can hope to reach are those secured by property situated within the State and owned by taxable residents of the State, while in practise the average assessor will fail to reach a large proportion even of this restricted class.

Coming to the specific topic of mortgage taxation in Wisconsin, it is fortunately possible to lay the historical basis of the analysis in a few sentences. On the statute books, at least, the double tax method reigned supreme from the time Wisconsin became a State until May 23, 1903. During this long period, however, the assessment of mortgages was exceedingly perfunctory. In 1889, for instance, the moneys and credits assessed in the State (representing largely real estate mortgages) amounted to only $6,513,050, whereas the federal census investigation showed a mortgage debt of $82,461,393 on January 1 of the same year. About 1898, however, great public interest was aroused in the subject of taxation in Wisconsin, and in 1901 legal provision was made for the appointment in each county of a supervisor of assessment with the special purpose of improving the administration of the property tax. About the same time, moreover, the Wisconsin Tax Commission got well under way, bringing pressure to bear all over the State in the interests of better and more thorough assessment work. The results are strongly marked in the financial statistics of this period. Between 1900 and 1902, inclusive, the State assessment (made by the Tax Commission after 1900) was raised from $630,000,000 to $1,504,346,000. The aggregate local assessment rose from $746,022,932 in 1900 to $1,369,811,000 in 1902. The assessment of moneys and credits increased in even greater proportion, moving from $25,865,940 in 1900 to $35,598,181 in 1901 and to $73,055,102 in 1902. Not less than $50,000,000 of the last amount, and probably more, consisted of real estate mortgages, most of which

had been listed in the particularly active assessment of 1902. In all probability between 30 and 40 per cent. of the taxable mortgages of the State were on the assessment rolls in the year 1902. As might be expected, however, the assessment of moneys and credits was very uneven in different counties of the State. In Douglas County, for instance, practically none, while in Grant County nearly all of the mortgages subject to taxation were placed upon the assessment rolls.

In their report to the legislature of 1903, however, the Wisconsin Tax Commission made a vigorous plea for the exemption of credits,-one of the three members dissenting, and on May 21, 1903, the legislature repealed the old law and substituted the Massachusetts method, by which every mortgage is taxed as an interest in the property by which it is secured, the parties to the mortgage being permitted to arrange between themselves who shall pay the taxes. Such laws, it is generally understood, work virtual mortgage exemption. Of the 50,330 mortgages recorded in Wisconsin in 1904, only 31-according to reports of the registers of deeds-failed to contain the familiar covenant by which the mortgagor assumed the taxes on the mortgagee's interest.

The exemption of mortgages took effect before the assessment of 1903 had been completed. In consequence the assessment of moneys and credits fell from $73,055,102 in 1902 to $24,118,031 in 1903. Some complaint was heard from counties which had in the past derived a revenue from this form of taxation, and at each subsequent session of the legislature bills have been introduced looking to the repeal of the present law and the substitution of various methods of mortgage taxation. Most of these bills, however, have never reached a vote, and none of them has come near to adoption. In his message to the legislature of 1907 Governor Davidson advised

the repeal of the present law, but no action was taken. Since the exemption of mortgages in 1903, therefore, interest in the subject has been active, but not intense. New legislation, while not imminent, is not unlikely; and, to secure information which would guide the legislature to wise action in the matter, the Tax Commission gathered during 1905 and 1906 comprehensive statistics of mortgages in Wisconsin, and published the results-without special analysis of their bearing upon the mortgage problem-in their report to the legislature in 1907. The present paper consists largely of an interpretation of the facts presented in that report,' to which the reader is referred for additional statistical detail bearing upon the topics hereafter discussed. For convenience, however, the most important statistical results of this investigation are reproduced in the table on the following page:

1 Third Biennial Report of the Wisconsin Tax Commission.

INTEREST RATES ON COMMERCIAL BANK LOANS AND REAL ESTATE MORTGAGES IN ELEVEN WISCONSIN COUNTIES AND
FOUR ADJOINING COUNTIES IN FOREIGN STATES, BY SEMI-ANNUAL PERIODS, 1900-1906.

INTEREST RATES ON MORTGAGES.

FOREIGN

COUNTIES.
GRANT

COUNTY.

MENOMINEE
COUNTY,
MICH.

Jan., 1900-June, 1906

5.50

5.36

5.83

5.63

5.80

5.69

5.34

5.19 6.27

6.60

6.07

5.96 6.43 5.97 5.24 5.56

Jan., 1900-Dec., 1902

5.51

Jan., 1903-June, 1903

5.47

July, 1903-June, 1906

5.50

5.29 5.75 5.55 5.61 5.57 5.30 5.16 6.33
5.44 5.90 5.62 6.15 5.75 5.39 5.17 6.54
5.42 5.89 5.71 5.87 5.81 5.37 5.23 6.19

The adequacy of the statistical basis upon which the above figures rest may be gathered from the statement that the mortgages recorded in the eleven
Wisconsin counties during the six and one-half years under investigation numbered 51,710, amounting to $64,146,219. In the six months January 1-June
30, 1903, in the eleven counties the mortgages numbered 4,091, amounting to $5,454,801. There were 29,996 bank loans, aggregating $36,441,689.

Bearing in mind the main events recited in the preceding paragraphs-the perfunctory assessment up to 1901, the active search by the assessors of some counties for mortgages in 1902, and the exemption of mortgages from taxation in 1903,-the figures in this table, which have been arranged so as to contrast the period of partial taxation with the period of complete exemption, take on a real meaning. Our principal concern, naturally, is with the subject of shifting. Shifting takes place in two ways, by an increase in interest rates or by the insertion in mortgage instruments of covenants providing for the assumption of all taxes on the mortgage by the borrower. The latter form of shifting may in this case be disregarded, since it was found in the Wisconsin investigation that prior to 1903 such covenants were practically never employed in the eleven counties represented in the table. Confining attention, then, to the interest rate on mortgages (hereafter referred to as the mortgage rate), the figures as they stand, I think, make out a strong prima facie case against shifting. The general level of interest rates indicated by the figures for bank loans (column 1) and wholly uninfluenced by tax legislation was about the same before as after the passage of the mortgage tax law of May, 1903. The average mortgage rate for the eleven Wisconsin counties was about the same also.1

The difference in rates, which is so slight as to be negligible, merely emphasizes this conclusion. The general level of interest rates indicated by the bank rate was rather lower after than before 1903. The general level of mortgage rates was higher rather than lower after 1903. It is only fair to say that, if we examine the figures closely, it is easy

1 The showing of the figures is borne out by the general testimony of Wisconsin bankers. In answer to the question whether the mortgage rate had been substantially lower after the repeal of the law, 140 of the 195 bankers who replied to this question answered that it had not, although a very large majority of the same bankers were in favor of the repeal, and believed that the reimposition of mortgage taxation of any kind would raise interest rates and prove disastrous in other ways.