whose assessment depends entirely on statements by the owner, cannot be uniformly or equitably assessed under the general property tax. Moreover, if such property were assessed and taxed on the same basis as tangible property, the taxes at the rates now levied (especially in cities) would amount to an unjust confiscation of from one fourth to one half of the income; and in some cases such extortionate taxes are collected from those who scrupulously obey the letter of the statutes. More often such intangible holdings escape taxation altogether, the owners defending their failure to report it, on the ground that such instruments as stocks, bonds, notes and credits are not in any real sense property, but are simply a series of claims or obligations secured by tangible property subject to taxation.

In rural counties in Illinois, mortgages appear to be partially assessed, in some counties perhaps one fourth as completely as real estate. But in the cities, and especially in Chicago, the assessed value of moneys, credits and other intangible personalty is obviously a much smaller fraction of the actual holdings. The assessments for 1909 for the entire state, and for Cook county, for the principal items of intangible property are shown below:

The original local valuations of property are subject to alteration by the county boards of review. In Cook county, where a special board is provided, a good many changes are made in individual assessments, but without remedying to any large extent the most serious defects of the original assessments. In the other counties of the state, the members of the county boards of review change rapidly, and the work seems to be even less effective. While a number of individual assessments are increased and lowered, and some additions are made to the total valuation, the alterations constitute but a fraction of the total assessment for the county.

The experience of Illinois in the assessment of personal, and especially of intangible property, confirms the experience of other

states with the modern highly developed and complex social structure. The notorious evasion of the terms of the revenue statutes are too glaring to be due simply to defects in administration; and while there is room for substantial improvements in administration, there is also clear need for more fundamental changes in the system of taxation, which cannot be introduced under the present constitutional provisions requiring the taxation of all property on a uniform basis. Nor are the deficiencies in the local assessment of property remedied or counterbalanced by the work of the state board of equalization. The organization of this board is not adapted for effective work, and its powers are entirely inadequate to the needs of the situation. It is composed of the auditor of public accounts and one member elected from each of the 25 congressional districts for terms of four years. It meets from August to December in each year to equalize county valuations and to assess railroad property and the capital stock of Illinois corporations. The large membership and the elective character of the board and the short time given to its work prevent it from becoming an efficient agent in the administration of the tax laws.

In connection with its duty of equalizing the aggregate valuations of counties, no provision appears to be made for any examination into local conditions; and the equalizations have been at best haphazard guesses. During the past twelve years, the state board has in fact made but few changes in the local assessments; and for the past two years has made no changes at all. The state boards needs larger powers and a more effective organization to perform its duty with any prospect of making an equitable apportionment of the state tax; it has no power to correct mistakes or inequalities in the local assessments of individual tax payers.

The assessment of railroad property by the state board also appears to fall short of what should be done. The method of determining the valuation of such property is not clearly indicated. The aggregate valuation of railroad property in the state has not been advanced in the same ratio as other property or in proportion to the increase of railroad earnings. The percentage of taxes to earnings paid by the railroads (on the basis of the state board's assessments) has declined from 13 per cent of net earnings in 1890 to 11 per cent in 1908, and from 4.75 per cent of gross earnings in 1890 to about 3.5 per cent in 1908. In 1898 the valuation of railroad property was practically 10 per cent of the total val

uation for the state; in 1910 it was barely 8 per cent of the total. Moreover as between the various railroads the ratio of taxes to earnings shows wide variations, some roads paying only from 6 to 7 per cent of net earnings, and one of the most important systems paying but 2 per cent of gross earnings, or little more than half of the average for all roads in the state. There appears to be need at least for a more thorough investigation of the value of railroad property in Illinois and its relation to the value of other property.

