1918. I • CONGRESSIONAL R.ECORD-HOUSE. 10145
These things must be before we sheathe the sword or before The bill (H. R. 12111) granting an increase of pension to victory is complete for America. Sometimes I think that the Henry Parrish; Committee on Invalid Pensions discb~rged, and prophecy of Tom Moore, the w~mls he placeu in the mouth of referred to the Committee on Pensions. the Veiled Prophet of Khorassan, may yet come true through the world's war of carnage: From the lips of truth one mighty breath PUBLIC BILLS, RESOLUTIONS, AND MEMORIALS. Shall, like the whirlwind, scatter in its breeze Tbe whole dark pile of human mockeries, Under clause 3 of Rule XXII, bills, resolutions, and memorials Then shall the reign of mind commence on earth.· ''"ere inh·oduced and severally referred as follows: The $8,000,000,000 of taxes will be paid by the American By 1\.Ir. ANDERSON: Resolution (H. Res. 429) requesting people with a '"ar spirit and with but one thought in mind: the Secretary uf Agriculture to furnish the House of Repre Victory for America. entatives with certain reports or recommendations touching On motion of Mr. GARNER the committee rose; and the the price of wheat; to the Committee on Agriculture. Speaker having resumed the chair, 1\lr. HAMLIN, Chairman of By 1\lr. KNUTSON: Joint resolution (H. J. Res. 328) to au the Committee of the Whole House on the state of the Union, thorize the President, in time of war, to supervise or take pos reported that that committee had had under consideration the session and assume control of any packing, canning, or refrig bill (H. R. 12863) to provide revenue, and for other purposes, erating plant or any part thereof and to operate the same in :tnd had come to no resolution thereon. such manner as may be needful or desirable for the duration of LEA \E OF ABSENCE. the war, and to provide just compensation therefor; to the Com mittee on Agriculture. By unanimous consent, leave of absence was granted to 1\lr. BooHER for four days, on account of the death of his brother. PUBLIC-SER\ICE FR.ANCHISES, PORTO RICO (8. DOC. NO. 274). PRIVATE BILLS ~1\ffi RESOLUTIONS. The SPE~R laid before the Hou e the following message Under clause 1 of Rule XXII, priTate bills and resolutions from the Presiuent of the Uniteu States, which, with the accom- were introduced and severally referred as follows: 1mnying documents, was ordered to be ·printed and referred to By Mr. BARNHART: A bill (H. R. 12906) granting n pen- the Committee on Insular Affairs: sion to Andrew J. Bierce; to the Committee on Invalid Pensions. To the Senate and House of Rep1·escntativcs: By 1\lr. BENJAMIN L. F.A.IRCHILD: A bill (H. R. 12907) for As required by section 38 of the act approved 1\larch 2, 1917 the ~·elief of Charles ,V, Johnson; to the Committee on Military (39 Stat., 951), entitled "An act to provide a civil government I Affatrs...... for Porto Rico, and for other purposes," I transmit herewith Also, a bi~ (H. R. ~2908) for. the relief of Zachary T. Hea1 ' certified copies of six franchises granted bY. the Public Service to the C?mnnttee .on .Nav~l Affairs. . . cr • r Commission, Porto Rico. The copies of the franchises inclosed By ~~r. HAWLEY· A b.ll~ ~H. R. 12909) ~antino an IJ?C ease are described in the accompanying letter from the Secretary of. o~ pensiOn to John T. Martm' to the Committee on Invalid Pen- 'Var transmitting them to me. Slons. 'VooDnow WILsoN. PETITIONS, ETC. TIIE 'VHITE HOUSE, 9 September, 1918. uKITED STATES RAILROAD ADMTI\ISTRATION (S. DOC. NO. 27:i). Under clause 1 of Rule XXII, petitions and papers were- laid on the Clerk's desk and referred as follows: The SPEAKER laid before the House the following message By Mr. BYRNS of Tennessee : Papers accompanying H. R. from the President of the United States, which with the accom 12901, granting an increase of pension to Louis Sickenberger; panying documents was ordered to be printed and I;eferred to to the Committee on Invalid Pensions. the Committee on Interstate and Foreign Commerce.: By Mr. FESS: Petition of the Woman's Civic League, Har To the Senate a11d House of RepresentaUz;es: veysburg, Ohio, for war:.tirne prohibition; to the Committee ori I transmit herewith for the information of the Congress re Agriculture. port of the Director General of Railroads of the work of the By 1\!r. KAHN: Petition of many citizens and residents of United States Rnilroad Administration for the first seven months Los Angeles, Cal., and vicinity, urging the passage of H. R: of its existence ended July 31, 1918. . 5407, permitting osteopaths to enter the Medical Reserve Corps; WOODROW WILSON. to the Committee on Military Affairs. THE WHITE HOUSE, 9 Se-ptember, 1918. By Mr. RUBEY: Petitions of Mrs. J. S. Smotherman, Sunday ADJOURXMENT. school temperance superintendent for Wright County, l\!o., and many other members of Wright County Sunday schools, urging Mr. GAR~~R. 1\Ir. Speaker, I move that the House do now immediate national prohibition; to the Committee on the Ju adjourn. diciary. · · The motion was agreed to ; accordingly (at 5 o'clock and 45 By Mr. Sl\TYDER: Petition of the Rome (N. Y.) License minute p. m.) the House adjourned until to-morrow, Tuesday, League again t change in the exist;ing liquor laws of the United Septembet· 10, 1918, at 12 o'clock noon: States; also, a petition of various persons residents of Little Falls, N. Y., favoring prohibition of the liquor traffic during EXECUTIVE COMMUNICATIONS, ETC. the period of the war and demobilization; to the Committee on Under clause 2 of Rule XXIV, executive communications were the Judiciary. · taken from the Speaker's table and referred as follows: - By Mr. TAGUE: 'l'elegrams from certain reputable business 1. A letter from the Acting Secretary of Commerce, transmit concerns in Boston protesting against the Gore amendment to ting part 2 of the Annual REport of the Commissioner of Light House bill 11945; to the Committee on .Agriculture. bon es for the fiscal y~ar ended June 30, 1918; to the Committee on Expenditures in the Department of Commerce. 2. A letter from the Acting Secretary of Commerce, trans HOUSE OF REPRESENTATIVES. mitting an e timate in the sum of $9,600 supplemental to the appropriation of . 380,000 for salaries, Lighthouse Service, 1919 TUESDAY, Septembe1· 10, 1918. (H. Doc. Ko. 1271) ; to the Committee on Appropriations. The House met at 12 o'clock noon. The Chaplain, Rev. Henry N. Couden, D. D., offered the fol CHAKGE OF REFERENCE. lowing prayer : Under clause 2 of Rule XXII, committees were discharged We bless Thee, Almighty God, our HeaTenly Father, for the . from the consiueration of the following bills, which were re onward march of civilization-apparent everywhere in the in fen·ed as follows: tellectual, moral, and spiritual life of men, which promises the The bill (H. H. 11570). granting an increase of pension to final victory of good over evil in spite of the cruel war thrust .Tame C. Burwell; Committee on ·Invalid Pensions discharged, on the civilized nations of the world by the barbaric hosts who and referred to the Committee on Pensions. would check advancing civilization and turn the world into a The bill (H. R. 11860) granting a pension to l\Iargaret Holly; Yeritable bell. Committee on Invalid Pensions discharged, and referred to the Inspire us as individuals and as a Nation to press toward the Committee on Pensions. . . mark for the prize of the high calling of God in Christ Jesus. 'l'he bill (H. H.. 12110) granting an increase of pension to Amen. . Ale:xamler n. Davis; Committee on .Invalid Pensions discharged, The Journal of the proceedings of yesterday ·was read and ap and referred to the Committee on Pensions. proved. LVI-642 10146 SErTEnrBER -10,
