Evening star., 1919-12-20
BY WILLIAM b. COLvER,
[ember Of the Federal Trade Commission

Crhis is q verbatim report Of a speech made
by Mr.. Colver Wednesday night before the
members Of the City club.)
Whenever I have an opportunity
to speak 1 am impelled to raise my
voice against the excess profits tax.
believe it would be a good thing If
the excess profits tax law could be re-
pealed tomorrow.
Experience seems to have demon.
strated that the excess profits tax is
one of the foundation stones upon
which the present intolerable price
structure has been raised, and which
works such a hardship upon the con-
suming public, and so, of course, upon
business concerns.
Between 81 and IS is taken from
you and me and the man on the street
as ultimate consumes. in excess
think that is going little bit stiff.
If you knock the whole thing out, the
price structure would come down, !
think, two or three stories at least,
and nobody would be hurt. OF course,
the government would lose this big
revenue.
What would we put in the place of
this tax? Plenty of devices have been
suggested for the raising Of revenue.
For instance, a reasonably small di-
rect tax that everybody can see, evi-
denced perhaps by stamp. on gross
sales. 1t would be something that
would stand right out - something
that everybody could see. That same
tax would apply on everything-lux-
uries and necessities and everything.
We would be nation of taxpayers
of course. and we would yell about
nf 70
now, and We are paying IS for 81
SO, why not put it out where we can
see It., and take it and pay it, and
kick about it and have done with it!
Net a Revenue Device.
In the beginning, the excess profits
tax. as l understand it, was not a rev.
enue device at all. During the war it
became necessary to fix prices of vari-
Gus commodities to keep the market
! from going wild. When it came to
fixing prices on any given commodity,
no matter what it was. it was found
there was a very wide range in cost
of production of the same article in
! the various processes Of manufacture
in factories or mines or mills. So
long as the theory Of fixing a single
price was adhered to. it was necessary
that the price should be fixed high
enough to bring into production the
amount. Of the commodity that was
needed to supply the wants of the
war time. So, the price was predi-
Gated on the cost Of production based
on the high cost Of operation then
existing.
The excess profits tax was proposed
| as means whereby the undue profits
which might accrue to the low-cost
operations could be gathered back
the money with which the government
could pay the high fixed price. because
| the government then, as you know
was the biggest customer for every
thing. So they put a price on copper
high enough to provide the last need.
| ed pound of copper. which was going
to be scandalously high with respect
, to the lowest-cost copper mined; but
| since the government was going to
buy all the copper anyhow, the idea
| was to take back the excess profits
| that went to the low-cost plant sc
| that the cost could be recouped and
! still pay the high fixed price which
was necessary to bring out the neces-
sary production.
Theory and History Of Law.
That is the theory of that law, and
| that Is the history Of it. In other
| words, the theory was-and I never
agreed with that theory for a min
| ute-that by taking back 80, or so
| or SO. or 80 cents on the dollar OF
undue profit. a condition of private
profiteering would be avoided. 1 dc
| not think it has worked out that way
| at all. 1t seems to me that it has
| been an attempt to lift ourselves by
our boot straps, and that we have
been losing 70 or 50 or 40 or 20 per cent
| Of the energy We have been putting into
the lifting process.
The inevitable result has been the
creation of a price structure which
! has been, and is, intolerable and abso-