anaheim-gazette 1924-01-03

WHY SURTAXES SHOULD BE REDUCED Representative Garner, of Texas, ranking Democratic member on the House Ways and Means committee, which is to handle the tax reduction bill, has issued a statement in which he denounces the administration tax reduction program as being a fraud. Mr. Garner asserts that by its provision for a reduction of high surtaxes, a few very large income surtax payers will be the chief beneficiaries of the bill. This is demagoguery gone to seed. The records of the Income Tax division of the Internal Revenue bureau show that the number of individuals paying income tax on $300,000 a year, or over, are today only one-fifth of the number that made returns six years ago, yet no one believes for an instant that the number of individuals who have large incomes has decreased. Why, then, this diminution in the number of returns? The answer is found in the high surtax provisions of the federal law. Rather than pay the high surtaxes, men of wealth have invested their money in tax-exempt securities. This is exactly why Secretary Mellon urges a reduction in the surtaxes. In his letter to Representative Green, chairman of the Ways and Means committee, Secretary Mellon made that point very clear. He said: "These taxpayers are withdrawing their capital from productive business and investing it in tax-exempt securities, and adopting other lawful methods of avoiding taxable income. The result is to stop business transactions that would normally go through, and to discourage men of wealth from taking risks incidental to the development of industries and keep it invested in productive enterprises of some kind, thus affording employment, creating additional wealth to be put on tax duplicates and reducing costs of production generally." DISFRANCHISEMENT IN THE GOLID SOUTH" Alabama recently enacted a law which prohibits any American citizen eligible for the Presidency from seeking support in Alabama for presidential nomination unless he be a citizen of that state. Alabama's action is the logical outgrowth of the system of disfranchisement of American citizens which prevails in every state of the Democratic "Solid South," in violation of the United States Constitution and in defense of the principles of representative government. This constitutes the most malignant cancer upon the American body politic today. It began shortly after the southern states were re-admitted into the Union upon their promise to observe and obey the American Constitution by their disfranchising the negro in defiance of the 14th and 15th amendments. This action was denounced by the Republican party. The right of the emancipated negro to the ballot was upheld by the Republican party. The South then proceeded to disfranchise white Republicans in southern states. Now the malignant forces which it turned loose threaten to turn upon the Democratic party itself. Having used the weapon of disfranchisement so successfully upon southern Republicans, both black and white, Alabama Democrats now employ it to bludgeon northern Democratic aspirants for the presidential nomination. OUR FOREIGN The annual report Hoover of the Department shows a treaty America's foreign firms and corporate foreign trade made requests of the Department during formation and as double the number year, which was to that time. The nounces that its success upon "in actual trade business totaling 2000. The development of the Department began practically direction of Secret maintenance of a nation dealing with conditions company trained by the Department would be fine for any private co-operation it enforces officials, American and journals, and the actual cost of Department of Commerce inquiry. In view of the fight many millions of foreign businessducers, the fact-of the Department one of the cheapest These taxpayers are withdrawing their capital from productive business and investing it in tax-exempt securities and adopting other lawful methods of avoiding taxable income. The result is to stop business transactions that would normally go through, and to discourage men of wealth from taking risks incidental to the development of new business. Ways will always be found to avoid taxes so destructive in their nature, and the only way to save the situation is to put the taxes on a reasonable basis that will permit business to go on and industry to develop." The fact is, men of large income will not be the beneficiaries of a reduction of the federal surtaxes. Such men now escape surtaxes altogether by investing their money in tax-exempt securities. Neither Secretary Mellon nor the administration is advocating lower surtaxes out of sympathy for the rich man or any desire to lessen his tax burden. They are advocating such a reduction out of a desire to attract capital back into fields of investment in industries, railroads and business where the public may be benefited by such investment and the government benefited by increased revenues. Secretary Mellon in his report upon the subject clearly brought this out. He pointed out that "the farmer is now complaining, and rightly so, of the high freight rates and the high cost to him of that which he has to buy. The railroads of this country require a billion dollars a year of new capital in order that they may properly maintain their service." The cost of capitals, therefore, one of the largest items of expense in the conduct of railroads. Nothing has so contributed to this additional cost of capital as the surtaxes which have driven the large investors from railroad to tax-exempt securities." In another place Secretary Mellon says: "Taxpayers subject to the higher rates can not afford to invest in American railroads or industries or embark upon new enterprises in the face of taxes that will take 50 per cent or more of any return that may be realized." In the long run the public pays the high surtax. As Secretary Mellon points out, "the demands of capital for higher return by reason of the high surtax rates, have raised the was upheld by the Republican party. The South then proceeded to disfranchise white Republicans in southern states. Now the malignant forces which it turned loose threaten to turn upon the Democratic party itself. Having used the weapon of disfranchisement so successfully upon southern