The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1920-01-21
Taxation

that heretofore has been the main
stay OF our investment market. for
the masses o. the American people
have not heretofore been IN the
habit Of putting their savings into
Prior to the war there were less
than 5000 individual owners OF
bonda In the United states. | have no
reliable figures which would enable
me 20 Judge TO what extent b num-
Der Of small bond Investors has in
creased within the past Few years
tnpart from Investors Ia Liberty
nondsl. Ia doubtless has Increased
but the aggregate buying power, or
rather. buying inclination OF the
small investor. has By no means
made up. and Il not at an likely 70
make up, for the detection OF the
larger investor.
Whether o. not we favor the insti-
tuition Of taN-eNempt sccurities-and,
personally l do not favor Tive are
thus confronted with u condition, no
"A theory. The existence OF that mass
OF n~on-taxabie securities IL an add
tiunal consideration among those
which should have bid our legislators
pause before raising the scale Of di-
rect taxation 10 -anexampled heights
,. Some OF h results OF
wholly eNorbltnnt and unparal-
.icled tdNation on the one hand,
and the existence Of a huge vol
ume OF tnN-frec securities on The
other, have been these;
n The owners Of medium
sized or large incomes have gone
on strike as far a. investing In
corporate securities IL concerned.
thus greatly diminishing the
quantity Of funds available FOR
private enterprise.
To the extent that they still buy
nnrNAWaHa auYfHrtttUu ak.sH a.NNuW.. fuNs
higher interest rates than formerly M
order To rec0up a portion, at least.
OF the impairment Of their income.
That enhances the cost OF capital and
makes for higher prices OF all arti-
Giles.
b In consequence Of this en-
tirely logical attitude Of self-de-
Tense on the part OF capital. the
American Investment market FOR
the time being has been largely
destroyed. Unparalleled stagna-
tion has characterized h for
many month";
The shrinkagc In the value OF
existing corporate bonds, which,
though In part due TO causes OF
"a general character, Is 10 the
largest extent attributable to the
income tax, amounts TO billions
OF dollars.
a successful bond issue OF larger
size. oven at what formerly would
nave been considered extraordinarily
attractive rates Of interest. has not
been known for a long time.
The free flow OF capital. the
normal working Of the Invest
ment market nre absolutely basic
elements for every Kind Of trade
and industry. THE effects OF their
disturbance to any serious de-
gree for any length Of time arc
ali-pervading.
We cannot have "A return to
normal conditions OF trade. pri-
ces. etc, until our Investment
market will have come within
measurable distance, at least. q
normal conditions. And that b.
impossible az long as our present
Income AK rcmainH In force,
even II az other clements which
have opersted 70 bring about the
present Abnormal situation were
removed.
G. Apart from the scale Of tax
alton, there are various provisions IN
our income tnA Jaw which seriously
handicap the American business man
aH against his European competitor,
Time on the present occasion permits
only 10 register his fact without go
ing into detailed specifications. A
common Characteristic of these pro-
visions is hat while nationally harm
full In their effect. they are little pro-
ductive OF revenue.
d our newborn aspiration 20
be the great financial mart OF
the world has been strangled In
its cradle because "a broad, active
and receptive Investment market
Is an indispensable prerequisite
for the establishment OF "a potent
financial center.
II Is wholly futile. under u
present income tax, to expect
private capital to invest In for
clgn securities TO o. adequate
degree and thus aid Ia cure, to
an extent. at least. the unpre-
ccdentedly abnormal state Of the
exchange rates, which sooner or
later Is bound to prove "a ior-
midabie obstacle to our export
trade. No foreign bond can pos
sibly compete with out own tax
exempt securities under the cN-
listing scale Of taxation.
II we wish the world TO continue
10 bus from us on "a large scale, II
We wish Co do what duty and selt-
interest demand In aiding Europe to
normallze ana stabilize itself, and
uIlcss we are prepared to torego
those opportunities Of lasting value 10
the country which the present situn-
ton offers, We must he willing TO adj
vance considerable funds 90 uur for
eign customers ms England. France.
and Germany have always done In
pre-war times and rs. indeed. Eng
land is doing now 10 b extent OF
her ability.
The banks cannot possibly carry
the whole load Of financing such adj
Nances. We may not look 60 tho
government 20 do 30. Private capi-
tal Canuot he Induced To do 10 under
the circumstances above explained.
There is only one way 60 end ne
deadlock. and that b. intelligent and
purpuseful revision uf our AVIATION
polio, and methods.
e Enterprise is hampcrcd n
thereby production retarded tand
production Is one OF the crying needs
81 the hour. An apparent contra
dictiun TO his statement AIuy be seen
in the great industrial activity which.
prevails now lud has prevailed FOR
some Time. But the contradiction ~
meielH an apparcm one.
our present prnfp'ritF is duc
90 Hl normal rauscs. n o. not
normal lh lts son,1mitIntf. nor
be- 10 .t tl uniform or cNru no is
WORKING NpW sufripiiHe is
largely confined tu those uciiN-
files In which. owilg to prevail
ing conditions. wholly abnormal
profits are possible, profits 30
great that Trey can stand cA-
urhifaut taxation