February 12, 1910





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Vol.   LXXXV.





FEBRUARY   12,   1910-.





No.   2187





IT is much to be hoped that the existing labor troubles
in the building trades will not involve a downfall of
the General Arbitration Plan. Under the operation of that
plan the building trades have enjoyed a period of rest from
labor disputes that has been as advantageous to the union
mechanics as to their employers. The latter have been
spared the losses ■which the formerly suffered through
petty strikes, and have been able to make bids upon pro¬
posed work without allowing for strike delays and expenses.
The mechanics, on the other hand, have secured steady
and remunerative wages, and have been able to obtain
increased pay whenever they could advance a valid claim
for more money or fewer hours. The consumer of build¬
ings has benefited, because he obtained his building more
nearly on time, and because the contractors were able to
give him lower figures. An arrangement of this kind,
whose operation has stood the test of so many years and
has been so successful, MUST BE RETAINED; and if neces¬
sary it must be retained at the expense of a prolonged
labor war, A return to the conditions which prevailed
from 1900 to 1903 is inconceivable, and the avoidance of
such a calamity is worth any sacrifices which it may cusl.
The employers' association has the power to keep the plan
effective, and it should not hesitate to use its power to that
end. The benefits of the Arbitration Plan are worth
fighting for. Everybody interested in real estate and build¬
ing will hope that the fight can be avoided, but it should
not be avoided in case the success and the authority of
the arbitration machinery is thereby weakened.





THE WHOLE QUESTION of the local taxation of real
estate and personal property is raised by Mayor Gay¬
nor's letter to Tax Commissioner Purdy. In that letter
the Mayor asks for information as to the effect of the com¬
plete abandonment of the taxation of personal property in
New Tork City, and it is evident that thei Mayor himself is
inclined to approve of such a measure. There is undoubt¬
edly much to be said in its favor. The existing laws
taxing personal property work badly from almost every
point of view; and they are universally condemned both
by experts in taxation and by the actual administration of
the law. The personal property tax has about every dis¬
advantage which any method of raising public revenue
possibly can have. Only a very small proportion of the
property which the law proposes to tax is actually reached
by the statute; and personal property owners have good
grounds for evasion, because if it were fully collected, its
collection would mean either an intolerable burden to the
property owner or flagrant double taxation. So far as it
is collected, its incidence is unequal, and falls largely upon
estates belonging to widows and minors. Por the city it
is a wholly uncertain source of revenue. The city does
not, and cannot, actually collect more than half of the
small sum which it ostensibly should collect; and real prop¬
erty owners are now suffering from the burdens conse¬
quent from entering on the books of the city suppositious
revenues which eventually have to be paid by real estate.
It is probable, as Mayor Gaynor points out, that the entire
abolition of the personal property-tax would not raise the
tax-rate more than a few points, and action of this kind
would, at least, have the immense advantage of removing
one source of unsound municipal finance. The question,
however,   is,   How -can   the   proposed   change   be   brought





about? The Legislature has always refused in the past even
to consider the abolition of the general property tax; and
it has been equally determined not to grant to any muni¬
cipal authority loca! option in matters of taxation. Assum¬
ing that the Legislature will persist in this attitude, what
can the Tax Department do? It must try to execute the
law; and as long as it tries to execute the law, it remains
dedicated to the task of assessing taxes which, for the most
part, are evaded or are not collected. It remains to fee
seen whether the present Mayor and Tax Commissioners can
flnd any way of breaking the bonds which have in this
respect tied the hands of their predecessors.





STRONG as are the arguments which can he urged in
favor of the abandonment of the personal property tax,
it can hardly be expected that the owners of real estate will
enthusiastically favor the proposed change—particularly as
this change is advocated partly on the ground that the
owner of real estate will not be able to shift this proposed
increase in taxation to the tenant. During the past three
years the tax rate has been steadily climbing. Tax bills
have been increased by almost one-sixth during that period;
and from various causes it looks as if still further increases
were to be expected in the normal course of municipal busi¬
ness. In addition the tax-payers are threatened by an agi¬
tation, which has not been wholly discountenanced by the
city authorities, and which proposes to pay a great many
more millions ot dollars out of the City Treasury to a
certain class of school teachers. If in addition to all these
other burdens the tax rate is further increased by assess¬
ing on real estate the several millions now collected from
personal property, the outlook will become discouraging
enough to seriously affect the real estate values in New York.
Admitting that the proposed change looks in the right direc¬
tion, the time for effecting it should be selected with ref¬
erence to its probable immediate results. Just at present
real estate owners are staggering under an enormous recent
increase in burdens, and a prospective increase which looks
equally disturbing. In case still further burdens are added,
the investment of capital in real estate and buildings will
be discouraged, and the general prosperity of the city threat¬
ened and diminished. It is not too much to say that the
whole scheme of local municipal finance is in danger of
breaking down. Our American cities, and particularly
New York, are called upon to perform an enormously in¬
creased number of services for their inhabitants, while at the
same time they derive but small returns from many general
sources of municipal revenue, such as franchises, which in
foreign cities help to pay the cost of these increased bur¬
dens. The whole expense falls upon the owners of real
estate, who at the same time are being vexed and injured by
an increasingly restrictive use of the police powers of the
state. Before, consequently, they are asked to pay the
millions of dollars now collected from-personal property, it
would be well to inquire what the effect of such increased
taxation would be, and to what extent they will probably
have to submit during the next few years to other in¬
creases in taxation. It is right and necessary that real
estate proprietors should be drained to the limit lor the
support of the municipal government; but it is equally right
and necessary that the limit should not be exceeded.





THE subject of possible legislation at Albany, in which
New York has the most interest, is undoubtedly the
method whereby the Legislature will give effect to the con¬
stitutional amendment in respect to the debt limit accepted
by the voters last fail. The question is: How are those,
the self-sustaining subways and docks, which are to be
left out of the reckoning of the net debt of the city, to be
determined? A bill, introduced at the solicitation of the
Citizens' Union, proposed the judicial rather than the ad¬
ministrative determination of these subway and dock im¬
provements, which can be constitutionally deducted. The
principle of this bill is undoubtedly correct. Before any
stock issued for subways or docks is declared to be ex¬
empt, the city authorities should be obliged to prove in
court that the improvements are self-sustaining and have
every prospect of continuing to be self-sustaining. More¬
over the same rule should be applied to any future improve¬
ments of the same kind. In case the city should decide to
build a subway at its own expense, the money appropriated
for the construction should be included in the estimate of
the net debt of the city, until the subway has been operated
for a definite period. If after the expiration of the period
the revenues from the subway are sufficient to pay for the





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