The Washington herald., 1917-05-15
HOLLAND LETTER

end OF the next hscal year, Therefore,
approximately $1,000 100000 will be and
must be, in fact secured at home by the
government within the next twelve
months.
For the past week or ten days some
of these who will be Of great assistance
to the government in marketing the loan
OF 81, oo0, 700 and in certain other ac-
tivities, have been in Washington and
have been able to learn, face to face
with the authorities there, some things
which II was not possible to learn in New
York city. For instance, they have been
able to learn that while Congress is fully
disposed TO adopt any revenue measures
whereby the needed funds can be OBJ
tanned within the next twelve months,
nearly 5000. 10000, nevertheless there
does not seem it is feared to be at pres
ent clear understanding on the part
OF Congress of the true relation Of taxa
ton to the floating of immense loans.
Taxation Must BE Co-ordinated.
For some days reports have been cur
rent that in the higher circles of the gov
ernment there may have been some dis
appointment because the loan OF 5000
100000 has not been Immediately or more
enthusla stically subscribed to by the
American people. Yet no one doubts the
success of the government in placing the
loan by mid June. The disappointment
does not refer to the expectation that the
loan would be successfully fioated. but It
rs based upon the apprehension that there
may not be wide adjustment OF revenue
measures to the very great borrowing
propositions which the government will
hereafter make. It is not so much a
question of the loan now in progress of
perfecting as 1t is a question of future
loans. for the United States VIII at some
time. probably within a year, come for
ward with another offering OF bonds, and
the government is authorized to offer as
much as $1,000, 10000.
The revenue measure, which now ap-
pears in the form OF bill before the
Lower House OF Congress, does not, It is
feared, reflect accurate and adequate ad-
tustnrent of taxation to the marketing of
great loans by the United States. Some
OF those who were recently in Washing
ton had reason to infer that the admins
tration received excellent information re-
specting the manner in which Great
Britain has adjusted her taxation system
to her borrowing capacity.
How England Met Problem.
1t was said by one Of the leading men
OF finance, who has recently been in
Washington. that England really leaned
backwards in her attitude toward busi-
N.
and her statesmen realize that If Eng
land were to borrow heavily, she must
also tax heavily. She must. however. so
tax her citizens as not to impair their
business activities. but in fact to stim-
ulate them. For It is largely upon pres
ent and future business that Great Bri-
tain must rely for her money supplies.
That is one of the reasons why England
so gradually increased the income tax.
hat ha 81
Gems OF Great Britain who receive large
Incomes, spent in personal ways only
comparatively small part OF these in
comes. All of the rest went back into
business. Much of 1t was invested in
new business or the enlargement of ex-
isting industries
If, therefore, Great Britain took by
taxation one half OF the great incomes,
she would in that way prevent the men
OF capital from investing in new enter
prises, or in reinvesting In such manner
as to speed up the business life of Great
Britain. And 1t was for this reason that
England gradually increased the income
tax
Business and Taxation.
The result has been that, notwithstand-
ing the enormous Increases in taxation
in Great Britain. it has been so accom-
plished as to stimulate rather than to re-
tard business. Some OF those who have
studied the revenue bill which is now
before the House OF Representatives, are
fearful lest, should It become in its pres
ent form a law, it would tend consid-
erably to impair business prosperity in
the United States. Some say that II
certain Of the sections contained in the
bill are adopted, the taxation thereby
imposed would reduce the capacity of
large corporations to pay taxes, which
they would pay and could pay were the
tax measures adjusted to the borrowing
capacity of the United States with scien-
tifio precision.
In other words, some of those who have
made careful study of the situation, es-
in Washington, are persuaded that be-
fore a revenue measure becomes a law,
it should be so perfected as to stimulate
and not retard American business life,
for II Is out of the earnings of business,
great and small that the government
must in the future depend for the float
ing of the loans which are surely here
after to be made, and which may reach
s, 900, 100000. or even more before the
close of the war.
why the Hesitation.
One reason why there appears to be
some hesitation in subscribing to the
loan which has Just been offered by the
Secretary of the Treasury, is that busi-
ness men are not sure that a war revenue
measure will not impair their business
prosperity.
1t appears to be the views OF those
whose Judgment is we'll worth needing
that future loans should be secured out
of future earnings. That is to say, the
people should not go to the savings
banks and the corporations should not
go to their surplus accounts, as these
already exist, for the money with which
to pay for such subscription as they may
make to the new loans. II business is
highly prosperous. there will be ample
opportunity through earnings to obtain
the funds which will be needed If sub
scriptions to a second. third or forth
loan are secured in amounts sufficient
to meet the offering.
The United States Steel corporation
has subscribed SIS, 100000 to the present
loan, but should a war revenue measure
pass which would take over to the gov
ernment large part of the earnings of
the steel corporation, then that corpor-
alton would not be in position to make
as large a subscription to a new loan
as it did a day or two ago.
Business Boost Not General.
Some have said that, although the reve-
nue. measure contemplated by Congress