, and, where the license was to sell liquor at a tavern or eating-house, $18.00 was to be paid in addition to the $12.00 traders' license. The present mode of fixing the amount of the traders' license tax was introduced in 1832, by an Act 1 which proportioned the tax to the amount of stock on hand at the principal season of the year. The inauguration of the present method of fixing the rate of ordinary licenses, by the annual rent value of the premises occupied, was by two acts of the same year ; the first 2 of which provides for a tax of five per cent, on the excess over $500, of the annual rent or rent value of taverns ; 3 and the second 4 directs that no tax on tavern keepers shall be more than $100 or less than $18, per annum, including the license tax and the excess of rent. I have thus minutely called attention to these acts,. because they constitute the beginnings of our present license tax system, and because the character impressed by them, upon the various kinds of licenses which they created, continues for the most part to the present time. Other Taxes — Corporation Taxes— One of the most noticeable differences between the Second Period and the present is the almost total absence from the former of special laws for the taxation of corporations. They were subjected to taxation just as natural persons, and the same methods of valuation, assessment and collec- tion applied to both. Taxes on shares of stock were charged to and collected from the owner. Our present system of valuing and assessing stock in Maryland cor- porations and collecting the tax on it began with the present period. However, from an early day there 1 1831, ch. 262. '1831, ch. 262. 3 In addition to license tax. 4 1831, ch. 248. clii were, in the acts granting and renewing charters to banks, provisions which required them to pay annually to the State Treasurers, a bonus, usually 20 cents per $100 of paid up capital, for the benefit of the public schools. 1 This, though sometimes called in the acts a tax, is not strictly so, but rather a consideration for the charter privileges. Other taxes were levied by various Acts at different times. In 1780, a tax of Id. per gallon was imposed on homemade spirits made from sugar, molasses, or grain; 2 in 1817, 3 five per cent, on prizes drawn in lottteries; in the same year, by the Act which became a part of the ■constitutional history of the United States, 4 a stamp tax on the circulation of all banks in Maryland not •chartered by the Legislature ; by other Acts, twenty- five per cent, of the excess over $1,500 per annum, of the fees of the clerks of the counties and of Baltimore City Court, of the Courts of Appeal of the Eastern and Western shores, and of the Eegisters of Wills and Reg- ister in Chancery ; 5 fifty cents on every plaintiff bring- ing a suit. 6 The first tax on officer's commissions appears to have been under the Act of June, 1780/ which imposed a tax of ,£10 on all commissions and letters of marque and reprisal. 1 See, 1813, ch. 122, sec. 7-10 ; 1827, ch. 42 ; 1833, ch. 98 ; 1834, chs. 210 -and 274, &c. s 1780, ch. 8' (June session.} By the same Act an import tax of 2d. per gallon was imposed on all imported spirits. 3 1817, ch. 154. 4 1817, ch. 156. Held void as to Bank of United States and its branches. "Supreme Court of the United States in McCulloh vs. State of Maryland et al., 4 Wheaton, 316. 6 1823, ch. 146, and 1824, ch. 190. Repealed 1826, ch. 246. 6 1825, ch. 195. ' Chap. 8. cliii Income Taxes — An income tax was imposed in the- first year of the State.' Wages, salaries, annuities and profits of trade were all subjected to a tax of 5s. per £100. Stipends and annuities secured to be paid by any person living in this State were expressly included. Stipends and annuities issuing out of, or chargeable upon, lands were excepted. 2 A similar tax was laid by the Act of 1779; 3 but the amount the was increased to £2 10s. per .£100 of salary, wages, &c. The income taxes- under the Acts of 1777 and 1779 were both to be assessed by the officers who valued and assessed property. After 1780, when the Act of 1779 went into operation, the in- come tax of the second period disappears. A tax of one per cent, on the value at which all goods, wares, merchandise and effects whatsover sold at auction in Baltimore city was imposed by the act which first levied the auctioneer's license fee. 4 The reservation of one-fifth of the passage proceeds of the Baltimore and Washington Railroad (now Wash- ington Branch B. & O.), in consideration of a State sub- scription of |500,000, was not a tax, though sometimes- called such. 5 1 Feb., 1777 ; Chap., 22 ; sections, 5-6. 2 The act also taxed wages, earnings and profits. The sections in ques- tion read as follows : Section 5—" Every person having any public office of profit, or an annuity, stipend, or annuity secured to be paid by any per- son living in this State (except such as issue out of land or are chargeable- on the same) shall be assessed 5s. per £100, received yearly therefor." Section 6—" Every person praticing law or physic, every hired clerk acting without commission, every factor, agent or manager trading or using commerce in this State shall be assessed 5s. for every £100 of clear yearly profit." '1779; ch., 35, sec, 48. 1 1837 ; Chap., 111. The duty on auction sales, like the auctioneers' license tax, still exists. It now varies, according to the articles sold, from 10 cents per $100 to 75 cents per $100. The original act appropriated $20,000, annually, out of the proceeds of the tax laid by the act, to deepen and improve Baltimore harbor. This appropriation was afterward sus- pended until the eity should pay for damage done by the mob in certain riots. 5 1832, ch., 175. cliv Local Taxation— It must be remembered that direct taxation for local purposes his never been suspended ^ince the beginning of that species of taxation. The county rates continued to be levied, assessed and col- lected while direct taxation by the State was suspended. After 1813, the local taxes were laid upon the basis fixed by the valuations made under the Act of November, 1812, ch. 191, and the local assessment acts supplement- .ary thereto. 1 It would naturally be supposed that the people, hav- ing been kept familiar with direct taxation by the con- stant exaction of such a tax for local purposes, would have submitted more readily than they did to its re- newal by the State. Originally there was no power in the county officers "to levy taxes lor any purpose except as temporarily -authorized by special Acts of Assembly. The onerous- ness of the work, imposed upon the General Assembly by a practice that made lt> necessary to obtain a special act to authorize the adjustment and payment of the or- -dinary county charges, led to the Act of 1780, chapter 26, which authorized the county courts to Impose the as- sessments to defray the ordinary county charges, and to provide for Its collection. This act which was origin- ally passed for six years, was continued until the Act of 1794, chapter 53, permanently established the levy courts, which, under the provisions of the act, consisted in each county of the justices of the peace of the county or any five of them. It was substantially the eame as the Act of 1780. The Act of 1798, chapter 34, directed that the governor and council appoint and commission seven justices of the peace ia each county to be justices of the levy court, which was invested with the powers before 1 See ante. civ conferred upon the justices of the peace at their respec- tive meetiugs as levy courts of their counties. 1 All through the second period there was a constant tendency to increase the authority and discretion of the county officers. Up to 1836, county aid to the poor by means of appro- priations, to relieve needy individuals, was, for the most part given by authority of special Acts of As- sembly "for the relief" of the particular person or persons to be aided. The act would name the person or persons, appropriate a certain sum, (usually designating it a." pension " or " out pension "), and authorize and di- rect the Levy Court or County Commissioners to levy 'The Acl of 1779, cu. 35, (Nov.), directing provision to be made for the local expenses of the current year, will give some idea of the manner in which expenditures were authorized and provided for prior to the Act »f 1780, and also of the tendency toward the more liberal policy of increasing the discretion of the local authorities which was developed under the last named act. It enacts, " That the justices of the several counties shall, and they are hereby empowered and required, at their November adjourned csurts, or March courts at farthest, to adjust the public expenses of their several •counties, including an allowance for the poor, and apportion the same ac- cording to the late assessment of property, in each county respectively and the clerk of each county shall, and he is hereby enjoined and required to make out a fair copy of the rate so made by the justices aforesaid, to be by him delivered to the sheriff of the county, who shall, and he is authorized and required to collect the same in the same manner the public assessment hereinbefore mentioned is directed to be collected." The Act of Oct. 1780, ch. 26, provides as follows : Sec. 1—" Be it enacted by the General Assembly of Maryland, that the justices of the several •county courts, or any three of them, in court sitting, shall, and they are hereby authorized and required, at their respective June and August courts, ■to adjust the ordinary and necessary expenses of their several counties, in real money, estimating Spanish milled silver dollars at seven shillings and six pence each, and for the payment thereof (with the same commission for collection as may be allowed by the public) to impose an assessment or rate on all property within their county sufficient to defray such county charge ; and the said justices shall apportion such assessment or rate according to the last valuation of property on their county, and the person or persons appointed to collect the public assessment or rate in their county, shall col- lect the same; and every collector, before he acts as such, shall give his bond, (payable to the State) with good and sufficient securities, such as the ■said justices shall approve, in double the sum to be collected, with condi- clvi and collect the amount appropriated. 1 As time went by, the number of these pensioners increased so consid- erably as to occupy a great deal of the time of the Leg- islature. This, together with the fact that the local- authorities were much better fitted to judge of the' wants of the poor in their neighborhoods, and to give prompt and effective relief, prompted the tendency to confer larger discretionary powers upon the counties. This growth of local institutions is evidenced by the transfer to the counties of the power and duty to pro- tion," &c. The condition required to be inserted in the bond is set forth in the act. By sec. 2 the county clerk is required to keep an accouDt of "such, assessment or rate " and annually within one month after the assessment to transmit a copy to the governor and council, " for their information, of the gross amount of the property in such county, and the amount of the tax for the county expenses." The collectors were required, "after the first day of October annually, to collect the said rate in the same manner the public assessment in such county shall by law be directed to be collected,, and shall render account thereof and pay the same to their respective county courts, on or before the first day. of November annually." * * * The term " public assessment " was applied to the State tax as distinguished from the local or county assessment. By sec. 5 the sum which the justices might assess in any one year for making or finishing " necessary repairs to the court-house of their county" was limited to one hundred pounds "real money," for like repairs to the county prison, one hundred and fifty pounds,. " for full and complete repair of any one bridge in their county " to fifty pounds, and " for the erecting and building of any one new bridge in their county," to two hundred pounds. 