THE OMAHA DAILY BEE: TUESDAY, JULY 15, 1902.
'. -LJ.3
RAILROAD TAXATION IN COURT
Arguments of Counsel on the Issues Raised in the Mandamus
Case Before Nebraska Supreme Court-- v.
Argument by E. W. Slmeral for th re
lator :
If-rour honors plrut, Id presenting to
the court the argument, to far I tm
concerned, I desire briefly to go over tome
of the eallent point In tbe testimony and
I will aleo present whit the relators be
lieve to be the law governing this case.
In the first place, I might say that when
the brief of the relators was In the bands
of the printer, or at least part of It, and
almost all of It had been written, we
were met by the second answer of the
respondents, which they say changes ma.
terlally the lsauea of fact to be determined
In this case. The only question, which
was one of law, as the case originally
stood, was whether or not under section
19 and 40 of the revenue law the words
"railroad property" Included everything
pertaining to or belonging to railroad, be
that property physical, tangible. Intangible,
corporate stocks.' bonds or franchises.
Therefore, we devoted our attention so
far as the law was concerned to showing
that under sections 39 and 40 It was the
duty of the board to value the railroad
property as a unit to value It In all of Its
factors, tsklng Into consideration not alone
the physical property, but also the In-
'' tangible property and the franchise. That
' a railroad must be taxed as a unit Is
Virtually conceded by the briefs of coun
sel for the respondents. They now raise,
' and I believe it Is a question of law, the
question whether or not the franchise can
be taxed separate and apart from the
tangible property. As I said In our first
brief and in the answer, the question was
whether or not under our law railroad
property Inclnded the franchise. It now
comes down to the question whether or
not the franchise Is such a piece of prop
erty pertaining to the railroad that If It Is
v omitted the court will require the board to
' reconvene and assess It.
I care not what counsel may call this In
tangible property this franchise. By some
, decisions it le called intangible property
, a tax upon intangible property. In other
It Is designated as a tax upon the fran-
' chlse. . Bo that now we propose to show by
. the authorities that it Is the duty of the
board to oaseB the franchise as such. In
their second answer to this writ respon-
l dent ay that all the property was assessed
by the board as a unit as a going concern
. but we find by the testimony of Mr. Wes
ton, the auditor, that they did not consider
the frsnchlae at all. We claim that a fran
.' chUe is as much a separate and distinct
. jilece of property, I as much of an entity,
although intangible, as would be the depota
i and terminal facilities, and bad this board
,. la Its session in May last eliminated en
' tlrely all the terminal facilities of these
rsllrosds, all the property that they owned
r in Douglas county, and we bad shown it to
be worth millions of dollars, undoubtedly
the court would have ordered them to re
'. convene and asses that property. So here
.. taday we aay that they have omitted the
xnost valuable portion of this railroad prop
arty throughout this state, that by falling
to assess the franchise they havo omitted
the lire of the railroad, it very existence.
It very power, and they should therefore
be o.dered to reconvene and assess that
'' property eallrd a franchise.
Our constitution provide In so many
word that the property and franchise of
corporations (hall be assessed. Another
.( rrovUlon of the constitution, and in the
A;lim actJole,- provides that rto property
hill be exempt from taxation; therefore
franchises must be assessed. A to
wh'ther or not a franchise I a separate and
distinct piece of property which Is assess-
, able I shall first refer to the case of the
Southern Railroad company in Kentucky
agalnat Oust O. Coulter, decided June 10
' of this year- I do not auppose It ha been
reported in the Southwestern Reporter, but
I tent to the clerk of the court of appeals
of Kentucky and have here a manuscript
copy of the opinion. I might say before
reed ng from tbl opinion that In Kentucky
they have two separate boards, one of the
board assessing tbe physical or tangible
property of the railroads and other corpor
ation and the other, which meet there-
" after, assesses the franchises of these vari
ous railroads, deducting from the total
value of the roads the amount of the as
sessment made by the previous board,
. thereby getting at the value of the fran-
ehts. This opinion was delivered by Chief
Justice Guffy and this decision was baaed
Upon taxes which had been assessed for four
year back, from 1896 to 1900, so that the
" tnard of assessor in that stats went back
and assessed the railroads for that which
they bad not been assessed for prevloua
"- year. When the railroad said, "Why, you
have no business to assess us for past
year," their answer 'Was, "You have had
the value of the money and got Interest on
' It and saw you have to pay th taxes." If
- th board here ahould do that I think th
state debt might be paid oS. Among other
thing this court says:
There Is soma evidence Introduced by ap
pellants (that 1 the railroad companies)
attempting to show that they did not take
Into consideration the value of the fran
.i. chlse. but we are not inclined to th opin
ion that th testimony sufficiently show
v that th commlaelonere did In fact fix any
.i larger value upon the roads than If they
Jiaa not tnougnt or tne franchise.
How applicable that 1 to tbl case and
, . th testimony of Mr. Weston.
