Omaha daily bee., 1902-05-18
Evidence of Value Afforded BY Known
Market Conditions.
DIFFERENCE BETWEEN CORPORATIONS
Public and Private Are on Different Footing
Before Law.
RUNNING DEBATE ON THE QUESTION
CrOssare of Question and Comment
Before state Board of Equalisa-
tion at Its sitting at
Lincoln.
(From a star CorrespondentN

Rosewater and E. w. Simeral appeared
before the State Board OF Equallza-
tion to complain that the railroads OF
the state were assessed too low, the run
ming debate took on as interesting and al
most important an aspect as the formal
arguments, that have already been pub
| lished. The Bee herewith presents the full
stenographic report OF the general debate
on the proposition:
The Governor II would like to ask you,
on that theory. for instance, there Is a
| company or corporation doing business and
organized in the state of Nebraska for
500, ,00O-that is the amount OF their capital
STOCK and that stock is worth on the mar
ket 100000; that is. 1t would sell for that
then, you would contend, would you, that
| they should pay taxes on S400, ,0007"
Mr.. Simeral: That depends entirely
| upon what kind Of a corporation you are
dealing with. For instance: We have pub
| lie corporations, such as railroads, those
which exercise the right Of eminent do
main; and we have private corporations,
whose value may be in the enterprise OF
one individual. who created that corpora
tion and who put his money into the cor
poration but what we are speaking OF
now are those corporations that have been
| given certain rights by the state, such as
| the right of eminent domain, which We
know is a part Of the sovereignty OF the
state and which is given by law to those
corporations. They can take your property
they can take the property of a private
corporation for their use. II it should be
determined, for instance, that the Union
Pacific or any other road in Omaha wanted
| The Bee building and they needed 1t for
| their purposes-for railroad purposes-they
| could go and take 1t, or any property In the
| state belonging to private corporations or
individuals. Now, that is where the fran
| chise of a road Is OF value. Take any in
dlvidual who owns stock in a corporation
| and builds up its business. 1t is his enter
prise. his vim and push and vigor that
| makes that corporation stock OF value. II
| he was to die that value might go down to
a very small amount. but with the railroads
It does not make any difference whether the
president of the road dies OF not. The
property is there and the value is there"
The Governor Then you would make
a distinction between a railroad and the
| value Of it's stocks and bonds on the mar
ket today-that is, you would make a dis
tinction between that and the value Of
stocks and bonds OF private or local cor
poration7"
Franchises and Functions.
Mr.. simeral: "You are talking now about
stocks and bonds The stocks and bonds
may be OF equal value, but am talking
about the franchise, that which the state
gave them and which can be exercised by
the public corporations in a certain way,
but which cannot be exercised by the pri.
vate corporations. or course, take the
stock of any private corporation, building
or manufacture occupation, and 1t may be
worth 100 cents on the dollar. Why? Be-
cause its business produces that value. But
here is a railroad which has its stock out
and which has certain rights or franchises
given to 1t by the state; II is not ham
perti by the environments surrounding tho
private corporation or private individual"
The Governor: THE point wish to get
is, for instance, a railroad costs $4,000 to
build it and from its earnings it is worth
S40, 900 and sells on the market at a basis
Of $40 900. then you would contend that It
should be taxed on the basis OF s40.000?'
Mr.. Simeral: The value OF the stock is
not necessarily the criterion OF taxation
The Governor: "supposing 1t starts out
costing 900 and It's bonds sell on the
market for $4,000 because of the fact that
1t will pay a reasonable profit on $4,000.
then what would you say?"
Mr.. simeral: Then should say It should
he taxed according to the value Of it's stocks
and bonds.'
The Governor: well. that would be-say
two for one."
Mr. simeral: Eyes, II it was worth that
on the market"
The Governor: "You think that it sho1id
be taxed, then, on the basis of S40,0003"
Mr.. slmeral: ION whatever basis is fixed
on, whether two-thirds or one-third."
The Governor: THAT is. so as to make
It equitable?'
Mr. simeral: Eyes. sir"
The Governor: Now, II have business
that is stocked for 500. 900 and that is vir-
tually the cost OF II, and II that business
pays a profit on $500, 900, then in the same
ratio and for the same reasons should
not then pay taxes on s40O.OO0?"
Mr.. simeral: THAT would depend entirely
on what kind OF a corporation you had.
As said in the beginning the private cor
poration and the public corporation are
very different"
The governor: II see your point. That Is
what wanted TO get at. as TO whether you
contended that the railroads should pay
the same proportion Of taxes on the value
OF it's property a private person?"
Mr.. Simeral: Il should say that both being
OF the same value they ought both to pay
in the same proportiSn-that Is. taking into
consideration, OF course, the franchise
which the public corporation has and It's
greater rights under it's franchise. or
course these are questions that are purely
economic questions and should require care
full study"
stock of Private Corporations.
Mr.. Rosewater: THE statutes require pri-
vate corporations to return either its stock
or it's tangible property. For instance, take
a newspaper; II may choose TO make It's
return on the stock. Take the Omaha
WorldHerald--I will not make a COMPARE
son with our own psper-but take another
one. The World Herald Is stocked. a. I
understand 1t. for $3.50, 900. but it would be
ridiculous to take that stock as the value
Of that paper. The proprietor has the right
TO return the machinery he has on hand and
the materials. whatever they might be. and
II the stock EspFsasnts' real estate tAAt
q --f q. - ~ - H.. y Il