Cooperation of munic.i.p.ality, State, and Nation, in keeping and administering for the general good the property of all the people--this is the policy of common sense and common honesty (applause). Strife and dissension between munic.i.p.ality, State, and Nation, that the reign of pillage may go on and that mighty acc.u.mulations of wealth may be upbuilded upon the ruins of the people's resources--_that_ is the policy of private avarice and private plunder (applause). Coal, timber, asphalt, phosphates, water-powers--all the property of the people--must be kept and administered for the people by the Government which Lincoln said was "of the people by the people for the people" (applause).

Already this greatest of our present-day National policies is well under way. Let any man beware how he r.e.t.a.r.ds or hinders it (applause). Already we have saved much of the people's property still belonging to the people. We must save _all_ of the people's property still belonging to the people. (Applause and cries of "Good") "Honor to whom honor is due."

(Applause) Let us not forget, in this great hour, that the man who, by thought, word, and deed, has wrought for this great reform, until today he stands its National personification (applause), that splendid, courageous, pure, unselfish young American, the President of the National Conservation a.s.sociation, Gifford Pinchot. (Tumultuous applause and cheers, calls for "Pinchot"; and the audience rose, gave the Chautauqua salute, and continued cheering for many minutes)

For years--and I speak from personal knowledge, because twelve years ago when I entered the Senate I was made the chairman of the then despised forestry committee--for years Gifford Pinchot has ceaselessly worked and fearlessly fought to keep for the people the property of the people which special interests were trying to steal from the people (applause).

And in that Nation-wide battle he has been the field-officer of the man who _first_ succeeded in making Conservation a permanent and practical policy of American statesmanship, Theodore Roosevelt. (Great applause. A Voice: Let us vote to give him back his job!)

The soul of our prosperity--even of our very life--is in the idea of our unity as a people. Let munic.i.p.ality, State, and Nation, each act and, within its own province, work to keep what belongs to the people for the people, instead of the munic.i.p.ality, State, and Nation, each within its province, conniving at the waste of the people's property for the upbuilding of the wealth of special interests to the detriment of all the people. The wise, honest and economic administration of the people's welfare means the just advantage which individual enterprise and thrift as of right ought to have. The unwise, uneconomic and dishonest waste of the people's resources for the enrichment of the special few, this in the end, believe me, is the denial of that just advantage which individual thrift, enterprise, and integrity as of right ought to have.

(Applause)

The young men of today in working for themselves individually must think and act for what the Const.i.tution calls "the general welfare" of the whole people (applause). After all, only as the Nation is prosperous can any State be really prosperous. After all, only as the Nation is powerful can any State be really safe from foes, foreign and domestic.

The young men of the twentieth century in this Republic are not the heirs of the provincial idea which we inherited from the British kings, and which has so hindered our real progress as a people, squandered so much of the people's resources, shed so much of the people's blood. No!

The young men of today are the heirs of all the advancement that our struggling millions have made toward their common brotherhood. The young men of today are the heirs of all the victories which heroes and statesmen have won for the general welfare. The young men of today are the heirs of all the unifying influences by which the genius of man has knit this great people into one splendid family. And so the young American of today, when thinking of himself, must think in the terms of the Nation; through his veins must pulse the blood of our general welfare; his every thought and act must be for the common good of all.

And only so can his individual success be well builded; and when it is builded on such foundation, though "the rains descend and the floods come and the winds blow" and beat upon a house thus builded "it shall not fall, for it is founded upon a rock." (Applause)

Why was the American Nation founded? What is the purpose of this Republic? It is to create a greater human happiness than the world has ever known (applause). It is to enable millions of men and women to cooperate in building clean, honorable, prosperous homes. And so let us Americans move forward as brothers and as sisters until we shall give the whole world an example of one great brotherhood in heart and in deed as well as in words. (Great applause)

There were repeated calls for "Pinchot"; and Mr Pinchot, coming forward amidst great cheers and hearty applause, said--

Ladies and Gentlemen, Members of this great meeting: There can be in a man's life but few moments like this, in seeing policies in which he believes and for which he has tried to work so splendidly acclaimed by such a meeting, when at first they were questioned. I haven't anything to say at this time except to thank you most profoundly, and to add that the policies for which this Congress stands are sweeping the country as they are sweeping this body--and that, so far as the United States is concerned, Conservation, I believe, has won out. (Applause) I thank you!