Born comment has been made In regard
' to the apportionment of the tax In propor
tion to tne length of the road or line In the
1 county. However, It Is manifest that th
Intention of the leKlslatur was that this
tax should be certified to the aubdl vision
In proportion to ths mileage without any
regard to any other question, snd such rule
Is manifestly eaultable. for. while It Is true
that th tangible property of the raJlroads
differ In estimate, yet the franchise doea
not. For Instance take the tanathle nroD-
rty of the road In Franklin, a dlatance of
ten mile of th track toward Louisville,
the totdl value of the tanalb e orooertv
th total value of th tangible property
would he worth much more than the ten
mllea of the tangible property further on,
- but the franchise of the last named ten
rntlta Is worth ss much as the franchise of
the first named ten miles, becajse the
whole of the track I necessary to make
the franchise of any appreciable value.
Hence It follow that the manner of certi
fying the value of the franchise as re
quired by the statute la Just and reason
able. I refer to that for the purpose of show
log that after that decision they assessed
th franchise as something separate and
, apart from th tangible property. But that
la not th only decision upon th question.
I might cite a great many, but I have
taken but on or two more. I now refer
to tb cas of Porter against Rock Island
St. Louis Railroad Company, 78 III., tii,
whoa syllabus covers ths whol question
X am now d'scusslng:
A franchise of a corporation 1 property
and as such I liable to taxation aa well as
the capital stock, and tangible property of
th corporation. Th franchise mev also,
be condemned for public uaa under the
right of eminent domain upon due com-
Sensatlon being made. The fact that It la
ifflcult to tlx a true value upon a fran
chise furnishes no objection to the rlttht of
the state to tax It, aa no other specie of
property can escape taxation on account of
the difficulty of ascertaining lta value. Ab
solut accuracy In the asrsmnt of prop
erty I not essential to the validity of
taxea baked upon It.
Than the suprem court of tb United
Etste. la th cass of th Csntral Pacing
Railroad Company against Ths People of
th SUU of California, cited la 18 8up.
Court Reporter I read from page T7. Thia
waa a cas in which th state of California
through Its board of assessors had assessed
tb franchise of th Southern Paclflo Rall
roa4 company. Th company claimed that.
being a government railroad, chartered by
the general government, th frsnchlae
wa that of th United State government
and therefore could not be assessed by the
state, but the stste had also granted right
through their general law to the Southern
raelfle Railroad company, and th supreme
court held that it wa the state franchise
which was being assessed and not the fed
eral franchise. This opinion wa banded
down by Chief Justice Fuller. I read a
few sentences:
The question here Is not a question of
the value of the state franchise, but
whether that franchise existed, for If, In
1W7. plaintiff In error possessed any sub
sisting rights or privileges, otherwise called
franchise, derived from the state, then
they were taxable, and the extent of their
value was to be determined by the board
of equalisation.
So from that decision and from many
other I might cite to your honor. I be
lieve it to be a truism that a franchise
is to b aasessed a property, a much as
the tie or the locomotive or th terminal
facilities of th railroad. Anothor rule of
law, and constitutional law, too, which per
tain to the taxing not only of railroad
property but of all other property, Is that
it must be equal and uniform and that
equality must extend to every part and
every division of th state; it must be
equal as to its valuation and uniform as to
the amount of tax placed upon It. It two per
sons own a thousand dollars worth of prop
erty each and one 1 taxed at one-seventh
and the other at one-tenth, that is not
equality and uniformity. They must both
be taxed the same and for the same value
of property. It has been claimed by th
briefs and will undoubtedly be urged In
argument by counsel, that all they are
asking and all that they are seeking 1
absolute uniformity In taxation so far a
the railroad are concerned, with other
property n th state, of equal value.
Now, there 1 a great difference between
the manner of obtaining these values look
ing at It as a whole or as a unit. Here Is
the assessment In this state of 1320,000.000
or $326,000,000 worth of railroad properties.
It la not all scattered over the state in
piece, separate and distinct, a are the
farms, th horse or tho cattle. It Is not
owned by th million of people within th
commonwealth, but It I owned by a few
companlea, corporation held together by
the same power created for the very
am purpose and that 1 what make up
th large amount of value and that I what
we were asking this board to assess this
franchise this homogeneous property, sot
the property scattered, a that of indi
vidual. And when they seek to say that
they want taxes uniform and equitable,
then w say. "What other property in this
commonwealth can you liken to yours T"
There 1 and I presume there always
will be a great disagreement with regard
to th manner of arriving at valuation.
No tax, I presume, that th human mind
can conceive of will be absolutely equitable.
It cannot b to individual. It cannot be to
corporation. AH we ask Is that they bear
their Jut proportion of the burden of
government No more and no less. They
claim, I believe, that they pay 18.40 per
cent of the taxea of this state. Grant, for
me sax or argument, that that ba true,
and yet, If they have 25 per cent or one
fourth of th property in this atat. con
stituted as It 1 of a homogeneous mas,
ought they hot to pay accordingly T
It Is asserted by these respondent that
the board assessed th valu of th fran
chise this year. I believe I am within the
bounds of truth when I cay that never be-
Ur, me nistory of , the stste of Ne
braska has this question of franchise ever
been brought up before the State Board of
Equalisation. It wa. an original que.
Hon. so far a thl. board wa concerned, and
i . u e nnaT Tnelr who' mouis
i. Why. the other boards did "not." Llk
Adam, they .y. "Oh. Eve gave me the
the "1. 1 The'
almot that were aasessed ten or twelve
years ago. If anything, they have lowered
J?n Taluat,on of railroad property per
.... 1 ca" your nonor' attention to
on thing In this book-In 1874 th Omaha ft
"""n natiroaq company waa as
sessed 19.690 per mile. Her. I a piece of
property 47.05 mile, long that wa.
