Omaha Daily Bee Newspaper, July 16, 1902, Page 7

THE OMAHA DAILY BEE: WEDNESDAY, JULY 16, 190 RAILROAD TAXATION IN COURT Arguments of Counsel on the Issues Raised in the Mandamus Case Before Nebraska Supreme Courte-ru vi Argument by M. F. Harrington for the re- lator: i questions Involved here are of so much importance that it should be the duty of all parties interested to furnish the court all possible light upon the tranaction pos- sible. I think the first thing to be considered, and, in the end, the main thing, §s whether or not the rallway companies of the state are paylng & tax {n proportion to their property ownership. First, we will have to mscertain the general rule of assessment of property in the state. . Our basis here is not founded upon imagination; it is founded upon the public records; it is founded upon the testimony In this cass The returns made by the assessors and county clerk of Douglas county certity th for all county and state purposes the prop- erty of the county is assessed at ome-sixth of 1ts' fair cash value. As to the sors and county clerk of Lancaster county, we have thelr Ificate that the property ln this county Is assessed at one-fAfth of its fair cash value. These are the two heavy taxpaying counties of the state, and the lowest valuation is on xth of its fair cash value. We do not need to stop with these coun- T Thirteen counties returned that thelr property is assessed at one-fourth of its fair cash value, nine countfes at one- third of ite fair cash value, four countles at one-sixth of Its fair cash value, two at one- seventh of its falr oash value, twenty-ome ot -fifth of its falr cesh value; one re- ighth of its falr cash value and the others ranging from one-fifth to ome- tenth, with two exceptions. Not a county in Nebrs eturns its property at less than one-seventh of its fair cash value, and only four counties out of the ninety-three in Nebraska retura at less. than, ome-sixth of its fair cash value. I am within the bounds of truth; my statement here is conservative, as. based upon this testimony, that property, ally speaking, in Nebraska Is as: one-sixth of its fair cash value. That is, all We expect these rallway companies to do fa to pay that same rate of taxation, We expect the State Board of Equalization to nescas the rallroad property at one-sixth of Its fair cash value. The rellef ight here should be awarded. If it be true that the franchises and other intangible property of these raflway companfes have been omitted from the tax list, if they h: Dbeen as- sessed, 'then It Is the duty of this board to reassemble and assess that propesty which they have by thefr act exempted from taxa- tion. If, upon the other hand, they took into consideration franchise, and it they made the assessment so low that it is a fravd upon the taxpayers In the state, then that assessment so made by them Is utterly yold in law, and it 1s their duty to reassem- ble and make a new assessment of t erty. 8o ‘that if either one of thes has occurred, or if both of these things have occurred, it is the duty of this board to re- assemble and make a new assessment of the property. ‘What is a franchiee? It {s asked, And what 8 its value? It may be defined more easily by {llustration or by negative than by an sffirmative answer. Here was the Union Pa- cific raflrond in the hands of receivers but B few years age, with a bonded debt much bess than the bonded debt of today. Yet hat road was finally to come to sale, and that corparation was to go out of hummess, and it could no lenger pay dividends upon Its stock, with® the' result thut’ the ‘wtock went to as low as a few cents on the dollar per share. The reason was that the fran. chise was practically taken away from that torporation, 1's right to levy tolls prace Lically ceased to exist. But just as soon as that corporation was reorganized, just as %000 as there was new life given to it, just B3 s0om as it-had the right to take tolls upon the grain and upon the cattlé and on the product of our mill carrying passengers, and to levy tribute not only on the crops and manufactures of this year, but for the years and ages to come, whether under public lor private centrol, Just o eoon as it became that in perpetuity, they might collect and levy tribute upon trade between the Occldent and the Orient, W8 #oon as that occurred this tranchise gave Mfe and tremendous value to the common stock of the Unlon Pacifie, and today, in- woad of bein rth $5 a it is worth and can be cashed on Wall street before voon tofmbrrow for $107 @ shdre. That Is ‘what a.franchise fs—the right to colledt the right to leyy tribute, the right to rates and increase them at witl. It Is In perpetuity; it is because it ‘lasts for the ages to come; because it is in itself the very means by which they collect tribute snd dividends ‘snd pay .interest on their bonds, whether they represent value or reps Tosent water; whether theéy représent value in dofars and cents, or whether they are concelved in iniquity and bern iu fraud, as 1 propose to show the bpuds and stocks of the Unlon Pacific raliroad were to wwe- thirds of their extent. Now ‘we can get some things by com- parison. Back in 1874 the lines of - roads In this state, which were but sti of rust in comparison with the transporta- tion lines today, were assessed at $10,005 a mile. If the same ratio had been’ main- tained between the lands, both improved and unimproved, this year as was maln- talned between the railroads and the im- proved and unimproved lands of Nebraska in 1874, the ussessment of the railroad