Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1889-02-20
4 Careful Consideration Of the
Subject.
WOULD 1T BE co,ssTITUT1oNAL9
A Review of the Railroad Reas
sessmens Question Which Makes
Clear the Entire Subject
Now Before the Legis-
lature.

Francisco Examiner in its issue of Fehru-
airy 10th:
10 the Editor OF the E.masinsy-:SIR
When the Langford and Ostrom bills
were introduced relative to the reassess-
ment of taxes, your paper was disposed to
favor them, rest ing your support upon the
ground that those bills had been the result
of deliberation. and faithfulness, and ema-
mated from men who had made study of
and had lpast .red the subject.
In this it now appears that you and the
supporters of the measures, who took them
upon the reputation of their authors, were
entirely mis- taken.
No enc now maintains that either of
these bills should pass, and they are en-
tirely without support. This is proof
positive that the great subjects involved
have rot received the consideration which
their Importance demands, and that the
legislation which has been attempted is on
par with all the attempted legislation
since the controversy began.
The relations of the Southern Pacific
Railroad to the Government and the ques-
ton of the constitutionality of any status
in relation to railroad taxation, are sub
than seems to have been given TO them by
the people of this State.
The taxing power has its limitations,
and these limitations inhere in the very
definition itself There must be equality
and uniformity. There may be classical
ton, but if classification is attempted it
must be classification of things and upon
all things within a given class the burden
must fall equally. The Constitution of
California provides that, as to all kinds and
classes of real property owned by natural
persons, or by corporations not quasi pub
lie that a mortgage shall be deemed and
treated as an interest in the property, and
that the value of the mortgage shall be as
sessed to the mortgage and deducted from
the valuation of the property; that the
taxes upon the mortgage shall be a lien
upon the property, and if paid by the
mortgagor, he shall be entitled to deduct
it. The Constitution then makes an ex-
ception which covers all classes Of prop
erty, and is based upon ownership alone
1t says in effect that railroad or other
quasi public corporations which own lands,
tenements, roads, and may own all other
kinds of real property, shall not be al
lowed this deduction and in effect, that they
shall pay the taxes upon the mortgage,
and not be entitled to recover it from the
mortgage or bondholder.
NEITHER PoLITIC NOR CONSTITUTIONAL
These provisions are neither polite nor
constitutional. Had they been reversed
they might have been polite Railroads
collect the money which they pay as taxes
hair
burden upon transportation. If the per-
sons who hold the bonds of the Central
Pacific Railroad purchased them at an av-
erage of 60 per cent. on the dollar, and
these bonds are now worth 80 per cent.
premium, the owners have made large
sums OF money, and are well able to pay
some taxes toward the support of the State
government. Holders of these bonds live
in foreign countries, but their property is
protected by the laws of this State. Under
the present provisions they pay no taxes,
but the people of the State, if the law
could be enforced, would be virtually pay
ing taxes equitably due to the State from
the foreign money-lender.
The Central Pacific Railroad has depre-
citated in value owing to the construction
of rival roads, and other causes. If the
exception in the Constitution were stricken
out, it would read, as applied to railroad
company, that the bondholders should be
taxed for the value of their securities, and
the company taxed for the value of the
the excess, if any The tax upon the
bondholders weRld be lien upon the
property, and would be paid by the com
pany, but the company would be entitled,
as other property owners are, to deduct
that payment from the interest due on the
bonds. This exception violates the four
tenth amendment to the National Consti-
tuition in this, that it imposes a greater tax
upon land owned by railroads and other
quasi public corporations. than it does upon
lands owned by private corporations or
natural persons.
This has been virtually decided in the
case of Miller VS.. Hebron, in our own
Supreme Court, and that State officials so
consider it is evidenced by the fact that
for nearly two years there has been a case
pending in the Supreme Court OF this
State in which that question could be de-
termined, but they have successfully re-
sisted all attempts of the railroad to adj
vance it on the calendar.
GOVERNMENT Observation-Disclosures
The Central Pacific and Southern Pacific
Railroads have bsen decided to be Govern
ment instrumentalities.
II is held by the United States Supreme
Court, and our own Court, that no State
can pass any law which can hinder, i'm.
pede or delay Their operations or business
or the Acts Of Congress under which they
were constructed. lnthe SoutherR Pacific
Railroad the Government has reserved Z
beneficial interest As TO the Central Pa
cific Railroad, it Is ot,entirely clear thai
the Government does not hold the lega
title. The Act under which it was con
lstructed provides that the company is tC
build aIoad and maintain it, and, fof al
time TO come. to held it subject 20 eh.
order offihe United States cor the trans
portation of troops, mails, munitions o
war and military stores; and to the eD<
that this object might be attained tht
United Sktes exacteS all kinds of secEri
ties. The obligations assumed by the com
fany were 80 keep It ia repair, to pay fv,
per cent. oisthe net proceeds and to aiiev
The Government to retain the cost OF il.
avn transportation, and d. the end OF THIRTY
wears, II any balance WAS due, 10 pay thss
or surrender the road. SNoh was the uu,
Outstanding when the Act WAC passed
Senator McDolgall voiced the .intent o
Congress, when in debate, he SAID
4 II is proposed that the Government
shall advance So, 100000, OF rather theii
bonds at thirty years, as the road is com
pleted, III Abe coarse of series Of years, SC
that the interest &C no time can lie eqrsl 4
the service 20 be rendered by the road as il
progresses, aud thatthe Government really
requires no service except compliance OF
the part of The company with the eontrec
made Ii was not intended thai there
should be a jHdgmeatof foreclosure and {
sale of this road on failure TO pay. W.
wish il TO be distinctly understood that the
bill is not framed with the intention tS
have foreclosure In case they failed K
perform their contract. that is another
thing. This is asiipulation: that is 4 for
feiture, in terms Of lava very different
thing from n foreclosure for the non-pay.
Inento bonds"
PAY OR SURRENDER THE ROAD.
The contract was substantially that al
she end Of thirty years the company might
exercise It's option TO pay the balance and
take the read or surrender it, Congress:
authorized FIRST mortgage to be made or
IL. III Al. :.