My Story (17 page)

The case was carried through the courts, the temporary injunction was made permanent and the Tax School was
eventually forced to suspend. However, it had now been in operation twenty months and its work could not be undone. Not only was it instrumental in making public service corporations pay sixty thousand dollars a year more in taxes, but, fearing the result of a tax fight, these same corporations made a secret settlement of back taxes at the end of his term with county auditor Craig who was their friend, by paying into the county treasury more than one hundred thousand dollars of back taxes.

The following year in my campaign for Governor of Ohio we dug out the inequalities in taxation in every city in which my tent was pitched and by the use of a stereopticon we showed not only the inequalities existing in Cleveland but gave many local illustrations as well.

Important changes in the State tax laws may be traced to the work of the Tax School. Land and buildings are now appraised separately for taxation and the old decennial appraisement has been replaced by a quadrennial appraisement and these quadrennial boards of appraisement, consisting of five members, are elected locally and at large without party designation.

Results thus far obtained more than justify the publicity methods which we employed to direct the attention of an indifferent public to this all important question of taxation.

The question of taxation was no less a State question than a local one. Indeed our whole Cleveland movement was more than local, more than a one city movement from the very beginning. The big lesson we started out to teach through the Tax School and in other ways was that taxation in all its forms, however designated, is merely the rule by which burdens are distributed among
individuals and corporations. Farms, buildings, personal property, land, pay no taxes, yet so persistently have these inanimate objects been spoken of as being taxed that the public has all but lost sight of the fact that it is men and women who are taxed and not things. So long and so universally has taxation been regarded as a fiscal system only that comparatively few people recognize it for what it is, viz.: a human question.

A
N
early opportunity to take aggressive measures on the subject of railroad taxation presented itself. The county auditors' board met in Cleveland in May, 1901, for the purpose of making a valuation of steam railroads whose roads ran through Cleveland and Cuyahoga county. I invited Professor E. W. Bemis, an expert on the valuation of public service corporations and the only such expert on the people's side, to come on from New York where he was then located, and assist us in arriving at the true valuation of these properties. I attended the meeting of the auditors and insisted on being heard.

We had to get at the real tax valuation of the railroads running through Cleveland. Time and again I took Professor Bemis before the auditors. Our desire was to get them to place at least a sixty per cent. valuation upon these properties. As a rule they placed their assessment of railroad properties in exact accordance with the return given them by the auditors and land tax agents of the various railroads who made the returns on their respective properties at fifteen to twenty per cent. of their market value.

I attended a great many of these auditors' meetings, trying to force them to put up the valuation to something like that which had been placed upon the property of
small householders and other people. I frequently asked them to give me just a few minutes of their time, while my experts showed them how inadequately they were adjudging these valuations, and on one occasion went before the court in mandamus proceedings to compel them to give me a hearing.

EDWARD W. BEMIS

“An expert on the valuation of public service corporations, and the only such expert on the people's side.”

I remember saying at one time in the discussion over the Cleveland Terminal & Valley Railroad, “I charge this fact, that railroad companies by distributing favors and passes are getting off with paying from about six or seven per cent., to about fifteen per cent. on their properties, while other property owners are taxed on the basis of a sixty per cent. valuation or higher.”

The railroads always had a claim agent or lawyer present at auditors' meetings to swear in their “valuation.” I often asked the auditors and the representatives of the railroads: “Is there any reason why railroads should be assessed differently from farm and home property?” but I never got an answer. On one occasion I said, “How do you auditors arrive at a valuation of five thousand five hundred dollars a mile for this railroad property? I claim that instead of being appraised at five thousand five hundred dollars a mile it should be appraised at one hundred and six thousand dollars a mile.”

Auditor William Craig said: “Mr. Johnson, our members were not prepared for this. I think we had better postpone the hearing until to-morrow.”

Then the claim agent for the “Valley Railroad,” remarked: “Yes, we should have twenty-four hours, at least.”

“You have had twenty-four years,” I retorted, but they took their twenty-four hours.

