, 1873-09-11
THE pRoPoBED TAX on FRANCHISES.

The Springfield journal, In answer to our OK
PLANTATION OF tho duplicate taxation sought to ba
enforced against private corporations in this
ileges, thinks We have overlooked something.
Tho case was whore private firm with $100, 900
invested In ground, buildings, tools aud ma
chincry, and making $4,000 profit por annum,
had their tangible property assessed ut $4,000,
while private corporation, with tho same capt.
tai inyostod In tho same way, and making tho
6arno profit, would DO assessed on the capital
stock at par, and on @50, 900 premium value; from
which the S45o 600 valuo Of tangible property
would be deducted, leaving them to pay taxcs on
100000, while their noighbora would only pay
ta1oa on precisely tho same businoBB. and prop
crty On e45,000. The Journal explainH that this
tax on tho additional $50, 900 "ia Justly charged
against the corporation On account Of tho fact
that by reason Of the formation Of corpora
tion, tho ownora arc not individually liable for
tho debts Of tho concern on1y to the amount Of
their atook respectively. But A and arc liable
to tho whole amount Of their respective property
for the dobts Of the concern. Tho corporation
has this advantage ovor tho private flrm."
While tho momhor Of tho private firm is liable
individually for tho dobts Of tho concern con-
tracted whilo ho ia mombor Of II, the mon1ber
Of private corporation Incorporated by special
charter Is responsible, to tho extent Of bis In
toroat for all debts and liabilities duo at tho timo
ho leaves 1t, and for six months after he has
ceased to have any interest," or to exercise any
control In 1t. In cases Of banking corporations,
tho individual liability is for double the amount
Of capital stock hold by each; under the general
law, stockholders In manufacturing and other
corporations arc personally liable without rotor
cnce to the amount Of their stock for all debta
due for labor. And after all tho vital question
Is not to liability for possible debts, but to tho
o1istenco Of actual debts.
The Journal oyor~ostimatea tho value Of tho
franchise when It clnims that private corpora
tion under tho general law or eyon uuder special
charter should bo taxed 60 per cont highor on
the aamo property, because the stockholders arc
personally liable only to the amount OF thoir
stock. Tho actual capital invested in private
firm and private corporation being the same,
tic credit Of tho two establishments ought to be
the Bamo, but as the liability Of the mombora of
the firm iB personal, it's crodit md itB financial
character arc as extended a. tho means and
property OF It's members. The corporation has
no such advantage; its capital la the limit Of it's
liability and, OF cour8e, Of its credit any credit
1t may have beyond it's capital is duo to public
confidence in its management, and, sifted Of all
char, it is precisely the possession Of this con-
ndence which tho State Journal insists shall be
taxed. II stockholders in corporation enjoy
an exemption from liability for debts beyond
their respective interests, the corporation itaelf
ia limited in its credit by tho amount Of its &C.
tual capital, while tho private firm has a credit
in addition to it's capital AS extensive as tho
entire property and means Of all its
proprietors. Tho advantage which tho
Journal thinks ought to be ta1od so per cent in
tho case Of corporation, is fully offset by tho
advantage Of increased credit by the private
firm. But the real value of tho stock Of cor
porations rosts IN tho skill and rectitudo Of its
managers. The stock Of corporation 80 nun
aged that 1t inspires public confidence will soil
higher thnu that Of other corporations doing
twice tho amount OF business, but in whoaa man
agement tho public have no such confidence.
Lot my corporation whose stock may bo quoted
as high as 200 change managers, and pass into
tho control OF those in whose skill or poraoual
character thoro is loss confidence, and at onco,
and hnfnrO INV 1Nau NJ hy,u; of
means takos place, that stock will fall in value
and continue to fall until ita entire premium is
frittorod away. Tho premium value on stock
Ia almost invariably due to tho skill and ability
with Which tho business Is conducted 1t is not
computable valuo, as 1t may perish in day,
aud that without any loss Of tangible property
Of tho corporation. This premium yaluo Of cor
poration stock, which tho journal insists is tho
valuo Of tho franohise is unaubatnntial it has a
Vaiuo like that OF good mans character it
rises or falls as that character rises or falls Tho
editor Of the Springfield journal is a good mnn,
and has character Of great value ho can raise
money on that character his personal obliga-
tlona will soil In the market for more money
than those of his tricky neighbors but luis
character, however valuable 1t may bo
to him, and however much It may
add to tho value Of his obligations,
Is hardly O lt subject for taxation, and the
Board Of Equalization might haye some difficult
ty In reducing 1t to cash basis This boing
true, why tax the credit aud character OF O
private oorporation7 The fact that 1t is ohagao-
tor mud not franchise that It ia sought to tax is
shown By tho fact that corporations not having
special privileges whose stock boars no premium
arc not taxed beyond tho amount Of their capital
stock, though they have precisely the sarne fran
ohises as other corporations whosc stock Is at O
premium. The whole mistake has boon in going
beyopd the enumeration Of tangible property for
taxation. The Constitution never contemplated
anything Of tho kind; taxation Of franchises or
special trades mud occupations waa to DO accou,-
plBhel by othor mseaus, md these not being pro-