ADDRESS ON TAXATION, 
 
 BY 
 
 
 
 MR. THOMAS HILLS, 
 
 Chairman of the Assessors of Boston. 
 
 DELIVERED BEFORE 
 
 o 
 
 THE BOSTON EXECUTIVE BUSINESS ASSOCIATION, 
 
 Revkre House, Jan. 20, 1890. 
 
 BOSTON: 
 
 ALFRED MUDGE & SON, PRINTERS, 
 No. 24 Franklin Street. 
 
 1890. 
 
Boston Executive Business Association, 
 
 OKKICERS. 
 
 PRESIDENT. 
 
 HERSEY B. GOODWIN, 
 
 Of Chamber of Commerce. 
 
 VICE-PRESIDENTS. 
 
 JEROME JONES, DANIEL G. TYLER, 
 
 Of Earthen-Ware Association. Of Paint and Oil Club. 
 
 secretary. 
 
 WILLIAM H. SAYWARD, 
 
 Of Master Builders Association. 
 
 TREASURER. 
 
 LAMONT G. BURNHAM, 
 
 Of Coal Trade Association. 
 
 DIRECTORS. 
 
 S. J. HARRISON, JOSEPH R. LEESON, 
 
 Of Furniture Exchange. Of Merchants Association. 
 
^ ^OOu-hoa 
 
 ^ZC,- >- 
 
 K ■ Qc;» 
 
 A DDRESS. 
 
 Gentlemen of the Boston Executive Business Association: 
 
 At your Annual Meeting in October last, a committee appointed six 
 months previous “ to consider the question of taxation for the city of 
 Boston,” submitted a report recommending radical changes in our Massa¬ 
 chusetts system of assessment. I have been honored by an invitation to 
 join in the discussion of that paper. My part shall be to review the report 
 from the stand-point of one who cannot agree with the conclusions of the 
 committee or the reasoning that led to them. The subject is so important 
 and far-reaching that the most concise statement will occupy more time 
 than is usually allotted to one person on such an occasion. Though the 
 necessities of the case make the manner of dealing with it hard and dry, I 
 shall not attempt to relieve its presentation with any rhetorical dress. 
 To none other than a collection of Boston business men would I venture 
 upon such a style of discussion, but interested as you must be in the 
 subject, I trust I shall not weary you beyond endurance. 
 
 And let me say in the beginning that a majority of your committee are of 
 my personal friends and acquaintance, and though they have not spared me 
 in their report, I have not considered their remarks as personal, but as 
 aimed at the opinions I am known to hold. In my review of their report let 
 no words of mine be construed into an attack upon the committee, for 
 whom I entertain sentiments of sincere respect, but let my plain words be 
 deemed as directed only at the views they have adopted as their own. 
 And now without another word of preface let us consider their report. 
 
 Statement of the Case, and Proposed Remedy. 
 
 The foundation of it appears to be the opinion of the committee that so 
 small a proportion of personal property is assessed under our laws, that 
 what is discovered, and with the real estate of the community taxed, is so 
 disproportionately burdened that great injustice results. That so large a 
 part of the personalty escapes, that what is found by the local assessors 
 and added to the valuation of the realty, makes an insufficient basis of 
 taxation, and all the money needed for the city’s requirements cannot be 
 obtained by the rates of taxation applied to the whole amount of assessable 
 property. Their remedy is to give up all local assessment of personal 
 property for city taxes; to have the Commonwealth relieve the city of all 
 
 P 205o8 
 
2 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 State and county assessments. They provide for the deficit their scheme 
 would make by transferring to the State the power to assess certain classes 
 of personal property, especially that which passes through our Probate 
 Courts, and by the special assessment of certain franchises. 
 
 The Relative Value of Real and Personal Property. 
 
 The corner-stone of their foundation is their belief that 
 “ the personal property of both city and State, which, under the law, is subject 
 to taxation, cannot be less than twice the value of the real estate.” 
 
 They say: — 
 
 “ Upon this all recent writers agree.” 
 
 They do not name the writers. I wish they had done so. I have not 
 met the statements of any recent writer who would be considered an 
 authority upon that point—other than the Hon. David A. Wells, who in 
 his report to the governor of New York, in 1870, put the value of the 
 personal estate as equal to that of the real. But the committee think that 
 twice the value of real property is an under-estimate of the value of the 
 personal, for they indorse the opinion of “a distinguished professor of 
 political economy,” 
 
 “ that in such great financial States as Massachusetts and New York it was 
 undoubtedly true that the personal property of the people of these States was in 
 value fourfold that of real estate.” 
 
 But 
 
 “ to make the point strong beyond doubt, a concession of one half was made, and 
 it was called only twice the value of real property.” 
 
 But they add : — 
 
 “ Every day, however, facts and opinions come to us which only strengthen the 
 original opinion expressed.” 
 
 What this proportion is, is evidently a matter of opinion, with no accurate 
 data upon which to make a determination. We have as much right to 
 reason on it as any one. Let us spend a few moments in its consideration. 
 
 Seventeen years ago the great fire of Boston swept over sixty-five acres 
 of the best part of the business district of our city. There, if anywhere, 
 would have been found the largest proportion of personal property as 
 compared to the real estate upon which it was placed. It was because the 
 buildings of that district were so crowded with merchandise that the fire 
 was beyond control, until it reached a point where there were no ware¬ 
 houses. No other district in our city of equal area could have exposed so 
 great a value of personal property to a conflagration. It is generally 
 conceded that the total loss by that fire was $75,000,000. The assessed 
 value of buildings destroyed was in round numbers $14,000,000, and of 
 the land on which they stood $28,000,000, — a total real-estate value of 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 3 
 
 $42,000,000. This leaves $61,000,000 for the value of the personal property 
 destroyed; about one hundred and forty-five per cent of the value of the 
 real estate. Another test indicates that this estimate is ample. The 
 insurance placed on the property of the district was $52,076,600. Deduct 
 the assessed value of the buildings destroyed, and the approximate value of 
 the personal property covered is found to be about $38,000,000, or about 
 ninety per cent of the real estate. Take the fire of sixty days ago in 
 Bedford and Chauncy streets. The assessed value of the real estate 
 where the buildings were destroyed or badly injured was $3,035,000. Land, 
 $2,116,400; buildings, $918,600. The insurance loss is officially stated in 
 to-day’s papers, and for personal property is found to be $2,502,707, — an 
 amount equal to eighty-two per cent of the real property upon which it was 
 stored. I need not remind business men that insurance is not an infallible 
 test of values. But we are now in the region of estimate, and not of 
 accurate statement. It is admitted that it can be claimed that this propor¬ 
 tion is only approximately correct, for the reason that personal property was 
 consumed upon which there was no insurance, and much saved that was 
 covered. But the value of the uninsured personal property that was 
 destroyed is known; it amounted to $370,188. We have, then, an ascer¬ 
 tained personal property loss of $2,872,892; less than ninety-five per cent 
 of the value of the real estate. Nothing is left for estimation but the 
 value of the property saved upon which there was insurance. Let the 
 other five and one half per cent stand for this sum, and in this most favor¬ 
 able location for sustaining the committee’s estimates we find that the 
 destruction of a score of warehouses shows that in the heart of the 
 business district of our city the value of real and personal property is only 
 about equal. 
 
 But let us further try the committee’s estimate, which “every day” is 
 strengthened, in their opinion. Boston’s real estate, $600,000,000 ; personal, 
 “fourfold,” $2,400,000,000; total, $3,000,000,000. I shall like to assess 
 taxes in Boston upon that valuation. We could have all we desired. There 
 would be no complaint about the rate. Can you conceive of the sum your 
 committee say is the true valuation of Boston? The amount is larger than 
 the national debt at the close of our Civil War. Try their figures by the 
 population of the city, — we all hope that the census of this year will find it 
 450,000, — call it that; and you have an average of over $6,600per capita. 
 Hereafter as I pass through the lower end of South Boston, oh my way 
 from home to business, and note that teeming population, it seems to me 
 I shall look with ever increasing respect upon each ragged urchin, for in 
 one sense at least he is the representative of $6,666. 
 
