The sun., 1919-08-03
Cumulative Production Costs All
Along the Line.


Wide discussion has been arouset
In England over a clear and convinc
Ing statement by Mr.. ALGERNoN +
FIFTH before the General Council o.
the National Alliance OF Employer
and Employed on the causes Of great!
increased costs Of production. From
his statement, as repeated In the Lon
don Times, we extract this:
MY contention IL that the IN
creased cost Of production Is caused
primarily BY two factors--namely.
the greatly Increased cost Of labor
and the heavy taxation. and only to
q minor extent by tho increased earn
inss Of capital.
I'm support Of this statement
gave figures as to q business with
which am familiar. in which a COM
parison was made OF the extra
amounts paid out tai to labor. OBJ
for taxation. and (c) as extra dlvi-
dends on capital. on the average OF
the last two war years as compared
with the average Of the last two pre-
war years. Adding the three totals
together and dividing II into the
percentages received ind that Of
the total sum labor has received
Just over 81 per cent. taxation has
amounted to 40 per cent. and capital
has received . per cent extra
ct further pointed out that though
It was hoped that . reduction in the
excess pronts duty from 80 per cent.
to 10 per cent. would result in q re-
duction in the price OF the products.
while the matter was under consid-
Grafton the frm referred to received
a fresh demand from labor. which.
II granted. would more than absorb
the amount saved by the reduction Of
the excess profits tax.
81 do not think that the cumuia-
tive effect of the excess profits tax
in forcing up prices 10 fully under
stood by the public. No one will
dispute that capital Is entitled.
equally with labor. to some increase
IN It's return to Offset the increased
cost of living. Under an 90 per cent
excess profits tax II was impossible
for anybody to make Il extra profit
without charging E5 TO the consumer.
because the Government took "a Of
Il. This would not DO 30 serious If
goods were manufactured with only
one profit TO be charged. A little
consideration. however. viii show
that there IL hardly any manufao-
tured article which does not rep
resent several landings by different
interests from the raw material to
tho time the finished goods are in the
hands Of tho consumer.
Trade Is very much specialized,
and there are very few manufactures
that arc not the result OF three or
tsur processes. all in separats hands.
before the goods are finished On the
top Of these. they are handled by the
Wholesale merchant and the retailer
before the goods reach the consumer.
know of some goods which pass
through I'VE different processes. car
ried out by different works, so that
with the addition of the merchant
and the retailer there are seven prof
its to be charged Thus. II each of
these firms has TO receive fl extra
proft. It is necessary to charge ts5
to the consumer. and OF this sum the
Government takes f2s. Thin. I'M
doubtedly. ia ono OF the chief causes
of tho high prices which now pre-
vail"
Now, Of course, what is true O,
profits taxes entering into the cost o.
production and coming out as tn,
higher price to the consumer is tru,
of any charge going into the product
The wage cost, however, transcend.
in Importance ali other costs for thii
simple reason: There may not be any
profits tax at all. because It may b,