Evening star., 1920-07-11
BY I. A. FLEMING.

Some of the leading bankers of the
city believe that we are in for pro-
longed period of high money rates,
perhaps for several years. pending
the completion of the work of re-
adjustment from the condition result
ant fl ON the world war.
The great need of the world today is
new money; the work of rehabilita-
| ton, in it's fncipiency as yet, so far
as central Europe is concerned, and
making slow progress elsewhere, will
continue to demand credit and more
credit for years to come.
Even in our own country the ad-
Justment process has not been gain
ing any great speed. When concerns
like Armour & Co. are willing to en-
ter the market in competition for
cash, paying nearly per cent, and
the best commercial houses are offer
ing their paper at I u to 8 per cent,
and time money on collateral security
holding around s to 8 per cent, it is
painfully evident that we are far
from the dear old days of per cent,
with occasionally a little less or a lit
tie more.
Further Adjustment Needed.
1t certainly begins to press home
on the reader of the news of the day
that further expansion in business
and increased trade are not likely, but
that further readjustment. through
dull days, through economies, reduced
expenditures. public and private. and
tax method changes to firmer
foundation. is needed.
1t is more than twenty months
since the war ended actually, al
though we are not at peace officially,
yet the reduction in public expenses
has been unimportant.
The individual is beginning to find
to his own satisfaction that there is
pays, hence the wild buying of the
days OF year ago seems to be over.
Cooperative sales have come to be
more or less numerous as means of
stimulating afresh the buying fever.
which has fallen almost to normal.
Cancellations of orders have furthered
these cooperative methods of work
ing off superior stocks. and decreased
production in the heretofore most ac-
tive lines is likely to be more notice.
able in the near future.
Shut-downs have developed here
and there. but labor is still generally
employed at high wages.
Shifting of Investments.
The higher rates at which new
financing is being consummated will
naturally result in shifting of in
vestment, increasing in volume as the
days pass, provided that the theory
of long-period high money is correct.
1t is the new money that is being
invested nowadays in the per cent
securities. Any increase in security
values. if carried to any extent. will
probably develop more selling for the
purpose of reinveSting in the higher
interest bearing stocks and bonds.
The outlook generally speaking is
materially improved by the fact that
{e f1y
to revise income tax methods, Great
ing a more equitable distribution, SO
that the greater part of the taxes
will not come directly and so heavily
on manufacturers and corporations.
Manufacturing extensions and bet
terments are made from surplus
funds. and when the entire surplus or
a very large part Of it is paid to the
government in excess profits, better
ments have to depend on financing in
open market channels at high rates.
With money holding as high as it Is
credits will be watched very closely
and more and more rates will be
marked up, discouraging the non-es-
sentials and expansion in lines where
there seems to be no warrant there
for.
An English View.
Lord Leverhulme, one Of England's
merchant princes, has this to say of
faulty taxation:
when my income was s25o,00o a
year T lived in a house that cost me
SITS and every surplus penny OF my
income went into my business. By
the employment of my surplus CAPT
tai my business was expanded. That
is the way all business expands. and
If the state takes. the surplus In tax
alton there can be no expansion.
'It is the surplus profits of her busi-
ness that have made England the
predominant figure in commerce Of the
whole world. Without those profits.
all the courage of her industrialists
the wisdom of her statesmen and the
advantage of geographical situation
would have been in vain.'
He predicts for England glorfes that
her founders never conceived If al
lowed to go her way under good gov
ernment and accumulate and reinvest
surpluses.
This is certainly a strong argument
against excess profits tax.
Strength in Capital Traction and