ART. VII. SEC. 5. State credit not to be loaned. ART. XII. SEC. 1. Creation of corporations by special laws forbidden and all such laws may be altered or repealed. SEC. 2. Charters or franchises not to be extended or forfeiture remitted. SEC. 9. State can not be a stockholder. SEC. 10. Right of eminent domain to apply. SEC. 13. Almost identical with section 21, Article XIV, Alabama. SEC. 14. Pooling of earnings forbidden with any common carrier. SEC. 15. Discrimination in rates forbidden. SEC. 16. Consolidation of competing lines forbidden. SEC. 17. Rolling stock, etc., personal property. SEC. 18. Legislature to pass laws for regulation of fares and freights. SEC. 20. Free passes to members of legislature and public officers forbidden. SEC. 21. No discrimination against express companies. SEC. 22. Trusts and monopolies forbidden. WEST VIRGINIA. ART. XI.-Corporations. SEC. 1. Corporations to be organized under general laws. SEC. 8. Rolling stock, etc., considered personal property. SEC. 9. Railroads declared public highways. Legislature to make laws establishing reasonable maximum rates and the preventing of abuses and discriminations. SEC. 10. Legislature to require railroads running within one-half mile of a town or village to establish a depot. SEC. 11. Consolidation with parallel or competing lines forbidden. SEC. 12. Right of eminent domain to apply to property and franchises of railroads. NOTE.-About half a dozen other constitutions contain provisions of a similar nature. Usually 3 miles is the distance taken, and the county seat the point concerned. They are to pass through latter in one instance "if no natural obstacle intervenes." (See sec. 9, Art. X, Texas.) Organic act, section 6. * * * OKLAHOMA. "This further provided that the legislature shall not authorize the issuing of any bond, scrip, or evidence of debt by the Territory, or any town, city, or county therein, for the construction of any raiiroad." NOTE.-The organic codes of New Mexico and Arizona contain no mention of railroads. WISCONSIN. ART. XI.-Corporations. SEC. 1. Corporate powers not to be granted by special act, and all general laws changed or repealed at will of legislature. ART. IV. SEC. 31. Special legislation forbidden for granting corporate powers, except to cities. ART. VIII. SEC. 3. State credit withheld. WYOMING. ART. I. Declaration of rights. SEC. 30. Monopolies and perpetuities.-Perpetuities and monoplies are contrary to the genius of a free state, and shall not be allowed. Corporations being creatures of the State, endowed for the public good with a portion of its sovereign powers, must be subject to its control. ART. III.—Legislative department. SEC. 27. Special and local laws prohibited. The legislature shall not pass local or special laws in any of the following enumerated cases: A long list of subjects is here enumerated, including "the right to lay down railroad tracks, or any special privilege, immunity, or franchise whatever, or amending existing charter for such purpose." In all other cases where a general law can be made applicable no special law shall be enacted. SEC. 39. Political units prohibited from aiding railway construction, or loaning credit or otherwise contracting an indebtedness. ART. X.-Corporations. SEC. 1. Corporations organized under general law. SEC. 2. All franchises subject to control of legislature. SEC. 3. All previously granted special charters, not yet in actual operation, declared void. SEC. 4. Laws, contracts, and agreements limiting liability, illegal. SEC. 5. Full acceptance of constitution before business can be transacted. SEC. 6. Corporations engage in only one line of business specified in charter. SEC. 7. Agencies of transportation and communication declared to be common carriers. SEC. 8. Combinations to prevent competition or influence prices prohibited. SEC. 9. Right of eminent domain and public use to apply to corporate property. In addition the constitution of Wyoming contains nine sections specially devoted to railways, as follows: SEC. 1. Grants power to construct, operate, intersect, connect, etc., without discrimination. SEC. 2. Railways and telegraphs declared common carriers, "and as such must be made by law to extend the same equality and impartiality to all who use them, excepting employees and their families and ministers of the Gospel, whether individuals or corporations." SEC. 3. Shall make annual report to auditor of the State. SEC. 4. May exercise right of eminent domain, but legislature reserves power to subject franchise and property to public use. SEC. 5. All political units enjoined from aiding by donations, loans, credit, etc. SEC. 6. Constitution must be accepted before business can be done. SEC. 8. Foreign corporations must appoint legal representative in State. SEC. 9. Depots to be established when railways run within four miles of a town. "No railroad company shall deviate from the most direct practicable line in constructing a railroad for the purpose of avoiding the provisions of this section." TAXATION OF TRANSPORTATION COMPANIES. A Report Prepared under the Direction of the Industrial Commission, by ROSWELL C. MCCREA. Page. CHAP. E. Other expanding practices I.-Development of the taxation of transportation companies.. B. Second period-Increasing and more uniform taxation. D. Miscellaneous transportation and transmission compa- CHAP. II.-Analysis of present methods of taxing transportation com panies 1006 1007 1011 1012 1015 1017 1018 A. The property tax principle 1018 B. The income tax principle. 1022 C. The fee or benefit principle. 1028 D. Local taxation 1030 B. Double taxation by competing jurisdictions CHAP. V.-Constitutional and statute provisions, by States. CHAP. V.-Constitutional and statute provisions, by States-Continued. Page. Bibliography. Tables showing methods of taxing transportation companies in each State. 