Evening star., 1924-12-04
MELLON REPEATS
TAX REFORM PLEA
Secretary Forecasts Era OF
- Prosperity - Country's
~ Finances Show Progress.

conditions. such as succeeded the cleo
tion of 1896" were forecast for the
United States by Secretary Mellon in
the annual report of the Treasury,
sent to Congress today.
The Secretary's views are based, he
said. on the reputation of various
theories inconsistent with economic
laws and the Endorsement OF plo-
gram of constructive handling of
Government affairs givt~, in the last
election. He counselet I've Nation,
however, to approach is problems
with Intelligence, that the progress
made and the groundwork laid in the
last four years may not come to
naught
The United States, he asserted,
was the first world power to come
through the postwar transition
stage successfully, and the first TO be
able to present reasonable assur-
ance' that true progress" will con
tinue within its borders. sdr. Mellon
urged perpetuation of the program
adonted by the great n1ajo 'ity OF our
people in the last election which he
interpreted as one of hard work,
economy and sound policies"
Tax Cut in Half.
~ tai ttouOIulC cOnultlOnS as
we'll as in the domain of Federal As
cal operations Mr.. Mellon recounted
now complete the transition had been.
He said that in the last four years
the per capita tax on citizens Of the
United States had been cut from $54
TO $27, or exactly one-half: public ex-
pHnditures, which in 1920 exceeded
$500, 100000. were only $500, 600. 900
IN the fiscal year which ended last
! La ~
cation" of the economic structure by
the collapse of prices In 1920 and 1921
had been rectifed
The lifting OF the tax burden all
though slight as the decrease has
been, has done much for busitess. Mr.
Mellon said, and he expressed the
hope that more could be done soon.
He said he desired tax reform as well
as tax reduction, and warned against
using the field of taxation as a field
for soclalistic experiment or as a
club 10 punish success" If this wers
done, he said, the conditions of a few
years ago may come back.
Business BASIS Sound.
While it has taken time for this
situation completely to remedy itself"
the Secretary continued, the adjust
ment has now been made and both
banking and business conditions are
IN thoroughly sound position. Prices
have been comparatively stable for
two or three years, production has
increased 20 or 2S per cent, bank
debts Is or 20 per cent, and en-
ployment or 10 per cent. Interest
ana discount rates, as rule have
been reduced more than half Dis
count rates of the Federal Reserve
Bank Of New York. for example. have
been reduced from IA to az per
cent. Bank deposits have increased
six or eight billion dollars from the
low point OF 1921, or over 20 per cent
AT the same time reserves are un-
usually high, frozen loans have been
almost completely liquidated, and the
country's banking and credit struc-
ture was never in a stronger position
and more able to support continued
business and Industrial expansion.
The traffic handled by the railroads
continues at almost record levels. and
many roads are returning to q divi-
dend-paying basis after years Of
financial difficulties and struggles to
build up road and equipment TO q
basis of efficiency. The building and
automotive industries are prosperous
and in turn are big factors in main
taintng the country's general pros
perity.
Agriculture Faces New Era.
while recovery of agriculture has
been slow. II has been substantial.
and today, due largely to changing
conditions In world crops and world
markets, faces new era. The NAL
adjustment between agriculture and
other industries has been removed
and the farmer Is nearly restored to
his proper status in the economic
system"
But American commerce and indus
try must maintain an anchor to the
windward in future world trade. the
Secretary said, for, as America has
recovered. so now Europe is becom-
Ing stabilized. Mr.. Mellon gave cred
1t to the Dawes reparation plan as
providing foundation OF economtc
recovery there. While declaring i'm
proved conditions in Europe meant
benefits to the United States. Mr..
Mellon argued that cheaper produc
ton and lower living standards
abroad would force closer calcuIa
tion here in world market selling.
Those countries concerned with
me reparation question: have already
developed a new mental attitude and
outlook the Treasury chief said
ana something of the old-time in
dustrtal Vigor and thrift are return-
ing. The effect of more prosnerous
Europe means the broadening of our
markets and opportunities and q
quickenfng OF our economic develop
heHL me situation in America looks
more favorable for sound and or
derby economic development thar q,
any time since the war"
Views Are Reiterated.
turning to the purely domestic
question OF taxation policy. Mr.
Mellon suggested that since tha
power TO tax was the power to de-
stroy, 1t seemed the advisable coursa
70 lay down program for leyving
taxes that would permit Commerce
and Industry to expand rather than
70 suck Its hfeblood. He reiterated
ms views, those which caused the
bitter political battles Of the last
session of Congress, and called at
tention to recommendations from the
same economic viewpoint" by two
,reVious Secretaries of the Treasury
both under another political admin
stration."
Mr.. Mellon again attacked the con-
tinued issue of tax-exempt securities
as a menace, saying that surely II
will mean in the end continued heavy
tax burdens for the States and
municipalities. For the Federal Gov
ernment, he said, 1t means that so
long as high surtax rates are effec-
tive the possessors of large fortunes
will continue TO avoid the Federal
levy by investment in the tax
exempt paper. He renewed his
Recommendation for a constitutional
amendment limiting the issue of tax
exempt obligations, but suggested a
more imm mediate remedy in the form
of changes in surtax rates, as pro-
posed a year ago by the Treasury.