about these times ;" and from the 15th to the 31st of October another entry to this effect: "Bonds begin to go back again to Connecticut.'

2nd. But if negotiable instruments, from the very nature of the case, are either not taxed, or if taxed, not held, the question arises: Is it expedient to attempt to tax them? or, if expedient, is it not preferable to abandon the attempt at direct taxation, and adopt the Pennsylvania method of taxing directly the interest paid by corporations, and requiring the corporations to become responsible for its collection? Again, if the effect of an actual and direct taxation of these instruments is to drive them from the jurisdiction of the State (as would to a great extent be undoubtedly the case), then, it may be asked, is not the State subjecting its citizens to restrictions more onerous than those to which the citizens of any foreign or some kindred States are subjected? Is it not interfering with a movement of capital which in the end will be restrictive of development? Is it not, in substance, saying to itself, to its railroad and other corporations: You cannot borrow money for works of public necessity or utility in the home market; or, if you do borrow, you must either directly or indirectly pay an excessive interest; and, if such interest is paid, does the public gain anything? Or, figuratively, does it not put into one pocket only as much as it takes out of the other, less the cost of collection? The prediction is often made, and the hope indulged, in view of the immense natural resources and the increasing wealth and population of the United States, and the further fact that the march of empire tends steadily westward-that New York city, at no distant day, will become the moneyed centre for the civilised world. But this can never be so long as New York imposes restrictions on the concentration and movement of active moneyed capital, which do not exist in other and financially competitive nations. If a Mexican or British colonial railroad or State improvement loan, for example, were tendered to the New York market, and if financial or political reasons should render it expedient that such loans should be there taken, it could not be done, for the reason that the State taxation of to-day would, of necessity, require New York bankers and capitalists to demand nearly fifty per cent more of interest than would be asked by their foreign competitors. Is it not time, therefore, that we put an end to this indulging in predictions of our future, and in bragging of what we are going to do, and rather set ourselves to work to practically consider what it is that stands in the way of our doing; and whether if, with freedom continually upon our lips, we are not continually sanctioning laws and practices which are not only inconsistent

with freedom, but also obstructive to growth and development. The commissioners would not, however, be understood in this as pleading for the exemption of moneyed capital from taxation, for they are not in any way assuming such a position; but they are pleading that the State, in dealing with such property for the purpose of obtaining revenue, should not tax it in a way as to place the State and its great city at a disadvantage, as compared with every other commercially and financially competitive country.

3rd. The consideration of the extent of the jurisdiction of the State over negotiable instruments for the purpose of taxation opens up again a new series of questions, involving the situs of personal property under different conditions, of much novelty and of not a little intricacy. As already stated, the general practice in New York has been, and still is, to hold that, however it may be in respect to visible personal property, or property in the nature of chattels, invisible personal property-i.e., bonds, promissory notes, choses in action, and the like—has no situs away from the owner, and is therefore always taxable to the owner at his own place of residence or domicile. As bearing, however, upon such assumption and practice, the commissioners would especially ask attention to the following judicial opinions and decisions, which are for the most part of recent date, and closely connected with the recent increased incidence of taxation.

In the case of the British Commercial Life Insurance Company v. The Commissioner of Taxes of the City of New York (18 Abb. R., and 31 N. Y. R., p. 32), the Court of Appeals held that negotiable bonds owned by foreign insurance companies, and deposited, under compulsion, with the State Comptroller, have a situs in this State, and are deemed money in business within the meaning of the act of 1855; and that the companies are properly taxed at the place where they have their principal office, or place of business within this State. And as in accordance with the above decision negotiable instruments or bonds, the property of foreigners, brought into New York for the temporary purpose of pledge, are taxed, it is evident that New York adopts two opposite and inconsistent rules for the determination of the situs of such property-First, that it follows the owner, and must be taxed where the owner is and, second, that it does not follow the owner, and must be taxed where the property is located, or actually is. Again, in respect to the capital of citizens of a State invested without the State, the decisions of the New York Court of Appeals (23 N. Y, 232) and of the Supreme Court of Vermont (23 Vt., 152) would seem to warrant the conclusion that a resident

of New York is not liable to be assessed and taxed in this State for his capital invested in loans in other States upon securities taken and held in those States by his agents. Whether the owner of property thus situated is liable to be assessed for it in New York, depends upon the question whether it can be properly and legally held to be within the State at the time of the assessment; and if such property has no actual location or situs within the State, notwithstanding the owner's residence is here, it would not seem to be here subject to taxation.

Furthermore, the principle that personal property does follow the owner for the purposes of taxation, would seem to be opposed by the following facts and decisions :

1. England, Austria, and Italy tax non-resident holders of their national debts at the place where the debt is held to have been created or inscribed.

2. Attachments or processes of law are valid against all personal property in the nature of negotiable instruments, in the place where such instruments are situated, irrespective of the domicile or residence of the owner.