1 See A. A. 1832, ch. 266. " Be it enacted by the General Assembly of Maryland, that the levy courts or county commissioners, as the case may be, of Harford, Montgomery, Charles, Frederick, Cecil, Queen Ann's and Prince George counties, be, and they are hereby severally authorized, di- rected and empowered, at their annual meetings, so long as they shall see cause, at their discretion, to levy and assess on the assessable property of said counties for the use of the several persons hereinafter mentioned, any sum of money not exceeding in the several sums annexed to their respec- tive names." Then follow the names of the pensioners in each of the- counties named. A. A. 1827, ch. 27. Orders that the Levy Court of Cecil County assess- and lew a sum of money, not exceeding $75 per annum, for the use and support of the person named in the act, " so long as she remains in the Baltimore Hospital," if they shall see cause to do so. These are samples of a number of similar acts which appear in the- voluines of the Acts of Assembly of those times. clvii Tide for the relief of their poor without waiting in every case for special mandatory enactments by the Assembly. The first steps in this direction were made by passing, from time to time, sundry local laws con- ferring a limited authority upon the county commis- sions" or allowances to the poor of their respective gioners or the trustees of the poor, as the case might bo, of certain counties, 1 to grant at their discretion " pen- counties. Finally in 1836, 2 an act was adopted which, after reciting the saving of time, &c, it was expected to effect to the Legislature, authorized the levy courts or county commissioners of the different counties to pro- vide at their discretion for the poor of their counties by allowing them pensions, and to levy and collect the amounts necessary to pay the same. One of the factors in the development of local self- government in the counties was the creation of the boards of County Commissioners and the consolidation in their hands of the powers and duties of the Com- missioners of the Tax and of the Levy Courts. 3 This change, like almost every one in the growth ot local insti- tutions, was gradual, being affected in the counties, one by one, under special local acts. 4 The first of these 'For Charles co., 1825, ch. 150. Caroline co., 1829, cb. 47. Anne Arun- del Co., 11:29, cli. 03. Worcester co., 1829, cli. 161, &c. * 1835, cii. 307. " Wnereas, much, of Hie time of the Legislature is occu- pied in considering applications from indigent persons in the ptjicrn] coun- ties in this Slate, and in the patsige of laws for their relief, which might be saved by vesting in the several Levy Courts or Boards of Commission- ers, as the case may be, in the several counties, full power to receive such applications and grant the necessary and appropriate relief, Therefore," &c. "Originally, the County Commissioners had few, if any, other powers than those which f. 11 to them as the successors of the Levy Courts and Commissioners of the Tax. They were usually incorporated by the Acts which created them. 'Baltimore co., I82fi, ch. 217. IL.r'ord co., 1827, eh. 81. t'ecilco., 1837, eh. 45. Anne Arundel co., 1828, ch. 21. To 1-3 appointed ty Gov. and Council. **** clviii acts appears to have been that of 1826, ch. 217, which provided for the election of Commissioners for Balti- more county. From time to time, similar provisions were made for the different counties, until, at the end of the second period in 1841, as will appear by the note, the Levy Courts and the Commissioners of the Tax had been superseded by boards of County Commissioners in eleven of the counties, while in seven of the remaining counties the powers of the Commissioners of the Tax were transferred to the Levy Courts. In two counties the Levy Courts were ordered to be elected by the peo- ple, and in Carroll the Commissioners of the Tax were made elective. These changes produced a much greater revolution in the management of county affairs, and, indeed, in the administration of some State affairs, than would at first glance be supposed, and contributed largely to the growth of local self government in the counties, and to the power of the counties to resist and thwart the State authorities. The Levy Courts had been appointed by the Governor and Council, and the Commissioners of the Tax by the General Assembly ; but the County Com- missioners were elected by the people, as were also now the Levy Courts and Commissioners of the Tax in some of the counties. As the matters of valuation, assessment, levy and collection for State as well as county taxes were now, for the most part, in the hands of officers elected by the people, popular opposition to State taxation could, and in the beginning of the third period actuallydid, im- Washington co., 1829, ch. 21. Allegany co., 1829, ch. 25. Calvert co., 1830, ch. 28. Appointed by Gov. and Council. Talbot co., 1830, ch. 38. Worcester co., 1838, ch. 96. Montgomery co., 1838, ch. 128. Appointed by Gov. and Council. Dorchester co., 1838, ch, 125. Queen Anne's co., 1828, ch. 14. ] Pr. George's co., 1829, ch. 88 I Comiu'ra of Tax abolished, and Charles co., 1830, ch. 25. y powers transferred to Levy St. Mary's co., 1830, ch. 22. | Court. Caroline co., 1830, ch. 134. J Calvert co., 1833, ch. 259. j Ditto ; but Levy Court to be Kent co., 1838, ch. 305. J elected by the people Carroll co., 1842, ch. 179. Cornm'rs of Tax to be elected. clix pede the execution of the State tax laws, and in some counties even nullified thein for two or three years. Close of the Second Period. — When general direct taxation upon property according to ascertained value was first imposed in Maryland, it was for the pur- pose of prosecuting a popular war which had been entered upon with an enthusiastic determination to prosecute it to a successful issue, and a general wil- lingness to submit to sacrifices and hardships in order to do so. Therefore, the necessity for laying the tax was in the main, cheerfully acquiesced in. When, after an interval of immunity, State taxation upon property was renewed in 1813, it was agaiu in support of a war which was immensely popular in this State. And in neither case were the people, when it was first proposed to lay the tax, preseuted with an exhibit of colossal liabilities to dampen their ardor and to dismay their hope. They knew only that they were called upon to make a present contribution to meet the present neces- sities of an enterprise of which they heartily approved. The assessments upon the counties by the acts of 1821 and several succeeding years were so insignificant as not to excite the apprehension of the taxpayers. But the closing years of the second period found quite a different state of affairs. The people were un- expectedly confronted with a debt of such magnitude as to excite their doubts as to the ability of the State ever to pay it. The State had incurred this debt by negotiating loans in order to make prodigal and even reckless appropriations to various water-way and rail- road enterprises, not one of which was an assured suc- cess when direct taxation to meet the interest became imminent, and by guaranteeing the obligations of such enterprises. At the time these liabilities were incurred by the State, the people had been taught to believe that the works of .public improvement aided by them clx would promptly become sources of revenue and that the State would not have to do anything more than lend her credit, for which sin ill favor she would be handsomely repaid. Nor were they permitted to sup- pose that the State would have to pay the large sums for which she had become responsible, much less that it would become necessary to provide the means to pay by direct taxation. Consequently, when the people learned the real situation, they were very reluctant to submit to the taxes necessary to meet the obligations of the State. . The General Assembly hesitated and delayed, postponing the inevitable in hope of finding some way to escape it. Hesitation and delay embolden and devel- oped the opposition to taxation. What had been at first only hinted and suggested was now avowed and pro- claimed, and a furious war against direct taxation by the State, and even in favor of repudiating the public debt, set in. Meanwhile, the friends of State credit were urging immediate taxation.' Had their advice been followed in the first instance, the imposition of a moderate tax would have sufficed to produce the revenue necessary to relieve the treasury, and would have prevented the de- velopment of discontent into resistance. As it was, the delay encouraged the discontented and eventually re- sulted in serious resistance. It also resulted in accumu- lations of unpaid interest, which necessitated a higher rate of tax when the Legislature finally decided to resort to direct taxation. 1 One of these was George Peabody, who had been sent to Europe hy the Stale, to negotiate still another loan. While he was there, the crash in American securities came. In a letler of March 8, 1841. he staled that Ihe English bondholders were anxious as to whether the Stale would pass a tax bill, and complained that the Legislature was getting new loans in- stead of providing taxes lo pay the dividends; and he declares that, "to sustain the credit of the State in Europe, there is no other mode to adopt but immediate taxation." Sec ScharlT's Hist. Mc'. clxi Third Period, 1841-1S86— It was under these unpro- pitious circumstances that the Third Period, and with it the present system ;; of taxation began. This Period was ushered in by the Act of March, 1841, ch. 23, which was the first general assessment law in twenty-eight years. It departed widely, in its methods, from all the assessment laws that preceded it, and was the proto- type of those which have followed. The assessors were appointed by the act itself, which named them for every county. 1 Under^both acts since 1852 they have been appointed by the' Governor. Then, as now, the assessment districts were designated in the statute, 2 consisting at that time of two wards each in Bal- timore City, making six districts in the city; and in some of the counties, several election districts were constituted an assessment district, making two or more assessment districts to a county, while some counties constituted a single assessment district each. • The assessors were directed to meet and consider in- structions prepared by the Treasurer of the Western Shore, 3 after which they were to proceed with their du- ties, which were to be begun on the first Monday in May, 1841, and completed by the first Monday in October of of the same year. 4 Their returns were to be made to the County Commissioners or Levy Courts in the counties and to the Appeal Tax Court in Baltimore City. 5 The collectors, who were to be appointed by the County Commissioners or Levy Courts in the counties, 6 ] Sec. 3. The Act of 1852, ch. 337, sec. 3, also named the assessors. •Sec, 2. 3 Sec. 5. 4 Sec. 19. s Sec. 19. "Except in Prince George's, Talbot and Anne Arundel counties, for which the Act nanwd the collectors; but provided, thnt in case of death, the Levy Court of Prince George's, or the County Commissioners of Auue Arundel or Talbot, should appoint a successor. clxii or the Mayor and City Council in Baltimore City, 1 were consituted assessors, after the completion of the valua- tion under the act, and for succeeding years, to value such property as had escaped the general assessment or came into existence or was acquired afterward, 2 and it was made one of their special duties to inquire dili- gently for such property. The County Commissioners, Levy Courts and Appeal Tax Court were authorized to make reductions for loss by death or destruction. 3 The Appeal Tax Court of Baltimore City was created by this act. 1 This body was and still continues, a board rather than a court, exercising most of the functions formerly pertaining to the County Commissioners and before them to the Commissioners of the Tax and the Levy Courts of the counties. The Resister of the Land Office was directed to make return of certificates ready for patent, 5 and the clerks of the County Courts were required to return to the Levy Courts, County Commissioners and Appeal Tax Court respectively, lists of alienations of land 5 and household property. For the first time, exemptions were extended to in- corporated literary and charitable institutions. 6 Judg-, merits, bonds, mortgages, promissory notes and other se- curities belonging to any bank or other incorporated institution, the stock of which was subject to taxation by this act, were also exempt. 7 1 Sec. 45. "Sec. 41-44. 8 Sec. 39. 4 Tlie same provision exists at the present time. 'The siinie provision exists at the present time. •Uy 1845, eh. 31'J. limited to $10,000. '1 think this the first tax law which mentions corporation stock by name. clxiii The exemption, in case3 where the property assessed to any one person did not amount to $200, according' to the valuation, was subsequently repealed and the limit fixed at $50.' Except as to negroes the oath of the assessor was to be a sufficient valuation of personal property. 