1084 1080 CHAPTER I. DEVELOPMENT OF THE TAXATION OF TRANSPORTATION COM PANIES. In its report, issued in 1880, the railway tax committee1 asserted that "there is no method of taxation possible to be devised which is not at this time applied to railroad property in some part of this country." When this statement was made the States were passing through a middle experimental stage in their taxation of transportation companies; and though twenty years have since elapsed, another period of more definite experiment has only just begun. A chaos of tax systems almost, if not quite, equal to that which confronted the committee still prevails. But confused and confusing as railway tax laws have been and still are, both legislation and judicial decision give evidence of progress toward a better state of things. Even prior to 1879, the year of the activity of the committee, clearer comprehension of tax problems to be solved had already set on foot a movement for reform; and the past two decades have witnessed changes still more notably in the same direction. It is the general trend of these changes which this chapter attempts to describe. In the developing of its transportation facilities the United States has acted as a group of communities at widely different stages of industrial development. After the East had in a measure settled the question of an adequate transporta 1 The report of this committee was entitled Taxation of Railroads and Railroad Securities. The committee, the members of which were C. F. Adams, jr., W. B. Williams, and J. H. Oberly, was appointed at a convention of State railroad commissioners to report methods of taxation respecting railroads and railroad securities. Cor tion system the railway growth of the West was still in its incipient stage. respondingly, the East after continuous experiment was the first to devise definite methods of railroad taxation, some mistakes in the developing of which the States of the West were subsequently enabled to avoid. But in the main the general course of the development has been the same in both sections, and the same conservative attitude toward innovation is to be noted throughout. In tracing the course of this development it will be convenient to group the successive steps within two periods. To be sure, it will not be possible to assign any definite chronological limits to these separate stages; but the distinctive features in the process of change are so prominent as to group themselves broadly within the two periods which are here adopted. The first of these stages was characterized by the policy of subsidy and exemption from taxation and by the introduction of tax methods which were made to operate very leniently toward the railroads. This period may be said to have ended with the close of the first decade after the civil war. The second or pres ent stage has been characterized chiefly by the adoption and extension of definite methods of railway taxation, in the main distinct from the general-property tax as ordinarily administered in the taxation of individuals. A. FIRST PERIOD-PUBLIC AID AND TAX EXEMPTIONS. 1. State construction of railroads.-One reason for the slight progress which has been made in the field of railway taxation is to be found in the comparatively recent origin of the railway systems themselves. The building of railroads in the United States had scarcely begun before 1830, and, from the financial standpoint, it was not until after the period of the civil war that the ultimate success of the railroad experiment was assured. In 1830 population was sparse and the capital of the country was limited. At that time the States themselves were quite widely engaged in works of interna. improvement, but with the introduction of railways the States appear to have been averse to engaging directly in this new form of enterprise, with the result that the construction of railway lines was left chiefly to individual initiative.1 2. State and local aid.-Capital, however, in addition to the mere fact of its scarcity, was hard to secure for investment in an enterprise which gave no prospect of substantial or immediate returns. Under these circumstances, it was but natural that the various State legislatures should be impressed rather with the expediency of stimulating railway investments by special auxiliary enactments than of restricting their extension by the imposition of taxes. Accordingly, with a view toward encouraging the growth of a service which was seen to be of vital There are some instances of independent action on the part of States in the construction and ownership of railway lines, as well as cases where State policy looked definitely toward State ownership; but such instances are both relatively rare in number and almost entirely limited to the early period of railway construction. For instance, in Pennsylvania the canal commission was authorized in 1827 to estimate the expense of constructing a railroad from Harrisburg to Chambersburg, and in the following year the same commission was empowered to contract for the construction of a railroad from Philadelphia to Columbia. For a number of years after various appropriations for purposes of railroad construction are to be found in the State's general appropriation bills. In Georgia during the thirties the State, through the agency of a board of State commissioners, constructed the Western and Atlantic Railroad. This road was operated by the State until 1870. It has since been operated under lease by private parties. The rental for 1900 amounted to $420,012.. During the thirties Michigan projected an elaborate plan of railway construction under the direction of a board of internal improvement. This plan provided for the building of a northern, a central, and a southern road. The northern project was abandoned in 1841 and a wagon road constructed instead; but large sums were expended on the central and southern lines up to 1846, when they were sold to private parties and incorporated, respectively, as the Michigan Central and Michigan Southern lines. In both cases the State reserved the right to repurchase after January 1, 1867. In Massachusetts, to illustrate further, the State took an active interest, almost akin to ownership, in the construction of the Troy and Greenfield Railroad and Hoosac Tunnel. In 1872 the legislature provided that the interest of the State in the Hoosac Tunnel should never be sold; and since that time large sums have been devoted to the improvement of that line (e. g., in 1883, $264,552; in 1884, $66,000). In a number of instances early State policy in incorporating railroad companies looked toward the possibility of subsequent State ownership. For instance, during 1831 and 1833 New York, in granting the charters of the New York and Albany, the New York and Erie, the Utica and Schenectady, and other roads, reserved the right of purchase, to take effect within a period of five years, beginning ten years after incorporation. In Massachusetts charters of the early thirties the right of purchase was reserved for ten years (e.g., in the charters of the Franklin, the Boston, Providence and Taunton, the Boston and Lowell, and other roads). Similar provisions are to be found a few years later in charters granted by Kentucky and Michigan. In the latter State at least a single instance of actual purchase is to be found, namely, in 1841, when the State purchased the River Raisin and Lake Erie Railroad and joined it to the Southern State road. A recent instance of contemplated State ownership is furnished by Arkansas where, in 1897, a State board was created to locate, establish, and operate State railroads and telegraphs. 16A- -64 |