"Things went well until other classes of property arose under other economic conditions. As money increased and property decreased, our taxes have increased at least in like proportion. The tax laws for many years in operation in this Commonwealth, and now on the statute books, direct that the assessors of taxes in the municipalities shall value on full cash value the following principal classes of property each year:

(1) Real estate. That, as you know, means land and the things erected on it, or affixed to the land, or buildings, that is, real estate. (2) Personal property which are divided into five or six principal classes as follows:

(a) Stocks of merchandise.

(b) Live stock.

(c) Furniture and household effects.

(d) Net credit - the amount due in excess of that which you owe. (e) Your income from your profession, trade, or employment in excess of $2,000.

(f) Shares of stock of certain classes of corporations not exempt from taxation.

"The assessors of your town are required to go about the town, visit the property of citizens each year, and write down on their books, according to their knowledge or their judgment, all estimates of the fair. value of all these different items. The assessment of real estate is difficult enough but, on the whole, fairly well accomplished here. Assessments of stocks of merchandise is somewhat more difficult, but even that is done with a tolerable degree of success. The troubles of the assessors begin when they have to see that which is unseeable and know that which is unknowable, and unscrew that which is unscrewable. Their troubles are concerned with the assessment of those classes of personal property which you do your best to cover up, and which they, even if they did their best, could hardly uncover, and, as the gentleman said in the room above a few minutes ago, that he thought the historian of some future day would say Massachusetts was a community of the greatest untold wealth, I agree with him.

"With the arrival of credits and securities, that standard for taxa-. tion which had proved good in the simple days, began to break down. Credits and securities have multiplied during the last seventy-five years until, at the present time, there can be no doubt that more than half. the wealth of Massachusetts and the citizens of Massachusetts exists in the forms of credits and securities, shares of stocks, bonds, debentures,, or other evidences of indebtedness, which securities and credits derive their only value from the fact that they are paper evidences of property, and not wealth in their own right, and, under our Constitution, we have been repeatedly told by the Supreme Court that we cannot distinguish. between those classes of property which have value in their own right: and those other classes which have value only as they are evidences of something else of value. Do you get the point? Your land, your build-: ing, and your stock of merchandise, the things that are in Massachusetts,

where you live, the things with which you live, which carry on your industry and do your work for you, they are invested capital here, and are here performing their work as invested capital, but what about your Pennsylvania bond. There is no part of the Pennsylvania here. When you bought that bond you took $1,000 out of Massachusetts and sent it to Pennsylvania or Illinois, and out there it became invested capital, and started in out there to do its work as capital at will. Out there it became subject to taxation, and has been actually taxed, and the laws of the Commonwealth of Massachusetts say it has a value equally here, and that, although the only thing it does is to produce income here, yet it must be taxed upon its full capital value, at exactly the same rate in Massachusetts, as if that property actually were here, working as invested capital. The great distinction which exists, and which nobody can deny, between wealth and evidences of wealth, we cannot recognize under our tax laws.

"I might go into all sorts of details as to how the tax makes trouble, but I am satisfied the cause of the whole of our difficulty comes down to this. It is a fact of economics that there is a difference between property and wealth, a difference between that with value in itself and that which is only an evidence of value elsewhere, and that great distinction is as wide as the world and which cannot be controlled in the slightest degree by the State or the Legislature. The Legislature has asked the Supreme Court whether it is possible to make that distinction, to separate those things which are evidences of wealth and those which are wealth, and to tax one as evidence and one as the thing itself, one on account of its capital value, and the other on the only thing it produces in Massachusetts, its income, and the Court has said with the Constitution unchanged that distinction cannot be made, and that is why we are in trouble, and we will be in trouble always until Massachusetts squares itself to the principles of economics, which are to be much more considered than anything else. We have been trying here for a hundred years to say that we will set aside the laws of economics which are fundamental, and that we will try to secure our revenue equably, in accordance with the system which we have outgrown, and which has never been made to work in any community, in any country, where there existed side by side property of value in its own right and property which is an evidence of wealth elsewhere.

"What is your bond of the Pennsylvania Railroad taken at in Massachusets? At your income from it, that is all, and as long as your $1,000 remains a part of the Pennsylvania Railroad in Pennsylvania, the only thing that exists in Massachusetts is the thing that counts to Massachusetts, the $50.00 income, - and our tax laws say that the $1,000 which is out in Pennsylvania is here also, and taxes you accordingly. The result is that you don't want it known that you own that bond, and if you do own such a bond you see to it that the assessors don't know it, because with a $20.00 tax rate, it means that out of that $50.00 we give up to the municipality $20.00, and have a three per cent investment for

ourselves, and we don't like that, and don't believe it is necessary for any community in the State of Massachusetts to take forty per cent of our income in order to support the government, and it is not. So the great majority of us escape taxation on our bonds, and those who do not are those who have been unfortunate enough to have brought their estates to view, and in a way they could not avoid.

"There are a few who are so dead honest that they come in and make the sworn statement required by law, and expose their own property to this kind of taxation which takes from thirty-five to sixty per cent of income. They may get some satisfaction in their conscience, but very little approbation from their neighbors.

"We made up in the office a little while ago, for purposes of figuring taxes, a typical estate composed of some real estate, a mortgage and some securities, the same as any of you might own, and we subjected it, theoretically, to taxes in three or four places in the State. In the town of Orleans, which you may have heard of, and of which some of you are legal inhabitants, we found in 1914 seven per cent of the income of that estate would have been absorbed in taxes. Nobody would object to that. Woburn with a $26.00 tax rate would have collected sixty-one per cent of the income. Woburn is a little excessive in its rate; but in any $20.00 rate city, forty-seven per cent of the income would have been absorbed in taxes. That was an estate the same as any of you rich people might have owned. We thus have a tax system in Massachusetts which allows the same estate to contribute seven per cent in Orleans and forty-seven per cent in any town with a tax rate of $20.00 per thousand, and sixty-one per cent where the rate is $26.00 per thousand, and we call that 'proportional taxation,' and it is, as the Supreme Court has said.

