The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1923-12-26
WHEN STORMS THREATEN

When storm clouds gather upon the horizon and roll across
the sky in a manner that threatens a downpour of rain, you see
pedestrians hurrying for shelter even though there may be al
possibility that the storm will pass by on one side or spend its
fury before reaching those who are anxious to avoid its dis
comforts. Most people have sufficient observation and caution
TO know when a storm threatens and seek shelter. That is true
not only of storms composed of wind and rain but also of financial
storms which sometimes affect the people of a whole nation.
In recent times we have seen two such threatened storms
IN Europe. In Switzerland sometime ago there was a proposal
for the enactment of what was called a capital taxa tax
which would take from property owners a very considerable pro-
portion of their holdings. There was no certainty, of course,
that any such tax would be imposed. Nevertheless, the mere
appearance of the cloud upon the financial horizon was suffi
cient to cause capitalists in Switzerland to put their property
into movable form and send it out of the country. There was,
OF course, an enormous shrinkage in the value of property in
Switzerland
In recent months a capital tax has been proposed in Great
Britain and with an election impending and a possibility, if not
a probability, OF a reversal OF the majority In Parliament, men
who had worked and saved and accumulated property observed
with anxiety what appeared to be a threatening storm. I'M
mediately they began to liquidate their holdings in Great Britain
and send their money to the United States for investment in
securities in this country. Some of them invested in stocks and
bonds in American industrial corporations. Some of them bought.
United States Government bonds. Some merely deposited their
money in American banks to be invested in short time loans.
Perhaps some of them sent it here to be locked up in safety
deposit boxes. The records show that for one purpose or another
immense quantities of British gold were sent to the United States.
It was the threatening storm that caused the scurrving for
shelter.
There are many radicals in the United States who think
that by the enactment of legislation they can impose upon a
part of the population an undue proportion of the burdens of
Government. This has been tried in our national tax system
and in the tax systems of many of the States. The result has
been almost exactly the same in every instance. If such laws
are hastily enacted, without much warning to the public, the
object of the tax is attained for a time. But eventually the man
who is called upon to pay what he deems an unequal share of
the public taxes finds a way to avoid it. In most instances he
finds the method of avoidance without violating any of the laws
of the country. 1t is a notorious fact that when the excess
profits tax was imposed during the war the tax was included in
the cost of production and added to the price of the commodity,
resulting in what we commonly call the high cost of living
through which the ultimate consumer really paid the tax. There
was also a property of funds to tax-exempt securities. Men who
owned idle property which could have been made productive by
Improvement, postponed such improvement because they could
easily figure that the Government would take, under its tax
system, such a large proportion of their income from the i'm
proved property that it would be a losing venture for them. In
those and other ways the Government defeated it's own object
1t will be well if, in planning tax legislation, we keep in mind
some of the truths that have been written so plainly in the
financial history of this and other nations.