The history of Detroit and Michigan; or, The metropolis illustrated; a chronological cyclopedia of the past and present, Vol I, Part 34

Author: Farmer, Silas, 1839-1902
Publication date: 1889
Publisher: Detroit, S. Farmer & co
Number of Pages: 1096

USA > Michigan > Wayne County > Detroit > The history of Detroit and Michigan; or, The metropolis illustrated; a chronological cyclopedia of the past and present, Vol I > Part 34

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CITY TAXATION AND FINANCES.

Under the town incorporation, the first tax was voted on April 17, 1802. The amount was $150, and it was to be paid by an assessment of twenty- five cents upon each individual of the age of twenty- one years and upwards, and by a tax of one fourth of one per cent on "fixed property." In practice, the "fixed property " was then deemed to mean houses, and not lots or lands. Under the rule of the Governor and Judges, no city tax is known to have been levied. Freedom from such taxation was, probably, the one blessing of their regime. The territorial treasurer kept an account known as the Detroit Fund, and the Governor and Judges gave orders on it, which were paid by receipts obtained from sale of lots. In 1815 the citizens again as- sumed the management of their own affairs, and on September 21, 1816, a tax of $1,500 was voted for, and was chiefly used in building a market-house. It was raised by a poll tax of one dollar, and by a tax on real and personal property.

On February 13, 1817, the Board of Trustees agreed to levy a tax of forty cents on each one hun- dred dollars, and the total valuation of the city was fixed at $1,787.37. On May 10, 1819, the treasurer of the corporation made the following report for the year :

RECEIPTS-Rent of Market Stall, $64.06 ; Fines, $93.19 ; Tavern Licenses, $79.93 ; Use of Hay Scales, $17.06. Total, $254.24.

EXPENDITURES-On account of Market, $13.19; Fire Hooks and Handles, $64.13 ; Salary of City Clerk, from September 5, 1817, to May 11, 1819, $115.43 ; Commission on moneys received and paid by Treasurer, $13.31 ; Deputy Marshal, $47.43 ; Sheet- iron for Council House, 75c. Total, $254.24. Outstanding Bills against the City, $583.93. Amounts due City, $180.77.

Act of April 4, 1827, authorized the "citizens' meeting," by a plurality of votes from qualified voters, to levy a poll tax of not exceeding one dollar

upon every qualified voter. The same Act empow- ered the city to fill up the lots on low grounds along the river and in other localities; and if the improve- ments were not paid for by parties owning the lots, the city was authorized to lease them for seven years to any person who would pay the amounts due. By Act of April 12, power was given to lease lots so assessed for twenty-five years. As might be expected, there was much trouble in enforcing these laws, and special power was given to the city marshal under which he could summon citizens to his aid in order to put persons into possession of the lots they had leased.

We now reach the record of events that seem almost incredible, and that mark an era in the his- tory of Detroit. In the year 1827 the city entered upon and began to lay out the magnificent property known as the Military Reserve, which had been granted by Congress the previous year. Roughly described by present street-lines, the tract embraced all the land between Michigan Avenue and Larned Street, and Griswold and Cass Streets.

Like some boyish heir, who has unexpectedly come into possession of a large estate, the city did not know how to properly enjoy and utilize such wealth, and the saying "Easy come, easy go" proved as applicable to corporate as to individual finances. Property which to-day is in the heart of the city, the income from which, year by year, would pay the entire city expenses and meet our bonded debt besides, was frittered away and squandered. Twice in the history of the city a landed domain which would be a large factor in the wealth of a Rothschild has been lost by the mismanage- ment of those who should have preserved it. First the Ten-Thousand-Acre Tract and hundreds of city lots were disposed of, and then the Military Reserve; and to-day the city has literally nothing left of those magnificent gifts,-gifts such as no other city in the Union ever received from the General Government. No other city on this continent was ever so highly favored, and none could have made a much poorer use of such a donation. If the city had sold, or even given away, every alternate lot, and leased the remainder of the lots, if the aldermanic fathers had done one half as well for the city as the owners of the Cass and Brush Farms did for themselves, the city revenue would now be so great as to pre- clude any necessity for taxation, and Detroit would be the citizens' paradise, the Utopia of burdened tax-payers.

