(2 per cent.). This plan seems to be based upon reasonable grounds and is much easier carried into practice than the one mentioned of relieving ship-owners at stated times, and taxing them at others when they can afford to pay. Besides, such a system must have a great effect in multiplying vessels and encouraging investments in ship property instead of driving ship-owners to the wall, as is so often the result of burdensome local taxation.

Take the situation on the Northern lakes as an example, where the tax on shipping is levied like that on other personal property. The owners of our vessels there are in constant competition with the Canadian vessels which are not taxed.

The policy of Canada, like that of Great Britain, is one of liberality and encouragement towards the shipping interest. No tax whatever is levied on vessels either by national or municipal authorities. In contrast to this Canadian policy of permitting shipping to go untaxed, let us, by way of comparison, enumerate the burdens of this character that are borne by a vessel of, say, 600 tons, valued at $30,000, that hails from the American shore of the lakes.

The State and municipal tax varies in different States from 1 to 2 per cent., which is assessed on this valuation, amounting on an average to $450 annually. But the season of navigation on the lakes is only nine months in duration, hence we observe that the charges borne by a schooner of 600 tons owned in that locality is $90 per month, reckoning for the period she is at work, or equal to $600 per year. This sum (or one in proportion for a vessel of different size) must be paid by a vessel navigating the northern lakes, if documented on the United States side; while on the same vessel owned in Canada not a dollar is exacted.

In further illustration of this matter, and the effect of taxes levied by the respective Governments on the opposite shores of these narrow waters, let us suppose these two vessels, one American and one Canadian, to be running in the grain trade, and to carry about 30,000 bushels. The number of round trips of the ordinary kind would average about twelve during the season, each vessel carrying 360,000 bushels. It fol lows that the Canadian vessel has an advantage of 0.125 cent per bushel, or nearly five cents per ton.

Although this rule will not apply in the same degree to vessels in the Atlantic trades, the relief from local taxation enjoyed by the English ship-owner has given him a considerable advantage, and has been no small factor in giving an impetus to the building of expensive iron vessels in Great Britain.

Several of our State legislatures, appreciating these drawbacks to our shipping interest, and the manifest injustice of taxing ship property engaged in foreign trade, have recently passed laws exempting it from local taxation. But the system of taxation by the States is not equable. While in most of the States of the Union ship property is taxed as other personal property, bearing a rate varying from 1 per cent. in some States to 2 and 3 per cent. in others, in several of them it is exempted, or limited to coasting vessels, or taxed on the income only. The result is that there is a gradual drift of tonnage from States where it is heavily taxed to the States where it is altogether exempted, or where it is lightly taxed.

In the State of Delaware ship property enjoys perfect immunity from taxation for State or municipal purposes. It is reported that in consequence of the relief afforded there a considerable amount of the New York tonnage has gone to Delaware.

In Massachusetts, the State legislature of 1881 passed a law exempt

ing vessels in the foreign trade from taxation. It was argued that American vessels could not be expected to compete successfully on the high seas with those of Great Britain, so long as the former were taxed on their value while the latter only paid a tax on their earnings. Moreover, it was claimed that the exemption of such property from taxes in the State would bring shipping capital to Massachusetts from other States. This expectation has been realized to a considerable extent, as shown by the following table exhibiting the effect of the law since it went into operation May 1, 1882. The figures are from the report of the tax commissioner of the Commonwealth of Massachusetts, and show the amount of taxes refunded to the towns by the State to be $39,242 for the year 1884.

Statement of valuation of tonnage in foreign trade belonging to towns in Massachusetts, as returned to the tax commissioner, showing the effect of the law exempting ships engaged in the foreign trade from local taxation.

Under the law referred to, the State tax commissioner is required to report annually such facts about vessels in the foreign trade as are brought to the knowledge of the local assessors, and whatever loss is suffered by certain towns is made good by the Commonwealth as above. It will be observed that since the law went into operation the number of towns owning vessels has increased from 23 to 34, and the value of vessel property in the State engaged in foreign trade has increased over a million dollars. This amount represents twenty thousand tons of shipping, and if this increase were entirely attributable to the oper, ation of the law (an assumption which the commissioner of taxes has

reason to doubt), it would be only a question of figures to ascertain how long, at the same rate of progress, it will take for Massachusetts to absorb the entire tonnage of the neighboring States.

The following is the text of the act of the State of Massachusetts:

[Chapter 284.]

AN ACT relating to the taxation of ships and vessels engaged in foreign trade.

