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Show . LEFMGWELL'S FAMOUS ADDRESS l' o o ! (The following is from an address givon before the academy of political science and sent to a selected list of editors. It treats authoritatively one of the greatest problems America faces today.) By R. Cr LEFFINGWELL. Assistant Secretary of the Treasury. For about a year after our declaration declara-tion of war, our loans to the allies were our principal effective contribution contribu-tion to winning tho war ihey were fighting. The loans we made to Russia held the eastern front for six months. It was the loan wo made to Italy in tho fall of 1917, when the great offensive of-fensive broke on Italy, that gave the Italian people courage and enabled Italy It-aly to replaco lost munitions and sup- In the spring of 1918 it was our silver sil-ver that held India for the allies. In the summer of 1918, American credits sustained the French when Paris Itself was under gunfire. As our military effort grew, the burden which tho treasury had to bear camo increasingly to represent the expenditures ex-penditures of our own government and dccrcasingly those of the allies. The total war disbursements of $37,-455,000,000 $37,-455,000,000 include expenditures for loans to the allies and obligations taken from the allies and other governments gov-ernments upon the sale of goods on credit in the aggregate amount of, sav, $10,000,000,000, and in addition several sev-eral billion dollars' worth of more or less salvageable Investments. To what extent and with vvhat degree of expedition these Investments may be liquidated depends upon questions of public policy as well as practical finance. fi-nance. The excess profits tax discourages initiative and enterprise, rewards over-capitalization and discourages conservatism in capitalism, confirms great corporations in their monopolies encourages extravagances and wasteful waste-ful management, and adds to the cost of living. Excessive surtaxes do not produce revenue, but drive capital into the billions of oxempt securities. It is within the power of congress,! by reducing surtaxes and increasing normal taxes, to lift Liberty bonds to practically any market level It chooses. In the last analysis, taxes can only be paid out of income, and the best tax is a properly graduated Income tax. When a tax is Imposed upon something else, or measures in some other way, tho taxpayer who has no current Income available must shift tho burden to someone else. If possible, pos-sible, ho will shift it to tho ultimate consumer. indirect taxation makes it posslblo to conceal from the great mass of voters vot-ers upon whom tho burdens fall that they are being mulcted in order to confer special benefits upon a part of the community. The cost of living here has increased increas-ed less than in any of the belligerent countries (Including Japan, which assumed as-sumed no appreciable part of the financial fi-nancial burden of the war), or In the neutral countries. This was in no small measure due to treasury methods meth-ods of financing the war. Since armistice day the world has receded farther from a sound position. We have failed to restore peace and peace conditions in Europe. In America Amer-ica unsound ecoonmlc Ideas have, in many instances, prevailed and the effort ef-fort Is being made, first here then there, to improve the condition of some of the people at the expense or all the people. Our own prices are being inflated and our own banking and curroncy position expanded by tho fevorish speculation in European currencies, credits and securities, including those of countries with which we are still technically at war. While congress deliberated, the government gov-ernment held control of the railway systems of the country for a year and a quarter after fighting stopped, and furnished transportation at less tV.n cost. Then congress ordered the rail-I rail-I roads returned to their owners with ,a new expondltue of $1,000,000,000 by tho government for their account aad the deferment for years of the ?1,000,-000,000 ?1,000,-000,000 the railroads owe the government. govern-ment. If the railroads had been allowed to charge reasonable ' rates, the government govern-ment would have lost nothing in the operation. Instead of telling the people frankly frank-ly and boldly that prices are high because be-cause they are wasting, we fix prices and prosecute profiteers in order that the people may buy more and pay less. Instead of telling tho people that Liberty bonds have depreciated because be-cause they are treating their Liberty bonds as spending money, wo clamor that the rate of Interest upon the bonds Is too low and urge a bonus to bondholders disguised as a refunding operation. We enjoy high - living while we grumble at the high "cost of living of silk stockings and shirts for the poor, of automobiles for men of small I means, ot palaces ror the profiteer and plutocrat. Instead of telling the young men who were drafted to fight the war, 'and who came back better and stronger and more fit to fight their own battles bat-tles than they ever were before, to go to work and look out for themselves as any solf-respecting man should, wo listen complacently to their organized demands for a bonus, euphemistically called "adjusted compensation." Wo must get together, stop bickering bicker-ing and face the critical situation which confronts tho world as wo should a' foreign war. We must cut government expenditure to tho quick, abjure bonuses and realize promptly uppn all saleable war assets, including ships, applying the proceeds' to the war debt. We must have a national budget with teeth in it. And above all, we must work and save. We must produce, more but, more important still, wo must con-sumo con-sumo less. |