When the city began to improve its possessions, it had not money enough to pay the laborers. The council therefore resolved to pay for the work in their own notes. Accordingly, on April 10, 1827, two days before the legislative council had granted them authority, the Recorder and Alderman Jones

152

CITY TAXATION AND FINANCES.

were appointed a committee to attend to the printing of the due-bills. On April 12, the legislative council gave the city power to issue these bills, to an amount not exceeding $5,000 at any one time ; and on May I the first lot of one hundred due-bills, for five dollars each, was issued ; and soon after fifty, for ten dollars each. On May 31 it was

Resolved, that the sum of five hundred dollars be issued in cor- poration notes, of a denomination not less than five dollars, at the discretion of the mayor.

During the year, bills of the denomination of three dollars, two dollars, and one dollar, and even of fractional amounts, were issued, and a total of $3,349.78 was put in circulation. In 1828 the issues of 1827 were redeemed, and $2,300 additional signed and circulated. It was found, however, that the people did not sustain this "fiat " currency, and on July 28, 1828, a special committee of the council made the following report :

The committee instructed to examine into the state of the credit of the paper, heretofore issued by this corporation, etc., have to report: That on inquiry it was found that at eight of the stores of the principal merchants of Detroit, which were in suc- cession visited by a respectable individual, a discount of eighteen cents on a dollar was demanded, when taken for goods.

The committee have learned that in several instances a much greater sacrifice has been required of those who offered the paper of the corporation; and in one instance, about forty per cent dis- count was exacted of a laborer, who had been in the employ of the street commissioner, and who wished to buy a barrel of pork.

In fine, it appears to the committee that in place of a desire on the part of many, who, it might be supposed, are mainly inter- ested in the welfare and improvement of the city, to support and assist the exertions of the Common Council, and to maintain the value of the means which are at its disposal, there exists a paltry and disgraceful propensity to speculate on these means, and to increase private wealth, at the sacrifice of the common property. * * * The street commissioner, and others who are called on to employ laborers for the corporation, find themselves under the necessity of paying one or two shillings more for a day's work, in the notes of the corporation, than the same would cost in money, or bills at par. And every article required for the corporation, and paid for in its paper, is charged in a like proportion. *

* The committee beg leave to suggest

First, that no improvement which will require pecuniary means be undertaken until the bills of the corporation shall be within five per cent of their nominal value.

Second, that all works which have been undertaken, which require pecuniary means, and which can be relinquished without prejudicing the public health or interest, be discontinued.

Third, that all debts now due the corporation be immediately collected; and

Fourth, that, if it be necessary to restore the credit of the paper of the corporation, a number of lots be immediately sold for that purpose, or that a loan be obtained of either the Bank of Michigan or the Bank of Monroe, at the legal interest, and pay- able in the manner money is usually paid when obtained on what is called Accommodation Notes. * *

Respectfully submitted.

JOHN P. SHELDON, B. F. H. WITHERELL,

JULY 18, 1828.

Committee.

The report produced but little effect, and matters grew worse and worse. The total city receipts in 1828 were $20,836.20, of which $11,765.95 was from

sales of lots, and $1,689.36 from lease of lots on the embankment. The expenditures were, for debts of the previous year, $1,117.66; for roads and super- visor, $1,697.80; for sewers, $1,278; for embank- ment, $7,718; and for opening streets, $1,754.

