The Washington herald., 1919-05-21
Textof Message Cabled byPresident

sums we have had to raise by taxa
ton. would seem to indicate for
very large proportion of those sums
were raised In order that they might
be loaned to the governments with
which we were associated In the war.
and those loans will. of course. con-
stitute assets, not liabilities. and VIII
not have to be taken care of BY our
taxpayers.
Ineome and Excess Profits.
The main thing we shall have to
care for Is that our taxation shall rest
as lightly as possible on the produc-
tive resources of the country. that its
rates shall be stable. and that 1t shall
be constant in its revenue-yieldins
power. We have found the main
sources from which IT must be drawn.
/ take il for granted that its main
stays will henceforth be the income
tax. the excess profits tax. and the
estate tax. All these can so be ad-
Justed to yield constant and adequate
returns and yet not constitute a too
grievous burden on the taxpayer. A
revision of the income tax has already
eC~h pA0NAACN AOI W 1hC AZ - -
but I think you will find that further
changes can be made to advantage
both in the rates of the tax and In
the method of its collection. The ex-
cess profits tax need not long be
maintained at the rates which were
necessary while the enormous ex-
penses of the war had to be borne:
but II should be made the basis of
permanent system which will reach
undue profits without discouraginG the
enterprise and activity OF our business
men. The tax on inheritances ought,
no doubt, to be reconsidered in its re-
lation to the fiscal systems of the sew
eral States, but 1t certainly ought to
remain a permanent part of the fiscal
system of the Federal Government
also.
Texas to BE Eliminated.
Many of the minor taxes provided
for in the revenue legislation of 1917
and 1913. though no doubt made nee
essary by the pressing necessities OF
the war time. can hardly find suffi-
cient Justification under the easier
circumstances OF peace, and can now
happily be got rid OF. Among these.
/ hope you will agree, are the ex-
cises upon various manufacturers and
the taxes upon retail sales. They are
unequal in the incidence on different
industries and on different individ-
uals. Their collection Is difficult and
expensive. Those which are levied
upon articles sold at retail are large.
ly evaded by the readjustment oi
retail prices. On the other hand,
should assume that 1t is eXpedient
to maintain a considerable range oi
indirect taxes: and the fact that al.
coholic liquors will presently no long.
er afford a source of revenue by tax.
alton makes il the more necessary
that the field should be carefully re-
studied in order that equivalent
sources of revenue may be found
which IL will be legitimate, and not
burdensome. to draw upon. But you
have at hand in the Treasury Depart
ment many experts who can advise
you upon the matters much better
than i can. I can only suggest the
lines of a permanent and workable
system, and the placing OF the taxes
where they will least hamper the
life of the people.
General Tariff Policy.
There is. fortunately. no occasion
for undertaking in the imm ediate
future any general revision of our
system of import duties. No serious
danger of foreign competition now
threatens American industries. Our
country has emerged from the war
less disturbed and less weakened
than any of the European countries
which are our competitors in manu-
facture. Their Industrial establish
ments have been subjected to great
er strain than ours. their labor force
to a more serious disorganiZation.
and this is clearly not the time to
seek an organized advantage. The
work of mere reconstruction will.
am afraid. tax the capacity and the
resources of their pepole for years
to come. So far from there beng
any danger or need OF accentuated
foreign competition. it is likely that
the conditions of the next few years
will greatly facilitate the marketing
of American manufactures abroad.
Least of all should we depart from
the policy adopted in the tariff act
of 1913. of permitting the free entry
into the United States of the raw
hihAVi I" suppiNihN"N eAhA
enrich our own abundant supplies.
Nevertheless. there are parts of
our tariff system which need prompt
attention. The experiences of the
war have made il plain that in some
cases too great reliance on foreign
supply is dangerous. and that in de-
termining certain parts of our tariff
policy domestic considerations must
be borne in mind which are political
as well as economic. Among the in
dustries to which special considera-
tion should be given is that of the
manufacture of dyestuffs and relat-
ed chemicals. Our complete de-
pendence upon German supplies be-
fore the war made the interruption
of trade a cause of exceptional eco
nomic disturbance. The close rela-
ton between the manufacturer of
dyestuffs. on tho one hand. and of
explosives and poisonous gases, on
the other. however. has given the
industry an exceptional significance
and value. Although the United
States will gladly and unhesitating-
ly join in the program of interna-
tional disarmament. II will never
theless. be a policy of obvious pru-
dence to make certain of the sue
cessful maintenance of many strong
and well equipped chemical plants.
The German chemical industry. with
which we will be brought into COM
petition. was and may well be again.
thoroughly knit monopoly capable
of exercising a competition of a pc
cuIiarly insidious and dangerous
kind.
Means of Protection.