such a character as to commend itself to the most
careful consideration of your body upon broad lines.
The law must not only be correct in the abstract ;
it must work well in the concrete. Experience
shows that certain classes or symbols of property
w^hich in theory ought to be taxed can not under
the present practice be reached. Some kinds of
taxes are so fertile in tempting to perjury and sharp
dealing that they amount to taxes on honesty — the
last quality on which we should impose a needless
burden. Moreover, where the conditions and com-
plexity of life vary widely as between different com-
munities, the desirability and possibility of certain
taxes may seem or be so different that it is hard to
devise a common system that will work. If possible
the State tax should be levied on classes of property,
and in a manner which will render it collectible with
entire fairness in all sections of the community, as
for instance the corporation or collateral inheritance
tax Is now collected. So far as possible we should
divorce the State and municipal taxes, so as to ren-
der unnecessary the annual equalization of values
between the several counties which has proved so
772 Gubernatorial Messages
fertile a source of friction between the city and the
country.
There is a constant influx into New York State
of capital ofttimes previously incorporated under the
laws of other States, and an increasing number of
men of means from other parts of the country, non-
residents of New York, come into this State to so-
journ and to conduct and be at the head of various
business enterprises which are drawn to New York
as the financial centre of the whole country. This
calls for legislation which shall provide, in a broad
and fair spirit, for taxing foreign capital in this
State, whether in corporate or individual form, ex-
actly as we tax domestic capital doing business along
the same lines.
I call your attention to the fact that the great
burden of taxation is local, not State. In the large
cities the hea\'y local charges are mainly due to the
action of the local authorities themselves. For this
the local authorities are of course responsible. But
sometimes taxation is added to by legislative enact-
ment.
On certain points the failure of the tax laws has
become so evident that it is possible to provide more
or less complete remedies without waiting for a gen-
eral scheme of reorganization. Ag-ain and again in
recent years this has been recognized, and through
legislative enactment certain species of property
which had escaped taxation have been made to pay
their proper share of the public burdens. The col-
lateral inheritance tax offers a case in point. The
Gubernatorial Messages 773
corporation tax offers another. In all these matters
of taxation, however, it is necessary to proceed with
extreme caution, the path never being so simple and
clear as the advocates of any particular measure in-
variably believe. Every wealthy corporation that
perpetrates or is allowed to perpetrate a wrong helps
to produce or inflame a condition of angry excite-
ment against all corporations, which in its turn may
in the end harm alike the honest and the dishonest
agents of public service and thereby do far-reaching
damage to the whole body politic. Much of the
outcry against wealth, against the men who acquire
wealth, and against the means by which it is ac-
quired, is blind, unreasoning and unjust; but in too
many cases it has a basis in real abuses ; and we must
remember that evei-y act O'f misconduct which af-
fords any justification for this clamor is not only bad
because of the wrong done but also because the justi-
fication thus given inevitably strengthens movements
which are in reality profoundly anti-social and anti-
civic. Our laws should be so drawn as to protect
and encourage corporations which do their honest
duty by the public; and to discriminate sharply
against those organized in a spirit of mere greed,
or for improper speculative purposes.
There is plenty of misconduct, plenty of selfish
disregard of the rights of others, and especially of
the weak. There is also plenty of honorable and
disinterested effort to prevent such misconduct or to
minimize its effects. Any rational attempt to pre-
vent or counteract the evils, by legislation or other-
774 Gubernatorial Messages
wise, is deserving of hearty support; but it can not
be too deeply impressed upon us that such attempts
can result in permanent good only in proportion as
they are made in a sane and wholesome spirit, as far
removed as possible from whatever is hysterical or
revolutionary. It is infinitely better when needed
social and civic changes can be brought about as the
result of natural and healthy growth than when they
come with the violent dislocation and widespread
wreck and damage inevitably attendant upon any
movement which is revolutionary in its nature.