vorporations would have been over $36,000,- 00—more than $10,000,000 more than it is. And that assessment is mot falr to the people of this state because it goes upon the assumption that lands in Cheyenne. lands in Sioux and in Dundy counties are ‘worth as much per acre as they are worth in the eastern part of this state, becsuse ‘we all know that in 1874 the assessed lands were practically confined to the eastern one-third of the state of Nebraska. So that upon that showing alone and assum- ing that lands clear out in the arid region, they don't raise a Grop one year in five, and are just as valuable as in Nemaha Otoe and Rickardson counties—even if we take that as the basis these respondents here have exempted from taxation at least $10,000,000 of property that ought to bave gone upon the assessment rolls, They say that this mssesment Is similar to what it was in prior years. 1 am here to say that I belleve that all the prior assessments upon railway property In Ne- braska were too low, and I am here to point out to your homore so clearly that o man can doubt it that there is no com- parison between these assessments and the Wssessments of the present year, In 1594, 1895, 1596 and 1887 the Union Pacific rall- road was in the ha of a recelver—had been run down, it was a bankrupt con cern, its franchise had gone and had almost B0 value at all. By the fall of 1897 the maln 11 of the Union Pacific, not the franchises, not the feeders that 0 the preperty, buk the main line. got out of the hands of the receiver, but by the time the asseesment of 1895 was made there was 8o report of its met carniogs under the new condifions and no oppor- tunity to compare their earnings when they ‘would get all their franchises togetber, be- cause the framchises were still in the Bands of & recelver. There was no report made 4o the Iuterstate Commerce commis- slon por to the publisher of Poor's Manual, ‘where you tould get lnformation ss to the value of this property, hence in 1898 there wae no possible way by which any man could get at the actual value or fair valus of the Union PacMfic railroad in 1808. The stock of the Unlon Pacific railroad had mot paid & dividend for several years. All the common stock and all the preferred stock, all of it, are paying dividends that has sent that common stock to par and above it, sending It to a premium. Now, then, as to 1800 there was a dif- ferent showing. In 1800 and 1000 as a re- sult of that these rallroad values ought to have been iner Immensely upon the tax rell. But something occurred in 1900 ~—though counsel may not be aware of it— which added immepsely not only to the value of the Unton Pacific raliroad, but the lue of every mile of raflroad in Ne- braska asd every mile of rallroad west of Chicago. The information that these cor- porations had done certain acts by which they had immensely Increased the value of thelr roads was not known to the state board that made the assessment two years ago. 1 think I bave given a fair consid- eration to this question far several years, but I am frank to say that this order was personally unknown to me, close track as I aimed to keep of these matters. What bas given value to these rallroads, what was- the entering wedge of the mergers which have since taken place was a com- mon agreement made In the city of Chi- cago under which they placed all territory running from Chicago north of St Louls and then down the Misslssipp!l to the gulf and taking all the territory west of those lines throughout the United States and putting them into a division and issued a rate sheet, known as classifi- cation No, 20, binding upon every railroad operating within that territory. 4+ What was this general classification or this. order No. 207 It provided, the report of the Interstate Commerce com- mission mow in evidence shows, reduction of 31 per cent on enteen articles of commerce an increase of 47 per cent on 240 ticles in common use that comstituted the bulk of the commerog of this coyhtry. The average increase in tbe 267 articles was more then- 40 per cent, so as a result a Anan’ who paid $100 trelght before that classification went into effect on the 25th day of Janunry, 1900, had to .pay $140 in pluce of §100.. But as the Interstate Com- meérce commission says that as the ‘cost of carying freight did not increase a dol- 1ar, it simply added to the profits of the raliroad corporation. The result was that Ahey ‘could pay larger: dividends, they could pay better interest on their bonds and larger dividends on thelr stock, and they got up & new plan, some criterion by means of which they could double if neces- sary the amount of the stocks outstanding #0 as to pay dividends on twice the amount while the rate of dividends would look only half as high. That is what has been at the bottom of the mergers. It is the pur- pose to collect tribute from the people by these increased railroad rates and at the same time conceal the truth from the peo- ple as to the rate of interest they were actually paying upon the amount the road fairly represented. I do not know whether counsel would call that “‘moonlight on a shovel;” that is for the Interstate Com- merce commission to say. When the assessment of two years ago was made the state board did not know & siagle. thing about .this immense increase in- rates, which means an increase in the value of the railroad property. It was not unt!l their annual report was published in the following year—a year later—that anybody, unless it was these gentlemen who- manipulated from the inside or some ship- per