The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1909-05-27
TRIP TO COAST.
State Tax Commissioners In
spected Railroad Lines.
Back Today From Long Jaunt to
California.
70 FIND VALUATIONS
Used as Basis for the Kansas
Assessment.
GOV. Stubs Requested That
Trip BE Made.


s. T. Howe, S. c. drummer and w.
S. Glass of the Kansas tax commits
sion, returned today from a ten days
trip to the Pacific coast. These gen.
tlemen did not go on a pleasure jaunt
or sightseeing trip, but rather on
a very important business mission in
connection with their duties as the
state taxing officers.
The tax commissioners Travelled to
the coast over the Santa Fe line and
returned via the Union Pacific and
their expenses were paid from Cover
nor Stubs contingent fund They
made the trip in order to ascertain
the commercial value of these railroad
properties and the business and work
ings of the two systems in the western
states in order to make comparison
with their Kansas business and thus
reach a conclusion in regard to the
value per mile of the entire system
and base the Kansas rate on that
value.
The commissioners had a good idea
of the business of these two great
transcontlnental roads in Kansas and
east of this state but had no idea at
all of their western business and earn
: ing capacity.
+ They made the trip, at the sugges-
ton and request of Governor Stubs,
after due elaboration over this re-
quest.
In an interview this morning the
commissioners declared that they had
nothing to make public at this time in
regard to their findings or conclusions.
They declared that they would weigh
the matter carefully and their conclu-
sions will show for themselves in the
final assessment of the railroad pro-
perties of the. state.
A definite idea of the mission of the
commissioners to the Pacific coast can
q ha fn11 inc or
they received from the governor under
date OF May 10:
Gentlemen of the Tax Commission
Before making final valuation of rail-
road and other public service corpora
tion properties desire to call your at
tention to the commercial value of these
properties as indicated by their stock
and bond issues and by their earning
capacity and also by the statements
of the officers of the several corpora
tionsi for instance, the Santa Fe is
earning interest and paying dividends
on $4,000 per mile and the stocks and
bonds of the road are selling It a price
which would indicate it's commercial
value to be $4,000 per mile, while the
earnings of the Union Pacific are very
much in excess of that amount and the
market price of its stocks and bonds
would indicate that the commercial
value of the property was 100000 per
mile. OF course, on the Union Pa
cidc it may be necessary to consider
whether all the earnings of that cor
Operation arise from railroad business
or from other speculations in connec-
ton Herewith, -
4 81 am well aware that the
physical valuation of these proper
ties is not anything like as much as
the commercial value at the present
time. The commercial value is
based upon the earning capacity of
the properties and the earning
capacity. is determined by the rates
which the railroads are permitted to
charge for transportation of per-
sons and property. AS long as rates
are maintained high enough to earn
interest and pay dividends on such
valuations 1 am decidedly in favor of
using an equally high valuation of
these properties for taxable pur-
poses. Indeed, 1 am advised by the
attorney general that the state has
a right to take into consideration
the value of the franchises of the
for taxation. while the supreme court
of the United States has held that
where the railroad has given no con-
sideration for such franchises that
they cannot use the value of their
franchises as a basis for rate making
and earnings, thus indicating that
the value of railroad and other pub
lie service corporations property
might well be higher for taxable pur-
poses than for rate making pur-
poses The United States supreme
court has also decided that a correct
rule of taxation is to ascertain the
value of the property used as a sys-
tenn and to then pro rate the value
in any one state according to the
mileage IN that state.
after fully considering this whole
problem with which you have to deal
and about which we have had sew
eral conferences during the past
month I wish to recommend to your
honorable board that you inspect the
lines of the Santa Fe and other
roads outside of Kansas with a view
of determining the relative value OF
such properties in Kansas as com
pared with the values of the prop
erty outside our state For instance
II the Santa Fe system is worth $780,
900 per mile as a system and is sc
mercial and rate making purposes
the Kansas tax commission ought t.
determine how much less the valu'
of the Santa Fe in Kansas is IL
comparison with the mileage of tn
Santa Fe outside the state. applying
this same rule and method to all othe
railroads and other public servic
corporations of like character.
at have arranged to furnish what
ever funds you may require for sucl
inspection. 1 have no desire to d
injustice to the railroads but do wis
to see all property within our Dor
ders bear its equal burden o
most earnestly desire to see you g
very deeply into the matters re
ferfed to In this letter.
"W. r. sTUBBs."
1t can be plainly seen from tn
governors letter and the action @
the commission in making the Cal
&, fv-fr ha