TIIE OMAHA DAILY BEE: WEDNESDAY, JULY 10, 1002.
RAILROAD TAXATION IN COURT
Arguments .of Counsel on the Issues Raised in the Mandamus
Case Before Nebraska Supreme Court Pan vz
Argument by M. F. Harrington for the re
lators: Tbe questions Involved her, ere of to
much Importsnce thst It should ba the duty
of all partita Interested to furnish tha court
all possible light upon th tranactlon pos
Bible. I think tbe flrit thing to ba considered,
anil. In tha end. tba main thing, la whether
or not tba railway companies of the state
are paying a taz (n proportion to their
property ownership. First, we will have
to ascertain tha general rule of assessment
of property la the state. . Our basis here
Is not founded upon Imagination; It la
founded upon . the publlo records; It la
founded upon tbe testimony In this case.
The returns . made by . tba assessor and
teunty clerk of Douglas county certify tbat
for all county and atate purposes the prop
erty of tha county Is assessed at one-sixth
of Ha' fair cash value. As to tha assessors
and county clerk of Lancaster county, we
have their, certificate that the property la
thla county la asaeaaed at pns-flfth of Ita
fair cash value. These are tha two heavy
texpaylng counties of tha state, and tba
lowest valuation la one-sixth of Ita fair
cash value.
We do not need ta stop with these. coun
ties. Thirteen counties returned tbat
their property la asseaeed at one-fourth of
Ita fair cash value, nine counties .at one
third of Ita fair cash value, four counties at
one-sixth of Its fair cash value, two at one
seventh of Ita fair cash value, twenty-one
at one-fifth of Its fair caah value; one re
turns one-eighth of Jta fair cash value and
tha others ranging from one-fifth to one
tenth, with two exceptions. Not a county
In Nebraska returna Its property at less
than one-seventh of Its fair cssh value, and
only four counties out of .the ninety-three
In Nebraska return at less., than, one-sixth
of its fair caah value. . y
8) I am wtthln the bounds of truth; my
statement here Is conservative,, as. baaed
upon thla testimony, that property, gener
ally speaking, in Nebraska is aassssed at
one-sixth of U fair cash value. That la, all
expect theee railway companies to do
la to pay that same rate of taxation. . We
expect the State Board of Equalisation o
sss the railroad property at one-stxth of
Its fair cssh value. The relief idught here
should bo awarded. If It be true that: the
franchises and other intangible property of
tneae railway companies have been omitted
from the tax list. If tbey have not been as
essed, 'then It la the duty of this board to
resisemble and asaees tbat property which
they havo by their act exempted from taxar
tlon. If. upon tbe other band, they took
Into consideration the franohlse, and If they
made the assessment so low that It la a
fraud upon the taxpayers In the state, then
that assessment ao made by them la utterly
-voia in law, ana u is tnsir amy to reassem
ble and make a new assessment of the prop
erty. Bo that if either one of these things
baa occurred, or If both of theao thlnga have
occurred, It la the duty of thla board to re
assemb'.e and make a new assessment of tbs
property.
What. Is a franchise? tt Is asked, and what
la Its value? ,It may be defined mora easily
v illustration or by negative than by an
affirmative answer. Here was the Union Pa
cific railroad In the hands of receivers but
a few year agq. with a bonded debt much
leaa than tha bonded debt of today. Yet
that road was finally to come to sate, and
that corporation was to go out of business,
ind It could no longer pay dividends upon
Ita atock.. with.' UW' result that " the:"! ttock
rent to as low as a few cents on the dollar
per ahare. Tha reason waa that tha fran
ehlae was practically taken away from that
corporation, l a right to levy, tolls prac
tically eeaaed to exist. But Just as soon aa
that corporation waa reorganised. Just as
toon as there was new lite given to it. Just
as soon as U bsd the right to take tolla upon
the grain snd upon the cattle and on the
product of our mills, and to take toll for
carrying pasaengers, and to levy tribute not
only on the crops and manufacturea of this
year, but for the year, and agea to come,
whether under publlo lor private control.
Just ao soon aa It became that in perpetuity,
they might collect and levy tribute' upon
trade between' the Occident and the Orient,
a loon aa tbat occurred thla franchise gave
life and tremendoua value to the common
ato:k of the Union Pacific, and today, In
stead of being worth $5 a share. It la worth
and can be caabed on Wall atreet before
peon .tomorrow for $10T share. Thst is
what a, franchise te the right to collect
tol'a. tha right to levy tribute, the right to
inake rates and increase 1 them at will. It
la In perpetuity; it la because It 'lasts for
the agea to comet because It is la Itself the
Very means by which they collect, tribute
nd dividends . and pay . . Interest on .their
bonds, whsthss they represent value or rep
resent water; whether they represent value
In dollars and cents, or whsther they are
conceived la Iniquity and bora in fraud,' as
I propose to shew the bends and stocks of
the Union Faolflo railroad' were to we
thlrde of their extent. . . -;
Now we can get some things by com
parison. Back In 1874 tha lines of rail
roads In this state, which were but atreaks
f ruat In comparison with the transporta
tlon line today, were aaaeaaed at 110,095 a
xo He. If the aame ratio had been- main
tained between the lands. , both Improved
and unimproved, this year as waa main
tained between the railroads and the Im
proved and unimproved lands of Nebraska
in 1874, the assessment of the railroad
corporations would have been over 136,000,
WO more than $10,000,000 more then It Is.
and that assessment is not . fair to the
people of this state because It goep upon
the aasumptlon that landa In Cheyenne,
landa In Sioux and In Dundy counties are
worth aa much per acre aa they are worth
In the eastern part of this stats, becsuse
ws all know that In 1S7I the aaaeaaed Isnds
were practically confined to the eastern
oss-thlrd of tbe state of Nebraska. So
that upon that abowtng alone and assum
Ing that landa clear out In the arid region,
where they don't raise a crop ons year . In
five, and are Juat aa valuable aa in Nemaha.
