Year: 1879

In taxation in California. PARTIAL
ity has been so rampant, and there
have been 30 many capitalists in
this State who have answered to
every characteristic of a cormorant,
that, except as the champion OF
the needy and the poor, we should
not raise our voice were the cor.
templated remedies never so radi-
cal. The trainers of the new Con-
stitution claim that they have
sought to remedy these inequal-
itiee, and it is quite possible that
they were sincere in their inten-
tion to effect q salutary reforma-
ton. But nothing is more certain
than that the best intended legisla-
tion on financial topics has fire.
quently had the effect of BOOM
erang, doing its principal mischief
to the persons or interests sought
to be benefited.


1t goes by the mere saying that
the prime object Of any Constitu-
tion is to protect and benefit the
people. In so far as an instrument
of this kind promotes the public
welfare and increases the general
prosperity 1t is good and whole
some in its scope, and should be
adopted. Anything which has
tendency to make money abun.
dant, and to stimulate those enter
prises which give employment to
the industrious, is to be desired. On
the other hand. anything which
tends to drive capital out of State,
to paralyzs industry and impede
enterprise, is highly hurtful and to
be deprecated as an incident of its
organic law.


1t is a curious fact that the most
despotic governments of Europe,
governments which support grind
ing and expensive schemes of adj
ministration and large standing
armies, have taxed everything un-
der the sun but money. There
they have stopped, and for an cas-
lily understood reason-taxation of
capital could have but one result,
to drive it out of that country to
some other where Il more enlight-
ened policy is pursued.


There is we'll grounded rumor
throughout the State of California
to-day that, if the new Constitution
is adopted, all our savings banks,
and most of the others, will wind
up their business aud retire from
banking. They will do this, it is
alleged, on the simple and selfish
principle that, with the
scheme of taxation Of mortgages
and capital proposed by the new
Constitution, it will no longer pay
to carry on the banking business.
As we understand the new instru-
ment, "a bank with capital stock of,
ay,S500, 900 Is taxed on that capital,
while the individual shareholders
are also taxed on their proportion
of this capital stock. The money
paid in as capital, and which is en-
ployed in loans on mortgage, or in
other uses in which interest can be
earned, is obliged, in addition, to
pay mortgage tax.


Take the case of o bank in Los
Angeles, for instance, and let us as
sumo. for the purposes of the argu-
ment, that the city and county
taxes amount to four per cent, two
per cent. for the city and two for
the county. Both bank and de-
positor have to pay these taxes,
with the mortgage tax added on,
which would amount to eight per
cent, or one per cent. more than
savings banks can afford to pay de.
positors. With a searching system
OF taxation which reaches both
money and assets, banking in Cali.
fornia would no longer pay, and the
poor man would get no interest on
his deposits.


We should waste small sympathy
on the capitalists, if they were the
only parties In interest. 1t has run
into an axiom that capital can al.
ways take care of itself. 1t is the
effect of the new system upon poor
and necessitous people that we are
concerned about. If there ia one
thing In the Providence of God
firmly established by the expert
ence of the whole world in all ages,
it is that exaotions upon capital
are always borne by the debtor
class. This has been the case from
the days of Crassus down to the
Nevada Bank regime. Any one
who cares to pick up Thisrs's
graphic narrative of the attempt to
restrict usurious speculation in
Paris ia the first French revolu-
tion, when hundred heads a day
were rolling from the guillotine,
will find signal instance of the en-
tire helplessness of legislative
bodies. ana legislative bodies of un-
exampled energy and ferocity at
that, in their attempts to regulate
financial matters by law. 1t has
been said that transactions between
the lender and borrower would be
regulated by the law Of supply and
demand. This would be a good ar