President BAKER--Ladies and Gentlemen: We all know Conservation has, with such a leader, won out. (Applause)

We now take up "A Rational System of Taxing National Resources," by Frank L. McVey, President of the University of North Dakota, whom I have the pleasure of introducing. (Applause)

President MCVEY--Mr Chairman and Good Friends: The invitation of the President of the Congress to be present and to deliver an address on the subject of a rational system of taxing natural resources, asked that specific suggestions be made of a practical nature for the improvement of our present laws on this subject. This places upon me a heavy responsibility if the suggestions made are to be accepted in any serious way. The t.i.tle of the address a.s.signed emphasizes a _rational_ system; it implies that the one now in vogue cannot be so designated, and that any system of taxation has a close relation to the Conservation of natural resources. This, if I may put it in so many words, is my thesis.

It is unnecessary for me to go into the need of Conservation, since that has been done in the previous Congress and at various times in the public prints. The question then to which I must devote the time of the program a.s.signed to me is this: How does taxation affect the Conservation of natural resources, and what suggestions of a practical nature can be made for the betterment of the taxation of such resources?

It may be said in the beginning that the difficulties involved in the taxing of natural resources exist to still greater degree in the case of other property. Generally speaking, we have not attained to a rational system of taxation in any field, and we are now attempting to revamp the old system and extend it, by adding to or taking from it. Economic conditions in America have changed from time to time, and these changes have forced upon us a reorganization of our methods, not only of manufacture and of transportation, but also of administration, government, and social organization. Such a condition of affairs is seen today in nearly every State, and attempts are being made to meet it in the specific instance of the fiscal problem by adding to the old system of taxation through the special taxation of corporations, inheritances, royalties, and incomes. The consequence is that so far as natural resources are concerned we have no principle existent in the general scheme of taxation that can be used to meet the new conditions that have arisen in our efforts to conserve our resources. Just as the problems of industrial organization have come upon the States, so now has come the problem of our natural resources. In hazy thinking, and sometimes in indefinite laws, we have attempted to regulate through legislation the great corporations of the present day; and in much the same manner we shall, by feeling our way, attempt to develop some plan of taxing natural resources.

Sometimes in discussing this question of the taxation of natural resources a great deal of emphasis is placed on the statement that it is the cause of the depletion of timber and mineral lands especially. I think it may be said at the outset that the taxation of natural resources is only one of many factors in the destruction of them. The extent to which this takes place is impossible to say, but the fact remains that the taxation of natural resources may or may not hasten the destruction of forest lands, the exploitation of minerals, and the cultivation of the soil. Where lands bearing timber are owned, interest charges with each year of ownership are piled up, and the same is true of the taxes. Where, on the other hand, lands are held through a royalty contract, the lessee is in a position to carry the lands without special cost to himself except that of the taxes. The consequence is that it is impossible to apply the same principle of taxation to agricultural lands, timber lands, minerals, and water-powers. There must be a differentiation between them, and a differentiation that will clearly meet the various uses to which they are put.

Without question, the general property tax, as it now stands upon the statute books of the different States, does not meet in any true sense of the term the general economic conditions, and the special needs of mining and lumbering in particular. The principle of taxing the product when it is placed upon the market applies particularly to mineral and timber lands, but the same principle in the case of agricultural lands would probably deter their use and fail to meet the needs of revenue as well as working to the discouragement of the agricultural industry. The single-taxers have insisted that the taxation of lands hastens its use, that it forces the owner to develop it; and this is just the thing that is needed in the special instances of agricultural lands and of town lots, but the same principle could not be applied to the other resources of the Nation.