Almost as soon as the city began to dispose of the property given to it, the corporation began to be in want. Unpaid debts of previous years were called for. Improvements paid for in depreciated due bills were charged for proportionately, and cost much more than they were really worth. The city continued its issue of due-bills, neglected taxation, and sold its lots for almost any price, often taking in payment its own notes, bought at thirty and forty per cent discount. Most of the funds that were re- ceived were expended in improving the very lots sold. A series of so-called improvements was entered upon, many of them of a temporary char- acter, and others solely in the interest of speculators. The Steam Mill Wharf, at the foot of Woodward Avenue, was filled in at a cost of several thousand dollars, for the benefit, as was soon found out, of private owners. The river front or "embankment " was really improved. The result of the needless expenditures and bad financiering is indicated in the following resolution, adopted by the council on June 22, 1829:

Resolved, that the corporation loan of the Bank of Michigan $50, for the term of ninety days, with the permission to renew for a like term; the same to be appropriated for the uses of the poor. .

In the following year a committee, appointed by the Common Council, reported that "they had applied at both of the banks of this city, and had been unable to obtain any definite terms from said banks upon which they would loan money to the cor- poration."

When we look at the city of to-day, with its im .. mense wealth and unassailable credit, receiving and expending over a million of dollars yearly, it seems strange indeed that its credit was ever so poor and its future so entirely unforeseen.

In 1830 the city became more moderate in its ex- penditures, and the total amount paid out was $4,542.75, of which $4,426.63 was received from sale of lots. Whenever money was wanted for any purpose, the city officials did not, as a farmer might do, take a sheep to market, but they sold a lot of land instead, and thus, year by year, the city lived upon and devoured its substance. On November 12, 1830, a committee was “appointed to obtain a loan for the purpose of redeeming the corporation money," and this year the city redeemed $2,610.07, and issued $1,526. In March, 1831, the due-bills were subject to a discount of twelve and a half per cent. Still the printers were kept busy, and on April 14, $1,000 in corporation notes were issued,

CITY TAXATION AND FINANCES.

153

and the same amount in 1832. On July 10, 1834, the last of the first series was issued. Up to that time $21,208 had been circulated, and on August I there were $6,830 outstanding. On October 22 it was decided to cease the issue of these bills, and to redeem all that were outstanding.

It should be remembered that, during the years named, neither under the town incorporation of 1802, the rule of the Governor and Judges from 1805 to 1815, nor by the regular city government existing from 1815, were any city taxes levied upon real estate. Is it any wonder that those who owned broad acres in single farms within and adjoining the city grew rich as the years went by, almost without effort or care? However, "nothing is surer than death and taxes," and city taxation of real estate came as the direct result of the deaths in Detroit by Asiatic cholera. The expense incurred by the city during the prevalence of the scourge of 1832 was too great to be paid by the methods previously in vogue. The county refused to pay any portion of the expense, and finally, as a last resort, the citizens voted to tax the real estate. It was found, however, that the city had no power to tax the property of others than the citizens, and as much of the taxable property was owned by non-residents, no tax was then levied. Application was soon made to the Legislature, and an amendment to the city charter was obtained on April 22, 1833, which authorized the council, with the consent of the citizens' meet- ing, to levy a tax of one fourth of one per cent real and personal property, and to levy on goods or chattels, or sell real estate for a term of years for non-payment of taxes, on notice of one month to residents, or three months to non-residents. This law helped the city out of the financial slough into which it had fallen.

Seven years having elapsed since the city received its donation from the General Government, a com- mittee was appointed to ascertain the condition of the city finances. On March 1, 1834 an elaborate report was made to the council by C. C. Trowbridge and J. Williams, showing that there had been an almost entire lack of system in the keeping of accounts by the various city officers; and that during the previous seven years, out of $5,000 bor- rowed from the banks of the city, only $600 had passed through the treasury. The report further set forth that between 1825 and 1834 the average annual receipts from fines and licenses was $1, 100, and the average annual expenses, excluding amounts paid for laying out streets and improving roads, was $1,800, and that the yearly deficit had been paid by the sale of city lots; also that more than two thirds of all the money which had been received from sales of city lots had been expended on streets, roads, and embankments.

