Pike County Democrat, Volume 25, Number 18, Petersburg, Pike County, 14 September 1894 — Page 5

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RAILROAD TAX SITS. Origin, Object and Besnlts of This Famous litigation. Most Important of the Kind That Ever Engaged the Courts. The Democratic Law Folly Vindicated. Valuable Work of Attorney General Smith — An Adverse Opinion Would Have Bankrupted the State—Full and Sucelnct History of These Great Suits and Analysis of the Law They Were Intended to Nullity. Prior to the passage of the tax law, approved March 6, 1891, the subject of taxation in this state was practically misunderstood. Those! who paid taxes under the old system did so upon valuations fixed by themselves, without the slightest legal restraint or desire to fix a value upon their prbperty representing either a fair or true cash value. Every person had been educated to the belief that it was right to force valuations down, because it was generally understood that the policy of taxation in this state re sted upon the principle that to fo^ce a low valuation of property was to escape, in a measure, the payment of taxes necessary to support the government. This principle was manifested most clearly in valuations fixed upon all classes of corporate property. The owners of this property, being able to present their contentions more fully before the taxing boards than the owners of other property, always got the advantage of the situation by representing a condition which caused the authorities to place the lowest possible valuation upoi* their property, and this fact was known to all the taxpayers of the state, and, to counteract its evil consequences, the owners of real estate and other small IKJssessions entered into the spirit of the times and fully competed with the owners of corporate property to the end that values should be made as low as passible, and in this competitive struggle for low values the land owner and the possessor of homes and small holdings were necessarily the sufferers from such a system. They could not, and did not, compete in this matter with those who held large property interests and controlled the corporate wealth of the state. Therefore in a short time the concentrated wealth of the state received the largest benefit from this system of pressing down the values of the taxable property, and the owners of other property were necessarily made to bear the largest share of the public burden. This was the condition of things when the legislature of 1891 met to consider ways and means to raise a sufficient revenue to carry on the affairs? of the state government, to pay the interest on the public debt and to gradually reduce the principal. The principle of taxation, that justice and equality can only be maintained by placing a fair- ca,sh value upon all property, had been lost sight of, and those most fortunate in the scramble to avoid taxation bereft he least share of the public burden w^ife, in all such cases, those who peiie^most numerous and farthest reiAu/od from the taxing authorities were made to bear the greatest, as well as an unequal, share of the public burden. Prior to 1891 there was no such thing as equality in assessment of taxes in this state. The constitutional provision which provides for a uniform an equal rate of assessment and taxation had been lost sight of or totally disregarded by those who may have misunderstood it.

Another principle under this system of taxation, which had been forgotten or disregarded, was that an increased and equal valuation of all property' does not necessarily increase the amount of taxes to be paid by the citizen, for the reason that where all property is placed upon the tax duplicate at its true cash value all citizens will pay equally, according to the property which they own, and the higher the valuation the lower the rate of taxation; so it is a fundamental truth that the proper way to reduce the taxes, which the citizens must bear as a reward for good government, is to place upon the tax duplicate al) the property of the state and attach to it a value according to the cash basis, which alone can equalize the burden of taxation. But tnis was not the rule prior to 1891, and the principle of equality having been destroyed by a violation of the constitutional rule of taxation, the burden of government fell most heavily upon that class of property which never can escape the eye of the tax assessor, the homes and farms and tangihle personal property of the people, while railroads and banks and great corporate interests, the value of which is most difficult to understand, bore but a slight portion of the public burden in comparison to what the people necessarily had to pay by reason of this misapplication of the equity rule in taxation. In 1890 the property of this state was valued so unequally that it scarcely" produced a revenue sufficient to pay the ordinary expenses of state government, and did not produoe sufficient revenue to carry on the public institutions of the state and pay the interest on the public debt , necessarily-requiring eaoh year a temporary loan, at a high rate of interest, to meet these public expenditures. And it was this condition, which was known and severely felt throughout the state, that prompted certain persons to demand of the legislature of 1891 that the entire tax laws of the state be revised, and to cause a re-valuation for the purpose of taxation of all property, real, personal and corporate, to be made in the year 1891. The revisions of the tax laws of that year did not essentially 'differ in principle from the laws that have always been in force in this state. In fact, they had i the same machinery fear valuing ; railroad property and equalizing the I value of real estate and to value | small holdings and personal property of the citizens prior to 1891 as is inoorpor- , ated in the tax laws of that year. But i the laws concerning the valuation at all | ... - 'v

