The plaintiff publishes and sells religious books at a profit. It also furnishes such books free to needy Sunday Schools. Its business showed a profit for several years. On this state of facts, the Chicago assessor sought to tax the property of the plaintiff used in the publishing business. The Supreme Court, in setting aside a decision of the Board of Review upholding such tax, says:

"The object of selling books and supplies is not to make money, but is to promote the religious, charitable and beneficent purposes of appellant by disseminating the teachings of its books and periodicals. The purpose of the soci ety is accomplished by the effect on the minds and lives of the children and adults who read and study its books and periodicals. The work of appellant is to send its workers and missionaries into those parts of our land where religious teaching among the young has been neglected, and there to take the young into Sunday schools for moral and religious instruction and provide for them wholesome literature. Many of these books are suitable for the use of adults, and the society seeks to supply needs of individuals and families by gift where that is necessary, but by a sale whenever a sale is practicable. The price received, whatever it may be, makes a gift to needy persons possible to the amount so received beyond what the society could otherwise give. It is not the use to be made of the profits but the nature of the business done that is to be considered in deciding the question of liability to taxation. We have already pointed out the purposes for which this society was organized and the fourfold nature of its business. Sales of publications made by this society, whether at a profit, at actual cost, or half cost, are in aid of the gratuitous distribution of the same publications among those who are unable to buy them."

There have been many recent decisions which have correctly held that a charity is properly taxed on property used strictly for commercial purposes and that it is no ground for exemption that the profits of the business are applied to charitable purposes. Stahl v. Kansas Educational Ass'n, 54 Kan. 542, 38 Pac. 796; City of New Orleans v. St. Patrick's Hall Ass'n, 28 La. Ann. 512; Ridgeley Lodge v. Redus, 78 Miss. 352, 29 So. 163; Parker v. Quinn, 23 Utah 332, 64 Pac. 961; Trustees of the Academy of Richmond County v. Bohler, 80 Ga. 159, 7 S. E. 633; Young Men's Christian Ass'n v. Douglas County, 60 Neb. 642, 83 N. W. 924, 52 L. R. A. 123.

The First Methodist Church of Chicago owns a very valuable property in the very heart of this great city. They use the third floor for church purposes and lease the other floors. The rental is applied altogether to the purposes of religion; yet the Supreme Court of Illinois has held that the part of the building used for profit should be taxed. First Methodist Church v. City of Chicago, 26 Ill. 482.

The point in all these cases is not whether the charity makes a profit or does not make a profit, but whether the purpose of the partirular business out of which a profit is sought is itself charitable. In the principal case the publishing, selling and distri bution of religious literature was in itself a charity, just as night schools or hospital accommodations in connection with charities, and designed in itself to be part of the charity and not merely to contribute means to further the charity, are themselves charitable and exempt from taxation.

RAILROAD LEGISLATION AS DEVELOPED UP TO DATE.

It seems useful to take stock at this time of the progress made by the present Congress during its first session toward the enactment of legislation necessary to meet the railroad emergency. The controlling necessity for additional railroad legislation is to re-establish railroad credit, which failed even before the war under the system of regulation in force, and to save from bankruptcy and ruin many, and perhaps most, of the railroads of the country because of the extraordinary increases in wages and in prices of fuel and other materials during federal control. Unless railroad credit is reestablished, it will be impossible for the railroads to reasonably keep pace with the growth of the country or to finance any substantial part of their requirements for extensions and betterments, generally estimated at one billion dollars annually. Let us therefore examine what Congress has proposed to date, and determine how far it meets this fundamental necessity, and what the country faces if these proposals are really as far as Congress means to go in solving the railroad problem.