Be it enacted, &c., as follows:

SECTION 1. Ships and vessels engaged in the foreign carrying trade shall not, for the purposes of taxation, be included in the personal estate of persons to be taxed; but the net yearly income of such ships or vessels shall be taxed to the owner or owners thereof in their places of residence proportionally to their interests therein.

SEC. 2. No ship or vessel shall be deemed to be engaged in the foreign carrying trade within the meaning of this act unless the same shall be either actually engaged in such trade, or in port undergoing repairs.

SEC. 3. The provisions of this act shall not apply to any ship or vessel unless the agent or owner thereof shall on or before the first day of June in each year, make a return, signed and sworn to by him, to the assessors of every town or city within this Commonwealth of which the owner of any share or interest in such ship or vessel may be a resident on the first day of May in such year, which shall set forth the name of such owner, and the name, class, and tonuage of such ship or vessel, the fact that she is at that date engaged in the foreign carrying trade within the meaning of this act, the share or interest of such owner thereir, and the dividends paid him upon bis said share or interest during the year ending on such first day of May, and such dividends shall constitute the net yearly income to be taxed to such owner as provided in this act.

SEC. 4. In the returns now required by law to be made by the assessors of cities and towns to the tax commissioner, and in the report of that officer to the legislature of such returns, shall be included a tabular statement of the statistics derived from the returns provided for in section three of this act.

SEC. 5. The assessors of any city or town may, on or before the first day of September in each year, make a return, under oath, to the tax commissioner, showing the amount of its valuation on the preceding first day of May included in said ships and vessels, as shown by the returns provided for in section three of this act, the net income therefrom in the year for which the return is made as shown by said returns, and the net loss in the revenue of such city or town in said year arising under the provisions of this act, such loss being computed from the statistics furnished by said returns; and an amount equivalent to the amount of said net loss shall thereupon be credited by said commissioner to said city or town as an offset to any tax or other payment to be made by it to the treasurer of the Commonwealth.

SEC. 6. This act shall take effect upon the first day of May, eighteen hundred and eighty-two; and the fifth section shall continue in force five years thereafter, and no longer.

Approved May 13, 1881.

NEW HAMPSHIRE.

The State of New Hampshire has had since 1879 a law exempting vessels in foreign trade from taxation excepting on their income. This income is taxed as "stock in trade." Coasting vessels of all kinds and all other classes of floating property is taxed as personal estate. Portsmouth is the only ship-building port in the State, and the effect of the law upon ship-owning is reported to be as yet without results.

CONNECTICUT.

The following extract from a letter addressed by the attorney for the Vessel-Owners' Association of Connecticut to the collector of customs at New Haven explains the manner in which taxation is levied on vessels owned in the State:

SIR: In Connecticut no distinction is made between property in vessels and property in real estate. Both are taxed at an estimated value. In the case of real estate, this estimated value is supposed to be, and in fact is, not far from two-thirds the ac

tual value. The appraisal of vessels is often made by persons ignorant of the property, and in consequence the estimated value is often far above the real value.

A vessel built and owned in Connecticut is entered in the tax list before it leaves the stocks, and this tax must be paid whether it ever returns or not.

In this State vessels are subject to a State and municipal tax, which on vessels hailing from New Haven amounts to within a fraction of 2 per cent. In addition to this are the various fees and taxes paid to the United States Government.

The entire burden of national, State, and municipal taxes and fees attaching to vessels owned in Connecticut is so great, in the opinion of our association, as to seriously affect our shipping interests, and to demand a remedy.

This disastrous effect is apparent in two ways:

First. The ownership of vessels already built is being rapidly transferred to other States, the law of New York and Massachusetts being much more favorable than Connecticut.

Second. By preventing the building of vessels in the ports and rivers of the State; parties contemplating building being deterred from investing money in vessels to hail from ports outside the State, and unwilling to pay the taxes asessed upon this class of property in Connecticut.

Numerous instances of both these results could be cited, but your own experience and that of the employés in your office will, I am sure, attest the truth of my state

ments.

The Ship-Owners' Association, which I represent, believing that the laws of this State in the matter of taxation are unfavorably affecting the shipping and shipbuilding interests of the State, applied to the legislature in 1882, and have repeated the petition each year since, for a modification of the laws, but so far without effect.

NEW YORK.

Ship property owned by citizens of the United States and by corporations is assessed and taxed under the laws of the State of New York. Exception is, however, made of registered vessels of the United States engaged in ocean commerce between foreign ports and ports of the United States, which are exempted from State and local taxation by a law of 1881.

The system generally adopted is for the local boards of assessors to assess the personal property of individuals in gross from the best information they can obtain. The result is that real estate in large places pays the greater portion of the tax. Incorporated companies pay tax on capital stock to the State comptroller for State purposes, and to the local authorities for county and municipal purposes.

