These statements have found their way to the press, and a circular issued by the company is being circulated, evidently to impress the public while the appeal is still pending that great injustice has been done this company. This seems to the Board to require a more extended statement in answer thereto than otherwise would have been thought necessary. First, the Board cannot assent to the proposition that the value of a franchise for taxation, or, indeed, of any property, corporate or individual, depends upon its present productiveness. If great privileges and powers are granted, and correspondingly great results do not spring therefrom, the cause may be found in bad management, bad judgment, dishonest officials; nevertheless, the grant or privilege with all the power to do things, to compass great undertakings, remains. If precisely the same privileges are given to another set of men, who produce large results therefrom by better management, a wiser policy, a more honest administration, shall they be made to pay largely for their grant while the other goes free? This, indeed, would be a tax on brains and honesty, and a bounty for bad management or dishonesty, or both combined. This present unproductive privilege may have a large prospective value, and even at the moment might be valuable and productive under a different management. Justice Miller, in the case already referred to, 2 Otto, page 606, gives the judicial sanction of the court to these views. He says: "The case of Toledo, Peoria and Warsaw Company, as we have said, is used as an illustration of the inequality which this rule works, and which counsel say is forbidden by the constitution of the State, thus rendering the tax assessed against it void. That company is insolvent and in the hands of a receiver. It is unable to pay any interest on its bonds. Its capital stock is of no value. But the Board of Equalization assessed the capital stock and franchise at $2,003,415, and its tangible property at $2,629,367, thus assessing a property which pays but little, if anything, beyond its running expenses, at the sum of $4,632,782. "This sounds plausible; but is nothing more. Concede for the present that the capital stock is sunk, and is of no value; concede that the funded debt of the company has at present no market value, or is unsalable; there remains what is valued as worth over $2,600,000 of real and personal property, which, like all other property of individuals or corporations, ought to pay its proportion of the public burdens. There also remains the value of the franchise, which is not destroyed by the circumstance that the road does not pay interest on its debt. Does anybody believe that this debt is of no value, that the holders of it attach no value to this franchise? Are they willing to give up the right to operate the road, to receive freights and fares, to endeavor to make it pay something more than the mere value of the personal property of the track, the depots, the grounds, the rollingstock, and other tangible property? Is it supposed by any one that they intend or will ever sell them separately or apart from the right to use them as a railroad? Why do not the bondholders sell all these things under their mortgage at auction, as a man would sell town-lots and household furniture, and horses and carriages? The reason is too clear to escape observation. It is because in the case of the railroad there is attached to all this property, and goes with it, a privilege, a right to use it through the whole extent of the richest counties of Illinois, in transporting persons and property, in a manner which adds immensely to its value when considered as so much iron, so much land, and so much personal property. By virtue of this privilege or franchise, this is all aggregated into a unit, well adapted to make money by its use in that way, with a chartered right to use it for that purpose. "It is this franchise which the Legislature of Illinois intended to tax-which it had a right to tax; and in taxing it committed no injustice, if it was fairly assessed, though the corporation which holds it may be so utterly bankrupt that it must necessarily pass from it into other hands. In those hands, disembarrassed of its overweight of debt, who shall say that it is not worth $2,000,000? And who shall that such is not the real value now of this franchise." say Can anything be plainer, or more logical and conclusive, than these words of the learned justice, touching the precise point at issue? So, if these views are correct, the value of the franchise of the Central remains, to a greater or less extent, even if the allegation of its non-productiveness was true in point of fact. But is this true? The Central Road, as is well-known, is now operated and controlled by the Philadelphia and Reading Railroad Company, under a lease entered into between the two companies June 1st, 1883, for nine hundred and ninety-nine years. But it must be understood that it is the Central Railroad Company, a New Jersey corporation, that is being taxed by the State, upon the true value of all its property, including its franchise, as it relates to that corporation, no matter by whom controlled or operated. We are in no sense dealing with the Philadelphia and Reading Railroad-the State taxation is against the Central Railroad Company of New Jersey. Who pays the tax under the contract, or what profit or loss comes to the lessees from the lease, is no concern of the State. If productiveness is in any sense a measure of the true value of the franchise of the Central Railroad it must mean its productiveness to the stockholders of that corporation. Let us inquire what this franchise is worth to them. It is matter of record that what the Reading pays as rental for all the Central's property, owned or controlled, is—first, the interest on all its debt and the rentals it is under for leased roads; second, an annual dividend of six per cent. on the par value of the entire capital stock of the company; and, third, the sum of $18,000 per annum for the maintenance of the organization of the Central Company. The following schedule of these debts, or obligations, assumed by the Reading, under the lease, with the annual interest thereon, is taken from the report of the New Jersey Railroad Commissioner, for the year 1883: SCHEDULE OF PAYMENTS. Interest on $5,000,000 Central Railroad first mortgage bonds, 7 per cent... $350,000 Interest on $4,400,000 Central Railroad convertible bonds, 7 per cent............... 308,000 Interest on $15,000,000 Central Railroad consolidated bonds, 7 per cent....... 1,050,000 Interest on $5,404,000 Central Railroad adjustment bonds, 7 per cent......... .... 