New-York tribune., 1918-09-11
Liberty Bonds Tax Free
Is McAdoo's Demand

war and for brief interval there
after This course would make it pos
sihle to meet the exigencies Of the
present situation and to counter bal
anca the adverse effect on the market
value of Liberty bonds of the increased
surtaX rates, and at the same time
would not be open to the very grave
oblcctlon which exists against any un-
hns'ted or permanent exemption which
would deprive the government of the
United States of the power to meet it's
necessities in the future by surtaxes
on incomes derived from Liberty
bonds. If the surtax rates should re
which is fixed in the bonds would cori-
tinuc.
Would Include Four Loans
I'm granting such exemption. 7
think appropriate provision should be
made to the end that those who sub
scribe for bonds of the Fourth Liberty
Loan may. to the extent of specified
portion of their holdings. participatc
IN the exemption in respect to bonds
of the first Liberty Loan converted, the
second Liberty Loan converted and
unconverted. and the third Liberty
Loan.
should these views commend them
selves to the Congress, | believe that
immediate action should be taken so
that the status of the bonds of the
fourth Liberty Loan, in respect to tax
alton may be promptly known. 1t is.
IN fact. Imperative that this status
should be quickly known.
mere are certain other matters to
which l desire to call the attention Of
your committee at this time.
Ihe provisions of Section s of the
Second Liberty Bond act. as amended
pE the Third Liberty Bond act, should
be extended so as to authorize the Sec
rretary to deposit the proceeds arising
IRON the payment of war profits taxes
with qualified depository banks and
.Iust tI companies in the United States in
the same manner as the proceeds of in
come and excess profits taxes.
The time has come to make pro-
VISION tor the sale of war savings GER
tihcates in 1919. The limit of 81 600
on the amount which may be held by
any one person should be made to ap-
ply separately to the series which will
De issued IN 1919, so that one holder
may own $1,000 of that series. in addi
ton to $1,000 of the series of 1918. At
m one same time the limit of 50 900 .OOO,-
600 now imposed on the aggregate
amount of the issue should be on
larged or better, removed, for the nee
essary distribution of the. war savings
stamps among thousands of postotfices
ana other agencies engaged in making
sales over the coentry may make the
illillC nm very embarrassing long before the
cash receipts of the Treasury indicate
'hat the limit is about to be reached
IN the negotiations which I have
mad, and am having, with or in foreign
countries IN the effort to stabilize for
eelgn exchange, I find myself seriously
nampered because | am without the
ireedom of action which is possessed
ny 'he hnance ministers of European
countries
Il may only sell bonds or Treasury
i, certificates of Indebtedness, which in
volves. often, international complica-
tons and may not obtain barking
credits nor operate as freely as NAV
be necessary in the effort to stabilize
exchange. notwithstanding these re-
strlctions, the Treasury has been able
10 make SUBSTANTIAL progress in deal
ing with TINS difficult problem. I urge
upon you, however, the incorporation
in the law of the necessary authority
TO give greater flexibility to the op-
eratlons of the Treasury in this re
spect: believe it is highly desirable,
at this time, that the President should
De empowered to investigate, regulate
and prohibit not only the export or
earmarklng of gold or silver coin or
bullioon or currency. but also the
hoardng or melting thereof.
Last March called the attention
OF the congress to the Importance of
amending the provisions of Section
o2oo OF the Revised Statutes, limiting
the amount of loans which national
DanKs may make to any one borrower.
/ \ Dill was reported by the Banking and
currency Committee of the House. II.
Il. 1851, passed by the House and re.
ported with amendments by the Com
mlttee on Banking and Currency of
the Senate, but not acted upon by the
i Senate.
THE Senate did pass bill. Senate
a,O99. dealing to certain extent with
.he same subject matter, prior to the
Senate committee report on the House
bill. and On the Senate bill no action
has been taken by the House. 1t is
essential that this matter be disposed
Of before the fourth Liberty Loan is
offered.
"By way of suggestion and in order
the better to formulate my views for
Your consideration, have taken the
liberty of preparing a bill which would
deal with the various points | have
mentioned in this letter. A draft Of
this bill is inclosed. May I not ask
that the Ways and Means Committee
give these points immediate attention,
with view to the enactment of the
necessary legislation, if my suggestions
commend themselves to the committee,
in ample time to become effective be-
fore the opening Of the Fourth Liberty
Loan campaign, on September 81?
81 feel that the success Of this loan
is deeply involved in this legislation.
"Mr Lefingwel is fully informed OF
my views concerning these matters and
is authorized to speak for me in my
absence should the committee desire
any further information. Cordially
yours, W. G.. M'ADOO."
House Debate on