Los Angeles daily herald., 1889-01-26
The mortgage Tax.

4u0 II HhALD tO-a0y PobAioASo :" A~SA~~V
rial sent by the Chamber of Commerce
to the Legislature urging the abolition OF
the mortgage tax in force in this State.
AS the HERALD began the agitation OF
this legal reform, it may be pardoned for
looking with some complacency on the
rapid progress the movement is making.
The memorial in question gives excellent
reasons for the abolishing OF this inju-
rious feature in the Constitution of the
State. When that instrument was
framed and put before the people for
their approval, it was argued by its advo-
Gates that this mortgage tax would work
to the advantage of the poor man who
found himself under the necessity of bor-
rowing the money of his rich
neiehbor. 1t is difficult to get
a "cinch" on capital. The
man with cash in bank can get what he
wants whenever he wants it. The poor
man with empty pockets and a great
pressure to procure money on him can
not bide his time as the capitalist can.
In such case the borrower must come to
the lenders terms, and no human law
can get around this circumstance or do
away with this law inherent in the prin-
ciples by which business is done. The
man with money, therefore, merely
added the mortgage tax to the interest
rate-plus about l per cent. to cover
incidental contingencies, such as the
whimsical views of assessors, the trouble
of paying the tax, and other like mat
ters. The borrower had to come
to the lenders terms, and what
was meant for the poor mans
benefit turned out to be the rich mans
prime opportunity.
In the case of foreign capital the
trouble of paying the mortgage tax was
very great. So uncertain were capitalists
at a distance as to the working Of our
laws on this head, and SO much labor
and care were required to get the taxes
paid that it has been almost impossible
to induce them to lend their money on
our property. The result of all this has
been to make money scarce, and being
scarce, of course, it is dear. Here
again the local capitalists had the bor'
rover at a disadvantage. Had the
poor man been able to pit rich
men in competition one against
another, he might have won the
victory, as Jason did when he set the
warriors sprung IRON the dragons teeth
to butchering each other.
Then in the case of capital brought
to one county from another, there has
been, as the memorial says, great injustice
arising from this mortgage tax. AS the
country is usually the borrower and the
large cities the lenders, all the rural
districts have been paying tribute in this
as in other things to the metropolis. In
this county there are millions of money
borrowed from great corporations in San
Francisco. This money is assessed
here and not there. When we come to
pay our taxes to the State, we
are obliged to pay on this capital from
the Bay City, and that county escapes
her share of the State burdens to just
that extent.
The memorial closes with the radical
reason which underlies all others, and
out of which all others spring in this
matter. That reason is the philosophi'
cal, the economical principle that all
unnecessary legislation is vicious. The
less law we are compelled to live under
the better We are off. The lending and
borrowing of money should not be put
under any restraints that are not abso.
lutely necessary. The money mar
ket ought to be left as un-
trammeled as the wheat market.
The legislation which attempts to fix the
price of money is as vicious as that
which should try to fix the price Of
wheat. The proper province of law in
both spheres of business is to aim al
making the markets as free as they can
be. The laws should be invoked only to
remove distractions Of an artificial sort
from the channels Of trade in order that
the current may flow freely. The law
would be quite as wise which should say
to the wheat seller. you shall not be
obliged to pay for transportation
on your wheat to tide water,
the buyer shall come to your door and
buy your wheat there, as is the law
which says to the farmer, you shall not
pay the tax on the money you borrow
the lender must do that. If the legis-
lators would only grasp these funda-
mental principles of economy; if they
would learn that the less a people is
governed, the better it is governed; that
the less the laws interfere with business,
the better business is, they would have
grasped one of the most essential ideas
of the scope of governmental powers.
The mortgage tax is one of those un-
necessary laws which is drag on the
wheels of enterprise. Let the unphilo-
sophie law 60.
PAY Taxes Twice q Year and at