2 Negroes were still valued according to schedules fixed by law,* as they were also under the Act of 1852. In these provisions there is much that is similar to the tax acts of the former period; but, aside from the ordinary general provisions such as one would naturally expect to find in every assessment law, the differences are marked. In respect to direct taxes on visible per- sonal property and land, and it is principally in omis- sions that the law of 1841 and the subsequent acts of the present period differ from all that went before. There is no provision looking to the equalization of val- uations, either between individuals or counties. It is left entirely to the assessors in each county to fix the value of the land in their county, and the same kind of Bilverware may be valued at a different sum in every county or in every assessor's district in the State. Like- wise there is no provision for the assessment of succes- sive estates in the same property to different owners, or for the payment by the lessor in a ninety-nine year lease of the tax on his interest in the land, or yet for a local supervision and control of the assessors, such as was exercised under the old acts by the Commissioners of the Tax. The law of 1841, which was entitled "An act for the general valuation and assessment of property in this State, and to provide a tax to pay the debts of the State," imposed a tax of twenty cents per hundred dol- lars 3 upon the valuations to be made by the assessors. 1 Dec, 1841, ch. 110. 'Sue. 15. 8 Sec. 9, Mch. 1841, ch. 23, bcc. 53. clxiv By a supplement an additional fifty cents per hundred dollars was added. 1 The rate was fixed upon an esti- mated basis of $300,000,000, which was expected to yield a revenue of $-156,000 per annum ; but the valua- tion resulted in a basis of only $190,723,783, which was reduced on appeal to $177,139,645. This result was, of course, a great clisippaintment to the Legislature and State officers; but it could have been avoided if the act of 1841 had recognized and applied the principle of the act of 1785,* which, after fixing the average taxable value of land in each county, assessed upon the counties the gross sum needed by the State ; and the accomplish- ment of their object would have been facilitated if they had followed still further the example of the laws of the former period by fixing the rates at which cer- tain classes of tangible personal property were to be valued. In some of the counties the valuations and assessments were not made at all that year; and, to give them further opportunity, the time for completing the work of the assessors, and for collecting the tax thereon for 1841, was extended by an act passed early in 1842. 3 But the spirit of defiance was abroad, and in seven counties the State tax was not levied, nor were collec- tors appointed. It is worthy of notice that the County Commissioners, who were, in most of the counties, re- quired by law to levy the State tax and appoint collec- tors,were now elected by the people of their counties, as were several of the Levy Courts, which still existed, while the old Levy Courts and Commissioners of the Tax, who liad previously performed these duties, were appointed, the former by the governor and council and the latter by Acts of Assembly. This change doubtless greatly 'Dec. 1841, ch. 328. »Cli. 53. Deo. 1811, ch. 116. clxv Tendered the enforcement of the law of 1841, since the Co,unty Commissioners and Levy Courts would naturally represent the hostility and resistance of the constitu- ents who elected them, or, even if disposed to impose and collect the tax, would be more timid and hesita- ting in their efforts to do so than officers who did not ewe their appointment to the people, but held place from the State authorities who were demanding the «nforceinaut of the law. For several years, through difficulties, obstructions and resistance, the State government continued to struggle for the enforcement of taxation. As the people and local authorities of the counties recognized and acquiesced in the necessity of a revenue to supply their local wants, and, indeed, would have felt severely the inconvenience which would have result- ed from the suspension of local taxation, the county rates . continued to be assessed and collected as usual. The Legislature took advantage of the fact that local taxation was a felt necessity, and by an act passed March 3, 1843, 1 required that the State taxes should not be separated from the county taxes, but collected together with them by the same collector and under the same bond in each collection district. The same Act required the County Commissioners or Levy Courts of counties in which •collectors had not yet been appointed under the Act of 1841 to appoint collectors immediately. But 1844 found the law still a dead letter in some of the counties. For three years the county authorities had defied or ignored it. However, the end was at hand. Vigorous and effective measures were provided by the Act passed March 1, 1844, 2 which authorized the Governor to appoint collectors for the counties in which '1843, cli. 269, see. 4. 'A. A., 1843, ch. 208. clxvi there were none appointed by the local authorities. 1 This he was to do on or after May 1st following the passage of the Act. But, if by June 1st, there was no collector appointed by the Governor, the State Treasurer was to appoint an agent to perform the duties of collec- tor in such county until a collector was appointed. It was also provided 2 that, in case of the failure of the Levy Court or County Commissioners of any county or of the Mayor and City Council of Baltimore city to levy the State tax under the Act of 1841 and its sup- plements, the Governor should appoint a board of three persons, for such county or city, to levy the tax and place it in the hands of the collector for collection. 3 By the same Act, all State taxes were declared liens on the real estate of the person from whom they were due, 4 ministerial officers making sales, by judicial pro- cess or otherwise, were required to pay out of the pro- ceeds, before making any other application of them, all taxes due the State from the person whose property was sold; 5 and it was made the duty of all executors, admin- istrators and guardians to pay as preferred debts, to the exclusion of all other dues, except necessary funeral ex- penses, all taxes due and in arrear from the intestate or testator, on property held as guardian; and, upon fail- ure of any one so to do, his bond was to be put in suit and the whole amount of taxes so due, with interest thereon, recovered." Section 14 of the Act, after reciting that in several of the counties the taxes for 1841, 1842 and 1S43 were not levied and collected, and collection of all in one year would be onerous, directs levy and collection of said 1 A similar provision exists at present. See Rev. Code, Art. 11, sec. 33. 'A. A., 1843, eh. 208, sec. 12. 8 Similar to the present provision. See Rev. Code, Art. 11, sees. 25, 26. * Sec. 6. See Rev. Code, Art. 11, sec. 46. • Sec. 7. •Sec. 11. clxvii unpaid taxes to be made during the three years next fol- lowing — i. e. 20 cents in 1844, 25 cents in 1845 and 25 cents in 1846. Of course this was in addition to the regular current taxes for these years. This act appears, together with the moral effect of the election of Gov- ernor Pratt, which took place in the same year with the passage of the law, to have finally overcome the diffi- culties which had so long set at naught the authority of the State, and submission to direct taxation by the State was enforced throughout the Commonwealth. It is with pride that we record that there is not upon the Statute books of the State a single enactment look- ing toward or intimating a thought of repudiating one cent of her debts. For several years, beginning with 1841, the books abound with laws imposing new taxes and devising means to enforce them. A singular fragment of the legislation of that time and one which would have hardly have stood in the Court of Appeals, the application of the rule of equality contained in the Fifteenth Article of the Declaration of Rights, is an act of 1842, 1 which laid a tax of $2.50 per $100 worth, on all the silver plate of any person to whom more than $50 worth of such property was as- sessed, and which established a specific tax on watches, to be regulated according to a schedule set forth therein. 2 Taxes on Stock — The most marked and, perhaps, the most important feature added to the tax laws in the be- ginning of the Third Period is that found in the special provisions for the taxation of shares of stock in corpo- rations and of the bonds and evidences of indebtedness of States, cities and incorporated institutions. The first step toward our present mode of taxing stock was made ■Dec. 1841, ch. 297. The general tax rate was 25ets on the $100. 'Ibid, sec. 2. $1 on every gold lever watch; OOc-ts on every other gold •watch; 25cts on every silver watch or like value; 12icts ou every other watch. clxviii by Section 17 of the Act of March 1841, 1 which re- quired that the president, or other proper officer of in. corporated companies, return the stock owned in such companies by non-residents of this State, and pay the tax charged on such owners. This provision was evi- dently suggested by the difficulty in ascertaining the stock of non-residents for assessment, and in collecting the tax on such stock alter the assessment was made. But in 1842-' the same mode of collecting was applied to all stock in Maryland corporations, whether owned by residents or non-residents, by an Act which directed that the corporation semi-annually withhold the amount of the State tax on all its stock, out of the dividends, and pay the same to the collector of the county or city in which the corporation was situated, accompanied by a statement showing the respective proportions in which the tax was paid for the several stockholders. It is noticeable that these Acts do not provide for any valuation; but the tax is imposed upon the valuation made by the general assessors under the act of March 1841, that the stock was still charged, or assessed, di- rectly to the owner; like any other property on the books, that the tax was not demandable from the com- pany unless a dividend was declared, or at least earned, and that county and city taxes were not within the acts, but continued to be collected from the share- holders. From time to time, all three of these features were supplied. First the Act of 1847 ch. 26G 1 directed the Levy Courts, County Commissioners or Appeal Tax Courts, as the case might be. of the county or. city in which was situated any incorporated institution char- tered by this State, to value the stock of such corpora- tion, after giving opportunity to the president to pro- ' Ch. 23. » Dec. 1841, ch. 281. Supplement, 1843, ch. 289. 8 Sec. 5. clxix duce evidence of its value. The assessed value of the- real and personal property of tlie corporation was then to be deducted from this valuation of the stock, and the remainder was to be the valuation of the capital stock for the purposes of State, county and city taxation. An account of every such assessment was directed to be sent to the State Treasurer. Thus was provided an as- sessment for both State and local taxes. But in the mat- ter of the collection of the taxes on capital stock the- counties were still at the disadvantage of having to col- lect the tax from the shareholder. It was also required that the corporation pay the State tax on its capital stock whether or not it had declared any dividends or earned any profits. This was quite an advance on the Act of Dec. 1841, which made the liability of the corporation dependent on the declaring of a dividend, and on the Act of 1843, which made it the duty of the company, where no dividends were declared, to withhold the tax out of the profits and pay it over to the Treasurer. To promote the collection of county and city taxes it was directed' that all corporations furnish to the Levy Courts, County Commissioners or Appeal Tax Court of each county, or of the City of Baltimore, in which any stockholders may reside, a list of the same, so far as the residence of stockholders is known, with the amount of ' stock held by each ; but such list need not be furnished to any county, &c, with which such corporation has ar- ranged for payment of county or city taxes on its capi- tal stock without recourse to its individual stockholders. The law continued in this shape from 1848 to 1872. 