At the same time a change should never be shirked
on the ground of its being radical, when the abuse
has become flagrant and no other remed}'' appears
possible. This was the case with the taxation of
local franchises in this State. For years most of
these franchises escaped paying their proper share
of the public burdens. The last Legislature placed
on the statute book a law requiring them to be treat-
ed as real estate for the purposes of taxation, the tax
to be assessed and collected by the State Assessors
for the benefit of the localities concerned. This
marks an immense stride in advance. Of course at
first serious difficulties are sure to arise in enforcing
it. The means for carrying it into effect are very
inadequate. There may be delay before we get from
it the substantial additions to the revenue which will
finally accrue, and there may be disappointment to
the enthusiasts who are so apt to hope too much from
such legislation. But it will undoubtedly add largely
to the public revenues as soon as it is fairly in opera-
Gubernatorial Messages 775
tion, and the amount thus added will increase stead-
ily year by year. The principle which this law estab-
lishes has come to stay. There will doubtless have
to be additional legislation from time to time to per-
fect the system as its shortcomings are made evident
in actual practice. But the corporations owning
valuable public franchises must pay their full and
proper share of the public burdens.
The franchise tax law is framed with the intent
of securing exact and equal justice, no more and no
less. It is not in any way intended as a means for
persecuting or oppressing corporations. It is not
intended to cut down legitimate dividends ; still less
to cut down wages or to prevent a just return for
the far-sighted business skill of some captain of in-
dustry who has been able to establish a public service
greatly to the advantage of the localities concerned,
where before his time men of less business capacity
had failed. But it is intended that property which
derives its value from the grant of a privilege by
the public, shall be taxed proportionately to the
value of the privilege granted. In enforcing this
law, much tact, patience, resolution and judgment
will be needed. All these qualities the State Board
of Tax Commissioners have thus far shown. Their
salaries are altogether inadequate, for the new law
has immensely increased not only their responsibili-
ties, but their work. They should be given not only
the needed increase for themselves, but also an ap-
propriation for an additional number of clerks and
experts.
77^ Gubernatorial Messages
During the year 1899 not a single corporation has
received at the hands of the State of New York
one privilege of any kind, sort or description, by
law or otherwise, to which it was not entitled, and
which was not in the public interest; nor has cor-
porate influence availed against any measure which
was in the public interest. At certain times, and in
certain places, corporations have undoubtedly ex-
erted a corrupting influence in political life ; but in
this State for this year it is absolutely true, as shown
by the history of every measure that has come before
the Legislature from the franchise tax down, that no
corporate influence has been able to prevail against
the interests of the public.
It has become more and more evident of late
years that the State will have to act in its collective
capacity as regards certain subjects which we have
been accustomed to treat as matters affecting the
private citizen only, and that furthermore, it must
exercise an increasing and more rigorous control
over other matters which it is not desirable that it
should directly manage. It is neither possible nor
desirable to lay down a general hard and fast rule
as to what this control should be in all cases. There
is no ix)ssible reason in pure logic why a city, for
instance, should supply its inhabitants with water,
and allow private companies to supply them with
gas, any more than there is why the general govern-
ment should take charge of the delivery of letters but
not of telegrams. On the other hand, pure logic has
a very restricted application to actual social and civic
Gubernatorial Messages 777
life, and there is no possible reason for changing
from one system to the other simply because the
change would make our political system in theory
more symmetrical. Obviously it is undesirable that
the government should do anything that private in-
dividuals could do with better results to the com-
munity. Everything that tends to deaden individual
initiative is to be avoided, and unless in a given case
there is some very evident gain which will flow from
State or municipal ownership, it should not be adopt-
ed. On the other hand, when private ownership en-
tails grave abuses, and where the work is of a kind
that can be performed with efficiency by the State or
municipality acting in its collective capacity, no
theory or tradition should interfere with our mak-
ing the change. There is grave danger in attempting
to establish invariable rules; indeed it may be that
each case will have to l3e determined upon its own
merits. In one instance a private corporation may
be able to do the work best. In another the State
or city may do it best. In yet a third, it may be
to the advantage of everybody to give free scope to
the power of some individual captain of industry.
