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Show uu WHAT WILL BE THE EFFECT ON BUSINESS. Every business man is Inquiring as to the effect the war loans and war taxes will have on business. The best Informed student on this subject is Henry Clews, who madecs this extended ex-tended comment in his last letter: "Tho mobilization of our finance and Industry upon a war basis is for the timo being the controlling factor in buslneas circles. Such an adjustment adjust-ment naturally causes more or less Inflation In-flation and derangement. Congress is about to pass the necessary legislation legisla-tion authorizing tho issue of $2,000,-000,000 $2,000,-000,000 treasury notes, ?2,000,000,000 bonds for our own use and $3,000,000,-000 $3,000,000,-000 for use by our allies. Since these vast sums cannot be spent all at once, it is reasonable to suppose that they will be withdrawn with as little disturbance dis-turbance in tho financial markets as possiblo. Our own expenditures will begin gradually, and be extended over many months before additional loans can possibly be needed. The loan to our allies Is a similar process and is likely to follow similar lines; that is, tho bonds will probably be Issued at stated periods, when most needed, thus avoiding the injurious effects of locking up huge amounts at once, or suddenly withdrawing them from employment em-ployment in the regular channels of trade. The effects of these transactions transac-tions will, of course, be far reaching and temporarily unsettling. These vast sums will be largely spent in the United States, partly foa our own army and partly for those of the allies. That means further activity in certain industries, and possibly still higher prices for their products, although it must be remembered that the government govern-ment will use all power available to prevent undue advances. At the same time, these transactions will cause a wide shifting of investments; preventing prevent-ing any further sales of foreign holdings hold-ings on this side, and materially restricting re-stricting the amount of American money going into new domostic enterprises. enter-prises. For a period at least, many extensions, Improvements and enlargements enlarge-ments will have to be postponed. A few years ago our railroads were accustomed ac-customed to absorb about a billion dollars annually and hundreds of millions mil-lions at the same time wont into all kinds of industry. Such Investments will be largely curtailed until the war is over, when they will again be taken up. There has been considerable uneasiness, un-easiness, perhaps more than necessary, neces-sary, over the government tax proposals. pro-posals. Both the excessive corporation corpora-tion and incomo tax proposals excited grave concern lest they intimidate capital and discourage new enterprise. enter-prise. Thero is much difference of opinion as to what proportion of the cost of the war should bo born by taxation and what by bonds. So far as taxation goes, the object should be to raise as large a sum by taxes as feasible and consistent with an equitable equit-able distribution upon all classes; the higher rates of course falling upon those best able to bear them. At the same time, serious self-injury would be inflicted if the rates were carried so high as to dry up the springs of capital and impair homo enterprise. This is a problem which Congress Is endeavoring to solve; and the administration admin-istration can no doubt be safely depended de-pended upon to handle the expected bond and note issues with as little public inconvenience as possible." oo . |