Republicans, both black and white, Alabama Democrats now employ it to bludgeon northern Democratic aspirants for the presidential nomination. Were the evils of this southern practice of disfranchisement confined to the southern states and visited only upon the heads of the Democratic party, the rest of the country would not be necessarily concerned, but such is not the case. The South claims and obtains representation in the United States House of Representatives on the basis of its negro and white Republican population. But having used these for the basis of obtaining seats in the House of Representatives, southern Democracy proceeds to refuse its negro and its white Republican citizens the right to go to polls and vote for representatives in Congress. Eighty members of the House of Representatives from the "Solid South" are holding their seats because by "shot-gun" policy and by dishonest and fraudulent elections the exercise of citizenship of a majority of their communities is prohibited. It is a plain statement of a disreputable fact that there has not been an honest, free election in the solid Democratic South for a quarter of a century. But the evil extends higher and further. A state's vote in the electoral college is based upon its representation in both branches of Congress. The "Solid South" casts 114 electoral votes in every presidential election. Everybody knows that these votes are sure to be cast for the Democratic nominee regardless of who he is or for what he stands. Everybody knows this is true because honest elections and the free exercise o fthe franchise is impossible in any of the "Solid South" states. The Republican party starts into every presidential campaign with a handicap of 114 votes to overcome before it can "begin even" with the Democratic party in a contest for the Presidency. There are certain states in the North which are battlegrounds every presidential campaign. If the Republicans, after an intensive fight, succeed in carrying New York, Indiana, New Jersey, Ohio, Nebraska and In another place Secretary Mellon says: "Taxpayers subject to the higher rates can not afford to invest in American railroads or industries or embark upon new enterprises in the face of taxes that will take 50 per cent or more of any return that may be realized." In the long run the public pays the high surtax. As Secretary Mellon points out, "the demands of capital for higher return by reason of the high surtax rates have raised the cost of all manufactured products." In other words, the man who has his money tied up in industry or business or railroads and cannot escape the surtax, merely passes the tax on to the consumer. President Colidge clearly emphasized this fact in his annual message to Congress, in which he said; "High taxes reach everywhere and burden everybody. They bear most heavily upon the poor. They diminish industry and commerce. They make agriculture unprofitable. They increase the rates on transportation. They are a charge on every necessity of life." The charge, then, of Congressman Garner and his like that any proposed reduction in the high surtaxes benefits the very rich man and is of no consequence to the rest of the people is a charge not in keeping with the facts. The very rich man does not need any change in the income tax law. He can escape it by putting his money in tax-exempt securities. In fact, the majority of our rich men are now doing this very thing. The existing mass of tax-exempt securities aggregate about eleven billion dollars. Those who have these billions invested in these securities escape federal surtaxes altogether. A reduction of surtaxes would not therefore prevent it, but it would prevent additional capital from being invested in such secur- is impossible in any of the "Solid South" states. The Republican party starts into every presidential campaign with a handicap of 114 votes to overcome before it can "begin even" with the Democratic party in a contest for the Presidency. There are certain states in the North which are battlegrounds every presidential campaign. If the Republicans, after an intensive fight, succeed in carrying New York, Indiana, New Jersey, Ohio, Nebraska and West Virginia they have succeeded merely in carrying enough states to balance the 114 electoral votes from the "Solid South" and they must then go out and beat the Democratic party in the remaining northern states. Or, to put it another way: Democratic disfranchisement of Republican voters gives to the "Solid South" in every presidential election, without any contest whatever, a sufficient number of electoral votes to wipe out the electoral votes of the Republican states of Pennsylvania, Massachusetts Maine, Illinois, Iowa and Kansas. The Democratic "Solid South" attempts to justify its defiance of the Constitution, its disfranchisement of American citizens, its undermining of representative government, its pollution of elections, upon the ground that its action is necessary in order to have a "white man's government." If that be true then it should be limited in its representation in the House of Representatives and in the electoral college to the number of white men in the South who govern. That would give the South a "white man's government" in exact proportion to the white man's government in the rest of the country. It takes a "slick" man to sell oil stock right now, unless his customer is well "lubricated." OUR FOREIGN TRADE The annual report of Secretary Hoover of the Department of Commerce shows a tremendous growth in America's foreign trade. American firms and corporations engaged in foreign trade made over a million requests of the Department of Commerce during the last year for information and assistance. That is double the number of the previous year, which was the high record up to that time. The department announces that its services were called upon "in actual transactions of export business totaling more than $400,000,000." The development of this activity of the Department of Commerce has been practically all done under the direction of Secretary Hoover. The maintenance of a fact-finding organization dealing with foreign markets and conditions comparable to that maintained by the Department of Commerce would be financially impossible for any private