to detect plain evidence that the vigorous assessment of 1902 and the agitation of the subject during the legislative session of 1903 did affect the rate. Mortgage rates rise in almost every county in the last half of 1902 and the first half of 1903, whereas bank rates fall in the same period. And other evidence may be gleaned by close scrutiny of the figures, tending to modify slightly the apparent (and obviously absurd) conclusion that the effect of abolishing the tax on mortgages was to raise mortgage rates. But all these modifications and qualifications are insufficient, after all, to vitiate the primary lesson of the figures, that mortgage rates, in company with interest rates generally in Wisconsin, were at practically the same level before and after the exemption of mortgages in May, 1903. And as I understand the import of the theory of shifting generally accepted by advocates of exemption, this should not be the case. The general liability of mortgages to taxation and the actual taxation of one-fourth or one-third of the taxable mortgages, together with the consequent agitation and alarm of creditors, ought, according to the advocates of exemption, to raise mortgage rates in an appreciable and harmful degree. If this is not the theory of shifting accepted by the advocates of exemption, then that theory contains nothing practically adverse to the double taxation of mortgages.1

The preceding comparison, however, is inconclusive because the taxation of mortgages was not thorough in all of the eleven counties even in 1902. Fortunately, there is one county in which mortgages were fully taxed in 1902, the county of Grant, to which special attention is now asked. Conditions in that county were extraordinary. In 1900, assessments were exceedingly low,-real estate at

1 In estimating the harmful effects of shifting, it is interesting to note that the taxation of mortgages in 1902 and the agitation in the first half of 1903 affected large mortgages more quickly and more severely than small mortgages. Cf. Third Biennial Report of the Wisconsin Tax Commission, p. 343.

something like one-third of true value, and only $357,996 of moneys and credits on the tax rolls. In 1901 and 1902, however, the assessors made a campaign almost unprecedented in the financial history of Wisconsin, pushing the total local assessment from $9,376,425 in 1900 to $22,937,883 in 1901 and to $32,591,637 in 1902. In the latter year the local assessment of real estate was actually higher than the figure placed upon it by the State Tax Commission, which body, in equalizing county assessments of real estate, places the figures at full value, based upon elaborate and careful investigation. The assessment of moneys and credits, just a little more than $350,000 in 1900, was raised to $1,410,600 in 1901 and to $4,192,668 in 1902, averaging $107.83 per capita and constituting 18 per cent. of the true value of real estate as fixed by the Tax Commission. Careful estimates lead me to believe that not less than 90 per cent. of the mortgages legally subject to taxation in Grant County in 1902 were on the tax rolls. The general assessment was extraordinarily high for so large a district as a full-sized county; and there was considerable agitation, discussion, and feeling. The movement of the mortgage rate under such conditions ought to constitute about as fair a test of the possibility of shifting as is possible to secure.

An inspection of the mortgage rates for Grant County indicate that they were raised somewhat, but nothing like so much as the rate of taxation. The effective assessment of mortgages in Grant County began in the spring of 1901. The average rate of taxation for 1900, about the same as that to which they had been accustomed for some years and on the basis of which they were paying taxes in 1901, was between 2 and 3 per cent. Nevertheless, the mortgage rate was exactly the same in the first half of 1901 as in the first half of 1900, and only 1 higher in the last half of 1901 than the

of 1 per cent. last half of 1900.