 At our last election our voters numbered 70,344, — not those who voted 
 only, but those on the lists. Let us hope they voted wisely. Had they 
 known that the ballot of each citizen affected the destinies of a city where 
 the property to be protected was an average of over $34,000 to each voter 
 
4 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 it is probable they would have exercised the right of a freeman under a 
 sense of responsibility they never felt before. 
 
 In discussing the income tax the committee find a possible assessment in 
 forty years of $100,000, and ask, 
 
 “ What proportion of the business men about us can show as much money as this 
 as the net gain of as many years of toilsome business? ” 
 
 If the retired business men have but moderate competencies, and the 
 common people have less, where is this immense sum that the committee 
 thinks exists, and who hold it? 
 
 But I close this branch of my review with something a little better than 
 estimates. Your committee state that the amount of property which “ passed 
 through the Probate Court of Suffolk last year was not far from $25,000,000.” 
 
 They are doubtless right in this estimate. I know the source of their 
 information. It could not be better. I thought that here was an oppor¬ 
 tunity, following in their footsteps, to get some definite figures that would 
 go far to determine this vexed question. For though the inventories of 
 many estates are never filed, yet any considerable number being entered, it 
 is reasonable to suppose that the proportions of real and personal would be 
 substantially the same in all estates as was found to exist in any number 
 large enough to represent a fair average of the property of the community. 
 
 The investigation involved no little labor; for while the docket indexes 
 showed the amount of both classes of property, yet the true value of the 
 really could only be obtained by an inspection of the inventory, as in many 
 cases only the value of the equity of a mortgaged estate would be shown 
 upon the face of the return. 
 
 In the year which ended on the ist of May last, nine hundred and twenty- 
 five inventories were filed, and their analysis would, I think, have been gen¬ 
 erally accepted, but in the volumes that were accessible only three hundred 
 and forty-four had been entered. That number returned $4,131,255 real, and 
 $5,759,753 personal estate. The real estate was subject to a certain amount 
 of mortgage, but for fear that I shall open the discussion as to their status 
 as debts or property, I accept the figures as they stand, and find that of 
 $9,891,000 of property represented, forty-two per cent was real and fifty- 
 eight per cent personal estate. We will not pursue this branch of the report 
 further. It may be that the committee have this day, as “ every day,” 
 received “facts and opinions ” “ which strengthen the opinion” expressed, 
 that the value of the personal is “ fourfold ” that of the real estate — that 
 outweigh the considerations that have been presented. 
 
 The Claim that the Massachusetts System is Unjust and Illegal. 
 
 But starting from their premises, the committee assert that, 
 
 “ We all know, because it cannot help being known of all men, that ‘ taxation in 
 thj city of Boston and State of Massachusetts,’ so far as personal property is con- 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 5 
 
 cerned, is the greatest piece of injustice and inequality that could be well conceived 
 of.” 
 
 If your committee were denouncing an autocratic and centralized govern¬ 
 ment for the injustice its members conceive it is inflicting upon the people, 
 we could give them credit for the sincerity of their convictions if we did not 
 agree with their views. But what shall be said for their position when we 
 reflect that this is a government of, by, and for the people ? If the committee 
 are right, the people of this Commonwealth have foolishly oppressed them¬ 
 selves for the past two and one half centuries, or have been too ignorant to 
 know what was needed for their own prosperity. 
 
 We have the admission of the committee that our present system is not 
 ruinous, for although they say that each year produces “ more and more of 
 its evil fruits,” yet they are apparent only “ with every year of the growth 
 and prosperity of the city and State.” But your committee charge that 
 taxation in Boston and Massachusetts is 
 
 “ in violation of that constitutional declaration, that] it shall be proportionate and 
 reasonable, as well as of that statutory law which requires that it shall be according 
 to the ability of citizens.” 
 
 It is a sufficient answer to this position to say that if such is the case a 
 court that has enjoyed the confidence of all good citizens from its establish¬ 
 ment can promptly right the wrong. There is no need for argument here or 
 in legislative halls ; the mandate of the judge that relieves one citizen from 
 illegal assessment will settle the law for all. But just what do the commit¬ 
 tee mean when they say that our taxation is in “ violation ” “ of that statu¬ 
 tory law which requires that it shall be according to the ability of citizens ” } 
 That our laws are based on the idea that each shall contribute to the public 
 needs, according to his ability, I and those who think with me will claim, 
 and your committee and those who hold similar views will deny. But both 
 sides must admit that there is no statutory law in which that idea is specifi¬ 
 cally expressed. The law says that all property shall be taxed, and it is the 
 complaint of the committee that such is its requirement. Their position is 
 equivalent to saying that the execution of the law is its violation. Their 
 expression, that the taxes in our city are assessed and collected without 
 
 “ decent regard for the safeguards and assurances of the Constitution and laws of 
 the good old Commonwealth in which we live,” 
 
 is entirely gratuitous and unwarranted. 
 
 The Relative Amounts of Property in New York, Pennsylvania, 
 AND Massachusetts. 
 
 The absence of reliable statistics in your committee’s report or that are 
 easily attainable elsewhere, upon which to base an opinion as to the relative 
 amounts of personal property in New York, Pennsylvania, and Massachu- 
 
6 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 setts, leads me to pass that part of the report without comment. I am not 
 entirely ignorant of the laws and methods relating to assessments in our 
 sister States ; but can occupy the time allowed me to better purpose than to 
 give opinions based on such information as is available. But not to pass 
 unnoticed the important comparison called to your notice, I have asked 
 one of my associates of this evening to speak to that point. 
 
 Evasion of Taxation. 
 
 “ It would be easy,” say your committee, “ ... to bring . . . facts within their 
 own knowledge in our own State showing how immense estates in personal property 
 have, and do, escape that share of the public burdens which by law rest upon them.” 
 
 I am happy in this connection to note that they do not intimate that the 
 assessors of Boston have been parties to these evasions of assessment, 
 further than to say they have been informed 
 
 “ that even the eminent chairman of the Boston Board has been, we will not say 
 unwisely or unjustly, compelled to do a pretty considerable amount of hard winking 
 at facts, that Boston need not always get worsted in the encounter ! ” 
 
 I think I have a right to speak for that gentleman, and while he has not 
 knowingly been blind to what it was his duty to see, or attempted by hard 
 winking to be oblivious to disagreeable duties, yet while it is the policy of 
 the law, that even the criminal on trial shall have the benefit of every rea¬ 
 sonable doubt, he will exercise that discretion which the law intrusts to 
 him, in estimating the unseen. He accepts the qualified compliment of the 
 committee that in so doing he has acted not “ unwisely or unjustly,” as being 
 not wholly unmerited. But the evasion which they are sure exists, your 
 committee are unwilling to denounce, and apologize for it, and say that when 
 they, or you, their fellow-members, become millionnaires, you all will “ do 
 as most other millionnaires do or have done,” and that the blame for it will 
 not be yours, but that the “ system ” of taxation will be responsible for it, “ and 
 for that the people of the State are responsible.” They add, however : — 
 
 “ Your committee, however, are not unmindful of that view of the case expressed 
 in the following language. We quote from the chairman of the Boston Board of 
 Assessors: — 
 
 “ ‘ That personal property in Massachusetts declared by her laws to be subject to 
 taxation does in some degree escape assessment it is impossible to deny. The most 
 vigilant of assessors cannot find it all, and there are not wanting those in every com¬ 
 munity willing to invoke the name of the Creator to the truth of a statement which 
 is a falsehood and a fraud.’ ” 
 
 Before commenting on this statement, it is proper to say that your com¬ 
 mittee were not justified in giving me credit for the quotation. They found 
 it in the report of the Commission on Taxation of 1875. Associated with me 
 as members of that body were President Seelye, of Amherst College, and 
 Judge Barker, of the Superior Court; gentlemen of acknowledged ability. 
 
ADDRESS ON TAXATION, BY MR, THOMAS HILLS. 
 
