and as I firmly believe of the adjacent parts of Cen-
tral and South America, will be greatly benefited
by the building of the canal and the guarantee of
peace and order along its line; and hand in hand
with the benefit to them will go the benefit to us and
to mankind. By our prompt and decisive action,
not only have our interests and those of the world
at large been conserved, but we have forestalled
complications which were likely to be fruitful in
loss to ourselves, and in bloodshed and suffering to
the people of the Isthmus.
Instead of using our forces, as we were invited
by Colombia to do, for the twofold purpose of de-
feating our own rights and interests and the in-
terests of the civilized world, and of compelling the
submission of the people of the Isthmus to those
whom they regarded as oppressors, we shall, as in
duty bound, keep the transit open and prevent its
invasion. Meanwhile, the only question now before
us is that of the ratification of the treaty. For it
is to be remembered that a failure to ratify the
treaty will not undo what has been done, will not
restore Panama to Colombia, and will not alter
our obligation to keep the transit open across the
And State Papers 755
4
Isthmus, and to prevent any outside power from
menacing this transit.
It seems to have been assumed in certain quarters
that the proposition that the obhgations of article
35 of the treaty of 1846 are to be considered as
adhering- to and following the sovereignty of the
Isthmus, so long as that sovereignty is not absorbed
by the United States, rests upon some novel theory.
No assumption could be further from the fact. It
is by no means true that a state in declaring its
independence rids itself of all the treaty obligations
entered into by the parent government. It is a mere
coincidence that this question was once raised in a
case involving the obligations of Colombia as an
independent state under a treaty which Spain had
made with the United States many years before
Spanish-American independence. In that case Mr.
John Quincy Adams, Secretary of State, in an in-
struction to Mr. Anderson, our minister to Colom-
bia, of May 27, 1823, said:
By a treaty between the United States and Spain
concluded at a time when Colombia was a part of
the Spanish dominions ... the principle that free
ships make free goods was expressly recognized
and estabHshed. It is asserted that by her declara-
tion of independence Colombia has been entirely re-
leased from all the obligations by which, as a part
of the Spanish nation, she was bound to other na-
tions. This principle is not tenable. To all the
engagements of Spain with other nations, affecting
their rights and interests, Colombia, so far as she
756 Presidential Addresses
was affected by them, remains bound in honor and
in justice. The stipulation now referred to is of
that character.
The principle thus asserted by Mr. Adams was
afterward sustained by an international commission
in respect to the precise stipulation to which he re-
ferred; and a similar position was taken by the
United States with regard to the binding obligation
upon the independent State of Texas of commercial
stipulations embodied in prior treaties between the
United States and Mexico when Texas formed a
part of the latter country. But in the present case
it is unnecessary to go so far. Even if it be ad-
mitted that prior treaties of a political and commer-
cial complexion generally do not bind a new state
formed by separation, it is undeniable that stipula-
tions having a local application to the territory
embraced in the new state continue in force and are
binding upon the new sovereign. Thus it is on all
hands conceded that treaties relating to boundaries
and to rights of navigation continue In force with-
out regard to changes in government or in sover-
eignty. This principle obviously applies to that
part of the treaty of 1846 which relates to the
Isthmus of Panama.
In conclusion let me repeat that the question
actually before this Government is not that of the
recognition of Panama as an independent republic.
That is already an accomplished fact. The ques-
tion, and the only question, is whether or not we
shall build an Isthmian Canal.
And State Papers 757
I transmit herewith copies of the latest notes from
the minister of the Repubhc of Panama to this Gov-
ernment, and of certain notes which have passed
between the special envoy of the Republic of Co-
lombia and this Government.
Theodore Roosevelt.
