The New York herald., 1922-02-26
Tax Measure Threatening
Mortgages Is Withdrawn
property and evidences of debt

property and evidences of debt
Under Section 4-a OF the Tax law,
therefore, it has been contended. in the
recent action brought by the Hanover
National Bank of the city OF New York
VS.. Goldfogle ct al. that moneyed capi-
tai in the hands of individual citizens
entering into competition with the
money invested in national bank stocks
pays no tax, and, therefore. the State
taN on national bank stock Is invalid.
Justice Davis handed down an opinion
in the last named suit on February IL.
1922, in which he decides against this
contention, but, nevertheless, the issue
has been raised as to the validity OF
taxes levied by the State of New YORK
for the years 1920 and 1921. which
taxes are said to amount to over $780,
000, 900, and in order to validate the
collection of such taxes and to make
the future collection thereof valid. the
Department of Taxes for the state OF
New York is using every effort TO have
the Davenport bill enacted into law.
without any consideration as 10 the
sweeping character of its provisions
and the great hardship which In many
cases would be imposed by the initial
tax of 3 per cent. upon the property
which would be affected thereby.
"The uncertainty as to the incidence
of this tax arises by reason OF the gen.
eral character of the definition OF
moneyed capital in the hands OF the
individual citizens entering into compe-
tition with money invested In nationai
bank stocks. The inclusive character
of such property. however. is shown py
the definitions of moneyed capital IN
the two decisions heretofore rendered.
to wit: in Mercantile Bank VS.. New
York. 121, United States 1873, and, June
6. 1921, in the suit of Merchants Ma
tional Bank of Richmond, Va, VS.. Inc
City of Richmond, above referred 10.
'In the latter case Justice Pitney
quotes with approval the language OF
Justice Matthews in the Mercahtiie
Bank case as follows:
"'The terms of the act or congress-
therefore. include shares of stock OF
other interests owned by individuals IN
all enterprises in which the capital en-
ployed in carrying on its business Is
money, where the object of the business
Is the making of profit by its use as
money. The moneyed capital thus am
ployed Is invested for that purpose IN
securities by way of loan, discount, OF
otherwise, which are from time to time'
according to the rules of the business
reduced again to money and reinvested.
It includes money in the hands or In IL
viduals employed in a similar way, in
vested In loans or in securities for the
payment OF money, either as an invest
ment of a permanent character, or
temporarily with q view to sale or re-
payment and reinvestment. In this way
the moneyed capital in the hands OF IN
dividuals is distinguished from what is
known generally as personal property
Tho important part of this opinion IS
the, sentence which defines moneyed
sYanI I,td daG
money invested in bonds and mortgages
on real estate. as well as all moneys
in bank awaiting investment.
"I am told that the State Tax COM
mission, as well as Mr.. Davenport, holds
the opinion that the bill in question does
not impose tax on bonds and mort
cages. / cannot understand the ground
for this opinion, but in any evert their
opinion Is not the controlling factor.
We are bound by the decision of the
court and although there Is no de-
cision holding specifically that bonds
and mortgages would come un1er the
definlticn in question. yet / cannot
escape the conclusion that IL the mat
ter were ever brought to an issue the
court would hold that the above def.ni-
tiOn IL sufficiently ge-.eral and broad to
include such investments and II IL is not
the intention OF the sponsors of the bill
10 include bonds and mortgages within
it's provisions an exnress exception
should be incorporated therein 10 a,lay
any uncertainty in reference thereto.
1T is unnecessary to expat,ate at
length upon the seriousness of the situa-
tion which would accrue IL all invest
men:s in bonds and mortgages should
become liable at once to a tax of per
cent. The precarious conditions existing
in the real estate world at the present
moment would be made even more
serious by reason of the fact that every
holder of a mortgage on real estate
under the clause Incorporated in most
mortgages, would have the right to call
his mortgage Immediately"