The Birmingham age-herald., 1907-07-04

paper on insurance legislation which was also in line with the unanimous thought of the convention. The paper strongly attacked the proposed Gray bill anu the associa ton ordered that the same course as in the foreign loan tax mat ter be taken and the address will be printed and sent to the legislature. w. K. P. Wilson read a paper on the solution of the transportation problem being in the perfecting of the inland waterways and harbors of Alabama, which met with great favor.
 Aftsr denominating the Southern Com mercial and Industrial Record of Mo- bile as the official organ of the asso- l citation, and hearing few eloquent re- marks by David Holt, it's editor, the l a 5ociation adjourned until tomorrow. Dearborn's Letter.
 Following is the letter read to the as- sociation this afternon by A. l.. Dearborn of Birmingham:
 MT. President and Gentlemen-I beg to think you for the honor conferred in in- viting me to give expression to my views on the matter of foreign loan taxation.
 It has been very clearly explained in recent public utterances of certain mem- bers of the last constitutional convention, and concurred in by our governor, that by statutory mandate it was incumbent on the legislature to enact a law requiring all foreign corporations to pay franchise taX-the same to be based upon the actual amount of capital employed in the state | of Alabama.
 There is no sound objection, IS far as l am able to judge, to full compliance with this constitutional requirement, and think most of the states have a similar law, but, mind yon, 1t should not be made to serve as a foundation upon which to | pttf1J aF ,In faxr tion which is the result in fee simple when the present law gets around to for eign corporations lending money, and is operative in its entirety
 l It is not believed that any member of the constitutional convention had in mind that this franchise tax-sought to be properly placed upon foreign corpora tions doing business In this state-would, when applied to those corporations lend ing money within the state, create and enforce upon each and every borrower upon real estate from said foreign cor porations q penalty of double taxation. That there is no escape from this result is susceptible of being made clear to any intelligent mind. It is claimed that the application of the law, as construed by these legal authorities, who have been called upon to give an opinion, is greatly misunderstood by the public at large.
 Effect Not Appreciated.
 This statement I am sure will not be | denied, and I would further venture the opinion that the legislature when consid- ering the measure was to very consider able extent suffering from the same com paint-at least it Is my belief that the final effect of the legislation was not ap- preciated or the law would not be now upon our statute books. It is claimed by the friends of this legislation that the tax imposed is trivial, and not of suffi- cient importance to justify the extended discussion that it seems to have created
 This argument reduced to dollars and cents may be true, and further, as 1t is in every sense provided for by an ad- vance of rate named by the corporations lending money, the question quickly arises whence comes the complaint? The an swer is this The clear headed doctors of finance, who have been selected by reason of their demonstrated ability to diagnose and read the symptoms and signs on the far-distant financial horizon, claim that they have discovered in this law a well defined tendency, which they have classl- fled as an expression from the people of an unfrlendly feeling toward corporate management of large vested interests.
 Having reached this conclusion. and de- livered themselves of this opinion, the aforesaid corporations find a simple solu- ton to the problem by gracefully retiring
 
 no excuse for their action. further than to say that they are not pleased with the business outlook in Alabama-hence, for the time being, will not consider fur ther loans This X take 1t, can in most instances be regarded as forceful dem4 onstration of the effect of the law in prac- tical operation.
 Far-Reaching Sentiment.
 That there is fer-reachng sentiment prevailing throughout the country, seek ing to chastise the erstwhile opponents of corporate greed and arrogance. has had ample exemplification In the expression of legislative bodies in nearly every state. The causes leading up to this frame of mind upon the part of the public are, generally speaking. indefensible-especial- ly In the case of large corporations thwarting the will of the people by sheer power of wealth. That there have been too many instances of this cannot be de- nied
 Following up this line of thought, the lawmakers in the several states have summarly put In operation a system of dead-falls for the purpose of evening up the inequalities of life. There are times when 1t has been found upon opening the trap that the only game caught were the members of their own household. It is not claimed that such a purpose was in the mind of any one when enacting the Alabama foreign corporation tax The effect. therefore, Is by no means a true reflection of the public mind. Thus 1t ap- pears to be true that the business men of Alabama are being forced to pay q pen alty for condition inadvertently ere ated without proper foreknowledge of the consequences.
 That the county of Jefferson has sus- tained a serious injury as result of this law can be proven by more than one ex- caused by failure to obtain money that had been counted upon from the foreign loan source.
 Double Taxation.
 If there Is needed an Illustration to show where the double taxation comes in 1 will cheerfuly submit the following: A loan upon vacant realty under negotiation by Sl00,000 for a period of ten years-o1a per cent net to the borrower-was held up for a legal opinion on the corporation tax. Upon it's being given, the rate of interest was changed from 51s to per cent-a mere difference of $500 exacted annually from the borrower. Only s2O0 of this is payable to the state; $300 is collected ad- ditional for future contingencies, a peu- alty for unwise legislation. The money, when secured, is to be utilized for the purpose of erecting a building, which when completed, will be liberally taxed by the state, county and municipality. # this is not a perfect type of double taxa tion, | should like to know under what head 1t properly comes.