2 In the latter year, the General Assembly adopted a law' providing for the annual assessment of shares of Etuck in companies incorporated by this State. As- 1 Sec. 10. » 18--.2, c .. 337, sees. 17-19. 1864, cli. . 391 1872, cb. 419. a 18;2,ch. 'JU. clxx National Banks were not incorporated by the State, they were provided for by another Act of the same session. 1 But the latter Act differed from the former in that it required the National Banks to make annual returns to the comptroller, of the number of shares of the capital stock of the bank, and the par value of the same. The comptroller was directed to notify the officers of the National Banks, of the amount of the tax on the share of the capital stock, and the same was to be retained out of the dividends due shareholders, and paid to the treasurer of the State by the first of July, annually, thus making the taxes on National Bank stock, payable in the same way as the taxes on stock of domestic corporations. The Act of 1874, chapter 483, which repealed and re-enacted Article eighty-one, "Revenue and Taxes" of the Code, embodied, with some change, the foregoing provisions concerning stock of corporations. 2 The offi- cers of corporations, including State and National banks, were directed to make to the county commissioners or Appeal Tax Court of the county or city in which the corporation was located, annual returns of the stock held by non-residents of the State, and the county and -city taxes on such stock were directed to be collected from the corporations, which in turn were authorized to charge it to the owner. 3 This relieved one of the diffi- culties in the way of the collection of local taxes. But it was not until 1878, that the counties and the city were put upon the same footing with the State, as to taxes on stock. By the act which created the office of Tax Commissioner,* it was directed that the taxes 1 1872, ch. 172. 8 1874, ch. 483, sees. 83, 84, 87, 145-148. 3 1874, ch. 483, sec. 87. * 1878, ch. 178. clxxi assessed for State, county and municipal purposes, upon .shares of capital stock, be collected from the company. 1 The Act of 1862, chapter 261, was intended to subject to municipal taxation in Baltimore, all personal prop- erty located or found in the city, even though the resi- dence of the owner might be elsewhere. An Act of 1865, 2 excepted from this rule stocks, bonds, mortgages, certificates or other evidences of indebtedness; and in 1867, thejpolicy of 1862 was entirely reversed by the adoption of the new constitution, one of the clauses of which directs that personal property be taxed in the county or city where the owner bona fide resides for the greater part of the year, for which the tax may be levied, and not elsewhere, except upon goods and chat- tels permanently located, which are required to be taxed in the county where they are so located. 3 The result of this constitutional provision is to transfer from Baltimore city to Baltimore county, a considerable part of the taxes paid by corporations located, doing business and earning profits in Baltimore city. The Maryland system of taxing shares of stock has continued to develop by gradual processes. As already stated the Act of 1872 directed the Comptroller to assess shares of stock at their " true market value." In the Act of 1874' the provisions of the two Acts of 1872, 5 with ■1878, ch. 178, as amended by 18S0, ch. 20, sec. 151: "Aud the taxable value of such respective shares of stock, or shares in such banks, corpora- tions or joint stock companies, owned by residents of this State, and tax- able within this State, shall, for county and municipal purposes, be valued to the owners thereof, in the city or county in this State, in which such owners shall respectively reside, but the taxes assessed upon said respec- tive taxable values, of such respective share of stock, or shares, shall be collected from such bank, corporation or joint stock company, and when so paid shall be charged by such bank, corporation or joint stock company *o the account of such stockholders or shareholders, respectively. ■' 1865, ch. 119. 8 Constitution, Art. 3, sec. 51 . 4 1874, ch. 483. *Chs. 90 and 172. clxxii reference to the stock of domestic corporations and of national banks, respectively, are consolidated into one. section, 1 and it is directed that shares of stock be assessed at "the true value thereof in dollars and cents."' But section 88 of the same Act, directed that where any corporation held, as part of the investment of its capital or assets, any of the stock debt of this State, or any stock of any other incorporated institution of this State, and had paid taxes on the same, then a credit to the extent of the tax so paid should be allowed in the settlement of the tax on the capital stock of such corporation. 2 The attempt to tax both the shares of stock and the real and personal property of corporations was resisted, and this resistance resulted in a decision by the Court of Appeals that to tax both is double taxation and unconstitutional. 3 This decision was rendered in 1877. In 1878 the statute was made to conform to it by providing that the assessed value of the real property belonging to any corporation, shall be deducted from the aggregate value of its shares of capital stock. The present mode of assessing and collecting taxes on shares of stock of domestic corporations and national banks located in this State, took its final shape under the Acts of 1878, chapter 178, and 1880, chapter 20. The former Act created the office of "Tax Commissioner of the State of Maryland," imposing upon him the duty of assessing " for State purposes tlie shares of stock in all banks, State or national, banking associations or other incorporated institutions, or companies incorpo- rated under the authority of this State, or located or doing business therein" * * and directs that he shall have all the powers and perform all the duties ia ' 1874, ch. 483, sec. 145. 9 See amemliix nt 1S80, oh. 312. 8 Co. OonnnisMOEeiB of Frederick Co. vs. Farmers and Mccliarica Bank of Frederick, 48 Md. 1S8. clxxiii reference thereto, which have heretofore devolved by- law upon the comptroller." The commissioner is re- quired to certify the assessed value, as fixed by him, of the shares of stock of each corporation, to the County Commissioners of every county where any stockholders in such corporation reside, and to the Appeal Tax Court of Baltimore City, if any stockholders reside in said city. An appeal from the assessment of the commissioner, to the comptroller and treasurer, is given. Railroads which are subject to the tax on gross re- ceipts, are excepted from the provisions of the laws for taxing stock. The mode of making the valuation ns prescribed by section 151 of the Act of 1878, was somewhat amended by the Act of 1880. As the process can best be under- stood by the text of the Act, the section regulating it is quoted in full in the note. 1 i "At the time of making the returns* of stockholders to the County Com- missioners and Appeal Tax Court of Baltimore City, as required by law the president, or other proper otficer, of every bank or other incorporated institution incorporated under the laws of this Slate, or doing business therein, and of every joint slock company doing business in this State shall furnish to the County Commissioners of each county in which such bank or other incorporated institution, or joint stock company, shall own or possess any real property, or to the Appeal Tax Court of Baltimore City, if such bank or other incorporated institution, or joint stock company shall own or possess any real property in said city, a true statement of such real property, situated or located in such county or city, and such real property shall be valued and a-sessed by such County Commissioners and Appeal Tax Court, respectively, to the s-iid bank or incorporated institu- tion, or joint stock company, so owning the same; and said County Commis- sioners and Appeal Tax Court shall give duplicate certificates of such val- uation and assessment to such president or other officer, who shall trans- mit one of such duplicate certificates with his return to the State Tax Com- missioner; and State, county or city taxes shall be levied upon and paid by such bank or other incorporated institution, or by such joint stock com- pany, on such assessment, in the same manner as the same are levied upon and paid by individual owners of real property in such county or city. The respective taxable values of shares of stock in such banks, corporations and juint stock companies, shall be ascertained by the State Tax Commis- sioner in the manner following : ITe shall deduct the assessed value of such ***** clxxiv The effort to tax stock of foreign corporations, (i. e., corporations of other States and countries,) held by residents of Maryland, has been very unsuccessful. It has been almost impossible for the assessors to find such stock. The unsatisfactoriness of our system in this direction have been in marked contrast with the grati- fying results of our plan for taxing stock of domestic corporations. real property belonging to the said respective banks, corporations or joint stock companies, from the aggregate value of all the shares of such respect- ive banks, corporations or joint stock companies, and divide the residuum by the number of shares of the capital stock, or shares of such respective banks, corporations or joint stock companies, and the quotient shall be the taxable value of such respective shares for State purposes, and when the valuation and assessment of the shares of the capital stock, or shares of such bank, corporation or joint stock company shall have been finally de- termined or made for State purposes, the State Tax Commissioner shall cer- tify to the County Commissioners of each county, where any of such re- spective stockholders or shareholders may reside, and to the Appeal Tax Court of Baltimore City, if any of said stockholders or shareholders reside in said city, the assessed taxable value of such respective shares of stock or shares so ascertained, as aforesaid, and the taxable value of such respective shares of stock or shares in such banks, corporations or joint stock com- panies owned by residents of this State and taxable within this State, shall for county and municipal purposes, be valued to the owners thereof in the county or city in this State in which such owners shall respectively reside but the taxes assessed upon said respective taxable values, of such respect- ive share of stock, or shares, shall be collected from such bank, corporation or joint stock company, and when so paid shall be charged by such bank, corporation or joint stock company to the account of such stockholders or shareholders, respectively ; but it is expressly provided that all railroad companies, worked by steam, incorporated by or under the laws of this State, and doing business in this State, shall respectively be subject to an annual State tax of one-half of one per centum upon their respective gross receipts within this State, which shall be paid and collected in the manner provided by the Act of 1874, ch. 408; and the real and persona] taxable property belonging to such respective railroad companies shall be subject to county and municipal taxation in this State in the respective counties and cities in which such property is located ; and where such respective railroad companies are subject to such gross receipt tax for State purposes, their shares of stock and real or personal property shall not be subject to taxation for State purposes, and where such real and personal property of such respect- ive railroad companies is subject to county and municipal taxation, their- respective shares of stock shall not be subject to county and municipal taxation.'' clxxv Pnblic, Corporation and Private Securities — Early in the present period the tax on the public debt of the State was regulated by special enactment, which speci- fied the rates at which the different classes of bonds should be valued and assessed, according to the interest they bore. 1 The law of 1845, which remains substan- tially unchanged, 2 directs the State Treasurer to levy the Stater taxes on all the public debt of the State of Maryland liable to taxation, and to collect the same by retaining it out of the interest falling due on the first day of July in each year. The Register of the city of Baltimore is required to set apart and pay over to the Treasurer of the State, on the first day of July in each year, out of the funds in his hands for payment of the interest becoming annually due, the State tax on the stock of the city of Baltimore. 