Both the Senate Committee on Interstate Commerce, of which Senator Cummins is chairman, and the House Committee, of which Mr. Esch is chairman, have presented bills designed to embrace all the legislation they deem necessary upon the subject. The Esch bill, after many amendments in

open session of the House, was passed by that body and has gone to the Senate. The Senate did not consider either bill during the first session, but has taken up the subject in the session which has just convened. If the usual course is followed, it will substitute its own bill for the House bill, and, after extended debate and probably amendments, it will pass its bill, and the differences between the two measures will be worked out in conference.

THE ESCH BILL IN THE HOUSE.

The Esch bill as amended and passed by the House contains the following discouraging features:

1. The first and fundamental objection is that it bases its whole scheme of relief upon the Interstate Commerce Commission. It imposes upon the already overburdened Commission the performance of many new duties and the administration of many new regulations. It creates no new agencies to assist the Commission in rate matters, such as Regional Commissions; and it leaves the

Commission still burdened with the administration of the Car Service Act, the Act Relating to the Construction and Operation of Switch and Sidetrack Connections, the Act of August 24, 1912, the Safety Appliance Acts of March 2, 1893, the Act of May 6, 1910, relating to railroad accidents, the Safety Act of February 23, 1905, the Hours of Service Act of March 4, 1907, the Safety Act of May 30, 1908, the Act Relating to the Transportation of Explosives, approved March 4, 1909, the Boiler Inspection Act of February 17, 1911, the Act Relating to Block Signal Systems and Appliances, approved June 30, 1906, and many other duties of an administrative character having nothing to do with rates, which could be better performed by a smaller board-leaving the Commission free to devote its time and talents to the making of rates and to the hearing and determining of rate cases and other important controversies. The bill adds two new members to the Commission, it is true, making the membership eleven instead of nine as at present.

But it is still a single Commission. And, though its membership be increased and it divide itself into sections, it remains a single body, governed by the same semi-judicial rules of procedure and methods, and with the same diffused and all-embracing duties, many of which are in no wise related and require wholly different experience and talents and methods for their correct solution. It is obvious that the Commission must employ subordinates, not merely to assist, but actually to decide and dispose of many of its important duties; and the bill authorizes it to do this and the Commission has been doing it heretofore of necessity, even with its present duties. This is one of its defects. It is not right to put the practical decision of questions of such vast public importance upon subordinates of the Commission who are unknown, who get no credit or recognition for what they do, who hold their places at the pleasure of the Commission, and who receive salaries insufficient, without any certainty of tenure of office, to command the ability and experience that ought to be brought to bear in the decision of such questions. No reflection upon the subordinates of the Commission is intended, for. I believe them to be, individually and as a class, quite equal in ability and character, to any other men in similar lines of work. But my point is that the system is not calculated to produce the wisest decisions, and that decisions by even the best of men in such subordinate, precarious, underpaid and unrecognized positions would be unsatisfactory as a rule.

All experience suggests that Regional Commissions and administrative Boards for administrative duties, composed of members appointed by the President and confirmed by the Senate, for definite terms, and receiving fixed salaries, would be better suited to decide and dispose, subject to review by the main Commission in rate cases, all these important questions, and be more in keeping with our traditions and ideals. The Interstate Commerce Commission must either leave wholly and entirely to subordinates the final decision and disposition of a

great multitude of important matters, or it must devote to the review and revision of the conclusions of its subordinates an amount of time that will be seriously needed for rate questions and controversies and its more important work. Delay in rate making and revision and in the decision of rate questions is deadly to railroad and commercial interests alike. It has been a great evil in the performances of the Interstate Commerce Commission in the past, and with the additional duties imposed by the Esch bill it will, in my judgment, become intolerable.