62

During 1902 the assessment of mortgages was carried out so thoroughly that practically all mortgages subject to taxation were on the rolls. The rate of taxation in 1901 (payable in 1902) was 1.215 per cent. Mortgage rates, however, were less than of 1 per cent. higher in 1902 than in 1901. In the first half of 1903, during the discussion of the subject in the legislature, the mortgage rate in Grant reached its highest point, 6.15 per cent. If we accept the difference between the rate for the first half of 1900 and the rate for the first half of 1903 as a maximum measure of the elevation of mortgage rates due to taxation, agitation and uncertainty, then the conclusion. is that interest rates were raised of 1 per cent. in a county which for many years had been accustomed to a tax rate of approximately 2 per cent. and which for the year or two immediately preceding had been accustomed to a tax rate of a little over 1 per cent. (the average tax rate was 2.87 per cent. in 1900 and 1.028 per cent. in 1903). Moreover, there are strong indications that during this period the general level of interest rates was slowly rising in the section of the country immediately surrounding Grant County from causes wholly unrelated to taxation. Clayton County, Iowa, Jo Daviess County, Illinois, and Lafayette County, Wisconsin, are all in the immediate vicinity of Grant County. In all of these counties, interest rates were higher in the last half of 1902 and the first half of 1903 than, on the average, of the three years 1900-02, inclusive, while in none of them, with the exception of Lafayette and Grant, was there any special increase in the assessment of mortgages during the period under consideration.

A somewhat similar condition of affairs is found in Lafayette County, which immediately adjoins Grant. The assessment of moneys and credits, $160,114 in 1900, was raised to $1,473,148 in 1902, in which year I estimate that

somewhere from 55 to 65 per cent. of the taxable mortgages were on the assessment rolls. The total local assessment rose from about six millions in 1899 to about twentythree millions in 1902. Here, also, the statistics indicate that the vigorous assessment of 1902 and the agitation in the spring of 1903 exercised only the smallest kind of influence upon the mortgage rates. In the last half of 1902 mortgage rates rose to 5.59 per cent. for instance; but this rate is lower than the rate for the last half of 1900, and in the spring of 1903, when rates should have been at a maximum, they fell to 5.39 per cent., only nine points higher than the average for the three years 1900-02. The Lafayette figures show unmistakable evidence of the effects of the disturbances of 1902-03, but those effects are so minute, particularly when we take account of similar movements in the adjacent counties of Jo Daviess and Clayton, in which there was no marked increase in the assessment of mortgages, that they are practically negligible.

Lafayette County, Wisconsin, Jo Daviess County, Illinois, Grant County, Wisconsin, and Clayton County, Iowa, are grouped close together in that section of the country where Illinois, Iowa, and Wisconsin touch shoulders. All of these counties are, for this section of the world, comparatively old and well developed, altho the two foreign counties, Jo Daviess and Clayton, are perhaps a little richer and better developed than their respective neighbors, Lafayette and Grant. With respect to mortgage taxation these counties are both similar and dissimilar. In Jo Daviess, Illinois, mortgages have been separately taxed as credits for the entire period under discussion, but the assessment has been exceedingly slack, probably not more than one-fourth of the taxable mortgages being reached. In Clayton County, Iowa, on the contrary, where the double tax method is also in force,

the redoubtable tax ferrets have been at work throughout the entire period, and a large majority of the taxable mortgages-probably not less than 85 per cent.-have been assessed and taxed without interruption. In the two Wisconsin counties, as will be remembered, mortgages were taxable, but not effectively taxed in 1900; taxable and partially taxed in 1901; taxable and well taxed in 1902; and exempt from taxation after May, 1903. Compare now the movement of mortgage rates in these four counties, which are grouped together in the table, and the student will find it exceedingly difficult to explain results on any theory of mortgage taxation which insists upon shifting. Jo Daviess has the lowest rate and, on the whole, shows the most favorable movement. Clayton County with full taxation of mortgages has lower rates than its neighbor, Grant, and the increase in the interest rate has been less in Clayton County than in Grant County, altho Grant moved from a condition of taxation to one of exemption, while Clayton has had effective taxation all the time. In interpreting these figures, it is important to remember that, except in the Wisconsin counties before 1902, the average rate of taxation was low, just about 1 per

cent.

Space will not permit a thorough-going discussion of all the factors which lead the writer, at least, to the emphatic conclusion that in these counties during the period under investigation the theory of shifting sanctioned by those writers who oppose all forms of mortgage taxation is wholly discountenanced. Much additional evidence, however, may be secured by the reader who is interested in minute details of the comparison in Chapters VI. and VIII. of Appendix B to the Third Biennial Report of the Wisconsin Tax Commission. Among other facts brought out by the material there presented may be found interesting evidence to the effect that, while the effective taxation of