SPE.AKEB P:RO TEMPORE FOR TO-MORllOW. Haugen Le sh~r Pratt Ste,mcr on Hawley Little Quin ..:tephens, 1\Iiss. The SPEAKER The. Chair appoints the gentleman from Hayes Lobeck Rainey, II. T. , teph('ns, Nebt', Tennessee, iUr. GARRJ<::TT, to preside as Speaker pro tempore Heflin Lonergan Raker Sterling, Ill. Helm Longworth Ramsey Sterlin"' Pa to-morrow. Helvering Lunn Ramseyer Stevenson · LEAVE OF .AnSE -cE. Hf Arkansrl.s, for the day, .on account of Houston McKinley Roger-s T('mple illness ; and Hull, Iowa McLaughlin, Mich.Romjue Thomas To Mr. 1\fiLLER of Wa hington, for to-morrow, September 11, Hull, Tenn. McLemore Rose Thomp on Ma dden Rowe Tillman on account of delh"e.ring :m address in Massachusetts. ~~rc~~~e~~ l\lagP R·u cker '£ilt> on ENROLLED JOI~T RESOLUTION SIG~ED . lgoe Mansfield Sanders, Ind. '.rimberlnko Ireland Mapes Saunder Va. Towner The SPEAKER announced his signature to enrolled joint J"acoway Martin Scott, Iowa Treadway resolution of the fallowing title: James Merritt Scott, Mich. Ve tal S. J. Re .172. Joint resolution authorizing the Pre ident to Johnson, Wash. Miller, Minn. Seare Voigt Kahn 1\flller, Wash. Shallenberger Volstead estab-lish zones in wJ;lich intoxicating liquors may not be sold, Kearns Montague berley Waldow manufacttU'ed, or distributed. Kehoe Moon Sherwood Walsh Kelley, Mich. Moore, Pa. Shouse Walton 1:.rESSA.GE FROM THE SE~A.TE . Kennedy, Iown. Moor ·, Ind. Sims Watson, ra. Kettner Morgan Sinnott Weaver A message from the Senate, by Mr. Waldorf, its enrolling Key, Ohio Morin Slayden Wlty clerk, announced that :the Senate had passed bills of the fol Kincheloe Nolan Sloan - WhP.eler lowing titles, in which the concurrence of the House of Repre Kinkaid Norton Smith, Mich. Williams Kitchin Oldfield Snell Wilson, La. sentative was n~que ted·: Kraus 0 borne Snook Wingo S. 343.9. An act for tlle relief <>f certain homestead and desert Kreider Overmyer Snyder Wood. Ind. land entrymen; La Follette Park Stafford Wood", Iowa Langley ·Parker, N.J. Steagall Young, N. Dak. s ..3646. An act to grant :r.·ights <>f way ov.er Goverruli:ent lands Larsen Phelan Stedman Young. Tex. fc.n· reservoir purpo e for the con ervation and storage of Lazaro Platt Steele Zihlman water to be u ed by the city of San Diego, Cal., and adjacent ANSWERED "PRESENT "-2. communities ; and Parker, N. Y. Rouse S. 3522. An act to amend an .act entitled "An act to punish nets of interference with the foreign relations, the neutrality, NOT VOTING-184. Anthony Farr Lee, Ga. llubey and the foreign commerce of the United States, to punish es .Aswell Fisher Lehlbach Rus ell pionage, and better to enforce the criminal laws of the United .Barkley Flynn Lever 'abath State , and for other purposes," approved June 15, 1917. Bell Focht Linthicum Sander, La. Blackmon Foss Littlepage Sander , N. Y. SENA.TE BILLS REFERRED. Bland, Ind.. Francis London Sanford Booher Fuller, Ill. Lufkin Schall Under clause 2, Rule XXIV, Senate· bills of the following Brand Gallagher Lundeen Scott, Pa. title ·were taken from the Speaker's table and referred to their Britten Gallivan McAndrews Cully Browning Gandy McCormick Sells al;)proprhtte committees, as indicated below : Brumbaugh Gard McFadden hackleforu S. 3439. An act for the relief of certain home tead and desert Burroughs Garland McLaughlin, Pa. Siegel Jand entrymen, to the Committee on Public. Lands ; nud Byrnes, S. C. Garrett. T ex. ·Maher I son Caldwell Godwin, N. C. Mann Slemp .S. 3522. An act to amend an art entitled "An act to .punish Campbell, Pa. Goodall Mason Small acts of interference with the foreign relations, the neutrality, Cantrill Goodwin, Ark. hla.ys Smith, Idaho and the foreign commerce of the United States, to puni h es Carew Gould Meeker Smith, C. B. Carlin Graham, Ill. Mondell Smith, T. F . pionage, and .better to enforce the criminal laws of the United Carter, Mass. Graham, Pa. Mott Strong State , and for other purposes," approYed June 15, 1917, to the Carter, Okla. Gray, Ala. Mudd Sullh·an Cary Gray, N.J. Neely Swift Committee on the Judiciary. Clarlr, Fla. Greene, Mass. Nelson Switzer REVENUE LEGISLA.TIO • Coady Griest Nicholls, S. C. Tague Cooper, Ohio Griffin Nichols, 1\llch. Talbott 1\fr. KITCHIN. l\fr. Speaker, I move that the House resolv~ Copley Hamilton, N.Y. Oliver, Ala. Templeton itself into Oommittee of the Whole House on the state of the Costello Haskell Oliver, N.Y. Tinkham R. Cramton Hayden Olney Van Dyke Union for the further consideration of the bill H. 12863, to Crosser Heaton O'Shaune y Vare provide revenue, and for other purposes. Curry, Cal. HPintz Overstreet Venable The SPEAKER. The gentleman from North Carolina mov-es · D:tle, N.Y. Hicks Padgett Vinson Davis Hood Paige Walker that the Hou e re olvc itself into Committee of the Whole Delaney Howard Peters Ward Hou e on the tate of the Union for the further consideration Dempsey Huddleston Polk Wason of the revenue bill. Dies • Hus ted Porter Watkin Dillon Johnson, Ky. Pou Watson, Va. The question was taken; and on a division (demanded by 1\Ir. Donovan John on, S.Dak. Powers Webb W ALS II) there were 43 ayes and 2 noe . Dooling Jones Price Welling 1\Ir. FOSTER and 1\fr. WALSH made the point of order that Doolittle Juul Purnell Whaley Drane Keating Ragsdale Wblte,Me. no quo1·um was present. Drukker Kelly, Pa. Rainey, J. W. White, Ohio The SPEAKER. There is no quorum present, and the Door Dunn Kennedy, R.I. Randall Wilson, Ill. keeper will clo e the doors. the Sergeant at Arms will notify Dupre Kies , Pa. Rankin Wilson, Tex. Eagan King Reavis Win low the ab entees, and the Clerk will call the roll. Emerson Knut on Riordan • Wise The question was taken; and there were-yeas 244, answered Estopinal LaGuardia Rodenberg Woodyard "pre ent" 2, not voting 184, as follows : Fairchild, G. W . Lea, Cal. Rowland Wright YE..A.S-244. So the motion of Mr. KITcHIN was agreed to. Alexand('r Candl£> r, 1\Iiss. Dent Fordney The following pairs were announced : Almon Cannon Denton Fo-ster Until further notice: Ander on Caraway Dewalt Frear Ashbrook Chandler, N.Y. Dickin on Freeman Mr. OLNEY with l\fr. WARD. Au tin Chandler, Okla. Dill French 1\lr. BooHER with Mis RANKL"". ..A.yre Cherch Dixon Fuller, Mass. Mr. JoHN W. RAINEY with lli.ir. GREENE of Mas aclmsetts. . Bacharach Clark, Pa. Dominick Garner Baer Clason Doremus Garrett, Tenn. Mr. Wn..soN of Texas with l\Ir. F ARR. Bankhead Claypool Dough ton Gillett Mr. EAGAN with Mr. PABKER of New York. Barnhart Cleary Dowell Glass Mr. GALLIVA with l\fr. KIEss of Pennsylvania. Beak Collier Dyer Glynn Reshlin Connally, Tex. Eagle Good Mr. NICHOLLS of South Carolina with Mr. BBITTE X. Bla ck Connelly. Kans. Edmond Gordon Mr. Or.rrEr. of Alabama with Mr. PETEn . · Blanrt , Va. Cooper, ,V. Va. Elliott Green. Iowa. Mr. TALBOTT witll Mr. Bnow ITNG. Blanton Cooper, ·wi . Ellsworth Greene, T"t. Borland Cox Elston Gregg l\1r. SAl.'."DERS of Louisiana with 1\Ir. 1\Iunn. Bower Crago Esch Hadley 1\Ir. PADGETT with Mr. HrcKs. l3roubeck Crisp Evans Hamill Mr. RAKDALL with 1\ir. Foss. Browne Currie. 1\IiclJ. Fairchild, r::. L. Hamilton, 1\lich. Buchanan Dale, Vt. Fairfield Hamlin 1\lr. VINSON witlll\Ir. MOTT. Burnett Dallinger Ferris Hardy Mr. MAHER '-vith 1\Ir. GRAY of New Jer ey. Butler Darrow Fess Harrison, hli s. Mr. HowABn with Mr. OoP"LEY. Byrnl'>, Tenn. DPcker Fields Harrison, Va. Campbell, Kans. Denison Flood Hastings Mr. RIORDAN with l\Ir. TINKHAM. ,~ 1918.· ·1• CONGRESSIONAL RECORD-- HOUSE.