 7 
 
 above the suspicion that they would accept as their own, statements or 
 opinions which they did not believe to be true. Your committee charac¬ 
 terize the quotation from the report as a forcible statement, and ask: — 
 
 “ Is there truth and justice enough in it to have any considerable weight in this 
 discussion? We unhesitatingly say no, and unqualifiedly condemn both the spirit 
 and method of treating the subject. We doubt if there is a millionnaire in the Com¬ 
 monwealth who would for a moment entertain the thought of making such a solemn 
 false statement.” 
 
 A committee who think that if they reach the “ dangerous condition ” of 
 millionnaires they would be “ quite likely to do as most other millionnaires 
 do,” have certainly a right to an opinion as to what one of that class would 
 do under any circumstances. 
 
 But 1 think that even the committee will admit that they have limited 
 opportunities for judging what a millionnaire would do, who was in the “ dan¬ 
 gerous condition ” of being called on to contribute twelve or fifteen thousand 
 dollars annually to the public treasury. Perhaps they may be willing to 
 admit that an assessor who represented the government that demanded the 
 contribution and met the unwilling contributor, would have better opportuni¬ 
 ties to judge, than one who was a stranger to the transaction. Just how 
 much “truth and justice” your committee would require in a statement 
 before they would consent that it should “ have any considerable weight 
 in this discussion,” there is, I presume, no means of determining. 
 
 But, as a representative of the tax department of the city of which we all 
 are tax-payers, I assert that, had they the same experience that has fallen to 
 my lot, they never would have penned the quotation I have taken from their 
 report. 
 
 I am not a believer in the total depravity of millionnaires. I have found 
 so large a number of noble, public-spirited men among our heavy tax-payers, 
 that I am willing to say that, in my opinion, the retired capitalists of Boston 
 will compare favorably with the business men of our city, in meeting their 
 obligations to the public as measured by our tax laws. But he must be a 
 blind observer of human nature who expects to find with increase of wealth, 
 a decrease of the desire to avoid assessment. A statement of the worst 
 case that has come under my observation will, I think, satisfy the most 
 incredulous that the statement your committee “unqualifiedly condemn” 
 was warranted by existing facts, and that the actors in it were but types of 
 classes that are with us, and will remain with us. Consideration for those 
 still living among us, nearly related to the millionnaire assessed, forbids my 
 giving names or dates, or even putting to paper the story of the case. 
 
 Perhaps in this connection, and before we forget that your committee 
 have expressed the opinion that there is not “a milljonnaire in the Common¬ 
 wealth who would for a moment entertain the thought of making such a 
 
8 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 solemn false statement ” as filing with an assessor, under oath, a fraudulent 
 list of his property, it might be profitable to recall a case that can be named, 
 because some ten years since the particulars of the transaction were given 
 to the world by the public press. About that time the elder Mr. Vanderbilt 
 appeared at the assessment office of the city of which he was one of the 
 wealthiest, if not the wealthiest inhabitant, and swore off every dollar of 
 his personal assessment, upon the ground that “his just debts and liabili¬ 
 ties exceeded the amount of his personal property.” Perhaps it is the 
 superior virtue of Massachusetts millionnaires, not one of whom, in the 
 opinion of your committee, “ would for a moment entertain the thought of 
 making such a solemn false statement,” that enabled your committee to find 
 that in our State one fourth of the assessed aggregates were of personal 
 property, while in wicked New York the proportion sunk to one tenth. To 
 my mind, the more reasonable explanation is, that Massachusetts has a 
 better assessment law, and that it is better enforced ; and that here real 
 estate and business are relieved to the extent that wealth in the hands of 
 the capitalist class is compelled to contribute. But whether it is our supe¬ 
 rior virtue or the greater intelligence of our law-makers that produces the 
 difference, it is clear that one millionnaire, at least, was not only capable of 
 thinking of making “a solemn false statement,” but of actually making it, 
 for within a few weeks of the time when he took that oath, he purchased 
 $40,000,000 of United States four per cents without an entry being made in 
 the Registry of Deeds, to show that he had sold any real estate with which 
 to make the purchase. 
 
 The statement of these cases is made with regret, and I gladly went out¬ 
 side the State for one illustration. You must take my word for it — they do 
 not stand alone in my memory. But with what we know of human nature, 
 your committee must not discredit our intelligence to the extent of asking 
 us to accept without qualification their statement that “ the assumption that 
 men perjured themselves to escape taxation ... is too monstrous in its 
 folly to be entertained.” 
 
 But your committee also “unqualifiedly condemn ” a statement of the Tax 
 Commission to the effect that 
 
 “ There are not wanting officers who shut their eyes to the facts they have sworn 
 to observe in the supposed interest of the locality of which they are residents, and 
 help the possessors of wealth to act the lie they dare not utter.” Your committee 
 think “this reflection upon assessors ... is as unbecoming as unwise.” 
 
 The committee may be right. What is unbecoming or unwise is a matter 
 of opinion. But they do not venture to say that they think it untrue. In 
 fact, they admit its truth. Before leaving the discussion of this branch of 
 their subject, they say : — 
 
 “ All the efforts of the Board of Assessors of Boston, or any other city, will not 
 avail to influence the selectmen in the towns of the State from taking care, in their 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 9 
 
 oivn way, of the interests of these localities which so often prove to many a city of 
 refuge from a burden of taxation which could not otherwise be endured. In this 
 connection is it not worthy of remark, that the retired man of business, compelled to 
 live on the very moderate income which at the present time safe investments realize, 
 must go where he will not be compelled to divide the same with the assessors in such 
 unjust and unreasonable proportions as we witness in the taxation of small trust 
 estates? ” 
 
 Comment on this part of the report is needless. We do not have to read 
 between the lines to see the assessor, sworn to observe the laws, violating 
 his oath of office ; and the bargain to be taxed on a “limited amount,” made 
 a criminal offence by our statutes, not only admitted, but the parties to it 
 referred to, the one as offering, the other as fleeing to “ a city of refuge ” ; 
 and the unequal assessment of every property-holder in the community of 
 which the tax-dodger has made himself a part, resulting from this corrupt 
 bargain, is commended as something just and reasonable. 
 
 The Incidence of Taxation of Real Estate and the Plan of 
 
 THE Committee. 
 
 I must pass without notice the views of certain political economists in 
 whose school your committee have evidently been studying, if I am to have 
 time to deal with the view which the committee have adopted. But in quot¬ 
 ing Judge Cooley and others with approval, your committee say, that the 
 argument that the burden of taxation thrown upon real estate by the exemp¬ 
 tion of personal property from assessment 
 
 will not in the end come out of the real-estate owner is too familiar to be repeated. 
 It is well understood and filly accepted by all who have a large grasp of the whole 
 subject, and by none more so than large real-estate owners in Boston and other centres 
 of population.” 
 
 Will the committee tell us, then, when they would raise the tax limit from 
 nine to twelve dollars for city purposes, and give Mayor Hart “that other 
 million which he thinks . . . the city should have,” if there is to be no tax 
 upon personal property, and “ in the end ” the tax is not to “ come out of the 
 real-estate owner,” where the money is to come from ? Who is to pay it “in 
 the end”? And when this tremendous burden is put upon the users and 
 occupiers of real estate, as they think it will be, what is to be the compensa¬ 
 tion of that part of the community outside our great cities, upon whom a 
 burden has been laid, and no corresponding burden lifted? The reward for 
 carrying a doubled tax on rural real estate is thus outlined by the committee. 
 They say : — 
 
 “ Indeed, we think many in the country even are beginning to find out that to 
 multiply through all the Commonwealth such centres of wealth, beauty, and an 
 attractive and money-spending people as are to be found in Lenox and Lancaster and 
 Williamstown, and many other interior and sea-shore towns, it would only be neces- 
 
10 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 sary to relieve such persons from liability to be taxed upon their personal estate, 
 when they would freely invest in real property, and make these country residences 
 their abiding-places and real homesP 
 
 To this beautiful pastoral, why could not the committee have added 
 ,,the last touches, and have given us a happy and contented peasantry, bask¬ 
 ing in the smiles of those who “ tQil not, neither do they spin,” and so have 
 given us an entirely finished picture of the European civilization ? 
 