3 The provisions on this subject are the same as those contained in the Act of 1844,' which established this mode of collection. The Act of 1882, ch. 482, provides that, " The president, or other proper officers, of every corporation actually engaged in the business of manufac- turing in the city of Baltimore, or in any county where the tools and machinery of manufacturers have been exempted from county taxation," may have the same valued by the Appeal Tax Court, or County Commis- sioners, who shall furnish duplicates of such valuation, one of which shall be forwarded by such officer with his return to the State Tax Commissioner, who shall deduct the amount of such valuation from his valuation of the stock of such corporation, "and the valuation of shares thus detetmined shall be that for all shares taxable in the city of Baltimore for city taxes, ■or for county taxes, if the county wherein the corporation is located has •exempted manufacturers' tools and machiuery from taxation." As to deduc- tions for taxes retained by State treasurer out of Stock, or paid by the city of Baltimore on city stock, owned by corporations, and for State and local taxes paid by other corporations on their shares of stock owned or pos- sessed by the corporation seeking the reduction, see 1886, ch. 112. •See 1844, ch. 172, which applied to non-residents. 1845, ch. 170, which extended the rule to residents. 'See Rev. Code, Art. 11, sec. 95. The rate3 are — That part of pub. debt which bears interest at 6 p. ct. to be vald. at par " " " " 5 " $85 " 4i " $80 u ■■ » » 3 « |g4 » Rev. Code, Art. 11, sees. 90, 92. * Chap. 234. clxxvi The Act of 1847,' provided an effective mode of valuing securities issued by Maryland corporations, and collect- ing State taxes on such securities. The law then enacted continues in existence with scarcely any alteration. It requires every company which Las issued any interest- bearing bonds, certificates, or other evidences of debt, to make annual returns thereof to the Comptroller, and, out of the interest due the holders thereof, to pay the State tax thereon to the Treasurer. The return must be made and the tax paid on the first day of July in every year. It also requires such companies to furnish a complete list of the holders of such securities, to the County Commissioners or Appeal Tax Court of the counties or cities in which they reside. Such of said securities as are held by non-residents are not taxed in this State. 2 Private securities, as promissory notes, bonds of indi- viduals, &c, and book accounts, are assessed like other personal property, and the tax collected in the same manner, i. e., they are- valued by the assessor and the rate on them collected by the county or city collector. The law requiring judgment, decrees, alienations and property in the Lands of administrators and guardians to be reported by the clerks of courts and registers of wills to the county commissioners and Appeal Tax Court, was established by the Act of 1847, 3 and still exists. The Act of 1874 4 directs that "the public debt of this State, stock loans of the city of Baltimore, the capital stock and bonds, certificates or other evidence of debt, bearing interest, issued by incorporated companies or institutions of this State, shall be excluded from the 1 Oh. 2fi0. see. 9. •Rev. Co e, Art, 11, sec. 86. Under the decisions of the U. S. Sup. Ct., they cannot be mj taxed. * Chapter 266, «*. 12. * Chapter 4S3, Bee. 97. Rev. Code, Art. 11, see. 97. clxxvii assessment in the several counties and city of Balti- more, so far as relates to State tax, the paymeut\>f said tax thereon being hereinbefore provided for." Officers' Commissions. — The present tax on officers' commissions was imposed in 1844. 1 Though somewhat varied as to amount, the law has continued about the same ever since. The original Act directed that there- after the Governor should issue commissions separately to the respective officers, except in the cases of justices of the peace and coroners, who were to receive certifi- cates of appointment from the clerks of courts to whom their commissions were sent. The tax varied from two hundred dollars on the commission of the clerk of the court in Baltimore, to one dollar each on Justices of the Peace, due upon reception of certificate. The tax now ranges from three hundred dollars on the commission of the Sheriff of Baltimore city, to two dollars on each justice of the peace. 2 Income Tax. — An Act of 1841 3 established an income tax of two and a half per cent, on incomes, salaries, em- oluments and profits, except when the amount was less than five hundred dollars, and except salaries of judges and clergymen and incomes from property taxable for the benefit of the State. The County Commissioners, Levy Courts and Mayor and City Council of Baltimore, were directed to appoint an assessor of salaries for each assessment district. Upon any one's making oath that his salary or income did not exceed a certain sum, it was to be assessed at that sum. The Treasurer of the Western Shore was required to retain in the treasury '1843, eh. 284. A tax on officers' commissions had existed early in the history of the State. See Act June 1780, eh. 8. J 1878, ch. 23. Rev. Code, Art. 11, sees. 128, 131. 8 1841, eh. 325. This is the second income tax which hoi existed in Maryland. See Feb. 1777, ch. 22. clxxviii the tax on the salaries of officers, and every employer was required to retain the tax out of the salary of each employee liable to it, and pay it to the collector, under a peualty of twice the amount of the tax, if he ne- glected to do so. The same year, 1 a tax was laid on income from ground rent, at a rate per centum equiva- lent to what would be the tax at 25 cents per hundred dollars on the principal of which the ground rent is the annuity. But this Act was afterward repealed and the income tax on ground rent made the same as on other incomes, except that the owner of a ground rent was not allowed the five hundred dollar exemption. 2 The income tax was of short duration. Taxes on Commissions of Trustees, Receivers and Executors — The commissions allowed to receivers and trustees by Courts of Chancery or County Courts were subjected to a tax of one-tenth. 3 The act which imposed this tax continued in force from the time of its passage, 1845, until 1864, when it was repealed.* In the same year^that the tax was imposed on com- missions of receivers and trustees a similartax of one- tenth was laid upon the commissions allowed executors and administrators. 5 By an Act of 1864 6 the, tax was re- duced to five per cent., but the following'year^the As- sembly restored the former rate,.which continues tcTthe present time. Other Taxes—The present collateral inheritance tax originated in 1845. 8 1 Der. 1841, eh. 329. a 1843, ch. 29<». 8 1844, ch. 187. 4 1864, ch. 408. 5 1844, cK 184. •1864, cK 372. 1 1805, el>. 127. See Rev. Code, Art. 11, sees. 98-103. * 1844, ch. 237. See Rev. Code, Art. 11, sees. 104-124. clxxix A peculiar tax termed " An annual tax upon the State officers of this State was imposed by an Act of 1844.' It taxed the clerks of courts, including the clerks of the two courts of Appeals, and the Register of Wills and Eegister of Chancery. It varied from thirty dollars on the Register of Wills of Howard District to nine hun- dred dollars on the clerks of Baltimore County and City Courts. The familiar stamp law was passed the same year. 2 It imposed a stamp tax on every bond, obligation, sin- gle bill or promissory note above the sum of one hun- dred dollars. An Act of the- next year, 3 extended the law to every bond or obligation with collateral con- dition where the penalty was above one hundred dol- lars, every mortgage for over one hundred dollars, every deed and bill of sale for over two hundred dollars and every release of mortgage. To the people this was one of the most odious acts of the period, and was hated and denounced as long as it continued in force. The plan by which savings banks and corporations were authorized to assume by agreement the local taxes due by depositors and stockholders, so as to relieve the city and counties of collecting from individual depos- itors and stockholders, and by which the bank or cor- poration and public officers were allowed to fix by agreement the amount of tax to be so paid, is a feature of the legislation of the present period. 4 State taxes on deposits are required to be paid by the institution out of the interest due depositors. Of course the Act of 1878 which authorized the collection of county and city taxes on stock direct from the companies abrogated, the above provisions in so far as stock is concerned. License Taxes.— In 1842 license taxes were multiplied and the rates increased. This tendency had developed 1 1844, ch. 302. •1844, ch. 230. a 1845, ch.193. * 1847 ch. 266, sects. 8, 10. Rev. Code, Art. 11, sec. 85. clxxx during the latter part of the Second Period. Some of the license charges fixed that year were enormous. The Assembly recognized this fact, and reduced the exces- sive rates at the next session.' Besides additional brokers' licenses, the Assembly of 1842 imposed license taxes for theatrical and other en- tertainments, for exhibitions of curiosities, and for stud horses and jackasses. 2 The license laws developed pretty much along the lines begun in the latter part of the Second Period and in the first part of the Third Period. They are contained in Article Twelve of the Kevised Code, and in the acts of Assembly subsequent to the Code, except the provis- ions relating to the license of foreign insurance com- panies, which are contained in Article Forty two, &c. An act of 1839 3 laid a tax of two per cent, on the pre- miums received by the agents of foreign insurance ' companies. This tax was subsequently substituted by a license tax of two hundred dollars per annum. 4 In 1872' the office of Insurance Commissioner was created, and all foreign companies were required to obtain li- censes from the Commissioner, for which each company was required to pay an annual tax of three hundred dol- lars 6 and one and a-half per cent, of gross amounts of premiums received by such company. Tliis law was amended from time to time by various Acts, and the en- tire law was re-enacted by an Act of 1878 7 . The tax is now two hundred dollars and one and a-half per cent. 1 The Act of December, 1841, ch. 282 fixed stockbrokers' license at $1,000 per annum, and exchange and bill brokers' at $3,000 eacli. Tlic Act of 1842, ch. 257 reduced them to $50 for bill brokers, $75 for stockbrokers and $100 for exchange brokers. These rates still exist. 'Dec, 184!, ch. 194. 8 Ch. 24. * Code 18S0, Art. 20, sees. 27-30. * 1872, ch. 388. * New two hundred. 1 Ch. 106, amended 1880, ch.387. clxxxi of premiums actually collected, received or secured in this State, deducting only the amount of losses actually paid in this State. Formerly licenses were granted to run to the first of May following the date of issue, but an Art of 1886' di- rected that all " licenses * * shall be issued for the space of twelve months from the date of issuing the same, except," &c. Collection of Taxes.— We do not find in the present period any provisions, such as existed in the early part of the Second Period, for the payment of taxes by in- stalments, except that taxes on stock of corporations payable to the State by the companies were formerly required to be paid semi-annually, 2 but now these taxes also are paid annually ;* and the income tax of 1842, 4 which, though under the terms of the original Act was payable annually, was changed by the succeeding As- sembly so as to make it payable semi-annually. 5 In 1848, discounts for prompt payment of State taxes, were first allowed. 6 By an Act passed March 1, 1844, 7 State taxes were for the first time, made primarily liens on real estate. Then, as now, all taxes were declared liens on the real estate of the party from whom they were due. The same Act orders that "whenever any sales of real or personal property are made by any ministerial officers under judicial process, or otherwise, all taxes due from the party whose property is sold, shall first be paid and satisfied;" 8 and it is made the duty of all executors and 1 1886, ch. 507. • Dec. 1841, ch. 281. and 1847, ch. 266, sec. 6, Code 1861, Art. 81, sec. 93. ' 1874, ch. 483, sec. 83. '060.1841,011. 