the taxable personal property" of all taxable inhabitants of the town or ward, and the assessment must include all the taxable personal property owned by the persons assessed within the State; and further, a valuation of taxable property is only to be reached by deducting debts due, from the personal property that is subject to taxation. Now, it is a fair question, whether this law as it stands to-day upon the statute book, is not in itself a nullity, for the reason that it requires an act to be done which from the very nature of the case it is impossible to do, and it is understood that some assessors in the State, take this view of the case.

They allege that even if they have the power and capacity to find out, and examine, and appraise or estimate all visible tangible personal property subject to taxation, that the tax-payer alone can know the amount of his debts, and therefore that no assessment can be made on an individual according to a fair construction of the language of the statute, unless the tax-payer will voluntarily report the amount of his invisible and intangible property, and also the amount of his debts. The law, however, does not compel or require the taxpayer to make any such report, nor does it authorize the assessors to guess about taxable property that may have no existence, and about which they cannot have any certain knowledge or information. It is, therefore, worthy of consideration whether the law of New York, as it stands to-day, does not in great part defeat itself, and whether the assessors are not fully justified in declining to act as guessers and clairvoyants in such matters as they cannot by any possibility know (ascertain), and in abandoning all attempts to value and assess personal property of an invisible, intangible character.* It is

* In this connection, the following letter, addressed during the past year, by one of the assessors of the city of Syracuse, N. Y., to the mayor and common council of that city, resigning his office of assessor, and giving reasons therefor, will be read with interest:

To the Mayor and Common Council of the city of Syracuse:

GENTLEMEN.-I have the honor herewith to tender my resignation as assessor, and ask that you accept it, for the reasons involved in the following statement:

As would naturally be supposed, the duties, powers and obligations of assessors are defined, regulated and enforced by the statute; and its provisions in this respect are so ample, and its instructions so plain and specific, that every judicial act for which it provides, is entirely freed from the restraint it would impose were its teachings less exact, or did its language admit of a doubtful construction. It offers to assessors but one alternative, of assessing property in the manner and at the rate it prescribes, or of violating their oath of office. For it persistently requires, that all the property liable to taxation, for State, county and municipal purposes, shall be assessed at its full and true value; and then, as if to guard against the possibility of mistake, defines that value to be the value, at which they would appraise the same in payment of a just debt due from a solvent debtor. Accepting this as the necessary and only authorized criterion by which the judgment is to be guided and governed in their estimates of value, it only remains for assessors to ascertain, in the most reliable way possible, what that "full and true value" is, and then to assess accordingly; and from the responsibility of so doing I know of no avenue of escape, even though the pretexts by which it is sought be never so plausible or urgent. Admitting there is none, how can assessors con.

not, moreover, to be wondered that in some towns of this State there is no personal assessment levied; and that in some counties the entire valuation of personal property is not by any means equal to the personal property known to be in the possession of certain corporations. Other States, which adopt the system of taxing personal property of every description, attempt to overcome this by requiring the tax-payer to present and swear to a list of all of his property; and in default thereof, fine and arbitrarily doom or fix an assessment; but New York has thus far refused to subject her citizens to the exercise of any such proceedings; and the experience of other States, as already pointed out, shows that the results, attained to thereby, have no claim to be regarded in the light of a success.

sent to assess property at only one-third the value required by law? And what shall excuse or justify them, if they do?

But I may be asked, what difference does it make with tax-payers, whether their property is assessed at a high or low figure, if, relatively, it is all estimated by the same rule of valuation? I answer none whatever, practically; nor would it, if assessed as the statute requires, provided, that all through the State, the same inflexible rule was applied in determining values. But the truth is, no uniform standard of valuation is employed by assessors, even at the low rate at which property has everywhere been assessed; for an examination and comparison of the returns made by them, will show that the scale used by them is so very flexible in its character, and is graduated between extremes so remote as to allow real estate to be assessed anywhere from twenty to fifty, and personal from thirty to one hundred per cent of its full and true value," as determined by current market prices. In the language of another, this free and easy way of adjusting values under the law, "is not only grossly unjust, but it is demoralizing to the last degree." Another, in his attempts to make the practice odious, brands it as a "gigantic fraud."