Up to March 1, 1834, the city had sold and dis- posed of all the property donated, except three frac- tional lots, the sales aggregating $54,423; $15,000 of this amount was then due for lots already sold. Largely through the efforts of Mayor Trowbridge,

CENT'S

Hoemy Wrights Halet NewWork ..

FOR VALGEREKLIVED

- OF THE CITY OF DETROIT

ordini DETROIT Aug/7ANS8

ALLDIES

Treas.

THE

CENT'S

FAC-SIMILE OF 1213 CENT CITY SHINPLASTER OF 1838.

this $15,000 was used in erecting the old City Hall. That building has now disappeared, and a few Parks are all that the city has left of the extensive donations it received.

The report of the council committee recom-

Mayor, Recorder &Aldermen

Will pay TWELVE & A HALF CENTS to the beaver

& Farmer

154

CITY TAXATION AND FINANCES.

mended, and the city adopted, plans for the more perfect keeping of accounts. On October 22, a committee was appointed to devise a system of tax- ation on real and personal property ; and at a citi- zens' meeting on October 31, a real estate tax was voted. It was limited to one fourth of one per cent on the valuation.

From this time the credit of the city began slowly to improve; and with greater needs, additional powers of taxation have been granted by the Legis- lature. An Act of April 13, 1841, authorized the city, with consent of the citizens' meeting, to raise a tax of one half of one per cent. One of the first symptoms of enlarged credit was the agreement of Oliver Newberry, on October 28, 1835, to purchase $100,000 in city bonds. His offer was accepted on November 13, and the first bonds issued by the city were thus sold to a citizen. They were dated October 1, 1835 ; one half of the amount was then issued, and the balance just one year later.

The simplicity, or duplicity, of those days is illus- trated by the fact that the bonds were delivered before they were paid for, and the money paid over from time to time, as wanted.

The panic of 1837 created a demand for a new issue of city shinplasters, and on August 8, $2,000 were ordered issued in small bills, of the denomina- tions of six and one fourth, twelve and one half, eigh- teen and three fourths, twenty-five, thirty-seven and a half, fifty, and sixty-two and a half cents. On Saturday, October 21, 1837, Alderman Chase offered the following, which was adopted :

Resolved, that the city treasurer, under the direction of the mayor, have printed upon bank-note paper, due-bills to the amount of $3,000, of the forms previously adopted by the board, of the denominations of fifty and seventy-five cents; $1,000 of said sum to be made payable at the Bank of Michigan; $1,000 at the Michigan State Bank; and $1,000 at the Farmers and Mechanics' Bank; and when filled up and signed, that the amount be placed to the credit of the city, the treasurer giving his receipt therefor.

On April 1, 1839, a report of the city clerk showed that there were in circulation, on March 31, 1838, $15,615.04 of these bills, and on March 30, 1839, $12,323.45. On May 14, 1839, $10,000 were ordered printed, to redeem mutilated bills. The mutilated bills were redeemed by the city treasurer, who had the care of them, until they could be destroyed by a committee of the council. In those days there were no public safes, and the city officers had none of the modern conveniences for the safe keeping of valu- ables, consequently the bills were packed in an immense "hair trunk,"-a trunk covered with horse- hide, tanned with the hair on.

On one occasion, when Saturday night came, the trunk was crammed full of these promises to pay, and the treasurer was obliged to convey it to his own home; and, with double-barrelled gun and brace

of pistols loaded and primed, he kept watch and ward over the trunk all through the Sabbath, and on Monday turned the money over to be burned.

By Act of February II, 1842, the city was pro- hibited from issuing any more due-bills. Little

£9D

Mayor, Recorder &Aldermeu TH ENA

OF THE CITY OF DE TROIT,

EIGHTEEN & THREE QUARTER CENTS JICH110

FAC-SIMILE OF CITY 1884 CENT CITY SHINPLASTER OF 1841.

heed, however, was paid to the law, and their issue continued until even the tenants of the city had no faith in their landlord. The following notice appeared in the daily papers :

CITY TAXATION AND FINANCES.