1 property for the purposes of taxation in this state had not been faithfully and honestly executed. The principle of valuing property according to its true cash value and placing all property upon the tax duplicate had not beep adhered to, but had been abandoned, and the question was sharply presented to the people ef the state as to whether the government of Indiana should be supported by means of a uniform and equal rate of assessment and taxation, or by going into the market every year and borrowing money to support the government, and thereby going into debt and increasing the state debt each year. The lesson taught by the passage of | the tax law of 1891 was the lesspn of | constitutional taxation based upon a L uniform and equal rate of assessment, j j As soon as the law was passed its execu-; | tion assumed a partisan phase. One po- j I litical party of the state, at least, de- | nounced the law as infamous and retardi ed its execution and enforcement in every wav possible; and so fierce were the assaults made upon this system of taxation by the Republican party that even the friends of the law despaired of its execution and, at times, were almost willing to abandon the effort of constitutional taxation in this state. While it | was not a new law, yet it was a new j enactment, and being a new enactment, its enemies urged against it all the objections that might have been made against an original and new law. It became necessary, to carry out the provisions of the law of 1891, that nearly every section of it should be defended and oonI struedbysomeoue. This defense began | early in the spring of 1891 and was vig- | oronsly prosecuted by the attorney general until all the values for that year had been fixed and placed upon the tax duplicate. The contest which was 1 waged during that year against the tax system by the corporate interests of this and other states having property in this state was the fiercest and most unrelenting that has been witnessed since the organization of the state government. From the tax boards, who fixed the values upon the property of the rich and wealthy, appeals were taken to the courts for the purpose of having the salient features of the law declared unconstitutional. It was alleged in the courts that this law violated nearly all of the provisions in the constitution of Indiana, and that it violated the most essential Provisions of the constitution of the Tinted States; that it denied due pro- : cess of law to the corporations; j denied the equal protection of the laws to them; that it was an invasion of the constitutional {>rovision that the states shall not reguate or place a burden upon interstate commerce. It was alleged by these corporations, who sought to break down this system, that the valuations fixed upon their property were so high that, in themselves, they constituted a fraudulent administration of the law and, for this reason, they asked that the power of the court be exerted in their behalf. It will be remembered now, and a history of transaction has been written, that the valuations of all property in this state, including railroad property and other corporations, was the result of the labors of the attorney general, who crave such construction to this system of

taxation that, when the values were increased upon real estate by the local authorities, it became absolutely oertain and necessary that the values of corporate property under the jurisdiction of the state board should be increased by that body. There ^ras no escaping the proposition that prior to the passage of the law, real estate had borne the heaviest share of the public burden, and although it was not valued at its true cash value, still it was valued proportionately higher than corporate property within the state, and that since the local assessors valued real estate at a sum deemed to be its true cash value, thereby increasing the value over 46 per cent over the value of former years, that the authority charged with the duty of valuing railroad property must increase the value of that property in such equal proportions as to bring it up to the level of a statutory cash value. The action of placing a value upon property for the purpose of taxation is merely an executive or administrative function which, if honestly performed, must proceed in the line of construction given to the general system, so that one class of property shall tear the same relation to the public burden as any other class of property shall tear. Prior to 1691 railroad property in this state had been valued in the aggregate at $69,000,000. It was admitted by the railroads themselves that this valuation represented only three-fifths of the true cash value of such property, and to bring it up to the true cash value it would require a large increase to be placed upon all railroad property. This increase was the result of the general contest which was waged in behalf of the law by the attorney general of the state, who fought the corporations on the basis of equal and just taxation at every inch, and contested with them every step from the passage of the law to the values fixed by the assessing boards. And with this contest the values on the property of railroads were increased from $69,000,000 to $191,000,000. This increase represents the difference between the true cash value of the property as fixed by the board under the construction given to the law by the attorney general and the values which they them- } selves fixed upon their property. The i per cent of increase of 1S91 over 1890 was 130, and it was this increase that drove these corporations into the courts, where the attorney general appeared and fought them from the circuit court through the supreme court of Indiana and to and through the supreme court of the United States, in one of the most ! bitterly contested lawsuits that has ever i teen brought or concluded in this eounI try, and the success which crowned the I efforts of the attorney general in these ; lawsuits is written in the history of this state. The amount involved, directly ; and indirectly, in the litigation which resulted in the supreme court of the United States holding the law to be con1 stitntional and refnsing to interfere with the assessment of the taxes against these ' corporations is, at first blush, fabulous. No such consideration was ever involved i in any tax litigation in this country. The law was assailed because it was unconstitutional, and if the courts had held that it was unconstitutional all the taxes assessed under it would have been null and void, and where any of them had teen paid the state would have been, obliged to refund them to the corporations. The amount iuvolved in this litigation on the day the supreme court of the United States decided the cases in favor of the state was $7,101,827. Of this amount at least $3,000,000 had been paid under protest, and sinoe the deois

