WYOMING. ART. I. Declaration of rights. SEC. 30. Monopolies and perpetuities.-Perpetuities and monoplies are contrary to the genius of a free state, and shall not be allowed. Corporations being creatures of the State, endowed for the public good with a portion of its sovereign powers, must be subject to its control. ART. III.-Legislative department.. SEC. 27. Special and local laws prohibited. The legislature shall not pass local or special laws in any of the following enumerated cases: A long list of subjects is here enumerated, including "the right to lay down railroad tracks, or any special privilege, immunity, or franchise whatever, or amending existing charter for such purpose." In all other cases where a general law can be made applicable no special law shall be enacted. SEC. 39. Political units prohibited from aiding railway construction, or loaning credit or otherwise contracting an indebtedness. ART. X.-Corporations. SEC. 1. Corporations organized under general law. SEC. 2. All franchises subject to control of legislature. SEC. 3. All previously granted special charters, not yet in actual operation, declared void. SEC. 4. Laws, contracts, and agreements limiting liability, illegal. SEC. 5. Full acceptance of constitution before business can be transacted. SEC. 6. Corporations engage in only one line of business specified in charter. SEC. 7. Agencies of transportation and communication declared to be common carriers. SEC. 8. Combinations to prevent competition or influence prices prohibited. SEC. 9. Right of eminent domain and public use to apply to corporate property. In addition the constitution of Wyoming contains nine sections specially devoted to railways, as follows: SEC. 1. Grants power to construct, operate, intersect, connect, etc., without discrimination. SEC. 2. Railways and telegraphs declared common carriers, “and as such must be made by law to extend the same equality and impartiality to all who use them, excepting employees and their families and ministers of the Gospel, whether individuals or corporations." SEC. 3. Shall make annual report to auditor of the State. SEC. 4. May exercise right of eminent domain, but legislature reserves power to subject franchise and property to public use. SEC. 5. All political units enjoined from aiding by donations, loans, credit, etc. SEC. 9. Depots to be established when railways run within four miles of a town. "No railroad company shall deviate from the most direct practicable line in constructing a railroad for the purpose of avoiding the provisions of this section." TAXATION OF TRANSPORTATION COMPANIES. A Report Prepared under the Direction of the Industrial Commission, by ROSWELL C. MCCREA. Page. nies CHAP. I.-Development of the taxation of transportation companies...... B. Second period-Increasing and more uniform taxation. D. Miscellaneous transportation and transmission compa E. Other expanding practices CHAP. II.-Analysis of present methods of taxing transportation com panies 1006 1007 1011 1012; 1015 1017 1018 A. Double taxation by the same jurisdiction.. 1035 1037 1042 H. Tax on corporate charters 1048 CHAP. V.-Constitutional and statute provisions, by States. 1048 CHAP. V. Constitutional and statute provisions, by States-Continued. Page. Tables showing methods of taxing transportation companies in each State. 1084 1080 CHAPTER I. DEVELOPMENT OF THE TAXATION OF TRANSPORTATION COM PANIES. In its report, issued in 1880, the railway tax committee' asserted that "there is no method of taxation possible to be devised which is not at this time applied to railroad property in some part of this country." When this statement was made the States were passing through a middle experimental stage in their taxation of transportation companies; and though twenty years have since elapsed, another period of more definite experiment has only just begun. A chaos of tax systems almost, if not quite, equal to that which confronted the committee still prevails. But confused and confusing as railway tax laws have been and still are, both legislation and judicial decision give evidence of progress toward a better state of things. Even prior to 1879, the year of the activity of the committee, clearer comprehension of tax problems to be solved had already set on foot a movement for reform; and the past two decades have witnessed changes still more notably in the same direction. It is the general trend of these changes which this chapter attempts to describe. In the developing of its transportation facilities the United States has acted as a group of communities at widely different stages of industrial development. After the East had in a measure settled the question of an adequate transporta 1 The report of this committee was entitled Taxation of Railroads and Railroad Securities. The committee, the members of which were C. F. Adams, jr., W. B. Williams, and J. H. Oberly, was appointed at a convention of State railroad commissioners to report methods of taxation respecting railroads and railroad securities. tion system the railway growth of the West was still in its incipient stage. Correspondingly, the East after continuous experiment was the first to devise definite methods of railroad taxation, some mistakes in the developing of which the States of the West were subsequently enabled to