firmed by the Supreme Court of the United States. In that State, the State Board of Equalization, for the purpose of ascertaining the fair cash value of the capital stock and franchises of corporations in excess of the value of their tangible property, adopted the following rules:

"WHEREAS, The fourth clause of section three of An act for the assessment of property, and for the levy and collection of taxes,' approved March 30th, 1872, in force July 1st, 1872, provides as follows:

"Section 3. Fourth. The capital stock of all companies and associations, now or hereafter created under the laws of this State shall be so valued by the State Board of Equalization as to ascertain and determine, respectively, the fair cash value of such capital stock, including the franchise, over and above the assessed value of the tangible property of such company or association.

"Said Board shall adopt such rules and principles for ascertaining the fair cash value of such capital stock as to it may seem equitable and just; and such rules and principles, when so adopted, if not inconsistent with this act, shall be as binding and of the same effect as if contained in this act, subject, however, to such change, alteration or amendment as may be found from time to time to be necessary by said Board; therefore, be it

"Resolved, That for the purpose of ascertaining the fair cash value of the capital stock, including the franchise, of all companies and associations now or hereafter created under the laws of this State, and for the assessment of the same, or so much thereof as may be found to be in excess of the assessed or equalized value of the tangible property of such companies and associations, respectively, we, the State Board of Equalization, hereby adopt the following rules and principles, viz. :

"First. The market or fair cash value of the shares of capital stock, and the market or fair cash value of the debt (excluding from such debt the indebtedness for current expenses), shall be combined or added together; and the aggregate amount so ascertained shall be taken and held to be the fair cash value of the capital stock, including the franchise, respectively, of such companies and associations.

"Second. From the aggregate amount ascertained as aforesaid, there shall be deducted the aggregate amount of the equalized or assessed valuation of all the tangible property, respectively, of such companies and associations (such equalized or assessed valuation being taken in each case, as the same may be determined by the equalization or assessment of property by this Board); and the amount remaining in each case, any, shall be taken and held to be the amount and fair cash value of the capital stock, including the franchise, which this Board is required by law to assess respectively against companies and associations now or hereafter created under the laws of this State."

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Referring to these rules of the Illinois Board of Equalization, Justice Miller says, State Railroad Cases, 2 Otto, page 604: "The statute of Illinois, and the rule adopted by the Board of Equalization, under the power conferred by the clause we have just recited, may not be the wisest mode of doing complete justice in this difficult matter; but we confess we have, on the whole, seen no scheme which is better adapted to effect the purpose, so far as railroad corporations are concerned, of taxing at once all their property, and of making the tax just and equal in its relation to other taxable property of the State."

If the Illinois rules, pure and simple, were adopted by this Board, by which to ascertain the value of franchise, then the franchise tax on the Central, as now assessed, would be relatively lower than that of the United Companies. A glance at the preceding tables will show that, under this rule, the franchise of the United Companies would be onetwelfth more than that of the Central. The assessed franchise tax of the Central as returned by this Board is $63,250; that of the United Companies $71,500, which is about $3,000 more than the proper proportion by the Illinois rules, as compared with the Central. Under that rule the "glaring and unexplainable discrepancies" would disappear.

We come now to the consideration of the two items with which the circular deals so freely in its comparisons-gross receipts—and length

of line.

First. Gross receipts, so far as they relate to railroads and canals, are not so much as mentioned in the law of April 10th. Among the items of information this law prescribes to be furnished to the State Board by the several companies, as basis for the ascertainment of true value, gross receipts or net receipts are not included or called for. And is it not a fair inference to be drawn from this, that the Legislature did not look upon gross receipts as the measure of true value? In Pennsylvania and other States, gross receipts are made the chief element upon which taxation is based. But the Legislature of New Jersey chose to fix a different standard for taxation-the true value of property, including franchise; and, as has been before said in this report, present productiveness is not the measure of true value of either corporate or individual property. An unimproved and unoccupied square on Broadway would be rightfully taxed on a valuation of millions, although it might not produce enough to keep it enclosed.

A. and B. each own a farm adjoining, of like area, equal fertility. of soil, and of equal money value. A., having a practical knowledge

of farming, by industry, thrift and good management, secures a good result from his farm-makes it a source of profit. B., without the practical knowledge, and lacking the industry and thrift of A., fails to make his farm pay current expenses. Do these different resultsthis difference in productiveness-change the taxable value of either property? Surely not. And is there any difference in the principle when you apply it to the property of railroad corporations? So, this item of comparison can hardly be said to confirm the "glaring and unexplainable discrepancies" charged.