ion of che case by the supreme court of the United States there has been paid into the county treasuries throughout the state at least §4,COO,000, the direct j and necessary result of the victory won j by the attorney general of Indiana over j the corporations of this state. No such victory was ever before won for a state in the matter of taxation. The contest which resulted in bringing these taxes into the public treasury of the various counties of this state was directed, j planned and executed by the attorney 1 general and by ho one else. He com- J menced with the beginning of the controversy and first laid open to the people of this state the doctrine of constitutional taxation in the great bank controversy, which originated in the superior court of Marion oounty, wherein the best lawyers of the state appeared for the purpose of getting a decision not so mnch affecting the banks, but a decision that would break down these laws and destroy their force in the matter of railroad and corporate taxation. This oontest was carried on by the attorney general, not for any good result that might come in the so-called bank litigation, but for the purpose of asserting the constitutional power of taxation and maintaining it, so that when tho threatened suits, which were afterwards brought, should be commenced, that this policy of battle shoifld be continued all along the line as against them. And it is not forgotten that the fight made in the superior court and afterwards in the supreme court in the bank cases resulted in the establishment of the same constitutional doctrine as wsis afterwards asserted and settled by the supreme court of the United States. These contests on the part of the attorney general in asserting the true doctrin e of constitutional taxation has set at rest forever the objections raised against the law involved in these litigations, and the amount of taxes which the settlement of these questions will produce to the people of the state of Indiana in the future cannot be well or accurately calculated. They are like Tennyson’s Brook. They will flow on forever, and if the public servants selected to administer this law in the future will adhere to the doctrine as asserted by the attorney general, and execute the duties of their trust with fidelity to the people, it wall not be 10 years until this system of taxation will produce sufficient money not Only to carry on affairs of the state, but to pay the interest on the state debt and to wipe out the principal. And it is to be hoped that the lesson taught by this great contest will never fall upon deaf ears, nor be= forgotten by the taxpayers of Indiana, and it is the prayer of all good people that neither time nor jealousies, the egotism erf some or the vanit y of others, will ever deprive the real author of this blessing tp our state of the merits due him for his labor and fidelity in standing hy the cause of all people in behalf of just, uniform and equal taxation, to the end that every citizen of high or low degree, of much or little property, will be required to pay his just share of the public burden and feel that when the taxpaying time comes that he has not been called upon to contribute more to the maintenance of good government than his neighbors have been required to do.

PULLMAN IN INDIANA. The Great Magnate Now Has to Pay For His Privileges. The public generally will learn with surprise, if not disgust, that the valuable franchises of the Pullman Palace Car company in Indiana were enjoyed for years without the payment to the state of a singlo dollar for the privilege. His cars were run on every railroad in the state, enjoying the protection of the laws and making enormous stuns of money for the owner, and yet there was no statute requiring any return for this. What was made was clear profit, and if other states have been equally generous there need be little wonder that this corporation found little difficulty in accumulating a fortune. Exemption from taxation is of itself equal to a good per cent on investment, as everything is receipts and no expenditure, and the making of fortunes is greatly simplified. Not only Pnllman, however, but the telegraph companies and the express companies were equally fortunate in this respect. The only taxes they paid was on their oflice furniture and other appurtenances of this kind, which amounted to little or nothing. But for using the territory of the state for their lines and other privileges of indispensable value to such corporations these companies, like Pullman, went scottfree of taxation. During the last session of the legislature Attorney General Smith drafted a bill to remedy tins omission and to add the favored companies to the list of state taxables. The bill was drastic in its provisions and supplied a long felt want, but it was by no means allowed smooth sailing through the legislature. On the contrary, it met with most determined and angry opposition. A robust and well paid lobby was on hand to fight it at every stage. The Western Union and the express companies, as well as the redoubtable Pullman, were on hand “by attorney” to see that the bill was scotched if not killed. It was a formidable array of lawyers, professional lobbyists and interested parties that confronted Mr. Smith, but the plucky attorney general succeeded in defeating the “army of occupation” and finally got the bill passed^ It was not, however, until, the very last day of the session and after the hardest land of a fight that the new statute became a cer-! tainty. As a result of its provisions the. [ state of Indiana has been made richer this year by $100,000, and this off of - property winch was never before a sub- ! ject of taxation. It,was not without a ! struggle, however, that the tax was col- J lected, even after the law was passed. . The companies refused to pay, showed ! fight and the attorney general was compelled to enter suit against them. It is in the nature of corpora- ; tions that if allowed to enjoy special privileges for a term of years they eventually come to consider them vested rights. Abuses of this kind become en- J trenched and it is always difficult— sometimes impossible—for the state to ; dislodge the possessors with all the machinery of. the law at its book. The new law above described makes a valuable supplement to the general tax law of the state, and for both the Democratic party deserves full credit. It has done inval- ■ uable work in the last few years in bmching various corporations that the state has some rights which they will be compelled to respect. ~ ' - <'■. .j .. ... . . P" .v- \ - , ■'.. - ....

