Detroit evening times. (Detroit, Mich) 1921-1958, 1941-12-06
Stop Initiation
By Taxa+ion,
Letter Urges
Now You Take Oranges,
and 90 on From There
BY HUGH S. JOHNSON

i that both sides of any prob
lem ought TO be presented fairly
and fully-I-hare repeatedly
stated that taxation is not the
way TO control initiation, that it
is only an indirect adjunct to
overall price control.
The contrary view that taxa
ton is the direct method and
price fixing only the indirect adj
junct is so simply and clearly
presented in the following letter,
which / received today from
one signing himself by the
pseudonym "Cantillon." an early
laissez-faire economist, that l
am setting it out in full:
"My Dear General johnson:
"SOme time ago, In one of
your columns. you held up to
scorn and ridicule the position
that a proper fiscal policy
taxation-can be utilized to pre-
vent imitation. AS l happen to
hold this view, take the liberty
of writing this letter and risk
offending you by characterizing
your own position as superficial
and wrong.
~ do not contend that all
price increases can be prevented
by proper tax policy land l do
not believe that it is desirable
10 prevent all price increases) /,
but only that the major prob
lem of imitation can be solved In
this way; and II this Is done the
scope for price control and Diff
ficuIties thereof would he greatly
diminished. My position can be
stated briefly.
THE price of oranges In any
town will rise IL more of us de-
Cided TO buy more oranges and
II IL Is not possible To Increase
the available supply; similarly
the price would rise II the sup
ply were reduced.
"This.of course. Is a simplified
but very accurate description OF
what Is now happening with re-
spect 10 good in general. You
are aware of the fact and have
called attention 70 IL in your
column) that. II we are To make
an about effort, the supply of
consumer goods will have to be
reduced.
1.-THE resources used I'm their
production have to he trans
ferred To produce military sup
plies. At the same time people
have larger incomes, due to
more employment, overtime and
higher rates OF pay. Having
larger incomes they want 10 buy
more. As they can't buy more,
they drive up the price OF the
things they do buy.
"In the case of oranges we
can stop the price increase II
we can stop people from trying
10 buy so many. In exactly the
same way. IL We can stop the
people from trying to buy so
much of everything we can pre-
vent rise In the price of every
thing. This we can do by taxa
ton.
IF I have an income Of ST.
600 and only Sl.5O0 worth of
goods are available to me at
present prices, the simplest way
of preventing a price rise IL to
prevent me from spending more
than $1,000. This can be done
by getting me TO save or hoard
$500. For obvious reasons, the
best Of all ways Is to collect $500
in taxes from me.
ITO repeat, do not contend
that all price increases can he
prevented i'm this way. but only
the general ones. When this Is
done then will the price fixers
have chance OF managing the
special problems.
Every truly yours,
"CantillOn."
WELL. Cantillon. old boy, if
w you are going TO pay me
more and more As | ask for
more and more 10 buy more and
more and then you tax me more
and more TO prevent me from
buying more and more, and then
] ask more and move. tetc.. etc,