The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1920-05-24
HIGHER TAX
OR BORROW;
ONE'SC|NCH
No Escape, Says Houston,
in Plea for Sane
Financiering.
BIZ DAVID LAWRENCE.
(SneciaI tn The ArPuS.)

Washington. May 24.-No man is
closer to President Wilson nor bet
ter able to speak the views of the
Wilson administration on financial
and economic questions than the
present secretary of the treasury,
d. F. Houston. His opinions as to
the business and financial outlook
and thoughts of the world situation
are therefore an authoritative ex-
preston of the policies of the Unit
ed States government at the pres
ent moment. Mr. Houston was
asked by the writer to discuss var
ious phases of the credit furry and
economic upheaval which America
is experiencing. Here are some Of
the secretary's thoughts as he
penned them:
First. There is no essential rea-
son why this nation should not
continue financially on a sound and
safe footing. 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 in part of unwhole-
some states of mind. When one
has a difficult situation to face. it
is essential that he keep himself
we'll in hand, but it, is equally nee
essary that he look the facts
squarely in the face. Industrially.
this nation is in a fundamentally
sound position, but there are ten
denotes which must be controlled.
Undue credit expansion must be
permitted. Further imitation must
be prevented. Many of our banks
were not in position they should
hold at the beginning of the plant
ing season. If imitation continues,
it will mean further increase of
price, further demands for wages,
increased costs, unrest and strikes.
Must be Effective Cooperation.
Second. Increases in the dis
count rates alone. influential as
they may be, will not suffice. The
intelligent and effective coopera-
ton of business men through the
exercise of discrimination in in
dustrial extensions and through re-
straint in their demands for credit,
and especially of all bankers in ex-
tending accommodations, is Of the
first Importance.
Third. Until recently the gov
eminent seemed to be in position
where it could go forward with ex-
listing tax provisions and meet its
obligations from tax receipts, with
occasional resort to temporary bor-
rowing through tax certificates;
but the situation has recently
threatened to be changed for the
worse. The railroad legislation
has placed a burden upon the treas
ury, which, together with apprO-
priations asked for by the railroad
administration, may approximate a
billion dollars. And now comes
threat of an additional burden of
from one billion to two billion in
the shape of bonuses to soldiers. If
this materializes, then there must
be increased taxes, or worse. re-
newed borrowing at increased rates.
This would result in further in
creased costs, increased prices, an
immediate addition to the burdens
OF 100000 Of people, an added
depreciation of government secur-
tiles held by 20,O0O.00O of citizens,
renewed unrest, and what more /
will not venture to predict. The
amazing thing about this bonus
proposal is that very few people in
responsible positions in Washing
ton seem to favor doing this detri-
ment to the body polite. and the
equally striking thing is that few
Of them have the courage to say so
and to offer effective opposition. l
cannot believe that a majority of
the fine boys who periodically re-
sponded to the call of the country
would ask this subsidy If they
knew what it involved. And if l
we're mistaken, I should be greatly
depressed over the fate of the ma
ton.
Saving Is Vital.
Fourth. The immediate need is
Continued on page four).