Indiana Democracy’s Record in This Respect How the Legislation of 1889 Was! Brought About. 6ham#l«M Abnaes of the Old System. ! Dorsey’s Two Dollar Notes and Dudley’s MBlock»-of-Flre” — Vote Buying as a [ Fine Art—Republican Aame Blocked. Australian Ballot Knocks It Out—Enduring Glory of the Democratic Party. It is a remarkable fact in the history of the American commonwealths that, while progressing so rapidly in other respects, they have always been singularly backward in matters relating to the exercise of the suffrage. For a free people, who govern themselves by the ballot, the first and most essential requisite would seem to be laws regulating the principles and methods of voting. The ballot is the recorded opinion pf the masses. In no other way can the will of the majority be ascertained and the government set in motion. The first; step, therefore, in a republio controlled i by suffrage would naturally be a law clearly ascertaining the right and providing the means for a fair and honest vote of the enfranchised citizen. Yet it is not too much to say that scarcely a state in the Union, during the first hundred years of the country’s history, had a scientific or even decent ballot law. The codes prevailing in most of the states were crude^ imperfect, unsatisfactory in operation and often little short of barbarous. The socalled ballot laws led to endless confusion in practice and were fruitful breeders of corruption and oppression. They seemed especially adapted to invite that most insidious and dangerous crime against the life of a republic, the purchase of votes. While nominally secret, the ballot was really open, and the voter was subject to that espionage, intimidation and tampering which is fatal to a fair ascertainment of the popular will. The arrangements for counting and announcing the result were little better than the method of voting. Every facility was afforded the dishonest election officer to play his game of chicane, while the voter outside was left a prey to unprincipled party “workers” and the schemes of designing politicians. How to remedy this crying abuse was long a subject of earnest thought on the part of many American legislators. Various schemes were devised, but none were satisfactory in operation. The socalled reforms proved inadequate to reach the seat of the evil; the relief was but temporary, and one by one they were abandoned as wholly inadequate to the emergency. At

lengtn, unable to invent lor themselves, the ballot reformers were forced to go across the world for a hint of the needed law. It was left for the people of the former penal colony of Australia to solve the vexed problem. They invented what has since been widely famed as* the Australian ballot law. . While not perfect, nor a complete remedy for all abuses, the Australian system is undoubtedly the best yet deviled for the purpose. While simple in operation, the results under honest administration are so fair as to satisfy the most exacting, Indiana was among the first of the states of the American Union to adopt this new system. When the Democratic party took charge of tne legislature in 188'J one of the first measures introduced was a bill to reform the ballot, modeled ou the Australian law. The Republican parry opposed it bitterly. Under the old system that party had enjoyed a great advantage. The loose methods and imperfect details afforded facilities for the practice of those abuses in which the Republican party had become an <wlept and an artist. Under the old laws that shameless traffic in votes, which for years made the name of Indiana a byword and a reproach, had been brought by the Republican party to such a degree of perfection that honest elections were an impossibility under these laws. Dorsey’s two-dollar-bill campaign of 1880 converted the whole state into a market for the purchase and stile of votes. Under these laws in 1888 Dudley reduced the “blocks of five” system to a fine art. Our elections for years were roaring farces, when not bloody tragedies, and free government was practically overthrown by the poisoning of its basic principle at the fountain source. From ali these evils the state was rescued by the Democratic ballot law, which first went into operation at the fall election in 1890. Then, for the first time probably since the war, Indiana had an election that was absolutely honest and fair. The humblest citizen was able to vote in perfect secrecy, undeterred by the pestiferous “ticket handler” on the one hand or the partisan intimidator on the other. Crowds of hoodlums no longer assembled around the polls to abash or influence the honest voter. The trade of the vote buyer was abolished and the occupation of the whipper-in was gone. Under the new law it was found practically impossible to bring the power of money to bear to influence'; votes. Nor can the wealthy employer control his workingmen as formerly, as j under the Australian system it is irnpos- J sible to ascertain how any man casts his ballot. These and other evils were re- f moved, and it is not too much to say ! that Indiana now enjoys an electoral | system that is substantially perfect. ‘ Elections being honest and the count; fair, the people acquiesce peacefully and1 cheerfully in the will of tne majority as ascertained at the polls. No longer is ; the bitter complaint heard that “the state was bought” or “the count was not honest,” which cries constituted the aftermath of every general election held in the state from the tiO’s to the 90’s. It is the enduring glory of the Democratic party that it placed this great law on the statute book and thereby rescued the state from the incalculable evils nieident to a corrupted suffrage. Not only was it the greatest of reforms itself, but it was the fruitful parent of other great reforms which depend for realization upon an honest system of yotiug. Had the Democratic parly done no more in ali its later career, the passage of the Australian b illot law would alone entitle it to the lasting gratitude of the people of Indiana. !

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