It is possible for the owners of timber lands by following the principles of forestry to modify the product and to keep the land in producing condition indefinitely. Taxation of such land, therefore, should have in view the maintenance of this condition. It must be clearly understood, however, that the fear of fire, interest charges on investment, and the cost of management will act quite as surely toward the rapid destruction of forests as will taxation. These conditions must also be recognized by the State in the establishment of a fire warden system, and the encouragement of forestation through some plan of bonuses. Where forestation is not practiced, the taxation of timber products under present conditions, whether on stumpage or in transit to the saw-mills, is a serious problem--serious to the local governments because under existing laws logs in transit are taxable where they are owned, and serious to the owners of the timber lands because the fixed charges on their property increase each day without any income from them. As near as can be ascertained, the annual taxes on timber vary from one cent per thousand feet to fifty cents per thousand feet, with an average tax of somewhere in the neighborhood of fifteen cents per thousand feet. Interest charges are probably about twenty-three cents, making a total annual cost of something like thirty-eight cents per thousand feet. In ten years time the tax on each thousand feet of standing timber will amount to $1.50, which compounded with interest makes a total of $2.37. When added to the other charges it is probably true that the owner of timber under modern conditions must have at least $13.02 per thousand feet on his logs delivered at the mill if he is to come out even at the end of ten years with a profit of six percent.

The suggestions which have been made from time to time regarding the taxation of timber have as their fundamental principle the separation of the value of the land from the value of the timber. This plan meets the criticism of the local a.s.sessing officers by providing a basis of taxing annually a part of the valuation, and of procuring some income for the local government. If it is understood then that the land may be taxed annually and the timber product when it is cut, we have under this plan a simple scheme of taxation which will unquestionably meet the difficulty that is now urged against the general property a.s.sessment of timber lands. Under the old plan of valueing annually the property, it was difficult to secure an apprais.e.m.e.nt that was satisfactory to anybody; and, what was more, as the years went by the local governments found their a.s.sessed values decreasing and the burden of government materially increasing with the decline in amount of standing timber. The annual taxation of the land on which the timber stands meets this difficulty, while the taxation of the product at the time of harvesting provides a plan that is fair both to the local government and to the owner of timber.

On the other hand, the taxation of mineral properties differs from the taxation of timber lands in that it is not possible for the owner to increase by any plan of Conservation the amount of tonnage that he has in his possession. The Conservation which he might practice is the simple Conservation of saving for a future time. From the point of view of the State the problem is largely one of getting a share of the value of the minerals in the ground. The method that has been generally followed is that of making an apprais.e.m.e.nt of the mineral lands, which might be very far from or very near the truth. The same principle which is applied in the case of the timber lands, namely, the taxation of the product, should be applied to the taxation of mineral properties. There is no question that the easiest way, and the most satisfactory and acceptable way to all concerned, is a tonnage tax, varying possibly with the character of the ore and the cost of mining, but always depending for the rate and the amount on the ore that has been mined. It will probably be argued, as it has in other instances, that the local governments are compelled to rely largely for their support upon the taxes paid by the owners of mineral properties, and consequently a tonnage tax would deprive them of the regularity of their income. There is much to be considered in this point; but the taxation of the surface on some such basis as that seen in the case of the timber tax would provide a regular income, which would be supplemented by the amount of the tonnage taxes.

The rate of the tonnage tax would not, as in the case of the apprais.e.m.e.nt of a general property tax, tend to hasten the utilization of the ore. That would be determined entirely by the demand for it in the fields of manufacture. The real essence of the tonnage tax lies in the fact that value found in the ground is distinctly a product of nature, which an _ad valorem_ tax cannot recognize, and in consequence the State's right to a share of the value of the earth's products, together with the diminishing value element involved, are overlooked.

The protection of the local government, and often of the mineral owner, demands a combination of the tonnage tax and of the local land tax.

When we come to the taxation of water-power we are face to face with a problem that involves even more difficulties than are found in the case of the timber and mineral lands. The thing here involved is so elusive, so difficult of measurement, and requires such expensive administration, that it is quite conceivable that many years must elapse before an adequate plan for such taxation can be developed. A water-power, however, is perpetual, and in this particular it differs from timber and mineral properties, and is more akin to farm lands. It differs from the latter, however, in this particular, that the work once done in harnessing it is done once for all, and the annual labor expended upon it is not exhausted, as in the case of the farm. Nature, having been harnessed, is able to accomplish the work for which she is called upon.