On one point there must be no step backward.
There is a consensus of opinion that New York
must own its own water supply. Any legislation
permitting private ownership should be annulled.
Nothing needs closer attention, nothing deserves
to be treated with more courage, caution and sanity,
than the relations of the State to corporate wealth,
and indeed to vast individual wealth. For almost
77^ Gubernatorial Messages
every gain there is a penalty, and the great strides in
the industrial upbuilding of the country, which have
on the whole been attended with marked benefit,
have also been attended by no little evil. Great for-
tunes are usually made under very complex condi-
tions both of effort and of surrounding, and the mere
fact of the complexity makes it difficult to deal with
the new conditions thus created. The contrast of-
fered in a highly specialized industrial community
between the very rich and the very poor is exceed-
ingly distressing, and while under normal conditions
the acquirement of wealth by an individual is neces-
sarily of great incidental benefit to the community
as a whole, yet this is by no means always the case.
In our great cities there is plainly in evidence much
wealth contrasted with much poverty, and some of
the wealth has been acquired, or is used, in a manner
for which there is no moral justification.
A profound political and social thinker has recent-
ly written : ''Wealth which is expended in multiply-
ing and elaborating real comforts, or even in pleas-
ures which produce enjoyment at all proportionate
to their cost, will never excite serious indignation.
It is the colossal waste of the means of human hap-
piness in the most selfish and most vulgar forms of
social advertisement and competition that gives a
force to passions w^hich menace the whole future of
our civilization." But in continuance this writer
points out that the only effectual check lies in the
law of public opinion. Any attempt to interfere
by statute in moral questions of this kind, by fetter-
Gubernatorial Messages 779
ing the freedom of individual action, would be in-
jurious to a degree far greater than is the evil aimed
at. Probably the large majority of the fortunes that
noAV exist in this country have been amassed, not by
injuring mankind, but as an incident to the con-
ferring of great benefits on the community — what-'
ever the conscious purpose of those amassing them
may have been. The occasional wrongs committed
or injuries endured are on the whole far outweighed
by the mass of good which has resulted. The true
questions to be asked are : Has any given individ-
ual been injured by the acquisition of wealth by any
man? Were the rights of that individual, if they
have been violated, insufficiently protected by law?
If so, these rights, and all similar rights, ought to
be guaranteed by additional legislation. The point
to be aimed at is the protection of the individual
against wrong, not the attempt to limit and hamper
the acquisition and output of wealth.
It is almost equally dangerous either to blink evils
and refuse to acknowledge their existence or to
strike at them in a spirit of ignorant revenge, there-
by doing far more harm than is remedied. The
need can be met only by careful study of conditions,
and by action which, while taken boldly and without
hesitation, is neither heedless nor reckless. It is well
to rerriember on the one hand that the adoption of
what is reasonable in the demands of reformers is
the surest way to prevent the adoption of what is
unreasonable; and on the other hand that many of
the worst and most dangerous law^s which have been
ySo Gubernatorial Messages
put upon the statute books have been put there by
zealous reformers with excellent intentions.
This problem has a hundred phases. The rela-
tion of the capitalist and the wageworker makes one ;
the proper attitude of the State toward extreme pov-
erty another ; the proper attitude of the State toward
the questions of the ownership and running of so-
called "public utilities," a third. But among all
these phases, the one which at this time has the
greatest prominence is the question of what are com-
monly termed "trusts," meaning by the name those
vast combinations of capital, usually flourishing by
virtue of some monopolistic element, which have
become so startlingly common a feature in the in-
dustrial revolution which has progressed so rapidly
during recent years.
Every new feature of this industrial revolution
produces hardship because in its later stages it has
been literally a revolution instead of an evolution.
