New-York tribune., 1918-09-11
Would Limit Exemption to
War Period and Brief
Peace Time
Against Trading
In Loans on 'Change
Other Drastic Amendments
to Push Fourth Issue
Urged on Congress
Special Dispatch to The Tribune

(Specldl Dispatch TO The T'1bune)
WASHINGTON. Sept. 1O-~Late to-
night Secretary McAdoo released let
ter he wrote TO Chairman Kitchin of
the Ways and Means Committee and
Chairman Simmons of the Senate
suggesting radical changes in Liberty
Loan legislation, recommending the ex-
emption Of Liberty loan bonds within
certain limits from income surtax
rates. Increasing the loaning power Of
national banks. giving the Secretary of
the Treasury power to deal in forei ign
credits and authorizing the Pres ident
10 forbid the expectation or boarding
al gold or silver bullion or currency,
removing the limit on war savings Ger
tihcateS both as to individual holdings
and the amount of the total issue, and
recommending authority for the Treas
urv TO deposit the proceeds from war
profits taxes with qualified depositary
banks and trust companies in the same
manner as proceeds from income and
excess profits taxes.
With his letter the Secretary submits
tentative bill embodying his requests.
The letter follows:
IN connection with the tax bill now
before the Congress, and without await
ing its enactment | feel constrained
70 bring to Your attention matter
aFec ing the fourth Liberty Loan. The
delay in the enactment of the tax bill,
the fact that the rates of income sur
taxes 10 which the interest on Liberty
bonds except the first Liberty Loan.
is subject, will be higher. and the rate
Of normal income tax on unearned in
come viii be lower than | had contem-
plated. materially affect the prospects
Of the fourth Liberty Loan.
Would Stabilize Rate
The market price of Liberty bonds,
which responded favorably to the sug-
geston OF an increased normal tax.
from which the bonds will be exempt
By their terms. was depressed by the
newspaper reports of a greatly in
creased surtax. to which the interest
on the bonds VIII be subject. | have
heen anxious to stabilize the interest
rate upon government bonds. believing
that by so doing we should be reducing
the cost of the war. not only to-day
for ourselves, but, in the future. for
ourselves and for our brave men who
arc fighting in France and who have
little or no opportunity to accumulate
they must upon their return join the
army of taxpay esS who must pay this
interest.
Il have sought to avoid the issue of
bonds at such a rate and upon such
terms as might result ultimately, when
the war is won. in the ulation
OF great wealth in the hands Of rela-
lively small proportion of our popula-
ton. carrying interest at a high rate
and exempt from taxes.
The magnificent patriotism of our
people and the fervor and efficiency
Of the Liberty Loan organization have
made it possible to place the Liberty
bonds in the hands of many millions
investors in securities of any kind.
Bonds Of The third Liberty Loan re-
ceivcd the widest possible distribution,
and feel sure that we all owe duty
to the millions OF subscribers Of small
means. not merely y to pay them a fair
rate Of interest. which we are doing,
but to take such measures as may be
necessary 70 insure to them a marke t
ter the bonds at approximately par, in
case their necessities are such as to
force them to realize upon the invest
ment which they have made in the gov
ernment's obligations.
i have been much impressed by the
success Of the plan which has been
adopted in Canada for the purpose of
maintaining the market value Of Cana
das Victory bonds. | am not without
hope that some such plan may be made
efectlve IN the United States To
make such a plan effective it would be
necessary to put an end to dealings in
ponds on the exchanges and. accord
lngly. to substitute an active and ade.
quste market through the banking
houses Of the United States. acting in
close cooperation with an instrument
4llty OF the government, probably the
war Finance Corporation.
AT the same time it would be neces-
Sary TO put an end to the numerous
Scnemes. many OF them actually fraud
ulent, for inducing inexperienced hold
crs OF Liberty bonds to exchange them
ior merchandise or property of less
inherent value, though carrying the
promise OF higher value CIR a higher
income return. In order that the
feasury may be placed in a position
20 carry such plans as these into eff
,ec'' II they should be found expedient.
! suggest for your side ration the
laton. ~ Ni'- |''' ''s
In order to give the numerous small
noioers of Liberty bonds the advantage
y, market IN case of necessity: and
ESQ 10 attract subscriptions from the
s'eal number of investors of ample
,pieahs but not Of great wealth. it will
pc necessary ediately either to in
.fease the interest rate or to neutral
.L re the increased surtaxes by freeing
NE oonds to a limited amount from
such taxes.
recommend that a portion Of the
tneome u these bonds should be free
I'm Surta1es for the period Of the