J . fw71"' ' " 9-890 nd
during tho. year, was their property worth
a. much a. It 1. today T Ha. th.r been
uojucrea. i the population of thl. .tat?
f .K-f bMn no ,ncr l th valuation
kL- Z V v "7 ,lne tnenT Haa there
of th., !!" .In tb " 'Militia,
of that property alnce then? Why. at that
a-eu .!? th:r baT,T What' kind of
V.ih"ufelt w" disgrace
and they kept It up until 1898. Then they
Put in a building, and from that day to thu
Ra'nr"17 ' thl m,U 8outhw..t.rn
$6,600. and for yean back their property
haa .teadlly Incr.a.ed In valu. and
...sment ha. a. .teadlly decrease! Tnat
I but a sample..
Th gentlemen may .ay. "Why, what
I. It you want to a..u vv Jt.
franchiser , don't k7w aa I can define
11?! ' 'J1'" 1 ' It to
" --"-"""a wno nave .tudled that mat-
rlf'6 ut I know what a
franchise do f. - ..
..., II w lu rauroM are
Tt in till, ' 9W.am 0t the"
It In their office, in Wall street and they
tZUT' bond' ,er nl,n,on, of d0"". "5
then they travel through thia commonwealth
and a.e the cltle. and town, and village,
and farm properties, and they say. "Why
tola I v. i ' 1
" " - "uoiness community out here
. .t.ie is wealthy and w. have got to
have a tri .. .... " l"
f bonds." That Is how a franchise oner..,
. "w .. uww " rancniee operates.
.. interest on our
lv v ucn a tariff a will pay
ft no? UPn Ur ck, w w lJf
a. ft. V 7r' to P' otl these bond,
and thes. dividend, but for generation.
thev I., . .Tb" U' '""hi... and
If- . .1. m"',M and lien upon every
Jlngl. thin, that come. Into thl. state Jd
nl ah0o?.0Ut f lt-,h b" th4t
7", lPn T0Ur f"t 'Whin, you
, . ever'rthln that I. created In
thl. .tat I mortgaged to pay th?s dlvi-
ay and their attorney win ei,im that
they have assessed the.. fn,n.
in ..ninV?BV,t 1f ,h relator. They hid
fm. hve, doubt whether -hey hud"
In! ' uhority under the aectlona of
I5?."Ik'u,iLJ?'?ri ? o value and as'
and f..r tk. ,,Ll1 corporations,
I,?, k ? ,lh6 I'""0'1 ht said board had
ft "ii,!".1!'! ' ,U "diction and poweri
an.i demand of relator's representative.
Thai waa their first answer. That has
been Introduced in evidence. In their sec
ond aosaer tbey say:
JltInd.enu fl'rbr answering said writ
aver thut on the 14th day of May. u
i.r:.,lH.,or' 5V Edward Rewufer. Its
ueen assessed, the franchises of said r.,r.
S,.,k which the relator, acting aa
thl? .2'1rl.r'fu,,l to do' for ,h reaaon
Ib iVh .? . r ,h lu creating said board
o to'do. power, it doubted it right
They tUt they bad already iiiiwd
L,. ","ae "emana on the respond-
ITii I 1., s'Ulng e such board that the
J."tr aeaee. In addition to the tangi-
sleeo nr"yr ' ""?'f 'J?:
-.i-iiirsj inicn ntaa airAiiv
the tangible property on the 14th of May.
Now tb respondents, In their last answer,
say:
Respondents further represent that the
Items mentioned In the foregoing para
graph are the matter and things which
these respondents took Into consideration
In arriving at th value of the property of
tne said railway, teiegrapn, Sleeping
and
dining car companlea for the purpose of
taxation; that salrt respondents did not be
lieve that under the law defining the pow
era and dutlea of the respondent hoard it
had authority to value snd aseees the cor
porate franchises of said companlea sepa
rately and apart from their tangible prop
erty, and here submit the facta that were
actually taken Into conaideratlon by said
board In the performance of lis said .duty.
Now, they assert by this second answer,
filed under very peculiar circumstances to
say the least, that they doubted their power
to assess the franchises separate and apart
from the other property, and It will be as
serted here that thl. first answer wa. a
mere conclusion. Why Isn't It just as much
a conclusion to say that they did not a.-
ess the franchiser So I say that so far as
ths second answer is concerned it does not
claim in so many words, in a straight-forward
manner, that they did aeeess the fran
chises. It leave It for inference. And If
I understand the rule of law with refer
ence to a return to a writ of mandamus It
1 that nothing must be left to Inference;
It must be poeltlve It must state exactly
what they did or what thy did not do and
If anything Is left to inference the presump
tion will be against them.
We have said, your honors, that fraud I.
not only alleged but proven In this case.
I car not whether you call It actual fraud
or whether you call It a legal fraud. Cer
tainly tbe Ignorance, the Egyptian dark
ness displayed by th respondents when
they were upon the stand a. to the value of
railroad property entitle, these relators to
believe that It was at leaat legal fraud.
They did not know bow to arrive at th
value of any railroad property. They said
upon the stand In reference to th manner
In arriving at value that they couldn't tell
didn't know anything about It. It was an
exhibition for the gods. Cal it fraud or
call It Ignorance, I car not which. Call It
a mistake if you pleas- certainly It was re-
markable Ignorance and something which
tbl court should correct and tell them how
to go to work to arrive at the value of thl.
property.