who happened to have paid the in- creased rate, that then knew about it. It was pot kmown to the public generally or ta, the public officials until they had is- sued their annual statements in the follow- ing year and until after the Interstate Commerce commission had published its report. And as soon as it was shown that they had collected these increased tolls and thereby immensely increased the value of all ‘raliroad property in the country, then the very mext year, that is, last year, it was the duty of this board to increase the assessment of these railroad corpora- t %0 that thelr assessment would cor- féspond with -the increase in the mctual value of their property, which they them- selves brought about, ‘as the Interstate Commerce commission says, by their own order; Did tlls board make any effort to find out what it was that was causing this im- mepse . Increase. in rallway values? Has this board. in this case shown any desire te glve this court information as to what these properties are fairly worth? Haven't ‘We, on the,vital points here which affected these rallroad properties, been met con- staptly. with objections? Why, the two or_the three pleces of evidence upon which We. can rest this case with absolute safety above all others, as showing that an in- crease should be made, are the Interstate Commerce reports, Poor's Railroad Manual and the market quotations on these stocks, evidences a majority of which were resisted at the outset hers, 1 want to ksk this court 1f this is not information which this tribugal, the highest in the state, cught to have from the servants of the state. the respondents here? It it was not for the Jight we have thrown upon this transaction, would you have been able to tell the value of any rallrosd in the state of Nebraska? We brought the information here. We put it.in over the captious ebjectlon of these gentlemen, who are not here serving the commonwealth, but serving corporatio whio 'are swindling the balance of the peo- of this state in the matter of taxation. Their conduct in that respect, their failure to inform themselves of the value, thelr eonduct in this trial in failing to furnish or trylng to furnish this court with the true lue of the raliroad property, their cap- tlous objections te the offered evidence, are proof that they have acted fraudulently in this matter, that they have been in collu- slon with the raliroad companies, and com- mitted, as I said befors, to exempting the bulk of this property for taxation. Now, let us take the Union Pacific rail- road for an example. I take the Union Pacific first, because it is the biggest sin- ner of the lot. Mr. Daldwin in his briet says that the amount of the stocks out- standing, not only of the Unlon Pacific and the Republican Valley, which s & part of it, but of the Oregon Short Line, which they couple with it, although it has 90 per cent of its stock that it owns, but the Oregon Navigation company, the total amoust of its stock is $263,000,000. That is about right in one sense. The funded debts of these corporations are §331,000,000. He he adds these together and then he deducts what be calls securities owned by the com- pany, amounting to $332,000.000 and he leaves it worth about $262,000,000. Why, Brother Baldwin, 1 don't suppose you ¥now It, but the fact of the matter is the figures on which you base your whole argu- ment here s that these three 7aliroad companies are worth §1,000,000 less than the wfock ~ without - ome dollar of bends. You ought to have gome & Mivle further; you ought ‘t0 bave tak the ‘balance afioat” column there and have deducted that from the bal- snce and If you bad dose that you would have proved that the Union Pacific rail- road, the Oregon Short Line and the Ore- gon Navigation company by the very same principle you used, all three were worth and then they would bave put you at the head of the rallroad tax bureau of the Union Pacific raliroad and increased your salary. Let us look at these figures that are here to mystify us. 1 am not here to charge Mr. Baldwin with trying to misrepresent to the court, but I am here to point out that these figures are decelving and that if Mr. Baldwin is ot responsible for their making he ought to expose the man who by misrepresenting was trying to get an unjust judgment here. 1 might point out some things he takes into consideration; for example: When they took this North- ern Pacific stosk they issued 4 per cent certificates and then they got the stock. ow if I buy today a thousand dollars of ock and give my note for a thousand dol- lars I am peither richer mor poorer whep the day closes. But Brother Baldwin by bis figures here even after they have paid off and retired the stock figures differently He figures it I buy $1,000 worth of stock today and give my note for it I am $2,000 poorer tonight. In addition to that he takes the Southern Pacific stock, which is an asset In the hands of the company; and he treats it as a liability. Why, bless you, Brother Baldwin, It you can get a-hold of a million dollars of that stock it would be a million dollars of your assets and mot of your liabflities. The Unlon Pacific railroad, according to Poor's Rallroad Manual, according to the Interstate Cofamerce Commission and ac- cording to their own report—I am talking of the Unlon Pacific, not these affiliated lines which are operated under their own charters—has a total mileage of 2,967 miles. That covers the entire line from Council Bluffs to Ogden, Utah, and includes the branch lines in Nebraska, Kansas, Colo- rado and wherever else