corporation. This is true for two reasons—first the tremendous outlay such an organization would require if maintained by private enterprise, and second, the inability to have access to official sources of information in foreign countries as does the Department of Commerce. Because of the exceptional cooperation it enjoys with foreign officials, American trade organizations and journals, and American exporters, the actual cost of this bureau in the Department of Commerce is about $2 per inquiry. In view of the fact that it has brought many millions of dollars worth of foreign business to American producers, the fact-finding organization of the Department of Commerce is one of the cheapest, from the stand-to reach these foreign combinations through our anti-trust laws. "Under authority of Congress an exhaustive examination of such combinations was undertaken by the department before the close of the fiscal year to determine—first, the character and extent of the combinations themselves; second, whether alternative sources for these raw materials can be stimulated and therefore natural competition induced; third, what relief can be obtained by stimulation of synthetic or substitute materials within our own borders; and fourth, what protective or retaliatory legislation can be undertaken. "It is as yet too early to speak of the results of these investigations; but one effect has already been of the most practical value, and that is that the notice given of the interest of the American government in these transactions has in definite cases resulted in stemming the tide of advancing prices and has induced more moderation and consideration on the part of such foreign combinations." AMERICA'S SUPREMACY IN TELEPHONE SERVICE The supremacy of the United States in the extent to which the telephone enters the business and social life of the people is well known. Striking evidence o'f the degree of American leadership in the telephone field is, however, afforded by a recent compilation of telephone statistics for all countries of the world. According to this survey, there were on January 1, 1922, a total of 21,848,960 telephone in the world. Of these, 13,875,219 were in the United States. That is, the American people, who number but 5 per cent of the total population of the globe, had for their use 63 per cent of all telephones in the world. Tied States in telephone development these two countries are well ahead of the great powers of Europe where government ownership obtains. Germany, for example, has only 3.3 telephones for every 100 inhabitants. Great Britain and Ireland have 2.1 and France has only 1.3 Europe as a whole, had on January 1, 1922 only 1.2 telephones per 100 people—a state of telephone development attained by the United States in 1900. In this respect Europe is 22 years behind America. Another striking contrast between telephone conditions in this country and abroad is brought out by a consideration of the relative extent of telephone service in large and small communities in the various countries. Telephone service has been developed, in practically all foreign countries, mainly in the larger communities; and the less populous places, particularly in rural areas, have a disproportionately small number of telephone. For instance, one third of all the telephones in Great Britain and Ireland are concentrated in London; one-third of all the telephones in France are in Paris. Farmers' telephone lines, as we know them here, are almost non-existent in Europe. Nevertheless, the telephone service abroad, even in the cities, is still relatively restricted in extent as compared with the urban telephone systems in this country. There are few cities outside the United States and Canada with as many as 10 telephones per 100 population. Yet the 38 United States cities of over 250,000 population on January 1, 1922, showed the high average of 17.2 telephones per 100 inhabitants. In absolute numbers, the single city of New York had, on that date, almost as many telephones as the whole Kingdom of Great Britain and Because of the exceptional cooperation it enjoys with foreign officials, American trade organizations and journals, and American exporters, the actual cost of this bureau in the Department of Commerce is about $2 per inquiry. In view of the fact that it has brought many millions of dollars worth of foreign business to American producers, the fact-finding organization of the Department of Commerce is one of the cheapest, from the standpoint of service rendered, of any executive department of the government. In addition to ascertaining valuable information regarding foreign markets for our producers, the Department of Commerce has during the last year entered into an investigation of foreign sources of raw materials which are needed by manufacturers and producers in this country. In this connection, Secretary Hoover says in his annual report: "There are a number of necessary raw materials for the supply of which we are predominantly dependent on imports from foreign countries. Possibly as a result of the war, but more particularly during the past 18 months there has been a growing tendency for producers of these commodities to combine in control of prices against the American market. This is particularly the case in nitrates, tanning extracts, quinine, rubber, silal, tin, cork, mercury, tungsten and various minor minerals." "The effect of these price combinations in the consequent higher cost to American consumers presents a most serious problem. While we are vigorous in the control of price combinations in respect of our own industries, we are of course powerless DURING 1924 Will You "GET AHEAD?" WITH THE NEW YEAR JUST AHEAD, IT IS A GOOD TIME TO TAKE AN INVENTORY OF YOURSELF AND YOUR WORK Will You "GET AHEAD?" WITH THE NEW YEAR JUST AHEAD, IT IS A GOOD TIME TO TAKE AN INVENTORY OF YOURSELF AND YOUR WORK. ARE YOU SATISFIED WITH THE PROGRESS YOU HAVE BEEN MAKING? ARE YOU BETTER OFF FINANCIALLY THAN YOU WERE SIX MONTHS—A YEAR AGO? ARE YOU "GETTING AHEAD?". WE ALL CAN GET AHEAD, IF THE WILL IS AROUSED IN THAT DIRECTION—and IF WE PERSISTENTLY HOLD TO IT. MAKE THE NEXT YEAR COUNT FOR YOU. START A SAVINGS ACCOUNT AND DEPOSIT REGULARLY EVERY WEEK DURING 1924. 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