FARM FINANCE 133 



Under these conditions rising land values and cumulative 

 taxation the land is slowly but surely passing away from 

 resident ownership to landlord ownership. Farm tenancy is 

 undeniably on the increase. 



Attention is called to the fact that without some mod- 

 ification of our present laws of taxation, the substitu- 

 tion of the European system of land mortgage will ma- 

 terially increase the possibilities of taxing fictitious 

 values. The lender creditor does not receive the ob- 

 ligation of the borrower debtor, who issues his obliga- 

 tion, namely, the mortgage to a bank, and this bank 

 in turn issues a second obligation, the collateral trust 

 bond or land-mortgage bond, to the real creditor, the 

 man who invests his money. If all these values are 

 taxed, the land, the mortgage, and the bond, we will have 

 increased the burden of taxation, which, under present 

 conditions, rests so heavily on the owners of mortgaged 

 real estate. 



DIFFICULTIES BY REASON OF STATE SOVEREIGNTY. 



The commission also calls attention to a difficulty 

 which will arise in the institution of a system of long- 

 term mortgages of an agricultural character in this 

 country by reason of our double sovereignty. Not only 

 are taxes laid by the nation in this country under vari- 

 ous forms, such as customs and internal revenue taxes, 

 taxes on manufactured products and incomes, but also 

 we have a system of wholly independent taxation in 

 the States, based on the theory of the absolute sov- 

 ereignty of the State. The State, however, delegates 

 its authority largely to the counties, so that special 

 taxes for special purposes may be laid in the counties 

 for school, road and other purposes, to be levied and 

 spent within the county. This multiple system of tax- 