 But your committee were too intelligent not to see that when they threw 
 overboard personal property locally assessed, they must trim ballast, or give 
 up the hope of bringing their ship into port. 
 
 They applied their remedy where they thought it would do the most good, 
 or where possibly they deemed there was the most danger. 
 
 Their scheme is, for the purposes of taxation, to reduce small estates 
 ($3,000 and under) thirty-three per cent, an aggregate of $30,000,000 under¬ 
 valuation, and increase the assessment of our four business wards (6, 7, 10, 
 and 12) ten per cent, an aggregate of $22,000,000 of over-valuation. 
 
 Waiving the discussion as to who pays the tax of this business property “ in 
 the end,” and how much of it would sift down to the occupiers of the small 
 estates, and those “ used for agricultural purposes,” which are also included 
 by the kind consideration of the committee, there is this to be said to their 
 proposition. Whatever may be the form of the organic law of Pennsylvania, 
 which permits the city of Philadelphia to tax its city wards at full rate, its 
 suburbs at three fourths, and its farm land at one half of the city rate, that 
 of Massachusetts is not so elastic. In a case decided in 1875, where one 
 class of real estate, reservoirs of water for mill power, assessable by a special 
 law on a scale different from other real estate, our Supreme Court found the 
 act unconstitutional. In their decision, the Court say that the provision of 
 the Constitution that “ requires that all taxes levied under its authority be 
 proportional and reasonable, forbids their imposition upon one class of per¬ 
 sons or property at a different rate from that which is applied to other 
 classes ; whether that discrimination is effected directly in the assessment, 
 or indirectly through arbitrary and unequal methods of valuation.” (118 
 Mass. 386.) 
 
 It will hardly be profitable to further consider the proposition of the com¬ 
 mittee, or their suggestion that “ a reasonable amount of common-sense on 
 the part of the assessors in Boston” would “nearly meet all the difficulties, 
 antagonisms, and hardships of the change.” 
 
 Collateral and Succession Taxes. 
 
 It is a pleasure to agree with your committee as to the expediency of a 
 collateral inheritance and succession tax. I can hardly do otherwise, as the 
 commission of which I was a member, and to which I have already referred, 
 suggested it to the Legislature fifteen years ago. 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 The Income Tax. 
 
 Much of the space of your committee’s report is used in denouncing the 
 assessment of the income above $2,000 of a “ profession, trade, or employ¬ 
 ment,” which, under its old-time name of the “ faculty tax,” has been a part of 
 the assessment law of Massachusetts from the earliest colonial times. An ' 
 extract from the law of 1646 will show that an income tax upon business 
 men has been in force in this State for more than two centuries: — 
 
 “ And for all such persons as, by the advantage of their arts and trades, are more 
 enabled to help bear the public charges than common laborers and workmen, as 
 butchers, bakers, brewers, victuallers, smiths, carpenters, tailors, shoemakers, joiners, 
 barbers, millers, and masons, with other manual persons and artists, such are to be 
 rated for returns and gains, proportionable unto other men, for the produce of their 
 estates,” 
 
 The discussion of the justice or expediency of an income tax would take 
 more time than can now be spared. But we can say, in passing, that John 
 Stuart Mill and other able political economists advocate such a tax, and even 
 your committee are willing to compromise with their principles and have an 
 income tax laid on the invested capitalist, if only he can be relieved of the 
 tax of fourteen dollars on the value of his one-thousand-dollar bond, and pay 
 an assessment of two dollars and a half from its income. 
 
 But they have no suggestion of compromise for the income tax upon the 
 business man, and demand its repeal, although they say that “ it does not 
 amount to much in its result.” They “ repudiate ” the “ concession ” of the 
 assessors of Boston, as evidenced by the most liberal construction of which 
 the law will admit, and word their argument for repeal in such a manner as 
 to leave the inference that a tax that is older than the Constitution is itself 
 unconstitutional. If they are right, it follows that the founders of our Com¬ 
 monwealth submitted to assessments that could not be justified by the 
 organic law of which they were the authors. 
 
 But bolder than inference, they talk about the imposition of the tax upon 
 those whose stocks of merchandise have been assessed, and declare that 
 the action of the assessors is 
 
 “ in direct violation of that provision of the laws ‘ that no income shall be taxed 
 which is derived from property subject to taxation.’ ” 
 
 Before charging officers sworn to execute the law with direct violation of 
 its provisions, and suggesting that they observe “ more conscientiousness in 
 this regard,” would it not have been well for some member of the commit¬ 
 tee to have ascertained from the department at City Hall if there were not 
 some justification for the construction they so hotly condemnHad they 
 done so, they would have been informed that the restraining language on 
 which they rely was enacted forty years ago, and that twenty years ago the 
 precise point upon which they base their argument was before our Supreme 
 
12 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 Judicial Court, and was, by the full bench of judges, decided against the 
 view of the law of which they are so certain. In the opinion, the Court 
 begins with the statement that “the assumption on which the petitioner’s 
 case depends is a fallacy,” and the case ends with the opinion that “ we can 
 not doubt that this tax is allowed and justified by the laws of the State.” 
 
 The case, which is that of Wilcox v. Middlesex (103 Mass. 544), is com¬ 
 mended to the study of the committee. It might follow that they would 
 derive some information from the reasoning of the learned judge who wrote 
 ihe opinion for the Court. 
 
 The Single Tax. ^ 
 
 The next subdivision of the report is on the single-tax theory of Henry 
 George. It is a satisfaction to agree with what seems to be the conclusion 
 of your committee, or with any one who can give good reasons that will 
 help the people to see through this wild scheme. 
 
 With its first appearance, I tested it by our valuations, and found that the 
 whole yearly ground rent of the improved land of Boston would not meet 
 the annual tax requirement. It goes without saying, that if such would be 
 the result in our city, the scheme of the single tax would not work elsewhere. 
 
 In the early part of their argument, the committee say that 
 “ the attempt to divorce land from the buildings or improvements thereon seems to 
 us so unreasonable and unnatural, and to work such injustice, that it cannot be 
 entertained by your committee, nor will it be sanctioned by the people of the 
 Commonwealth.” 
 
 This seems well enough. But near the close of the discussion of this 
 branch of their subject, your committee observe that they 
 “ are free to say that they can imagine a single tax upon land made in so fair, just, 
 and reasonable a way as that some of the wise ends its friends seek to accomplish 
 and some of those which more conservative tax reformers are striving after, might’ 
 alike be attained.” , 
 
 How to make the first and last part of their argument agree, upon any 
 other theory than that the conclusion is a bid for the assistance of the 
 single-tax reformers, to help them carry their half-way scheme, is beyond 
 my comprehension. I must leave the problem with the committee. And 
 with their explanation will they kindly tell us if “ every day . . . facts and 
 opinions come to ” them “ which only strengthen the original opinion 
 expressed” by the “distinguished professor of political economy,” so 
 that they are compelled to believe that the personal property of our city is 
 ^‘fourfold” that of its real estate, and the wealth of Boston is $600,000,000 
 real and $2,400,000,000 personal estate, where, in principle, is the Henry 
 George scheme more unjust than their own ? They would give up the attempt 
 to make eighty per cent of the property of the community contribute to the 
 public charges, and would lay the burden on the twenty per cent they 
 would hold for taxation; and yet complain of the “injustice” of those who 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 3 
 
 move forward but one more step in the path of reform, and lay the assess¬ 
 ment on ten per cent of existing property. 
 
 Taxation as applied to Boston. 
 
