The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-11-19
leagues EFFECT
Ion FINANCES Of
WATCHED
Upon Ability of Creditors to
Pay U. S. Will Depend to
Large Extent Action of.Con-
gress in Reducing Taxes.
BY DAVID LAWRENCE,
Special Correspondent Of The News
Scimitar.)

WASHINGTON, Nov. Is.--It's a
Tar cry from Geneva, where the league
ot nations is meeting, to the income
E>tax division of the American treasury
kr the 1pocketbooks of the American.
people. but entirely aside from the
International politics of the occasion.
the United States government Is TAX.
hug u deep interest in the effect OF
the leagues meeting on the finances
Eof Europe.
The pressure from all parts of the
United States for reduction of taxes
lis so overwhelming that the Repub-,
|lican congress which meets next
month will find it necessary to make
a start upon the problem even before
the next Republican president taxes
office.
Yet the officials most familiar with
the taxation question seem to be al
most a unit in their belief that taxes
can not be reduced unless the Ameri-
can government can sooner or later
begin to expect money from its
various creditors in Europe.
And the ability of European gov
ernments to pay America either the
interest on the war debt-which alone
amounts to $475,000,000 year--or
payments on the principal loaned
during the war, approximately $l0,-
coo, 900, 900, depends entirely upon the
credit situation inside Europe.
Disarmament is the single remedy
which one hears discussed In offlcial
Washington. II European countries
would cease thinking about future
wars and agree to disarmament pro-
i gram, they would have available not
only money to pay, America her in
II terest, but money on the big war debt
III itself. Similarly, if the United states
III could feel free to reduce <her own
II armament because OF agreement with
othe" nations, including japan, fhe
estimated total of $4,000,0O0,0O0 need
4 ed by our government in taxes from
the American people could be ma
i terially reduced.
The general feeling here is that on
II the political stability Of Europe de-
4 ponds her ability to pay external
\ debts, as well as to produce goods for
exuort around the world, so that her
Il own revenue from taxes will increase
| and so that international exchange
A viii tend to become equalized.
Il Great Britain and France, VINO
\ bwe America large sums of money
4 and who have not been able TO pay
/ interest to the United States, are
4 laying aside huge sums OF money Tor
/ military and naval defense. although
i there is faith in the ultimate ABILITY
! of the league of nations to prevent
| war. y.
| European countries will not limit
4 their ornaments until all nations, in
1 cludinE the United States. enter INTO
| the agreement The >unwillingness or
4 the United States to enter the league
| of nations and the controversy about
| it in the United States mas for the
| moment prevented an understand
ing about disarmament. but ire
spectiye of whether President elect
Harding decides that he wants
America to join. q league of nations,
he has pledged himself to work for
disarmament.
The league of nations has a spe-
cial commission at work on the ques-
ton of disarmament. but it is doubt
fu whether the movement will get
much momentum until President
elect Harding throws the moral force
of America behind 1t.
Practically every tax expert in
Washington can work out formula
whereby taxes would be reduced and
/ Liberty bonds restored to par II the
entire world agreed not to build any
extensive ornaments, but simply to
maintain sufficient for national de-
Tense. Secretary Houston estimated,
fer instance, that the American gov
eminent would need four billions OF
dollars in revenue during the coming
year.
There is a good deal of talk about
extravaganza in government, but
when that $4,000,000,000 estimate is
analysed, his figures are likely to
be considered conservative. OF the
$4,000, 100000 at least $1,000, 000,0 600
1. m l.
can people the interest on the, Lib
erty bonds they hold. Another ST.
000,OO0,00O will have been spent on
guarantees to the railroads and other
assistance provided for by the Re-
publican congress during the last
session in order to help the railroads
out of the plight they were in when
taken over by the government dur
ing the war. This leaves $2,000,-
/ 100000 for other purposes.
- Pensions, war risk insurance,
maintenance of the military and ma
val establishments and other eXpen-
ditures growing out of the war, to-
gether with the billion dollars that 1t
used to cost to run the American
government before 1914. consumes
tte remaining two billions;
4 Moreover, the high cost of COM
modities which the government itself
must huy would ordinarily have ip-
creased the government budget beN
You'd the single billion, even if there
were no expenses incident to the
war. -,
The impression is that there will
be much pruning Of expenditures
during the coming year. but that II
can not offset the main items like
the sums guaranteed to the rail
roads, the amounts to be spent fol-
the soldiers and sailors and the bill
lion that must be paid in interest to
Liberty bond holders.
1t is general feeling, too. that the
government will be doing well II II
can cut it's expenditures to four bill
lion and raise that amount of rev
enue. Nobody knows just what the
ldss will be on the revenue from eX-
cess profits taxes.
The slump in business will NEAR
considerable reduction in revenue
The prospect is that there will be
an insistence on a cut in army ano
navy appropriations and things in
cident to war making. Should Eu'
rope be able to do the same thing
the outlook for lower taxes, accord
ing to officials here. would bt