325. 5 1843, ch, 294. « 1847, ch. 266, bcc. 1. For payrnt. by Sept. 1st, 5 per cent. ; by Oct. 1st, 4 per cent. ; by Nov. 1st, 3 per cent. ' 1843, ch. 203. See Rev. Code, art. 11, bcc 48. 8 Sec. 7. clxxxii administrators, "to pay all taxes due from their de- cedents, as preferred debts, and to the exclusion of all others except the necessary funeral expenses;" and the- section is made to apply to guardians also. The above mentioned provisions of this Act are still in force. 1 The existing provisions for the collection of taxes can be found in article eleven of the' Revised Code, in the Acts of Assembly since 1878, and in the various local laws applicable to the different counties. The mode of collecting taxes on the stock and bonds- of domestic corporations, State and city stock, and from savings institutions, has been already explained. The collateral inheritance tax, and tax on executors and administrators commissions, are collected by the registers of wills both in the city and the counties, and license taxes by the clerks of the Circuit Courts in the counties, and the clerk of the Court of Common Pleas in Baltimore city, except license taxes on foreign insurance companies doing business in this State, which are paid directly to the State treasury. ' Eev. Code, art. 11, sees. 63 and 64. MR, PESRCE'S DISSENT TO SEC, 22, SRT 81 The following memorandum of dissent from Mr. Pearce reached the printer too late to be incorporated as a foot note in the body of the report, as had been intended, and therefore appears as part of the appendix : I do not concur in that feature of section 22 of article 81, as revised by this Tax Commission, which requires the County Commissioners where they believe the neglect of a taxpayer to return the schedule is wilful, and with the intent to evade payment of taxes, to add from twenty- five to fifty per cent, to the valuation of the taxable property which should have been returned. Section 17 of article 81, which requires the assessor to- idd ten per cent, to the valuation of the taxable property upon failure to return, goes as far in this respect, as I am willing to go, and I regard the extension of this feature in section 22 as oppressive. I ought to add that the principle upon which both sec- ions 17 and 22 proceed, namely, the addition to the valu- ttion of the taxable property may, in my judgment, be held obe ultra vires, as not in fact the imposition of a penalty 'or omission of the taxpayer's return, but as the assess- nent and enforced collection under the guise of a penalty, of oore than the offenders constitutional proportion of taxes, tnd before that principle is enacted into law, I think it hould be subjected to thorough scrunity by the Judiciary Jommittee. This feature of the proposed revision ot taticle 81 has seemed to me of sufficient importance to tistify this note expressing my dissent. James Alfred Peaece. TAXATION IN THE COUNTIES. It gives us pleasure to acknowledge our obligation the local officers of a number of counties for useful infc mation. received from them. Besides the communicatio published in the succeeding pages, we have also hea from time to time from Alleganey, Washington, Frederic Carroll, Prince George's, Charles, Anne Arundle, Ball more, Harford, Queen Anne's and Wicomico counties. We regret that our repeated applications failed to elk any response from the other counties of the State. Montgomery County. Boclcviile, Md., January 2G, 1887. C. M. Armstrong, Esq., Dear Sir — I enclose herewith tables showing the ai nual levies in this county from 1875; also the valuatioi {or assessment) of property from 1875. * * * The a sessments for 188(5, I will send when I can get hold of tl book, and you can then fill up the appropriate column. I have gone back to 1875, so as to get the basis for U years before the assessment of '70 for comparison. The increase of valuation of real estate has been vei moderate, 1537,222; of personal property, $03,707; win the private securities have decreased $214,457, making tl net increase of the basis only $340,741 in eight years, $43,342 per annum. [These figures will be slight clxxxv shanged when the basis for '86 is obtained.] The valua- tions of land proper (per acre, that is) has not, probably- increased at all, and the increased valuation of real estate is on account of "improvements," i. e. buildings. During ill this time, however, the market price of the land has in- sreased steadily and largely, its productiveness is greater than ever before, and large areas have been brought under cultivation which at the time of the assessment were in "old fields." Personal property must also have increased very far beyond what appears from the books of the County Commissioners. The shrinkage in private securities is probably accounted for by their conversion from notes, etc., into mortgages. From my own observation and the opinion of others, I should say that the basis of Mont- gomery County should not be less than eleven millions of dollars. Certainly there should be annual valuations of personal property, and some method of getting at the increased value of land. For the counties, too, I think the levy should be made in advance upon estimates. Those who work for the county always expect to be kept out of their money from six to twelve months, and charge accordingly. Ten per cent, of the county levy could be saved by levying in ad- vance, provided the laws for enforcement of collection were so changed as to meet the demands as they arose. I don't know as to other counties, but here we cannot ascertain whether there are over due taxes standing against a given piece of property, and if a collector should happen to lose his books, very serious difficulties might arise. A record of this kind should be kept, and the col- lectors compelled to make full statements monthly. I have ventured to suggest one or two matters of detail j but they have probably always suggested themselves to clxxxvi your mind; and with the report of the Clerk to the Com- missioners, I hope you will find the tables useful. I shall he glad to furnish particular information whenever you «all upon me. * * * Tours most truly, Philip D. Laied. We are much indebted to Mr. Laird for the above prac- tical suggestions, which have been incorporated in our re- port, and also for the tables, which indicate for themselves the labor and pains bestowed upon them. Caroline County. Office of County Commissioners, > Denton, Caroline County, Md. ) John P. Poe, President Maryland Tax Commission: Your circular of blank date to the Board of County Commissioners for Caroline County, asking for information in reference to the valuation of the taxable property and •our opinion of the existing system of taxation, received. It is a question of considerable importance at this time, in view of another assessment. To the best of our ability we will answer your several questions : First. The taxable basis, or total assessed value of pro- perty is $4,181,609. Real estate as assessed (partial estimate), $3,681,609. Personal (estimated), $500,000. Second. The annual revenue of the county, for county purposes, averages for the past ten years about $38,000. M.'iitgomery County, Md.— Levies of Taxes from 1875 to 1883, inclusive. Valuation m each FOR WHAT PURPOSE LEV'D 1875. Out Pensioners Indigent Insane Alms House Inquests Pauper Coffins "'Circuit Court and Jail 'Orphans' Court Registration....... Election Justices of the Peace Constables Roads and Bridges Pub'ic 'Schools Taxes Overpaid t Corporate Towns Printing Sundries t Collectors Discount Surp us County Commissioners Vaccination County Bonds Hawks. Owls and Crows Ass'ors & B'd Control & Review Total Cou-ity Levy.. State Levy 2,480 00 2.450 00 3,622 20 99 00 420 00 11,456 01 1,070 25 789 00 125 00 302 03 asm 5» 14,218 39 15,000 00 1,141 15 1,492 25 64 50 4,132 16 Total Levy Basis of County Levy 1 . Rate of County Tax.... Basis of State Levy Rate of state Tax 1,143 41 1,745 90 300 00 1,108 31 82,670 00 2,450 00 2,313 90 112 50 466 00 i i,:eo 92 1,045 65 500 00 168 00 411 45 388 37 13,366 91 15,000 00 1877. $2,715 00 1,956 25 2,330 30 77 50 461 50 13,176 61 942 00 375 00 202 00 474 00 480 7~> 14,003 37 15,000 00 1878. 1879. 83,015 00 2,210 83 6,814 20 H'7 00 570 50 13,973 81 1,415 45 401 00 200 00 401 00 492 85 16,532 88 15,000 00 $3,535 00 1,056 25 2,337 20 32 50 422 00 10.68i 71 1,268 90 730 00 203 00 535 45 612 30 11,689,08 14,000 00 1,156 34 1,916 75 45 00 3.717 76 1,940 52 1,633 00 1,059 34 1,703 50 447 00 4,564 91 1,321 00 857 32 1,268 10 1,267 63 2,035 45 1,018 07 2,736 50 4.897 20 1,179 90 1,760 38 1,677 80 3,352 67 1,476 41 950 52 1,454 90 for Slate and County Taxes. Rate of Tams jor each year, 1870-1886, inclusive. 300 00 504 33 3,436 44 300 00 28 18 2,332 00 300 00 300 00 62,431 15 15,645 40 64,684 14 13,263 53 66,051 25 14,270 18 73 994 88 14,915 14 78,076 55 77,946 67 80,321 43 7,834,499 00 79 11-16 rts. 7,702,253 00 20 5 16 cts. 7,816.815 00 834 cts. 7,688,434 00 17% cts. i,468,110 00 78 cts. i,272,571 00 174 cts. 88,910 02 8,381,689 00 884 cts. 7,954,743 00 18% cts. 59,016 46 14,804 88 73,861 34 8,288,627 00 714 cts. 7,895,938 00 18 % cts. 53,740 00 2,008 65 2 502 00 120 00 40 1 50 11,605 88 1,236 91 620 00 3 .'3 00 411 65 571 64 15,871 30 | 14,01)0 00 l 229 81 I 1,346 08 1,600 00 300 00 3,047 25 1,679 04 ! 1,416 75 '3,523 '75 3,680 00 2,822 09 4,070 45 201 50 373 00 10,759 05 991 55 600 00 362 00 299 39 786 42 13,784 84 18,100 01 4 95 1,401 23 1,610 00 2 50 3.385 22 1,700 00 288 05 1,328 00 1882. 4,565 00 1,960 00 3,582 44 121 00 390 00 10,338 10 987 43 750 00 405 00 310 40 627 66 13,66 70 20,915 07 403 85 1,357 27 1,400 00 1884. 1885. 1886. 4,950 00 2,110 00 3,343 90 81 66 329 74 8,750 88 972 60 . 475 75 1 446 00 ! 215 63 I 55-3 65 17,142 00 I 23,285 00 ! 67,161 64 14,751 84 81,913 48 1,207 25 3,316 13 1,708 00 33 80 1,274 15 173 50 1,789 95 1,400 00 $4,780 00 8,240 28 2,598 50 48 00 3.36 00 10,762 48 1,039 85 I 641 75 I 446 O0 238 41 538 35 16,275 77 23,150 00 ! 87 32 ! 2,186 47 I 1,457 00 i $4,850 00 2,857 07 2,281 60 214 76 234 50 8,671 36 1,057 50 699 37 520 00 225 07 391 48 19,492 35 23,025 00 257 49 3,364 81 1,445 00 3,718 25 1,708 00 1,369 CO 133 50 3,785 03 1,930 00 314 59 1,667 90 61 50 3,655 40 1,930 00 $5,170 00 2,359 16 3,083 90 65 10 282 50 9,287 27 875 40 731 75 487 00 175 72 262 25 21,162 84 22,165 50 223 96 2,401 71 1,450 50 30 85 3,720 52 1,930 00 1,086 85 1,706 80 $67,760 48 14,855 00 : $68,386 40 14,973 00 $82,615 48 [ $83,359 40 266.048 00 $8,339,752 00 $8,416,788 00 814 cts. 81J4 cts. 814 cts. 867,6 9 00 $7,922,666 00 ' $7,985,598 00 8% cts. 18% cts. I 18% cts. $72,977 26 15,122 23 $74,585 20 15,438 20 i $76,028 08 16,678 01 $88,099 54 | $90,023 40 \ $91,706 09 8,464,202 00 86'4 cts. 8,065,218 00 18% cts. 8,647,560 00 86'4 cts. 8,233,700 00 18% cts. 8,814,851 00 864 cts. 8,361,603 00 18;4cts. $78,959 58 15,749 42 $94,709 00 $8,847,013 00 894 cts. $8,399,693 00 18% cts. * By Act of 1878, Ch. 303, the County Commissioners are directed to levy in advance a sufficient amount to pay Jurors and State's witnesses when they are dischargedfrom attendance upon Court Prior to this Act, the Orders were cashed by "shavers," at a heavy discount. The average advance Levy .is about$4,500. f Two-thirds of the taxes levied in Corporate Towns in the County are paid to the Town Commissioners. X Includes insolvencies. Montgomery County.— Valuation of Property from 1875 to 1886, inclusive. Sliowing the Basis upon which State and County Taxes were levied in each year. COUNTY BASIS. 1875. 1876. 1877. 1878. 1879. 1880. 1881. 1882. 1883. 1884. 1885. 1886. 5,929,458 1,180,170 734,871 5,959,300 1,170,417 687,098 6,278,343 1,234,124 955,743 6,277,087 1,213,644 893,958 6,350,801 1,307,364 830,463 6,293,074 1,301,827 711,147 6,366,121 1,339,565 744,066 6,440,800 1,317,833 758,155 6,526,773 1,310,783 736,646 6,699,419 1,336,002 712,139 6,815,465 1,258,100 741,386 6,907,987 1353,665 685,460 7,834,499 7,816,815 8,468,110 8,384,689 8,288,637 8,366,048 8,339,753 8,416,788 8,464,303 8,647,560 8,814,851 8,847,112 STATE BASIS. 