Otoe and Richardson countieseven tf we
taks that as the baala theao reapondenta
here have exempted from taxation at least
$10,000 ,t00 of property thst ought to bare
gone upon the sssessmeat rolls.
They ssy tbst this aseeement Is similar
to what it waa In prior yeara I am here
to aay that I believe tbat all tbe prior
asaeasments upon railway property la Ne
braska were too low, and I am here to
point out to your honors so clearly tbat
e man can doubt It tbat there Is no com
parison between thess aaaessments and the
assessments of the present year,, In 1894,
im. 1S9( and 1897 tba Union Pacific rail
road waa In the banda of a receiver had
been run down. It was a bankrupt con
' earn, Ita franchise had gone and had almoat
ao value at all. By the fall of 1897 . the
main line of the Union Pacific, not the
franchises, not tbe feeders tbat gave value
' to tha property, but tbe main line, got out
' of the banda of the receiver, but by the
time the assessment of 1899 was made
tl ere waa ao report of Its net earnings
1 under the new conditions and no oppor-
tunlty to compare their earnings ben they
I would get all their franchise together, be
cause the franchises were still In the
I tends of a receiver. Thers was no report
mads e tbe Interstate Commerce commis
sion nor to ths publisher of Poor's Manual,
4 alter you. could get Information la to the
value of thla property, bence In 1891 there
was no possible way by which sny tnnn
could get at the actual value or fair value
of the Union Pacific railroad In I89. The
Stock of the Union Paclfio railroad had not
paid a dividend for aeveral yeara. All tbe
common atock and all the preferred Block,
all of It, are paying dividends that has eent
that common stock to par and above it,
aendlng It to a premium.
Now, then, as to 1900 there wss a dif
ferent showing. In 1899 and 1900 ss a re
sult of that theee railroad valuea ought to
have been increased Immensely upon ths
tsx rsll. But something occurred in 1900
though counsel may not be aware of It
which Added immensely not only to the
value of the Union Pacific railroad, but the
value of every mile of railroad In Ne
braska snd every mile of railroad weat of
Chicago. The Information that these cor
porations had dons certsln acts by which
they bsd Immensely Increased the value
of their rosds was not known to the state
board that made the assessment two yeara
ago. I think I have given a fair consid
eration to this question for several years,
but I am frank to aay that this order was
personally unknown to me, cloae track as
I aimed to keep of these matters. Whst
hss given value to these railroads, what
waa' the entering wedge of the mergers
which have since taken place was a com
mon agreement mado In the city of Chi
cago under which tbey placed all territory
running . from Chicago northwest of St.
Louis and then, down the Mississippi to
the gulf and taking all the . territory weat
of those lines throughout the United
States and putting them Into a division
and Issued a rate sheet, known aa classifi
cation No. 29, binding upon every railroad
operating within that territory.
t What was thla general classification or
thla. order No. 29? It provided, aa tbe
report of the Interstate - Commerce com
mission . now ' In evidence ahows, a
reduction of SI per cent on sev
enteen articles of commerce and
aa ' Increase of 47 per cent .. on $40 ar
ticles In common use that constituted the
bulk of the commero, of this country. Tbe
average increase In the 257 articles wss
more than-40 per cent, so as a result
man ! Who paid $100 freight before that
classification went Into effect on the 25th
day T January, 1900. had to pay $140 In
plaoe of $100 But- as the Interstate Com
merce commission says that , as the 'cost
of carrying freight did not Increase a dol
lar, it elmply added, to the profits of ths
railroad corporation. The result 'was that
they ' could pay larger- dividends, they
could pay better Intereat on their bonda
and larger dlvidenda on their atock, and
they got up a new plan, some criterion by
means of which they could double If neces
sary the amount of the stocka outstanding
so aa to pay dlvidenda on twice the amount
while the rate of dlvidenda would look only
half as high. That 1b what hss been at
the bottom of the mergers; It Is the pur
pose to collect tribute from the people by
theee Increased railroad rates and at the
same time conceal the truth from the peo
ple as to the rate of Intereat they were
actually paying upon the amount the road
fairly represented. I do not know whether
counsel would call that ' moonlight on a
shovel;" that Is for the Interstats Com
merce commission to say.
When the aasessmsnt of two yeara ago
waa mad the state board did not know a
sUcla tbiag about, this .Immense increase
In rates, which mesne an Increase In the
value of the railroad property. It was
not until their annual report was published
In the following . year a year later that
anybody, unless It was theae gentlemen who
manipulated from the lnsme or acme anip-
per who happened to havo paid tbe in
creased .rate, that then knew about lt.
