Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1918-07-16
.fAvORS IMP0sT TO !
CURB PROF|TEERs
HOOVER URGES HIGHER TAX TO
RETURN EXCESS PROFITS TO
PUBLIC FUND.
GIVES APPROVAL TO
GRADUATED LEvIES
Problem in High Cost and Low Cost
Producers and In Stimulation War
lndustries-Lays Stress on Fact That
Production Must Be Kept at
Maximum " War Needs Arc Met.

Washington, July 16.-Herbert Hoov.
err, the food administrator. has made
public letter written to Senator Sim.
mons. chairman Of the senate finance
committee. in which he set forth ir
some detail his views on proflteerine
and recommended heavy excess profits
taxes as the proper method to put
back into the treasury Of the United
States inordinate profits which some
concerns have made.
| Mr.. Hoover laid stress upon the fact
that production must be kept at a max
imum if war needs of the allies and
America were to be met, and expressed
a doubt that all branches of vital in
dustr:es could continue to produce I'M
less margin of profits were permitted
which would make 1t possible for GER
tain low cost producers to realize on
Investments a return which was admit
teddy too large. Such excess profits, he
felt, could be recovered by taxation.
There ran thru Mr.. Hoover's let
ter distinct note against sensational
attacks upon industries which we're do
ing work vital to the war. The let
ter in part follows:
MY Dear Senators:
II have before me your kind letter
asking that I should, before leaving,
give to you. for your consideration in
connection with impending tax legisla-
ton. such views as I have been able to
formulate in our experience upon the
questions of proflteering. Because OF
the considerable emotion often intro
duced into these discussions 1t seems
to me that it is worth while to distin-
guish between the moral and economic
phases. On the moral SIDE the nation
Is endeavoring to draw distinction be-
tween a profit commensurate with the
effort or capital employed and stimula-
tive to enterprise and production. and
the profit that is abnormally large due
to war conditions. The latter. l take
it. is what is meant by profiteering.
Too often they are confused in discus
sion.
Extra War Profits Hateful.
Extra profits out of war are hateful.
That any man taking profit in greater
measure because the goods he produces
are needed for war or because Of the
scarcity created by war, is abhorrent
to all decent people. and rightly so,
when the youth Of the nation are being
called upon to sacrifice all that they
have. I do not think 1t will be denied
that our whole production and distrt-
button system is based on earning of
profits. and that it is primary thing
A. Ill f@x, ptAvVo hos
so to proceed on this basis and that.
therefore, normal profits are not i'm
moral.
1.-The government is. thru many de-
partments. endeavoring to reduce prof
iteering thru regulation and trade
agreements. and with great measure
Of success. There are, however, GER
tain economic necessities which must
dominate war regulation of industry
and which. in themselves, can not en-
tirely eliminate proflteering, and which.
in my view. can only be. accomplished
if reinforced by taxation on war profits.
'In the face Of shortage-and we are
short of most commodities today-the
maximum production Of that COM
modify Is positively essential. In gov
eminent regulation, to safeguard pro-
duction, all profits or prices must be
based either directly thru price or
indirectly thru profits, on the stimu-
lation OF production. The consequence
is that it is necessary to set these
standards sufficiently high to mainta- :"
and stimulate a certain level Of high
cost producers.
There is. however, point in profits
{v,r oA,,r
ton Is not commensurate and restraint
is needed lest price ascend to height
where the people OF the more limited
means can no longer buy. This is con-
servation for the rich and not for the
5oor. On the other hand. neither the
cost nor the profits in any two unit OF
production will be the same, and while
the high-cost producers may be limited
to low margins and low cost producers
under these conditions will make prof
iteering profits.
while I am convinced that regula-
ton of the types in practice by many
executive departments is fundamentally
essential to prevent runaway markets
and vicious speculation. I can see Tic
remedy for the intermediate situations
below such regulations. except a gradu-
ated excess profits tax that will restore
that excess Of profits made from public
necessity back to the public. 1t is my
belief, from an intimate contact with
many industries that such course OF
enlarged taxation will be periodically
supported by them.
Cites Sugar az AN Example.
"A good case in point is sugar. II
sugar were unrestrained by agreements
the price would, in the face Of this
world shortage go to 20 cents pound
as 1t has in countries where no restraint
| exists. AS American people consume
5000, 900 pounds, such rise in price
would cost the consumers 100000, 900
The great majority Of producers. manu-.
facturers, and the public agree that re.
straint is essential In considering thu
costs of production we find that a Ger.
tain level is necessary to protect thu
high cost producers. Yet at this level 6
minority OF the best factories will b,
earning profits Of from 40 per cent t.
i61 per cent upon their investment
This minority creates the impression o
profiteering. Their profits are in
ordinate. While the public can re