1\!r. GALLAGHER witlllllr. LUFKIN. trict that once sent to this Congress William P. Frye and Nelson l\lr; S..illATH with 1\lr. LEHLBACH. Dingley. 1\Ir. l\IcGillicuddy came before the people again for l\lr. GOODWIN of Arkansas with Jllr. WINSLOW. election, basing his claim upon the statement that a vote for 1\!r. DOOLITTLE with l\1r. SIEGEL. Congressman WmTE would be a vote for the Kaiser. His record l\Ir. LEA of California with Mr. SANFORD. in Congress had been n record against every measure of pre Mr. OLIVER of New York with Mr. SWITzER. paredness while he was here, and my colleague [Mr. WHITE] put 1\Ir. SCULLY Willi Mr. STRONG. his record against that of Mr. McGillicuddy. The governor of Mr. TAGUE witlllli. KENl'<""EDY of Rhode Island. my State, in speaking at Lewiston the last night of the cam l\fr. DALE of New York with Mr. DUNN. paign, said : Mr. O'SHAUI\TESSY with Mr. Wrr.SoN of Illinois. I didn't come o>er here on my own account altogether. I came 1\lr. ROUSE with Mr. FRA.NCIS. to urge the people of this district to return to Congress my friend, Congressman WALLACE II. WHITE, a clean, faithful, efficient, honest Mr. LEE of Georgia with Mr. GooDALL. man, every inch a gentleman, for whom none of you will ever feel the Mr. BYRNES of South Carolina with Mr. NELsoN'. necessity of apologizing to anyone for having sent to Washington. Mr. CALDWELL with l\Ir. CARTER of Massachusetts. [Great applause.] I want to call your attention to the fact that you haye seen no one ftllm Washington here urging the election of his l\fr. BELL with Mr. GoULD. opponent. Two yearo ago there were Cabinet officials here and promi The result of the vote was then announced as above recorded. nent Democrats of national reputation trying to help Mt'. WHITE'S A quorum being present, the doors were opened. political opponent. They are not here to-day. ::fhis is a most signiticant Accordingly, the House resolved itself into the Committee of fact. No one in Washington urges l\Ir. WHITE's defeat, and for good reasons. Th~::y k-now his r ecord there. They know how he stands, the ·whole House on the state of the Union for the further con together with the other Maine Representatives aud Senators. fot· tbe sideration of the revenue bill, with 1\!r. SAU?o.JJERS of Virginia in winning of the war. - Mr. WHITE is loyal, as are all the other men from Maine. You have reason to be proud of him and of them. What reason the chair. is there for changing your Representative in Congress from this dis The Clerk reported the title of the bill. trict? I have heard of none. No one in Washington has a reason to l\lr. FORDNEY. l\Ir. Chairman, I yield 10 minutes to the advance, because there is n one, and they know it. gentleman from Maine [Mr. HERsEY]. At that meeting my colleague [Mr. WHITE] said: l\Ir. HERSEY. Mr. Chairman, I do not rise at this time to He [l\lr. McGillicuddy] says that my election "ill please the Kaiser discuss at any length the revenue bill, for I agree that it is the and that his election will be a blow to the Kaiser. To be honest about it, I don't believe the Kaiser evet· heard of either l\Ir. McGillicuddy or duty of every Member of the House to make a_.s good a bill as pos myself, or is e>cr likely to. sible and upon the final vote to vote for the bill, which I shall do. I w~h to speak for a moment or two, however, upon the bill so [Laughter.] But if he has heard of 1\Ir. ~cGillicuddy it was because he helped the far as it relates to the conduct of the war. Kaiser keep this country from preparing itself to fight when it ought to Maine had an election yesterday-a sort of nonpartisan affair. have been preparing, as e>cry man with any vision at all should have [Laughter and applause on the Republican side.] We had our seen. · primaries in June. They were very quiet. There were no fights. I want now to call your attention, in closing, to the following Each political party nominated its candidates without any oppo telegram sent by Senator FERNALn: sition. The Republican State committee met and agreed, so far Republicans elect governor, Senator four Congressmen. Milliken's as the RepubHcans were concerned, that they would not have majority,- 8,000; FERXALD'S, 12,000; WHITE'S, •2,000. Vote light, but Republican gains in every county. any speaking campaign. The Democrats said nothing, but im (Signed) BERT hl. FERNALD. mediately commenced a speaking campaign throughout the State, [Great applause.] in every school district, in every schoolhouse, from every auto l\fr. Chairman, two years ago 1'Hr·. WHITE's majority was 537, mobile that they could hire or borrow. Their candidate for now it is 2,000. I wish to say, in closing, tllat great credit is to governor, with candidates for Congress, with the candidates for be given to the President of the United States for not inter eve):y office upon the Democratic ticket, went into tlleir speaking fering in tile Maine elections. There has been great pressure campaign. Upon the part of the Democratic Party in Maine it brought upon the President. lie bas refused to send into Maine was the most unfair campaign ever conducted-an attempt to letters advocating the election of 1\ir. McGillicuddy in the second prejudice the governor and to prejudice every Member of Con district. gress and every man who was running for office upon the Repub:: Mr. FORDNEY. 1\:Ir. Chairman, will the gentleman yield? lican ticket. I need not go into the issues of the campaign-issues l\fr. HERSEY. Yes. - of prejudice, not against the governor of Maine because of any l\Ir. FORDNEY. The President tried his interference in thing done by his administration, because it was admitted that l\llchigan and found it failed. Therefore he let Maine alone. it had been a good administration, the best so far as business was l\lr. HERSEY. Whatever the reason was, I think the Presi concerned, in Maine; not on the ground that any Member of this dent understands now that the people of this country are going Hou~e or &f the Senate had been unpatriotic, that they had not to take care of theL· own elections from now on, and I think this stood by the administration, because it was admitted everywhere will be a good omen for every man who goes into the campaign that they bad; but outside of prejudice and local fights here and in the ides of November. [Applause.] there, every candidate from the smallest, most insignificant l'.fr. FORDNEY. 1\Ir. Chairman, I yield 30 minutes to the gen orrice on the Democratic ticket made the issue that a vote against tleman from Iowa [l\1r. GREE~]. the Democratic candidate was a vote against the administration Mr. GREEN of Iowa. Mr. Chairman, in the latter part of :mel in favor of Germany. Let me show you just a moment about May of this year the President came before Congress and a ~ ked that campaign. The Democratic candidate for United States us at once to take up the matter of additional taxation, which Senator a few days before the election said: he deemed necessary to be imposed in order to carry on the I only ask you to send to Wilson your vote of confidence in him and war. Pursuant to his request, this bill is now before us. Upon in his splendid leadership. Do not by your vote in September send any confidence to Germany. Defeat the Huns and -the governor. it the Ways and Means Committee have spent months of ar The following was scattered all {)Ver the State, put in all of the duous labor. In its most important feah1res it reflects the Democratic newspapers and in editorials: views of the administration. The President said that we sllould turn to war profits, incomes, and luxuries for additional taxes, SUPPORT THE ADMINISTRATION-DISCOlJRAGE GERMANY. and the committee has done so. The' President said that enor Our opponents, the Germans, are very quick and " cute " about catch mous loans, the proceeds of which were freely spent in stimula- ing onto little things by which to encourage their people in time of dis couragement and distress, like the present. Don't you suppose that the . tion of industry, caused inflation and extravagance, and rightly German authorities and newspapers, if the-Democrats get the worst of he concluded that the amount raised by. taxation must be it in the congressional elections this fall by the Republicans, in this greatly increased. The bill provides for the amount desired by country, will at once pi"oclaim the news from the housetops that the American administration, which has been conducting the war so vigor the administration. The President has since stated that profi ously against Germany, has not been backed by the United States. but on teering existed to a large extent and that the bill should be so the contrarv has been rebuked, and that, if the Germans will only ho1d framed as to reach profiteers. I am of the opinion that it would. on a few months longer, America may be out of the war entirely, as evi denced by the result of the election? be better to use more efficient methods to prevent profiteering OC course they will do just that thing, and thus a Republican victory at the expense of the Government in the fir t instance, but I in the election this fall would probably mean months longer of war, believe that if this bill does not reach the profiteers it will either bloodshed, an