So much then for the requirement of the statute as to valuation, and the practice under it. Permit me now to say, in view of it, could I be persuaded, for reasons not yet apparent, that it was my duty to go into the field and, "to the best of my ability" help to do the preliminary work which is required to be done, prior to July 1st, doing it under the rule of valuation applied by assessors hitherto, and which it is proposed to reapply the current year also, I could not, when the assessment rolls should have been fully completed, consent to subscribe to an oath thereon, that in estimating the value of the real and personal property assessed therein I had complied with the requirements of the law when, in fact, I had knowingly and purposely violated it at every step, save, perhaps, in assessing the shares of bank stock.

Were I so to swear, I should deem myself guilty of and justly amenable to the penalties for willful and corrupt perjury, a crime which would find neither excuse nor justification in the acknowledged fact that, all through the State property is everywhere assessed in this same irresponsible and arbitrary manner.

What defenses are set up for this constant violation of the law from year to year, or by what ingenious processes of reasoning it is made both possible and easy to take the oath referred to, 1 know not. But this I do know; had I been in possession of the above facts at the time it was proposed to use my name, in connection with the nominations to be made for the office to which I have been elected, I certainly should have refused it.

If I have succeeded in making myself understood in this review, I have accomplised three things: 1st. I have made it appear that it would be inconsistent, unreasonable and unjust to increase the valuation of property in this city, unless there was a corresponding increase throughout the county and State.

2d. That the oath without which the completed assessment rolls would possess no legal force, is neither self-adjusting, nor is it a mere matter of form. If taken at all, it must be without change of modification. If not taken, payment of the taxes assessed is a voluntary matter, entirely. 3d. That my resignation is based upon scruples of conscience under the oaths required of me and these I cannot sacrifice. Very respectfully,

A. G. SALISBURY.

1

PERSONAL PROPERTY FREE FROM TAXATION?

But whether the existing tax system of New York defeats itself in the manner indicated or not, other influences, arrising from causes over which the assessors can have no control, have very effectually combined to render it practically inoperative.

United States Instrumentalities.-Thus, of the personal property of the whole country, an amount equal to probably one-fifth-supposing the same to be all owned in the country-is represented by United States notes and securities, which are by law placed beyond the reach of State authorities for assessment and taxation. Under this head would be also included, so much of personal property as is represented by "cash," in actual possession, or on deposit, the same being like the bonds, a national instrumentality.*

IMPORTED GOODS, wares and merchandise, in original packages, in possession of the merchant importer, also stand in the same category.†

State bonds. The fact that the supreme court of the United States has decided that no State can tax any instrumentality of the federal government—the power to tax involving the power to destroy—is now universally recognized, and its legality acknowledged; but it is not so generally known that it has also been decided, that the federal government cannot tax a State instrumentality, as for example, in the special case decided, the income arising from the salary of a State office; and that Congress some years since, acting under the advice of the supreme court, repealed so much of the internal revenue law, as required the affixing of stamps to State processes, warrants, commissions, etc. But it would seem clear that what has been decided to be unlawful for the federal government, to do in respect to the States, is equally and unquestionably unlawful for the States to do in respect to each other; as for example, the taxing of the instrumentality or the borrowing power of one State by another State. And hence the commissioners hold, in conformity with the opinions of some of the best legal authorities in the country, with whom they have conferred, that the bond of a State, issued for the purpose of raising money, or as an acknowledgment of its indebtedness, is not taxable by any authority other than the State which issues it.

Personal property exempted by State legislation.—In addition to

*Some States, as Connecticut for example, require their citizens to return in the list of personal property, "cash on hand," and then tax the same for State purposes. This requirement and proceedure is, however, clearly beyond the power of any State to do, as there can be no cash in the sense of current money, which is not a national instrumentality of precisely the same character as a bond of the United States bearing interest.

+See supplement.

+For legal decisions bearing on this subject, see supplement to this report.

securities of the above named character, whose exemption from taxa tion is universal, there is also a very large class of property whose exemption is more limited, but sufficiently broad to influence the situs and determination of capital, and so give exemption from local taxation to the very classes and forms of capital for the taxing of, which the retention of the present New York system is constantly advocated. Thus, for example, the States of Pennsylvania and New Jersey, for some years, have united in exempting bonds and mortgages on real estate from taxation, in those counties where investments of this character by non-residents and citizens are most likely to be made. During the past year also, the legislature of Maryland has swept from her statute book, all acts imposing taxes on mortgages in the city and county of Baltimore; while the legislature of the territory of the District of Columbia, has gone even still further in this same direction, and has exempted from direct local taxation all evidences of indebtedness; namely, railroad, corporate and municipal bonds, bonds and mortgages, money at interest, book accounts, etc.

