Evening star., 1941-01-01


basis of the obvious trend toward
Capitalization in recent years. But
sober second thought might change
the verdict.
War Problems Anticipated.
Never before in history has there
been so much knowledge of the
problems of war to guide and direct
the policies of our Government In
the first place, the number of sur
vlvOrS Of the World War period
who had an active hand in the
administration of its various func-
tions is large.
In the second place. general
knowledge of the economic aspect
Of war is far greater than ever
before and no opportunities are
being lost to familiarize experts
with the causes and effects of gov
eminent regulations on business in
countries al war. And finally. our
Government has developed a tech
nlque Of regulation and restriction
by commissions which under any
but the most disOrganized state of
business could probably accomplish
more than direct Communicating.
War inevitably causes diSruptiOnS
IN the normal course of trade.
Sometimes these are temporary.
caused by the shift from consumers
goods to war necessities in the early
stages Of hostilities. As shortages
OF materials develop through abb
normal use of restricted shipping
facilities, further diSIocations re-
suit. SO far as has been determined.
this point has not been reached bv
any Of the WalTing nations as vet
but 1t will come. Finally, there are
acute labor difficulties and the dis
organization Of industry which ap-
pear in the final stages of warfare
and usually weigh as a large factor
IN the eventual Capitulation of the
country where they have advanced
most rapidly.
war First Policy Inevitable.
The advance OF government con-
troll Of business generally progresses
no taSter than the need. Canada
has as yet made few moves except
elementary restrictions on foreipn
exchange and embargos on certain
imports (such as automobiles. radios
1urnlture) in order TO conserve bal
ances for purchases of war neces-
stiles in this country.
England has gone a step farther
requiring sale Of specified holdings
OF foreign securities to the govern
ment at market prices Of an arbi-
trary date. But English industry
is still functioning without govern
ment control.
In France, now neither at war
or at peace, the situation is far diff
ferent. That country has swung
with incredible speed through all
the dlSorganlzation that normally
takes years Of warfare, and the
Vlchy government is now taking
command Of one industry after an
other. Coal and steel were first
then textiles; other necessities of
life will follow.
Would Take Up Slack First.
If war necessity dictates that
government control shall be exer-
clsed over any economic activity,
there is no doubt that the govern
ment will be ready with the plans.
The chances OF such a move in the
United States, however, even should
war be declared, are remote.
The essentials of a huge industrial
program are at hand. Labor, raw
materials, present or potential plant
capacity, and the capital to finance
new ventures, are all present in such
abundant quantities that a conSid-
cradle period would be consumed
in taking up the slack. Our close
approach to Self-suffciency and our
huge gold reserve reduce to insig-
nifcance the problem of CONNER
Cial relations with other nations in
wartime.
Taxes Powerful Implement.
On the other hand. there is a
very good possibility that an early
attempt would be made to release
productive facilities now engaged in
the production of non-necessities
through penalty taxes. In Canada
the way has been pointed out bv
the application of 20 per cent
excise tax on domestically manu-
factured automobiles with a retail
value of less than 5000 If the
value is more, the excise on the por-
tion of the purchase price above
5000 is 40 per cent, and any portion
of the cost above $1,000 bears an
tmpoSt of 80 per cent.
Many other items are subject to
a fiat excise levy of 25 per cent
under the new regulations. which
were announced in December. The
success of this measure in making
labor, materials and plant facilities
now producing automobiles avail
able for defense PRODUCTION will be
closely watched in this country. An
other method of diScouraging pro-
ductlon OF non-neceSsities, of course,
is that of raising income-tax levies
in the lower brackets, and compul-
sorry purchases of government bonds
according to ability of the individual
as measured by annual income and
total liquid assets.