The Washington herald., 1917-06-09
Th. Great Goal Of War Financing.

Ing OEeat ooaa " war EtuhmCuSs
Representative John ]. fitzgerald.
Of New York. who Is chairman OF the
House Committee on Appropriations,
and has had long experience on thar
committee. in a speech made to the
Business Mems League IN New York
City on Monday said that the ex-
penses Of the government for the
next fiscal year will be about IS, 10o,-
100000 This will not strike any one
as an extravagant statement. because
we are becoming familiar with the
vast demands made by the war upon
capital and the expenditures which in
the case Of England long since passed
the point of sSO.oooOOo a day and in
the case of Russia amount now TO
about s25,ooO,Ooo day.
That means that aside from ad-
vances to the allies which viii
certainly reach 800, ,Oooo 900 we also
are to produce more than 5000, OcO, 900.
OF this amount 1900, 900, 900 are prac-
tically provided and In hand as the
proceeds of the first liberty loan. A
billion an a half will certainly be
provided from taxation, and this may
be nearer s1,76o.OOO.ooo when the
revenue bill comes out Of con-
ference. There remains at least
d,5oo, 100000 and perhaps more to
be raised by the sale of additional
bonds. Now sight must not be lost of
the loans to the allies. That money
has been provided by the banks and
It must be forthcoming as regularly
as 1t is required. A very large amount
OF the liberty loan Of 5000. 600, 900 will
be found to have come from the
banks, trust companies and other
fiduciary institutions. The next liberty
loan will be heavily taken by the
banks but it will be taken. Thus in
one year and perhaps without any
straining the sS,OOC.OOO.OOO and more
required will have been provided.
This Is a wonderful prospect. II
shows that confidence and credit are
at the highest point. But since it Is
= priceless possession it must be safe
guarded throughout the war. No
greater calamity could happen to
civilization than to have one of the
loans Of the United States fail or to
have a slowing down in industries
through excessive taxation or a short
sighted scaling down Of commodity
prices by the government. The
natural influences Of trade should b.
permitted to ebb and flow withour
restraint. If we are to have boom
times, so much the better. II prices
are to mount, let EN-!
An interesting statement was made
by Senator Calder. of New York, a
few days ago which attracted too
little attention because 1t contained
much common sense. He showed how
the issuance OF bonds and excessive
taxation were bound to react upon
each other. Leaving out the loans TO
the allies which will be redeemed by
the countries benefitting, Mr.. Calder
assumed, for illustration, that the
total cost OF the war to US for the
first year would be s3.75O,OO0,OOO. OF
this cost he assumed that 5000, OOO, 900
would be raised by loans and $50, co.,
900 by excess taxation for war pur-
poses. By continuing these excess
taxes for five years, assuming that
the war ended in a year this entire
bond issue could be paid OF in fiye
years. Assuming that the cost of the
war for the second year was 5000
0oo. 900 OF which 81, 900, 900, 900 was raised
by bonds and S1,OOO,OCo.OD by taxes the
total debt at the end Of the second
year would be 5000. COO, 900 The in
terest charges on this loan, assuming
that the rate by this time was per
cent, would be SJO,OCU,UOO leaving
$3.50, 100000 for the retirement funo.
By continuing the 81, 900, 900, 900 excess
taxes for ten years the entire bona
issue would be extinguished in about
ten years.
Taxation should not be piled on the
country, already heavily taxed, the
first year Of the war. II Congress
had done that in 1861 bond issues ana
taxation both would have failed. Ths
country Is wealthy. Its accumulations
in the banks have increased s., Co.,
100000 in a year. But it is easy to do
the right thing in a broad way ana
make that additional accumulation
1900, 10000 next year. The obvious
duty Of Congress is to proceed with
out excessive taxes at first, mindful
that every dollar whether invested
or on deposit do its full share in the
war, and it may be "a long, long