they may be. 1 want to get the value of this road, and I intend to keep it apart from these other two roads run under thelr own franchises, and I intend to keep it clear from the Northern Pacific deal that they had when they cornered the stock in Wall street. I want to get the value of this road by itself; its main line and its branches, and to show what it is worth per mile. The honded debt of the Unlon Pacifie in that way is $99,500,000, the .bonds floated $194,602,300, not including the $445,000 in your treasury. The total mileage is 2,967 miles. These bonds are worth a premium. The preferred stock s a little below par, it fluctuates. The common stock is at a premium. But in my figures I have taken the bonds and both stocks at par. I know that is conservative. I know it is fair to the Union Pacific rallroad—it is more than fair, but I have taken them at par. Under the rules laid down by every court that I know of since the great declaion of Judge Miller in the Illinols tax cases in the Second United States, the value of tho stock, plus the bonded debt, measures the value of the entire rallroad property, franchise and all combl Taking this funded debt and taking thls stock and dividing it by 2,967 we find that the Union Pacific raliroad from Council Bluffs to Ogden, including all the branch lines in Kansas, Nebraska, Colorado and Wyoming, s worth $09,124 a mile, practically §100,000 & mile. But I do not need to stop éven at. these figures to prove it ls worth miore. than $100,000 & mile in Nebraska. - I do not need to go outside of its own report to prove it is worth more than $100,000 a mile in Ne- braska. The Unlon Pacific bonds, on the testimony here, bear 4 per cent. It Is very safe to say that in a safe railroad money can be borrowed at 4 per cent. Money is plenty in the United States at 4 per cent per annum on absolutely safe investment and covering long periods of time. The Union Pacific fs doing business upon that basls. Its bonds are 4 per cent. Its preferred stock is a 4 per cent stock; its common stock on which dividends have been paid according to the testimony here, have drawn 4 per cent and have been paid in the last couple of years. So the Unlon Pactfic ralle bonded and stocked upon & 4 per . Now, the statements before this same board show that the total mile- age of the Union Pacific rallroad ta Ne- braska 1s 1,020 miles, and I have treated it just the same way, becaus 1,020 miles 18 included iu the earnings. I am not treating It so in figuring the value per mile when I take the bonded and stock debt, but"when I figu based upon the earnings I am taking it as 947 miles of its own, and it s operating under some trackage arrangement with the Omaba road 74 94-100 miles from Norfolk to Sfoux City. The net earnings of the entire 1,020 miles in Nebraska for the year ending June 80, 1901, according to the report flled with this board itselt, was $4,800,000—I will give the figures accurate, $4,807,288.87. Its net earn- ings per mile are $4,711. That will pay 4 per cent interest upon $100,000 & mile and leave more than $700,000 of its surplus every year. It we capitalize it right down on a 4 per cent basis, it shows that the Unlon Pactfic ralirond is worth $115,000 a mile, and 1 believe that is a fair basis, because that Includes not only all of its tangible property, but it includes the intangib! well; it includes its contracts for operat- fog over this Omaha road, it includes the revenues it gets for the use of its bridge from the Milwaukee and Rock Island roads, and for the other roads that eross over that highway; it includes its mall contracts and its express contracts. And when you take the value of the tangible property and when you take the value of the intangible co tract, when you take the value of the fran- chise under which they levy tolls and col- lect tribute, not ouly now, but in perpetulty when you take all these things together you have got the value of the road and the only fair way by which you can measure is the value of the stock plus the bonds, Upon the showing, and I know it cannot be contradicted, that is, not only their own showing filed with the board, but it is from Poor's Manual as well, and it is the market reports in evidence, as well, is this Unlon Pacific rallroad paying a fair sbare of the taxation In Nebraska? Why, that main iine that was but a bankrupt road In the hands of a recelver a few years ago is mot assessed. for oue single dollar more today than at that time, though it is now the best paylng property west of the Missourl river. It is the greatest earning road of all the transcontinental lines, and yet it is not assessed for one single dollar more this year than it was when it was & bankrupt coucern. Take this rcad which I say we can safely say is worth $100,000 a mile and which'upon the ordinary rate for n- vestment today is worth $118,000 a mile, the average assessment in Nebraska is just something over $6,000 & mile. The Union Pacific rallroad in Nebraska, the main line and all branch lines comblued, are assessed this year for less than 6 per cent of the amount of money for which you can sell it for cash tomorrow on the market. Who says that any other taxpayer in this state has been favored in this way? In ity of Lincoln bere property is assessed 100 per cent for municipal purposes. The professional man, the merchant, the laborer, the mechanic in the city of Lincoln pays a | cific rallroad. The State Journal bullding | down here pa much tax, almost, as the entire Burlington rallroad. The Lindell hotel or the Lincoln hotel pay more