White House,
January 4, IQ04
EXTRACTS FROM THE MESSAGES
OF THEODORE ROOSEVELT AS
GOVERNOR OF THE STATE
OF NEW YORK
MESSAGE OF THE GOVERNOR OF NEW YORK
TO THE LEGISLATURE, JANUARY 2, 1899
State of New York, Executive Chamber,
Albany, January 2, i8pp
To the Legislature :
The people of New York, like the people of every
other State in the Union, are to be congratulated,
because during the past year the Nation has carried
to a brilliant triumph one of the most righteous
wars of modern times. When last spring it became
evident that the interests of humanity and of na-
tional honor alike demanded that we should drive
Spain from the Western Hemisphere and free from
her tyranny the subject peoples of the islands of
the sea, New York responded with eager zeal to
the call for volunteers, and in the Cabinet, in Con-
gress and in camp, her representatives did all they
could to insure the success of the American
policy. We are not merely New Yorkers. We are
Americans; and the interests of all Americans,
whether from the North, the South, the East or the
great West, are equally dear to the men of the Em-
pire State. As we grow into a mighty nation,
(758)
Gubernatorial Messages 759
which, whether it will or not, must inevitably play
a great part for good or for evil in the affairs of
the world at large, the people of New York wish it
understood that they look at all questions of Ameri-
can foreign policy from the most thoroughly na-
tional standpoint. The tropic islands we have taken
must neither be allowed to lapse into anarchy nor to
return under the sway of tyranny. War is a grim
thing at best, but the war through which we have
passed has left us not merely memories of glory
won on land and sea, but an even more blessed heri-
tage, the knowledge that it was waged from the
highest motives, for the good of others as well as
for our own national honor. Above all, we are
thankful that it brought home to all of us the fact
that the country was indeed one when serious dan-
ger confronted it. The men from the East and the
West, from the North and the South, the sons of
those who wore the blue and of those who wore the
gray, the men of means and the men who all their
lives long had possessed only what day by day they
toiled to earn, stood shoulder to shoulder in the
fight, met the same dangers, shared the same hard-
ships and won the same ultimate triumph.
In our domestic affairs, the State is to be con-
gratulated on the gradual return of prosperity.
Though temporarily checked by the war this return
has been on the whole steady. The capitalist
finds constantly greater business opportunities; the
wageworker, in consequence, is more steadily em-
ployed; the farmer has a better market.
760 Gubernatorial Messages
TAXATION
No Other question is of such permanent impor-
tance in the domestic economy of our State as the
question of taxation. At present our system of tax-
ation is in utter confusion, full of injustices and of
queer anomalies. It is an exceedingly difficult sub-
ject, one well worthy the attention of our best men,
the men with most highly trained minds and the
broadest practical experience; men who are able to
approach the subject from the standpoints alike of
the farmer, the merchant, and the manufacturer.
Not only is it necessary to consider whether any
kind of tax ought, if practicable, to be levied, but
whether it is in fact practicable to levy it. We
should discourage the building up of non-taxable in-
terests, and yet we should discourage driving prop-
erty out of the State by unwise taxation, or levying
a tax which is in effect largely a tax upon honesty.
I most earnestly commend the whole matter to your
special attention.
MESSAGE OF THE GOVERNOR OF NEW YORK
TO THE LEGISLATURE, MAY 22, 1899
State of New York, Executive Chamber,
Albany, May 22, iSgg
To the Legislature:
I have called you together in extraordinary session
for the purpose of considering the subject of the
taxation of franchises.
Gubernatorial Messages 761
My message to the Legislature of March 27, 1899,
ran in part as follows :
"At present the farmers, the market gardeners,
and the mechanics and tradesmen having small hold-
ings are paying an improper and excessive portion
of the general taxes, while at the same time many of
the efforts to remedy this state of affairs, notably in
the direction of taxing securities, are not only un-
wise, but inefficient, and often serve merely to put
a premium upon dishonesty."
