Evening star., 1919-12-02

l sincerely regret that l cannot
be present at the opening of this
session of the Congress. / am thus
prevented from presenting in as
direct a way as l could wish the
many questions that are pressing
for solution at this time. Happily.
| have had the advantage of the
advice of the heads of the several
executive departments who have
kept in close touch with affairs in
their detail and whose thoughtful
recommendations | earnestly sec
ond
In the matter of the railroads
and the readjustment of their af-
fairs growing out of federal con-
troll. i shall take the liberty at
later date of addressing you.
l hope that Congress will bring
to conclusion at this session leg
lSlation looking to the establish
ment of budget system. That
there should be one single authori-
ty responsible for the making of
all appropria tions and that appro-
priations should be made not in
dependently of each other. but with
reference to one single compre-
hensive plan of expenditure prop
erly related to the nations in
come, there can be no doubt. l be-
lleve the burden of preparing the
budget must. in the nature of the
case. if the work is to be properly
done and responsibility concentrat-
ed instead of divided, rest upon the
executive. The budget so prepared
should be submitted to and ap-
proved or amended by single
committee of each house of Con-
gress and no single appropriation
should be made by the Congress.
except such as may have been in
cluded in the budget prepared by
the executive or added by the par
t1cular committee of Congress
charged with the budget legisla-
tion.
Economy in Expenses.
Another and not less important
aspect OF the problem is the ascer-
talnment of the economy and eff
cheney with which the moneys ap-
propriated are expended. Under
existing law the only audit is for
the purpose of ascertaining whether
expenditures have been lawfully
made within the appropriations No
one is authorized or equipped to
ascertain whether the money has
been spent wisely. economically
and effectively. The auditors should
be highly trained officials with per-
manent tenure in the Treasury De-
partment, free of obligations to or
motives of consideration for this or
any subsequent administration,
and authorized and empowered to
examine into and make report upon
the methods employed and the re-
suits obtained by the executive de-
partments of the government
Their reports should be made to
of the Treasury.
I trust that the Congress will
give its immediate consideration
to the problem of future taxation.
Simplification of the income and
profits taxes has become an i'm
mediate necessity. These taxes
performed indispensable service
during the war. They must, how
ever, be simplified, not only to save
the taxpayer inconvenience and
expense, but in order that his liza
bility may be made certain and
definite.
With reference to the details of
the revenue law. the Secretary of
the Treasury and the commission
er of internal revenue will lay be-
fore you for your consideration
certain amendments necessary or
desirable in connection with the
administration of the law-recom-
mendations which have my ap-
proval and support. 1t is of the ut
most Importance that in dealing
with this matter the present law
should not be disturbed SO far as
regards taxes for the calendar
year 1920. payable in the calendar
year 1921. The Congress might
well consider whether the higher
rates of income and profits taxes
can in peace times be effectively
productive of revenue. and wheth-
er they may not on the contrary,
be destructive of business activity
and productive of waste and inef-
f1ciency. There is a point at which
in peace times high rates Of in
come and profits taxes discourage
energy. remove the incentive to
new enterprise. encourage extrav-
agant expenditures and produce
industrial staenation with. conse-
auent unemployment and other at
tendant evils
Americas PositfOn Changed.
The problem is not an easy one. A
fundamental change has taken place
with reference to the position of
America in the worlds affairs. The
prejudice and passions engendered
by decades of controversy between
two schools Of political and economic
thought-the one believers in protec-
ton of American industries. the
other believers in tariff for revenue
only-must be subordinated to the
single considera ton of the public in
terest in the light of utterly changed
conditions. Before the war America
was heavily the debtor of the rest of
the world and the interest payments
she had to make to foreign countries
on American securities held abroad.
the expenditures of American travel
ers abroad and the ocean freight
charges she had to pay to others.
about balanced the value of her pre-
war favorable bala nee of trade. Dur
ing the war Americas exports have
been greatly stimulated. and in
creased prices have increased their
value. On the other nand. she has
purchased large proportion of the
American securities previously held
abroad, has loaned some $4,000. .00O,-
900 to foreign governments. and has
built her own ships
Our favorable balance of trade
has thus been greatly increased
and Europe has been deprived of
the means of meeting it heretofore
existing. Europe can have only
three ways of meeting the favor
able balance of trade in peace
times: by imports into this coun-
try of gold or of goods, or by es-
tablishing new credits. Europe is
in no position at the present time
to ship gold to us nor could we
contemplate large further imports
of gold into this country without
concern. The time has nearly
passed for international govern
mental loans and it will take time
to develop in this country a mar
ket for foreign securities. Any
thing. therefore. which would tend
to prevent foreign countries from
settling for our exports by ship
ments of goods into this country
could only have the effect of pre-
venting them from paying for our
exports and therefore of prevent
ing the exports from being made.
The productivity of the country
greatly stimulated by the war must
find an outlet by exports to foreign
countries and any measures taken