2. The Esch bill, as introduced and as amended and passed by the House, recognizes that the revenues from existing rates remaining after the payment of wages and other operating expenses will be insufficient, due to conditions arising during federal control and still existing, to save many of the railroads from bankruptcy and to conserve the credit of the others. It therefore provides a guaranty for a period of six months after federal control. But this "guaranty" is illusory if not worthless. It does not provide, as one would suppose, that one-half of the "standard return" for twelve months now paid shall be guaranteed the companies for the period of six months, but provides instead that the guaranty to each company shall be the average of the corresponding periods of six months during the test period. That is to say, assuming

that federal control terminates December 31st, as now believed, the bill provides that the average net earnings during the test period for the six months from January to June, inclusive, rather than one-half of the earnings for the whole year, shall be taken. Now we know that the first six months of the calendar year are the worst for the railroads. The crops have been moved and the traffic is light, and during the three winter months of January, February and March. the snows are heaviest, the weather generally is the worst and the operating difficulties are the greatest of the year, while in the spring months of April, May and June the maintenance work is actively resumed to

repair the ravages of winter and to prepare for the heavy traffic of the late summer and autumn. As a result, many railroads have deficits for the first six months of the year. Hence I say the "guaranty" tendered by the Esch bill, as passed by the House, fails to meet the emergency which it recognizes and assumes to provide for.

3. The provision of the Esch bill as amended by the House with respect to the funding of amounts charged by the Government to the railroad companies for addıtions and betterments made during federal control is a serious menace to the credit oi companies without great financial resources and strength. It requires that the amount due from the Government to any company, even for rental, shall be set off against amounts incurred for additions and betterments made during federal control and chargeable to capital account, to the extent permitted under the standard contract between such company and the United States relative to deductions from compensation. Any balance due by the company with respect to additions and betterments may be funded into into not exceeding ten equal amounts, one of such amounts to be payable annually beginning at the expiration of five years from the termination of federal control, with interest at the rate of 6 per cent per annum from date, subject to the right of the carrier to pay before maturity. Any other indebtedness existing at final settlement shall be evidenced by notes payable on demand with interest at the rate of 6 per cent per annum and secured by such collateral as the Government may require. No progressive railroad company in a growing country such as ours can pay for its additions and betterments out of earnings, as this act thus requires. Such expenditures are for capital account, and as such must, to a great extent if not entirely, be provided for by the issue of capital securities. Furthermore, the bill provides that even the balance which the Government cannot collect by setting off the rental because of the restrictions in the standard contract, shall be funded for only five years and shall be

thereafter payable in annual instalments, provided the company is able to give good security, which many of them cannot do. Funding for five years, it is true, allows at breathing spell, but the requirement that the amounts shall be paid in ten annual instalments thereafter is a method which only financially strong companies can avail of, and probably will have to be taken care of out of current income.

When it is considered that the additions and betterments were ordered by the Government, and many of them to meet the emergencies of the war, and especially when there is considered the very liberal treatment accorded by the Government to war industries with respects to improvements, it would seem not unreasonable to allow the railroads which need the indulgence a long term in which to pay the capital expenditures charged against them by the Government while under federal control. The provision leaves the railroad companies without a dollar of working capital, with a large indebtedness to the Government for equipment and for additions and betterments ordered and made by the Government during federal control, with an increased pay roll of over a billion dollars a year added during federal control, confronting a scale of prices for fuel and other materials comparable with the increased cost of living for individuals, and with a rate increase insufficient to save the Government itself from a huge deficit in its own operation of the railroads. Such a refunding provision certainly does not tend to the enhancement and re-establishment of railroad credit.

4. But the most amazing provision of the Esch bill as amended by the House is that with respect to labor. It effectually perpetuates every wage increase and every working rule or regulation made by the Railroad Administration under the stress of the world war and the abnormal conditions resulting therefrom, no matter how radically conditions may change nor how soon normal conditions of living may be restored.