It was pot known to the public generally'
or to, the public officials until they hsd Is
sued their annual atatements In the follow
ing year and until after the Interstate
Commerce commission had published Its
report. And as soon ss It was shown that
they had collected these lncreaaed tolls
snd thereby immensely Increased the vslus
of all railroad property In the country,
then the very next year, that la, laat year,
It waa the duty of thla board to Increaae
the aaaeeament of theee railroad corpora
tion a so that their assessment would cor
respond with -ths Increase la ths actual
value of their property, whloh they them
selves brought about, as the Interstate
Commerce commission, saya, by their own
order - -. i
Did thla board make any effort to find
out what It was that waa eauaing thla im
mense. Increase la railway values? Has
this board, in this caae Bhowa any deelre
t gWs this court information as to what
these properties are fairly worth T Haven't
we, ,oa the., vital points here which affected
the railroad, properties, , been met con
stantly with objections? Why. ths two
er he three pieces of evidence upon which
we. can rest this, caae with abaolute aafety
above all others, as showing that an in
crease ahould be made, are the Interstats
Commerce reports. Poor's Railroad Manual
and the market quotatlona on these stocks,
svldsnces a majority of which ware resisted
st the outset here, and I want to tsk this
court If this Is not information which this
tribunal, the hlgheet in the stats, ought to
have from the servants of the state, tbs
respondents here? If It was not for the
light we have thrown upon this transaction.
would you have been able to tell the value
of any railroad la the state of Nebraska?
We brought . tha Information here. We
put it In over tha captious objection of theis
gentlemen, who are not here aervlng the
commonwealth, but aervlng corporations
who -are awindllng the balance of the peo
ple et tble Btate la tbe matter of taxation.
Their conduct la that respect, their failure
to Inform themselveo of the value, their
oouduct In thla trial In falling to furnish or
trying to furnish this court with tha true
value of the railroad property, their cap
tloua objections to the offered evidence, are
proof that they have acted fraudulently In
this matter, that they have been in collu
sion with the railroad companlea, and com
mitted., as I said before, to exempting the
kulk of this property tor taxation.
Now, let us take the Union Paclfio rail
road for an example. I take the Union
Pacific first, becauss It la the blggeat sin
ner of the lot. Mr. Baldwin la hie brief
saya that tha amount of the Blocks out
standing, not only of the Union Paclfio and
the Republican Valley, which is a part of tt,
but of tbe Oregon Short Line, which they
couple with It, although It has 90 psr cent
of Its stock that it owns, but the Oregon
Navigation company, the total amount of
Ita atock U $263,000,000. That is about
right In one acnes. Ths funded debts of
these corporations are $331,000,000. He ssys
hs adds theee together and then he deducta
what he calls securities owned by the com
pany, amounting to $832,000,000 and be
leaves It worth about $2t.aoo,0O0. Why,
Brother Baldwin I doq't auppoae yon
know It, but the fact ct the matter la the
Bgurea on which you base your whole argu
ment here show that thsse three railroad
companlea are worth $1,000,000 leaa than
the stock ' without oae dollar of
boada. vTou ought to have gone
Utile ' further; row ought to have
takea the . "balance a Boat" column
there and have deducted that from the bal
ance and U yea bad doae that you would
bsve proved thst the Union raclflc rail
road, the Oregon Short Line and the Ore
gon Navigation company by ths very same
principle you used, all three were .worth I
less than nothing, and then they would !
have put you at the head of the railroad
tax bureau of the Union Pacific railroad
and Increased your salary.
Let us look at these figures that are here
to myatlfy us. I am not here to charge
Mr. Baldwin with trying to misrepresent
to the court, but I sm here to point out
hat these figures are deceiving and that if
Mr. Baldwin la not responsible for their
making he ought to expoae tbe man who
by misrepresenting waa trying to get an
unjust Judgment here. I might point out
some things he takes Into consideration;
for example: When they took thla North
ern Pacific atosk they Issued 4 per cent
certificates and then they got the slock.
Now If I buy today a thousand dollars of
stock and give my note for a thousand dol
lars I am neither richer nor poorer when
tbe day closes. But Brother Baldwin by bis
figures here even after they have paid off
and retired the atock figures differently.
He figures It I buy $1,000 worth of stock
today and give my note for It I am $2,000
poorer tonight. In addition te that he takes
the Southern Paclfio stock, which is an
asset in tbe hands of the company; and he
treats It ss a liability. Why, bless you.
Brother Baldwin, It you can get a-hold of
a million dollars of that atock It would be
a million dollars of your assets and not of
your llabllltlea.
The Union Pacific railroad,' according to
Poor's Rallrosd Manual, according to the
Interstate Commerce Commlasion and ac
cording to their own report I am talking
of the Union Pacific, not these affiliated
lines which are operated under their (own
charters has a total mileage of 2,967 miles.
That covers the entire line from Council
Bluffs to Ogden, Utah, and Includes tho
branch lines In Nebraska, Kansas, Colo
rado and wherever else they may be, I
want to get the value of thla road, and I
Intend to keep It apart from these other
two roada run under their own franchises,
and I intend to keep It clear from the
Northern Pacific deal that they had when
they cornered the stock in Wall street. I
want . to get the value of this road by
itself; Ita main line and its brsnches, and
to show whst It Is worth per mile.