The State imposes taxes on vessels under the provisions of chapter 361, laws of New York, 1381, by which corporations owning such prop. erty are assessed by the State, and the same corporate bodies and individuals are also liable to be taxed by the local authorities or municipalities under chapter 456, laws of New York, 1857. In adjusting the taxes imposed by the acts above referred to, provision is made for a rebate to such corporations from the local tax equal to the amount paid to the State.

The tax rate in New York City is high, being for city and county tax $2.25 in the year 1884. In consequence of the high taxation it is not uncommon for corporations to locate their offices in some country town or in some other State for the object of reducing the tax rate on the capital stock.

PENNSYLVANIA.

The revenue laws of the State of Pennsylvania do not include ship property in the schedule as subject to taxation for either State, county, or municipal purposes. In point of fact there are no local or State laws which infringe upon owners of vessels, with the exception of compulsory pilotage and harbor-masters' and port-wardens' fees where no services are rendered, and these are said to be rarely collected now at the

port of Philadelphia. The solicitor of the Vessel-Owners' and Captains' Association at that port, writing to the collector of customs on this subject, says:

In some of the Southern States the harbor fees exacted and collected from our vessels under guise of police regulations and harbor-master's fees are very onerous, and, we think, absolutely unnecessary, unless some service is demanded and received by the vessels. Many of these charges are collected upon the slightest pretense of voluntary service. Compulsory pilotage, as you, perhaps, are already aware, is demanded and paid where no service is needed or assistance rendered or required, and amounts to about one-sixteenth of the net earnings of our vessels in the best times, and very considerably more at present.

I need hardly call your attention to the fact that our association has labored diligently and unceasingly for nearly twenty years to have the compulsory pilotage laws of our own as well as those of other States repealed or corrected by act of Congress. They still remain in our own State, and are specially onerous on coast wise vessels, making numerous voyages annually.

VIRGINIA.

The legislature of Virginia has lately adopted an act relieving shipping in part from local taxation, which was formerly quite exorbitant in this State. The collector of customs at Norfolk, writing upon the subject of the taxation of shipping in Virginia, says:

In response to yours of 23d ultimo, I have the honor to say that by the act of the Virginia legislature approved March 15, 1884, a tax of forty cents on the one hundred dollars was levied upon all vessel property held in the State (this includes steam vessels). This is not a special tax upon vessel property as a class, but such property is rated as personal property and taxed as such. There is also a tax (on such property) of 1 per cent. on the net earnings in excess of $600 per annum. There is now no tax on charters.

I inclose you a copy of the Rules and Regulations of the Harbor Commissioners, which will give you the charges made upon vessels coming into this port. As to these charges I have doubts as to the right of a State to impose them upon the merchant marine of the United States. I doubt also the propriety of such a course. I believe that harbor masters are necessary; but they should be paid by the harbor requiring them, and not by fees exacted from vessels using the harbor, every burden inflicted upon such ships tending to keep them away, to the detriment of the port. I think that the State and city of New York impose such heavy taxes, upon their steamship property especially, as to drive some of it at least to the State of Delaware; but these heavy taxes, whatever they may be, do not obtain in Virginia.

LOUISIANA.

In Louisiana taxation for State or city purposes is, by constitutional enactment, based on the same assessment. A late law of the State (section 6 of act 107) is somewhat arbitrary in assuming to tax all water craft navigating within the waters of the State, regardless of the place where registered. The following is an extract from the law referred to: SEC. 6. Be it enacted, &c., That section first of the foregoing act be amended and re-enacted to read as follows: That for the calendar year anno Domini eighteen hundred and eighty-four, and for each and succeeding calendar year, there are hereby levied annual taxes, amounting in the aggregate to six mills on the dollar, of the assessed valuation of all property situated in the State of Louisiana, except such as is expressly exempted from taxation by the constitution, and the term property, as herein used, means and includes all real estate, with the buildings and all other improvements thereon or thereto attached, all improvements upon public lands and other untaxed land; every share or portion, right or interest, either legal or equitable, in and to every ship, vessel, or boat of whatever name or description, used or designated to be used either exclusively or partially in navigating any of the waters within or bordering on this State, whether such vessel, ship, or boat shall be within the jurisdiction of this State or elsewhere, and whether the same shall have been enrolled, registered, or licensed at any collector's office or within any collection district in this State or not, including all vessels sailing under a foreign flag, navigating any of the waters of this State, within or bordering thereon, controlled or run, in whole or in part, for the