As reported by the committee, the bill contained an elaborate provision for a "Railway Labor Adjustment Board" and a "Railway Board of Labor Appeals" for hearing labor disputes, but no means were provided for enforcing such decisions. Where a contract existed, it was provided that the railroad company and the unions respectively and members advising should be liable in damages and civil actions for violation of such contract. But this would simply discourage or prevent the making of wage contracts. Strikes and lockouts were not made unlawful, and no penalties were prescribed therefor. But even this "milk and water" provision called forth the usual denunciation from the union leaders, and when the bill came up in the House a strictly union labor amendment was adopted by a vote of 161 for to 108 against. The bill as thus amended and passed recognizes the various railroad brotherhoods and unions

by name and provides for Boards of Adjustment composed equally of representatives of such unions and of the railroad

companies, but makes no provision for en

forcement of the decisions of such boards or for the decision of cases, of which there must be many, where the equally divided Board cannot agree; and it does not prohibit or in any wise discourage strikes. But the most remarkable provision is that the act as thus amended makes every decision of the United States Railroad Administration or of the Commission of Eight perma nent, for it says all such decisions

"affecting question of wages, hours of service or conditions of employment are hereby confirmed and shall apply to all carrier lines subject to this act. Decisions which have been rendered by the United States Railroad Administration and which apply to the individual carriers subject to the provisions of this act shall remain in effect until superseded by mutual agreement between the carrier and the employes or by decision"

of one of the Adjustment Boards created. by the act. Of course, this provision means that no change can ever be made except in

the way of further wage increases, since the requisite "mutual consent" to a reduction or modification will not be given by the unions, and will not be superseded" by the Adjustment Boards, since under the act the unions have one-half the membership of each board. The same provision exists with respect to the Adamson Eight-Hour Law. I am not advocating a reduction of wages at this time or any change in working rules and regulations, although some of them are absurdly unjust to the railroads and to the people who pay the freight bills.

But it is almost unbelievable that the House realized that by adopting this amendment it would saddle upon the country by law the railroad wage scales and working rules established under the stress of war and at a time when the cost of living and

the merit at least of recognizing the facts of the railroad situation and the courage of grappling with them in an honest attempt to solve the problem. It recognizes that the Interstate Commerce Commission is overburdened now with duties that interfere with its more important work of making and revising rates and deciding rate controversies. The bill, therefore, relieves the Commission of various administrative duties with respect to other matters which can be as well or better performed by some other board, and confers upon it additional duties of a much more important character and provides it with the assistance necessary for the proper performance thereof. The bill also recognizes for the first time in our congressional legislation the responsibility of the Federal Government to create some agency charged with the duty of pro

to attract investors to railroad securities or to inspire much confidence in the future provision of the transportation facilities which the country will need.

The Esch bill as passed by the House contains other provisions that will not be helpful, though less objectionable; some that seem merely formal and of no particular consequence; and some that undoubtedly are wise, as, for example, giving the federal government exclusive regulation of the issue of railroad securities. But I comment only on those which in my judgment tend to defeat what I conceive to be the main object and reason for any legislation by Congress at this time, namely, the reestablishment of railroad credit to the extent necessary to enable the railroads to obtain the means required to provide the transportation facilities which the country must have.

THE CUMMINS BILL.

The bill introduced by Senator Cummins and reported by the Senate Committee has

road facilities requiring it to keep an eye on transportation service and find out what is necessary to provide that which is needed, and co-operate with the railroads and the Commission in bringing it about. The bill creates a Transportation Board composed of five members to be appointed by the President with the consent of the Senate, and charges it with the duties just mentioned, and transfers to it the various administrative duties with which the Interstate Commerce Commission is now burdened with respect to the Car Service Act, the Safety Appliance Acts, the Railroad Accidents Act, the Hours of Service Act, the Act Relating to the Transportation of Explosives, the Boiler Inspection Act, the Automatic Signal Act and other acts referred to above. The bill also recognizes the danger to the whole people in the power of four men, whoever they may be and however wise, who lead the trainmen's brotherhoods, armed with a strike vote given merely to support them in negotiations, to tie up the railroad transportation of the country and to throttle the life of the nation. The bill therefore provides means for promoting the just settlement of all railroad labor disputes through tribunals cre