Evening star., 1920-05-22
Says Public CIamor for
Funds May Increase
Taxes.
HOLDS EXCESS PROFITS
LEVY CAUSE OF WASTE
Takes View That Ex-Soldiers
Would Not Insist on Bonus il
They Understood Situation.
BY DAVID LAWRENCE.


No man is closer to President Will
son nor better able to speak the views
of the Wilson administration on finan-
| clal and economic questions than the
present Secretary of the Treasury. d.
| f. Houston. His opinions as to the
business and financial outlook and
thoughts on the world situation are,
therefore, an authoritative expression
| of the policies of the United States
government at the present moment.
Mr. Houston was asked by the writer
to discuss various phases of the credit
hurry and economic upheavel which
America is experiencing. Here are
some of the Secretary's thoughts as
he penned them
FIRST, there is no essential reason
why this nation should not continue
financially on sound and safe foot
ing. There is no present cause for
! alarm. 1t is important that We shall
at no time become alarmed or lose
our heads. Panics are the result I'm
part of unwholesome states of mind
When one has difficult situation to
face it is essential that he keep him
self well in hand. but il is equally
necessary that he look the facts
squarely in the face. Industrially,
this nation is in fundamentally
sound position. but there are ten
denotes which must be controlled.
Undue credit expansion must not be
permitted. Further imitation must be
prevented. Many of our banks were
not in position they should hold at
the beginning of the planting season.
If imitation continues it will mean
further increase of price, further de-
rest and strikes.
Discount Increase Not Enough.
Second. Increases in the discount
rates alone influential
be. viii not suffice. The intelligent
and effective cooperation of business
men through the exercise of dis
! elimination in industrial extensions
and through restraint in their de-
nsinds for credit. and especially of all
bankers in extending accommodations.
is of the first Importance
Third. Until recently the govern.
ment seemed to be in position
where it could go forward with exist
ing tax provisions and meet it's OBJ
legations from tax receipts with oc-
casional resort to temporary borrow
ing through tax certificates: but the
situation has recently threatened to
| be changed for the worse The rail-
road legislation has placed a burden
upon the Treasury which, together
with appropriations asked for by the
Railroad Administration may an
proximate a billion dollars And
now comes threat of an additional
burden from one billion to two bill
hon in the shape of bonuses to SOL
dlers. If this materializes, then there
must be increased taxes or. worse re-
newed borrowing at increased rates.
IhiS would result in further increa sed
costs. increased prices. an Immediate
addition to the burdens of one hum
dred and ten millions of people an
added depreciation of government Sc
curities held by twenty millions OF
citlzenS, renewed unrest, and what
more / will not venture to predict.
Ihe amazing thing about this bonus
proposal is that very few people in
responsible positions in Washington
Seem TO favor doing this detriment
TO the body polite. and the equally
striking thing is that few of them
nave the courage to say so and to
1ner eHecuve opposition. L cannot
believe that a majority of the fine
boys who patriotically responded 10
the call of country would ask this
subsidy II they knew what it involved.
ana IL L were mistaken, / should be
greatly depressed over the fate Of
the nation.
Business Men Must CO-Operate.
Fourth The immediate need is for
business men, and particularly for
member banks, to Cooperate with the
officers of the federal reserve system
and the Treasury. The problem is
theirs quite. as definitely as II is the
officials'. But there must be some-
business men and bankers There
must be cooperation from that part
of the public which is in a position
TO save. and everybody must devote
little more high tension to hard
work. Some people are not in a posi-
tion to save. but many can save who
are not saving.
Fifth. Undoubtedly no new taxes
should be imposed if they can be
avoided. But they may not be avoid,
II
to clamor for appropriations. And I
unhesitatingiy assert that the people
and not executive departments are in
the main responsible for increased
demand on the Treasury and the en-
largement of government activities.
The demand for services comes from
them 7 do not speak eXtravagantly
when I say that for seven years I
have expended many times as much
effort in resisting demands from
groups of people for appropriations
as I have in seeking them.
sixth. The excess profits tax is nor
all evil II has good features. II in
productive of revenue. II reaches
some real profiteers. But 1t tends to
promote waste 1t works unequally
and capriciously 1t depends upon
mere accident of form of corporate
organization. 1t Furnishes conservative
business and rewards and promotes
stock watering. Many of the corpo-
=
off very lightly because they are so
generously capitalized. and the tax is
now confined to a part of business.
II does not apply to all business con-
Germs. and, therefore. works unjust
Iv. The substitution of a fiat rate on
undistributed profits would place in
and unincorporated con-
Germs more nearly on the same basis.
Cool Judgment Needed.
Seventh. What we need nowadays
is cool Judgment, regard for facts and1
courage to follow conclusions based on
them. Let US have debate. criticism
and progress by all means, but let US
have constructive criticism and let US
have progressives who know where
they are headed and who are headed
In the right direction. Economically
and politically we were in the war
from the moment of the first movement
IF the German troops. We were in IL
years before we entered it formally in
military fashion. and we shall be in it
and politically for many
years after our last soldier is with
lrawn from Europe. How idle it is
for men to insist that this nation shall
i've in isolation. 1t cannot live apart
from the world. 1t is hopelessly en-
tangled with it. Nothing of great inn
portance, either of an economic, finan-
.ial or military nature. can happen
gain anywhere in the world without,