 But passing this topic, we come to the last subdivision of the report: 
 Taxation in the City of Boston. And I find that under this head they 
 discuss, and come to conclusions upon, city expenditures with special 
 reference to some of the largest items, as paving, etc.; the borrowing of 
 money, and the debt limit; the yearly rate of taxation ; the franchises of 
 certain monopolies, notably our gas, electric light, and street railway 
 companies; the desirability of this last-named class of business being 
 conducted by municipalities; the ways and means of the city, including the 
 taxation of corporations by the State for the city’s account; and liquor 
 licenses; and finally, political jobbers and robbers, and the exemption of 
 mortgages from taxation. I note the force of their arguments, and concur 
 in many of their conclusions; but the scope of the review I have marked 
 out will not allow me to touch any subject not directly connected with that 
 annual deficiency that must be met by direct taxation. 
 
 The Taxation of the Business of Corporations. 
 
 And first, a few words on the position of the committee as to the State 
 tax on corporations. That the committee propose that the business men of 
 Boston, who are carrying on their business under the charter of the State, 
 shall be taxed on the personal property employed therein is manifest, from 
 their estimate of ways and means under their twelfth conclusion. 
 
 In their “income from general sources” of $2,400,000, the State corpora¬ 
 tion tax, which last year yielded to Boston’s treasury $820,564, is included; 
 and this is their justification, in their own words : — 
 
 “ It may be proper to say that to some it will perhaps seem unjust to relieve 
 capital in business from taxation, while the surplus, as working capital in manufactur¬ 
 ing corporations, will still be taxed by the State, and Boston get her substantial share. 
 It must not be forgotten, however, that all corporations are creatures of the State; 
 that the man who thus employs his capital faces only a limited liability; that it is 
 becoming more and more the method of business men in doing a general mercantile 
 business, because of the limited liability; that all the States avail themselves of this 
 resource.” 
 
 Your committee would destroy a system of taxation older than the 
 Commonwealth because of the impossibility of reaching all personal prop¬ 
 erty; and so great is the enormity of that system, by reason of this impossi¬ 
 bility, that they are moved to declare, that 
 
 “ when you think of the burden of taxation as being laid, so far as personal prop¬ 
 erty is concerned, on, it may be, one fifth or one tenth part of that property, it is 
 immaterial which, does not the injustice of this thing loom up so that it overshadows 
 all others?” 
 
14 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 And yet they come forward with a proposition, as a part of their scheme, not 
 only to exact full taxes of our manufacturing companies, but of six mer¬ 
 chants doing business in Boston, three are to be exempt, and three are to 
 be taxed upon all their capital invested in personal property. The one man 
 alone in business, the two constituting a firm are to be exempt; the remain¬ 
 ing three, having organized themselves into a corporation, under the four¬ 
 teenth section of Chapter io6 of the Public Statutes, are to be taxed, because 
 “ all corporations are creatures of the State,” and persons “ doing a general 
 mercantile business,” under corporate forms, face “only a limited liability.” 
 Probably your committee found, as most reformers do, that it is easier to 
 tear down than to build up. 
 
 Revenue from Liquor Licenses. 
 
 With regard to another item of revenue, that from liquor licenses, your 
 committee seem to be a little out in their figures and a little off in their 
 morals. As to the amount of revenue, they say: — 
 
 “ In regard to the income from licenses to sell intoxicating liquors, the gratifying 
 fact appears that it has so increased that while one fourth goes to the State, yet the 
 remainder gives our city treasury a million of dollars.” 
 
 The statements of the city auditor’s report rai st be accepted as conclusive. 
 Sect. 14, Chap. 100, of the Public Statutes, requires that one fourth of the 
 gross receipts from this source shall be paid over to the State Treasurer. 
 The auditor’s report shows that $154,234.25 was so paid. This would give 
 $616,937 total receipts, with the city’s share, $462,702. But this share is 
 charged by law with the extension and maintenance of the police signal 
 system, and the general expense of clerks and officers employed in enforcing 
 the license law. 
 
 The city report gives these in detail, and shows that the net revenue to 
 the city last year was $299,964. 
 
 But the committee point out how this loss can be repaired; they say: — 
 
 “ The ease with which this income has increased is a plain indication of further 
 possibilities in the same direction. It is suggested that special pains should be taken 
 in this kind of taxation to discountenance public bars, which are illegal noiv ; and the 
 first-class hotel, that shall limit its sale to the dining-table and banish this already 
 illegal institution from its premises, should be favorably considered, and the tax upon 
 those who do not should be much larger than as at present. A classification of this 
 sort seems, to your committee, wise and justy 
 
 Sympathy for a committee whose scheme starts out with an annual deficit 
 of $7,500,000, caused by the loss of personal taxes, and who want not only 
 to replace that amount, but to find an increased revenue, compels me, while 
 I look to their methods, to remember their difficulties. 
 
 But the proposition to charge ohe rate of license fees to those who keep 
 within the law, and another and a higher rate to those who break it, leads 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 15 
 
 me to suggest that in this line there is a fruitful field for increase of revenue; 
 and that a license for liquor to be drunk on the premises, might, for ten per 
 cent advance, be changed to one to get drunk on the premises; and, at some 
 price, a man might be licensed for twelve months to commit assault and 
 battery. 
 
 But if the committee are serious in their proposal, to use their own lan¬ 
 guage as applied to myself, I must 
 
 ♦ > 
 
 “ unqualifiedly condemn both the spirit and method of treating the subject.” 
 
 Assessment of Personal Property by the State. 
 
 The committee recommend that direct State and county taxes be abolished 
 so far as the assessment of real estate is concerned, and would raise the tax 
 of the Commonwealth and her counties by the central authorities at the 
 State House. This, they think, would be possible under their scheme of 
 having our real estate taxed only for city purposes. In this connection 
 they say: — 
 
 “ Recognizing, however, the fact that an increased rate upon real property, which 
 now bears three fourths of the taxation, would be misunderstood and excite opposi¬ 
 tion, they recommend on the part of the State such taxation of personal property as 
 shall realize a sum about equal to the ordinary State tax, and the amount of the 
 county taxes, say from $3,000,000 to $5,000,000.” 
 
 The State tax last» year was $2,000,000; for each of the two preceding 
 years, $2,250,000 ; the county taxes of 1889 amounted to $1,823,000. The 
 estimate of the committee is a fair one — call the sum $4,000,000. Your com¬ 
 mittee evidently consider that the strongest reason for giving up local tax¬ 
 ation of personal estate is, that a large part of it cannot be reached, and that 
 to the extent that it is taxed, it is disproportionately assessed. The annual 
 assessment and collection of $7,500,000 by the local authorities makes the 
 grievance that justifies their report and conclusions. They throw away the 
 $7,500,000, and ask the Commonwealth to assess more than fifty per cent 
 of the amount on personal property. Do they think, by reducing the 
 amount one half, that the new tax would be twice as just or only one half 
 as unjust as the old one ? Do they think that State officials, from the dome 
 of the State House, can discover personal property better than can local 
 assessors from three hundred and fifty city and town halls ? Or perhaps 
 they think that their adoption of the suggestion of the Tax Commission of 
 1875, ^nd their recommendation for a legacy and inheritance tax, will, if put 
 in the form of law, raise the amounts needed for State and county revenue. 
 Possibly that result would follow if the committee would guarantee their 
 estimates, and are good for their amount. The tax on collateral inher¬ 
 itance exists in Pennsylvania and New York. These States, in area, popu¬ 
 lation, and natural wealth and resources, are vastly our superior. New York 
 
i6 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS 
 
 is nearly six times larger, and, by the last census, nearly three times more 
 populous, than Massachusetts. Your committee state that 
 
 “This tax realized to the State of Pennsylvania, 
 In 1888 over ...... 
 
 In New York in 1887 .... 
 
 In New York in 1888 .... 
 
 Estimated in 1889 ..... 
 
 ^700,000 
 55L716 
 736,000 
 1,000,000 ” 
 
 The estimate of the official was a good one. The figures are just out; 
 the five-per-cent tax realized $1,076,000. Your committee’s observation and 
 •estimate are, that 
 
 “As there are few States in the Union whose inhabitants lead the people of Mas¬ 
 sachusetts in the accumulation and distribution of property, this tax should realize to 
 the State treasury not less than $1,500,000 at the outset.” 
 