taxes than all the railroads, terminals and all, in L'ncoln combined, and yet they say that they have done justice In this c that they have not committed fraud In this case, that they have tried to do right in this case as best they knew how. It we take it on a one-sixth basis and say it 1s only worth $100,000 a mile, then the Union Pacific rafiroad should be assessed, both the main line and the branches, at about $17,000 a mile; it should be assessed about three times high as it 4 for every gle mile, main line and branch line, In Nebraska. This great crime is not com- mitted on one mile, but on every mile of that road in this state. Another argument ought to urge morally strong here and that {s this: I have said this road Is worth at least $100,000 a mile. The undisputed testimony before you shows that its property In Nebraska, including its terminals in Omaha can be reproduced for $30,000 a mile, that Is their statement in the brief they eubmitted In the federal court in the penalty case in 1899. The tangible prop- erty, the physical property of the Unlon | Pacific road in Nebraska, with the Omaha terminals and all combined, is worth only $30,000 a mile, but the road can be sold on the market for $100,000 a mile. The fran- chise, the right to take tolls or tribut which amount to $70,000 a mile in the value of this road of a $100,000 a mile for which you can sell-it. You can duplicate the road for $30,000 a mile, the other $70,000 a mile represents nothing but wind and water on which the stockhold and bondholders are drawing dividends. That is what the fran- chise is doing for them. The bomded debt against the Union Pacifie rafiroad in Ne- braska will pay for replacing the property. The bonded debt against the Unlon Pa- cific raliroad will duplicate the property, terminals and all, and leave $3,000 & mile for profit, so that the entire preferred stock on which they are drawing dividends, the entire common stock an which they are drawing dividends, this §70,000 a mile which represents the franchise—that is, the result ot their power to take tolls, and that $70,- Have You Said Your Say? Everybody is saying Zu Zv How about you? Don't let procrastination stand between you and the best ginger snap you ever tasted. Go to the store stand in line. and When it comes your turn give up 5 cents Then go home and and enjoy yourself. NATIONAL BISCUIT COMPANY | ) of their value if the men who make the 000 & mile has been absolutely untaxed by the present respondents. Let us take thé Burlington. I cannot in the brief time permitted for this argu- ment say all that should be sald to show why this assessment should be increased. But T want to take up the Burlington road because the same effort to get & wrong judgment by misinformation is contained in the briet of the .Burlington—perhaps unintentionally, I don't charge counsel with intentionally trying to mislead the court, but here is a condition, as proved by the evidence: here. The. Burlington railroad all its stock, almost, 98 per cent of it, was sold to the Great Northern and to the Northern Pacific. It was delivered to them and placed with a trustee in New York Clty. To pay for it they fssued their joint obligations, the Great Northern and the Northern Pacific raliroads, bearing 4 per cent, and this stock was deposited as col- lateral. They pald for the Burlington stock 32 for $1. When the assessments of 1897 and 1898 were made in this state the Bur- lington stock was below par. The Burlington stock when this assessment was made was worth twice as much as it was worth in 1897 and 1898. I say that that stock at $200 share was a cash tramdéction. Why? Be- cause the ‘proot here stiiws that xny man that @d not want to tgie’ the obligations ©of the Great Northern and the Northern Patiftc, that the cash wis ready. It shows that they set aside $50,000,000 in cash to pay $200 for ench $100 share of that stock to any man Who did not want to take the obligations of these companies bearing 4 per cent fnterest. ' , But, your honors, that is not even a falr est, although it is the first test I going 'to apply to the Burlington raflroad. The miileage given here s uttefly incorre the Interstate Commerce commission has it right; Poor's Rallroad Manual has it right and if you will take up_ their second report and take out the leased lines you will get it right; take out the sécond track. The Burlington raflroad owns 7,894 miles of rallroad, or had when théy were assessed this year. I by the newspapers that they are getting hold of narrow gauge and Widening it out and the other day, I be- lieve, in Missourl, the néwspapers say they e getting hold of the K., C, & 0. But none of these companles are covered by the stocke or bonds of the Burlington and, hence, are not & proper matter to be taken into consideration. To get at the value per mile wo will first take the stock at $196. T took it half way between coun: figures and $200. That gives it, taking the stock of the Burlington, at $196. After that add to It the funded debt and divide It by and you will get the walue of the Bur- lington railroad to be $45,600 a mile. In other words, on a one-sixth basls it would 1 be assessed at nearly $8,000 a mile instead of about $4,300, as it is. But that {s not & true test. The Burling! ton rallroad is worth more than that and before 1 pass from the mileage I want to say to counsel I have included not only every mile of road that you gave when you made your last report to Poor, but I have included the road that was under construc- tion in Wyoming then and I suppose is in operation