. Tho bonded debt of the Union Pacific In
that way la $99,500,000, the . bonds floated
$194,602,300, not Including the $445,000 In
your treasury. The total mileage la 2,967
mile. These bonds are worth a premium.
The preferred atock Is a little below psr. It
fluctuates. The common stock is at a
premium. But In my figures I have taken
the bonda and both stocks at par. I know
that la conservative. I know It is fair to
the Union Paclfio railroad It Is mora than
fair, but I have taken them at par. Under
the rules laid down by every court that I
know of since the great decision of Judge
Miller in the Illinois tax cases In the
Second United Statea, the value of tho
atock, plus tbe bonded debt, measures tbe
value of the entire railroad property,
franchise and all combined. Taking . thla
funded debt and taking - this stock and
dividing tt by 2,967 wo find that , tho Union
Paclfio railroad - from Council Bluffa to
Ogden, Including all the branch lines In
Kansaa, Nebraska, Colorado and Wyoming,
is worth $99,124 a mile, practically $100,000
a mile.
But I 4a not, need to atnn even at theee .
flaurss to Drove. It Is worth more, than
$100,000 a mile In Nebraska.' ' I do not need
to go outside of Its own report to prove It is j
worth more than $100,000 a mile In Ne-
braska. The Union Pacific bonda. on tha
teatlmony here, bear 4 per cent. It Is very '
aafe to aay that In a safe railroad money
can be borrowed at 4 per cent. Money la
plenty In the United States at 4 per csat
per annum on abaolutely aafe Investment
and covering long perloda of time. The
Union Pacific la doing business upon that
baala. Ita bonds are 4 per cent. Its preferred
stock Is a 4 per cent stock; Its common
stock on which dividends have been paid
according te the testimony here, have drawn
4 per cent and have been paid In the last
couple of years. So the Union Pacific rail
road Is bonded and stocked upon a 4 per
cent basis. Now, the ststements before
this same board show that the total mile
age of the Union Paclfio railroad in Ne
braska is 1,020 miles, and I have treated It
In my brief Juat the aame way, because
1,020 miles is Included in the earnings.
I am not treating it so in figuring the
value per mile when I take the bonded and
atock debt, but" when I figure as baaed upon
tbe earnlnga I am taking It as 947 miles of
Its own, and it Is operating under some
trackage arrangement with the Omaha road
74 94-100 miles from Norfolk to Sioux City.
The net earnlnga of the entire 1,020 miles
In Nebraska for the year ending June SO,
1901. according to tbe report filed with thla
board itself, waa $4,800,0001 will give the
figure accurate, $4,807,288.87. Its net earn
ings per mile are $4,711. That will pay
4 per eent Intereet upon $100,000 a mile and
leave more than $700,000 of Its surplus every
year. If we capitalise it right down on a
4 per cent basis, it shows that the Union
Pacific railroad is worth $118,000 a mllo,
snd I believe that Is a fair baala, becauae
that Includes not only all of Its tangible
properly, but It Includes ths Intangible aa
wall; It Includes Its contreota for operat
ing over thla Omaha road, it Includes the
revenues it geta for the uss of. Its bridge
from tbe Milwaukee and Rock Island roada,
and for the other roada that erosa over that
highway; it includea ita mail contracts and
Ita express contracts. And when you take
the value of the tangible property and when
you take the value of the Intangible eon-
tract, when you take the value of the fran
chise undsr which they levy tolls and col
lect tribute, not only now, but In perpetuity
when you take all tbesa things together
you hsv got ths value of the road and the
only fair way by which you can measure ta
ths value of the atock plus ths bonds.
Upon the showing, and I know it cannot
bs contrsdlcted. that Is, not only their own
showing filed with tbe board, but It is from
Poor'a Manual as well, and it la the market
report In evidence, as well. Is this Union
Paclfio railroad paying a fair share of the
taxation In Nebraska? Wby, tbat main
line that waa but a bankrupt road la the
banda of a receiver a few years ago is not
assessed, for ons single dollar more today
than at that time, though It la now the
best paying property weat ct the Mlaaourl
river. It la the greatest earning road of
all the transcontinental lines, and yet tt la
not aaaeaaed for one aingle dollar more tbla
year than tt waa when it waa a bankrupt
concern. Take this read which I aay we
can aafely aay Is worth $100,000 . a mile
snd which' upon the ordinary rate for in
vestment today is worth $118,000 a mils
ths average assessment in Nebraska la Juat
something over $6,000 a mile. The Union
Paclfio railroad In Nebraska, the main line
and all branch lines combined, are aassssed
this year for leas than 4 per cent of the
smount of money for which you can aell tt
for caah tomorrow on the market.
Who aaya that any other taxpayer in thla
stale haa been favored In thla way? In tbe
city of Lincoln here property la asaeesed at
109 per cent fcr municipal purposes. The
professional man, the merchant, the laborer
the mechanic In the city of Lincoln pays a
tax aUteen Uinta a high as the Union Pa-
clfic railroad. The Stat Journal building
down here pay a as much tax, almoat, aa ths
entire Burlington railroad. The Llndell
botel or the Lincoln hotel pay more taxes
tfcea all the railroads, terminals and all. In
L'ncoln combined, snd yet they ssy thst
they hsve done Justice In this esse, thst
they have not committed fraud In thla case,
thst tbey have tried to do right In this case
aa beet th?y knew how.