 New York, two years ago, was receiving only about one third of what the 
 committee expect to get at the outset. 
 
 A law taxing collateral inheritance ought not to be difficult of enactment. 
 But while love for wife and children remains an animating sentiment of the 
 human race, it will be impossible to pass a succession tax law that will at¬ 
 tempt to produce a large revenue, or, if passed, to enforce it with uniformity. 
 Such a tax, if considered burdensome, would be defeated \y^ ante mortem 
 gifts. Yet your committee, in their estimates, after putting the collateral 
 tax at $1,500,000, put the annual income of their proposed succession tax 
 at no less amount than $2,500,000, for they say: — 
 
 “ Your committee have no doubt that these two State taxes will annually at least 
 equal the $4,000,000 of State and county tax.” 
 
 Before looking to neighboring States with such unfortunate results, your 
 committee should have remembered that Massachusetts has had experience 
 in this class of assessments, and that it is not twenty years since the United 
 States discontinued its legacy and inheritance tax. 
 
 In 1871, the last year of its operation, personal estate, assessed at three 
 fourths of one per cent to parent or child, brother or sister, and with increas¬ 
 ing rates up to six per cent to a stranger in blood, produced $292,131; and 
 real estate, assessed to the immediate family at one per cent, to brothers 
 and sisters at two, to collaterals at four and five, and to strangers at six per 
 cent, produced $71,378; a total of $363,509. Both taxes united, from 1863 
 to 1871, produced less than one half of the amount your committee “have 
 no doubt ” will annually be forthcoming if their recommendation is adopted, 
 the exact figures for nine years being $1,934,392. 
 
 The void the committee made, they have not filled. What class of per¬ 
 sonal property will the committee recommend the State to tax to provide for 
 the deficiency ? And how will they prevent still greater injustice than they 
 claim now exists ? 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 7 
 
 The Valuation of Personal Property in Boston. 
 
 Before I review their concluding remarks, I have a few words to say as to 
 another class of their estimates. Your committee have assumed all through 
 their argument that the assessable personal valuation of Boston was the 
 $201,606,300 borne on the assessors’ rolls at City Hall. They make no men¬ 
 tion of $54,836,500, the investments of our Boston residents in Massachu¬ 
 setts corporations, or of $1,493,100, the shares of national banks in the State, 
 but out of Boston held by our citizens, although these figures, with the ex¬ 
 planation of their meaning, are contained in the assessors’ statement, printed 
 as an appendix to the auditor’s report. 
 
 The committee were not unaware of this class of statistics. From the 
 report of April last, containing the figures of May i, 1888, they took the 
 number and value of the vacant houses of the city, while discussing the 
 effect of the single tax. It does not trouble me that they gave the credit of 
 the compilation to the auditor, but it does that they should drop out of 
 sight twenty-two per cent of Boston’s assessed personal. I can not explain 
 these classes of property more concisely than to say, that the State taxes 
 the corporations, or receives their assessment, and pays over to the city the 
 tax on the shares of its residents. I will add, however, an extract from the 
 report, which I shall not say I quote, for the language is my own; — 
 
 “ As the revenue from these two sources is always estimated before the 
 amount to be raised by taxation is determined, the effect of the valuation of 
 this property in reducing the rate of taxation upon the $764,452,548 assessed 
 by the city is, as nearly as may be, the same as though its amount was in¬ 
 cluded in the assessors’ aggregate, and the taxes were assessed by them. 
 
 “The total valuation of personal estate which is assessed for all purposes 
 for which the city must raise money by taxation can, for the year i888, he 
 put at $257,768,873.” 
 
 Possibly the committee left this trifle of $56,000,000 out of their computa¬ 
 tion, because, while they intend that all other personal property shall go free, 
 their scheme proposes that these classes shall be held for full taxation. I' 
 cannot help again quoting their own words : — 
 
 “ Now, when you think of the burden of taxation as being laid, so far as personal 
 property is concerned, on, it may be one fifth or one tenth part of that property, it 
 is immaterial which, does not the injustice of this thing loom up so that it over¬ 
 shadows all others? ” 
 
 The taxes for present year (May i, 1889) are not yet fully collected and 
 paid over to the city ; but the indications point to a larger return than that 
 of last year. As you further consider your committee’s report, keep 
 Boston’s assessed valuation in mind as $260,000,000. 
 
i8 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 The Effect of the Exemption of Personal Property on Real 
 
 .Estate. 
 
 But retaining the revenue from personal property in Massachusetts banks 
 and corporations, so that under their sche 7 ne if a 7 nan held shares in a for- 
 eig7t co 7 npany he would be exe 7 npt, but if he held in a ho 77 ie corporation he 
 W02ild be taxed^ your committee promise, if their plan is adopted, with a 
 million dollars added to the tax levy, the bills can be settled at City Hall, 
 with only three dollars added to the rate, the tax to be based on real estate 
 alone. Your committee admitted in an early part of their report that they 
 had a difficult problem. They said that 
 
 “ The task given your committee, so far as Boston is concerned, is doubly arduous 
 because of the immediate twofold requirement. 
 
 “The problem here, then, is not simply to release all personal property and keep the 
 tax rate about where it is, but to add a million or more to our income, as well as 
 release all personal property, and keep the rate where it is.” 
 
 The committee think they have successfully accomplished their task. 
 By such estimates as have been considered they have disposed of the State 
 and county taxes ; have retained the city’s income from corporate invest¬ 
 ments and licenses, and find that a rate of $i6 per $1,000 on $600,000,000 
 real estate will produce $9,600,000, which, added to the income just indicated 
 and from other sources, would make a total of $12,400,000, and give the 
 $12,000,000 the city needs. From their stand-point this computation seems 
 correct. But I am confident when the full effect of your committee’s scheme 
 shall be felt, you would not have $600,000,000 of real estate to assess. The 
 right of the government to tax is a mortgage on your property to-day. 
 What we call a first is in reality a fifth mortgage. The debt of the nation, 
 the State, the county, and the city are all below the mortgage, and public 
 securities are a choice class of credit property because of the paramount 
 right of government to tax for principal and interest, with a lien on the 
 estate. The greater the mortgage, the less the value of the equity. Your 
 committee put the proportions of assessed real and personal at seventy-five 
 per cent real, twenty-five per cent personal. When the taxes assessed at the 
 State House, in respect of personal property, are added to those of the local 
 assessors, their true proportions are shown to be fifty-eight and forty-two per 
 cent, respectively. By the increase of the tax rate from nine to twelve dol¬ 
 lars for city purposes, an advance of thirty-three per cent, and to a greater 
 per cent if the city must still carry a part of the State and county taxes, your 
 committee propose to add to the present direct tax on real estate from a 
 third to a half, and expect that it will retain its present value. The effect of 
 exemption on the property remaining to be taxed can perhaps be better under¬ 
 stood by an illustration. Start from our city boundary and draw a line run- 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 19 
 
 ning east and west, through Beacon, School, Washington, and Milk streets 
 to the water, and by our nnain ship-channel to the outer harbor. North of 
 that line a fairly close computation found $185,200,000 real estate; call it 
 $200,000,000, and say that south of the line there is $400,000,000. Pass a law 
 that will exempt that $200,000,000 from taxation, and lay the whole burden on 
 the $400,000,000. Does any one suppose that when it was sure that the con¬ 
 ditions would continue, that one third of the value of the city would be found 
 on one side of the line and two thirds on the other ? Such effect will be pro¬ 
 duced on real estate by the exemption of personal property. Mr. Gleason, 
 our late State Treasurer, stated that he thought such taxation would diminish 
 the value of the real estate one third. The gentleman who will speak after 
 me has worked out the problem more definitely. In a recent speech before 
 a legislative committee, he puts the confiscation that would be worked by the 
 Henry George scheme at $550,000,000, and a tax on real estate alone (land 
 and buildings) at $110,000,000, this last tax increasing the average rate of 
 Massachusetts from $15.06 to $27.29. 
 