155

We, the undersigned, butchers in the City Hall Market, have become satisfied that, in order to sustain ourselves in our business, we must discontinue to receive corporation shinplasters for meat, from this date. Trusting the public will sustain us in the stand which necessity alone has compelled us to take.

S. B. MORSE, B. TAFT, DANIEL COGHLAN, JOHN HULL, CHARLES BONDWER, JOHN HESS.

DETROIT, April 18, 1842.

The notice seems to have borne some fruit, for on November 1, 1842, the Committee on Ways and Means reported that they had destroyed $6,444.84 in warrants and due-bills. This good work was continued, and on January 24, 1843, the committee reported the destruction of $4,708.24 additional, and four hundred and eighty sheets of blank due-bills. On the 7th of February following, six hundred more sheets were burned. On March 19, 1844, the coun- cil resolved "that henceforth no shinplaster or war- rant shall be issued by the corporation."

In 1845 Rawdon, Wright, & Hatch were paid $888.51 for printing due-bills previously issued. On March 13, 1851, $3,472.62 of this corporation money was still outstanding, and as late as 1871 the sum of $21.87 was redeemed.

Expenses of City.

The expenses of the city for several decades, and the amounts expended for the most important pur- poses, are shown in the following table :

1830

1840

1850

1860

1870

1881

Fire Department

$356

$1,639

3,259

$10,771

$78,223 $111,198

Schools

8,003

40,667

173,974

183,172

Public Sewers

246

16,563

35,725

112,607

46,593

Care of Poor

14,395 2,046

2,913

11,625

17,332

24,029

Care of Parks

297

685

2,393

13,633

13,909

City Police

1,17I

715

140

8, 112

27,469

Care of Streets

1,153

1,998

3,432

18,912

44,157

33,002

Paving St's and Intersections

445

1,232

33,309

65,294

57,974

Water Works

30,080

12,469

Salaries of Alder-

men, City Offi-

cers and Clerks

588

1,212

4,149

18,947

35,526

73,483

Election Expen- ses

301

364

1,314

2,780

12,935

Total expendi- tures for ordi- nary purp'ses

$4,542 $61,060 $127, 260 $294,436 $693,014 $902,889

Amounts for 1881 are given because the reports for 1880 included a period of seventeen months. The amounts appropriated in any one year for any certain purpose do not always indicate how much was expended for that purpose during the year. Of the appropriation for any year, only the amount col- lected can be used, but balances left over, or amounts collected as back taxes, can be used.

A variety of interesting facts concerning the tax- ation and finances of the city are herewith given :

Years.

Valuation of Real Estate.

Valuation of Personal Prop.

Total Valua- tion.

1830

$711,680

1840

4,610,951

1850

2,372,639

1860

$14,027,133

$2,186,690

16,213,823

1870

16,872,333

6,730,994

23,603,327

1880

64,556,085

19,807,705

85,363,790

1887

105.824,640

36, 583,240

142,407,880

RECEIVED

Mayor, Recorder &Aldermen

IScom / Scarche

Mayor.

FOR VALUE

OF THE CITY OF DETROIT

on demand DETROIT april 24 1858)

ALL DIES

2466

Will pay TWENTY FIVE CENTS

Treas'

FAC-SIMILE OF TWENTY-FIVE CENT CITY SHINPLASTER OF 1838.

2,475

64,706

135,022

City Courts

8,880

20,019

62,945

City Lights

I86

4,333

1,952

City Printing

24,231

19,850

52,318

117,325

Interest on Debt

THE

156

CITY TAXATION AND FINANCES.

Years.

Total City Tax.

Net City Debt.

In Sinking Fund.

1830

$3,195

1840

186,500

1850

$29,863

359,538

1860

129,484

304,845

$11,123

1870

631,872

797,794

37,252

1880

885,830

1,360,400

528,628

1887

1,925,720

* 593,015

*776.984

*July, 1887.