In the case of the Cleveland Belt & Terminal Railroad, Colonel Myron T. Herrick, afterward Governor of Ohio, then chairman of the railroad's board and its receiver, was present when the auditors were about to pass upon the valuation of the road. The road's written return placed the property at nineteen thousand six hundred and fifty-five dollars. J. E. Taussig, the assistant general manager of the Wheeling & Lake Erie, which owns the Belt Line, in handing over the report, said, “That's all we have to say.”

Then I spoke up and told the auditors that this road was sold for four hundred thousand dollars. “You will remember, Myron,” I said, turning to Colonel Herrick, “how you and I tried to buy it about five years ago for five hundred thousand dollars, and we thought that was dirt cheap. And it hasn't depreciated any since then, has it?”

“It isn't earning anything,” answered Colonel Herrick.

“Well,” I said, “the law says that property shall be assessed for what it is worth, not for what it is earning, and it is worth just what it will sell for.”

I then called upon one of my assistants who said that he had walked over the entire length of the road, measured the width of the right of way, and ascertained the value of the adjoining property. I then called upon another assistant, an engineer, who testified that he had measured the earth-work of the embankment of the road, and had estimated the worth of trestles, bridges, rails, etc.

“Now then,” I said to the auditors, “we demand of you that you assess this road at sixty per cent. of its actual value. If you assess it at nineteen thousand dollars,
as this railroad asks you to do, and as it has been assessed in the past, you are taking money out of the pockets of the people and putting it into the pocket of the railroad, just as much as though you went out on the street with a club and robbed a man.”

At this point Assistant Manager Taussig interrupted to say that my assistant's figure as to the number of acres was nearly twenty acres too high.

“All right,” I said, “if you acknowledge fifty acres, we'll stand on that. Honestly, now, do you think nineteen thousand dollars is what this road ought to be returned for?”

“Based on its earnings, yes. You wouldn't buy anything that wasn't earning anything, would you?”

“My dear sir, that is the way I have made all my money — buying things that other people didn't know how to handle.”

“You wouldn't buy this for what you claim it was sold for, four hundred thousand dollars—?”

“Yes, I will.”

“That's a bluff.”

“Is it a bluff? I will make a big cash deposit right here and take this road for four hundred thousand dollars.”

“You know this road is in such shape legally that it can't be sold,” interrupted Colonel Herrick.

“And you wouldn't sell it for anything like four hundred thousand dollars if that were not the case.”

At this point the railroad's attorney spoke up:

“All this is nonsense and politics.”

“Politics?” I answered. “Of course it is politics. It is the kind of politics with which all the people of Cleveland
— Democrats and Republicans — are in sympathy. They want to see these railroads pay their just share of the taxes, and they look to me, as the mayor of all the people, to do my utmost to see that it is done. That's what we are here for, sir; we present figures and facts, and we challenge you to review them. You don't try. You can't. You run away. You say you only ask that you be assessed as other railroads are assessed; that you have precedent in your favor. Yes, you have precedent and you have the votes; you have the county auditors; you have the auditor of this county.”

It was also at this meeting that I called upon Auditor Craig for some definite information about the bonds of this road, and he replied, “That was before my time.”

“I expected that answer,” I said. “That is what they all say. I have been here often, and I have seen roads assessed at fifteen to twenty per cent. of their value. I understand that the auditor of this county believes that railways should be assessed the same as farm lands, which is at sixty per cent. of their value. I want to know what the auditor will do, and what his method of assessment will be.”

The auditor answered: “I don't know that I can tell that, or that I would care to.”

“Your answer is satisfactory. I am going to prove that you auditors simply guess. You don't know whether or not you are buying a gold brick.”

In regard to the hearing before the auditors about the Nickel Plate road, I protested every inch of the way. When their attorney, who was present as the representative of the road, returned the value upon which the Nickel Plate road was to be taxed, I took their return and showed
where the report was dishonest. It listed twenty-six first-class passenger locomotives in fair condition at one thousand five hundred and fifty-five dollars apiece; sixty-six first-class freight locomotives in fair condition at two thousand five hundred and nine dollars apiece. I charged that that was not fifteen per cent. of their real value.

