Evening star., 1926-12-09
PROSPERITY TIDE
NOT TO EBB, SAYS
MELLON REPORT
Secretary Asks Congress to
Strengthen Prohibition by
Passing Needed Bills.
DESIRES REVENUE LAW
TEST BEFORE TAX CUT
Urges War Debt Funding Body Be
Allowed to Die in February, As
Work Is Nearly Done.
By the Associated Press.

~ tHc AeSOCldteO FTeSS.
The. Nation has attained a record
level OF income. and there is likely to
be no ebbing Of the high tide of pros
perity, Secretary Mellon reported to
Congress today in his annual review
of Treasury activities.
AT the same time he virtually closed
the door to revision of the French
debt settlement, and declared that pro-
hlblt1on enforcement, also a part of
the work of the Treasury Department,
was making good progress, but should
be stimulated by the passage of pend
ing bills strengthening the enforce
ment statutes.
He also urged legislation to permit
disposition Of the sequestered German
property and to renew the charters of
the Federal reserve system, and advo-
eating passage of the McFadden
branch banking bill without the Hull
amendment restricting branch bank
ing in the future.
Revenue Law Test.
The financial and Industrial outlook
the lions share of attention
in the report. Mr.. Mellon declared the
domestic situation was such that I'VE
can look forward to another satisfac-
tory year." The strength of the pros
perity, he added, Is the "broadness of
its base" and while spending has in
creased, so have savings accounts,
life insurance writings and the pur-
chasing of sound securities by small
investors.
The Nations prosperity is shared by
the Treasury, the Secretary reported,
but he again demanded years test
of the new revenue law before sane
tiontng any revision of the tax rates.
He 1ndorsed as a permanent policy,
however, the proposal of President
Coolidge to return to the taxpayers
the large surpluses of the Government
such as will be available this year.
In suggesting that Congress make
no move to continue the life of the
War Debt Funding Commission. which
declared the work of the commission
had virtually been completed. He did
not even mention the possibility of
further negotiations with France,
which appears dissatisfied with the
agreement effected by her representa-
tiveS in consultation with the commits
sion and has not yet ratified it. He
that this Government has
a consistent policy against
and quoted at length the
discussions between foreign represent
atives and American officials at the
time the war loans were made. as we'll
as statements by President Wilson. to
show that there had been no thought
of cancellation from the very outset.
progress" i'm Prohibition.
The commission has negotiated set
Elements representing S9,S11 .094 ,094.
or 81 per cent Of the total, the Secre-
tary said. While Greece has not con-
cluded settlement, he suggested that
if negotiations are necessary these
might be conducted by such members
Of the commission as are available.
Reporting progress" in the enforce
ment Of the prohibition law, Mr..
Mellon declared that if given the
legislation requested "the Treasury
feels confident that it's reorganiZed
force, given the essential cooperation
and assistance of the Department of
Justice, will be able in the future to
achieve even greater effectiveness in
the enforcement Of this law"
He believed the reorganized prohibi-
ton staff, under the direction Of AS
sistant Secretary Andrews, had in the
last year effectively stopped rum
and had gained the upper
hand on the diversion of industrial
alcohol and illicit distilling. He en-
phasized that the Federal forces were
centering their attention on the
sources of supplies, and expected local
to reasSume their reSpOn-
sibilities of law enforcement.
Debt Situation Sound.
Pronouncing the debt situation of
the Government sound, Mr.. Mellon
pointed out that in the seven years
since the close of the war the public
1ebt has been cut by $5,841 ,289, ,845 to
s19, ,216,315 on last July 1. A re-
1uction of $S72,977,572 was made in
he last year.
1--WE have worked hard and we have
the Secretary continued.
During the year commodity prices
have declined slightly, and
farm prices have not yet been re-
stored Ia their relative position as
with all prices.
There is little unemployment and
wages are good. Industry is active.
There is close margin between costs
and prices, which has made competi-
ton severe, but. due to the great vol
ume of business and quantity produc-
ton, profits. small in each transaction.
have been large In the aggregate. The
most notable improvement has been
the restoration of the railroads to
LHclT proper pIdC0 LII IIlC community.
The railroads are one of the principal
factors in the strength Of this coun-
try"
Warns Against Trend.
Mr.. Mellon indorsed the principles
Of installment buying and the making
Of foreign loans, with proper caution
In each Installment buying is no
menace, he said, II the article has a
real and permanent value and If the
payments are not made too light in
an effort to stimulate consumption in
times of decline.
He said the Treasury was not pass
ing upon the soundness of particular
loans, a problem entirely for
private bankers.
'If a foreign loan Is productive
and by that 1 mean that the debtor.
put of the use of the money borrowed,
can repay the principal. the interest.
and make a profit for itself--then /
think foreign loans are sound" he
said.
Warning against the trend in in
vestments and loans on securities
without a proportionate increase in
short term commercial bills, however,
he continued:
Adequate Tax Rates.
"Since it is the latter which are the
most easily liquidated, we are gradu-
ally noting a decline in assets which
may be rediscounted at the Federal
reserve banks. and thus in what may
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