The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1874-03-23

lature which passed the sill.
We publish the following article as interest
ing TO all, notwithstanding that the interes
bill has passed both houses of the Legisla
ture. The article may affect the tax bill:
lFor the Dispatch
How the Legislature may RenaeF
Substantial Service to the Asrlcui
tural Interest. -----
3Iessrs Editors We cannot close GU
ewes to the fact that the agricultural commu
nifty ia this State is far from being IN pros
perous condition. 1t is needless to reclte TIT
reasons; they are too painfully patent to u
all. The question for US to consider no"
is. how may relief be afforded! Ii
the admirable report lately submitted Ce
the General Assembly by the Chamber o
Commerce of this city on the subject or the
usury lax, measure of help in THIS dlrcc
ton was pointed out. II was to rehece az
7aoncy lent on mortgage e1lhrety from tdta
tom. As land IS mainly the only security
the farmer has TO offer, he should get h''
money Mt the very lowest rate such security
will command. Reference was mace I'D Tue
report referred to, TO memorial praying
the enactment Of such IN" IN the
state of New York. 1t appears that
:his very matter has been the suDJcct
of a decision by one OF the prlnclpai ieSal
tribunals the country-the supreme Court
of Cslifornia-and it iSa source or regret That
the fact was unknown TO the committee OIL
the Chamber of Commerce who prepared the
report. as the unanswerable reasoning of the
decision would have added peculiar force to
the recommendation they made. The vital
importance of any arrangement looking 10
the relief of this great interest will compen.
safe for the space asked to present it to the
earnest consideration OF the Legislature. 1t
is specially commended by Dir. David A.
Wells, through whom the following comes,
and who, as Il statistician and political econ
omiSt, is without superior In this country.
The court, on a suit in which one of the
savings banks Of San Francisco was party,
decided ''that in virtue of clause IN the
Constitution of the State requiring all taxa
ton to be equal and uniform, the taxation
of mortgages was unconstitutional and ille-
gal; inasmuch as to tax given property, and
then tax a mortgage on it, which mortgage
is not in itself property. but, like deed or a
lease, is species of conveyance or acknowl-
edgment of conditional interest or right in
the property, is not equal and uniform taxa.
ton, but an unequal and double tax on the
property mortgaged." The importance
of this decision, considered as an act re-
formatory of our popular theory of local
taxation does not require to be proved and
but as it is unquestionably q
step in advance of any hitherto taken by
either our Federal or State courts, and as by
reason of it, not only are mortgages now
exempted from taxation in California. but
also all promissory notes and other evidence
of Indebtedness, it is desirable briefly to ask
attention to the reasoning by which the
court was led to its conclusions. The deci.
sion was delivered by Chief Justice Crockett,
and he used the following language:
81 come now TO the point, whether tax
on land at its full value and tax on debt
for money loaned, secured by mortgage on
the land, Is in substance and legal effect
tax on the same property. We all know, rs
a matter of. general notoriety, that almost
by stipulation between par
ties, the mortgagor is obliged TO pay the tax
both on the land and on the mortgage.
Practically he is twice taxed on the same
value, if lie has still in his possession the
borrowed money to secure which the mort.
gage was made. The law taxes in his hand
both money aud land; and by his stipula-
ton he is required to pay tax on the mort
gage debt, and also, if the money has passed.
out of his hands into the possession OF some
clhcr Taxpayer, it is taxed in the nanuS OF
The latter, 80 that the money bears It's share
Of taxation and the land its share, IN the
hands of Whomsoever they may happen
10 be.
at il very true that voluntary agree
ment on the part of the mortgagor to pay
rhe tax on the mortgage debt cannot I'M
nroye its situs. The State was no party to
tne contract, and is not bound by stipulation
inter dltis. The burdens of taxation cam
not be shifted from those on whom the
law imposes them by stipulation between
private persons; but, in the absence OF such
a stipulation, an memorable law of political
economy would impose upon the mortgagor
the burden, in different form, OF paying
the tax on the mortgage debt. Interest on
money loaned is paid as compensation for
the use of the money, and rate Of interest
as agreed on is the amount which the parties
stipulate will be lbe just equivalent
to the lender. II, however, by the imposi.
ton of tax on the debt the government di.
miuishes the profit which the lender would
otherwise receive, the rate of interest will
be sufficiently increased to cover the tax,
which in this way will be ultimately paid by
the borrower. The transaction would be
governed by the same immutable, intleXible
law OF trade, by reason of which import du-
ties on articles for consumption are ulti.
mately paid by the consumer and not by the
importer. The rate of interest on money
loaned is regulated by the supply and
demand which governs all articles oil
commerce, and the burdens imposed
by law in the form of tax on
the transaction, which would thereby
diminish the profits of the lender,
if paid by him, will prompt him to compen.
the rate OF interest demanded. If his money
arould command gice7 rate Of tntereS
,ott1.out The burden he ,ciN be rtgitant 10 sec
that The borrower assumes The burden, either
By express stipulation or in the form Of in.
creased interest. THIS is a ia,o Of human
nature, lbhich statute ldpS are polrerleSS Il
suppress, and ,chich pe,.cades the ,chole o.
trade governed By the lar of supply and de-
n,a1d. Nor would the enactment of The
most stringent usury laws produce differ
ent practical result. Human ingenuity
has hitherto proved inadequate to the task
OF ueflSluS uSuTy laws WHICH were lucapa-
BILE OF easy evasion, and wherever they exist
they are and will continue to be subordinate
to that higher law of trade which ordains
that money, like other articles of Commercial
value, ,ciH command Just ,chat it is ,oorth in
the market, no more aud no less. : II
is the borrower and not the lender who pays
the tax ON borrowed money, whether secured
by mortgage or not; but if secured by. mort
gage, he is taxed not only on the mortgage
and property, but on the debt which The
property represents, and which Is held as @
security for the debt"
Of the soundness of this decision there