“Here,” I said, “are six thousand box cars at one hundred and forty dollars apiece. We all know one hundred and forty dollars would not pay for half a truck under one end of one of these cars. Now I ask you again to call on this company to appear before you and explain.”

“Now, gentlemen,” I went on, “the market value of the bonds and stocks of the Nickel Plate company is about forty million dollars. As about forty-six per cent. of the road is in Ohio, it has over seventeen million dollars worth of property in this State. The law says you shall assess property at its full value in money and that includes railroads, but as you have adopted a rule to assess property at only sixty per cent. of its value, I ask you to apply that rule in this case. If you apply this rule of sixty per cent., the Nickel Plate road will pay on about ten million dollars instead of three million dollars in Ohio as it has been doing and wants to continue to do.”

Then Auditor Craig called the other auditors into executive session and the attorney, who seemed to know how the vote would go, said: “Now we will see.”

I answered, “Oh, you've got the votes of this board of auditors all right, but you haven't got the last say. We will put this matter up to the State board of railroad equalization at Columbus, and if it does not do the right thing we will put it up to the courts. And if we don't
get a square deal there, we will put it up to the voters of Ohio. The people will take this matter up finally and then the railroads will be brought to time.”

So thoroughly under the control of the railroads was this board of auditors that the railroad's return was accepted. The result of all this demonstration was that the auditors raised the valuation of the road over what it was the year before less than one per cent.!

I put detectives on the trail of the auditors to find out exactly what relations they held with the railroad companies, but knowing they were watched, they did nothing more criminal than dine with the railroad's representatives and ride on passes. Frequently I tried to get them to let me address them, but they always voted me down. I got out a mandamus to force them to put railroad officials on the stand and make them swear under oath to the actual valuation which they returned in their tax lists.

When I asked for information, half a dozen auditors remarked, “Oh, pay no attention to him!”

I began to laugh and just then the sheriff arrived with the writ of mandamus and served it on the auditor.

“Get on to the grandstand play of this accidental mayor,” shouted an auditor named Sissler. “Let's see what he's got.”

After he saw what I had, he announced, “I guess we've got to stop.”

“That's the first chance I've had,” I said.

“Yes, and it's all you will get,” said Sissler. “We're sick and tired of this ——— nonsense.”

“So am I. Why don't you stop it?” I answered.

After this long session with these men I said to them:

“Gentlemen, you have succeeded in keeping the railroad taxes just where they were. You have but dammed up the courses that will eventually sweep over you. The time will come when you will be sorry.”

I carried this question to the people in two very aggressive State campaigns and always into the State conventions of the Democratic party. I showed the methods by which the railroads controlled county auditors. Railroad land agents were very active in nominating conventions before elections; and after election, in addition to giving auditors and their friends passes it was no uncommon thing for them to take auditors and their families to the seashore for the summer. These abuses were so evident and met with such universal condemnation when I called attention to them that a great many auditors fell into line, promised to be “good” and stood on our platform. It was noticeable, however, that we rarely found a majority of our friends on any auditors' board.

We appealed for a public hearing to the State board of equalization, composed of the Governor and several other State officers, which board had power to equalize the returns of the county auditors.

I took Professor Bemis and Attorney Newton D. Baker with me to Columbus to participate in this hearing.

This board tried to hide behind the statute. It claimed that it could do nothing in the way of raising the assessment on the railroads, saying that the county auditors levied the assessment and that all that the State board was for was to handle matters of “equalization.”

“Well,” said Mr. Baker, “suppose that the county auditors for some reason failed to return a road at all. What then?”

“We couldn't do a thing,” answered the chairman.

“Suppose that they return a road for a valuation so low as to be ridiculous, and on its face not one hundredth part of what it should be taxed. What then?”

“We would not be able to do anything,” protested the chairman. “The statute says we shall equalize the values as returned by the county auditors.”