Another evidence of fraud It might be
but little, but, nevertheless, I think it tends
in the same direction Is tbe fact that they
refused to make any record at all when
requested to say whether or not they would
value these franchises. Now, your honor,
must remember, as I said before, that this
board was the first one which ever bad
the question raised before it. They could
not be in ignorance. They knew very well
that there waa a value connected with thl
property. And right her let me call the
court', attention to some of the docu
ments that were filed before them, and
those which Mr. Weston had locked up in
bis safe. Here Is tbe argument made by
the Union Paclflo tax shirkers. He shows
that the total value of this property aud
mind you he only take the physical prop
erty alone, the right of way, etc that the
total value of the railroad property
property throughout lta entire length and
breadth 1 $30,853,000.67. That 1 the value
of this great Union Faclflo railway, this
transcontinental railway, for taxation pur
pose., though for tariff purposes, I pre
sume It i Increased considerably. And
he gives hare a list, to which be makeo
thl note: "Not that thl. testimony wa
Introduced for th purpose of maintaining
ratea and not for taxation ' purposes."
When Attorney General Smyth waa taking
some testimony, this wa tb valu of
their tangible property, and that to their
argument right atralght through, on which
they appealed to thl board to asses, only
the tanglbl property. And If anything
wa needed in confirmation of that fact
we hav only to turn to th argument the
Burlington Missouri River Railroad com
pany made through Mr. Pollard, it. tag
agent, which I will tak th liberty of read
ing:
It 1 U 11. flfti 0O9 mrnmm Mimlnn1 ,T
pensea, twelve millions and something. Net
earnings for the year ending June 30, 1901,
84.322.8M.41; earnings per mile, gross $4.8u6;
net earnings per mile, .1.137. cnicago,
Burlington & Qulncy. Missouri line (1 pre
sume that embrace all your lines), S33,
7,0u0 gross earnings; 822,026,000 operating
expenses, 811,661,000 net earnings lor tbe
year ending June 80, 1901. Earnings per
mile, gross, 8i,42; earnlgs per mile, net,
82,916 per mile, ao that our lines east of the
Missouri river, our franchises is mora
valuable than those west of the river, a
they earn net nearly three timea as mucn.
I understand that the receipts of Chicago
station alone are nearly 81.oc0.o00 per month.
over twelve timea a much as any station
on the B. & M. They have 1M miles of
main and side track in Cook county, Illi
nois. I am sure I am safe in saying that
thay are worth five time a much a that
number of mile of main and side track
west of the Missouri river, either from an
earning standpoint or cost of reproduction.
The fact that we have double tracks prac
tically across Illlnola and Iowa must not
be lost sight of. The bonded debt on June
80, 1901, on the whole Chicago, Burlington
& Qulncy system waa 8133,264.454; capital
stock, 3110,6;7,7uO; an average of $29,b60 per
mile. The net earnings east or tne river
are nearly three times as much as those
west of the river. If It were not for the
lines east of the river it Is very doubtful
If the lines west of the river could have
any more than paid their proportion of In
terest on the bonded Indebtedness of 818.400
per mile, and consequently the capital
stork of the line west of the river would
have been valuelesa. How. for Instance,
would Illinois like to have lta mileage in
that state vslued at the same figure per
mile as our line from Hotdrege to Chey
enne? Would that be fair and equitable?
The fact is that we have to return to the
state of Illlnola, Iowa, etc., the property
we nave tnere, and these bonds and atocks
are issued largely on the value of the prop
erty we own east of the Missouri river, and
not on our lines west of the Missouri river,
which were more cheaply built and have
leas earning capacity. If, therefore, w
are assessed on a stock and bond basis hera
In Nebraska, the moat valuable part of our
road has already been assesaed In the
states eaat of the Missouri based on what
we have there, ln't It a eecond or double
assietament and consequently lllvgal and
void, it is not aa it an our property was
In one state, such as the Denver & JXin
Grande In Colorado, or In one county, arch
aa the Street Railway company in Omaha.
R. P. I'OUKI), Tax Agent.
Now, that is their statement. Here are
also aoma figure from th Union Stock
Yard aa to hogs and cattle and horses,
which enow the value for taxation and bow
much they sold for and I suppose we will
hear a great deal abuut that.
Mr. Kelby Are thoee paper, filed?
Mr. S'.meral Ye. !r.
Mr. Kelby Introduced by the relator?
Mr. Slmcral Yea, sir. Now, what Is ths
assessment per mil in thl state? About
11.660 per mile for these railroads. The
BBe .ineui tevi.a oy mis poara amount to
"abo-ut thai 0, 6 704 m..",.:T be.reUvU.: "
something over 1.000 mile, of sidetrack and
various other things. That Is what la taxed
at $4,600 and a little over per mile. Isn't
that undervaluation? And In any way that
ycu could figure on the value of tbe railroad
property In thU state, taking It as ao ag.
grcgate, you cannot make it less than $300,
lOO.oi 0 to $325,000,000 worth of property.