military policy, do not find it pru·t of their functions to consider Mr. GREEN of Iowa. It is a fact. Farm wages have risen the cost of any policy which may be proposed. Of-course, any beyond anything that was believable. The gentleman from Ne official who has any proper sense of his duty and who has charge braska told me the other day that he was paying-how much? of the expenditure of money will endeavor to obtain as much for Mr. SLOAN. Eighty dollars a month. the money as is possible, but unfortunately, as. all of us know, Mr. HAUGEN. A hundred dollars a month in Iowa. many of those who make contracts for the Government are in 1\Ir. GREEN of Iowa. And board, of course. exvet·ienced in the matters with relation to which they deal. Mr. MOORE of Pennsylvania. I want to say, .so long as the Competition has arisen between various departments, so that gentleman puts that in his speech, that the same difficulty is ex one department has bid against another. When one department perienced by manu:fn.cturers and employers of labor neru· by the is enlarged, there is a djsposition on the part of each other de cities where they have great difficulty in holding labor on account partment to enlarge its functions; to extend its operations into of the high prices offeL-ed by contractors under the 10 per cent tields already occupied by other departments; to undertake cost-plus plan. I take it the sam~ thing operates against the in operations which can far more economically be carried on under dividual farmer,. private management; to increase the number of its employees Mr. GREEN of Iowa. ·And out West we are trying to run the and. to see that they are paid at least as high as those in any farm with the old men, the women, and girls. other division; to ask for incxeased and enlarged quarters, and 1\Ir. TILSON. Will the gentleman yield right there? in a tllousand and one ways either increase of multiply ex Mr. GREEN of Iowa. Yes. penses. All this is but natural, and will inevitably exist as 1\Ir. TILSON. The gentleman speaks of the Government tak long as no proper supervision by Congress is maintained. ing over these works under certain conditions. Is there any The system of purchase under which the greater part of our indication after the Government takes them over tt is any dif material is obtained is altogether :faulty and can not result but ferent in regard to wages? in the Go\ernment being greatly overcharged. Instead of in Mr. GREEN of Iowa. Not .as far as wages are concerned, but ducing economy, it tends directly to waste and extravagance. they have abolished some kinds of graft which prevailed when 'Vith respect to many contracts, the vicious cost-plus system the Government took them over. still prevails. Testimony given in the hearings before our com Every department of the Government has been enormously mittee shows that contracts for war materials ru·e being made increased without any effort to ascertain whetlier the employees with wide margins, intended to cover all conceivable losses which which it already had were working to full efficiency. Waste. the contractor might eventually be found to have sustained. Millions are voted for new buildings in Washington, while the In other words, the contractor puts a figure on the cost to cover big Maltby Building, owned by the Government, stands unoccu ·every conceivable contingency of loss and adds what he c~n pied, and no examination is made as to whether the buildings siders a reasonable percentage of profit. Some of these con we have recently constructed are fully occupied. Waste. The tracts actually contain a clause which might be considered to newspapers are filled with advertisements for stenographers and grant reimbursement for taxes which might eventually be paid typists, and no investigation is made as to the amount of work on the profits of the transaction. In some of the later con which those already employed are doing. If there was it would tracts it should be said that these faults have been corrected be found that a large number of them are not fully employed. by having a reasonable cost fixed as well as the profit by the Waste. The Treasw·y Deprui:ment buys lands and constructs contract. In case the reasonable cost is exceeded, a deduction bmldings. When Congress refuses to approve the transaction as is made from the profit. If the estimated cost is lowered, a wasteful, it is paid for out of the special fund in the bands of the premium is given on the profit. Thus the profit rises as the Presi(J.ent. The Shipping Board is given millions upon millions cost decreases and is lessened as the cost becomes higher. to build houses practically as it pleases, and the Secretary of Thereby a sti:ong inducement is held out to the contractor to Labor is given millions upon millions more to build houses and make the cost as low as possible. Why this method was not recreation centers practically as he pleases, with other things _used in the beginning instead of the cost-plus plan is one of that might be admirable in time of peace for the local govern tho e things that no one will ever find out. mentE themselves to buiid, but which is waste on the part of the Everyone who has any personal knowledge of the building of Government to build for suburbs which may lack inhabitants the cantonments, shipyards, and shlps under the cost-plus con after the war. A $500,000 warehouse is built on an aviation tracts knows of the immense waste that occun:ed. There is field in Ohio to hold material manufactured in the extreme East, gross waste in our navy yards and arsenals, where men are used which must be sent back to eastern ports for shipment. Troops to do work which ought to be done by machinery. The same are shipped from. the North' to the South and from the Soutll waste occurs in the Bureau of Engraving and Printing. We to the North, from the West to the East and back again to are building ships regardless of cost, and wastefully paying where they started. A hundred and sixty so-called conscien any price for labor that may be demanded, with the result tious objectors m·e shipped from western Kansas to central that the shlpyards increase the pay of all other classes and the Iowa to meet three commissioners who are to classify them. cost of the production of all kinds of food and necessaries. Waste. Everywhere waste. Millions upon millions are voted Why should you expect a man to work on a farm for less than for a water-power nitra.te plant in the South ostensibly for war $7 a day if any man who can handle a aw and a hammer can purposes, although it can not be completed until after the war get a larger amount in the shipyard? And so we go on. As is over, ann can not then be profitably operated. Waste. Ac costs of production increase the cost of living increases. New cordingly more millions are spent to erect a steam-power plant demands for increases of wages are then made, and we travel for the same purpose and in the same locality, although the in a vicious circle, which never ends but ever widens, affecting expert engineers report tllat there is a far better and more eco all classes of the people, and most of all the Government, which nomical way of obtaining this material. Waste. Enormqus pays first 5Q per cent more, then 100 per cent more, then 200 waste. This, you say, is congressional waste. lt is, although and 300 per cent more for what it obtains than it did before Congress is not responsible for the construction contracts of this the war. If labor costs and contractors' profits had heen han project which will enable a single concern to profit to the extent dled with half the firmness nnd del'ision used in England, the of a million dollars with only a nominal investment in the way · home of the labor unions, we would have had no such a situa of capital. · tion, but when the workingman sees his work used for profiteer In fact, if comparisons are made it must be admitted that Con ing, what can be expected but that his demands will increase. ~ress is one of the worst of the sinners in this respect. It has Out of all tills arise such conditions as the malodorous Hog ~reated boards and commissions galore, and when it could think ' Island. scandal, which smelled to heaven, with contractors, sub of no more subjects or departments in which to create commis contractors, owners of land, and employees of every kind goug sions as the gentleman from Mississippi [Mr. HuMPHREYS] ing the Government at every opportunity, until at last it took well ~·emarked the other day, it has created a new commission the management entirely into its own hands, as it sllould have to do exactly the same things which form part of the powers done in the first place and should do in all cases where the and duties of a commission already created. 