The laws of the State of New York also exempt from taxation the deposits and surplus of savings banks, involving personal property to the extent of nearly three hundred millions of dollars:* all personal property of a visible, tangible character-stocks of goods, and chattels of every description-belonging to her citizens situated without the territory of the State; and all property in transitu, which by a decision of the court of appeals has been held to exempt from taxation all firms and corporations established in other States, but selling their own goods exclusively in New York through permanently located agents and warehouses.

And, finally, another door for the exemption of personal property from taxation in New York, one wide enough to admit all owners of such property to pass through, and one practically beyond the power of the State officials to close, will be found to have been opened during the past year by a decision of the State courts, that not only is property invested in national securities exempted from all State cog'nizance and taxation, but that indebtedness created by the purchase or hypothecation of such securities, whether incurred in legitimate

* Before the year 1867 the surplus of savings banks, which are practically "nobody's property," were liable for taxation, but during that year the following ingenious law was enacted: "The privileges and franchises granted by the legislature of this State to savings banks or institutions for savings are hereby declared to be personal property and liable to taxation as such in the town or ward where they are located to an amount not exeeding the gross sum of their surplus earned (after deducting the amount of such surplus invested in United States securities)." It seems unnecessary to add that after this the amount derived from the taxation of the surplus of savings banks was very inconsiderable.

transactions or avowedly for the purpose of evading taxation, may be used to offset a similar amount of other personal property, and thus withdraw the same from any control whatever by the State authorities for valuation and assessment.*

The person loaning the money on such collateral, it may be remarked, will also undoubtedly regard his loan as an investment in United States securities; and as he is permitted to make a secret interpretation of the facts and of the law, his conscience will probably allow him to swear that so much of his property as is thus represented is likewise exempt from taxation.

When the former report of the commissioners was published, a criticism was preferred against it, that the exposures which it presented of the defects of the existing system and the means resorted to for the purpose of evading taxation, were likely to prove exceedingly damaging to what were left of the "honest tax-payers," and that the value of the report would have been enhanced if much of this information had been omitted from its pages. But the commissioners take a different view of the subject, and hold that if there are ways and means of evading taxation, this information shonld not be restricted to a few, but that all should be placed upon an equal footing. And then again, they would ask, what sort of public policy can that be which does not invite the utmost scrutiny and exposure of details; or, what can be thought of a system of taxation whose efficiency is supposed to be in proportion to the ignorance of the community in respect to its defects and irregularities?

*SUPREME COURT OF NEW YORK, Jan. 3, 1871-(Before presiding Justice Ingraham and Judges Barnard and Cardozo)—Assessment of Personal Property-The People ex rel. Benjamin T. Babbitt v The Commissioners of Taxes and Assessments for the City of New York, Respondents.-The relator in this case was, in April last, assessed by the commissioners of taxes of this city, on his personal pro perty on $250,000. He claims that, on the 1st of January, 1870, his personal property and assets, other than certain bonds of the United States government, amounted in the aggregate to $345,895.97, and that his debts on that day were $356,084.49; that between January 1 and April 1, 1870, the liabilities and debts of the petitioner increased, and that at the end of April the excess of debts over his assets was greater than on January 1. On the 29th of April, 1870, he addressed to the respondents a written notice, duly verified, to the effect that he was not liable to taxation in any amount for personal estate, and requested them to strike his name from the assessment rolls. From this statement it appeared the relator was the owner of $250,000, commonly known as five-twenties, which had been purchased by him in the years 1865, 1866 and 1867, for permanent investment, which bonds he claims are by law exempt from taxation. The petitioner, therefore, insisted that as his debts exceeded the amount of his personal property, aside from the bonds mentioned, he was not liable to be assessed or taxed in any amount for personal estate, and that those bonds could not be taken into consideration for the purposes of taxation, either as a part of his capital, or for the reduction of his debts and liabilities. The respondent declined to accede to this, but gave the relator notice that they had reduced his assessment to $200,000. From such decision an appeal was taken to this court, which, after hearing, gave judgment in favor of Mr. Babbitt.-Press Report.