"There is evident injustice in the light taxation
of corporations. I have not the slightest sympathy
with the outcry against corporations as such, or
against prosperous men of business. Most of the
great material works by which the entire country
benefits have been due to the action of individual
men, or of aggregates of men, who made money for
themselves by doing that which was in the interest
of the people as a whole. From an armor plant to
a street railway no work which is really beneficial to
the public can be performed to the best advantage of
the public save by men of such business capacity that
they will not do the work unless they themselves re-
ceive ample reward for doing it. The effort to
deprive them of an ample reward, merely means
that they will turn their energies in some other
direction; and the public will be by just so much
the loser. Moreover, to tax corporations or men
of means in such a way as to drive them out of the
State works great damage to the State. To drive
i^-VoL. XIV
762 Gubernatorial Messages
out of a community the men of means and the men
who take the lead in business enterprises would
probably entail, as one of its first results, the star-
vation of a considerable portion of the remainder
of the population.
"But while I freely admit all this, it yet remains
true that a corporation which derives its powers from
the State should pay to the State a just percentage
of its earnings as a return for the privileges it en-
joys. This should be especially true for the fran-
chises bestowed upon gas companies, street railroads
and the like. The question O'f the municipal owner-
ship of these franchises can not be raised with pro-
priety until the governments of all municipalities
show greater wisdom and virtue than has been re-
cently shown, for instance, in New York City; and
the question of laying and assessing the tax for
franchises of every kind throughout the State should
in my opinion be determined by the State itself. I
need not point out to you that in foreign communi-
ties a very large percentage of the taxes comes from
corporations which use the public domain for pipes,
tracks and the like."
I stated that the power of assessing the tax on
franchises should be left with the State authorities
— not the local authorities — because in my view this
was desirable both for the sake of providing against
improper favoritism of or discrimination against
corporations by the local authorities, for the sake
of working equity as between the franchises in dif-
ferent localities, and finally for the sake of providing
Gubernatorial Messages 763
for the cases where a railroad or telephone or tele-
graph line runs through several different communi-
ties.
Many representatives of corporations owning
franchises heartily approve of having them prop-
erly taxed ; and I am confident that, in the end, this
will be of positive benefit to the franchise owners,
and in no way oppressive to them, save as all taxes
are oppressive to all owners of property.
The line of cleavage between good and bad citizen-
ship does not follow the line dividing the men who
represent corporate interests from the men who do
not; it runs at right angles to it. We are bound to
recognize this fact, to rem^ember that we should
stand for good citizenship in every form, and should
neither yield to demagogic influence on the one
hand, nor to improper corporate influence on the
other. There is no intention of oppressing people
who have put their money into franchises. We rec-
ognize that, as in the case of all legitimate business,
they benefit not only themselves but the community
at large. If a franchise is worth very little, it should
be taxed verj'- little; but where the franchise is of
great value, it certainly should be heavily taxed;
and the value is of course based upon the use of the
city's or State's real estate. Such use of the public
real estate should not be given without substantial
returns ; returns not only in the way of service to the
public, which of course a street railway or a gas
company gives, precisely as the proprietor of a
grocery or dry goods store gives it, but also in the
764 Gubernatorial Messages
way of bearing a just share of the burden of taxa-
tion; again, precisely as the owner of the grocery
or dry goods store bears his share, the difference
being that a railroad company, for instance, owes
infinitely more than the proprietor of a big business
establishment does, to the real estate itself. Of
course, this value differs greatly in different places.
Where population is dense, as in New York City,
the real estate along which the tracks are laid on
Broadway may be worth an immense amount for
every lineal foot, exactly as the real estate fronting
this portion of Broadway is worth an immense
amount for every lineal foot. In sparsely settled
districts, however, the value of the real estate of
the railroad will diminish greatly, just as the value of
the realty through which it runs diminishes.