The first step in any adequate system of taxing water-powers must be their survey. This means listing, locating, and measuring. It means, too, that the Legislature should a.s.sume at the beginning all water-powers belonging to the State, and that the acquirement of them must be through lease, as in the case of mineral lands in the State of Minnesota, for example. Several plans have been suggested for the taxation of water-power. One is the measurement of the water flowing over a dam, and another is the taxation of the actual horsepower developed. The latter plan is subject to many criticisms. The development of horsepower depends so largely on the skill of the engineer, on the capital invested, and on the way the water is handled, that it would be far better to measure the capacity of the dam under proper engineering authority and determine a fair rate for the amount of power produced by the water pa.s.sing over the dam. Of necessity many refinements of this plan would be required; such as the determination of the movement of the stream, the height of the water, the difficulties of harnessing the power; but it is possible, by taking into consideration the general expense of operating a water-power plant, to work out a rate which would be fair to the users as well as to the State. In no instance of Conservation does a greater need of proper taxation appear than in the case of water-power. Nature provides a perpetual force with but little expense after the necessary fundamentals have been arranged, and for the State to receive no compensation of any kind for the utilization of such a great wealth-producer is to bring into existence the greatest possible factor of injustice in the matter of taxation.

It will therefore be seen that a rational taxation of natural resources does not depend on any very great and intricate principle, but that, on the other hand, the principles involved are comparatively simple. It must be clearly understood as well that the taxation of land for agricultural purposes, for minerals, for timber, or for water-power, must differ in many respects, and that a principle of taxation applied in one case may not work out in the other. But if we keep clearly in mind the purposes for which land can be utilized, and that the fundamental taxation of land as such can be made annually, and that of the product at the time of its harvesting, we have in the three instances of agricultural, mineral, and timber lands a principle that may prove satisfactory when put in the form of legislation. The same idea can be applied to the water-power site; taxation of the land at a nominal a.s.sessment and of the water-power on the basis of the amount of water pa.s.sing over the dam gives us again a principle upon which can be based satisfactory legislation.

It must be remembered, however, that all legislation is compromise in character, and that the recognition of these principles has usually been set aside when it came to the question of legislation. The States have reached a point in the raising of revenue where not only more revenue is needed for the purposes of general social advancement, but where better administration is as essential and necessary as the other.

Administration bureaus must be provided in all of the States to furnish the necessary data, if we are to reach some practical basis of conserving our resources through taxation. And tax commissions must be given ample authority, and in addition must have plenty of expert advice and a.s.sistance which will give it the necessary endors.e.m.e.nt. To my mind, a rational system of taxing natural resources depends largely on administration based upon a few fundamental principles of legislation.

It is comparatively not a difficult matter; it is largely a question of willingness to meet the problem; but if the experience of the past has any light to throw upon this subject, it is very clear indeed that legislation will be slow, and that the different interests involved, through fear of some possible advantage likely to be gained over them, will cling to the old system until it is almost too late to produce any results through adequate taxation.

It is my hope that a Congress like this may have some power and some influence in setting aside this att.i.tude, but I fear that an adequate system of taxation will move very slowly when it comes to its formulation in legislation. This is not encouraging, but it is truth; and that after all is what we are really trying to get at without confusing the issue by arguments favoring present att.i.tudes either of the State or of owners of natural resources. Big views will help solve the problems, little and narrow ones never. (Applause)

President BAKER--Mr J. B. White, Chairman of our Executive Committee, will discuss the question of taxation, especially in relation to woodlands. (Applause)

Chairman WHITE--Mr President, Ladies and Gentlemen: We have listened to a great paper upon this subject of taxation. It is a subject difficult to a.n.a.lyze and very difficult to apply, because each section of the country requires a different form of taxation; each State has different views, and each should apply the remedy according to the local conditions.

I speak as a representative lumberman, and as Chairman of the Conservation Committee of the Lumber Manufacturers of the United States.

Now, the lumbermen have asked for nothing in regard to taxation excepting what they have incorporated in a resolution, part of the preamble to which I read:

Whereas, there is a great and growing need for uniform laws among the States in the interest of forest growth, conservation, and protection from forest fires, and for an equitable and helpful system of taxation which will make possible the conservative handling of standing timber.

That is the declaration of the preamble. It asks simply a uniform system of taxation.

