transported. The particulars appear in the analysis of the Hungarian law here appended. (Enclosed I.) II. "In how far are the railroad companies taxed as holders of realty?" A. All the realty is exempt from taxation. III. "In how far as holders of personalty?" A. The personalty is also exempt from taxation. IV. "In how far are they subject to a franchise tax?" A. There is no tax on the franchise. V. "In how far is their stock taxed as personalty to its owners?" A. The shares are not subject to taxation. VI. "What taxes are levied on the receipts of the companies,. whether gross or net ?" A. There is no tax upon either gross or net receipts in Hungary. Explanation. With one or two exceptions, in both Austria and Hungary, the plan was early adopted of providing for the ultimate acquisition of the railroads by the Government. To this end the concessions were granted for ninety years, with the condition that at the end of that. period the whole franchise and property, with an equipment equal to the original amount, should revert absolutely to the State. To save the builders and owners from loss, a system of amortisation was established, in pursuance of which a certain portion of the capital in shares and bonds was to be refunded in each year, by which the reimbursement would be completed in ninety years. In principle it is a sinking fund. In Hungary the Government guarantees the amortisation fund, and an interest of five per cent. on capital and bonded debts, in silver; and if the net earnings are not sufficient, the deficiency is made good out of the National treasury-but to be refunded if subsequent net receipts are sufficient. In point of fact, in the aggregate there is each year a deficiency of several millionscharged upon the State Treasury of Hungary. Under such circumstances it is evident that taxes upon the corporation would involve the paying in of money with one hand only to be paid back by the other. Hence the State levies its revenue upon passengers and freighters as a surtax upon the regular tariff charges of the railroads, these latter being the agents to collect it, and to account to the Govern ment. In effect it is a tax on the gross receipts, while in law it is a tax on private business. This explanation, together with the summary of the legal provisions hereto appended, will fully answer the inquiries so far as they relate to Hungary. Some further elucidation of the railroad system is reserved for a subsequent dispatch, when some expected documents shall have been received at the Legation, showing more completely the legal provisions for Austrian railroads. I have the honor to be, sir, Your most obedient servant, JOHN A. KASSON. RUSSIA. LEGATION OF THE UNITED STATES, ST. PETERSBURG, RUSSIA, March 20, 1879. To the Honorable W. M. Evarts, Secretary of State, Washington : SIR Referring to your dispatch No. 39, addressed to Mr. Stoughton, relative to methods of taxation as respects railroads and railroad securities in use in Russia, I have the honor to report: 1st. That the railroad companies are free from taxation as holders of property, real or personal. 2d. The stock is free from taxation to its owners. 3d. On the 1st day of January, 1879, the Government levied a tax of 25 per cent. on all passenger tickets of the 1st class, 20 per cent. on 2d class, and 15 per cent. on 3d class. With the above exception, there is no direct tax on the receipts of the companies, net or gross. 4th. The railroad companies of Russia are under the control and exercise of the Government, and by their respective statutes subject to a general franchise tax. But before the usual conditions of a franchise can be satisfactorily stated, an explanation must be given of the method followed to obtain it. The founders of the company must, in accordance with the form instituted for that purpose in the Empire, present to the Minister of Ways and Communication an outline of the enterprise. By direction of the Minister, the matter is then intrusted to a Board of Engineers belonging to the ministry, with instructions to examine and report as to the feasibility of the project, and to prepare plans and estimates of construction. If, after examination, it be deemed beneficial to give effect to the enterprise, the plans and estimates are placed by the Minister before the Committee of Ministers for their consideration and action, and, if approved, are submitted. for the inspection of his Majesty the Emperor. After the imperial sanction has been obtained for the organization of the company, the Ministers of Ways and Communication, and of Finance, elaborate the conditions of the concession and the statutes of the company. The concession, with the statutes elaborated and recommended by the Ministers of Ways and Communication, and of Finance, is submitted to the Committee of Ministers, and, if approved, is presented for the inspection and sanction of his Majesty the Emperor, The concession usually defines: 1st. The name, object, and extent of the undertaking. 2d. The duty of the founders of the company, including the amount of caution money to be deposited by the founders in a government depository, in order to guarantee the establishment of the company within a specified time. The statutes of the companies are the laws to be observed by the companies, and are invariably, after the sanction of the Emperor, printed and filed among the collection of laws for the Empire. The following appear to me to be the principal provisions of the statutes of the various companies: 1st. They fix the duration of the franchises, usually from seventyfive to eighty-one years, at the expiration of which period the exclusive ownership of the entire line, with all the real estate and rolling stock of the company, is vested in the government without any payment therefor 2d. They specify the amount of the capital of the company, which is usually one-third in shares and two-thirds in bonds. 