The new inventions and discoveries and the new
methods of taking advantage oi the business fa-
cilities afforded by the extraordinary development
of our material civilization have caused the changes
to proceed with such marvelous rapidity, that at each
stage some body of workers finds itself unable to
accommodate itself to the new conditions with suf-
ficient speed to escape hardship. In the end the ac-
commodation of the class takes place; at times too
late for the well-being of many individuals. The
change which would be unaccompanied by hardship
if it came slowly, may be fraught with severe suffer-
Gubernatorial Messages 781
ing if it comes too fast, even when it is in the end
beneficial. Occasionally, moreover, the change is
positively deleterious, and very often, even when
it is on the whole beneficial, it has features which are
the reverse. In some cases, while recognizing the
evil, it is impossible with our present knowledge to
discover any remedy. In others, a remedy can be ap-
plied, but as yet only at a cost that would make it
worse than the trouble itself. In yet others it is pos-
sible, by acting with wisdom, coolness and fearless-
ness, to apply a remedy which will wholly or in
great part remove the evil while leaving the good be-
hind. We do not wish to discourage enterprise. We
do not desire to destroy corporations; we do desire
to put them fully at the service of the State and the
people.
The machinery of modern business is so vast and
complicated that great caution must be exercised in
introducing radical changes for fear the unforeseen
effects may take the shape of widespread disaster.
Moreover, much that is complained about is not
really the abuse so much as the inevitable develop-
ment of our modem industrial life. We have moved
far away from the old simple days when each com-
munity transacted almost. all its work for itself and
relied upon outsiders for but a fraction of the neces-
saries, and for not a very large portion even of the
luxuries, of life. Very many of the anti-trust laws
which have made their appearance on the statute
books of recent years have been almost or absolutely
ineffective because they have blinked the all-im-
782 Gubernatorial Messages
portant fact that much of what they thought to do
away with was incidental to modern industrial con-
ditions, and could not be eliminated unless we were
willing to turn back the wheels of modern progress
by also eliminating the forces which had brought
about these industrial conditions. Not only trusts,
but the immense importance of machinery, the con-
gestion of city life, the capacity to make large for-
tunes by speculative enterprises, and many other
features of modern existence could be thoroughly
changed by doing away with steam and electricity;
but the most ardent denouncer of trusts would hesi-
tate to advocate so drastic a remedy. What remains
for us to do, as practical men, is to look the condi-
tions squarely in the face and not to permit the
emotional side of the question, which has its proper
place, to blind us to the fact that there are other
sides. We must set about finding out what the real
abuses are, with their causes, and to what extent
remedies can be applied.
That abuses exist, and that they are of a very
grave character, it is worse than idle to deny. Just
so long as in the business world unscrupulous cun-
ning is allowed the free rein which, thanks to the
growth of humanity during the past centuries, we
now deny to unscrupulous physical force, then just
so long there will be a field for the best effort of
every honest social and civic reformer who is capa-
ble of feeling an impulse of generous indignation
and who is far-sighted enough to appreciate where
the real danger to the country lies. The effects are
Gubernatorial Messages 783
bad enough when the unscrupulous individual works
by himself. They are much worse when he works
in conjunction with his fellows through a giant cor-
poration or trust. Law is largely crystallized cus-
tom, largely a mass of remedies which have been
slowly evolved to meet the wrongs with which hu-
manity has become thoroughly familiar. In a simple
society only simple forms of wrong can be com-
mitted. There is neither the ability nor the oppor-
tunity to inflict others. A primitive people provides
for the punishment of theft, assault ard murder, be-
cause the conditions of the existing society allow the
development of thieves and murderers and the com-
mission of deeds of violence ; but it does not provide
for the punishment of forgery because there is noth-
ing to forge, and therefore, no forgers. The gradual
growth of humanitarian sentiment, often uncon-
scious or but semi-conscious, combined with other
causes, step by step emancipated the serf from bodily
subjection to his over-lord; he was then protected in
his freedom by statute; but when he became a fac-
tory hand the conditions were new and there were
no laws which prevented the use of unguarded ma-
chinery in the factories, or the abuses of child labor,
forced upon the conscientious employers by the un-
scrupulous until legislation put them on an equality.
