New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1879-05-03
THE LETTER.

ARD. and others
GENTLEMEN: In response to your request by let
ter and telegraph for my opinion respecting the
practicabity or expedIency of the tax sections OF
Your proposed new Constitution, beg leave to sub
nit the following points for your consideration:
TREATMENT OF MORTGAGES.
The new Constitution treats a credit secured by
mortgage not as property but as an interest in or
representative of property. But in endeavoring to
apply this principle, its trainers have evidently
overlooked the fact that tax on mortgaged prop
erty, as an entirety is equally tax on all the inter
ests in and representatives of that same property;
or that taxation of the whole of thing necessarily
embraces all its parts and incidents. Furthermore,
it needs no argument to prove that it is far less ex
pensive cumbersome and annoying to tax given
property as a whole rather than It's numberlesS
possible or imaginary subdivisions, represent
atives and titles But this latter method is
exactly what the new Constitution prescrlbes
shall be followed in respect to mortgage IN
terests in property in the State of California
For the reduction of the valuation of mortgaged
property for the purpose of taxation 10 the extent OF
the mortgage and the coincident taxation OF the
mortgage interest in the property to the MORTGAGE
las proposed is practical exemption OF the mort
gage from all taxation, and taxation OF the mort
gagged property in subdivisions instead of an en-
".
least vexatious method, inasmuch whichever of
these methods is followed the mOTtgagor must
ultimately pay the tax. The object of loaning
money Is compensation and IT IS eelt-evdent that
the mortgage creditor will exact additional COM
pensation for whatever tax may be imposed upon
him for his representative interest i'll the mort
gagged property and that the debtor will also cheer
fully pay it in consequence of the reduced valua-
ton of his property for taxation The pro-
posed system, as applied to existing mortgage
credits will impair contracts and will therefore be
unconstitutional and void; and aS applied TO new
mortgage credits will be imperative Tor increasing
the revenue in producing results OtheT than tne
unnecessary trouble and expense involved IN max
INC two assessments and collections instead of one
II will give relief TO the landowner, but rather
burden him additionally. through the higher rate
of interest he will have 10 pay TO insure the mort
gage against the uncertainty Of the rate OF TAXA
tion from time to time unless the rate OF interest
is adiuSfed annually with the lender after 1he Tale
of taxation has been annually established. III fact
the proposed system of taxing mortgages under the
new Constitution is cumbersome and nOnsenslcal;
and seems TO be based solely ont the prnclple whlch
prompts puppy to chase worry aud bite his own
tail IL Is taxation OF mortgages Only III hanlc'
and NOT in substance. .,
The Constitutional provision winch makes void
auy obligation on the part OF me debtor 10 pay aia
tax imposed on the mortgage credit IN name Is also
nOIhmg but cmlG's play Inc debIOf Is IeIt AT HD-
ertv 10 agree TO pay an additional rate OF interest
or an additional amount of principal; and the pro-
vision in question therefore, simply amounts 10 a
prohibition of names, and not things, or the sub
stance. .y
Aqain. while the taxation article Of the Calfor-
MIA Constitution regards a mortgage credit not as
prop rty but as a representative of property, it at
fine same time treats a credit unsecured by mort
gage. not as a representative of property, but as
absolute property-fat pTopeTty-aud permits no
rcdurtiou of ihe valuation Of the debtors visible,
tangible property on account OF any deot WhGh he
I'M inn afI IL
harmonious and illogical; and Is as much deTO'd OF
all principle a the game OF the Llt!le joker,
" Now you see II, and now you don't see IL! Nhere
Is the Little Joker" straightforward prOperty-a
good definition of fiat pTOperty-ls nat nonsense or
the dream of lazy ldier.
CRFDIIs GENERALLY MADE FIAT PROPERTY.
Property is an embodiment of labor, and cannot
be made by constitutional definition. credit Is
au incident of business property is produced by
transfer of right and therefore may he increased
TO any nominal amount without any appreciate
labor. A credit cannot be treated in any economic
sense rs property, for it 10 always balanced or eX
tinguished in any general estimate of values
by an equal and corresponding debit. 1t is
created by a transfer of property or right,
and is Inundated by a transfer of some
equivalent property or right back to the creditor
The creation OF credits does not operate as Cicd-
ton OF property, nor does their liquidation tXlih-
puish any property. II an immediate payment IOr
goods bought viii not create or produce any
Ne Y. [
how deferred payment for the same class Oh goods
bought IN the same open market, VIII nave the
magical effect OF producing or creating properly
Now, under the system proposed III the hcM N'l.
fornia Constitution, he vino buys for cash VIII pay
only on one valuation of his property; but ms lmhe-
date competitors. whose limited camtai co onI
pes them to make deferred payments, WI; VIII
BE obliged TO pay an additional, odlous,
discriminating tax, in tho increased price
OF their goods. Merchants and others VIII
not sell goods or commodities Tor taxed
at
sell them for untaXed credits; nor VIII money
be loaned at the low rate OF interest on taxed
system as this California Constitution proposes,
therefore effect depriycs man OF Hmlteu cdPltal
Of the equal protection OF the laws ana gives 10
the capitalist who Is up tho Ladder an exemption
from "A burden which Is refused to his immediate
compcttor Who stands on the lower rounds Ihis
is not fair play. and Is a denlal OF thal equaIty
which is the basis of all republican institutions
HocUs-PocUs PROPERTY To BE CREATED.
Constitutional Convention can act the part of
photographer OF defner. whether accurate or not
IN its definitions but it has omnpotent power TO
create propcrty out of nothing and without the APP
plicatiou of labor. Your convention seems to have
been managed by a band of magicians who have
great contempt for labor or embodied labor, but
great confidence in their magical powers. 1t did
not stop at making unsecured credits nat property,
but goes further and proposes in numerous cases 10
make LEGAL. EQUITABLE, leasehOld and other titles
hocus- pocus property, subject to taxation This IS
brilliant conception to save the necessity
of labor in producing property, If it could be
realized; but all titles are but incidents OF
property, and are never IN Allowance, ana always
inhere i'm the property, and are fully taxed when
the property they represent Is taxed IL is further
more impracticable for the State to 90 into legal
Investigation of the abstract queston-in winch
ne State has no inteTest-Of the nature extent and
duration Of every PERSONS title and interest in
property. - c,..,... ..o,.
" all propertyD subject to taxation and them In
addition. defines ana includes as property " all
stocks dues or other matters or things capable or
private ownership. corporation, under ms rue,
= II H.