The San Francisco call., 1898-07-22
FRANCHISE TAXATION.

HE regular annual discussion concerning the taxation of corporation franchises, which closed
 few days ago before the Board ot Supervisors, has elicited the usual amount of wisdom from the $3oooo contract railroad organ and the statesmen who achieve fame in its columns Undivided atten- this year has been given to the bonded indebted of the street railways of San Francisco, especial attention having been paid to the Market street com pany, which is always the horrible example" of our municipal system. The principles which found to exempt this corporation from conhscatory taxa ton, it has been contended, of general applica- ton.
 Mayor Phelan for whom taxation demagogy has many charms has claimed in letter to Assessor Siebe that the assessment placed upon the Market street system is inadequate. The property of the pany has been valued by Mr. Siebe at $3,2ooooo and its franchise at s. 5ooooo. The Mayor asks the As sessor pointedly what has become of the company's bonded indebtedness of $I4,oooooo, and he attempts to his own question by calling attention to the fact that the bonds not assessed at all The Mayors letter to the Assessor is heartily indorsed by the contract organ which lays down the broad propo ston that judged by its bonded indebtedness and the value of its stock the corporation in question not being assessed at above two bits the dollar.
 This IS all the veriest buncombe. Both Mayor Phean and the organ know that the constitution and statutes expressly OOnQS Ol all railroad and other quas-public corporations. The theory is that the property represented by the bonds and if the former is assessed that will be sufficient With mortgages 1t is different. They are treated as an interest in the property affected and assessed their owners The difficulty of following up bonds and assessing them to their holders evidently induced the constitution makers to abandon, in the of railroads and other quaspubic corporations, the rule set up concerning mortgages
 Nor is the market value of their bonds safe cri- teron for valuing the property of corporations The San Francisco and San Mateo Electric Railway was bonded for a million dollars; in fact it cost million to build it. Yet when foreclosure came it sold for $35oooo Would it have been just for the Assessor have assessed that corporation upon the value of its bonded indebtedness? Had he done so he would have wrecked the company long before its time.
 The market value of corporation bonds is more less speculative It is based upon temporary interest paying power future prospects, schemes of improve ment, etc Railroads often mortgage their property for more than it Is worth So do individuals. AL though the savings banks aim to loan not 50 per cent upon real estate, they often unable realize the amount of their loans and interest on foreclosure
 What does all this argue1 It simply argues that it is the duty of the Assessor to assess street railway property at its leash value" namely the amount it would be taken for in payment of debt by sol vent creditor from solvent debtor. rule for valu- ing franchises has been laid down by the Supreme Court The difference between the market value of the stock the first Monday in March and the value placed upon the tangible property represents the franchise We understand that this rule IS followed by Assessor Siebe in valung franchises in this city notwithstanding the organ and Mayor Phelan's at tempt to make it appear otherwise.