avoid. But in the main the general course of the development has been the same in both sections, and the same conservative attitude toward innovation is to be noted throughout. In tracing the course of this development it will be convenient to group the successive steps within two periods. To be sure, it will not be possible to assign any definite chronological limits to these separate stages; but the distinctive features in the process of change are so prominent as to group themselves broadly within the two periods which are here adopted. The first of these stages was characterized by the policy of subsidy and exemption from taxation and by the introduction of tax methods which were made to operate very leniently toward the railroads. This period may be said to have ended with the close of the first decade after the civil war. The second or pres ent stage has been characterized chiefly by the adoption and extension of definite methods of railway taxation, in the main distinct from the general-property tax as ordinarily administered in the taxation of individuals. A. FIRST PERIOD-PUBLIC AID AND TAX EXEMPTIONS. 1. State construction of railroads.-One reason for the slight progress which has been made in the field of railway taxation is to be found in the comparatively recent origin of the railway systems themselves. The building of railroads in the United States had scarcely begun before 1830, and, from the financial standpoint, it was not until after the period of the civil war that the ultimate success of the railroad experiment was assured. In 1830 population was sparse and the capital of the country was limited. At that time the States themselves were quite widely engaged in works of interna, improvement, but with the introduction of railways the States appear to have been averse to engaging directly in this new form of enterprise, with the result that the construction of railway lines was left chiefly to individual initiative.' 2. State and local aid.-Capital, however, in addition to the mere fact of its scarcity, was hard to secure for investment in an enterprise which gave no prospect of substantial or immediate returns. Under these circumstances, it was but natural that the various State legislatures should be impressed rather with the expediency of stimulating railway investments by special auxiliary enactments than of restricting their extension by the imposition of taxes. Accordingly, with a view toward encouraging the growth of a service which was seen to be of vital There are some instances of independent action on the part of States in the construction and ownership of railway lines, as well as cases where State policy looked definitely toward State ownership; but such instances are both relatively rare in number and almost entirely limited to the early period of railway construction. For instance, in Pennsylvania the canal commission was authorized in 1827 to estimate the expense of constructing a railroad from Harrisburg to Chambersburg, and in the following year the same commission was empowered to contract for the construction of a railroad from Philadelphia to Columbia. For a number of years after various appropriations for purposes of railroad construction are to be found in the State's general appropriation bills. In Georgia during the thirties the State, through the agency of a board of State commissioners, constructed the Western and Atlantic Railroad. This road was operated by the State until 1870. It has since been operated under lease by private parties. The rental for 1900 amounted to $420,012. During the thirties Michigan projected an elaborate plan of railway construction under the direction of a board of internal improvement. This plan provided for the building of a northern, a central, and a southern road. The northern project was abandoned in 1841 and a wagon road constructed instead; but large sums were expended on the central and southern lines up to 1846, when they were sold to private parties and incorporated, respectively, as the Michigan Central and Michigan Southern lines. In both cases the State reserved the right to repurchase after January 1, 1867. In Massachusetts, to illustrate further, the State took an active interest, almost akin to ownership, in the construction of the Troy and Greenfield Railroad and Hoosac Tunnel. In 1872 the legislature provided that the interest of the State in the Hoosac Tunnel should never be sold; and since that time large sums have been devoted to the improvement of that line (e. g., in 1883, $264,552; in 1884, $66,000). In a number of instances early State policy in incorporating railroad companies looked toward the possibility of subsequent State ownership. For instance, during 1831 and 1833 New York, in granting the charters of the New York and Albany, the New York and Erie, the Utica and Schenectady, and other roads, reserved the right of purchase, to take effect within a period of five years, beginning ten years after incorporation. In Massachusetts charters of the early thirties the right of purchase was reserved for ten years (e. g., in the charters of the Franklin, the Boston, Providence and Taunton, the Boston and Lowell, and other roads). Similar provisions are to be found a few years later in charters granted by Kentucky and Michigan. In the latter State at