The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1891-08-26

not be- taxed because it falls behird from
1925, 600 to 100000 every year. 1t occupies
a valuable right of way, does business
every dav and should anu will pay
thing. There is one difficult problem to
solve. and another was the determining of
inst how much tax it was right q railroad
should pay in Indiana, when such road is
an interstate line and earns considerably
more money in States other than this.
EARNINGS FROM U THE sTATE.
Is it right, he inquired, that Indiana
should assess earnings made without her
borders. Portions of the roads outside the
State had a value far in excess of the parts
in the State. The Jacksonville, Madison
q Indianapolis road. for example, he said.
was once q valuable property. IL had IN
former years a monopoly OF the business
between Louisville and Indianapolis and
paid dividends OF 10 per cent. a year. COM
peting lines had sprung up, however. the
rOac's receipts had fallen of and 1t had
been several years since the road PAID q
dividend. Some years the pennsylvania
had advanced money 10 pay the interest on
and was paying its fixed charges. Is 1t
right. he asked, that roads should draw
money from prosperous. w~ellDopulated
communities and distribute the money over
less favored portionsl Mr.. Brooks referred
to the valuabIe interests of the Fort Wayne
road at Chicago, where, he said, It occu-
pied right of way worth nearly a million
dollars a mile. The fourteen miles OF right
of way IN Chicago. he believed. was worth
from Sl2, OOO, 600 to S14.00 600. because 1t
cost that much. A four-track line in q city
of over O million inhabitants was. he said,
O valuable property. The company also
owned large areas of land in the heart of
Chicago, $50 or go acres in all, which cost
point that compared to Chicago in impor-
tance TO his line. In Pennsylvania and east
ern Ohio the line also cost much more to
build, because of the nature of the country,
which was billy. when northern Indiana
was almost o dead level The average earn
ings, last year. Of the Indiana division OF
the Fort Wayne road from Crestline to
Chicago were $4,000 q mile. while those OF
the Pittsburg division from Crestlipe TO
Pittsourg were $1,000. Inc increased tra1,
by conditions with which Indiana had
nothing whatever to do. Half q dozen feed
ers contributed in coal and ore freights to
these increased earnings, and not a ton of
From that source 10 derived very largely
the Sc, 900 a mile earnings. and he wanted
to know il Indiana had any right to claim
q share of what she never sees.
I'VE don't claim it," replied the Gov
ernor.
Then further discussion on that point is
unnecessary blandly remarked Mr..
Brooks, and he dropped the subject.
He did not believe it just to assess q rail-
road for taxation by what it cost or by the
par and market value of its securities. Re-
ferring to the cost of q road he said that In
it's construction q railroad company was
guilty of the same negligence and subject
TO losses by reason of mistakes of employees
toe same as experienced IN enterprises OF
individuals. S~uperhuous work, costing
thousands of dollars, is often the result of
having IN its employ an incompetent en-
gineer and the road may cost much more
than it should have done. The same is
true regarding every form of human in
vestment. The construction of a railroad
is attended by q waste and loss which
should not enter into Its tax
able value. What it cost originally or
what it could be reproduced for he thought
earnings outside the State where Its value
for taxation is being considered annot he
thought. justly be taken into account. The
Fort Wayne has property In four States.
and should be taxed on the value OF that
property separately and distinctly. and
not upon a common basis. Property valu-
able in one State may not be valuable In
another, and the same is true OF portions
of q State. IL may be productive in one
part and non-productive III another.
AND
He held that q roads bonds and stocks
might bear no relation to its cost OF value.
The actual earnings approach nearer TO
being q fair basis for taxation. but even
in this respect mistakes are liable to be
made. unless the board is familiar with the
manner In which a railroad makes up Its
accounts. The Fort Wayne, he said, was
leased about twenty-five years ago by the
Pennsylvania, and during that time the
latter company had improved 1t vastly.
issuing capital stock meanwhile to meet
the cost of such improvements. Other
companies, which he forebore to mention.
- .- ---- -
charged them to expenses. so that
the words net earnings mean,
one thing in one case and a
totally different thing in another.
Therefore. unless the commissioners under
stand a roads system of bookkeeping, they
cannot nave any idea of its real earnings.
The capital stock of the Fort Wayne road
is { 5000. 900, and superadded to that stock
is the Pennsylvania ~Company's guarantee,
which insnrss Z per cent. interest: even
cent. There is an element which
reflects value upon this stock and
with which the traffic of the States
through which the road runs has nothing
whatever to do. The wealthlest corporation
in the world guaranteesa perpetual inter-
est of z per cent. Fort Wayne stock is now
157. but Mr.. Brooks held that. for the rea-
sons just given, its market value wes not a
fair test of it's value for taxation. Going
to she other extreme. he said that nobody
wanted Wabash stock at any price. and if
il was put upon the market at ~one-tentl,
oEe-sixth. or one-fourth of it's capital it
would find no purchasers. The bond or
stock basis. therefore. he declared was
utterly wrong and fallaoious, and could
not fairly enter into an estimate for tax
alton.
ANNUAL NET o
Mr.. Brooks urged in conclusion that
there was no better, wiser or juster basis
for taxation than the annual net income of
o railroad property for q period covering a
series of years. He did not regard 1t as
fair to take a single year and make that
the basis. TIE year 1890. for instance was
almost without president as q prosperous
one for railroads. Such a basis Is not used
in estimating their interests for taxation.
A farmer, he said, would repel with indig.
nation an attempt by the board to tax Ill
as heavily on n poor year as on one proceed
ing. which had been good. Because he had
bountiful harvests u made much money
one year, that could not fairly be made n
standard for the following years appraise-
menVof his farm. Another nttrged by
Mr. Brooks was that railroad property
should not be increased for taxation
in greater proportion than farming
land, which is appraised every
six years. In the eight northern Indiana
counties through which the Fort Wayne
road -uns, he claimed that the farm lands
year of from IS to II per cent. only. or from
$S5.O00,OO0 to 500. 900. 600. The railroad
property. he held. should be subject to no
greater proportion of increase He filed
with the board Il statement to verify this
claim regarding the eight cOuntiesin ques-
tion. The statement. he said, was taken
from the records In those counties and
onntd H. 4.- n.I,l f-nv.