The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1935-04-03

3
~ crops. What
AE%%# ~ ever the New
Lewis Haney Dealers may
have done to crop production,
they certainly have made mess
of the farmers markets. Farmers
may we'll hesitate to encourage
the AAA to do more tinkering
with the outlets for their prod
uctS.
1t is also encouraging to find
growing criticism of the so
called processing taxes" par
ticularIy those on cotton. Such
taxes are among the worst fea-
lures of the New Deal, and have
done incalculable harm to the
nation.
In effect, processing tax is a
special sales tax, all or part of
which is borne by the ultimate
consumer.
On every pound of cotton that
is manufactured, the manufac'
turer must pay a tax of about
cents. He is, therefore, forced to
raise the price of his products by
some such amount, depending
upon the quantity of cotton it
contains. He can't reduce the
price of new cotton, since the
Government virtually pegs that
around IL cents. So he advances
the price of his yarn and cloth.
1t is as if the Government had
said, 1--WE will fix raw cotton at
IL cents to the farmer, but We
will add a Accent tax to you,
thus making your raw material
cost you Is cents. You can
soak the consumer"
OF course, the manufacturer
may not be able to sell his goods
at an advanced price. But in
that event he fails, and ceases
to buy any cotton. Then we see
that the power to tax is the
power to destroy, and we realize
that the Government is driving
certain of it's citizens out OF
business by a grossly dlscrlmlna-
tory policy.
For the most part, however,
prices of goods are raised. Then
what happens? The results are
as follows:
l. Consumers buy less cotton
goods and cost OF living is In"
creased.
2. Exports of goods are re"
duced.
3. Imports of foreign goods
are encouraged.
4. OF course, the pegged price
of raw cotton reduces exports
of raw cotton.
5. The net results are de-
creased consumption of raw
cotton, both at home and
abroad, and accommodating sur
plus stocks of American cot
ton. The Government strains
its credit further by trying to
keep the price pegged, while
carrying the surplus. Cotton
growing and manufacturing
are stimulated abroad, thus
depriving us of markets, and
causing excessive world ca"
pacity.
If now we try to "dump" our
excess raw cotton on the foreign
markets at cut prices, foreign
countries will either impose tar
ifs on cotton imports and retali-
ate by dumping" other goods in
our markets, or they will manu-
facture our cut-price cotton and
underseu us. Of we pay bounty
on cotton exports we merely shift
the cost of all this from our COT
ton exporters to the rest of us
as taXpayers0
The fact is that we have sew.
eral millions of bales more cotton
than can be sold at present
prices. We face an enormous loss.
How shall we take it? That is
the only question.
/. We can burn the cotton.
2. We can continue to try
carrying it along at Government
expense, with the idea of gradu.
ally selling it out. But if we
maintain the price, we encourage
continued overproduction and con.
tinue to pay farmers for not pro-
ducing!
8. We can sell the surplus for
what it will bring-liquidate 1t.
This would bring losses to all who
are holding cotton and shut down
cotton growing for awhile.
But low prices would increase
consumption and cotton mill
employment. Cost of living
would be reduced.
We would have to support the
cotton farmers for awhile, but
We are doing that now, and
the cost would be less. Above
all, they could soon start with
a clean slate and be able to
sell what they produce in free
markets.