towards democracy was mistaken. Democracy was not, as he wrote Sedgwick a few hours before his death, "our real disease." That he thought it was, is not surprising; for in him the love of order was instinctive, and the predilection for conservative methods of progress was strongly marked. In his day, moreover, democracy, both here and in France, showed itself at its worst. But, as we can now see, democracy is essential to progress; it is both the means and the fruit of the diffusion of civilization.

Equally mistaken was Hamilton in wishing to destroy the states. They hindered, it is true, the work of consolidating the Union; but at the same time they stood for the invaluable principle of local self-government. The evil which they did was of minor consequence when compared with that which their destruction would have caused.

In

These defects, considerable as they are, did not, during the period of his greatest usefulness, seriously affect the work of Hamilton; but during his closing years, they proved fatal to his influence and, it is mournful to add, to his peace of mind. 1801 the American people came under the sway of Jefferson and refused to listen any longer to the conservative statesman who hated and warred upon their most cherished political beliefs. Hamilton recognized his isolation and not without bitterness

wrote:

Mine is an odd destiny. Perhaps no man in the United States has sacrificed or done more for the present constitution than myself; and contrary to all my anticipations of its fate, as you know from the very beginning, I am still laboring to prop the frail and worthless fabric. Yet I have the murmurs of its friends no less than the curses of its foes for my reward. What can I do better than withdraw from the scene? Every day proves to me more and more, that this American world was not made for me.1

But he had not failed. Although in hands that he distrusted, the republic was safe; and no one had done more than he to make it so.

ANSON D. MORSE.

1 Works VIII, 591.

IT

THE GENERAL PROPERTY TAX.

T has been said recently that there is no science of finance in England. The same remark is equally true of America, at least in the domain of public revenue. In no other civilized country has there been less discussion of the principles of taxation; in none can there be found a more unsatisfactory system. The reason is plain. As long as prosperity was general and the public expenses were small, taxation was light and its burden was scarcely felt. But during the last few decades, with the complicated demands of modern civilization, public expenditures, both local and national, have increased to such an extent as to exert a sensible pressure on the population. The problems of public revenue have been pushed to the front. The expressions of discontent with various phases of our financial system have become numerous and loud. But for the most part the discussion has been superficial and the conclusions reached have been inadequate.

There is perhaps no single feature of our tax system that is commonly thought to be more thoroughly American than the general property tax. The proportional taxation of all property is held to be an instinctive feeling original to and thoroughly ingrained in the minds of our people. And yet it may be said that no institution has evoked more angry protest, more earnest dissatisfaction, than this very tax. Its opponents, however, have confined themselves to a portrayal of its practical shortcomings. No one has hitherto attempted to give the deeper reasons why the property tax is unsuited to the present generation or to discuss the subject in its wider relations with the science of finance in general. It is proposed to show in this series of papers that our property tax is by no means original to this country; that it has gone through precisely the same evolution in many other places. It is further proposed to prove that the property tax is as destitute of theoretical justification.

as it is defective in its practical application. And it is proposed, finally, to discuss the reforms of our direct taxation some of them partly completed, some projected, and some hitherto neglected.

I. Practical Defects of the Property Tax.

The defects of the general property tax may be discussed under five heads.1

The

1. Lack of uniformity, or inequality of assessment. property tax with us is an apportioned, not a percentage tax. According to the latter method the tax would be levied on the individual taxpayer by means of a fixed rate or percentage of all property. According to the actual method the total amount to be raised by the state is first ascertained, and is then apportioned to the various subdivisions according to the appraised valuation in each. The final rate of taxation is obtained by adding the local tax to the state tax. The rate of taxation ought therefore to vary only with the local needs, and would indeed so vary if property were everywhere assessed uniformly. As an actual fact, however, this is far from being the case. In most of the commonwealths the tax laws provide for the assessment of property at its "fair cash value." And in all the states it is expected that the valuation shall everywhere be made at a uniform rate. Yet it is a notorious fact that in scarcely any two contiguous counties is the property-even the real estate appraised in the same manner or at the same rate. In regard to the manner, it frequently happens that corporation property, e.g. the roadbed of a railway, is assessed in one county at an immense sum per mile and is treated in the adjacent county like a piece of grazing land.2 In regard to the

1 In the monograph entitled Finance Statistics of the American Commonwealths (Publications of the American Statistical Association, Dec. 1889) I have collected a large number of citations from the commonwealth financial reports for the past year. The reader is referred to that publication for the verification of statements for which no special authority is adduced in these pages. See especially pages 401-417.

