SCIENCE. 



[Vol. XVIII. No 449 



diminution in the cost helps him, and it also helps the in- 

 habitant of the city ; and while the latter profits by good 

 country roads he contributes nothing to their support, but 

 leaves the entire burden of constructing and maintaining 

 them on the farmers. 



Local management of these institutions, then, and the at- 

 tempt to make the localities pay for them, lead to two things, 

 relative overburdening of the farmers, and inefficient insti- 

 tutions. The general neglect of our country roads leads to 

 the massing of the population along the railroads, placing 

 them still more completely at the mercy of the railroad 

 managers than they are now. 



The thoroughgoing reform of our financial system means, 

 however, more than the mere utilization of the State govern- 

 ment in lifting the weight of local burdens. It means a 

 further utilization of the Federal Government for the same 

 purpose. Under the political system which we adopted a 

 century ago we distributed the functions of that time among 

 the national, State, and local governments in a way which 

 experience has shown to have worked very well down to a 

 recent date. If the economic conditions of a century ago 

 had remained the same until to-day, the system would be 

 still as good as then. But the railroad came in to modify 

 and change everything. Aided by the federal. State, and 

 local governments to the extent, in many cases, of building 

 their lines for them, they have continued to increase in 

 number and importance until they dominate our whole in- 

 dustry and government. Nothing can be done without their 

 consent. No problem can be solved without considering the 

 railroads. They have changed the centres of trade and in- 

 dustry. They have shifted the centre of agriculture. They 

 determine more and more the lines along which industry 

 and population must move. They have been built and are 

 now building, not necessarily in places where the true in- 

 terests of the country would have dictated, but oftentimes 

 where ideas of private interest, caprice, and fancy may have 

 ordered. They have built up great sections of the country, 

 it is true, but they have also ruined others. They have de- 

 veloped farmers on the icy plains of Dakota and on the 

 burning sands of New Mexico, but have driven a race of 

 farmers to the wall in New England, Pennsylvania, Dela- 

 ware, etc. I do not mean to say this is not good. It may 

 lie in the interests of the country to change the centers of 

 industry. But when this is done by a national policy it is 

 not fair to ask one class to bear all the burden. 



Now we have given to the nation the most fruitful sources 

 of revenue and to the community the heaviest burdens to 

 bear. The defence of the country against foreign aggression 

 has never been a very heavy burden, and it is destined to 

 become lighter and lighter; but the burden of keeping up 

 the educational institutions of the country, the load of keep- 

 ing up the means of local communication by the system of 

 country roads, the support of the courts open to all citizens 

 of the United States, the support of the poor, the blind, idiotic, 

 insane, etc., are heavy, and continually growing heavier. 

 To the federal government we have given the right to resort 

 to all sorts of taxation, — duties on imports, on domestic 

 products, on incomes, on lands, on polls, in fact every kind 

 of privilege in this respect consistent with the practices of a 

 free government, except taxes on exports. To the States we 

 have, it is true, also given the right to levy all sorts of taxes 

 except duties on imports and exports; but the industrial cir- 

 cumstances prevent us from resorting to the most fx-uitful 

 sources, to those places where the real wealth of the commu- 

 nity to-day lies. No State dares tax its domestic manufac- 



tures, for example, from fear that the manufacturers will 

 move into another State. We cannot levy an income tax, 

 for fear that the citizens will reside somewhere else. This 

 practically keeps us from resorting to the most fruitful sources 

 of revenue altogether. One may say. How is this dififerent 

 from the condition of things a century ago ? If our fathers 

 got along well then, why should not we now ? 



A century ago a State could resort to such taxes as it chose, 

 because the impediments to changing one's residence or 

 moving one's business were practically so great that nothing 

 short of the very heaviest taxation could move one to try to 

 avoid it by altering his location. To-day, on the contrary, 

 thanks to the railway, there is almost no obstacle to living 

 in one State and doing business in another. The merchant 

 in New York city can live in Connecticut, New Jersey, or 

 New York, or even Pennsylvania or Massachusetts, and still 

 be in New York every day for business. The citizen of 

 Wilmington can reside in Delaware, Maryland, Pennsylva- 

 nia, or New Jersey. Of course under such conditions the 

 various States have to be very careful about levying taxes, 

 and the possibility of adopting taxes which a century ago 

 were easy to use and collect is very much limited. 



In a word, our financial system and our industrial system 

 are no longer in harmony, and they are daily growing 

 wider and wider apart. The bodies which have heavy pub- 

 lic burdens have only limited financial resources, and those 

 which have large resources have comparatively few functions. 

 The places where the wealth is not are taxed, and those 

 where it is are left untaxed. Now there are only three ways 

 out of the difficulty. Either the functions of the federal 

 government must be increased to correspond with the greater 

 financial power of that body, or greater financial power must 

 be conferred upon the local bodies by allowing them to tax 

 imports from other States in order to enable them to adopt 

 an excise system, or we must collect through the federal 

 government those revenues for local purposes which can be 

 reached only through its agency. The first of these is un- 

 desirable, the second impossible, while the third is at once 

 practicable and possible. 



If we would have a reasonable system of taxation we must 

 entrust to each public body the collection of such taxes as it 

 can most easily raise. Thus the tax on land can easily be 

 raised by the local bodies, such as city, school district, town- 

 ship, and county. The taxes on corporations which do busi- 

 ness over a whole State, like the railroad corpoi'ations, cannot 

 be collected by the local communities. Nothing is more 

 ridiculous than for a township, for example, to try to collect 

 a tax on a railroad which runs through it. If it assesses 

 merely the value of the road-bed for what may be termed 

 ordinary uses, the assessment is, of course, ridiculously low. 

 If the local assessors attempt to assess such a part of the 

 whole value of the road as the local part bears to the whole 

 length of the liue, they have no means of compelling pay- 

 ment or of proving that their assessment is a fair or just one. 

 The only sensible thing is to allow the State government to 

 tax the railroads and divide the results of the tax among the 

 communities in the State. The same thing is true of other 

 sorts of taxes as well. 



In the same way the collection of import duties is one of 

 the most fruitful sources of taxation, and that whether you 

 take a so-called tarifl' for revenue only, or a so-called protec- 

 tive tariff. No State or local community can collect these 

 taxes, and yet to let these taxes go uncollected would be a 

 very short-sighted financial policy, since you can raise large 

 sums by this device without injuring the country at all. 



