The sun. [volume] (New York [N.Y.]) 1916-1920, 1917-04-10
Revenue Experts Estimate
Nations Wealth Can
Withstand High Tax.
TO KEEP MONEY HOME
Plans Made to Retain ST.
OO,OOO,OOO Bond Issue
in Circulation.
BIGGER LEVY ON PROFITS
Increase in Rate Discussed as
Means of Raising
War Funds.
TO KEEP MONEY HOME
BIGGER LEVY ON PROFITS

WASHINGTON. April e.-The s5,0oo.-
100000 war loan which Secretary Nc
Adoo officially announced tonight as
the Administration's immediate finance
proposal. represents only a small part Of
what the country may be expected to
offer toward the prosecution Of the war
against Germany. according TO financial
and revenue experts who have reported
recently on the conditions Of the coun-
try.
IL IS pointed out that on the same
basis as the loans which other Entente
peiilgerents have negotiated, and with
the same relation to the country 8
national wealth-s2o0, 700, 900, ,OOO-this
country should be able to raise between
$4,000. 900 and $40, ,000. 900, 900
IL is hoped that the huge credit may
be negotiated In such a way as to re-
tain in the banks and circulating cur
rency OF the country virtually the entire
amount through transfer OF credits
which Will not withdraw any material
part OF the money from circulation. 1t
has been suggested by some members
OF the Federal reserve that the loan be
SO negotiated that the proceeds Of the
huge bond sale can be retained in the
vaults OF the various banks, members
O. the Federal reserve system, as United
States deposits and subject to be lent
on proper commercial paper as are other
deposits in tho Federal reserve system.
May Ask New Laws.
u IS believed tina, the present law.
which expressly commissions Federal
reserve banks as fiscal agents Of the
Government. Will offer sufficient author
.ty for this: II not enabling legislation
will be asked of Congress. In this con-
nection Il is pointed out that not only.
all OF the $4,000, 100000 retained for tho
war expenditures OF this Government
but IN all probability most OF the
$4,000. 900 900 which Is to be used TO
cover credits Of the allied Governments
will be expended in this country.
The Administration hopes that details
of the handling OF the big credit will be
left as far as possible by Congress TO
the discretion of the Secretary OF the
Treasury. AS pointed out in the state
ment OF Secretary McAdoo, there Is
every reason TO believe that between the
Federal reserve system and other Fed
cral machinery and the patriotic offers
of the banking interests Of tho country
the marketing OF the bonds Will be
handled without any hotation expenses.
II IL possible that an instalment plan
by which bonds may be bought on pay
ments of three monthly installmcn.s
will be Instituted.
Not only the first issue, but all subse-
quent issues Of the bonds will have con-
vertible features, according to the pres
ent plan of the Treasury Department.
While the $1,000, 900. 900 OF bonds will be
issued at 3i2 per cent, Il Is realized that
others may have to follow n the war Is
prolonged. and these would have TO he
at a higher rate. In such an event the
convertible feature would become op-
erative.
Morgan Sees McAdOo.
The Administration hopes that Con-
gress will not attempt to determine the
date Of maturity for any part OF the
credit. leaving that feature 10 be deter
mined by the Secretary OF the Treasury
or by Congress after the conclusion OF
the war.
T. p, Morgan was one OF Secretary
McAdoo's callcrs to-day. The proposed
bond issue was discussed. Mr.. Morgan
told the Secretary that in his opinion the
country could absorb the $4,000. 10000 100
bond issue.
The Ways and Means Committee o:
the House and the Finance Committee
of the senate will have the Job OF rails
ing upward OF s2.00o.00o,00o by direct
taxation without great deal OF sug-
Zest,on from the Administration The
work will devoive largely upon Repre-
sentatlves Cordell Hull and Henry T.
Ra.ney OF that committee, as Claude
Kitchin the chairman and majority
leader, is not in sympathy with the plan
to distribute a part OF the taxation upon
the non-wealthy classes
The excess profits tax Is being worked
ou. with n view to It's increase to be-
tween 90 and "a per cent. of all profits
In excess of 3 per cent. Instead OF TAX
ing the preceding year as the basis for
such computation the years l9l2-l3-l4
will be compared with the years 1913
14-15.
with view to bringing In a part At
least OF the returns from income and
excess profits taxes as rapidly as poss!-
BILE II is proposed TO require that at least
80 per cent. of the nominal tax be re-
turned Immediately. leaving the rest TO
be settled by contest II desired.
Special efforts will be made by the
committee in distributing the taxation
to ,.rithhold special taxes from corpora
ticls or firms paying excess profits and
corporation taxes.
McAdOO Announces Rate.
Mr.. McAdoo's formal announcement
of the programme. made at the conclu-
sion OF a day OF conferences. says:
"The Administration will ask Con-
rress for authority to issue $4,000, 900, =
600 OF Government bonds to meet the
situation created by the war with Ger
many. The proposed bonds will be ex-
empt from taxation and bear interest
probably at sh per centum per annum.
Two billion dollars OF these bonds will
be required to finance. in part. the ex-
pendirures involved in the proper or
ganization and operation OF the army
and navy and the conduct Of the war
generally. or course. a large amount OF
additional revenue will have to be raised
by taxation, but this part OF the problem
is under consideration by the Ways and
Means Committee or tho House OF Rep
resentatives.
"Three billion dollars ot the proposed
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