When new evils appear there is always at first diffi-
culty in finding the proper remedy ; and as the evils
grow more complex, the remedies become increas-
ingly difficult of application. There is no use what-
ever in seeking to apply a remedy blindly; yet
784 Gubernatorial Messages
this is just what has been done in reference to
trusts.
Much of the legislation not only proposed but
enacted against trusts is not one whit more intelli-
gent than the mediaeval bull against the comet, and
has not been one particle more effective. Yet there
can and must be courageous and effective remedial
legislation.
To say that the present system of hap-hazard
license and lack of supervision and regulation, is the
best possible, is absurd. The men who endeavor to
prevent the remedying of real abuses, not only show
callous disregard for the suffering of others, but
also weaken those who are anxious to prevent the
adoption of indiscriminate would-be remedies which
would subvert our whole industrial fabric. The
chicanery and the dishonest, even though not tech-
nically illegal, methods through which some great
fortunes have been made, are scandals to our civil-
ization. The man who by swindling or wrong-
doing acquires great wealth for himself at the ex-
pense of his fellow, stands as low morally as any
predatory mediaeval nobleman and is a more dan-
gerous member of society. Any law, and any
method of construing the law which will enable the
community to punish him, either by taking away his.
wealth or by imprisonment, should be welcomed.
Of course, such laws are even more needed in deal-
ing with great corporations or trusts than with in-
dividuals. They are needed quite as much for the
sake of honest corporations as for the sake of the
Gubernatorial Messages 785
public. The corporation that manages Its affairs
honestly has a right to demand protection against
the dishonest corporation. We do not wish to put
any burden on honest corporations. Neither do we
wish to put an unnecessary burden of responsibility
on enterprising men for acts which are immaterial;
they should be relieved from such burdens, but held
to a rigid financial accountability for acts that mis-
lead the upright investor or stockholder, or defraud
the public.
The first essential is knowledge of the facts, pub-
licity. Much can be done at once by amendment of
the corporation laws so as to provide for such pub-
licity as will not work injustice as between business
rivals.
The chief abuses alleged to arise from trusts are
probably the following: Misrepresentation or con-
cealment regarding material facts connected with the
organization of an enterprise; the evils connected
with unscrupulous promotion ; overcapitalization ;
unfair competition, resulting in the crushing out
of competitors who themselves do not act improper-
ly ; raising of prices above fair competitive rates ; the
wielding of increased power over the wage-earners.
Of course none of these abuses may exist in a par-
ticular trust, but in many trusts, as well as in many
corporations not ordinarily called trusts, one or more
of them are evident. Some of these evils could be
partially remedied by a modification of our corpo-
ration laws; here we can safely go along the lines
of the more conservative New England States, and
17— Vol. XIV
786 Gubernatorial Messages
probably not a little farther. Such laws will them-
selves provide the needed publicity, and the needed
circumstantiality of statement. We should know
authoritatively whether stock represents actual value
of plants, or whether it represents brands or good
will: or if not, what it does represent, if anything.
It is desirable to know how much was actually
bought, how much was issued free; and to whom;
and, if possible, for what reason. In the first place,
this would be invaluable in preventing harm being
done as among the stockholders, for many of the
grossest wrongs that are perpetrated are those of
promoters and organizers at the expense of the
general public who are invited to take shares in busi-
ness organizations. In the next place, this would
enable us to see just what the public have a right to
expect in the way of service and taxation. There
is no reason whatever for refusing to tax a corpora-
tion because by its own acts it has created a burden
of charges under which it staggers. The extrava-
gant man who builds a needlessly large house never-