Now, bat doe. the suprem court of Illi
nois say upon this question of undervalua
tion aa an evidence of fraud? I ahall read
but Just on paragraph from this decision
a cas I presume your honors are thor
oughly familiar with tha Gogglns case:
That In the assessment of the capital
stock and franchise of the Consolidated
Traction company over and above its tangi
ble property as asrecd by the local as
sessors was fixed by th state board at
lUO.Oug, while that of the Union Traction
company waa Cxd at ew,0w, which, ac
cording to the contention of counsel tor re
spondent, would make the net total as
sessed rash value of the capital stock and
franchise of said thirteen omitted compa
nlea of said Chicago Consolidated Traction
company and Chicago Union Traction com
pany aggregate the sum of ITOn.pon, while
the uncontradicted evidence establishes be.
yond a doubt that the cash value of the
capital stock of the Chicago Consolidated
Traction company and Chicago Union
Traction company, together with the
bonded Indebtedness to be deducted there
from, the assessed value of their tangible
froperty alone exceeds that amount by a
arge sum. It therefore clearly appears
that the capital stock and franchisee of
said thirteen omitted companies, as a mat
ter of fact, wcrs not valued and assessed
by the State Board of Equalisation of the
said several corporations, nor were the
same Included In the assessment of said
traction companies, but that the same were
wholly omitted from the assessment of 190.
We have repeatedly held that an assess
ment may be Impeached on the ground
that property hae been fraudulently as
sessed at too high a rate. In Hall against
Ueber. 83 III., we say: "Where the valua
tion ts so grossly out of the way as to
show that the assessor could not hav
been honest In his valuation and must
reasonably have known that It was ex
cessive, is accepted as evidence of a fraud
upon his part ae against the taxpayer and
the court will interpose." And in Haliroad
Company against Cole, T5 111.: "Valuations
must be the result of honest Judgment and
not of mere will. The converse of the
proposition must be true and that an as
sessment may be Impeached where the
assessment has been fraudulently made at
too low a rate."
I come now to Mr. Baldwin' brief. Mr.
Baldwin, In one part of his brief, seem, to
be much afraid the Union Paclflo railroad
Is not a monopoly, because ha aay that
under tbe law of thia state a franchise
may be granted half a doeen persons to
build a railroad. Well, when th Union
raclflo ceases to be a monopoly I do not
believe anyone within the sound of my
vote will car very much. Mr. Baldwin
take up from page 15 to page 22 of hi
brief th argument that section 32 of the
revenue act doe. not apply to th Stat
Board of Equalisation. Now, we never
.aid It did; we do not think it doe. apply,
but w do aay that under the law you have
to as.es all railroad property, that th
only way they could value that railroad
waa to take Into consideration bonds and
stock., a. provided by section 82. That Is
the guide, that 1. the polar star. It may
not be incorporated Into those section, pro
viding for th board, but the word "rail
road property" include and suppose that
when assessing that railroad property they
will take Into consideration stock and
bond, because no other way 1 known to
the law to arrive at a Just valuation of tho
railroad without ao doing.
But the argument of counsel goe too far.
It Is a self-evident fact if they did not tak
Into consideration th provisions of section
82 ta valuing thl railroad property that
they had no data before them from which to
arrive at a Just valuation thereof. But
Mr. Baldwin, on page 82, gives us Something.
Mind you, be haa claimed all the time that
you cannot valu th franchise separate
and apart from th balance of tho road
it cannot be done but If there la a atat
in th union tinder the domination of th
railroad., I presume that atat would be
Montana, and yet how doe the board asses.
it there?
GREAT NORTHERN,
Frsnchlse f 132. M
Roadway 800.00
Roadbed k. l.Km.OO
Kails 1,800. no
Rolling stock 1,400.00
Making th total ' valuation, including
Uje franchise, whloa yov ae I separately
valued there, of $5,432.'- Then come th
Oregon Short Line company, which la a
part. I preium. o th line controlled by
th Union Pacific. Thar tb bar- franchise
I valued at $182.60 and he goe. on and
ahowt the valuation of th other element
and, according to Mr. Baldwin', brief In
Montana, ths Oregon Short Line la valued
at $6,662 per mile and th Union Paclflo
railroad her In Nebraska to valued at
$6,572 per mile. But another item in Mr.
Baldwin' brief which I think, to say th
least, i. Tory puxzllng to me, or pethapa I
hsuld say it to astonishing, U tbl., on page
88, headed:
The correct statement la mm follnwat
Union Pacific Re.tlroad romn.nv. Oregon
DQon i,ino itntiroaa company, uregon Kali'
roaa ana navigation company.
That all of th stock and bonds issued
for those three system on June 80, 1901,
was: Total bond Issued, $331,279,800; total
stock. Issued, $263,999,000; total bonds and
atocks, $595,278,800. Then come, in th as.
tonlshlng part. Mr. Baldwin takea out the
bonded debt entirely. You eliminate it en.
tlrely there, wholly, Mr. Baldwin. And you
knock out about a million dollar worth of
stock because you .ay, "Less e'curltles
owned by th three companies, $332,601,
259.87." You haven't atopped . taking out
then. Why, lr, if you go on taking out,
you will have your road a "cadaver"
"moonlight on a shovel." You haven't don
yet. Then you tak out land asset.
$5,353,353.95; water line properties (estl
mated), $3,000,000. Now come th mile
age. With th Union Pacific and th Ore
gon Short Lin and th Oregon Railway
and Navigation company all united th rail
road mileage amounts to 6,679.88 mils and
th entire bond and stocks covering them,
according to Mr. Baldwin' figure., are
$254,297,186.68; for bond, and atocka, par
mile, $45,574.
