The Washington herald., 1914-09-20

of profits is sufficiently large to justify paying
high rate for money.
Incidental to the property loss caused by the
war will be the employment of a part of the
proceeds of the new loans in repairing the waste
which it has caused 1t will be almost essential
to restore normal conditions of railway traffic,
where bridges have been blown up and tracks
destroyed in Northern France, Belgium, East
Prussia, and other sections which have been
scorched by the iron heel of war. The reStora-
ton of the railways alone, to say nothing of the
damage to public buildings, tramways, telegraph
lines, mills and other private enterprises, will
represent very considerable item of expendi-
ture. The cost of the entire railway system of
France is estimated at more than $4,000 100000,
of which the lines of the north and east repre-
sent about one-quarter.
WHERE WILL THE BURDEN FALL?
How will the burden of increased taxation be
distributed as between capital and labor, the rich
and the poor? ....
The answer to this question was the subject
of much discussion among economists at the
time of the Napoleonic wars, and their opinions
were by no means in accord. 1t is probable that
direct taxation of earnings like the income tax,
imposes the burden as effectively upon the rich
as it can we'll be imposed without grossly dis
eliminating taxation. 1t by no means, follows,
however, that the man who gives up 5 to 12H
per cent of his money income to the state pays
it all out of his own pocket. If he is landlord
he will almost inevitably increase his rentals; +;
if he is a manufacturer, he will increase
the price of his products; if he is a re-
taller, he will raise the price of the arti-
cles he sells. Thus, in effect, the burden vii
be shifted to the men of small means and the
poor man without means, who is a victim of the
iron law that "the destruction of the poor is
their poverty"
Two interesting phases of this problem are
discussed by John Stuart Mill in his classic
work, THE Principles of Political Economy"
On one of the questions he discusses the facts
have so radically changed since his day that they
almost reverse the results which follow from his
reasoning. Commenting upon the fact that the
destruction wrought by many great wars seems
to be almost repaired within a year, he pointed
out that this destruction was really only pre-
mature consumption of the product of the years
labor, and that so long as land remained fertile
buildings stood erect, and roads remained fit for
traffic, the net effect of the destruction of war
was felt only upon current production and not
upon permanent accumulations of capital
This condition has radically changed, how
ever, since Mill wrote, until the accumulated
capital of a country represents many times its
annual production. In so far as this accumulated
capital is left untouched by the war or capable
of easy repair, the principle of Mill applies
that the effects of the war react only upon the
prediction of single year When, however,
bridges are blown up, railways are destroyed,
public buildings are burned and nlzchinery is
wrecked or left to rust through idleness, the
damage goes much further than the effect upon
annual production.