now. I sald this stock was all 8014 to the Great Northern and the North- ern Pacific. I sald it was sold upon & 4 per cent basis. Now, when the Burlington earns all of its operating expenses and when it earns enough money to pay inter- ést on its bonded debt and enough money is earned to pay 4 per cent on these joint obligations of the Great Northern and the Northern Pacific, the whole surplus goes to those who still own the Burlington stock. So when you figure this stock at $200 a share we are not figuring it right at all. It is worth a whole lot more than $200 =« share, You can’t buy any of it, It is not in the market, but the obligations given for it Dear 4 per cent and were taken at par, but this does not represent the net earnings, because there are millions of stock of the Burlington en top of that. Let ux take another basis, which I think is a fairer one. Take their net earnings for the last year and capitalize that upon & basis of 4 per cent. Put the value of the property st $400,000,000, which is more than $50,000 & mile, it will pay 4 per cent interest on that and leave you §1, of a surplus every year. So that on the very basis on which the Burlington rail- road was cashed in the market within a year, snd taking its present rate of net earnings, the Burlington will pay st the ordinary rates on momey on safe invest- ments at $50,000 a mile and sent $1,600,000 & year into the surplus fund. Or, if you will capitalize it stralght out upon the 4 per cent basis and fgure it up from an investors' standpoint, it is worth In the market $55,000 a mile. Of course this State Board of Equaliza- tion didn't kn the rallroad cor- poration didn’t w them to know It, and because they didn't, they didn’'t want to know it. How could these men assess this property without kuowing its value? How n tell what to assess any property for until he ascertains its value? You say you will assess property at one- sixth of its value. How cam the state essment do not know its value? It the men who make the assessment will not inquire about the value? If the men who make the assessment purposely avold find- ing out the value of it? If the men who, make the assessment simply defy the re- quest that they find the value? If they refuse to make & record of their faflure to do these things? What stronger proof is needed of fraud and collusion between them and the transportation company whose property they have exempted simply because they have rvefused to find the value? 1 want to say to the court that the first thing and the most important thing, in my judgment, that should be contained in this writ, 1t your homors should conclude to grant it, is this: First, that the board fix the value per mile of overy raflroad in Nebraska. That is the first proposition. You never will get a just assessment in this state until the state board first fixes the value per mile. After that they can equalize it In the eame ratio as other property is assessed in the state. But the first basis, the first thing and the first prerequisite to be exercised by an intell gent judgment in the matter of an asses ment is to ascertain the value per. mile of every railroad in- the state. The Missouri Pacific, in the same way, is| worth at least $60,000 a mile. The Rock d can be s0ld in the market for $53,000 a mile. Yet both of these roads are as- sessed at less than 10 per cent of their| value. The Omaha is earning interest upon more than §50,000 per mile. The preliminary | reports for this year, ending on June 30,/ indicate that it is worth $60,000 & mile. Yet | 1t ia assessed for 35,200 a mile. The entire purpose from beginning to end has been | simply to let these people practically fix, their own assessment without reference to| their value, without any consideration for what the value of the property was, because | this board mow admits that it does not] know, that it never did koow, that 1t never tried to know what these rallronds were | worth per mile. That is the kind of a State| Board of Equalization that will satisty these | transportation corporations.. The kind of a man they want is a man who doesn't know and doesn’t want to know. And that Is the kind of a board we are arralgning here. What 1 have sald of these roads applies also, though with less force, to the gmaller roads. Because there is no guestion even when you get among raliroads that the blg- | ger the road the bigger the sinner. Now | you take the Burlington. They have a) ranged this thing in such & way that if man didn’t want to know he easily couldn’t know the earnings that they have made. The only earnings of the Burlington that we bad were the earnings back a couple of years ago when they separated the B. & M. from Kearney down to Plattsmouth from the balance of the road. Now do you know how they fixed that in order to get these valuations? Why they showed that the road from Kearney down earned $12,000 & mile net oach year. Why did they do that? They knew there wasn't much danger that any railroad in Nebraska would be assessed for more than $10,000 & mile, they were not afrald it would be pushed up higher if any, than the Union Pacific, so they practically shoved the whole earnings of the state into that 191 miles from Kearney to Plattsmouth and sald if they do stick us up there & thousand or two we will get off for three or four thousand & mile for every other mile of the 2,400, We can stand that on 191 miles if the other mileage can be assessed on the theory that it doesn't earn any money. And you take it right through, that is what it shows. Why you would almost