'Ve have boards Government furnishes all the money with which to cru·ry on or commissions on everything that could-possibly be invented, the operations. ·whenever the Government furnishes all the thought or dreamed of, except a commission on economy and capital it should take full control and responsibility and not efficiency. leave the payment of salaries, commissions, rates, construction It is a poor excuse, but the fact is that little of the waste in charges, and price of land to be determined by the cost-plus this line was originated by Congress itself. Rather, it has been plan or anything simila!" to it. brought about by the persistent and continuo·us demands of Mr. MOORE of Pennsylvania. Will the gentleman yield? the various departments, to which Congress has most unwisely l\Ir. GREEN of Iowa. I will. yielded. In the Agricultural bill recently pending in the Seuate Mr. MOOB.E of Pennsylvania. Ts it not a fact that the farmer we have appropriated nominally for the benefit of the farmers is very mueh handicapped at the present time by the withdrawal millions of dollars for all sorts of things that they did not want or labor from the farm by shipyards and other large operations and would not use, including instructions how to make cottage of the Government where high wages are paid 't cheese and how to put in crops. The crops are already har- 10150 SEPTE~IBER 10, vested, but I have no doubt the money will be spent. Waste, $3,000,000 was put into buildings located in a swamp whict. is more waste. sooner or later to be flooded, as it is part of a drainage reserrolr. Mr. SLOAN. Will the gentleman yield? Mr. SLOAN. Will the gent1eman yield? Mr. GREEN of Iowa. I will. Mr. GREEN of Iowa. I will. Mr.· SLOA.l'l. The gentleman compla.).ns. about not having Mr. SLOAN. Was not that field designed for the construc had a committee on economy and expenditures. With whom tion, the use, and practice of submarines rather than airplanes? does the fault lie that such a committee was not established? l\Ir. GREEN of Iowa. In the future it will be better adapted Is it with the Ways and Means Committee, with the House of for that purpose, I think. Representati"\'"es, the Senate of the United States, or some other But the hundreds of millions that have been wasted in this body or power? connection are not the greatest waste. That occurred on the Mr. GREEN of Iowa. The gentleman, I think, will ha\e to field of battle. Oh, the pity of it! Oh, the shame of it! that go on still higher up to :find i:b.e reason why such a committee the lifeblood of America's young men should have been poured has not been established-a committee on expenditures. out upon the battle field because of lack of airplanes for proper l\1r. SLOAN. I hope the speaker will lead me as high up as scouting work and for defense against the German aircraft is necessary so as to get the information. that, flying low, raked their lines with a storm of bullets from Mr. GREEN of Iowa. I will endeavor to do so before I get machine guns and dropped bombs upon them during the ad through. yance from the l\Iarne. Mr. SLOAN. I accept the gentleman's promise. Some say that this is of the past and "let the dead past bury 1\Ir. GREEN of Iowa. I have never been one of those who its dead." I am willing, provided along "ith the past we coulu joined in the attack on the Food Administration, but I am bury those who are responsible for such conditions. [Applau e.] clearly of the opinion that a large portion of its employees But unfortunately it is not of the past. The same condition might be safely dispensed with. . Its work is <'arried on here still continue. In the E\ening Star of day before yesterday when it ought to be carried on in Chicago, and as a result we are I find the following item: unnecessarily constructing in Washington buildings in which to GERMAX FLIERS BUSY. house its employees or the employees of other departments. The German aviators contributed materially to the rear-guard de Waste, eternally waste. I do not know what these buildings fense. Ev-ery yard the French and Americans advanced was noted by the enemy aviators, who also took an activ-e part in the efforts to stop will be, but I have seen some of the houses constructed by the the allied progress, but in the long run their efforts were as ineffectual Shipping Board in one of its newly constructed towns. There as those of the line of machine-gun nests. The au·men repeatedly I saw beautiful six and seven room houSes, each one different bombed the Americans and let loose with their machine guns while fiying low. The light forc~s adv-ancing, however, were never more than from any other, turreted and gabled in the most expensive momentarily checked, as, after disposing themselves for defense in a style, the architect ha"\'"ing never for a moment considered the way their mobile formation made possible, theu· progress would be re exrpen e of construction for houses that after the war will be sunled after a moment or so. inhabited bv bats and owls. I wish that the ordinary Congress~ Does some one ask how long such reprehensible conditions ar~ man could find in Washington in war times such living accom~ to continue? I answer that they will continue as long as an modations. attempt is made to conceal them and coYer them up. 'Vhat is the result? It is this: We have been in the war a With proper supervision by Congress no such follies and year and a half and spent about as much as England in three blunders which approach a crime would have been permitted years, although, as I haYe said, during most of the time they a-nd the repetition of the mistakes and blunders in other quar baye had an army twice the size of ours and a navy three times ters would be prevented. Only a management which has some as large. But some say we have incurred a large expense in thing which it wishes to conceal is afraid of investigation. We the way of preparation and that om· appropriations will de know now why such persistent efforts were made to suppress crease. Do not deceive yourselves. ,we have merely entered an inYestigation with reference to aircraft construction until on the threshold of the war, so far as expenses are concerned. the greater portion of the facts had leaked out through sources So far we ha"\'"e only had about 200,000 to 300,000 men on the that C{)uld not be stopped up. Rightly or wron<>ly, the effort fighting line. We expect to ha'\e five times as many and our to suppress inYestigations elsewhere must inevitably give to the total emollment to be more than twice what it is now. Where American people the opinion that im-estigations are needed be we are now using shells by the thousands or the millions we cause they are obstructed and disapproved. shall be usin<>' them by the tens of thousands or the tens of mil Everyone admits that waste is going on, and from high lions. .Judging from the past, I speak to some who will not quarters has come the suggestion that a budget system hould bear, but I warn the country that we can not go on