If we take It on a one-alxth basis and ssy
It U only worth $100,000 a mile, then the
Cn,on rclne railroad ahould be assessed,
both the main line and tbe branches, st
sbout $17,000 a mile; it should be sssrssed
sbout three times ss high as It ta for every
single mile, msln line and branch line. In
Nebraska. This great crime Is not com
mitted on one mile, but on every mile of
that road in thla atate.
Another argument ought to urge morally
strong here and that Is this: I have said
this road is worth at least $100,000 a mile.
Tbe undisputed testimony before you shows
tbat Its property In Nebrsska, Including Ita
terminals In Omaha can be reproduced for
$30,000 a mile, tbat la their statement In the
brief they eubmilted In the federal court In
the penalty caae In 1899. The tangible prop
erty, the pbyaical property of the Union
Pacific road In Nebraska, with the Omaha
terminals and all combined. Is worth only
$30,000 a mile, but the rosd can be sold on
the msrket for $100,000 a mile. The fran
chise, the right to take tolla or tributes,
which smount to $70,000 a mile In tbe vsluo
of this road of a $100,000 a mile for which
you can sell-It. You can duplicate the road
for $30,000 a mile, the other $70,000 a mile
represents nothing but wind and water on
which the stockholders and bondholders are
drawing dividends. That Is what the fran
chise is doing for them. The bonded debt
against the Union Paclfio railroad In Ne
braska will pay for replacing the property.
The bonded debt against the Union Pa
cific railroad will duplicate the property,
terminals and all, and leave $3,000 a mile for
profit, bo that the entire preferred stock
on whloh they are drawing dividends, the
entire common stock on which they are
drawing dividends, this $70,000 a mile which
represents the franchise tbst Is, the result
of their power to take tolls, and that $70.
000 a mile 'baa been absolutely untaxed by
the present respondents.
Let us take the Burlington, t cannot
In the brief time permitted for this argu
ment say all that should be said to show
why this assessment should be Increased.
But I want to take up the Burlington road
because the same effort to get a wrong
Judgment by misinformation is contained
In the brief of tbe ..Burlington perhaps
unintentionally, I don't charge counsel with
Intentionally trying to mislead the court,
but here is a condition, aa proved by the
evidence here. The . Burlington railroad
all Ita atock, almost, 98 psr cent of it, wss
sold to ths Oreat Northern and to the
Northern Pacific. It was delivered to them
and placed with a trustee In New York
City. To pay for it they Issued their Joint
obligations, the Oreat ..Northern and the
Northern Pacific railroads, bearing 4 per
cent, and thla stock waa deposited as col
lateral. They paid for the Burlington
atock $2 for $L When the aseessments of 1S97
and 1898 were made In this state the Bur
lington stock wss below par. The Burlington
stock when this aaaessment wss made waa
worth twice aa much aa it waa worth In
1897 and 1898. I aay that that stock at $200
a ahare was a cash transaction. Why? Be
csuse the -proof lisr shews that "any man
that did hot want to' take' the obligations
f the Great Northern and the Northern
Pacific.'' that the Caah was ready. It ahows
tbat they set aside $50,000,000 In cash to
pay szoo for each $100 share of that stock
to any man who did not want to take the
obligations of these companies bearing 4 per
cent interest. ' , .
' Bat, your honors, that la not even a fair
test, although it is the first test I am
going to apply to. the Burlington railroad.
The mileage given here Is utterly Incorrect;
the Interstate Commerce commission haa It
right; Poor'a Railroad Manual haa It right
and If you will take up their second report
and take out the leased lines you will get
It right; take out the second track. Tbe
Burlington railroad owna 7.894 miles of
railroad, or had when they were assessed
this year. I aee by the newspapers that
tney are getting hold of narrow gauge and
widening it out and the other day. I be
lieve. In Missouri, the newspapers say they
are getting hold of the K.; C, O, But none
oi mese companies are covered by the
stocks or bonds of ths Burlington and,
hence, are not a proper matter to be taken
into consideration. To get at the value per
mile we will first take the stock at $196.
I took It half way between counsel's figures
and $200. That give. It, taking the stock
of the Burlington at $196. After that add
to it the funded debt and divide It by 7.894
and you will get the value of the Bur-
lingtoa railroad to be $45,600 a mile. In
other words, en a one-alxth basis it would
be assessed at nearly $8,000 a mile lnstsad
of about $4,300, aa It la. .
But that Is not a true test. Tbe BurllnaJ
ton railroad la worth more than that and
before I pass from tha mileage I want to
aay to counael I have included not only
every mllo of road that you gave when you
made your last report to Poor, but I have
included the road that waa under construc
tion In Wyoming then and I suppose Is in
operation now. I said this stock waa all
aold to tho Oreat Northern and the North
ern Pacific. L said It was sold upon a 4
per cent baals. Now, when the Burlington
earns ell of Ita operating expenaea and
when It earn a enough money to pay Inter
eat on Ita bonded debt and enough money
la esrned to pay 4 per eent on these Joint
obllgatlona of the Oreat Northern and the
Northern Pacific, the whole surplus goes to
tnose wno sun own the Burlington stock.
