Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-01-14
TIME TO WAKE UP,
BANKERS DECLARE
Prompt Correction of Present
Era of Economic Disturb
anoe Is Imperative
EVISl0N OF TAKE S

New York. Jan. 1.-THE causes and
the necessity for a prompt correction
Of the present era of economic dis
turbance were brought out strongly in
the various speeches made last night by
leading international financial leaders
at the dinner of the council on foreign
relations.
Revision of the federal income tax
law to bring the levy within bounds
of moderation was urged by Otto ii.
Kahn. while Frank A. Nanderlip a<S
serted that a dangerous situation"
had arisen in the expansion of credits
in this country, and that cts time to
wake up.
Speaking on the situation abroad.
Sir George Paish. the British econo
mist, estimated that the total needs of
Europe for the next ten years would
be about 500 900 600 900 in food and
raw materials. On the other hand,
leading international bankers asserted
that further extension of credit to
Europe by the American government
would be impossible.
Under no circumstances should we
grant additional government credit to
Europe" said Mr.. Nanderlip. that
felt all the time. We must go directly
TO the investors for this money. In
the last nine months we have dissipated
our own ability to grant credits. We
have blown our own credit situation to
such a point that we cannot grant cred
its as we could last spring even in the
present danger Of no'itical chaos"
Speaking of the low rate of ex-
change prevailing now. Mr.. Nanderlip
said :
I,Ny-a ,,,,,- Coco n braolyJorp IN ax
rhange that will even surpass the break
down of the present. There is deeper
"pasou for the present low exchange
than the difference between imports and
cXrorts. All of the fall below the gold
movement point deDreciates exchange.
The currency printing presses are still
working"
"Only extraordinary measures will
enable this country to prevent the serl-
Gus consequences Of the hurricane from
extending to its shores" said Paul D,
Cravath. chairman of the council. "Un-
fortunately the need of finding capital
in this country to meet the greatest
financial crisis the world has ever seen
comes at a time when the conditions
rosrlting from the war make it more
difficult than ever before to assemble
private capital.
The capacity of the banks to meet
the crisis is approaching exhaustion
Almost all the relief which, their ma
chinpry can furnish has already been
provided. Very little helm can be
Gained from individual investors OF
large wealth because the burdens Of
the income tax make it imposs bic TO-
them to invest in taxable securities. a
colossal government loan is out of the
question.
Herbert S!SIIouston also pointed out
that government loan was not teas
iblc and said that no money should bt
advanced TO Europe except for reIlet
He said he believed that extension o.
credit should be brought to pre-
war basis. -.
Otto H. Kahn declared the three chic
factors in upsetting present day econ
omics were the worlds demand to
America raw materials and manutac
tured articles. imitation and fault,
taxation. The worlds demand tol'
American materials and services vii
slackpn gradually. He said the cure
for imitation is.a slow process, but th'
remedy for faulty taxation can be Sc
cured at once whenever it pleases Con-
rress and the administration to seeh
that remedy and apply it.
Citing an extreme instance in whlcf
a person in the highest taxable class
would have to make nearly II per cent
with a corporate security or in his busl
ness to get the same return he woulc
receive by investing in tax free mu'
ricipnl. state or federal bond, Mr.. hahr
reached these conclusions:
"No bond-foreigu or domestlc-car
compete with the attractiveneSS of tax
EXEMPT bonds to those in possession o.
incomes of any considerable size.
The owners of medium sized ol
large incomes have gone on strike. az
far as investing in corporate securities
is concerned. thus greatly diminishing
the quantity of funds available for pri'
vate enterprise.
The American investment marke
for the time being has been largely de
stroyed; the shrinkage in the value o
existing corporate bonds. which is L
the largest extent attributable to tn
income tax. amounts TO billions of dol
lars: the free flow of capital and th'
normal working of the investment mar
ket are absolutely basic elements fo
every kind of trade and industry, ant
we cannot have a return to normal con
ditions of trade, prices, etc, until ou
investment market will have come with
in measurable distance at least o
normal conditions, which is impossible
as long as our present income tax re