this way be adopted. A budget system in time of peace would doubtles indefinitely, and if we could, there is no justification for placing be much improvement oYer our present procedure, but no coun such burdens either on the present generation or those of the try e\er found a budget system practical in time of war. Eng future. land has been compelled to abandon it, and no statements arc Competitive biduing i not made use of to the extent it should now presented by the war department to the House of Commons be ancl competition is often on the wrong side, the Goyernment or budgets by the chancellor of the exchequer. The special bidding again t itself. The system adopted by the Na\y is feature of a budget system is the :fixing in advance of the highly commendable, and if it were better coordinated with the amount which may be expended by a department for the cur War Department, so that one department would not bid agajnst rent year, but it is obvious that if Pershing says that new air the other, little improvement could be suggested in it; but the planes must be sent him because the old ones are worthies , War Department has, for the most part, proceeded upon plans or that he has not artillery enough, or that material has in that enormously increased the cost of what it purchased. At some way been lost, worn out, or destroyed in the course of the first the Quartermaster's Department would neither make public war and must be replaced, that he can not be told that the its needs in such a way that they would generally be known and estimates for the year ~re made up and that the War .Depart competition result, nor would it make public the prices which ment. can spend no more. The vicissitudes of war absolutely it paid. Time and again contracts were let at prices far aboye preclude determining in advance the amount which will be ex those at which other parties stood ready to furnish the same pended to cai·ry it on. Our own War Department has been good·, and even yet it takes no proper methods to insure com compelled again and again in the course of the last year to come petition. to Congress and ask for additional appropriations. The re The aircraft construction section, which, it should be under quirements in the Army and Navy are constantly changed with stood, is not a part of the Army, has been conspicuous for its new developments and the fortune or misfortune with which tho waste, but we know it is conspicuous only because it is the only war may be carried on. It is obvious that howe\er advan one that has been investigated by Congress. tageous tl1e budget system may be in time of peace it is un The testimony on the hearings before our committee shows workable in time of war. that at the outbreak of the war the piano manufacturers, whose For the same reason we can not always avoid voting sums in business was dull and whose factories were already fitted to bulk. War requires decisions to be made instantly, and urgent make everything -in connection with frames for airplanes, de matters can not wait for the passage of a special authorization sired to put their works at the service of the Government. In with the co t of e\ery item specified. stead of accepting their proposal the Aircraft Board erected What we nee - ~ I mittees and has presented a voluminous report. Through this Lever Olive-r, N. Y. Sanders, N.Y. Tinkham Lintblcum Olney Sanford Van Dyke committee careful supervision is kept of whatever that nation London O'Shaunessy Saunders, Va. Vare expends. - Great savings have already been made through this Lufkin Overstreet Schall Venable committee, and the effect of its watchful eyes has been very Lundeen Paige Scott, Pa. Vins on McAndrews Peters Scully Walker apparent. Certain kinds of artillery are now actually being McCormick Polk Shackleford Ward obtained cheaper by England than in the early part of the McFadden Porter Sherley Wason war and numerous instances where great savings could be McLaughlin, Pa. Powers Shouse Watkins Watson, Pa. effe~ted have been pointed out and the suggestions acted upon. ~n!r ~~f~! ~!::3 'Vatson, Va. At the outset of the war I proposed the appointment of a Martin Ragsdale Smith, Idaho W~>lling joint committee on expenditures ·taken from the House and Mason Rainey, H. T. Smith, C. B. Whaley Wheeler Senate and a provision for it ought to have been carried in this M:~~er fi:~~?t\ J. w. ~:ia~i- T: F. White, Me. bill, and I doubt not it vould have been carried had it not been Mondell Rankin Stephens, Miss. White. Ohio for the opposition from the White House. The committee Montague Reed Sterling, Pa. Wilson, IlL Mott Riordan Stevenson Wilson, Tex. should, as proposed by the gentleman fro_m Pennsylvania [Mr. Mudd Roberts Strong Winslow MoonE], be made up equally of Republicans and Democrats Neely Rodenberg Sullivan Wise taken from the House and Senate. Its findings would be non Nelson Rowland Swift Woodyard Nicholls, S. C. Rubey Switzer Wright political and would everywhere be accepted by the country. Nichols, Mich. Russell Tague Why should anyone but those who fear exposure be afraid of. Nolan Sabath Talbott it? It would bave nothing to do with military operations, but Oliver, Ala. Sanders, La. Templeton it would greatly lessen the amount carried by bills like the one Thereupon the committee rose; and the Speaker having re we now have before us, and no step that Congress could now sumed the chair, 1\fr. Froon, Chairman of the Committee of the take would more contribute to the winning of the war. The Whole House on the state of the Union, reported that that com sooner it is appointed the less will be the regret that it was not mittee, having under consideration the bill (H. R. 12863) to established earlier. · provide revenue, and for other purposes, finding itself without I do not now expect that such a provision will become a part of a quorum, he had caused the roll to be called, and that he pre this bill, but I do expect that the march of events will ulti sented therewith a list of the absentees for insertion in the mately compel its adoption. Journal and RECORD. 1\lr. Chairman, we can make no greater mistake, nor one that The SPEAKER. Two hundred and thirty-t ree Members are is more likely to prove fatal to ou~ success in this war, than to present, a quorum. The committee will resume its session. fail to take a correct view of our surroundings. We should The committee resumed its session. neither reverse the glass, so that we are looking through the Mr. FORDNEY. Mr. Chairman, I yield one hour to the gen- wrong end of the telescope, nor should we use one that unduly tleman from Ohio [1\Ir. LoNGWORTH]. [Applause.] . magnifies our difficulties. Our task is heavy but. we are strong Mr. LONGWORTH. Mr. Chairman and gentlemen of the ·and our resources so great that if we do not waste them victory House, I wish to say at tbe.very outset that I speak here to-day is certain. What we need, what we must have for ultimate suc not as a Republican, but as a willing worker in the cause and cess, is the truth, always the open, naked truth. Pitiless pub- as a Representative responsible to all of the people of my dis 1icity is ever the greatest enemy of waste and inefficiency. trict, regardless of party. [Applause.] There is no one here, 'Vhere resources are evenly balanced the side that turns ou the I think, more interested in the welfare of my party than I. light will win. To stifle publicity is but to insure that the mis I confess that I rejoiced at the welcome news from Maine this takes and the blunders which ha-ve heretofore been perpetrated morning, but in a crisis like this I subordinate that interest will continue unabated. entirely to what I conceive to be the welfare of all the Ameri There is no lack in spirit or performance on the part of our can people and the winning of this war. Army. Its glorious record has been further extended upon the Never before in my 14 years' service in _this House have I fields of France. The names of Cantigny, Chateau-Thierry, and a approached the consideration of any