"There are some of us who would like to get away from that system. I don't know whether you would like to or not, but believe me, we in any way responsible for the interpretation of such a law would like to get away from it, and the Legislature last year seemed to have an idea that it would like to get away from it, and passed last year a constitutional amendment which gives to the Legislature power it does not have now, power to assess classes of property in different ways, any classes it may select, with ratio to the income produced, and to exempt such classes of property from other taxation, and to make this tax just the same rate in Orleans as in Woburn; or, if you like, the other way. The Legislature has not that power now.

"The constitutional amendment passed last year is designed to give that power to the Legislature. That constitutional amendment is before. the Legislature for action this year. It has already passed the Senate. Next week it will be up for action in the House. It is a little ominous that we have not heard of any opposition. I have been on Beacon Hill long enough to know that if you don't hear anything about opposition you had better look out, and I don't think we have gotten so far along in this solution that any one can afford to assume that that thing is going smoothly through the House. The thing for us to assume is that it has

not gone through yet, and if any of us have any influence which we may properly use with members of the House, it is not too late, or too early, for us to use it between now and next week, in order that the members of the House may be advised of the seriousness of the situation, and the necessity for a remedy.

"Mr. Cushing said, downstairs, that he thought if this constitutional amendment was defeated in the Legislature now, or rejected by the people next fall, there would be little chance of getting nearer the solution of the problem for pretty near a generation. I think he is right. These are the days right now when it may well be that we shall determine for ourselves and our children, whether it is going to be possible for the Legislature, if it wants to, to establish an equable system of taxation in place of that which we all know to be unjust, even though it may be in line with, and agrees with, the necessary interpretation which has been given to the word 'proportional.' If the kind of system we have is proportional, God save the Commonwealth of Massachusetts, and let us forget that word 'proportional.' Let us get some of it, at least, out of the Constitution.

"It may seem strange to you that we have not taken this action before. I think I know the reason. Even such good citizens as belong to the Boston City Club, a good many of them have absolutely failed to think and to talk on matters of taxation in terms of Massachusetts, and have done their thinking and talking in terms of their little bit of a business, or their municipality. I doubt not there are such individuals now who can't see any farther to the tax situation here than the town of Orleans, and so are satisfied with it; and I doubt not there are some people also who can see nothing further in the tax problem beyond the fact that their own business, because of some peculiar situation, pays a small tax, and that makes them satisfied.

"I am confident there is no public question with which we have to deal which calls so loudly to the citizens of Massachusetts to think and talk and act in terms of the whole State of Massachusetts, and if we do that, the next step is the approval of the constitutional amendment in the House, and its approval by you next fall. If we do that I am satisfied we shall be able to teach the rest of the country something they have not yet learned about taxation, as Massachusetts has so often and so well done in other fields of public endeavor."

HON. LAWSON PURDY

President Dept. of Taxes and Assessments, New York City

"It is a very rash man that will come from New York at this time and advise other people about their constitution. We have a constitutional convention of our own in session. Our Constitution is very satisfactory to me as it is. I hope they will do nothing to it. It is almost as good as that of Connecticut. The word "taxation' does not occur in the Connecticut constitution, nor does the word 'revenue,' so

the commission tells me our Legislature is unrestrained. They have. never done anything reckless. I feel perfectly confident that the Legislature of Massachusetts will never do anything rash.

"I have heard much of the word 'proportional' in your Constitution. If I could have my own way, at least so I feel from my own experience, I should rather eliminate that word 'proportional.' With your Constitution I should be glad to see anything done to it, but I do not feel so confident about our own. I may not be in a position to brag in Massachusetts from now on. Times have been hard in New York. There has been much lack of employment, many tenantless houses, very little to do. The devil finds work for those who have little to do. Hence, with discontent rife in the city and State, some enterprising gentlemen this winter tried to turn our tax law for the State upside down. After they had finished with it, it was damaged a little, but not very materially changed.

"They are busy now over the Constitution. There are always people, especially when discontented, who seek to alter the whole Constitution and the course of nature by statute or amendments to the Constitution. I hope no great harm comes to our Constitution. I still have much faith in our Court of Appeals and that they will best the interests which seek to change it, or which we have heard so much of late, and that they will adhere to the theory that the Constitution is a structure of law and nothing more, as it is, in the main, throughout New England.

"Your troubles are due to accident rather than design. It might interest you a little to know how different our tax law is from yours. Not that you would wish to copy it, probably. But we are happily free from some of the troubles from which you have suffered, and it would seem to me that, even under your Constitution you might have some of the things we have. For example we have never thought the stock of a foreign corporation any more than the shares of stock in the hands. of an individual of a corporation which is taxed on its capital should be taxed again by our State. We always considered the one tax enough.

"It was not clear to some assessors about forty or fifty years ago that that referred also to the shares of stock of a corporation organized under the laws of another State, and so these assessors attempted to assess the shares of a foreign corporation in the hands of a citizen of New York. Our Court of Appeals, however, as it seems to me, very conservatively decided that the shares merely represented property somewhere, and it was to be presumed that property was dealt with by the laws of the State in which it was situated, in accordance with their best judgment, and that the shares could not be again taxed in New York.

"Nine years ago we followed in part the good example set us by Massachusetts and exempted all mortgages, but only after the payment of a recording tax. That was a compromise to the belief that