So when you figure this stock at $200 a
share we are not figuring it right at all. It
Is worth a whole lot more thsa $200 a
share. You can't buy any of it. It is not
In the msrket, but ths obllgatlona given
for' It bear 4 per cent and Were taken at
par, but tbla doea not represent the net
earnings, because there are mtlllona of
atock of the Burlington en top of that.
Let us take another baala, which I think
Is a fairer one. Take their net earnings
for the Isst year and eapttaltse that upon
a baaia of 4 per cant Put tho value of
ths propsrty at $400,000,000, which is more
thsn $50,000 a mile. It will pay 4 per cent
interest on that and leave you $1,600,000
of a surplus every year. So tbat on tbe
very baala on which the Burlington rail
road waa caahed In the market within a
year, and taking Its preeent rate of net
earnings, tbs Burlington 'will pay at tho
ordinary ratea oa money on aafe Invest
ments at $50,000 a mile and Bent $1,600,000
a year Into tbe aurplua fund. Or, If you
will capitalise it straight out upon the 4
per cent baala and figure' it up from aa
Investors' standpoint. It ta worth In the
market $55,000 a mlie.
Of courss this Stats Board of Equallxa
tlon didn't know this, the railroad cor
peratlon didn't want them to know It, and
becauae they didn't, they didn't want to
know It. How could tbeae men aaaeaa thla
property without knowing Its value? How
could aay maa tell what to aasess any
property for until he ascertains its value?
You aay you will assess property at one-
alxth of Its value. - How caa the atate
board assess these railroads at oas-tlxth
Have
Everybody Is
saying ZuZlT
How about you?
Don't let
procrastination
stand between you
and the best
ginger snap
you ever tasted.
Qo to the store and
stand in line.
When it comes your turnj
give up 5 cents and
Sap.
Then go home
and enjoy yourself. -
NATIONAL BISCUIT COMPANY
of their value If the men who make the
sasessment do not know Its vsluef If the
men who make the sasessment will not
Inquire about the value? If the men who
make the assessment purposely avoid find
ing out the value of It? If the men wh'oj
make the assessment simply 'defy the re
quest tbat they find the value? If they
refuse to make a. record of their failure
to do these things? ,Whst stronger proof
Is needed of fraud and collusion betweeu
them and the transportation company
whose property they have exempted almply
becauae they have refuaed to find the
value?
I want" to ssy to the court tbat the first
thing and the most Important thing. In my
Judgment, that ahould be contained In thla
writ, If your honora ahould conclude to
grant It, ta this; First, that the board fix
the value per mile of every railroad in
Nebrasks. Tbat la the first proposition.
You nsver will get a Just assessment in
this state until tho atate board first fixes
the value per mile.' After that they can
equalise It In the same ratio aa other
property ta assessed In the stats. But tb
first basla. the first thing and tho Oral
prerequisite to bo exercised by an intelli
gent Judgment la the matter Of an assess
ment is to ascertain the value per mile
of every railroad in-the atate.
The Missouri Paclfio, in the asms way, la
worth at least $50,000 a mile. The Rock
Island csn be sold In the market for $53,000''
mile. Yet both of theae roads nrt as-
sesssd at lees than 10 per oent of their
value. The Omaha is earning Intereat upon
more than $50,000 per mile. The preliminary
reporta for thla year, ending on June 80,
indicate that It Is worth $60.ooo a mue. isi
It ta aaaessed tor $5,200 a mile. The entire
purpose from beginning to end hss been
simply to let these people praciicaiiy n
their own assessment without reference to
their value, without any conalderatlon for
what the value of the property was, becsuse
this bosrd now admlta that it doea not
know, that It nsver did know, that it never
tried to know what thess rauroaas were
worth per mile. That la the kind of a State
Board of Equalisation that will aatlafy theae
transportation corporations.- The kind of a
man they want la a man who doesn't know
and doean't want to know. And that la the
kind of a board we are arraigning here.
What I have aald of these roada applies
also, though with less force, to the smaller
roads. Becauae there la -no question even
when you get among railroads that the big
ger the road ths bigger the sinner. Now
you tsks the Burlington. They have ar
ranged thla thing in auch a way that tf a
maa didn't want to know he easily couldn't
know the earnings that they have made.
Tt enlv earning of the Burlington that wo
had were the earnlnga back a couple of,
yeara ago when they sepsrated the B.
M. from Kearney down to Plattamouth from
the balance of the road. Now do you know
how tbey fixed that In order to get theae
value tlona? Why they ahowed that the
road from Kearney down earned $12,000 a
mile net each year. Why did they do that?
They knew there wasn't much danger that
any railroad In Nebraska would bs assessed
tor more than $10,000 a mile, they were not
afraid it would be puahed up higher It any,
than the Union Pacific, ao they practically
ahoved tbe whole earnings of the state Into
that 191 miles from Kearney to Plattamouth
and said if they do stick us up there a
thoussnd or two we will get off for three
or four thousand a mils for every other mile
of the 2.400. We can stsnd tbat on 191
miles If the other mileage can be aaaeaaed
on tbe theory that it doean't earn any
money. And yon take It right through, that
la what it shows. Why you would almost
have sympathy for thess railroads if you
would resd tbat report and you would won
der what Jealousy there must be in order
to let this road earn over $18,000 a mile,
while the balance of the system id the state
waa practically bankrupt
There was a purpose in that, and tha
purpose waa to evade taxation. And so
they have taken in the Chicago, Burlington
V Qulncy, which earns all of this money,
Whose treaaury It finally rsaches, whose
stockholdera finally get the dlvidenda and
who make the profit upon the road; Its
franchiae that collects thla tribute and
tolla from the people, Ita franchise IB not
asaeeaed. ita property la not aaaessed. It Is
simply fifteen deed corporatlona that not
one man out ef fifty In Nebraska ever
heard of one of them except the B. M.