I am perfectly well aware that as Chief Justice
Marshall says : "The power of taxation is the power
of destruction." But this applies to every species of
property. If demagogues or ignorant enthusiasts
who are misled by demagogues could succeed in de-
stroying wealth, they would of course simply work
the ruin of the entire community ; and first of all, of
the unfortunates for whom they profess to feel an
especial interest. But the very existence of unrea-
soning hostility to wealth should make us all the
more careful in seeing that wealth does nothing to
justify such hostility. We are the true friends of
the men of means, we are the true friends of the
lawful corporate interests which do good work for
the community, when we insist that the man of
Gubernatorial Messages 765
means and the great corporation shall pay their full
share of taxes and bear their full share of the public
burdens. If this is done, then sooner or later will
follow public recognition of the fact that it is done ;
and when there is no legitimate basis for discon-
tent, the American public is sure sooner or later to
cease to feel discontent.
The Legislature passed, and there is now before
me, a bill for the taxation of franchises by treating
them as realty. After watching the progress of this
bill I became convinced that the opposition to it was
less to its particular features than to the general
principle of taxing franchises in any way; in other
words, I became convinced that any really effective
measure of taxation aimed at franchises would be
vigorously opposed. It therefore became of the ut-
most importance to secure this year some statutory
enactment which would distinctly recognize the prin-
ciple which we seek to establish. Toward the end
of the session it became evident that the influences
against the taxation of franchises would be content
with nothing save the defeat of any measure of sub-
stantial relief ; and a measure of less than substantial
relief I would not accept. Finally it became evident
that the Legislature could pass only one bill and that
without amendment. I therefore sent in a special
message asking for the passage of this bill. It was
passed on the last day of the session. It represents
a long stride in the right direction, and one from
which there must be no retrogression.
Nevertheless, it can be greatly bettered if amended
766 Gubernatorial Messages
in two important particulars. In its essential prin-
ciple, that of taxing franchises as realty, it is right
and proper. After much study of the question, I
am convinced that in this way we can come nearer
to doing justice than in any other which has as yet
been proposed. It is no new thing to treat fran-
chises as realty. They are so treated in Wash-
burn's work on real property, and by Chancellor
Kent ; but under the laws of New York as they are
now a franchise can not be taxed except by special
statute, and as a matter of fact this extremely valu-
able species of property is in very many, if not in
most, cases untaxed or taxed far below its value in
comparison with other kinds of real estate. Local
franchises are granted for various purposes and un-
der varying conditions ; sometimes by special statute
and sometimes by the municipal authorities under a
general statute. The value of the franchise of
course varies widely in different localities, depend-
ing upon a variety of circumstances ; but a great part
of its value is dependent upon the same causes which
operate to make other kinds of real estate more valu-
able in one locality than in another. The franchise
is inseparable from the property of the corporation
in the street, whether this property consists of poles,
pipes, or tracks, above the ground, under the ground,
or on the ground. The right to lay a railroad track
and operate a railroad in a public street can not be
separated or dissociated from the railroad itself.
This is equally true of the right to lay water and gas
mains and the like. The franchise is a necessary
Gubernatorial Messages 767
and inevitable element of value and is a proper sub-
ject of consideration in determining the taxable
value of the real property of the corporation enjoy-
ing it. The right to occupy a street should not be
classed as an intangible something, distinct from the
other property of the company, but should be treated
as a necessary incident to the tangible property and
one to be considered in measuring the value of the
whole property. The Nichols law in Ohio which pro-
vides for the taxation of certain kinds of corpora-
tions such as telegraph and telephone companies and
the like, doing business in the public streets, proceeds
along these lines, and has in practice been found to
work admirably. It is possible that further expe-
rience may enable us to find some better method of
taxing franchises, but with our present knowledge it
is certainly wisest to tax them as realty.
Under the bill before me the assessment will be
levied by the local authorities. This would result
in many cases in a dozen different sets of local au-
thorities assessing the value of different parts of the
same franchise. It is on every account far better
that this assessment should be delegated to the
State authorities who will necessarily ascertain all
the conditions affecting the franchise and obtain
information which will enable them to judge of
the value of the franchise in the different localities
in which it is exercised. The Board of State Tax
Commissioners can collate the facts, compare con-
ditions and determine values as a result of a wider
range of observation and experience than can be
768 Gubernatorial Messages
obtained by local officers, and under them the system
of assessment will tend to produce justice, harmony
and uniformity. This is the system adopted under
the Nichols law and it has worked well in practice.