Now, where does h get that? He gets it
out of the Union Paclflo report. Ha had
those before th board. He take the total
amount of th bond and stock of these
three railroad companlea that are outstand
ing at $595,000,000. Then he take out
what? He take out all tha atocks and
bonds owned by th railway companies,
owned by the Union Pacific Railroad com
pany and th Oregon 8hort Lin and tbe
Oregon Railway and Navigation company
he takes out tbe total owned by tb three
companies, amounting to $332,631,259.87.
That Is exactly the amount that you hav
In your brief and which you lent before
th board by thia llttl piece of testimony.
He forgets all about the fact that the are
mostly assets; h charge them up a. lia
bility.. H. says, "We are poor," and ha
charges up the stocks and bonds aa liabili
ties instesd of as assets. Yet I find they
hav 124 locomotive, which cost $1,914,000,
or $15,000 apiece. Are they assessed at any
thing near that rat? I don't know where
It is. So that when we get Into Mr. Bald
w n's brief and also tb annual statement
of tb road and knowing that tbey put tbl
testimony before th board prior to th
valuation, w see how they misrepresent
th valu of thslr road, $48,000 a mile for
tb Union Paclflo Railroad company, bonds
and- stock, and verythlng of that kind!
Why, the value a. shown by tb market re
i 'V ' f. Tb ST ""I;
tive estimate that can poaslbly ba placed
upon it la $100,000 a mile, yat tbey .ay It
1. worth only $45,000. I can fully appre
elate that for taxes it I. worth $45,000 when
ycu rsk them) but when It come, to the
que.tlon of Imposing a tariff upon th pro
ducer In this stats It 1 worth a great deal
more than $45,000 a mile. Then they have
to make interest upon their bond and dlvl
dends upon their stock and these men lt
ting in tb money center of thl country do
not aik bow they do It or why they do It,
but Juat simply say, "Do It." They aay to
tbe managers of th roada her In thl eoun
try th same a th manager of th East
India company said to Warren Heatings:
Get vojr money and get It any way. W
want dividends. We want dividends and
nothing else will satisfy us. We must have
dividends upon our stock. It don't make
any diflervuc hew many people may be
Vig
Spiclal Excursion leav Omth Tueidiyi Aug. B. II
W X Writ for foldtr-rUtE.
l SyS. J FRANCIS, Otn'l Pan, Agent,
crushed to earth by so doing, we must
have dividends.
And therefor I say that for dividend
purpose th Union Pacific railroad 1
worth at the very lowest and most conser
vative estimate $100,000 a mile, but for
taxation purpoaea it 1 worth, according to
them, only $45,000.
Let u. now take up the B. ft M. brief of
General Manderson or Mr. Kelby. By their
united efforts they have produced some re
markable results. In the first place, on
page 4 I will read thl for th benefit of
Mr. Kelby a well a. the court and In
th light of the testimony given by Mr.
Weston yesterday:
Correlated to or supplementing sections
39 and 40 are other provisions of the law
and constitution, one of the apparent ob-
Jects of which I to afford the board a
means dv wntcn to oniain ana utilize re
liable Information" relative to railroads aa
a basis for admeasuring values. These pro
visions are recited In full In relator's brief.
for which reason It la unnecessary to copy
them here. We have said that one of the
apparent objects of these provisions Is to
supply the board with Information to en
able it to make a proper and just deter
mlnatlon of the value of railroad proper
ties. But whether this waa the purpose or
not la immaterial. If the railroads com
piled with these provisions this Informa
tion waa accessible to the board. That the
railroads did return to and file with the
auditor information of the character pre
scribed by these provisions Is not and can
not ba queatloned. The writers know that
a printed copy of the annual report of the
Chicago, Burlington A Qulncy Railroad
company for 1901 was, prior to the meeting
or tne DOara, uiea wun tne auaiivr ana r
matne a pert of tha public records of tbe
state.
Here 1 a report filed befor tbl board
on th 23d day of May, 1902. And yet they
mad the assessment on th 16th. They
did not hav thl at all at the time they
mad the assessment. That la th first
point that 'I hav to make with regard to
General Manderson'a brief. I have already
referred to that statement of Mr. Pollard
of tha Chicago. Burlington Qulncy.
Now on page 8 of General Manderson".
brief be .ay.:
It were idle to claim, and we do riot
claim, that the assessment fixed by the
board represents thi actual value of the
railroad property. What we do claim la
that the assessment of railroad property la
far In excess of the average ratio of as
sessment to actual or cash value and that
the average ratio of aeseesment In Ne
broaka of actual value doe not exceed 10
per cent. In other words, property of all
kinds other than railroad property within
the atate of Nebraska is and always haa
been, as we propose to show herein, as
essed at lei. than one-tenth of ita actual
or true value.
Where h get that I don't know. Prob
ably though h obtalna it from th cen.u.
report. Well, If I remember right, th
census report .bowed that Omaha had 140,
000 in 1890, but w did not. That la all
there 1 to it. They were not there count
ing dead men and everything else, tbey
wera not there and th report for 1900
show. It. Bo when they begin to talk
about eeneua reporta, they must remember
that when a cen.u. enumerator goe to
on for th purpose of obtaining tha value
of hla property, ha la not going to report
on lea than ha has.