mea ure with such a sense score of other battles will forever live in our history. While our of heavy responsibility. We are about to impose upon the soldiers have been sh·uggling and conquering, fighting and dying, American people taxes far higher than they have ever borne; the slimy trail of the profiteer bas marred our record on this we are about to burden them as no peoples in the history of the side of the ocean and the slach-er has been permitted to use their world have been burdened; we are about to cause them to pay heroism for his own protection. Every day the blood-soaked in taxes a sum which would have financed the entire cost of soil of Europe gives new proof of the valor and devotion of the the Civil War for both sides, and then left something over. men who haYe willingly responded to their country's call and Such huge taxes as these, my colleagues, are not to be imposed vffered their lives that freedom might not perish from the earth. without the most solemn deliberation, and each one of us It is our duty to see that their lives are not wasted through should be fully ali-ve to the grave responsibility that rests waste and inefficiency at home, and we shall play an ignoble upon him. part, indeed, if we lack the courage to strike at the root of those Is it too much to hope that gentlemen will not attempt to evils which may render all their noble sacrifices in vain. materially amend this bill except only after the most careful [Applause:] thought and the most thorough consideration? Not that it is Mr. HASTINGS. 1\Ir. Chairman, I make the point of order perfect, by any means, not that it may not develop that amend there is no quorum present, and I think we ought to have a ments may be found advisable ; but at least this can be said quorum in the House when an important bill like this is being of it, that it represents the final compromise and meeting di cussed. of minds of 23 men of all shades of economic thought and The CHAIRMAN. The gentleman from Oklahoma makes the after three months' work, who, if gifted with no uncommon wis· point of order there is no quorum present, and evidently there dom or ability, have at least proceeded deliberately, cautiously, is none. The Clerk will call the roll. and conscientiously, and without a thought or suggestion of The Clerk called the roll, and the following Members failed partisanship. [Applause.] to answer to their names : · The gentleman from Michigan [1\Ir. FoRDNEY] and the gentle Anthony Costello Foss Heaton man from Pennsylvania [1\fr. MooRE] yesterday both criticized Aswell Crago Francis Heintz and criticized very properly from their point of view ·certain Barkley Cra mton Fuller, Ill. Hensley Blackmon Crisp Gallagher Hicks features of this bill, but their- criticism was constructive and Booher Dale, N.Y. Gallivan Holland not destructive, and was animated not by partisanship, but hy a Borland Delnney Gard Hood sense of their responsibility as Members-of this House. Any man Bra nd DempsPy Garland Howard Britten Denison Glass Husted who would seek in this solemn hour to obtain partisan advantage Brorl hcrk Dies Godwin, N. C. Johnson, Ky. or make political capital for home consumption out of such a bill Burroughs Dillon Goodall Johnson, S. Dak. as this is, to my mind, a creature so infinitesimally small that Butler Dooling Goodwin, Ark. Jones Byrnes, S. C. Doolittle Gordon Juul when he shall retire to private life, as he speedily will if he Caldwell Drane Gould Kahn meets his deserts, his neighbors may well say of him, " There Caraway Drukker Graham, Pa. Keating goes nothing." Ca rew Dunn Gray, Ala. Kelly, Pa. Carter, 1\lass. Dupre Gray, N. J. Kennedy, R.I. In the imposition of taxes such as these we must always keep Cary E a gan Greene, Mass. Key, Ohio in mind two principal considerations: F irst, not to reduce or de Chandler, N.Y. Emerson Gregg Kiess, Pa. stroy the revenue-producing power of the country; and, second, Churcu 1i1s topinal Griest King Clark, Fla. Fairchlld, B. L. Griffin Knutson· not to impair its capacity to nbsorb the coming issues of liberty Claypool Fairchild, G. w. Hamilton, N.Y. Kraus bonds. Both of these tbin~s would inevitably happen from in Cleary l•'arr Hamlin LaGuardia judicious or over taxation. I need not elaborate the point that Coady F erris Haskell Lea, Cal. Cooper, Ohio Fess Hayden Lee, Ga. excessive taxation would impair the country's ability to buy Copley Flynn Hayes Lehlbach bonds. That is self-evident. But why it should destroy revenue .10152 .CONGRESSIONAL . R.ECOR .D~JIOlTSE • SEPTEMBER 10, 1s perhaps less clear and may deserve a word of explanation. To Mr. LONGWORTH. Yes. persons who have not given the question the most serious Mr. HAMILTON of l\licl1igan. Is a municipal bond that is thought it might seem axiomatic that higher taxes will always nontaxable under the laws of the States taxable under this mean higher revenues. Such, however, is emphatically not the bill? case, for two reasons : Mr. LONGWORTH. No .nunicipal bonds are taxable under In the first place; if you impose too high a tax on incomes, this bill except those hereafter to be issued. and those particularly of the larger class. you will inevitably Mr. GARNER. And then only the income from the bond. ddre the capital from which these incomes are derived into 1\Ir. LONGWORTH. Yes; then only ,he income from the nontaxable securities, and, in the second place, if by excessive bond. Of course they are to be taxable as a part of the in taxes on business profits you destroy the human initiative and come of the holder. ambition to engage in those businesses, you will thereby destroy Even more important llian the question of t11e effect that this the sources from whtch these revenues :m11y be derived. You bill will have upon the revenue is the question of the effect it may by taxation take from a man all he made this year, but may have on the coming issue of liberty bonds, and I ask every you cun not force him to remain in business, nor can you pre Member of this House during the consideration of this bill to -rent his putting his capital where its returns can not be taxed keep that fact uppermost in mind, because at least two-thirds of next year. the revenue that we must raise in the coming year is to be by . There are outstanding in this country to-day something over bonds. $8,000,000,000 worth of Federal, State, an<.l municipal securities, This tax bill, huge as it is, represents only one-third of that the proc eds of which are not subject to Federal taxation. amount. Nothing could be more disastrous to our cause than Under this bill we are endeavoring to reach those State, county, that the bond is ue should be a failure, and we should be and municipal securities which may be hereafter issued, though scrupulously careful therefore that nothing we do here sllall I admit that there is some doubt as to the constitutionality of prejudice its success. Most of the bonds will -be purchased by that course. This, however3 will in no wise affect those ah·eady individuals, and their purchasing power will be directly affected issued and outstanding. These nontaxable securities would by the taxes on their incomes. offer a tempting and fruitful field for investment for those Let us examine, therefore, the income tax provided in this '!hose incom-es we may overtax, in which case no one will be bill to see how it may affect the salability of these bonds. the lo er except the Treasury of the United State . First, let me lay it down as an axiom that the higher the This bill imposes a fiat tax of 80 per cent on war profits; a normal tax and the lower the surtax the more attractiYe will tax running as high as 70 per cent on excess profits, and a tax be the liberty bonds as a field for investment. That is self running as high as 77 per cent on incomes. This, I think, is eYident, it seems to me, because the income derived from liberty high enougll. In fact, I am not sure but that it is mighty near bonds is liable only to the surtax and not to the normal tax. the clanger mark. We must