The Washington herald., 1921-12-08
RIGID ECONOMIES
URGED BY MELLON
TO REFUND DEBTS
Says Maturity of U. S.
Obligations Total Near
ly Seven Billion.

The maturity within the next
eighteen months of s6.75O. 900, 900 OF
government obligations makes it
necessary that most rigid economies
be practised and new burdens on the
treasury avoided, according to Sec
Rotary Mellon.
The maturity of these short-dated
debts still dominates the situation"
Mellon said in his annual report to
Congress.
The greater part of this debt will
have to be refunded" said Mellon,
and the orderly conduct of the re-
FUNDING operations will requ re the
Treasury's best attention for some
time to come"
Quotes Refunding Figures.
The obligations maturing are war
saving certificates OF 1918. the Vic
tory Liberty loan. and Treasury GER
tificates OF var Gus series.
Mellon said that during the past
year about s70O.OOO.00 of short
dated debt had been refunded into
later maturities, and victory notes
mad been reduced to S3,60O,OOO, 900.
outstanding Treasury certificates
were reduced to $4,000. 900. 900. These
facts, coupled with lower money
rates and higher prices for govern
ment securities. Mellon believes
are most encouraging" and indi-
cate that the government will be
able to proceed with the great re-
funding operations without undue
disturbance to bus ness"
The Secretary devoted a consider
% fg
cussion of needed changes in the
system Of taxation. He declared
that expenses of the government for
some years to come WI probably be
several times those OF pre-war
years
Tax Adjustment Important.
1t Is, then, of vital Importance
that adjustments be made in our
scheme of taxation whereby the
burden will not fall unduly, either
directly or indirectly. upon any par
ticular class, and at the same time
VIII not seriously interfere with
productive industry and the general
prosperity of the country" said
Mellon.
After pointing out the business
and Industrial depression, accom-
panied by unemployment, that have
existed during the past year. Mel
Ion said:
How far-reaching the conse-
quences may be, no one can as yet
safely predict. Unemployment in
all classes has been very great. II
these conditions continue, our pres
emit burden of taxation must Sc
riously increase the troubles Of our
people. The hardship and suffering
resulting from business depression
and unemployment inevitably fall
most severely not upon those pay
ing high income taxes, but upon the
great body OF the people Of small
incomes"
Would Reduce Income Taxes.
Mellon set forth lengthy argu-
ments in favor Of reduction of in
come tax rates. particularly surtax
rates. which he thinks should be at
- per cent. instead of tn, present
maximum Of so per cent New and
Untried plans are unnecessary. he
said
The necessary adjustments can
readily be made by retaining most
Of the present taxes, but substan-
TALLY reducing the rates, and sup
plementing the revenues by some
additional taxes" he continued
To reduce the surtax rates to a
maximum OF 25 per cent. and grad
ing the reductions through all the
brackets. would mean an apparent
loss in revenue Of about 100000
900. A 20 per cent maxir-um rate
on the same basis would involve a
revenue loss Of about 5000, 900. 900
other adjustments which should be
made would probably involve an
amount equal to that ma, in the
surtaN rates. This loss of revenue,
however, would not be perma-
nent. for the reduced rates would
ultimately be productive of more
revenue than higher rates"
If the loss could not be met by
economy, Mellon suggested the
required revenue could be raised
either by placing a tax on certain
specific articles, or by a low-rate
general tax on a broad class of ar
ticles or transactions"