Evening star., 1921-02-13
ELIMINATION OF EXCESS TAX
SEEMS TO BE DOMINANT ISSUE
1t Certainly Is the Leading Topic of Dis
cussion-Plain Definition of Exchange
Guaranty Trust on Conditions.

, in place of the 3E to Az per cent paid
now on war bonds and to per cent
on floating debt. Instead of $922, ESQ.,
900 interest. estimated by the Treas
ment proposed is a billion and a half
or s577,000.000 additional.
More Taxes.
1t Is also proposed in this measure
to create a sinking fund to retire a
billion of the debt each year. The
present sinking fund requirement is
s265, 100000 for the fiscal year begin
ming July /. Here. then. is another ad-
dition to taxes of $734.300,000. The
sum OF these two proposed additions
to the tax burden is s1,311. 100000. Add
this to the annual estimates now be-
fore Congress-. which are above $5.96l, :
100000. and the total to be raised by
Such refunding as this is almost as
expensive as war. The need of re-
funding the present debt at higher
rate Of interest has not yet been forced
upon us, and money has been little
easier since a curb was placed by the
reserve board on unlimited specula-
ton. Perhaps money will be available
at still lower rate two years hence.
when the victory notes of above four
and quarter billions and SS00.000,o0o
war savings certificates become due.
Business Condition.
The Guaranty Trust Company. dis
cussing business conditions generally,
has this to say:
Improvement in the business situa-
ton as a whole continues slowly. but
more or less steadily. While the textile
industries of New England are resum-
ing operations. and farm products are
moving more quickly, there are evidenc-
es of slackening activity in the steel
and iron centers, and idle railroad
rolling stock is increasing. Wholesale
dealers and jobbers complain that
while their prices have been reduced to
costs. retailers continue to place orders
on the day-to-date basis. The retailers
declare that their prices are at rock
bottom. and that offers of big reductions
from the sale prices of few months
ago obtain no response from the uitl-
mate consumer, who expects prices
which would represent too big loss to
the stores, despite the apparent oppor-
tunity to replace at lower levels.
THE consumer. on the other hand.
has failed to be convinced by the fact
that the price drop in this country is
the most precipitate on record. and that
ha should not wait for greater fall.
If each element in the country is to do
its share toward the maintenance of an
orderly, conservative and safe readjust-
ment. This attitude is due in part. of
course, to the consumers loss in buying
power resulting from reduced wages,
part time work. and unemployment. The
effect is seen in the decrease in rail-
road traffic, in the diminished bank
clearings, in the falling off of mail
orders, in the effort which producers are
making to contract their cost expendi-
lures. This last involves further wage
reductions and whole train of attend
ant circumstances.
Constructive Factors.
Holding the controlling lever and CIV
ing promise of approaching stability,
however, are those factors in the sit
uation which lie on the constructive side
Of the problem. Arrangements are be-
ing made to dispose of large part Of
the country's copper surplus through
private financing. The War Finance
Corporation has made survey OF the
markets and this country's ability to
supply them.
poration is being formed to furnish
credits to cover expectation of Amer
lean products. There is a disposition
on the part of industrial enterprises
to avoid complete disintegration Of
their working forces or scrapping Of
efforts are being made to extend
business or at least to hold fast.
Many look to the traditional dull
ness of February give way to an
tions. 1t is a period where construc-
tive planning and optimism as to the
future prevail over the mere sur
face conditions. Hence the percepti-
BILE feeling everywhere that the trend
inclines toward improvement.
The Price Movement.
During the third week of Janu-
ary the decline in wholesale prices
continued. but more slowly than dur
ing the first two weeks of the year.
In the following week the rate of
decline was accelerated. while dur
ing the first week of February the
number Of advances in the wholesale
prices of household commodities as
compared with the declines swung
upward Last week the declines were
again in the majority. By the end of
the month a comparison will prob
ably show a net decline, but. as was
the case for the month of January.
at a slower pace than during the pre-
ceding month. In the opinion Of
business men who perceive the diff
culties in the way of recovering from
a severe setback, normal condition
would in the end have been reached
more quickly had the sweep of price
reductions inaugurated last year not
been so intense and so wide"