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Show Payroll Deductions Seen ( As Direct Inflation Cure 'Seven Keys to Economic Security' Won't Jj Carry War-Cost Load Unless American j Public Takes Voluntary Precautions. I .;' 1L ,- i,j By BAUKIIAGE News Anulyst and Commentator. WNU Service, 1343 II Street, N.W., Washington, U. C. The war may cost Mr. John Q. Taxpayer an extra seventy-five billion bil-lion dollars $75,000,000,000 (written that way it looks more like what it really is.) If it does, it will mean that this country will go through a depression that will make the black '30s look like a June day. That is the warning sounded by the Office of War Information. All we have to do to realize this is to look back to the period of the last war, when the cost of living rose 63 per cent between 1914 and Armistice day, 1918 and kept right on going up for nearly two years. Those were the days of 67-cent butter but-ter and 92-cents-a-dozen eggs. Then came the crash. Hundreds of thousands thou-sands of farmers lost their lands. Five million workers lost their jobs. The cost of the war was partly to blame, of course. When other prices went up, the war-cost increased in-creased by 13'A billions. On that basis, it is estimated that if prices run away now, it will mean a 75-billion 75-billion dollar rise in the war debt. This tjme, of course, the government govern-ment has tried to put on the brakes, but the brakes are already smoking. smok-ing. The seven "keys to economic security" the checks on the cost of living are all right, but they won't hold the load unless the public takes certain voluntary precautions. If it doesn't, stricter regulation must come. Some are bound to come anyhow. Let's look at those seven keys and Bee if they are really locking the door against inflation. The first is "tax heavily" keep personal and corporate profits at a reasonable rate. Well, you have to Sefine "reasonable." Profits, wages and salaries are high. The current tax law, although it is better than expected by many persons, does not do the job, according to fiscal experts ex-perts in Washington. The next "key" is the price ceilings. ceil-ings. According to Price Administrator Henderson, the cost of price-controlled foods fell seven-tenths of 1 per cent in the two months after May, 1942, while uncontrolled foods went up 7.3 per cent. Now all prices are "stabilized," but last month in order to assure maximum food production, pro-duction, the ceiling on farm wages was raised and a bloc in congress began agitating for a rise in the ceiling ceil-ing on farm prices. Certain civilian manufactured goods are caught between be-tween the ceiling and the cost of raw materials and may burst the bounds, too. Wage Standardization The next brake on inflation is stabilization sta-bilization of wages. That was achieved by the freezing of wages, but allowances had to be made for the people not getting a living wage, rhen the labor shortage in war industries in-dustries made it necessary to call upon women to fill the gap, and women had to get the same pay for the same work, which seems fair enough. That put more money into pocketbooks and, of course, put more people on payrolls. Another stabilization move was rationing certain commodities. That, of course, is effective as far as it goes, but it covers a limited field. Then there were the voluntary measures which haven't worked so well and which provide the real outlet for the possible boost in all costs in spite of the artificial checks. Citizens" were urged to buy war bonds, to save their money instead of buying things they didn't need, to pay off their old debts and refrain from making new ones. So far voluntary methods have not been successful. There is a limit to which a democratic country can go In regulating the lives of the people, t was hard enough to get the nationwide na-tionwide gasoline rationing through, but finally it was accepted. Perhaps when the public "understands" it will be willing to save instead of spend, but financial experts in and out of the government predict that compulsory savings is the next key on the list. Recently I talked with a hard-headed hard-headed official. He does not direct the fiscal policy of the government, but he is indirectly concerned with national finance. He picked up a chart on his desk. "This is not official," he said, "but it shows what is going to happen if the country keeps on spending at the rate it is spending now." He pointed to a line that shot upward. Where it climbed off the paper it was marked "twa hundred billion dollars." That is , what our war debt will be. "The only way to stop it," he said, "is to get hold of this spending money mon-ey at the source. Payroll deductions. deduc-tions. That money has got to be put away some of the deductions will go to pay taxes, some into bonds that will be redeemable when the government decides it is time to redeem them." Britain's Method He went on to explain that out of what Great Britain and Canada spend on the war effort, they finance one-half through taxes. We finance only one-fourth through taxes. They borrow the other one-half and of the amount borrowed, two-thirds is borrowed from the public and one-third one-third from the banks. We borrow two-thirds of what we do borrow from the banks and only one-third from the public. "When you borrow from the public," pub-lic," this very earnest official continued, con-tinued, "you cut down the amount of money that is used for spending and bidding up prices. When you borrow from a bank, you really create new funds, which is inflationary." "What about the present tax law?" I asked, "Isn't that going to take all we've got?" "The new tax law is better than it looked at first," he answered, "but it falls far short of touching the funds the pay-envelope funds which are the chief cause of inflation. infla-tion. Under the new law there will be 27,000,000 taxpayers. In 1940 there were 3,896,000 taxpayers. Of the new taxpayers, so many are spending spend-ing their money at such a rapid rate they will not possibly be able to pay their taxes. They will become be-come tax delinquent." Rock in a Weary Land Federal Reserve Building There is one building in hectic Washington which stands like a rock in a weary land an oasis of calm and quiet in the desert of tumult and shouting. It is the Federal Reserve Re-serve building. I called there recently and the moment I put my hand on the doorknob door-knob I felt an atmosphere of serenity, sereni-ty, an almost British solicitude and decorum, as the uniformed guard leapt up and opened the door. He didn't ask for my press pass. He said: "How can I help you, Sir?" The elevator man bowed me into the car. When I approached the guard in the anteroom of the offices of the board members, he arose and bade me welcome. I began to feel very small as I walked along the wide corridor with high ceilings. Voices were hushed. I entered an office presided over by a dignified secretary, a noiseless typewriter and a tickless telechron. Furniture of mahogany and mellow leather. Even the file cases suggested sug-gested period pieces. The walls were gray with a hidden touch of lavender. laven-der. The kind, I am informed, which are used in psychopathic wards to quiet the nerves. However, there was no need for such a sedative there, for the only suggestion of the vulgar world of finance was the muted sound of the Dow-Jones ticker. As I sat waiting for my appointment, appoint-ment, dropping the ashes of my plebian cigar into a beautiful receptacle recep-tacle which doubtless had collected the residue of many a Corona Corona, Co-rona, and gazed at the walls and ceilings, I suddenly felt that I should be wearing tails and striped trousers. trou-sers. The delicate hint of lavender in the gray panels was like the faint tint, a soupcon of which brings added add-ed charm to the coiffure of a silver-haired silver-haired matron. Lost in these thoughts, I heard my name announced. If the uniformed uni-formed Negro sentry (who reminded remind-ed me of a White House footman) had been saying, "Mr. Morgan," (or "General Lee"), "the chairman will be glad to see you, Sir," he couldn't have done it with greater dignity. Frankly, I enjoyed it thoroughly after fighting my way past sentries, guards and policemen to get into the War Production board. |