The Washington times., 1916-07-15
TAXING MUNITIONS OF WAR

There are some aspects of the pro-
posal to tax receipts from war mu-
nitions that deserve a measure Of
consideration that doubtless they will
not get. II they do not get it before
the legislation passes, the time will
come when, too late, they will COM
mand it.
There is already indication that
war sales are about to begin falling
off. The United States and japan
are the two great competitors in the
realm of manufacturing war sup
plies. Japan is able to turn them out
at very low cost, because of its
cheaper labor. If the United States
applies, to certain kinds of mu-
nitions, such as explosives, a special
and very high tax, the tendency will
be to discourage production in this
country and turn the business over
to Japan.
There are two reasons, at least,
why this would be bad policy. In the
first place, under the most favorable
circumstances, the decline Of the
war order business is going to be
real shock to the industry of the
country. There should be every eff
fort to make that decline gradual;
to cushion the shock as much as pos
sible; to let industry readiust itself
by degrees to the new conditions
that must follow the re-establish-
ment of peace.
The tax that is proposed on ex-
plosives would tend strongly to COM
pei the European governments to
buy elsewhere. This would mean a
very rapid reduction of the volume
of the business here. with a conse-
Guent necessity for sacrificing values
that have been put into huge plants
on the faith of the European bust
ness. At the best, these plants will
be well-nigh valueless when peace
returns. They have been built with
that understanding; it is necessary
to recover the investment from them
within the short period of the war, or
the loss will be a serious one to in
vestors.
Suppose the tax be imposed, and
J that it does serve to cut down the
foreign business sooner than ether
wise would be the case. The tax
can be collected only on business that
is done; if the tax kills the business,
there will be no revenue; and in the
end the Government will not get the
revenue, investors will lose their in
vestments, and the tens of thousands
of workers employed in these plants
will suffer.
The second reason why imposition
of this tax might produce real mis-
fortune is that Japan will be given
a greater and greater preponderance
in this line of business, just in pro
portion as American participation ir
it is rendered difficult and impossi
BILE. How much satisfaction would
accrue to this country if six month:
hence we should see Japan still add
ing to its war business, still building
itself toward supremacy in this line
of effort, which the United States
was declining, it's plants were beins
strapped, and its capacity to pro
duce the necessaries or war was fall
ing constantly? How much incen
tive would there be to American
manufacturers, in future that ma!
at any time see US involved in war
to discover that their Government
regarded with disapproval and dis
trust their efforts to create a bust
ness that is absolutely essential t,
real preparedness
Is it to the advantage of this coun
try, will it add to our feeling o
security, will. it impress the rest o
the world that we intend really an,
seriously to prepare for any event
uality, If at this juncture we procee,
to tax encouragement into enter
prises that stand for the very essen
tials of preparedness?
These are questions that deserv
the most serious and broad
minded consideration. There mus
be no prejudice against interests tina
are alleged to have taken grea
profits out of this business. If the
have earned great profits, they hav
not earned a dollar of them at tn
expense of the Ameri san people o
the American Government. Thei
business is not one that deserves I
be destroyed, merely because it ha
been prosperous. The country
getting away from that attitude Q
, mind.