It I a very different proposition, the cen
sus proposition, a. to valuee, than fnat of
th return of th assessors, and It to th
return of the assessors that wa must look
to. And what ao tney .now wun regam
to Nebraska? Tha auditor testified that
be had return from th county clerk of
thl entire state which showed that tne
as.e.ed valuation all over thl. atata wa.
from one-fifth to one-lxth of tb casn
valu of th property, or from 16 2-8 per
cent to 20 per cent. We hav alleged In our
writ that th property of other property
owner In tbl state wa. assessed at 20
ner cent of It actual valu. Th consti
tution and the law of thl atat provide
that property aball be assessed at its true
cash value and thl. court cannot pre.um
that all th a.sessor. throughout tb entire
state hav failed to do their duty, where
there 1 nothing befor thl court directly
showing that they hav failed. W ara
hera to Impeach th action of tbl. board
of assessors
with regard to railroad
property and tbey coma in and say
in and
Why bera ar ail tb assessors oi an tnia
tato that we propose to Impeach." By
what? By tbe census report; by the sales
that have taken place of property through.
out the atat. What were tb sale that
these gentlemen wer looking for. Who
compiled the sales? Why, w know that
tbey wer compiled by tbe railroads. The
railroad, were not there for th purpose
of showing that th sales were very much
below; tbey wanted to put tb sale aa
high aa possible and, of course, to put th
taxes down aa low aa posslblo. So, when
tb counsel make an argument that thl
exhibit bar was before the board, thowlng
a great number of aalea In a number of
counties throughout tha atat and that land
wa assessed there for $5 an acre and sold
for $50 aa acre, you must re
member it comes from the rellroads
But her w hav something that th
board bad to obtain and we have ber th
tatemecit of tb Improved land, and
unimproved land, for tb. countle. through
out tbe .tate, a. to tha value of aasesament
the assessors agreed upon in their meetln
In March, and what Is It? As I said. It ts
between one-sixth and one-fifth. That is
what It shows. But what ha. been th
aasessed valuation of the railroads? From
one-tenth to one-fifteenth
General Manderson lu bis brl.-f ba com
mented upon th funded debt of tb C, B
ft Q. railroad. Let us are what Uiat ta
He place tbe funded debt a. $147,000,000
and tha capital stock at $212,000,000,
figured at 192 per cent. Now th Great
Northern ft Northern Pacific took over all
the stock of the C, B. ft Q. and it is now
out of the market entirely. You do not
find it quoted. Here I tha report made
to tha directors. Her is ths report made
to, tbe director, of th Northern Faclflo
tor .-the year 1901 on thia que.tlon. It
say:
- Purchase of Burlington stock: The Great
Northern Railway company and the North
ern racino Hallway company nave jninur
purchased 1,076,772 shares, or $107,677.2M of
the capital stock of the Chicago. Burling
ton ft Qulncy Railroad company, being 96.79
per cent of the total authorised issue, and
In payment for same have Issued their
Joint collateral trust bonds and secured
to the amount of $216,164,400. Further bonds
of the same series up to a total of $222.4w.
may be Issued for acquiring the residue
of the stock. The bonds are dated and
draw lntereat from July 1, 1901, and mature
July 1, 1921. and may be redeemed on the
first day of January or July after January
1. 1906, at 105 per cent, wltn accrued inter
est, and draw lntereat at the rate of 4 per
cent per annum, payable January 1 ana
July 1 of each year on coupon bonda, etc.
The shares of the Chicago, Burlington ft
Qulncy stock thus acquired have been de
posited with the Standard Trust company
i Nov Vnrir am iruatMi under collateral
trust, under trust indenture, to secure the
above bonds. A contract has been entered
Into between the Great Northern and the
Northern Paclflo defining the right nnd
hllltic nf thn pomnanles growing
out of the acquisition of the stock. They
paid 200 cents on the dollar for every .hare
or atocK tney aoi. 1
So we find tbe actual aale of every emgle
olltary bit of tb Chicago. Burlington ft
Qulncy stock for ' 200 cent on tha dollar.
Yet what doe Oeneral Manderson figur It
at? Why, thl property ha would flgur
to be worth In one plac only about $29,000
mile, and from that up to $30,000 a mile,
But you have to add the stock and bond.
and when you do it you will find tbat
a 1. not correct, for It. 2,416 mile. In the
lata of Nebraska are worth about $50,000
per mile, according to a conservative cal
culatlon. And on of the beat piece of
testimony we hav in thl cas 1 fur
Dished by General Manderson on page 49
of hla brief, wherein he says:
TV,, fklxao-n Ttiirlfnrtnn A OulneV Rail
road company waa one of the railroads
subject to assessment in imnois, amu
nmtwri w hv that board assessed at
ii ofti fnv tha vear 1901. The ratio
o aasesed to total value in Illinois la 20
per cent. The actual value, per mne, mere-
fore, or tne cnicago, nurungion wuuiw
n.tirn.il rnmninv. as fixed by the board.
was 844.890. Taking the same basis for the
lines in Nebraska, which is absurd, rela.
tlve conditions considered and compared,
th aasenaed valuation In Nebraska would
be 84,449 per mile, upon a ratio of 10 per
cent.
