Columbia University Libraries Digital Collections: The Real Estate Record

Please note: this text may be incomplete. For more information about this OCR, view About OCR text.

166 Record and Guide. February d, IBM legiglation of the several States, The second Committee has just issued its preliminary report on "Valuation, taxation and exemp¬ tion in the Commonwealth of Pennsylvania." This Committee, of which Joseph D. Weeks, of Pittsburgh, is chairman, has accom¬ plished a great amount of work in a very short time and at a very small expense. To take a census of all property in the State would possibly have cost a million dollars. The amount of property has been computed with great apparent care, at a total cost of $J,300. A careful examination of the report shows that its results are based on a computation and not on a series of guesses. The assessed valuation of property in Pennsylvania has been about two billions and a-half. The report of tbis committee indi¬ cates tbat its real value is about $9,693,000,000. This includes all property, real, personal and mixed, and .no deduction is made of the $300,000,000 of property which has been specifically exempted from taxation by legislative enactment. The total taxes paid, including State, county and local taxes, are $49,383,000. It thus appears that if all property could be reached and assessed at_its real value a tax of one-half of 1 per cent would be adequate for all the public expenditures. One result of the general confidence with which the Conference seems to be regarded is an imusual willingness on the part of the various interests to answer the questions put to them. The rail¬ roads and tbe manufacturing corporations seem especially willing to give whatever information is needed. The committee appointed to formulate the principles on which a system of taxation should be based has not yet reported, but should they be able to formulate conclusions having the practically unani¬ mous approval of tbe Conference it cannot be doubted that such conclusions would be speedily crystalized into legislation. The interests behind tbem would be too strong to be ignored. Unlike tbe wandering "thoughts on taxation" which the average tax commission promulgates, the conclusions of this conference will have behind them the powerful influence of six of the greatest interests of the State, Bad as are the present provisions of the Pennsylvania law on the subject of taxation they are yet better than those of many States, Especially in the matter of taxing corporations, experts are of the opinion tbat the Pennsylvania system is as good as any yet devised. All interested in the promotion of good citizenship must wish that ber present encouraging experiment may result in giving her a tax system which it will he worth the while of other States to copy. Investments.—&ood and Bad. The reports for last year of the three most prominent coal roads whose stocks are actively dealt in on the New York Stock Exchange—Reading, Lackawanna and Delaware & Hudson—have all appeared within a few weeks;and have been critically examined wiih the view of findiDg;the extent to which each was benefited by the Coal Combination, Delaware & Hudson acknowledges an increase of $1,294,333 in its coal business for the year. Reading and Lackawanna are not so outspoken, though they caDnot al¬ together deny that they have profited by the increased price the consumer is compelled to pay as a result of Pres. McLeod's policy. Last year the amount of anthracite mined was nearly 12.(00,000 tons, and the price was increased on most sizes of the product at different times in the year until the increase amounted to from 75c. to §1 a ton. Supposing even that the amount marketed did not equal that mined, and as no increase was i n force in the first quarter of the yoar. it would still most probably be fair to say that the cash resu.tsoE the increasa was equal to 3Jc. per ton on the mined tinnage. Oa 43,000,OOO.tons this would be equal to $13,60 J.OCO to be distrib- utod among the coal producers. Reading and Lehigh Valley ruiued 685,953 tons less than in 1891, yet au advance of 30 cents per ton on the 15, l,i&,581 tous that they did mine would be equal to about Si.5LO,00 , or very much more thau the gross loss by tbe reduction in the amount mined. Even Jei-sey Central with au output of 5,271,131 tons and a reduction of ,7^6,837 tons from the output of the previous year would be more than com¬ pensated by an all round increase of 30 cents perton on the amount actually produced for the reductiou in tounage, the market price and the cost of producton being taken into account. Ihis very clearly illustrates the power put into tbe bands of thecoai-companies by tills combination. They may very easily limit production and compensate themselves by increased prices. For icstance, an agreement to limit the production of the current year to tbe amount produced last year aud to increase the price twenty-five cents would put §10,100,100 into the treasuries of the agi-eeing companies. With a fmther limitation of the supply the price might he still further in advanced to tbe greater enrichment, The annual reports of the Reading and Lackawanna make showings which might at first sight be attributed to the natural growth of such large enterprises without any combination to restrict tbe production of coal or to increase its price. Reading, owing to tbe Coal and Iron Lom. pany having paid its own way last year instead of calling on the con¬ trolling company to make good a deficiency, as has been tho habit of that institution, was able to pay full intei'est on all its three issues of income bonds. But the amount of money this called for in excess of tbe interest paid on incomes for the year 1S91 was only about $1,500 000. Actually the net earnings as reported did not increase last year so much bs they did in the preceding year, the increase being $i,fi33,2i3, as compared with ¥3,303,039 in 1891, when the combiaation-did-aot exist This is no more than should be -especited under or^iiiMy cirCumsttoces from a great property like Reading in th'e '^nde of coni^l^t m^'na'eer*. Lacki^waniia reports even more modest results. Its increase of net earnings in 1P93 was ODly ?489,218; interest and rentals decreased $51,630; consequently tbe balance available for the stock was only ?5il.05S greater than in 1891. Of this increase $343,085 was offset