from this definitive "natural" scheme or from the straight and narrow path that leads to its consummation, there is a grievance to be remedied by putting the wheels back into the rut. The future, such as it ought to be,-the only normally possible, natural future scheme of life,is known by the light of this preconception; and men have an indefeasible right to the installation and maintenance of those specific economic relations, expedients, institutions, which this "natural'' scheme comprises, and to no others. The consummation is presumed to dominate the course of things which is presumed to lead up to the consummation. The measures of redress whereby the economic Order of Nature is to renew its youth are simple, direct, and short-sighted, as becomes the proposals of pre-Darwinian hedonism, which is not troubled about the exuberant uncertainties of cumulative change. No doubt presents itself but that the community's code of right and equity in economic matters will remain unchanged under changing conditions of economic life.

STANFORD UNIVERSITY.

THORSTEIN VEBLEN.

THE TAXATION OF INTANGIBLE WEALTH IN

MARYLAND.

SUMMARY.

General considerations leading to a change in the method of assessment, 196-198.—Origin and history of former methods, 198-200.— Working of the new method, 201-203.-Further possibilities, 203-207. -Summary, 207–209.

I.

THE taxation of personal property-or at least that part of it commonly described as "intangible wealth". is the storm center of current fiscal discussion in the United States.

The assessment of chattels and household effects, of mercantile stocks and industrial plants, of shares of stock of domestic corporations, and of locally employed capital of foreign corporations, presents difficulties not different in kind from the efficient valuation of real estate. It is when we leave the domain of things and come to the realm of rights, and have to do with stocks, bonds, and evidences of ownership not taxable “at the source," that the real difficulties occur. For here it is no longer the relatively simple elements of finance that confront us, but an intricate complex of finance and psychology,-escape from taxation, double taxation, jurisdictional conflicts.

So flagrant have been the lapses of intangible property assessment and so complete has been the breakdown of insistent attempts to associate intangible wealth with real estate and tangible personalty for identical taxation under the term "general property," that the pendu

lum of expert opinion has tended to swing to quite the other end, and some of the most distinguished students of American finance have urged the complete exemption of such intangible property, and, as a means to that end, the separation of state and local sources of revenue, by constitutional amendment and legal enactment in so far as necessary.

It is hardly necessary to insist that these two proposals are in essence independent and distinct, and that, altho the provisions of the ordinary American state constitution would prevent the exemption.of personalty, save as a corollary to the disassociation of state and local revenue, yet it by no means follows that the converse is true and that advocacy of such separation carries with it a necessary presumption in favor of exempting personalty.

Indeed, at this point expert counsel and public opinion have been in sharp opposition. The text-books writers have accumulated masses of graphic evidence as to the inherent depravity of the tax on intangible personalty, and have insisted on its complete elimination from the scheme of local taxation. On the other hand, public sentiment has been unwilling to tolerate the concrete fact of wealthy citizens, owners of stocks and bonds, enjoying all or many of the benefits of municipal service, and freed entirely from the onerous tax burden resting upon other forms of property.

It is not proposed, in this connection, to discuss the relative merits of these opposed views. Much has been left unsaid on both sides. Certainly, not a fraction of the actual evils attending the working of the tax on intangible wealth has been brought to light. But, on the other hand, its critics have made sad confusion of theory and practise, of principle and administration, and have cried out somewhat dramatically that the tax is bad,

because, attempted under unfavorable conditions, it has worked badly. More than this, insufficient emphasis has been placed upon the fact that an equivalent burden of taxation upon different classes of property does not necessitate an identical rate of taxation. Whenever, as in the contrasting cases of real estate and intangible wealth, tax liability, on the one hand, and tax immunity, on the other, as represented by many years of actual administration,-have been virtually capitalized, fiscal justice is approximated rather than violated by differential rates.

tax

Ten years ago the State of Maryland, through fiscal exigency rather than in consequence of scientific analysis, was supplied with a method of taxing so-called “intangible wealth," which in the decade of its operation, under but fairly efficient administration, has placed a steadily increasing assessment of such wealth upon the tax books, to the material betterment of the public treasury, to the appreciable relief of the over-taxed real estate owner, to the manifest improvement of local tax morality, and to the lessening of migration for tax purposes. The following pages are devoted to a description of this experiment and to an estimate of its results.

II.

The reckless participation of Maryland in various schemes of internal improvement in the decade from 1830 to 1840 resulted in the accumulation of a large and oppressive state debt. Direct taxation, hitherto distinctly an emergency resource, became in 1841 the only means of averting repudiation. The imposition of a general property tax was proposed, resisted, delayed, and finally effected by the passage on April 1, 1841, of "an act for the general valuation and assessment of property in this

state, and to provide a tax to pay the debts of the state." It authorized the first general reassessment of property in Maryland since 1812, and imposed a direct property tax for state purposes of 1-5 of 1 per cent.

The act of 1841 introduced the essential features of the modern property assessment system of Maryland,the employment of a common basis for state and municipal taxation and the virtual absence of any periodic local reassessment. Subsequent revaluations of property primarily for purposes of state taxation were made in 1852, in 1858 (in Baltimore City), in 1866, and in 1876.

The results attained by the reassessment of 1876 remained practically the basis of state and local taxation for the next twenty years, during which time occurred no general revision of valuations. The respective boards of county commissioners in the counties, and the Appeal Tax Court in Baltimore, were indeed authorized to revise assessments from time to time, but no adequate equipment was provided therefor, and little was done beyond. taking account of transferred titles, newly erected buildings, and fresh arrivals. The resulting conditions were exactly what might have been expected from an original faulty assessment, an entire absence of equalization, and a long period of neglected revision. The widest discrepancies in rate and manner of assessment manifested themselves as between county and county and as between counties and city, and the most intense resentment developed at the evident escape of personalty. In the legislative campaign of 1892, reassessment was made a successful party issue. The General Assembly then elected promptly passed a radical reassessment law, of which the conspicuous feature was drastic provision for the listing of personal property. But so bitter was the outcry raised by propertied and mercantile interests in Baltimore and throughout the state that,