Evening star. [volume] (Washington, D.C.) 1854-1972, 1939-07-02

taken since the first of the year in
authority granted by the United
States Supreme Court to permit
reciprocal taxation of Federal and
State employees. Collateral to this
Is the movement which inevitably
will lead to an end to the issuance
Of tax-free securities.
Spending Effects Doubted.
1t is questionable how much
further pump printing measures
will prove effective in stimulating
industry. The rut into which bust
ness has dropped is so deep that 1t
would be difficult to extricate some
sections Of it pressed down by ira
dition and political prejudice.
The fact that less than $500, 0O0, 900
Of new corporation capital was sold
in the first five months of 1899, COM
pared with over $3.50 ,0OO,0 900 in the
same period of 1887. illustrated one
OF the many striking changes be-
tween these two years. On the
other hand the borrowing of munich
palities and Government agencies In
the same five months of 1899 was
more than double that Of two years
ago. The extravaganza of munich
palities Is coincident with the cheap
ness of money and the exemption Of
taxation Of their securities.
This factor Of low earning power
of money has become one Of the
disturbing elements in the banking
and investment world. National and
State banks, savings banks, insur-
ance companies, all find new prob
lens arising from inability to obtain
investments for new deposits or new
premium receipts sufficient to cover
former rates of interest to deposit
tors or dividends to policy holders.
At a conservative estimate, the
shrinkage in institutional and in
dividual incomes, owing to the fall
ing rate of money. amounts to be-
tween $2,500, DOC, 900 and $4,000, 000,-
900 per annum. This includes interest
on corporation and real estate obi
cations, defaulted or reduced, and
dividends, such as those on railroad
stocks, passed or cut down. The
effect on the consumer buying
power, as we'll as on employment of
those who cater to the RENTER"
class, is substantial and far reach
ing.
Debt and Waste the Issues.
The great issues of the next pres
idential campaign, whose form will
begin to outline itself in the coming
six months, will be those of the in
creasing national debt and the ex-
travagance in relief administration
and in public works.
In the past year this debt has
risen over 5000 600, 900 and Is now
in excess of $4,000 900, 900, or the
figure at which. two years ago. ex-
perts believed the Government credit
would begin to crack. 1t has not; in
fact the highest prices on record for
bonds and notes have been made
recently.
This writer has no fear of a still
greater debt and no expectation OF
any serious decline in Treasury obi
cations. There is too broad a base
of credit beneath the debt to permit
of its collapse. 1t is the chief invest
ment outlet for funds from every
source of savings.
On the other hand, sentiment can
be created against this credit If reck-
less appropriations continue and
politicians of both parties, for per-
sonal advantage, vote to sustain i'm
practicable and costly subsidies, as
they have done in the present ses-
sion of Congress.
Their example is eagerly followed
by State legislators and municipal
governments. Until today there Is
probably less complaint of individual
Federal income taxes than of the
levies to which the individual is sub
jected by his local government. This
is a pressure that must be lifted If
an explosion is to be avoided.