by additional expenditures for betterments. Tbe actual earnings on the stock were reported as 9,93 per cent, as against 9 31 per cent in 1891, but also compared with 10 per cent in 1&9', so that the results for ]893 do not appear to be more than the ordinary ones for this magnificent property. But Lackawanna in¬ creased its antln-acite output by 33i,6Ul tons in 1S93 and had a total output of 6,539,649 tons from which it received a very largely increased income, not only by reason of tbe growth of the output but also from its increased price. Reading and Lackawanna made large expenditures on their properties last year, evidently preferably to carrying forward to the credit of their stocks such results as would strengthen the opposition that has arisen to the coal companies in consequence of the combination made among them last spi'ing. Gross eamhigs of the Reading Coal and Iron Company increated 815,346 0"0 and its operating expenses $14,455,^47, leaving net earnings only just sufficient to pay fixed charges and carjy forward a small sm-plus of ?31-',319. This company is. of course, always operated iu the inLerest of the Reading Railroad Company, so that large results are not to be expected in its show¬ ing, but the increase in operating expenses is so enormous as to leave ooly one conclusion. In the same way Lackawanna increasel gross earnings by S;4,376,'^3y acd net by only $146,174, so tbat tbe cost of operation increased by $l,3J0,35o. Tbe average increase for some jears prior would be from §1,000,000 to $1,330,000. In the report of Delaware Sc Hu'Ison, the results of its coal businessaremore apparent and arc carried through the accounts to the surplus for the stock. It reports an increase of coal busi- ue.-s of $1,294,333 and an increase of the earnings on stock of ?1,Oil,411. Ibe importance of these figm'esis in tbeir bearing on the value of the coal road secm-ities. Tbey unquestionably show that if the coal companies can continue to act in unison not only are tbe coal secuiiiies already in demaud still more desirable, but those which have had only a speculative value may be expected to take on a new character and have greater esteem. If Lackawanna can continue to spend such large sums as it did last year on the improvement of its property and still add something to its surplus, wMch already amounts to over 60 jier cent, of the face of its capital stock, its stock is not dear from an investment point of view even if docs se 1 on a i}4 per cent, basis. It is not likely either that Reading will continue to spend all its increased income on improvements It has b;eu seen what a large increase to its income a small increase iu tbe ton price of anthracite will produce, and this fact takeninto consideration witb another, tbat about $2,i 0 ',000 would pay 5 per cent on tbe capital stock, is very significant. Of course, there is also a cold douche to be taken witb this glowing showing. The Coal Combination may be said so far to have emerged very succcessfully from the legal attacks made upon it. If Reading has been compelled to make a formal surrender of Jersey Central, it still holds Lehigh Valley and there is nowhere any intimation^of the coal companies reducing prices. There is, however, still a good deal of litigation to be disposed of, and it is yet to be seen whether the bill intro¬ duced into the New York Legislature can pass, and if it passes whether its provisions can be rauintained in tbe courts Hitherto it hasbeen the form of trade combinations that have bsen attacked, here it isproposed to control the prices of tbe commodity dealt in. It is very doubtful if Kew York cau as¬ sert this principle for itself. Tbe courts have been successful in breaking up objectionable forms of combinations to put up prices, but they ba\e not succeeded in preventing the results which those combioatious were made to produce. A long step toward the adoption of the Socialistic programme must be made before tbat is possible, and that step is not likely to be taken just yet. Legislation which can fix the price of coa! can also fix tbe price of every commodity subject to trade. This is a principle that has but com¬ paratively few supporters Experiments were made in its direction from tbe days of antiquity, aud always failed. Slow Progress in Eapid Transit Matters. A MEEIING OF THE GENERiL COMMITTEE AT THE EBAL ESTATE EXCBANGB TO-DAY. Rapid transit matters have not progressed very hopefully tbia week. Assemblyman Percival Farquhar last week telegraphed to Chairman Ricb¬ ard V. Harnett, of tbe General Committee on Rapid Transit, saying : " I heartily favor city building Rapid Tranit road, fcjhall introduce bill next week to that effect. Could I confer with your committee in Hew York to-morrow." So valuable an ally as thia telegram promised the committee was entitled to the highest eonsideration, it was thought, and accordingly two conferences were held oo Friday and Saturday, at both of which Mr. Faiqubar's ideas were ia everyway consistent with bis telegram. But on Sunday he conferred with Mr. Croker and Mayor Gilroy, and on Monday when he resumed the conference with the Committee, although without a draft of his proposed bill present, he had modified his ideas so greatly that the Committee could not agree with him. His bill made no provision for city ownership beyond limiting the period of sale of the pro¬ posed franchise to 150 years. It made no provision for city constmction, but removed many of the restrictions contained in the present act upon tbe corporation purchasing the franchise, and was designed to make the franchise more attractive bo private capital. The main feature of the new bill, however, was the provision calling for tbe appointment of a new Commission by Mayor Gilroy. This was a direct slap at tbe present Commission. Tbe Oommittee felt that it could not decide upou so important a matter off-hand, and has called a meeting of the full committee for to-day at one o'clock, at the Real Estate Exchange. There is a general sentiment in favor of preparing a separate bill empoydicg the provision for city owaersbip and construction and pressing it upon tbe LegiBlatiire by popular agitation and petition. Before the Rapid Transit CommlsEion the only events of importance were tbe answer of the Mianattan Elevated Railroad Company's Special Cotnmittfis of Conference, refusing tocoostruct estcJnsToliE olth^lr roada