Furthermore, the bill before me fails to take ac-
count of the fact that, in a very unequal and ir-
regular way, many corporations do already pay a
certain, though usually an utterly inadequate sum in
taxes. Some pay nothing at all to the local munic-
ipalities, but others pay sums varying from one to
five per cent on their gross earnings. The amounts
have been determined in the most haphazard manner
and bear no proportion whatever to the value of the
franchises or to their earning capacity. It is obvi-
ously unjust, when introducing a system under
which we believe that these franchises will for the
first time be fully and fairly taxed according to their
respective values, not to allow for this existing and
inequitable taxation. Accordingly it should be pro-
vided that from the sum assessed by the State au-
thorities as the tax which a corporation must pay
because of its local franchise, there shall be deducted
the amount already annually paid by it to the
locality for such franchise. In no other way is it
possible to tax these corporations with uniformity
and equity. It is contended by the advocates of the
bill that in reaching the value of the franchise under
the new law the amount thus paid away in taxes
must be allowed for and deducted anyhow; but it
is not certain that this would be done, and in any
event the principal should be definitely established
Gubernatorial Messages 769
by the law itself. There can be no possible oppo-
sition to putting it in the law by any man who is
anxious to tax corporations as other property is
taxed, and who believes that this end can be attained
by taxing them as realty. Either by taxing them
as realty we shall tax them at their full value, or
we shall not ; if, as we hold, the former is the case,
it would be unjust to tax them for more than their
full value, and this would happen were not these ex-
isting taxes deducted.
If it is claimed that the particular method of as-
sessment by the State Tax Commission may be im-
proper or unjust, provision can be made for the
same appeal to the courts that now lies in the case
of any assessment on other kinds of property.
Accordingly, I recommend the enactment of a law
which shall tax all these franchises as realty, which
shall provide for the assessment of the tax by the
Board of State Tax Commissioners, and which shall
further provide that from the tax thus levied for the
benefit of each locality there shall be deducted the
taxes now paid by the corporation in question.
Furthermore, as the time for assessing the largest
and wealthiest corporations, those of New York and
Buffalo, has passed for this year, and as it will be
preferable not to have the small country corpora-
tions taxed before the larger corporations of the
cities are taxed, I suggest that the operations of the
law be deferred until October first, of this year.
Theodore Roosevelt.
770 Gubernatorial Messages
MESSAGE OF THE GOVERNOR OF NEW YORK
TO THE LEGISLATURE, JANUARY 3, 1900
State of New York, Executive Chamber,
Albany, January j, ipoo
To the Legislature:
It is a very genuine pleasure to congratulate the
Legislature upon the substantial sum of achieve-
ment in legislation and administration of the past
year. Laws of the utmost usefulness to the com-
munity have been enacted, and there has been a
steady betterment throughout the year in the meth-
ods and results of the administration of the gov-
ernment.
The whole problem of taxation is now, as it has
been at almost all times and in almost all places, one
of extreme difficulty. It has become more and more
evident in recent years that existing methods of
taxation, which worked well enough in a simpler
state oi society, are not adequate to secure justice
when applied to the conditions of our complex and
highly specialized modern industrial development.
At present the real estate owner is certainly bearing
an excessive proportion of the tax burden. Men
who have made a special study of the theory of
taxation and men who have had long experience
in its practical application are alike in conflict among
themselves as to the best general system. Absolute
equality, absolute justice in matters of taxation will
Gubernatorial Messages 771
probably never be realized ; but we can approximate
it much more closely than at present. The last Leg-
islature most wisely appointed a committee to con-
sider the feasibility of a thorough and far-reaching
change in our tax laws ; and there is good reason to
believe that their forthcoming report will present a
scheme which will receive the support of substan-
tially all classes of taxpayers, and which will be of