PAYING FOR THE WAR

Dominion, Volume 10, Issue 3198, 24 September 1917, Page 8

PAYING FOR THE WAR

CASH DOWN OR BONDS ? AMERICAN WRITER'S VIEWS' Some interesting observations on ilie subject of "Paying for War Cash Down" aro mado by Air. Albert W. At.twood in the "Saturday Evening Post" (Philadelphia) of .Tune 9. In the course of a long article ho says:— Germany has wholly mistaken the ternper of tho British, and so to-day Great Britain is paying nearly 110 per cent, of her war expense from taxation, and has paid in this way 25 per cent, since the war began. But Germany still clings to her policy of bond issues, until now a large part of each new issuj is used up in paying interest on those which have gone Wore. A policy of bond issues veils the act of government. It is the easiest ivay. But it is just as unsound and impracticable to try and pay for a great war entirely by taxation. If there is justice in a war at all it is only right that the future should pay a portion of tho charges. The present day has to give its life blood and a great deal of its mouey. Why should it be oppressed with the entire load? Why should war finance be .planned in a ppint of disgruntbd, vindictive destructiveness, when that part of the sacrifice ca'n be made easy and convenient to bear?

Great Britain in the third year of its desperate war is raising millions by taxation, and imposing 34 per cent, supertax on large incomes. But all these measures were adopted bit by bit, without; appreciable protest from anybody, even from the land-owning dukes. But if excessive war taxes are imposed without warning, the mainspring of activity _ is broken, and the machinery for producing wealth is destroyed. In the formal but forceful language of Professor Adams, "A sound financial system will not dry up the source of revenue upon which it relies." By extreme measures the Government must not cripple itself at the outset of ft possibly long war. It might raise three or four or seven or eight billion dollars by swooping down upon every person who has more than enough to biny his next meal.' But when the proceeds of that, particular raid- had been spent there would be no more wealth to pillage. ' The Government would be stranded in the middle of the war, with no means to carry it through. It must think of the future as well as of the present. Taxation destructive of the thing taxed will produce tho money only once. No matter how pressing the need may seem to bo, it never pays to milk the producers of wealth all at once. The trick is to keep people working. Business should be as» unfailing as tho widow's cruse of oil. The Government _ must appeal to all who produce anything in such an alluring way, either by selling them bonds with good interest Teturn or by appearing lo spread taxation over other classes as well, that while in reality continually giving of their products to tho Government the producers' energy is never for one moment slackened. Taxes must not weaken tho will to work. Crushing taxation falls more heavily upon some lines of business than upon others. But even if it wero wise and hot against human naturo to raise tho billions needed in tho early, part of a great war by taxation, it would bo a sheer physical impossibility, because there is no machinery up to tho job. You cannot levy taxes to-day and have them paid in to-morrow without completely prostrating a country. But vast sums can be borrowed in short order. Of course, tho wise, sensible policy is to combine bond issues and taxes, the two going hand in hand. To find iust the right proportions is the financial problem of the hour. . As tho war goes on taxes should bo continually forced into greater and greater prominence. The burden must, be gradually shifted from borrowing to a'ctual income, and tho Government should iiiover forget that bonds ore a makeshift to fill the gap only, till it can be closed by solid-taxa-tion! But who shall be (axed, and how much? No Solomon has ever lived wise enough to answer that question. Hero are three of the most practical, fruitful, and'elastic taxes:-—

1. On the earnings or incomes of corporations or partnerships,' and on their excess profits or war profits. 2. On incomes of individuals. 3. On the spending of money technically known to tho economists as consumption taxes and excise duties.. These inolude stamp, duties so-called, and many taxes on luxuries, such as alcoholic beverages or tobacco. . "Put war taxes on the pending of wealth and not upon its creation." Here is the essential point upon which all financiers and business men-agree. f 1 have never found such unanimity ot opinion among the financial leaders aa exists on this issue.