But while that 1. true upon a ratio of 10
per cent, upon th ratio of what other
property 1 paying throughout thl. state it
would be at on-ixth $7,481 per mil. It
make all tha difference in tb world to
the rata
Here 1 another strange thing I would Ilk
to have counsel explain: General Mander
son. In hi. brief, figure, th Chicago,
Burlington ft Qulncy road at 8,842 mile
According to their annual report you cannot
find, to aava your life, even taking In the
railroad bought here tha other day you
can't find over 8,000 mile.
Mr. Kelby Look again.
Mr. Slmeral Ye, I will look. Look at
your annual report, and your annual report
lvea a ths total number of mile, of your
entire system. Including Iowa, Illinois, Mis
souri, Nebraska, Colorado, where you will
992.60 mile, but what doea their railroad
tax shirkers say? I will get that. That
Is the B. ft M. railroad tbat is, everything
west of the Missouri river 3,800 miles-
Chicago, Burlington ft Qulncy, Missouri line
and everything east of tb Missouri river,
000 miles. Can you make mor than
,800 miles out of that?
Mr. Kelby I can; yes, .lr.
Mr. Slmeral Well, then you will hav to
figure different from anything I can find In
your annual report.
Mr. Kelby No.
Mr. Slmeral If you have lost aoma In th
shuffle, if you hav a lot mor cadaver, for
assessment purposes, perhaps you can find
It, but If you bava live railroad, which are
making dividend., which hav a franchise
upon them, you can't find mora than 7,800
mllea to save your Ufa in any of your re-
UUIifTTITT.hnT,9
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porta any property that I covered by
your bond and stocks.
Mr. Kelby Read this.
Mr. Slmeral "Leased lines." Ye, that
I a narrow gauge Una of 178 mile In ad
dition to th standard gauge mileage th
Chicago, Burlington ft Qulncy railroad con-
trola.
Mr. Kelby "Operates."
Mr. Stmeral No, It .ay. "controls."
On hundred and seventy-eight miles. Tbat
wouldn't make It.
Mr. Kelby And the Atchison. 204 mllea.
Mr. Slmeral Tbat wouldn't make It. You
are atill short about 400 mllea.
Mr. Kelby Add the seoond track.
Mr. Slmeral Oh, th second track I
thought It waa the seoond track. Why,
Mr. Kelby, if you and Mr. Manderson can't
get some better excuse than that you had
better quit. I. tha aeeond track aasessed
in this state, the eecond track?
Mr. Kelby We haven't any.
Mr. Slmeral No, air! you haven't any.
Why don't you add turnouta, switches and
everything else, and that bridge down in
Rlcbardaon county, and all. There you pay
an assessment of $1,000 In Ricbardaon
county, and I preauma at riattsmouth you
pay $1,000 a mil there for th bridge as
sessment. It is like th Union Paotflc,
$1,600 for one-aixth of a mil of th bridge
at Omaha, where they tak In thousand
and thousand of dollar, a month ther for
it, and yet they say, "Wa want equality
aod uniformity In taxation." They aay,
"We must have equality and uniformity
In taxation," and yet tb Union Paclflo '
bridga 1 assessed on the Nebraska aid
at lesa than $1,600, although a few year
go It was asaeaaed at, $125,000, and In
Iowa it wa assessed at $280,000. I believe.
There I one other brief her. I bad
forgotten that. That 1 th relator, brief,
and 1. designated Juat "Memorandum
brier or "Memortal," I don't know which
Memorial, I think. The attorney general
says "We don't know whether wa as.
aessod $200,000,000 worth of property In thl.
atata or not, but we think we did. If we
did not we want tha court to tell us."
Tbat la exactly what he aaya. Tbey don't
know. It waa lost in th huffi this fran
chise. They ask th court to tell them
whether they assessed $200,000,000 worth
of property. I hop th court will tell
them they did not, because there to no evi
dence of the fact that tbey did.
Bo that I say to your honor., If thl.
board will Just act honestly will Juat act
aquarely with tb people, a. well a. with
tha railroad., they will hav no troublo
in arriving at an honest conclusion In
reaching the value of these properties, and,
too, they will find that there la a great
deal of exemption in favor of railroad and
against property owner, of thl. .tate.
Card from Mr. How.
OMAHA, July 14. To th Editor of th
Be: An article appeared In tha World
Herald Sunday, written by Charles Q. De
Franc, on th railroad tax cas, which la
Interesting and Instructive; but th writer
fell Into an error that doe. Injustice to
others and to me. The erroneous statement
refer, to my aeverlng my relation with
th Omaha railroad as It general aollcltnr
some dosen yeara ago. Tha service waa en
tirely pleasant. My relation with th other
officers were always cordial. It wa. a mis
take of fact to Intimate tbat anything waa
required of me, while I held that poaltlon,
that was Inconsistent with tha highest con
ception of professional ethics. Mr. Pa-
Franc waa misinformed. Pleas mak th
correction. Your truly,
JOHN D. HOWK.
IS. !, Otova.
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MILWAUKEE, Wis.. July 14.-Th death
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Milwaukee and St. Louis clubs, snd legal
adviser of the American la expeoted at tny
time today, doctors having announced that
he could hardly live through the day. Ban
Johnson is expected to be at hla bedside
today.
1.0 iu IUt LliUUltUp euu uu
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