5,939,458 1,180,170 593,725 5,959,300 1,170,417 558,707 6,378.243 1,334,424 760,304 6,048,762 1,213,644 693,337 6,022,476 1,307,368 666,078 6,064,749 1,201,827 601,075 6,137,696 1,212,715 572,355 6,312,475 1,208,733 564,390 6,298,448 1,210.783 555,987 6,461,669 1,336,003 536,029 6,584,140 1,258,100 519,363 6,675,962 1,353,565 470,171 7,703,353 7,688,424 8,272,571 7,954,743 7,895,938 7,867,651 7,932,666 7,985,598 8,065,218 8,233,700 8,861,603 8,399,698 clxxxvii Third. From direct taxation on real and personal, $37,- •215. From corporations within the State, railroads, banks, banking association, steamboats, etc., $785. From game license, paid over to school commissioners, ^223. From stocks, bonds, etc., other than Maryland corpora- tions, . Fourth. The assessed valuation is less than the real value. Fifth. Property is unequally valued. Sixth. There is a great complaint of unequal taxation. Seveuth. There is a general complaint of unequal valu- ation. Eighth. The tax rate varies from 80 to 92 cents on the $100, for county purposes. Ninth. Taxes are levied before the expenses are incurred. Tenth. In answer to this question, much may be jaid, and doubting our ability to answer a question of so much importance, we have delayed our reply longer than we should have done. In the first place, we are of the opinion that the present system of assessing and taxation is full of errors, and be- longs to the past ages, and should not be continued. We will give yon a few items of the errors in the present sys- tem that are the most common and every-day complaints. We will assume that the assessment made in 1 876 was in all respects just and equal. The question then arises, how Jong can or will it remain in that condition? The answer is plain, when you consider the great improvements going on anions the better class of farmers and in real estate generally. clxxxviii The progressive and successful farmer and business man are always busy studying to iraproye bis property, and in the course .of ten years will make considerable improve- ments, increasing the value of his real estate ten, twenty, or thirty dollars per acre, with no increase of taxes, except for buildings, and they oftener not assessed than assessed. On the other hand, you find an equal number of unsuc- " cessful farmers, who have little idea of improving their property. On the contrary, their property is gradually run- ning down, buildings going to decay, fences down, and at the end of ten years is worth much less than at the time of makiug the assessment. Yet their taxes remain the same during the term of ten years. This certainly is unequal taxation. The same is true in reference to their personal property, only more applicable to both parties ; each party having at time of assessment four or six horses or mules, valued at $100 or $125 each, after a certain time and age we all know that year by year they become of less value, and at the end of ten years are worth but little more than one half the original valuation, if as much. During all these ten years the tax has remained the same. What is said of horses and mules will apply to all farming imple- ments, only to a much greater extent; in fact, they are al- most valueless at the end of ten years. Here again comes in the injustice of the present system. Again, A and B attend a public sale of personal pro- perty, and become the purchasers of horses, mules, cows, etc.; if the party making the sale intends to remain in the county, he will make and present to the commissioners a sworn statement of property sold, with price and to whom sold. He is credited with the amount, or so much as is necessary to wipe out his assessment; the same is then transfeired, or charged to A and B. But before the com- missioners make their annual levy in June, they, A and B, have sold and disposed of the said property so purchased, not knowing or thinking the transfer had been made, they clxxxix take no steps to correct the assessment until they have been called upon by the collector for their tax. From year's end to year's end, at every regular meeting- of the commis- sioners, they are besieged to correct errors of this and others of similar nature. On the other hand, if the party selling- in- tends leaving the county, he does not trouble himself about making transfers, leaves his assessment standing, to beagain and again entered upon the tax book, and again and again returned by the collector as erroneous. As a further proof of the numerous erroneous assessments, we would state that there has been returned to the present board of County Commissioners nearly $2,500 as erroneous and uncollect- able taxes, assessed for the year 1885. This shows the un- certainity of the amount to be realized any year from the annual levy. On our parr, we are trying to remedy the evil by a thorough examination of these returned erroneous assessments. We will state a case that recently came under our notice. A widow, formerly of this comity, now a non-resident, owned in 1876 over 300 acres of land, assessed at $2,080, and thought to be worth at the time of assessment about $5,000. The owner, owing to the dilapidated condition of land and buildings, received but little rent. Consequently she became anxious to sell; her agent found a purchaser for 175 acres; 50 acres sold for $500, 125 acres for $l,(i00, including the buildings. The 50 acres were transferred to the purchaser, and the widow received a credit of $250, leaving her assessment $2,730, upon which she has paid taxes, the purchaser of the 125 acres having neglected to have his deed recorded, and is not now on the assessment roll. The party purchasing the 50 acres owns a farm ad- joining, which was assessed in 1876 at $1,900, and upon which he pays his animal tax. Some few weeks since he was offered $15,000, which he declined. The farm is a fruit and nursery farm, and of course, is an exception. The above, with many others of similar, nature, are the results of the present system. ****** cxc In reference to double taxation, we know but one branch of business that appears to be over-burdened, and that is the country merchant — who is charged with a liceuse on the average amount of stock he carries, and is then assessed on the same property about an equal amount. It is generally known that the merchant carries a larger amount of goods than he has capital, thus paying a tax on his credit. The license tax, therefore, is onerous and bur- densome, particularly to the small country dealers. It is a well known fact, that the sales of a majority of country merchants run from $4,000 to $10,000 per year, and after a ten years' business, are very little, if any, better off, than when they commenced. It is a well known fact, that a majority of country merchants finding they are not paying expenses, sell out, wind up or go to the wall, bankrupts. Very few succeed in making money to any extent. If the members of your board could spare the time, we would suggest, that each member visit the office of some of the County Commissioners at their regular sessions during the month of April and see the working of the present system. Seeing is knowing, and the knowledge thus obtained will be of great assistance to you in making your report. Bepudiating as we do, the present system, we would suggest as a substitute a system that has been thoroughly tested, works well and at same time more economical than the present system, and would urge upon the next Legis- lature, the system of annual assessments, a system free from the many defects of the present one, and one that is fast becoming quite popular with the thinking and better class of taxpayers. It is no new thing. It is one that has been tried in many States from the date of their organiza- tion. The modus operandi is, to elect annually at their spring election, one or three assessors for each town or district. The assessors so chosen, must be residents of the CXC1 town or district and taxpayers therein ; assessors so elected, (having taken the oath of office,) shall proceed to assess the real and personal estate in their town or dis- trict. ********#*#**#### One assessor can or ought to do the work in any one district in this county within thirty days ; three assessors, by dividing the district or town, can do the work in ten or twelve days each. The last assessment cost Caroline county nearly $5,500, and is charged with being very unequal and unjust. * * Before closing these lengthy and rambling answers to your questions, we would refer to the question of State taxes, a question now being discussed in several State Legislatures and in the State of New York, where it has been in existance partially for several years is now nearly a fixed fact by drawing a revenue from other sources than a direct tax on real estate, and is acquiesced in by all parties, by taxing the incomes of all railroads, insurance companies, banks, banking associations, and all incorpo- rated companies, looking to the State for protection. Stock brokers should not only pay a license, but a per- centage on their business transactions. All brokers and agents who carry their business in their hats should pay a license, otherwise many of them pay no taxes. Dealers in spirituous liquors, tobacco in any form, should pay a heavy license. Traction engines, lumber and timber teams and wagons should not escape an extra tax by taking out a license. It is well known that they do more damage to roads and bridges than all others, and should be made to pay a greater tax than the annual State and conntv tax. #**********##*# There is another feature in the present system that causes much trouble, and that is the selling real estate by contract, the contract not being recorded, the property continuing to be charged against the original owner, causing collectors much trouble. The annual assessment CXC11 does away with this, as well as all other annoyances and particularly with the law requiring the clerk of the county to furnish a list of all deeds brought in for record, before the Commissioners can close their annual assessments and levy the tax. In the proposed sysem, the assessors of each town or district will And all changes in ownership of real estate without the aid of the County Clerk and his fees. All of which is respectfully submitted, James C. Horsey, Clement Noble, Geo. W. Ernst, County Commissioners for Caroline Co., Md. W. P. Towers, Clerk. Dorchester County. Treasurer's Office, Cambridge, Md., Jan. 6. Mr. Cliarles M. Armstrong, Secretary of the Maryland Tax Commission: Dear Sir — In answer to your communication of a recent date, I take pleasure in submitting a statement which I think will cover the questions contained in your letter. For purposes of clearness and brevity I have grouped the ten queries under four heads, as follows : cxciii Dorchester Connty levy of 1887 : Total taxable basis for county tax $ 0,389,053 Real $ 4,581,414 Personal - 1,058,4 10 Stocks of Mil. corporations 135, 1 23 Stocks of foreign corporations. 14,705 $ 0,389,052 Deduct stocks 149,828 149,828 Taxable basis for State tax $ 0,239,824 State tax ISf c. on $0,239,824 yields. .' $ 11 ,099.07 County tax 80i c. on $0,389,052 55,1 10.75 Total State and county tax, $1.05, yields. . $ 00,810.42 The tax rate has been the same as above stated for the past seven years, and the basis has gradually increased from $5,900,000 to $0,389,000. Consequently there has been the same proportionate increase in the annual rev- enue from direct taxation from $50,700.00 to $55,110.02. The most of the monies paid for local licenses go direct to the School Commissioners, and the fines collected by the sheriff and justices of the peace are generally credited on their accounts, thus reducing the aiuouut of the annual levies for those two items of county expenses. The in- direct revenue thus derived from fines ranges from two to three hundred dollars per annum. The stocks of Mary- land corporations value $135,123, tax 80J c. yield $1,105.54. The stocks of Foreign corporations value $14,- 705, tax 80i c. yield $120.83. The assessed value will average about eighty per cent, of-the real value of the property in the county. Since the last general assessment (1.870) there has been a gradual de- pression in the productive value of agricultural lauds, and at the same time a general tendency to development and increasing productive value in town and village property. CXC1V The County Commissioners have made abatements in some cases, and in many instances by reason of the sub- division of lands for building lots, have largely increased the former assessments. This, with the addition of new buildings and other property returned by collectors of taxes has more than offset the losses by abatements and otherwise. The following statement shows the the levy of 1887 classified under thirty-two heads, and with the amount of each levy and the time or date up to which it will pay bills of its class. Ton will notice that only one of the thirty- two items is large enough to pay its current expenses to December, 1888. In other words, it is the only one of the thirty-two that is upon a permanent cash paying basis. The statement also shows an estimate of the additional amount required to put all county expenditures upon the same basis, provided there was no material change in the assessable basis, rate of tax, or the aggregate amount ex- pended for all purposes. The policy of the Commissioners for the past seven years has been to avoid increasing the tax rate above $1.05 for State and county, and at the same time to conduct the affairs of the county as nearly upon a cash basis as can possibly be done under existing condi- tions. The statement of the levy is as follows : State and County Levy, 1887 : Estimated Additional Levy. Required. 