 What the shrinkage would be must remain a matter of opinion. But 
 assume it to be one third, and the basis of the tax would drop to $400,000,000, 
 and to raise $10,000,000 would require a rate of $25 ; or if we discard all 
 income from personal sources and raise the $12,000,000 the committee 
 want, we must have a rate of three per cent, or $30 per $1,000. 
 
 The Effect of the Plan of the Committee. 
 
 Now, try the committee’s plan. The three-thousand-dollar house at the 
 present rate of thirteen per thousand bears a tax of $39. On their scheme, 
 $3,000 valuation, less $1,000 exemption ; net, $2,000. Tax at twenty five per 
 thousand, $50, or on full valuation, $75. 
 
 The fifty-thousand-dollar warehouse at thirteen carries a tax of $650. 
 But on the committee’s plan, raised ten per cent to $55,000, its tax at twenty- 
 five is $1,375. With taxes on real and personal at thirteen per thousand, the 
 warehouse could cover $50,000 of merchandise, and pay $75 less tax than 
 by the plan of the committee. 
 
 The Mortgage Question. 
 
 And now a few more words on the closing statements of the report, and I 
 have done. I never expect to agree with the honorable chairman of your 
 committee on a question of taxation, but I certainly never expected to dis¬ 
 agree with him on a question of fact. But when he says that in the struggle 
 which resulted in the exemption of money secured by mortgage, the chairman 
 of the Boston assessors and “ certain parties ” who were lenders of money 
 upon mortgage security were on one side asking for taxation, an^i on the 
 other side “only the people,” I must disagree with his statement. On the 
 occasions to which he refers, called before legislative committees by vote of 
 those bodies, I represented only my own opinions. But I believed then and 
 
20 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 I believe now, that I was on the side of, and not against, the people. The 
 credit of the exemption of secured debts (while unsecured debts are still 
 taxed), in my opinion, belongs more than to any other man to the Hon. A. 
 W. Beard, the friertd and neighbor of your chairman of committee ; and it 
 was that gentleman who received the aid and assistance of the lenders of 
 mortgage money. They saw, as clearly as did the chairman of the Boston 
 assessors, that the enactment in the form in which it was passed was power¬ 
 less to help the borrowers, and taxed all other classes for the benefit of the 
 lenders of capital. I am surprised that the committee should be so mistaken 
 as to put three leading Boston trustees, holders then and now of large 
 amounts of mortgages, as allies of mine in that contest, when, in fact, they 
 were my ablest opponents. 
 
 But as to the results of this law it is not surprising that I should disagree 
 with the committee ; they say that 
 
 “The rate of interest upon mortgages has fallen to so reasonable a figure that 
 nobody complains; even the well-to-do business man can hardly afford not to have 
 a mortgage upon his home.” 
 
 We all admit that the rate of interest on mortgages has fallen since the 
 enactment of the law of i88i. Two years before that law went into effect 
 the average rate of interest upon the mortgages of all parts of the State 
 was per cent. After seven years’ operation the records show that the 
 mortgages recorded in the first five months of 1889 were at an average rate 
 of ^ difference of per cent. With the average tax of the 
 
 State, as determined by its tax commissioner, at per cent, clearly the 
 borrower has not received the whole advantage of the exemption, unless the 
 rates of interest have been advancing during the last decade. That can 
 hardly be, when within a week Boston has sold its 3^ per cents, liable to 
 taxation, at a premium. We all know that interest has receded largely 
 during the last eight years. All the concession that lenders of money upon 
 mortgages have made to their borrowers they have been compelled to make 
 by the laws of trade, not by those of the State. I am satisfied that were the 
 laws that sustain the present exemption of mortgages repealed by the present 
 Legislature, as mortgages fell in, the lenders would take the rate fixed by 
 the money markets of the world, and pay their own taxes ; and if they refused 
 to do so, foreign capital would give borrowers all they required at that rate. 
 
 Not alone as a tax-gatherer have I had opportunities to study this problem. 
 One of the ways in which I work for the public is as the unsalaried presi¬ 
 dent of a savings bank with some two and a quarter millions of assets, nearly 
 one half of which is in mortgages. I have held the position six years. As 
 a member of its Board of Investment I have known of every transaction that 
 has taken place in that time, and not a dollar has been loaned upon mortgage 
 at less than five per cent. As second on your committee, I recognize the 
 name of my friend, the chairman of the Commission of Public Institutions, 
 who, like myself, is the president of a Boston savings bank. When he 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 21 
 
 places his mortgages at five per cent, or better; gets the remission of the one 
 half per cent tax at the State House on the amount he has invested, and 
 then buys the high-grade securities, in which alone savings bank funds can 
 be placed, at such a rate of premium that the interest is reduced to three and 
 one half per cent; finds that the one half per cent tax reduces the income to 
 a net three per cent, he needs no one to tell him which is the better invest¬ 
 ment, or which can better bear the tax. But he must not ask of us such 
 blind confidence that we accept, even from him, a statement that implies 
 that the imaginary lines that separate Massachusetts from her sister States 
 are barriers that control the price of money. Your committee say : — 
 
 “ Massachusetts mortgages have become the best possible investment for trust 
 funds, and the scanty income of the widow and orphan from this source is not 
 required to be divided with the town or city in taxes.” 
 
 The widow and orphan are protected now by Massachusetts law from 
 oppressive assessments, whatever the class of property held by them. The 
 assessors of Boston annually remit a large amount of taxes upon real estate, 
 which shelters the children of poverty. But from the statement of the 
 committee strike out “scanty” and insert a7itple^ strike out “widow and 
 orphan ” and insert and I will admit that it correctly describes 
 
 the effect of the present law. And, lastly, say the committee : — 
 
 “After the readjustment to the new order of things had taken place, there was no 
 perceptible increase in the rate of taxation; and this reform, which puts millions into 
 the pockets of the people in the reduced rates of interest upon mortgages and 
 increased value of real estate, to all appearances costs the general tax-payer nothing.” 
 
 No perceptible increase in taxation? In i88r, the last year that mort¬ 
 gages were taxed, the rate in Boston was $13.90. In 1882, upon their ex¬ 
 emption, the rate went with a bound to $15.10, notwithstanding a $12,000,000 
 gain in real-estate valuation. In 1883 the rate was $14.50, to be succeeded 
 in 1884 by the highest rate our city 'has ever known, $17.00 per $r,ooo. 
 Since that date the rate has been comparatively moderate. But no one can 
 trace any connection between the reduced rates and the mortgage law. The 
 reason for the reduction is manifest. 
 
 The law of 1885, limiting the rate of taxation, produced it, and has left 
 such a void in the city treasury that your committee are hunting for an extra 
 million to help fill it. Your committee use cautious words at the close of 
 this statement, “to all appearances costs the general tax-payer nothing.” It 
 costs him the shortage in the treasury, which must be met by increased 
 taxes or his share of the discomfort of neglected streets. An illustration 
 will perhaps make this clear. Our wards 13, 14, and 15 have a valuation of 
 $35,000,000, — just about the amount of mortgages that could be taxed, if the 
 law was now as it existed down to 1881. 
 
 I do not mean to say that there are only that amount of mortgages, out- 
 
22 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 side savings banks and corporations, held in Boston to-day. When the law 
 taxed them, it treated them as credits, to be offset, before they could be 
 taxed, by the debts of their holders, just as your ledger credits are dimin¬ 
 ished before assessment by your liabilities. But the taxable mortgages 
 under the old law and the valuation of South Boston are about the same. 
 Exempt the district from taxation, give the residents police, tire department, 
 schools, in short, all the costs of government without cost to them, at the 
 expense of the rest of the city. The rate of taxation would rise. But that 
 might be met by an enactment reducing our tax limit from nine to eight dol¬ 
 lars for city purposes. Your committee would only have to recommend that 
 instead of a million more than we are now raising, that a million and a half 
 be found, and they could again report that “ to all appearances,” the new 
 exemption “ costs the general tax-payer nothing.” • 
 
 But before leaving this branch of the report, let me call attention to one 
 more statement of the committee. They say ; — 
 
 “ Having in this reform flung out of the tax levy of the Commonwealth from one 
 to two hundred millions of Massachusetts mortgages, what is there at all alarming in 
 the bolder step of doing the same thing with five hundred millions more of personal 
 property, the inevitable result of which cannot fail to be a correspondingly greater 
 boon to every interest in the State? ” 
 
 The highest amount of mortgages assessed under the old law was $62,- 
 510,000. At the present time, had the law been continued, the amount 
 would have been about $80,000,000. The official figures, a year old, as to 
 personal property locally assessed, were, in round numbers, $532,000,000. 
 A statement so immensely broadened at one end and clipped at the other 
 can hardly be called accurate. 
 
