factory taxes (as, for example, the inheritance tax), there seems no reason why we should advocate the abandonment of license taxes because they have no apparent philosophical basis. Many of these licenses, notably the high liquor, cigarette, and exhibition licenses, are sumptuary measures. The first of these has had a most beneficial influence in Baltimore, and there seems little reason why we should not regulate by taxation if the measure of regulation desired by the public can be thus secured. The traders' licenses are not excessive and it is improbable that prices are appreciably affected by them. If the number of such fixed charges could be increased without causing more injustice or irritation than the average license of the present, the increase would seem, pro tanto, a most desirable substitute for the property tax.

Many of the licenses are specially devoted to the interests of the particular branch of trade from which they are drawn. Thus, most of the oyster licenses are imposed for the sole purpose of maintaining the supremacy of Maryland in the oyster trade. The same motive explains the fertilizer license. Baltimore is now the largest manufacturing center of the fertilizer industry in the country. In order to keep the standard of these goods high this license is imposed and the proceeds devoted to the maintenance of a chemical laboratory where the inspection and analysis of fertilizers is constantly going on.

In glaring contrast to most of the licenses are those required of peddlers and auctioneers in Baltimore. The latter occupation is a virtual monopoly in Baltimore, only eight licenses being issued in 1898. The law provides that auctioneers shall be appointed by the governor and shall pay $450 per annum if their sales excluding real estate and houses are less than $150,000. Where such sales amount to more than $150,000, the license costs $750. Whether this tax meets the approval of those who can afford to pay it, is not plain. But it certainly renders one legitimate vocation inaccessible to the poorer classes and undoubtedly diminishes the revenue that would accrue from this source if the licenses were of normal amount.

The excessive license charge required of peddlers furnishes another instance of explicable but unjustifiable trade antipathy. Scarcely a session of the General Assembly passes without these

charges being increased or extended over counties where formerly they did not apply. If auctioneers and peddlers thrive so well and it requires such an effort to repress them, it is only proof that they are performing some economic function better than the ordinary traders, and they should be encouraged, not discouraged. The excessive peddler's license is due in some degree to a survival of the Jew-baiting instinct. This charge is undoubtedly aimed at the industrious Jewish itinerant who peddles notions, since hawkers of fish and green provisions are exempt.

Licenses are granted by the clerks of the circuit courts. Sheriffs and constables are enjoined to make diligent search for violators of the law, and informants in every case are given one half of the penalty imposed. The law is generally well enforced and there are no wholesale evasions. Some of the penalties provided exhibit peculiar prejudices similar to those noted in the case of peddlers; for example, a penalty of $500 is imposed upon people doing a broker's business or keeping a public billiard table without a license, while the pecuniary penalty for selling liquor without a license varies from $50 to $200.

The more serious problem to be solved in connection with licenses is not whether they should be retained, but whether their proceeds should go to the state or the local division in which they are collected. The state retains one fourth of the proceeds of the high liquor license collected in Baltimore. It retains the entire proceeds of the traders' licenses collected in Baltimorenearly $104,000 in 1898. Two questions are frequently asked by the citizens of Baltimore: Why should any of this money go to the state at all, and, if the state has a just claim to the proceeds of license taxes, why should it take a part in the one case and the whole amount in the other?

The answer to the latter question is not difficult to find. The city of Baltimore, in so far as its liquor trade is concerned, is subjected to heavier taxation than other local districts. A portion of this taxation, about equivalent to the amount of taxes collected from liquor dealers in other parts of the state, is retained by the state in order to place Baltimore upon an equality with other local divisions in this respect. The justice of this apportionment must be acknowledged if it be decided that the state

has a better claim to the proceeds of licenses than the several local divisions.

The mayor of Baltimore has recently criticised the practice of using the traders' and other licenses for state purposes. The public expenses entailed by traders are borne by the city; the logical fund for the payment of these expenses, he claims, is that derived from the licenses imposed upon traders.

The question involved is clearly one of equity, to be decided by reference to the general principle in accordance with which license taxes are imposed. If licenses are paid in return for and in proportion to public services rendered, the proceeds, speaking generally, should go to the local districts in which they are collected. If they are payments for the grant of public privileges, the proceeds should go to the state.