3. In the recent case of Maltby v. The Reading Railroad, the plaintiff, a non-resident of Pennsylvania, resisted State taxation on a railroad bond issued by the defendants, and secured by a mortgage on their road, on the general ground that the property taxed was wholly personal, and followed the owner out of the State. The Supreme Court of Pennsylvania (Woodward, C. J.) sustained the validity of the taxation, on the ground that a railroad mortgage bond is a mere paper evidence of property existing at the place where the bond was created, and used the following language:

"The plaintiff cannot enforce the bond where he lives; he must come here to gather its fruits; it is founded upon and derives its value from a mortgage; but that mortgage is here, and the property and franchises which the mortgage binds are here within our jurisdiction. The bond signifies his right to recover so much money out of the mortgaged estate, but that estate not only belongs to our jurisdiction, but was in part created by our authority."

4. In the case of the Ohio and Mississippi R. R. v. Wheeler (1 Black U.S.R., 286), it was held by the Supreme Court of the United States that when a corporation is created by the laws of a State, the legal presumption is that its members are citizens of that State in which alone the corporate body has legal existence. Hence the inference seems warranted that the stock of a corporation does not follow the person.

5. The principle that two States cannot at the same time tax the same property, and that a State cannot tax property and

interests lying beyond its jurisdiction, has been also positively affirmed by the Supreme Court of the United States (December, 1868) in the case of the Northern Central Railroad v. Jackson (6 Wallace, 262). The railroad corporation in question, extending from Baltimore, in Maryland, to Sunbury, in Pennsylvania, was the result of the consolidation of four railroad companies; one incorporated by the State of Maryland, and three by the State of Pennsylvania. The latter State imposed a tax of three mills per dollar of the principal of each bond issued by such consolidated road, which tax the company at their office in Baltimore deducted from the coupons of bonds held by one Jackson, a non-resident of Pennsylvania. The Court, by Mr. Justice Nelson, decided adversely to the tax, on the ground that the bonds were issued upon the credit of the line of the road, a portion of which was within the jurisdiction of the State of Maryland; and that the security bound and pledged for the payment of the bonds and their interest embraced the Maryland portion of the road equally with that portion situated in the State of Pennsylvania, respecting which condition of affairs the Court used the following language:

"It is apparent, if the State of Pennsylvania is at liberty to tax these bonds to the extent of this Maryland portion of the road, she is taxing property and interests beyond her jurisdiction. Again, if Pennsylvania can tax these bonds, upon the same principle Maryland can tax them; this is too apparent to require argument. The consequence of this, if permitted, would be double taxation of the bond-holder. The effect of this taxation is readily seen; a tax of three mills per dollar of the principal at an interest of six per centum, payable semi-annually, is ten per centum per annum of the interest; a tax, therefore, by each State, at this rate, amounts to an annual reduction from the coupons of twenty per centum; and if this consolidation of the line of the road had extended into Virginia or Ohio, or into both, the deduction would have been thirty or forty. If Pennsylvania must tax bonds of this description, she must confine it to bonds issued exclusively by her own corporations. Our conclusion is, that to permit the deduction of this tax from the coupons in question would be giving effect to the acts of the Pennsylvania Legislature upon property and interests lying beyond her jurisdiction.

In face of this decision, it is a question of no little pertinence for the Legislature of New York, and its commissioners, to consider what position shall be taken in a new tax system in respect to this class of property, i.e., mortgage bonds, issued by railroad or other corporations without the State; and also by what right New York, Massachusetts, Connecticut, and other

States now tax such securities directly, under the assumption that their situs is at the place of their owner's domicile, and not in the place where they are actually situated or created.

6. In the foregoing cases, the situs of negotiable instruments in the form of bonds has been considered. Let us next examine how far the generally received fiction of law, that "personal property follows the owner," holds good in respect to negotiable promissory notes and other like evidences of property.

In the case of Pelham v. Rose (9 Wallace, 106), it was held by the Supreme court of the United States that a promissory note is a physical thing, capable of possession; and cannot be regarded as attached by a United States marshal, until the note itself was actually taken possession of by the officer. Hence the inference that a negotiable instrument of this character has a situs of its own, and does not, as personal property, necessarily follow the owner.

If

In the case of McNeilage v. Holloway (1 Barnwell and Allison's Reports, 218), the Court of King's Bench, England, Lord Ellenborough, C. J., presiding, it was decided that negotiable instruments are chattels personil, and that a negotiable note payable to the order of an unmarried woman becomes the property of her husband without her indorsement, on the ground that it was not a chose in action, but a chattel personal. this decision, which is the law of England, is correct, it would seem to follow that all negotiable instruments of this character have their situs in the place where they are found, and follow the same rule, as respects taxation and attachment, as applies to other chattels personal. Taxation, consequently, imposed on all species of property of this nature in States where the property is not actually existing, is unconstitutional, as much so as it would be to tax real estate and farm stock in one State that are situated in another State. "In truth such instruments (negotiable instruments) are treated not as mere choses in action, but rather as chattels personal. Choses in action are not assignable by law; and actions must be brought thereon in the name of the original parties. But negotiable notes are transferable by indorsement; and when transferred the indorser may sue in his own name." (Story, Conflict of Laws, § 359.)

In another English case, The Attorney-General v. Bouvens (4 Meesson and Welsby, 171, 190), Lord Abinger decided, clearly and explicitly, that Russian, Danish, and Dutch government bonds, payable to bearer, have a situs where they are actually situated, and may be there taxed for probate duty. He says:-"Such an instrument is in effect a saleable chattel, and follows the nature of other chattels as to the jurisdiction to grant probate." He cited the case of the Attorney-General