Who knowa where the Oxford A Kanaaa la?
Why, of theae corporations aaaeaaed here
nobody knows anything about them. They
have ne railroad, they run no railroad,
they exercise no franchise, they couldn't
sassss ths franchiae of theae fifteen corpo
ratlona becauae they are dead. They are
la the aame condition that the old Union
Pacific waa they have paaaed out' of ex
istence, and that ta why their franchiae waa
was not aasesssd becauae there ta none
there to aasess. Tbey hsve cessed to ex
ercise their franchise In thla atate. Tbeae
fifteen subaldlary corporatlona organised
merely to exerclae the light of eminent do
main in thia atate, have been turned over,
aa the Burlington report aaya, to tba great
parent corporation, the Chicago, Burling
ton V Qulncy, and that la the road whoss
franchiae ahould have bee aaaaaasd, and
pot oae dollar of propsrty, franchise, tan
You Said
Your. Say?;
X
gible or Intangible, is asaeeaed agalnat tha
Chicago, Burlington V Qulncy. ' So that
when they come to Yeassess here. If your
honora ahall see fit to-award tho writ,' it
will be their duty not simply to aaaeaa
these dead corporations, but to aasess this
entire property aa a live, going concern
with a valuable franchiae, aa a dividend
paying road, not these fifteen deed corpora
tions, but the Chicago, Burlington A
Qulncy.' --
Something baa been said here of assess
ments in other statea and I believe we have
the asseesment frdm Mlaaourl offered In
evidence. The railway assessment in Mis
souri,' at any event, ta about $12,200 a mile.
I don't know as thla amounta to very much
one way or tho other, or provea very much
because in the end the test la whether these
railroads are paying their fair ahare . of
the taxes In proportion to the value of
their property when compared with other
property in thla atate. The Vnlon Pacific
haa a half mile In Mlaaourl and for that
half mile It la assessed $190,000. Why, that
one-half mile Is assessed at as much In
Missouri, In fact more than all the termi
nals In Omaha and for twenty miles west of
It on the Union Pacific, although It la only
a branch. ' For aome ot the smaller roada
it may. be aald that they ear on a amaller
basis. That la true,, but when you get the
net earnings and when, aa oounesl seem to
claim, , tnaf tbe franchise was considered,
bare you' considered the franchise and net
earnlnga? - Not at all, the net earnings are
simply one guide to the value or the prop
erty, but, as pointed out by Judge Miller In
the T. B. ft W, case In Illinois,, road may
lose money for two or three years, but It
msy have a bright future, It may be In a
territory which la developing and growing
and in the future It may pay large dividends
and be profitable to tbe owners, and when
that condition exlats the franchiae has a
value that ahould bo taxed.
And ao It ta with some of these roada
here, aa 1 have Illustrated in the caae ot
the Unlonr Pacific- .Suppose the Union Pa
clfio charter was to expire on ths first dsy
of January next. The Union Pacific railroad
would earn Juat aa much money this year as
ever. ' The earnlnga would be Just as large
but what would the stock of the Union Pa
cific be worth? It would be worth Juat what
It would. coat to duplicate tbe property, be
cause of the, known fact that the franchise
was about to expire. Just as It expired be--fore.
And the stock would go, aa It did be
fore, down to $4 or $5 a ahare where some
people thought they ought to take tt In for
the purpose of getting on the Inside In the
new organization. That is all It would be
worth. So the fact that it earns money,
while that la one guide and a very im
portant guide In determining the value of
a going, living concern, yet It Is not the
only guide. ' But the capital stock, the fair
valus plus the bonded debt capitalises the
whole thing and you get the value of tha en
tire property Including the perpetual fran
chise. .
r One more thought that I wish to urge
and then ' I will leave the balance of the
time to my associates, and that ta the
question of the assessment of property
within the cities of Omaha, South Omaha
and Lincoln, if In the Judgment of tbe
court it properly arises in thla eaaa. I
think with one View of the caae it might
arise; In another view ot tho caao It might
be determined to have that oase left for ar
gument in a . aubaequent caae. I think,
however, it could be disposed of In tho caae
nere. '
- The constitution provides la the revenue
sectioi for ordinary taxation, and then by
aection 6, article XX, ft provides for munici
pal taxation, and Is as follows:
The legislature may inveet the corpo
rate authorities of cHles. towns and vil
lages with power to make local Improve
ments by special asaesement, or by spe
cial taxation of property benefited. For
all other corporate purpose, all munici
pal corporatlona may be vested with authority-
to assess snd collect taxss, but
such tsxes shall be uniform In rsspeot
to persons and property within the Juris
diction ot the body Imposing the ssme.