have sympathy for these rallroads if you would read that report and you would won- der what jealousy there must be in order to let this road earn over $13,000 a mile, while the balance of the system ifi the state was practically bankrupt. There was a purpose in that, and the purpose was to evade taxation. And so they have taken in the Chicago, Burlington & Quincy, which earns all of this money, whose treasury it finally reaches, whose stockholders finally get the dividends and who make the profit upon the road; its tranchise that collects this tribute and tolls from the people, its franchise 1s not asseesed, Its property s mot ai simply ffteen dead corporatio one man out of fifty in Nebraska ever heard of one of them except the B. & M. Who knows where the Oxford & Kansas is Why, of these corporations assessed hers nobody knows anythisg about them. They have mo rallroad, they run no railroad, they exercise no franchise, they couldn't assess the franchise of these fifteen corpo- rations because they are dead. They are in the same condition that the old Union Pactfic was—they have passed out' of ex- istence, and that is why their franchise was was not assessed—because there ia none there to assess. They have ceased to ex- ercise thelr franchise in this state, These fitteen subsidiary corporations organized merely to exercise the 1ight of eminent do- main in this st have been turned over, the Burlington report says, to the great parent corporation, the Chicago, Burling- ton & Quincy, and that is the road whose franchise should have been assessed, and tax sixteen tmes as high as the Unicn Pa~| board assess these rallroads at oume-sixth | not ome dollar of property, franchise, tan- gible or intangible, is assessed sgainst the Chicago, Burlington & Quiney. So that ‘when they come to Teassess Rere, if your honors shall see fit to award the writ, it will be thelr duty not simply to mssess thesc dead corporations, but to assess this entire property as a live, golng concern with & valuable franchise, as a dividend- paying road, not these fifteen dead corpora- tions, but the Chicago, Burlington & Quiney. Something has been sald here of assess- ments in other states and I belleve we bave the assessment from Missouri offered in evidence. The rallway assessment in Mis- souri, at any event, Is about §12,200 a mile. I don't know as this amounts to very much one way or the other, or proves very much because In the end the test is whether these rallroads are paying their fair share . of the taxes In proportiop to the value of their property when compared with other property in this state. The Unlon Pacific has & half mile in Missourl and for that half mile it is assessed $190,000. Why, that ope-half mile is assessed at much in Missour!, in fact more than all the termi- nals in Omaha and for twenty miles west of it on the Union Pacific, although it is only a branch. For some of the smaller roads it may, be said that they earn on & smaller basls. That is true; but when you get the net earnings and when, as counsel seem to claim, that the franchise was considered, have you considered the franchise and net earnings? “Not at all, the net earnings are simply one guide to the value of the prop- erty, but, as pointed out by Judge Miller in the T. B. & W, case in Illinels, ' road may lose money for two or three years, but It may have a bright future, It may be In a territory which is developing and growing and in the future it may pay large dividends and be profitable to the owners, and when that condition exists the franchise has a value that should be taxed. And so it ia with some of these roads here, as 1 have illustrated in the case of the Union' Pacific.- .Suppose the Union Pa- cific charter was to expire on the first day of January mext. The Union Pacific raflroad would earn just as much money this year as ever. The earnings would be just as large but what would the stock of the Unfon Pa- etfic be worth? It would be worth just what it would cost to duplicate the property, be- cause .of the knawn fact that the franchise was aboyt to expire, just as It expired be- fore, And the stock would go, as it did be- fore, down to $4 or $5 a share where some people thought they ought to take it in for the purposé of getting on the inside in the new organization. That is all it would be worth, Sqg the fact that it earns money, while that is one guide and s very im- portant guide In determining the value of a going, living concern, yet it is not the only guide. But the capital stock, the fal value plus the bonded debt capitalizes the whole thing and you get the value of the en- tire property including the perpetusl fran- chl One more thought that I wish to urge and then I will leave the balance of the time to my associates, and that is the question of the assessment of property within the cities of Omaha, South Omaba and Lincoln, if in the judgment of the court it properly arises in this case. I think with one view of the case it might arise; In another be determined to have that case left for ai gument in a subsequent case, I think, however, it could be disposed of in the case nere. The constitution provides in the fevenue section for ordinary taxation, and then by section 6, article IX, it provides for munici- psl taxation, and.is as follows: ‘The legislature may invest the ocorpo- rate authorities of cities, towns and vil- o proverty benefited. r all other corporate purposes, ail munioi- pal_corporations may be vested with au- thority to asseas collect taxes, but uch taxes shall be uniform in respect {0 persons’ and