2 In New York, for example, two adjoining counties made a difference of $24,000 per mile in assessing the same railroad. Other counties varied $20,000 per mile. Report of the State Assessors, 1879, p. 19.

rate, the assessors follow the practice sanctioned by local usage or decide by mere caprice. The official reports abound with complaints or open confessions that property is assessed all the way from par to one twenty-fifth of the actual value. In one county the property is listed at its full worth; in the next county the assessment does not exceed a tithe of its value.1 That this is a glaring infraction of the fundamental rule of equality in taxation is apparent. As between counties it leads to undervaluations which give an entirely fallacious view of the public resources. As between individuals it results in gross injustice. A tax rate of a given amount on one may be double, quintuple or decuple the nominally equivalent tax on another. The first constitutional injunction — that of uniformity of taxation — is flagrantly violated. Assessors are compelled openly to disregard their oath, or to incur certain defeat at the next election.2 There is no pretence of complying with the law.

3

An escape from these evils has been sought in the creation of boards of equalization. A large number of commonwealths have attempted to correct the undervaluation of the county officials by giving a state board power to raise or lower the valuations (or in some cases the rate) in the hope of securing a substantial uniformity. But the effort has been very imperfectly successful. The composition of the boards is such as to render any comprehensive scrutiny of the county returns almost impossible. Even were the boards to be constituted in an ideal manner, the local jealousies and bickerings would still continue

1 Biennial Report of the Auditor of Public Accounts of Nebraska, 1886, p. 4. In New York the range is from 18 to 100 per cent. Report of State Assessors for 1883, p. 3. In Illinois the range is from 5 to 100 per cent. Report of the Revenue Commission of Illinois, 1886, p. ii.

2 Report of the State Assessors of New York for 1886, p. 20. The report for 1884, p. 4, speaks of the assessors' open "intent to ignore the law." In one case an assessor objected to a certain declaration, and declared that it would be necessary to swear the merchant. The latter answered: "If you swear me, I'll vote against you next time." West Virginia Tax Commission, Preliminary Report, 1884, p. 13.

3 Boards of equalization are found in Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, New Hampshire, New York, Ohio, South Carolina, South Dakota, Vermont, Wisconsin and Wyoming.

to prevent any just distribution of the burdens.1 The boards themselves confess that such distribution is impossible under our present system.2 Boards of equalization are thus at best a mere makeshift, a clumsy and cumbrous attempt to accomplish the impossible. In the drastic phrase of Mr. Townsend: "A people cannot prosper whose officers either work or tell lies. There is not an assessment roll now made out in this state that does not both tell and work lies." As long as this is true, boards of equalization are of little avail.

2. Lack of universality, or failure to reach personal property. This is a defect which, although the most flagrant, perhaps requires the least commentary; for it is so patent that it has become a mere byword throughout the land. Personal property nowhere bears its just proportion of the burdens. And it is precisely in those localities where its extent and importance are the greatest that its assessment is the least. The taxation of personal property is in inverse ratio to its quantity. The more it increases, the less it pays. The reason is plain. So far as it is intangible, personal property escapes the scrutiny of the most vigilant assessor; so far as it is tangible, it is exempted in its chief form, as stock in trade, by every intelligent official. In the mad race for wealth it would be suicidal for the local assessors in large cities to assess the merchant's capital, with the sole result of driving it away to localities more favored by their financial officers. It is scarcely necessary to give figures to substantiate these statements. The tenth census of the United States asserts that from 1860 to 1880 the assessed valuation of real estate increased from $6,973,006 to

1 "The strife between counties to reduce assessments has not ceased and in all probability will not, as long as assessors are elected, or selfishness be a passion in the human breast." Report of the California State Board of Equalization for 1885 and 1886, p. 4.

2 "No board or officials, however diligent or however conversant they may be with the subject, can make an equalization which to themselves will be absolutely satisfactory." Annual Report of State Assessors of New York for 1887, p. ii. From ocean to ocean the same complaint is found.

3 M. I. Townsend, in Proceedings and Debates of the Constitutional Convention of New York, 1867–68, III, 1945. Cf. the first Report of the (New York) Commissioners to revise the laws for the assessment and collection of taxes (1871), p. 33.