378,280 Interest on $2,400,000 Central Railroad income bonds, 7 per cent., 168,000 bonds, 6 per cent............ bonds, 7 per cent........... Interest on $2,310,000 Lehigh Coal and Navigation Company's Interest on bonds of various parties, amounting annually to................... Dividend on $2,500 of the capital stock of the Elizabethport and Interest on $400,000 loan from the Mutual Life Insurance Com pany, of New York, 6 per cent.......................... Interest on various Car Trusts, amounting annually to............ cent.......... Interest on $1,500,000 Long Branch Railroad bonds, 5 per cent... and $500 to maintain organization of the company........................................ Interest on $5,000,000 American Dock and Improvement bonds, 5 per cent................... Interest on $200,000 Long Branch and Sea Shore Railroad bonds, stock of the Dover and Rockaway Railroad, and $500 for maintaining organization..... Interest on $50,000 Dover and Rockaway bonds, 6 per cent......... ...... Interest on $2,062,000 of Central Railroad floating debt, 6 per cent............ For maintaining organization of Central Railroad. $250,000 95,436 14,000 6,500 3,000 10,500 4,000 123,720 18,000 Total before dividend on stock of Central Railroad........... $3,613,819 Add dividend on $18,563,200 capital stock of Central Railroad of New Jersey, 6 per cent............ 1,113,792 Total rental payable by Philadelphia and Reading Co.... $4,727,611 A glance at these figures will give some idea of the vast proportions of a corporation whose investments, as represented by their capital stock and obligations, reach over $60,000,000, and for the control of which tangible property and franchise the Philadelphia and Reading Railroad Company comes under an annual rental of $4,727,611. It is true that a part of the line of railway, and other corporal property leased or controlled by the Central, is outside of the State of New Jersey, and, of course, not subject to taxation in this State; but the corporate power under which the Central acquired this control, and under which they managed and operated their vast system for many years, and which made it lawful for them to make this lease to the Reading, was conferred wholly by the State of New Jersey, and the ability to do all this as a body politic arises from that grant. The main line of the Central, which is immensely valuable, is wholly within this State. And it was doubtless this important link in the chain that connects the vast coal fields of Pennsylvania by the most direct and advantageous route, with tide-water at New Yorkand, indeed, with all the Eastern States-with its two hundred and sixty acres of terminal property on New York harbor, with over seventy miles of siding thereon for the storage of freight trains, and its immense rolling stock, valued at $7,185,653, that induced the Reading to bid so liberally for the lease, as to secure it, despite the fact, as generally understood, that it had a powerful competitor for the prize. And it would seem that the Reading is quite content with its bargain, while some, at least, of the Central stockholders are not. In a recent case, "the Dinsmore suit," when one of the large stockholders of the Central sought, through the courts, to break the lease, on the ground that he considered his stock would be more valuable without the contract, the suit was bravely and successfully contested by the Reading, throughout one of the most interesting and ablyconducted cases in the history of recent litigation. The whole estimated value of the Central's corporal property-of what they own and what they control-would probably not reach the amount of the debts assumed by the Reading; and yet somethingthis Board thinks the franchise-has so added to the value of this corporal property as to lead the Reading to assume the entire debt and rentals, and guarantee to the Central stockholders an annual dividend for nine hundred and ninety-nine years of six per cent. per annum— double the return that can now be obtained for investments in the best securities, say United States bonds, or English consols. And it is worthy of remark, in this connection, that the Reading also pays $18,000 per annum to maintain the organization of the Central, which is neither more nor less than to keep this franchise alive and intact. In view of all these facts, can it be said with any degree of propriety, that there is no value in the franchise of the Central to its stockholders? Certainly not. The Board has received the circular heretofore referred to and as it comes directly from the general office of the Receivers of the Philadelphia and Reading Railroad Company, 227 South Fourth Street, Philadelphia, it may be considered as coming officially from the company. In regard to the taste or propriety of issuing to the public such a document, with its broad and sweeping charges of "glaring and unexplainable discrepancies," while the subject is undergoing at least a quasi-judicial investigation, the Board will leave others to judge. Let us dismiss the epigrammatic manner in which figures are made to look each other in the face with manifest unfairness, and the illogical conclusions drawn therefrom in this circular, and fairly consider the question whether there is any such "glaring" inequality in the taxation of this company as is charged in this document, or, indeed, whether |