50 CENTS.

Dec. 1 1837.

Mayor.

Buen Berus & Co. Print

RECEIVABLE IN PAYMENT FOR CITY TAXES

detroit,

Howard

FIFTY CENTS.

Treabr®

of Michigan, the sun of Fifty Cents.

Pursuant Vaan Act of the Legislature.

FAC-SIMILE OF FIFTY-CENT SHINPLASTER OF 1837.

In addition to the regular bonded debt of the city, Detroit is also liable for about five sixths of the bond- ed debt of the county, and for all the bonded debt created by the Board of Water Commissioners. By the charter of 1883 the bonded debt of the city may not be over two per cent of the assessed valuation of all property. An Act of March 8, 1873, which authorized the 'expenditure by the Water Commis- sion of most of the amounts constituting their debt, made it the duty of the council to assess an annual tax of $75,000 for the use of the board, a portion of which was expected to be set apart as a sinking fund; but the council appropriated nothing until 1875, when $25,000 was appropriated, and since then $40,000 has been appropriated yearly.

The increase in the wealth of the city is shown by the fact that the valuation of 1830 would give each inhabitant $321, while that of 1880 would allow each person $728.

The rate of taxation per capita in 1850 was $3.26; in 1860, $2.83 ; in 1870, $7.94 ; and in 1880, $7.61.

City Debt and Sinking Fund.

Under Act of March 21, 1851, provision was made for creating a sinking fund to meet the indebt- edness of the city, and in 1852 the first tax, of $5,000, was levied for this purpose. The proceeds of this fund are invested chiefly in city bonds, the city thus acting as its own debtor and creditor. The fund is in charge of the mayor, comptroller, treasurer, and the Committee on Ways and Means of the Board of Aldermen, as commissioners of the fund. The bonds and other securities are deposited by the city treasurer in a "strong box," which, up to July, 1882, was kept in the vault of the bank acting as " city depository," and since then in one of the safes of the Wayne County Safe Deposit Company. The box has two locks, the mayor and treasurer each having a key, and when the box is opened, necessity compels the presence of the comptroller also, as he alone has the key to the particular safe containing the box.

Under law of 1879 the council was required to levy a tax, of not less than $5,000 nor more than $10,000 yearly, to be credited to the sinking fund. The charter of 1883 did away with this provision, as there seemed no further necessity for such a tax. The ordinary additions to the fund come chiefly from interest on investments, from percentage on taxes not paid when due, from interest on deposits of city funds, and from the taxes on liquor dealers. These latter taxes were credited to the contingent fund, and balances left unused were yearly turned over to the sinking fund. After July 1, 1885, they may be used to pay the current expenses of the city.

The Manor, Recorder and aldermen of the City of

DETROIT, Promise to Pay the Bearer, on demand, at the Park

157

CITY TAXATION AND FINANCES.

The total amounts received from liquor taxes in Detroit since the State law took effect are as fol- lows : 1875, $74,196; 1876, $88,442; 1877, $57,- 471 ; 1878, $65,175; 1879, and to July 1, 1880, $109,452; 1881, $99,890; 1882, $95,494; 1883, $141,657; 1884, $138,114; 1885, $192,883; 1886, $130,501.

The amounts transferred to the sinking fund have been as follows : 1875, $71,999 ; 1876, $69,695; 1877, $31,000 ; 1878, $58,000; 1879, and to July 1, 1880, $90,000 ; 1881, $85,000; 1882, $90,000; 1883, $130,000; 1884, $135,000 ; 1885, $10,000.

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The history of Detroit and Michigan; or, The metropolis illustrated; a chronological cyclopedia of the past and present, Vol I, Part 34

Author: Farmer, Silas, 1839-1902 Publication date: 1889 Publisher: Detroit, S. Farmer & co Number of Pages: 1096

Author: Farmer, Silas, 1839-1902
Publication date: 1889
Publisher: Detroit, S. Farmer & co
Number of Pages: 1096