In assessing the capital stock of Illinois corporations, the Illinois state board of equalization has a power which might appear to offer an opportunity to meet some of the deficiencies in the local assessment of intangible personalty. But in practice the capital stock assessments have never been of much importance, and for most of the time have had no significance at all. From 1875 to 1900 the assessed valuation of capital stock by the state board ranged from a minimum of $1,605,783 in 1877 to a maximum of $6,956,909 in 1890, the amounts for 1875 and 1900 being almost the same ($4,802,112 and $4,808,630). During the last decade the assessments have been considerably larger, as the result of a suit begun by the Teachers' Federation of Chicago, which compelled the state board to make some assessment for the franchise value of the public utility companies in Chicago. Public utility companies elsewhere in the state are also assessed now for small amounts; and a considerable number of other corporations are also placed on the list for nominal assessments of from $1,000 to $10,000 each. The total of these capital stock assessments from 1901 to 1908 reached a maximum of $22,705,627 in 1902 (immediately after the decision of the United States Supreme Court in the proceedings arising out of the Teachers' Federation suit), but declined to a minimum of $10,608,000 in 1907. In 1909 with the change in the basis of assessments from one fifth to one third, the capital stock assessments were increased to $35,394,441; and these figures were somewhat reduced in 1910 to $30,265,148. These low capital stock assessments are due in part to provisions of the revenue law which exempt from the jurisdiction of the state board important classes of corporations (such as those for manufacturing mining and mercantile purposes), and in part to the lack of legal authority to compel even the corporations subject to assessment to file the sworn statements prescribed by the revenue law. The result is that assessments are only a small fraction of what could

be assessed under a more effective law and with more efficient administrative machinery.

Exact comparisons of the assessed and true value of capital stock cannot be made. But a significant contrast may be noted between the assessment in Illinois and similar valuations by the officials of another state. The Illinois assessment of $35,000,000 for 1909 represents a supposed full value of $105,000,000 for the excess value of the capital stock of Illinois corporations above the value of the property assessed by local assessors. In the smaller state of Massachusetts, whose laws and regulations for the control of corporations are about the most stringent in the United States, the "corporate excess" value of the capital stock of corporations in 1909 was assessed at $427,643,330 or more than four times that in Illinois. Again, a striking contrast can be shown between the reports to the Illinois state board of equalization and those to the United States Commissioner of Internal Revenue, in connection with the federal tax on the net income of corporations in Illinois. The total amount of capital stock reported to the Illinois state board (including that of corporations against whom no state assessment was made) was $480,528,316 in 1909. A year later (in 1910) corporations with their principal office in Illinois reported to the Commissioner of Internal Revenue, an aggregate capital stock $3,191,058,968.

Taaset result of the inadequate system of assessment and taxation is an apparently high tax rate on general property, an inequitable distribution of the burden of taxation, and at the same time a lack in public revenue, both for the state and for local purposes, which is responsible for much of the deficiency in the scope and efficiency of public activities in Illinois as compared with other states. On the face of the returns, the average tax rate for the entire state increased from $3.12 on the $100 in 1880 to $6.20 in 1900. But on the basis of the census estimates of the true value of property, the ratio of taxes to true value had slightly declined between these dates; and in 1904 (the last census data available) the ratio for all general property taxes to estimated true value was somewhat lower-sixty-nine hundredths of one per cent.

The nominal average tax rate in 1909 was $3.85, an apparent decline since 1900, due to the change in the legal basis of assessment from one fifth to one third of "full value." This average, however, represents large variations-from $2.03 in the county with the minimum average to $5.20 in the county with the maximum

average. In some cities the nominal rate is higher than the maximum county average. But, recognizing that even real estate valuations are less than the one third of full value recognized by law, and that other property is assessed to a smaller proportion of its value, the average ratio of taxation to true value of property in Illinois is distinctly less than in other states with which it may be classed in population and urban development.

Nor is the ineffectiveness of the general property tax made good by other sources of public revenue. The state treasury does receive more than a third of its income from sources other than the general property tax. This is a smaller proportion than in any of the North Atlantic states, smaller even than in some of the states in the Middle West. For local districts, the only considerable amount of ordinary revenue received in addition to the general property tax is that from liquor licenses in cities. Indeed the total public revenue in Illinois is considerably smaller in proportion to population and wealth than in other important and progressive states. As shown in the table below, the per capita revenue for state purposes in Illinois is less than half that in New York and Massachusetts, and not two thirds of that in Pennsylvania; and the per capita gross revenue of Illinois is only about one half that of Wisconsin and one third that of Minnesota.

In total revenue receipts by state and local authorities (including counties, cities and other minor divisions) for 1902, Illinois had less than half the per capita revenue of Massachusetts, about sixty

*Based on population for the year named estimated from the census returns for 1900 and 1910.

"One half of amounts for biennial period 1908-10. 'School fund and local bond funds.