I want to say a word for our fathers and grandfathers who have been called the ruthless destroyers of the forests, and I want to say in their behalf that they committed no sin which shall be visited upon their children or their children's children (applause). They cut the forests to make homes for the people; they cut the forests to build our cities and our towns; they sold all they could, they saved all they could, they committed no waste; and it should not be imputed to them that there is a penalty to be paid by their children or their children's children upon the forests that now stand. (Applause)

Taxation is regarded everywhere as a part of the cost of a commodity.

Every person that buys a foot of lumber, every person that buys a yard of cloth, every person that buys a suit of clothes, or groceries, or anything that is manufactured, is the one who pays the taxes (applause).

We are all consumers. We pay each other's taxes, and there is no way of avoiding taxation. It is said that death and taxation are sure. There is no way of avoiding either. The consumer must pay the tax because it is part of the cost.

Now, in regard to the system of taxation; every Nation has its own form.

When it is necessary to encourage the growth or manufacture of a product, the States of the world have some way of encouraging it by relief from taxation. Germany has a law putting a duty on American wheat in order that every nook and corner of the waste land of Germany may be made to grow wheat. Now, that is a tax. The people of Germany pay that tax, but it encourages the farmer to grow wheat. And in our own country, when it is necessary to encourage the farmer in the beet-sugar, or any related industry, the Government gives a bounty, and people pay it, and the money is kept at home instead of going abroad for the product. So in timber taxation, it would seem to me that the reasonable way is to tax it as it is cut--let the tax follow the saw. Of course every State will apply the remedy according to local conditions. Louisiana has applied the remedy. She has pa.s.sed some very good laws, and we are going to hear from the representatives of that State, before this Congress adjourns.

We want to consider these things.

There are now so many subst.i.tutes for lumber that there will be inducements to let trees stand if they are not overtaxed. A tree must have a hundred years' growth before it can be utilized in the shape of clear lumber in the upper grades. If you tax the tree every year, you are putting one hundred years' taxes upon the timber. We must be reasonable about these things if we would encourage the growing of trees. Any other commodity in the United States pays a tax annually upon the crop, but here, in growing timber, we are paying for a hundred years where we should only pay for one. (Applause)

Some States will not grow trees. Illinois will not grow trees. It would prefer to grow corn. Its land is too rich to grow timber, and the people will grow corn and exchange it for the product of other States which are better adapted to tree-growing and not so well adapted to agriculture.

The lands west of the Cascade Range are well adapted to tree-growing on account of the great rainfall, and not so well adapted for other uses. A tree will grow there in forty years to as great a size as it will in eighty years on this side of the Cascade Range. In short, trees will be grown where it pays to grow them, where they are encouraged to be grown, where the people want them grown. We cannot grow trees on sentiment; tree-growing will have to pay; it will have to stand upon a commercial basis. The Government cannot grow trees without its costing something to grow them. Conservation has been wrongly understood.

The great leader of American forestry, Gifford Pinchot, is in favor of development (applause). He said in his speech at Seattle a year ago that there could be greater waste by non-development and by non-use than there had been by the wastefulness of the past. That is true. By non-development and non-use we commit sometimes more waste than we did in the past, for we could not waste when things were not worth anything; a thing that isn't worth saving and whose by-product cannot be utilized is not wasted even if it goes to the burning ground or lies in the woods. (Applause)

President BAKER--Ladies and Gentlemen: You will all be glad to hear from the greatest, grandest, n.o.blest work of G.o.d, our good women. I have the pleasure of introducing Mrs George O. Welch, of Fergus Falls, representing the General Federation of Women's Clubs. (Applause).

Mrs WELCH--Mr President, Delegates to the Second National Conservation Congress, Ladies and Gentlemen: In the preparations for this great Congress, there seems to have been no possible item omitted which could in any way contribute to the pleasure or edification of visitors, save in two particulars; and with these the management had nothing to do. The first is the unavoidable absence of the President of the General Federation of Women's Clubs, Mrs Philip N. Moore, resulting from the accident which befell her in Cincinnati last May, from which she has not fully recovered. The second is due to those two elements which have for years uncounted interfered with man's proposals--time and tide. It is because time must be consumed in crossing the Atlantic and tide reckoned with on the voyage that Mrs Emmons Crocker, of Boston, is not able to be present to speak on "Woman's Influence in National Questions." Her absence is indeed to be regretted, since influence is today women's best a.s.set.