Ths court will notice that the provision
relative to municipal taxation la very dif
ferent from that relative to general taxa
tion which refers to atate and county tax
ation, where tho, constitution by Its express
terms leaves the manner of determining
that entirely to the legislature. And under
that power tbe leglalature baa the right
and It la proper that It should, for county
and atate purpoaea, becauae the countlea
are only portion of the state carrying on
the ssme general bualneaa; tbat ta, having
to help bear aome of the expenaee, such aa
looking after the lnaano and unfortunate,
upholding the criminal lawa, maintaining
peace throughout the atate. It la the coun
tlea that do all those things, It la not the
municipalities; ao for all theee purpoaea
all the countlea are mere subdivisions of
ths state subdivided for the convenience of
the people. But as to thess municipalities
there ta a different rule. They do not ex
erclae these powers ot tbe stats, tbey do
not enforce the criminal lawa; that burden
ta not placed upon them, but they have
burdena of a more serious character, and
tbe (rasners of ths constitution having that
In mind, provided that for propsrty within
the municipality authority might be given
to the cities to assess the ssme, but It
must be done In such a way as to Insure
absolute uniformity as to all property
within the limits of thst eorporstlon.
Taking the city of Omaha for example,
here are these compsnlee with property
which It Is evident that all of them,, combined,-,
la worth millions of dollars. This
Union ' Paclfio bridge , transports , not
enly the , persons and property in
connection ' with the Union Paclfio
railroad, but that of five other
great transportation corporations, a property
I suppose worth at lesst a couple of mil
lions of dollars, and perhapa more; and yet
the west bslf ot that bridge within the city
of Omaha which paya city taxes for the sup
port of that municipal government, paya
leaa than the borne of the man who baa a
$5,000 place. That IS not uniformity tbat
la, tbe bridge Is not taxed In uniformity
with the property within that corporation.
That city haa nothing In common so far as)
municipal purpoaea are concerned, with the
balance of Douglas county, It baa nothing
In common with the balance of tha coun
tlea In the stats. The powers exercised
are absolutely separata and dlatlnct, . Jta
duties are different from those of tho state
or the countlea that are carrying out tho
pollclea and purpoaea ot tho state eo that
our contention with reference to all of thta
property, that Jt Is fair , to the people ..of
Omaha and tt la not unfair to tbe people
living In the country counties In Nebraaka
at all, that it makes no difference to them
snd it ta only fair to the other property
owners in umsna. Bourn umana ana un
coil (hat all of these Immense properties
tbat get protection- from the city govern
ment thould have to bear tbelr abare ot
municipal taxation, bear tbelr abare of mu
nicipal burden tbe aame as any other prop
erty there.
If they need police protection, the police.
furnished and paid for by public taxation
on the property within the city of Omaha,
Is at their beck and call. If they need pro
tection from fire the whole fire department
of Omaha, supported' not at tho expenae of
the atate not at the expense of any county,
but at the expense ot the taxpayers of
Omaha, la at tbs service of these copora
lions. If water ta needed, as It would be for
tbe purpose ot suppressing tbat fire, the
water ta furnished and It Is paid tor, the
whole department is kept and the chargea
are paid by taxation within the city - of
Omaha for municipal purpoaea. So that we
contend that this propsrty gsttlng the same
protection in every respect aa all other
property within the atate, getting what Is
known as municipal protection aa distin
guished from state protection carried out
by. tbe county, while it should be aaaeaaed
and dlatributed over the lines for atate and
county purposes and trsated aa a unit, yet,
under the rule of the constitution, which'
says that all property ahall be assessed
Uniformly, this property shall be assessed
In the city of Omaha for municipal purpose'
at the aame ratio as property of other taxi
payers of that city pay within tbe corporate
limits.
' If that bo true. It la the duty of theao as
sessors to assess It in thst wsy. If the ex
emption be unconstitutional then the city
assessor can take It up and assess It in
that way, whether It be finally, determined
In this case or. not or whether it be left
for aome aubaequent time. But it aeems
to me It can be determined In this caaa. I
think. It la within the plain mandate of the
constitution. So plain that thers Is no room
to read between tbe lines, that all property
must be taxed with uniformity for munio
tpal purposes.
I thank your honors.
Baer Goes to New field.
NEW YORK. July 15.-John' Willis Baer,
aecretary of tha Christian Endeavor so
ciety, has resigned that position to accept
one as assistant secretary of the Presby
terian Board of Home Missions. He will
take up Ms nsw duties on October 1.
Bastaess Resasned at Teseks.
' TOPEKA, Kan.. July 15. The Kaw has
fallen two feet alnce midnight and busi
ness along the river front le resuming nor
mal conditions. All tralna are running
again with slight delay..
QuickColds
A draught, a quick cold;
Ayer's Cherry Pectoral, a
quick, cure. Get well before
you have to think of weak
lungs, bronchitis, pleurisy,
pneumonia. Ask your doc
tor what he thinks of this
advice. If he has better,
follow it. If not, follow ours.
" I have found Ayer'g Cherry Pec
toral the beat all-round remedy for la
grippe, bronchitis, and other lunj
troubles thai 1 hiv ever osed. If baa
benefited or cured la every instance."
M. Lodeman, M-D., Ithaca, N. Y. .
Ik., H., $LM. J.C.mico-1
i