In origin, the license tax is closely akin to the modern franchise tax, and appears, in its historical aspect, as the price of the privilege to do business; in Mississippi, for example, the tax is still known as the privilege-license tax. The grant of such privileges lies wholly within the province of the sovereign power; it is not within the ordinary power of a municipal corporation either to authorize, prohibit, or circumscribe by license the pursuit of a calling or trade not inimical to the public health, morals, or safety. In consequence of these facts, the payments for the grants mentioned should be retained by the power which conferred them; and this power is the state. This interpreta

tion of the nature of the license tax is further supported by the difference in the burden imposed upon the several kinds of business. The broker and the peddler have no extensive stocks or establishments necessitating the maintenance of police and fire departments, yet they pay higher licenses than ordinary traders. Moreover, the license charges are substantially uniform throughout the state, irrespective of the degree of protection afforded by the various local governments.

It is admitted that the above is an ultra-theoretical view of the nature of the license tax, but the distribution of taxation among individuals and the distribution of the proceeds of taxation among the several governmental divisions are problems which are essentially theoretic. It is also admitted that there are many weighty arguments which may be adduced in support

of the justice of the mayor's plea. But in the opinion of the writer, the distinctive features of the license stamp it unmistakably as a state tax as distinguished from a municipal charge.

59. License Taxes in Mississippi. - Even more inclusive is the system of license taxes of Mississippi and most other Southern states. Dr. C. H. Brough has written the following account of the Mississippi system:

Mississippi, in accord with the general practice of Southern commonwealths, imposes a privilege-license tax on well-nigh every occupation. An examination of the present revenue laws reveals the fact that there are one hundred and nineteen occupations to which licenses must be issued as a condition precedent to the transaction of business.

The importance of the privilege-license system in Mississippi is conspicuous. From the time when the dominant landed proprietors of an antebellum régime demanded the taxation of other objects than their farms and estates, to the present day, when the need of revenue and a sentiment in behalf of local protection sustains what would seem to be a fiscal anachronism, the privilege-license system has been an important source of revenue.

Of recent years the number of occupations subject to the payment of licenses has multiplied and the charges have increased. In the early laws we found the privilege schedule limited to auction sales, billiard tables, bowie knives, nine-pin alleys, peddlers, race horses or tracks, taverns, groceries, and theaters. An examination of this list shows that the articles specified are principally luxuries, the restricted consumption of which was deemed desirable.

In striking contrast to this limited use of the privilege system is that implied in the revenue laws of 1898. Here the predominance of the idea of revenue over regulation permits of no discrimination between necessary goods and luxuries, and between useful and useless occupations. Railroads and lawyers are placed on the same footing with merry-go-rounds and dealers in

1 Studies in State Taxation, edited by J. H. Hollander. Johns Hopkins University Studies in Historical and Political Science, Series XVIII. Reprinted by consent of the editor, author, and publisher.

hopfenweis. Bedspring dealers are as important in the eye of the law as boarding-house keepers.

This enlargement of the scope of the privilege-license system indicates a gradual movement away from sole dependence upon the general property tax, a movement accelerated by the practical defects of the latter and the need of applying a fiscal differential to the modern complex industrial organization. The rigidity of the state constitution has necessitated the taxation of corporations in the form of a privilege-license tax. That the taxation of corporations has taken definite form in the privilegelicense system may be seen from the fact that railroad, express, sleeping-car, telephone, telegraph, and insurance companies are subject to the imposition of a privilege tax on those elements supposed to represent their taxable capacity.

Accident insurance companies pay $250 per annum; life insurance companies a graduated tax of $250 for the first year, $500 the second, $750 the third, and $1000 for the fourth year and thereafter. Insurance agents are also subject to a privilege tax, rated according to the size of the city or town where their business is transacted. Thus, an insurance agent doing business in a city of 5000 or more inhabitants, pays $40; in a city of more than 2000 and less than 5000 inhabitants, $25; in a town or village of less than 2000 inhabitants, $20; other insurance agents, $10.

Express companies pay a privilege tax of $500, together with a tax of $1 for each mile of railroad along which they operate, and a local property tax according to charter exemption and gross earnings. Railroads are divided into four classes according to gross earnings. The first class pays $20 per mile; the second, $15; the third, $10; and narrow gauge, $2. An interesting provision was inserted in the laws of 1898, whereby railroads claiming exemption from state supervision under maximum and minimum provisions in their charter are compelled to pay an additional privilege tax of $10. Sleeping and palace car companies pay $200 each. Telegraph companies pay $250; or if the line is less than 1000 miles, 25 cents per mile. Telephone exchanges are graded according to the number of subscribers. Thus, an exchange with 20 subscribers or less pays $5, while one with more than 150 subscribers pays $100.