least a single instance of actual purchase is to be found, namely, in 1841, when the State purchased the River Raisin and Lake Erie Railroad and joined it to the Southern State road. A recent instance of contemplated State ownership is furnished by Arkansas where, in 1897, a State board was created to locate, establish, and operate State railroads and telegraphs. public importance, special aids,' partial or even complete exemptions from taxation, and lenient tax methods were frequently made the subjects of general statute and special charter provisions. By 1860 the practice of granting aid to railways was widely prevalent. The outbreak of the civil war put a temporary check to the practice; but in 1865, particularly in the South, it became even more marked than before the war. By 1875, however, the practice began to fall into disfavor. In 1874, for instance, the legislature of Georgia provided that no more State aid should be given except where a road had a vested right to the same. In 1875 Alabama repealed her railroad-aid act of 1865, and Illinois in 1877 legislated that counties could not be held liable after 1880 for any aid which they had promised railroads. In a few instances, however, the practice has persisted up to quite recent years. Such has been the case in Kansas, where, as late as 1887, the legislature empowered the counties, cities, and townships of the State to aid railways by granting them subsidies and subscribing to their stock; in Maine, as late as 1891 and 1893, when Washington County was authorized to guarantee, for thirty years, 5 per cent interest on $650,000 bonded debt of the Maine Shore Line Railroad, as well 1 Aid granted to railroads was of different types. The following classification, accompanied by brief illustrations, will serve to differentiate those types: State aid: (1) By general enactment. e. g., Iowa, 1853. Railroads were empowered to occupy any State lands without the payment of damages. (b) Grants and loans of money and security, e. g., Alabama, 1868. The State agreed to indorse the first-mortgage bonds of railways to the extent of $12,000 per mile for each 20 miles of road, as completed, and $16,000 per mile for each 5 miles as completed, beyond the first 20 miles. (2) By special enactment. (a) Subscriptions to stock. e. g., Massachusetts, 1836. State treasurer authorized to subscribe to 10,000 shares of stock in the Western Railroad Company. (b) Grants of land. e. g., Minnesota, 1862 and 1863. Numerous grants to the Minnesota and Pacific, the Root River and Southern Minnesota, the St. Paul and Pacific, and other railroad companies. (c) Grants and loans of money and security. e. g., Maine, 1836. The State agreed to pay the necessary incidental expenses of California, 1863. The State agreed to pay the Central Pacific Railroad Com- Local aid (authorized by State enactment): (1) By general enactment. stock. e. g., Illinois, 1843. Counties and municipalities authorized to subscribe to railway (b) Grants and loans of money and security. e. g., California, 1870. Counties authorized to issue railroad-aid bonds, not to exceed in aggregate amount 5 per cent of the taxable value of property in those counties; aid to be granted any companies after 5 miles of road have been constructed. (2) By special enactment. (a) Subscriptions to stock. e. g., Kansas, 1855. Cities and counties authorized to subscribe to shares of stock in the Kansas Central Railroad Company. (b) Grants and loans of money and security. e. g., Alabama, 1859. City of Mobile authorized to issue bonds to aid the Mobile and Great Northern Railroad Company. Michigan, 1864. County of Bay authorized to issue bonds to aid in the construction of a railroad from Bay City to East Saginaw. For instance, in Arkansas we find the following in 1867: The State promises aid to any railroad at the rate of $1,000 per mile of line constructed up to the maximum limit of 100 miles, the State to be paid interest on the same and to be secured by a lien on the railroad; and again in 1868 authorization of aid was made to the amount of $15,000 per mile to such roads as had not received grants of United States lands, and of $10,000 per mile to such as had secured such grants, upon condition (1) that the total aid should not apply to more than 850 miles of road; (2) that a tax equal to the amount of interest on the State-aid bonds should be levied against the railroads until the bonds should be canceled, and (3) that five years after the completion of any road receiving such aid 2 per cent additional should be levied upon the whole amount of State aid. To illustrate further, the legislature of Georgia in 1868 authorized the indorsement of the bonds of the Macon and Augusta Railroad Company to the amount of $10,000 per mile of road, as well as of those of the Georgia Air Line to the amount of $12,000 per mile of road, with an aggregate maximum of $500,000, besides granting aid to numerous other lines. In the North, too, the revival of the aid-granting policy is exemplified in numerous land grants, such as those in Michigan and Minnesota from 1865 to 1870, and in loans of funds, such as that by Massachusetts of $3,000,000 to the Boston, Hartford and Erie Railroad Company, of $2,000,000 to the Boston and Albany, and of $300,000 to the Lee and New Haven Company in 1868, |