1 Keeping ferries to Dec. 1888 .. $ 1 ,300.00 $ , 2 County printing to June, " . . 650.00 325 3 Eedemption County bonds, July, 1887 1,163.82 4 Interest bonded debt June, 1888 2,220.00 5 Deficiencies in former levies, June, 1887 7,284.73 Amounts carried forward 12,618.55 325 cxcv Amounts brought forward... 12,618.55 325 6 Eoad supervisors' salaries, De- cember, 1887 1,200.00 7 Repairs, roads and bridges, Dec. 1887 4,500.00 5,000 8 Town corporations, Dec. '87 . . 420.00 420 9 Justice of the Peace, May, '88 . 100.00 200 10 Constables, May, 1888 400.00 200 11 Inquest fees, May, 1888 200.00 100 12 Pauper accounts, May, 1888. 200.00 200 13 Errors and insolvent taxes, Dec. 1887 1,000.00 1,000 14 Registration and election, Nov. 1887 1,500.00 700 15 Jurors, bailiffs and wit. June, 1888 3,000.00 2,000 16 Discount State and county taxes, Nov. 1887 1,200.00 17 Clerk 0. Court fees, June, '87. 2,787.98 4,000 18 Orpbans' court and fees, June, 1888 700.00 350 19 Register of Wills fees, June, 1888 200.00 100 20 Sheriff fees and jail expen- ses, June, 1888 2,400.00 1,200 21 Keeper C. H. and Grounds, June, 1887 50.00 50 22 States attorney fees, June, 1888 1,000.00 500 23 Special attorney fees, June, 1888 400.00 400 24 Alms house and outpensions, June, 1888 3,000.00 2,000 25 Keeping insane persons, Dec. 1887 2,000.00 1,500 26 Public schools, June, 1888 10,000.00 5,000 Amounts carried forward 48,876.53 25,245 CXCV1 Amounts brought forward... $48,876.53 $25,245 27 Co. Coin, and Co. Treas., Dec. 1887 2,000.00 1,000 28 Fuel C. house and jail, June, 1888 500.00 500 29 Collectoi's commission, June, 1888 2,719.74 30 Collectors assessing property June, 1888 313.69 31 State taxes, June, 1887 11,699.67 32 Contingent fund, June, 1888. 700.79 500 Total State and county levy, 1887 $ 66,810.42 Estimated amount required to put the county on a permanent cash paying basis, provided there was no change in the taxable basis, . the rate of tax or the amount of expenditures $28,245 Improvements Needed. The present system is probably as good as could have been devised for use forty years ago, but as applied to the circumstances of to-day it lacks nearly all the essential merits of equal and effective taxation. In my opinion it is not necessary to dwell upon the defects, because the real point is to secure a better arrangement. Values change so rapidly now-a-days that the plan of a general assess- ment every ten years is insufficient. What is needed is an annual assessment, and all property should be assessed at its actual value. To secure this there should be an assessor of property in every election district. In the many changes and transfers which occur to property, a personal know- ledge is required to ascertain and equitably assess actual values. An assessor who lives in one district is never in a position to act intelligently upon the partial information gathered by occasional visits to other sections. lie must live in his territory and be personally acquainted with the people and the property. CXCV11 This assessor should be furnished with printed blanks, arranged so as to properly list all of the taxable property of every description. He should be required to deliver at a stated time a copy of this blank to each and every tax- payer iu his district, with the request to fill it up with the actual values of his property. To this the taxpayer should be required to make oath, either before the assessor or a justice of the peace. In cases of neglect or refusal, the assessor should be required to make up the list, and to re- turn all lists to the Couuty Commissioners. His compen- sation should be fixed at a nominal sum, say twenty cents, more or less, for each list handed in. The County Com- missiouers should constitute a Board of Review, and as such should hear all complaints and adjust all inequalities. This system would not only get nearly all of the taxable pro- perty one time; it would come very close to doing it every time. Its merits are easily recognized. It would keep track of all fluctuations; it would impress a sense of re- sponsibility which is often lacking under the present ar- rangement; and last, but not least, it would do no injustice to any one. It embodies all the essentials— simplicity, economy and efficiency. In this county its cost would be from eight hundred to a thousand dollars a year, but it would aild to the annual revenue at least three thousand dollars. The last general assessment (L87G) cost the county about five thousand six hundred dollars, and was not as full and satisfactory as the plan suggested would be. There should be a change in the election of the County Commissioners. They should be elected for a term of not less than four or six years, and they should be elected al- ternately, so that every new board will not be an inexperi- enced body. As it now is, they are elected for terms of only two years, and by the time they get well acquainted with the duties their terms expire. As a consequence their proceedings, unless they profit by the advice of others, are •often largely experimental. It should be remembered that the commissioners cannot devote all their time to their CXCV111 duties, nor are they expected to do so, because the pay is- nominal, and they are not supposed to give up their regu- lar employment for public service. The county treasurer and the clerk to the County Com- missioners should be elected by the people for a term of six years, which is the same as that of the Clerk of the Court and the Eegister of Wills, who are chosen for that length of time in order that they may become fully ac- quainted with the records of their offices, and to be in a position to give permanency and business management to- their work. In the matter of detail and labor the position of treasurer and clerk to the County Commissioners is the most exacting, and in many respects the most important,, office in the county, and it is certain that the man who fills it can never become thoroughly efficient unless he is given sufficient time to get a comprehensive knowledge of its- duties. In reply to the latter part of your question, I need only say that any system which bears unjustly upon different classes of property is against the interests of the State- and the enterprise of its people. It is not necessary to se- lect instances in proof of this, for the fact itself is apparent- Wishing your excellent commission a full measure of success in its efforts to devise an improved system of taxa- tion for Maryland, I have the honor to be, Yours very truly, George J. Meekins. Cecil County. The following paragraphs are extracts from a letter from? Mr. John S. Eossell, clerk to the County Commissioners- of Cecil County: CXC1X There is certainly a large amount of personal property in Cecil County not assessed, which can not be found un- der our system. The absence of this from the assessment books, makes the assessed value of property, in the aggre- gate, below the real value. There is also, to some extent, an unequal valuation of real estate. A thorough readjustment would doubtless in- crease the basis of taxation. There is much complaint of taxation, and in many in- stances it is a positive burden. There is some complaint of unequal valuation, but the principal, objection to the present assessment is that it is too high throughout. The farmers contribute the great bulk of the taxes, and many of them, especially those who have small places, find it difficult to meet the demand. The existing system is against them in that it gathers up all of their property at a full valuation, but fails to reach that held in the shape of bonds, stocks, mortgages, or like investments, and places at a lower valuation the property used in other industries. The whole system of assessment should be abolished and in its place one adopleu that would tax every citizen according to his net assets, the rate to be regulated by the ascertained net profits of the business he may be engaged in. Kent County. Below we give an extract from a letter of Mr. S. Waters Eussell, clerk to the County Commissioners of Kent county: C. M. Armstrong, Esq., Secretary Maryland Tax Commis- sion : Dear Sir, — The existing system is defective because it lacks uniformity, in that all tangible property, as lands, cc goods and chattels, can be seen and assessed; all intangible, as securities, are not visible and are not discovered. Again, property is assessed in a careless manner; again, mortgages should be assessed as well as judgments and other securi- ties. As to payment of claims against the county, pro- vision should be made to pay the cash. The agricultural industry is seriously affected under the present system, be- cause it bears too large a proportion of the taxes, for the reason that all the farmers' property, so to speak, is visible, and therefore brought under taxation. The improvements to be made in our present system will, I hope, be discovered by our "Maryland Tax Commission," and an improved system put in operation by our next *' Legislature." Talbot County. County Commissioner's Office, ) E aston, Md., January 24, 1887. 5 C. M. Armstrong, Esq.: Dear Sir, — * * * I do not know that a new as- sessment would change materially our taxable basis, but I feel very sure that it would equalize taxes throughout our county. The assessment is less than the real value. Property is unequally valued. In some of the districts of our county it is assessed for as much as it will sell for, and even more, while in others it sells for twice, and sometimes three times its valuation. I do not say this by guess, for as clerk to our board it is my duty to make the transfers on our books from year to year, and I know whereof I speak. There is much complaint of taxation. But, there is always some of that. There is not much complaint of unequal taxation, though our people generally are of the opinion that we need a new assessment of property. CC1 The taxes for county expenses are levied before the expenses are incurred, by estimate, thereby enabling us to pay the cash ior all our bills. I do not know of any business or industry injuriously affected by our present tax laws, unless it be that of small traders. Taxes by all means should bear on all alike, as near as it is possible to get them, but in taking- out a traders' license, the poor man who may be only able to raise one or two hundred dollars is required to pay the sum of $12, while his wealthy neighbor on a capital of $40,000 pays only $25 for his. A glance is all that is necessary to see the injustice here. If each man or woman trading, were charged so much on each hundred dollars invested in business, each would pay their proper propor- tion, and there would be no cause for complaint. Women must pay a license of $6 it their stock does not exceed the sum of $500, and yet I know plenty of poor widow women, and poor young girls who are striving to make a living for themselves and theirs, who have only one or two hundred dollars in their business, and yet they in their poverty must pay the full $0. Can we say this is right f Every poor man who gets around him one hundred dol- lars worth of property is taxed to the last penny of all he is worth, and yet his rich neighbor has $100,000 of surplus capital invested in first mortgages and pays not one cent. No comment is necessary here. * * * Personal prop- erty should be assessed every year to have it anything like correct. It is constantly changing, and needs a yearly revision. Collectors should be allowed a definite time in which to collect the taxes, and the Courts ought not to be allowed to extend their time almost indefinitely as they now do. The Act of 1870, chapter 325, which seems to have been repealed by the Act of 1874, was an excellent law. It should be re-enacted by all means, with a change as to the time of payments; for example, our books do not go into the collector's hands until August, and according to the wording of the law his first payment would not be ecu