Clarksville weekly chronicle. (Clarksville, Tenn.) 1873-1890, 1877-01-20
HOW BANK TAXES WEIGH UPON
INDUSTRY.

from their customers the sums to which |
this unskilful taxation subjects them.
Their customers, in turn, draw from
the community with which they deal, |
prices for their merchandise enhanced |
by the discounts they pay at bank. So |
the tax presently falls on the consumer, /
and inasmuch as excluding idlers and !
-produetives, the actual laborer is |
the only consumer who pays, this tax |
falls entirely upon the laborer at last. |
If it were paid by him in the first in
stance, it would be easier. But each |
intermediate party silently adds to it |
enough to cover risk and profit in |
dealing with it. So that it is eventu-
ally paid by the producing class with
two or three unnecessary additions to
it.
But this is not the worst of it. These
taxes affect the rates paid for the use
of money in all business enterprises.
The taxes upon banks, in New York
city for instance, amount to two per
cent. of the capital for federal taxes,
and three and one-tenth per cent. for.
local taxes-that is to say, over FIVE
per centum in the whole. Add the in
evitable expenses of banking, book
keeping, rent, &C., and it follows that
the total disbursements, including
taxes-before a dollar is earned for
the stockholder-swellt to rate great
er than what should be the steady in
terest on money employed in agricul-
ture, manufactures and commerce.
1t was shown in an article which we
printed not long since, in respect to a
bank in New York city with five mil
lion dollars capital and one million
surplus, that these have need to be
loaned at about six per cent. per an
mum to get revenue enough barely to
pay expenses and taxes. That is to
say, upon the employment of its money
Mt current rates of interest, the bank
makes nothing. The entire revenues
from that quarter are absorbed in ex-
penses, with nothing left to be divided
among the stockholders.
1t is plain that the Interest paid for
money used in productive industries
enhances to that extent the cost of
production, and the commodities crea-
ted under that condition go into the
markets of the world weighted with
that burden.
In the present dull times in Eng
land money Is lending on commercial
bills at less than 2 per cent. per an
mum. Affairs are dull enough in the
United States, as everybody knows,
yet our manufactures are paying GER
taInly not less than six per cent. per
annum for whatever money is borrowed
Tor use IN their business. If they are
not paying so much interest In the ag-
gregate as formerly, it is because they
are doing much less business. But it
only concerns our argument to show
that IN respect to what business they
are doing, they are even now paying
rates OF interest twice as high as those
paid by English manufactures.
Mr.. Sprague used to say that for the
money invested in a spindle the Amer
can spinner paid 81 60 annual interest,
while the English spinner paid only
80 cents. The difference seems not
much, but it weighted the American
product to that extent.
Until recently, our cotton goods
found no sale abroad-none to any
mentiOnable extent, English goods
filled all the markets-poorer goods
than ours and less stylish. In plain
cOttOns, bleached and unbleached, our
fabrics had the evener thread and
were of hOnester make. In prints,
American designs and colors were fair
cr and better. Yet England had the
markets.
At the high rates they had to pay
for capital or current credits they had
to do business with, our manufacturers
never dared to borrow money to make
goods with which to contest foreign
markets. They paid six per cent,
seven per cent, nine per cent. per an
mum; then one per cent, and some
times as high as one and-a-half per
cent, per month, for credits with
which to manufacture for the home
trade. That was fenced off for them
against foreign competition by pro-
tective tariff. Secure in that market,
they charged the consumer profit en-
ough to reimburse what they had paid
as interest.
1t is only since the panic of 1873
that our manufacturers of cOttons have
ventured into foreign markets. Sue
cess has been such as justified the
strongest manufacturers, perhaps those
employing their own money mainly, to
continue the trade.
The markets which they sought and
were thus successful in, have always
been open to them, but they could en-
ter them to no purpose with the cost
of their goods enhanced by such dis
burSements as of interest at the rates
they have had to pay on the money
used in their manufacture. Taxed as
the banks are, it is plain that they
have to get a high rate of interest even
10 pay the taxes and expenses. Then
they have to get about as much more
to earn what the stockholders have
been led to regard as a fair return on
capital. But both these charges, tax
Is and expenses and dividends, fall on
such manufactures as borrow money
IN their business. Nearly all of them
borrow. If there he those who en-
plOy their own capital exclusively, they
expect a return for it like that which
those get who lend to their borrowing
competitors.
What portion of the money used in
manufacturing is borrowed at bank
and elsewhere, it is not easy to cOniect-
ure. But very much the larger part
of it no doubt is borrowed. The an
nual value of manufactured products
IN the United States as shown by the
census of 1870 exceeded 81 200 600, 900.
Assume that One-half of this amount
he borrowed for the usual period
clapsing between purchase of raw ma
terials and consumption of the finished
product, with interest at rates prevail
tug at the census date, the annual dis
bursement for interest would be SS4, =
600. 600
Thus our industries have been and
still are loaded by prevailing methods
Of finance. These it is but reasona-
BILE TO ask our legislators to investi-
cate and to mend them If they be
found faulty and remidablc.-Ameri-
can BaRkers' Association.
THE Dallas (Texas) Commercial