3d. They define the number and dimensions of the postal cars to be furnished by each company for the gratuitous transportation of post officials, mails, packages, etc., etc. 4th. They exact the gratuitous use by the government of the company's telegraph. 5th. They define the quantity of rails, rolling stock, bridges, etc., which must be bought in Russia. 6th. They determine the percentage of reduction, usually from 40 to 75 per cent. of the tariff, by which soldiers under arms are to be transported. 7th. They determine the percentage of the net receipts to be paid to the reserve fund and as dividends to shareholders. 8th. They concede to the companies, free of cost, all government land, stone or other material within certain specified limits, and which may be required for the legitimate use of the company in the construction or improvement of their lines. 9th. They declare the property, shares and bonds of the companies exempt from taxation. 10th. They guarantee to the companies an annual net revenue of (5) five per cent. on the share and bonded capital. I am trustworthily informed that with the exception of three companies, the government pays annually to the various companies from 1 to 4 per cent. of this guarantee.. The companies are all under the control of the Minister of Ways and Communication, who, among other things, determines the tariffs for passengers and freights. It will be seen from the statements here presented that the government takes away from the founders, substantially, the control and exercise of the roads. The above answers are therefore as complete as circumstances will admit of their being made, and I trust they will be found satisfactory. I have the honor to be, sir, your obedient servant, SWITZERLAND. Mr. Hammer to Mr. Fish. W. H. EDWARDS. BERNE, March 25, 1879. In answer to the note of the Chargé d'Affaires of the United States of the 10th inst., the Federal Council has the honor to furnish him with the following information: I. The Swiss Confederation does not impose direct taxes; consequently the railway companies pay no contribution to the federal treasury. On the other hand, the companies are bound as regards the Confederation, by virtue of Article 19 of the law of Dec. 23, 1872, concerning railways: a. To carry free of charge the letters and parcels, concerning which the prerogative of the State has reserved the right of transportation to the postal administration. For the other parcels (de messagerie) expressed, the postal administration pays to the railway company a compensation calculated on the basis of the general express tariff (tarif général de grande vitesse) by calculating the weight of the parcels for one month, and also taking into account the diminution of the (prestations) contributions occasioned the companies by such transportations. If the Confedera tion and the companies cannot agree, the Federal Tribunal decides. The conductor attached to this service is carried free. b. To carry free of charge the postal cars as well as their employees, and the persons charged with the inspection. c. To pay an annual tax of concession of fifty francs for each section of one kilometre in operation, when the revenue of the operating attains four per cent. after deducting the amount for loss by wear and tear, or that assigned to the reserve fund. In the event of this revenue, thus calculated, attaining five per cent., the tax of concession may be raised to fr. 100, and to fr. 200, if this revenue is six per cent. or over. II. Moreover, the Cantons have the right to tax the railway companies in conformity with their legislation respecting taxation. Nevertheless, according to the circumstances, not only have certain companies obtained from the Cantons a complete exemption from taxation, while other railway enterprises have been called on to pay contributions to the Cantons or to the Communes, but there exists such a variety of provisions that it is not possible to fix a general principle applicable to the collection of these taxes. The Federal Council regrets that, consequently, it is impossible to reply categorically to the questions specially presented by the Chargé d'Affaires of the United States, and it avails itself of the occasion to renew to him the assurances of its high consideration. In the name of the Federal Council, The President of the Confederation, HAMMER. SCHIESS. SUMMARY OF LAWS IN RELATION TO RAILROAD TAXATION IN FORCE IN THE VARIOUS STATES OF THE UNION. [The States are in alphabetical order.] ALABAMA. Returns are made to a State Board of the whole length of track, and of the length in each County and town; also of the value of the road and of all real estate used for operating it, and of the rolling stock. The board finds the value of each mile of road, and notifies the assessors of Counties and towns of the amount assessable by them, depending on the number of miles in their limits. They add the value of other real estate and of tools and machinery, and assess on the aggregate as on the estate of an individual |