The Saint Paul globe., 1902-02-28
PUBLIC
SERVICE
COR
PORATIONS

railways are assessed at $22, 100000, bring
ing into the treasury S3600O0 in taxes.
In Cleveland, Ohio the assessed valu-
alton OF the street railways was raised
S15,OOOOOO, making tax over 100000.
In Cincinnati, with a population less
than that of the Twin Cities, the street
railway system pays about 100000 in
taxes.
How do these figures compare with
those in the case Of our local street rail-
way system? 1t is to be borne in mind,
always, that the real estate and tan
gible personal property Of public service
corporations constitute only a very slight
factor in fixing the value of their stocks
and bonds in the open market 1t IS
the franchise itself, the right to operate
granted by the state or municipality,
which determines values In the Twin
Cities, these values of street railway
franchises are easily deducible from
authentic sources. The street railway is
bonded in both cities for over $40, 100000
IN addition to over $10O00,0 900 of watered
stock issued against the same. In 1891
this stock was utterly without value
A foreign corporation was formed, how
ever, having no assets which at once
proceeded to issue $1S,000,0 900 of its stock,
and to distribute the same among the
stockholders Of it's constituent COM
panies in St. Paul and Minneapolis.
During 1891 this company earned $780,
595. Ten years later, in 1901, it's earnings
We're $3,173, ,975.85. AS late as 1896 its stock
was valueless Today it's common stock
is worth $110 per share; it's preferred
stock $140 per share. The bonds of the
constituent companies draw and per
cent interest and are worth not less than
20 per centum above their par value
These figures show conclusively that the
street railway system is, at present,
worth $30,000,0O0 conservatively esti-
mated. If properly assessed at these fig
ures the average rate Of 2.7 would re-
aliZe a tax of $4,000 per annum These
are familiar facts to all state and local
taxing officials, from the highest down.
Yet, such is the powerful influence of
this concern that it has successfully
kept its assessed valuation down to
$4,75O,O00. yielding tax of only $4,000.
In it's proposed code, the tax commits
sion provided an ad Valorem basis for
the taxation Of the street railways, which
is that the value Of their bonds shall be
added to the value of their capital stock,
the total thereof to constitute the as
sessed valuation for purposes of taxation.
Ii this admirable system were enacted
into law, it would yield at least $5OO0OO
annually in taxes from this single COM
pany operating in the Twin Cities.
The interests affected, of course, are
Thoroughly alive to their own advantage,
and are adroitly seeking to engraft the
gross earnings method of taxation, as
applied to them by means of constitu-
tional amendment.
The legislature will be compelled to
choose between the interests Of the pub
lie and those Of private nature here
involved. The vital significance of this
choice of method thus appears, relative
to the street railway system in St. Paul
and Minneapolis:
Ad valorem taxation, If adopted. .$5OO.000
Gross earnings tax at per cent. $4,000
Annual loss under gross-earn-
ings tax system ............-... $4lO.OO0
What will the legislature do?