Second. Then, as to the only other item used for comparison—comparative length of line, and valuation thereof per mile, including all the property connected therewith used for railroad purposes. There is is no just conclusion to be drawn from the relative length of line; a mile of railroad in one locality may cost ten times or twenty times as much as in another. The cost of three or four miles of road through Bergen Cut would build a hundred miles over the level territory of South Jersey, where nature has done the graduation. That prince of railroad men, the late Thomas A. Scott, when crossing the bridge over the Susquehanna, on the Philadelphia, Wilmington and Baltimore Road, at the period when his Texas Pacific Road was foremost in his thoughts, said to a friend: "This is a fine structure and a very costly one; only think, the cost of this bridge would build a hundred miles of the Texas Pacific Road!"

The question, in ascertainment of value, is not how many miles of road is included in a line, but what did it cost, or what is its present value, or for how much could it be duplicated, or how much money is invested in it. The length of line may bear no relation to these things. There is one road in New Jersey, less than two miles in length, against which there is an assessment on a valuation of $814,603. Suppose the representatives of this road should issue a circular, complaining of injustice, and cite for proof that they had been taxed on a valuation of over $400,000 per mile, when some roads in the State have been taxed on a valuation of less than $10,000 per mile-calling attention to this as a "glaring and unexplainable discrepancy"! what would be proved thereby but the illogical reasoning of the circular?

An examination of the lines of the two systems which have been drawn into comparison will show that the Reading system has a considerably larger per centum of high-cost road than the Pennsylvania system, because of the large proportion of the line of the latter—above

one-half of their total, being comprised in the seashore system, which runs wholly through the level and comparatively inexpensive lands of West Jersey, while the bulk of the Central's line is located in the mountainous and hilly counties of East Jersey, which vastly increases the cost of laying a railroad.

It must be remembered that the period fixed by the law for valuation was January 1st, 1884. In the year that has since passed some misfortunes have come to the Central which are to be regretted, and which this Board, interested in the welfare of the great business institutions of the State, sincerely deplore. They earnestly hope there are brighter days for so important an interest in the near future. But its altered condition now, cannot affect or change the valuation made a year ago.

The Board regrets that it has felt it a duty to say so much in reply to the criticisms made so conspicuously by the Central or its friends in the official circular mentioned, but it seemed necessary to defend their action against what appeared to them to be an unjust criticism.

RELATIVE TAXATION.

A brief consideration of two important questions will close this report

First. Whether the total tax imposed on the railroad and canal companies of the State by the act of April 10th, as ascertained and assessed upon their property by this Board, bears an approximately fair relation to the total tax assessed against all the other ratable property in the State. In other words, does the railroad and canal property of the State, as assessed under the present law, pay more or less than it would if it paid tax at local rates in each taxing district in the State on its corporal property?

Second. A comparison of the taxation of railroad property in the State of New Jersey with that of a sister State, Massachusetts, in which the railroad property approaches very nearly a parallel with New Jersey in mileage, and in all the elements that should be considered in determining taxable value.

As to the first. The Board has had prepared tabulated statements, (see Appendix,) showing what the tax would be on the corporal prop

erty of three of the large railroad systems-the United New Jersey Railroad and Canal Company-the Central Railroad Company of New Jersey-and the Morris and Essex Railroad Company, if subjected to local taxation on their value in each taxing district, as fixed by this Board, at the same rate as all other property is taxed in each of said taxing districts, with a comparison of such total tax with the total amount assessed by this Board. This table has been prepared with great care, the rate in each taxing district, having been obtained from its local assessor-is believed to be accurate and will

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The result shows that the tax assessed against the United Companies by this Board is 56.14 per cent. of what the local taxation would be; that of the Central 56.19 per cent., and that of the Morris and Essex 55.32 per cent. On the first blush it would seem as if these roads or systems paid but little more than half they would pay under local taxation. But this is not so, for the following reasons:

First. The main stem and personal property of all railroads have been valued by this Board in accordance with the provision of the law at full or true value; while the universal custom of local assessors in the taxing districts is to value for taxation at a percentage of true value, ranging all the way from 40 to 80 per cent.; averaging, it is thought, about 65 per cent. of true value. Second. If the amount of the railroad and canal property was added to

the other ratables now locally taxed, it would increase the total ratables by so much, and, therefore, a less per centum of tax would raise the required amount of tax.

The Board is confident that, making the most liberal allowance for these two considerations, the tax of the railroad corporations on their corporal property, at the same percentage of valuation, and at the same rate of tax as levied on other property in the taxing districts, would still be considerably more than the total tax assessed against them by this Board, including the franchise. If this be true, certainly these corporations have nothing to complain of. The Board invites examination as to the figures, and criticism as to the. conclusions drawn therefrom.