 Effect of Taxes on Real Estate alone further considered. 
 
 My review of the report of your committee has taken more of your even¬ 
 ing than can fairly be given to one person. 
 
 I have no time to say a word in defence of the Massachusetts system of 
 taxation, or to trace to any considerable extent the incidence of the system 
 your committee would recommend. But a tax on real estate alone is a tax 
 on consumption. It will tax a man in proportion to the number of persons 
 in his family, and without other reference to his ability to pay assessments 
 than the value of the estate he occupies. It will largely exempt the rich ; and 
 directly upon the owners of small estates, and indirectly through increased 
 rents, will terribly tax the poor. Let me illustrate again, and as tax records 
 are public property, 1 shall not hesitate to use my own. Leaving out of 
 the account my vacant land (for poor people cannot carry that class of prop¬ 
 erty), I was taxed last year on twelve small estates in Ward 14. I live in 
 one, and let the others to fourteen families. My tax on this property was 
 $525.03. At $25 per $1,000, which I think fairly represents the rate under 
 
ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 23 
 
 the committee’s scheme, it would be $1,017.50, I do not in this illustration 
 make any allowance for the shrinkage of real estate, for the committee’s 
 plan would not effect much reduction of values of cheap land. There is not 
 much value to shrink. The buildings would not recede in value, for if such 
 property will not pay as fair a return to capital as untaxed personal estate, 
 it will not be built. The higher the cost of the land, the greater the loss 
 to the owner. Taking the $25 instead of the $30 rate is, I think, allowance 
 enough to make the illustration a fair one. But if I can take advantage of 
 the unconstitutional beneficence of the committee, and deduct $1,000 from 
 the value of my estates, worth $3,000 or under, the tax will be $150 less, or 
 $867.50, an advance of ninety-three per cent on the first, or sixty-five per 
 cent on the second statement of the case. Who pays this increase? The 
 committee think it so clear that the 
 
 “addition to the burden of taxation upon real estate will not in the end come out of 
 the real-estate owner ” 
 
 that they will not repeat the familiar argument. I cannot agree with them 
 that it is so clear. I think the addition would come out of me to the extent 
 of the land value, and out of my tenants for the value of the buildings. 
 Fortunately for me, land is cheap in that location. Including the value of 
 the house in which I live, my share of the added burden would be thirty- 
 eight per cent, and my tenants, nearly all of the wage-earning class, must 
 carry over three hundred dollars, sixty-two per cent, of the tdx added to 
 their homes. Every time they visit the corner grocery, or buy elsewhere 
 the clothing or subsistence of their family, in the price of goods increased 
 by increased rentals, they must be further taxed. Still worse will be their 
 condition if the committee are right, and under their proposed law I have 
 the power to put the whole increase upon them. In either case they 
 must come down in their scale of living. The tenant will save less of his 
 earnings, the owner will have less of income, but both together, with the help 
 of business taxed through added rents, can relieve the capitalist from per¬ 
 sonal assessments, and so help to create other “centres of wealth, beauty, 
 and an attractive and money-spending people,” beside those now existing. 
 That the ability to do this exists there can be no doubt. The wages of the 
 manual labor class in England exceed the united income of the middle class 
 and the aristocracy. Your committee clearly intend that that class shall 
 continue to contribute, when the millidnnaire is released from all direct tax 
 on his personal property. Nowhere is there a suggestion to give up the tax 
 upon savings-bank deposits, which last year yielded to the State a revenue 
 of $900,000. 
 
 The tax reformers who are ever planning that some class other than 
 their own shall carry the burden of taxation, may well halt where they are. 
 We live in times that are not favorable to transplanting to American soil 
 the tax methods and class distinctions of the governments of Europe. 
 
24 
 
 ADDRESS ON TAXATION, BY MR. THOMAS HILLS. 
 
 Questions of labor, capital, and taxation are year by year taking more and 
 more a hold on the masses of the people. 
 
 The path your committee have marked out will be a difficult one to follow, 
 and were it not for the fact that our form of government provides a peaceful 
 way for the determination of such problems, it would be a dangerous one to 
 tread. 
 
 We must remember that a majority of our voters pay only a poll tax, and 
 that a vast majority of our people either pay no property tax or one that 
 would be affected unfavorably by such changes as those recommended by 
 your committee. It cannot be that those best able to bear assessments 
 will be able to transfer their tax burdens permanently to those who hold the 
 political power of the State. It is much more reasonable to suppose that 
 the system of taxation which has existed substantially unchanged in our 
 prosperous Commonwealth for nearly three centuries will still require all 
 citizens, each as nearly as may be according to his ability, to contribute to 
 the support of the government that protects all within its borders, and 
 should know no favored class. 
 
STANDING COMMITTEES. 
 
 TRANSPORTATION. 
 
 Hon. ALDEN SPEARE. Of the Oil Trade Association, 
 
 Mr. WM. O. BLANEY. Of the Chamber of Commerce, 
 
 Mr. WM.B.RICE . . . . . Of the Shoe and Leather Association. 
 
 Mr. J. M. W. hall . . Of the Bay State Lumber Trade Association. 
 
 Mr. P. frank HENNIGAN . . Of the Fruit and Produce Exchange. 
 
 MAIL SERVICE. 
 
 Mr. JOHN D. MORTON. Of the Paint and Oil Club. 
 
 Mr. JOSEPH BURNETT. Of the Druggists Association. 
 
 Mr. OSCAR H. SAMPSON .... Of the Merchants Association, 
 Mr. GEORGE O. CARPENTER . Of the Underwriters Association. 
 Mr. JOHN L. BATCHELDER. Of the Coal Exchange. 
 
 CUSTOMS. 
 
 Mr. CHARLES I. THAYER. Of the Drysalters Club. 
 
 Mr. GEORGE W. HERRICK. Of the Metal Association, 
 
 Mr. clarence B. MITCHELL. Of the Fish Bureau. 
 
^xeeutiue Business /Issoeiatioi) 
 
 LIST OF flSSOCIffTIONS REPRESENTED 
 
 BAY STATE LUMBER TRADE ASSOCIATION. 
 
 BOSTON BOARD OF FIRE UNDERWRITERS. 
 
 BOSTON CHAMBER OF COMMERCE. 
 
 BOSTON DRUGGISTS ASSOCIATION. 
 
 BOSTON EARTHEN-WARE ASSOCIATION. 
 i BOSTON FISH BUREAU. 
 
 BOSTON FRUIT AND PRODUCE EXCHANGE. 
 
 BOSTON GROCERS ASSOCIATION. 
 
 BOSTON MERCHANTS ASSOCIATION. 
 
 BOSTON PAPER TRADE ASSOCIATION. 
 
 BOSTON 
 
 COAL EXCHANGE OF BOSTON AND VICINITY. 
 
 DRYSALTERS CLUB OF NEW ENGLAND. 
 
 NEW ENGLAND SHOE AND LEATHER ASSOCIATION. 
 NEW ENGLAND FURNITURE EXCHANGE. 
 
 NEW ENGLAND METAL ASSOCIATION. 
 
 OIL TRADE ASSOCIATION OF BOSTON. 
 
 PAINT AND OIL CLUB OF NEW ENGLAND. 
 
 THE MASTER BUILDERS ASSOCIATION.