Daily capital journal. (Salem, Oregon) 1903-1919, 1916-04-28

threatens to break upon these shores
President Wilson note to Germany
is in the nature of a polite ultimatum
Unless Germany modifies her subma-
rine policy in degree satisfactory to
the United States, severance of dip
loatic relations is inevitable. We are
possibly now ON the verge OF war with
Germany, a catastrophe that only Ger
many can prevent. If var comes,
which heaven forbid, its consequences
to the United States cannot be very
serious Owing to our geographic posi-
tion we are less exposed to harm than
any of the belligerents and are rela-
lively safe from attack. Tne German
navy cannot reach out coasts, and our
own navy can do little beyond aiding
the allied navies. Our army has yet to
be created and it would be months be-
fore we had a well-trained and equip
lped force to send across the Atlantic.
Our most vulnerable point would be
the relatively small American fleet Of
merchant ships, whichewould of course
/ be subject to subarine attacks. A big
| bond issue would he one Of the first
accOmpanimehts of war. Business re-
I llations between Germany and the Unit
| ed States, small as they are, would
probably he placed under legal re-
strictions, if not prohibited. 1t is not
| likely, however that hOstilites would
very seriously disturb our financial
markets. War might cause sharp
temporary setback and shock; also a
general mobilization of industry which
it would necessitate. Some of the in
dustrials would unquestOnably be af-
fected adversely, while others especial
ly steel and munition concerns, would
benefit through the placement of muni-
tiOns and equipment orders. Otherwise
domestic trade would not be very ma
terially affected. The withdrawal of
any large number of men from active
employment would induce some em-
barrassment owing to the general scar
lefty of labor, and would further ag-
gravatc tho present labor crisis. For
cign trade would be affected but lit
tie; commercial intercourse with Ger
many being already suspended. All
happenings of this character are based
upon the possibility of war Yet, war
may not come and, if it does, it can
scarcely be of long duration, while the
end might arrive before we are actual
lv ready with any important body of
troops. It is premature to give up hope
regarding the peaceful solution of the
present crisis; and it seems incredible
that Germany win deliberately invite
further isolation and the loss of ner
only remaining influential friend.
One result of the war would be that
the country would have to face an i'm.
portant increase in taxation The pre-
paredness movement alone will prove
very costly and may require an addi
tionll expenditure of $200,000,000 to
$500, 100000 a year What actual wal
would cost cannot be fOretold but il
would certainly be several times the
cost Of preparedness Various mean,
of raising further taxation are already
Fbeing discussed; such as an increase in
the rate of the income tax, its exten
sion to smaller salaries, an increase in
the inheritance tax, and also rise in
the tariff. Not much additional rev
enue could be obtained through the
latter source, for the reason that wher
the tariff reaches the prOhibitive stand
point, il automatically ceases to be q
revenue producer States and mnuici
palites are also adding to the burdens
of the Taxpayers; the general dispo
stion being to tax property wherever
feasible, and not infrequently with 9
flavor of vindictiveness. Thus far ther,
is no wide public opposition to increas
ed taxes, simply because the average
man is ignorant of the fact that al
taxes nave q tendency to distribute
themselves and in time are ultimately
passed on and paid by the consumer
who blssfully sleeps in the delusior
that his more prosperous neighbOr payl
the tax. Taxation is one of the mos
pressing problems Of the day, and viii
soon become more so, especially abroad
One Of the most disturbing features
of the present situation is the llbOl
crisis, which is really a sequence OF
the war or the intense industrial ac
tvity which it has been the meani
Of promoting in spots. Wages in many
industries have already risen, and il
some instances still further advances
are being dem lnded following those re
Gently given. Occasionally the rise hai
been as much as 20 per cent since tn,
first Of January, but this is exception
al and largely in the nature Of bonuses
the majority Of advances having beer
8 per cent TO 10 per cent. This is tn,
season wnen human unrest is usulll
at its height, the stimulus Of sprnJ
and the outlook for plenty Of worl
after the slack Of winter being univer
sal incentives to labor. The rise il
commodity prices and the initiation o
. profits are also factors in the move
ment. 10 is not without significance
that many great movements begin il
4 April, history showing that several o
. the great wars began in that month
! The concessions TO labor are bein,
made witn a full apprehension of wha
4 must be expected when the war is over
\ Then reaetiOnary tendencies will sure
~ assert themselves. Our mlnufaC
turers will find that they are eleyate
\ to a high cost level compared with FOR
4 eign manufacturers, who will be s.
4 much the better able to keep us on
Of foreign markets, and also better abb
4 10 compete with us in our own market,
4 For the next few weeks we must b
n prepared for more or less labor agita
tion. Labor at present is securing a
y advantage from the purely ephemera
rush af activity caused by war. Whe
this is over, viii labor be willing t
accept its share Of the downward read
\ iustmentl Unless prices and wages ar
4 allowed 10 fan back to more norma
and natural levels, il will be imposs
bic for our manufacturers 10 escap
some very serious difficulties. Price
7 Will probably adjust themselves autf