6i8 HARVARD LAW REVIEW of value attributable to its intangible property would shrivel to a mere trifle." It is obvious, as Mr. Justice Holmes remarks,^^ that "this notion of organic unity may be made a means of unlawfully tax- ing the priyilege, or property outside the state, under the name of enhanced value or good will, if it is not closely confined to its true meaning." Before distributing the "corporate excess" among the states it is first necessary to arrive at its value by first deducting from the entire value of the capital stock the value of all real estate, whether situated within the state or outside,^^ and of all machinery and other tangible personal property.^^^ Intangible investments of the company not in any way used in the business, such as undivided profits represented by investment securities, must also be deducted, since they do not affect the value for use of the business.^^® The result of this subtraction is the corporate excess, which may be divided among the states ratably by the method already considered. It has been held that a state may vary this method by dividing the entire capital, ratably, and then making a proper allowance for property in other states that would disturb the ratio.^^^ But though permissible this method is most inexact, and seems open to the objection to such loose calculations quoted above from Mr. Justice Holmes. The whole doctrine has elsewhere been summarized by the author.^^^ Whenever a business enterprise exists, in which prop- erty situated in several states is used, and the business is carried on in several states, the whole value of the business includes or may include more than the aggregate of the several articles of property used in it; and this excess may properly be referred not to any one state, but to all the states in which the business is done. But that part of the value which may be divided among the states ^" Fargo V. Hart, 193 U. S. 490 (1904). 1" Pittsburgh, C. C. & St. L. R. R. v. Backus, 154 U. S. 421, 431 (1894); Western U. T. Co. V. Taggart, 163 U. S. i (1896). 165 Western U. T. Co. v. Taggart, 163 U. S. i (1896); Adams Express Co. v. Ohio State Auditor, 165 U. S. 194 (1897), 166 U. S. 185, 222, 223, 17 Sup. Ct. Rep. 604. 168 Fargo V. Hart, 193 U. S. 490 (1904); Coulter v. Weir, 127 Fed. 897 (1904). 1" Louisville & Nashville R. R. v. Greene, 244 U. S. 522 (191 7), "8 Beale, Foreign Corporations, § 507.
