Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1938-05-13

which hiked the tax rate on these
companies to 80 or 80 per cent. I'M
mediately their owners began to sell
their stockholdings and replace them
with tax-free government bonds
Under the three-year rule of the Sc
curities Exchange Commission, the
stock market had become very thin
Prices often changed faster in a day
than they fluctuated in a week ten
years before. Hence the market was
unable to absorb these big blocks of
securities which the holding COM
panies wanted to get rid of. Prices ma
turally began to sink. Then high mar
gins brought on selling from other
sources. One forced sale would un
cover another stop-loss order. Within
month what began as an orderly
retreat had turned into a rout. For
the first time in my experience, j
stock market crash brought on a bus
mess decline rather than a business
decline bringing on stock market
crash.
Reforming By Taxes Bad Business.
The drafters of last Augustus in
crease in personal holding company
taxes little dreamed that it would
touch off one of the sharpest recess.
sions in history. The experience is a
vivid illustration of the danger of
tampering with our economic ma
| cnlnery 1t shows the dynamite in
using the tax power as a reform club.
! Business is like watch. You cannot
| take off one wheel to repair it and
expect the other wheels to keep gool
/ time. Our crazy-quilt tax system is
| the biggest problem we face today.
| Unemployment, crops, labor strife.
! epending, and ali our other worries
are "iunior" 10 it.
We are now wallowing in stupid
recession. Yet ours is the greatest
! and richest nation in the world.
| G gantc mineral and farm wealth.
unlimited factory and machine equip
ment, and unprecedented credit re
servoirs are ours. What has gone
wrong? My answer is that those who
control. the wealth and industry OF
the nation have joined labor and con
sumers in strike. These capitalists
refuse to risk their money (and every
business deal is a risk unless they
can make, and retain, fair profit.
| They feel that the administration has
stacked the deck" so they have gone
on a Shutdown of their own.
End the Strike of Capital.
Add this capital strike to renewed
labor troubles, plus the consumer sit
! down., and we have business stagna-
tion. The new Roosevelt spending pro-
gram has been given a cold and clam
nv reception In 1892 and '33 we need
ed pump-priming. We needed to in
flate the business balloon and get II
off the ground But we do not need
initiating or printing today. What we
need now is a little assurance that
the "heads-I-win, tails-you-lose" game
is over. Banks do not need bolstering;
utilities do not need new money; Ia
Dor does not need higher wages; but
capital does need to lie put to work.
A lower capital gains levy and the
taxing of new public bonds coul5
change the entire picture. They could
drive boarded and dead" money into
new enterprises and new industries
They could end the present business
"stand-still". Eliminating tax-exemp
ton ON new bonds, however, means
that public borrowing would cost the
taxpayer more money through higher
interest rates Hence, the passage OF
a modified tax on capital gains must
be a running-mate of any measure
eliminating tax-exempt bonds Ir
other words, force capital to work, or
the one hand, by ending tax exemp-
ton; encourage it to work, on the
other, by lowering the tax on capital
Gains.
These Are Emergency Measures.
If we expect owners of capital to
launch new industries, we must as
sure them that if they are success
full the government will not take IS
per cent of their profits. That is just
plain horse-sense. The great hope Of
America is new industries. Our won
derful standard of living has come be-