property within the Juris- dleflon of the body {mposing the same. The court will notice that the provision relative to municipal taxation is very dif- ferent from that relative to general taxa- tion which refers to state and county tax- ation, where the.constitution by its express terms leaves the manner of determining that entirely to the legislature. And under that power the legisiature has the right and it is proper that it should, for county and state purposes, because the counties are only portions of the state carrying on that is, havi to help bear some of the expenses, such looking after the insane and unfortunate, upholding the criminal laws, maintalning peace throughout the state. It is the coun- ties that do all these things, it is not the municipalities; so for all these purpos all the counties are mere subdivisions of the state subdivided for the convenience of not enforce the criminal laws; that burden is pot placed upon them, but they bave burdens of & more serious character, and the framers of the constitution having that in mind, provided that for property within the municipality authority might be glven to the cities to as the same, but it must be done in such a way as to insufe absolute uniformity to all property within the limits of that corporation. Taking the city of Omaha for example, here are these companies with property which it is evident that all of them, com- bined, is worth willions of dollars, Thia Unjon Pacific bridge . transports mot cnly the persons and property in conpection ~ With the Unlon Pacific ratiroad, but that of five other great transportation corporations, a property 1 suppose worth at least a couple of mil- lions of dollars, and perhaps more; and yet the west balt of that bridge within the city of Omaha which pays city taxes for the sup- port of that municipal government, pays than the home of the man who has a $5,000 place. That is not uniformity—that s, the bridge is not taxed in uniformity with the property within that corporation. That city has othing in common so far as muplcipal purposes are concerned, with the balance of Douglas county, it has nothing in commoén with the balance of the coun- tles In the state. The powers exercised are absolutely separate and distinet, its duties are different from those of the state or the countles that are carrying out the policies and purposes of the state o that our contention with reference to all of this property, that it is fair to the people .of Omaha and 1t is not unfeir to the peepls living in the country counties in Nebraska at all, that it makes no difference to them and it i only fair to the other property owners in Omaha, South Omaha and Lin- coln that all of these immense. propertics that get protection from the city goverm- ment rhould have to bear their share of municipal taxation, bear their share of mu- nicipal burden the same as any other prop- erty there, If they need police protection, the police, furnished and pald for by public taxation on the property within the city of Omaba, is at their beck and call, If they need pro- tection from fire the whole fire department of Omaha, supported not at the expense of the state; not at the expense of any county, but at the expense of the taxpayers of Omaha, is at the service of these copora- tions, If water is needed, it would be for the purpose of suppreasing that fire, the water is furnished and it is pald for, the whole department s kept and the charges @re pald by taxation within the city of Omaba for munieipal purposes. 8o that we contend that this property getting the same protection in every respect as all other property within the state, getting what Is known as municipal protection as distin- guished from state protection carrfed out by the county, whtle it should be assessed and distributed over the lines for state and county purposes and treated as a unit, yet, under the rule of the conmstitution, which' says that all property shall be assessed aniformly, this property shall be assessed in the city of Omaha for municipal purposes at the same ratio as property of other tax- payers of that city pay within the corporate lmits. If that be true, it s the duty of thess as- sessors to assess It in that way. If the ex- emption be uncomstitutiondl then the ecity assessor can take it up and assess it in that way, whether it be flnally, determined in this case or not or whether it be left for some subsequent time. But It seems to me it can be determined in this case. T think it is within the plain mandate of the constitution. So plain that there Is no room to read between Lhe lines, that all property must be taxed with uniformity for munies 1pal purposes. I thank your honors. Baer Goes to New Field. NEW YORK. July 15.—John Willls Baer, secretary of ristian Endeavor so- clety, has it one as assistant n Board of Home take up his new dutles on Octol Business K at Topeka. TOPEKA, Kan., July 15—The Kaw has fallen two feet since midnight and busi- ness along the river front is resuming nor- mal conditions. ~ All trains are running again with slight delay. QuickColds A draught, a quick cold; Ayer's Cherry Pectoral, a quick cure. Get well before you have to think of weak lungs, bronchitis, pleurisy, pneumonia. Ask your doc- tor what he thinks of this advice. If he has better, follow it. If not, follow ours. hed e found Ayer's Cherry Pec- toral the best all-round remedy for la glgr. bronchitis, and other lung oubles that 1 have ever used, It has benefited or cured in every instance. —M. Lodeman, M.D., Ithaca, N. Y. 25, b, Sl 4. CAVERCO. Lawsll Mase