remember that this is a bill to Therefore the higher the normal tax the more valuable the raise revenue, not n bill to reorganize society. The question as bond is as an investment. to ''"hat some of us may think is a proper amount for a rich It seems to me self-evident also that these bonus must be man to liYe on in war time is subordinate now to the amount we made at least a fairly attracti-re in-restment if five or six bil can· properly and effectively exact from wealth for the support lions of them are next month to find a ready market. England, of our .military program. with a 30 per cent normal tax and about a 50 per cent maxi Mr. MADDEN. Would it interrupt the gentleman if I asked mum surtax, is in a much more forhmate position, so fat· as him a question? the bond question is concerned. l\1r. LONGW.ORTH. I would be glad to yield to my friend. The gentleman from Pennsyl-rania [Mr. l\looRE] yesterday 1\lr. l\IADDEN. The gentleman has just stated that this bill thought that our income rate, our tax rate on the lo\Yer in imposes 77 per cent tax on incomes in some cases. Does the comes-and he particularly spoke, I think, of incomes from gentleman know that the average State, county, city, and school $5,000 to $50,ooo-was too high. Now, let me contrast those taxes collected by the political subdivisions indicated already lower income rates with the rates now imposed in England. amount to about 31 per cent on the incomes, and that this added keeping in mind always the fact that England has a 30 per cent to it would make it 108 .per cent? nQrmal taX: while we have only a 12 per cent normal tax. The Mr. ~ONGWORTH. 'Yell, the gentleman is hardly correct tax provided in this bill on an income of $5,000 i $180. In about that. I do not know exactly what the average of State England it is $937.50. In this bill the tax on incomes of $10,000 taxation may be, and I should think that 30 per cent is not is $845; in England, $2,625. On $15,000 in this bill, $1,793; much out of the way; but that iG deducted from the income be in England, $4,812. On $25,000 in this bill, $4,245 ; in England, fore t:Q.e Federal tax is imposed, and therefore the total tax $8,937. The two taxes are gradually approaching each other, could never reach 100 per cent. as you will see. On an income of $50,000 in this bill the tax Remember this, gentlemen, that just so surely as you impose is $12,495; in England, $20,937. And it is not until we get to a tax which amounts to plunder, just so surely will you over incomes of $300,000 that the tax proYided in this bill is higher shoot the mark nnd render difficult, if not impo sible, our task than the tax provided in England. of f-urnishing the money necessary to effectively prosecute the l\lr. MOORE of Penn •ylvania. 1\Ir. Chairman, will the gentle war. man yield? 1\Ir. FESS. 1\lr. Chairman, will my colleague yield to me? l\1r. LONGWOR'.rH. Yes. l\1r. LO:NG,VORTH. Yes. Mr. MOORE of Pennsylvania. l\ly criticism yesterday was l\.Ir. FESS. To a question that grows out of the question directed more particularly to the raising of the normal tax from asked by the gentleman from Illinois [Mr. MADDEN]: In com the 4 per cent that it is now and from 10 per cent that we had in paring the rates of tax that this bill entails upon the country the bill originally to 12 per cent, as in the bill as it is now pre with tbe rates of tax in England, would the rates carried in sented ; and my argument, while it applied also to these lower sur tbis bill represent all the tax that the country pays, as would tax brackets, was directed particularly to the fact that the men of be the case in England, where they do not have the subdivision small means paying this normal tax would be less able to buy taxes? the liberty bonds than heretofore and would be at a di advantage l\1r. LONGWORTH. No. In England, as I understand, the in the general financial arrangement laid down in this income only taxes outside of the national tax are some local municipal tax provision. taxes. There are there no such things as State or county Mr. LONGWOR'.rH. I hope to be able to show that the ques . taxes. tion of the size of the normal tax is more important with regard Mr. FESS. But there are people claiming that we are not to the attractiveness of liberty bonds as an investment than it laying as Wgh a tax as European countries are laying. Is it is as to the question of revenue ol· the amount of tax that it may not pos ible that we may lay an even higher tax than European raise. With our normal tax at 12 per cent and a 65 per cent countries when you take into consideration our local taxes? maximum surtax upon the higher incomes, we are not in a po i Mr. LONGWORTH. We are not laying as high a tax on cer tion in this respect so fortunate as Great Britain. tain classes of incomes as does Great Britain, but on the larger Personally I should have been willing t'o vote for a normal tax: incomes we are imposing a decidedly larger tax. . of 15 per cent, or even higher. But I think probably 12 per Mr. MADDEN. How would it be when it is combined with cent will be enough if the surtaxes remain substantially as the local taxes that I have been talking about? they are. At best, though, we are treading on mighty ,correctly, whereas, if we had a 15 per cent normal tax:, the - Mr. PLATT. I want to say that when the last liberty bond liberty bond would equal a municipal bond at 5 per cent interest; bill was up I made a proposition to increase the Cannon amend because for each 1 cent that you levy in the normal tax, you ment to a sum which would yield an income equal to the .mini equal 0.005 per cent interest of a municipal loan or other se mum amount exempt from taxation under the income tax; that curity; so the higher the rate you make on the normal tax is to say, to increase the amount of bonds that a man could which the liberty bond is exempt from, that much more de hold to an amount that would produce $1,000 income. If the sirable becomes that security as compared with other securities rate is 4 per cent, that would be $25,000. If the rate is raised in the country. · . to 4! per cent, it would be $22,500, and 5 per cent $20,000, and Mr. LONG,VORTH. The gentleman from Texas is absolutely so on. The capital sum exempted would decrease with each right. In other words, the raising of the normal tax accom increase of interest rate. I wrote a letter in regard to that to plishes. precisely the result that you would accomplish if you the Federal Reser-ve Board, and they expressed considerable in raised the interest on the bond. Congress has not authorized terest, and did not make any opposition ta it. There did not any higher rate. I hope we may never have to raise the interest seem to be any opportunity to present the amendment for a vote .rate on the liberty bonds, but certainly we can not avold the at the time. I simply proposed it in a brief speech. Such an raising of that rate unless we keep the normal tax as high or exemption could arouse no resentment, and I think that is the perhaps a little higher than it is in this bill. way the Cannon amendment should be raised. - l\Ie. SMITH of Michigan. Will the gentleman yield there? Mr. LONGWORTH. Perhaps that would be the best way. At 1\fr. LONGWORTH. Yes. any rate I am willing, as I say, to vote for any proposition of Mr. SMITH of Michigan. Does the rate of interest have any that kind which will make the coming liberty bond an attractive thing to do with the value of the bonds, and is that the reason investment. It may be absolutely necessary, gentlemen, with a that the bonds are selling at a discount now, becau8e the interest tax bill like this confronting the American people, to do what is not high enough in the gentleman's estimation? we can ta make the liberty bond a more attractive investment Mr. LONGWORTH. I think that is one of the reasons, under than it now is to the men of wealth of this country. I shall not our present low normal tax. Of course, another reason why the be surprised if before this session of Congress adjourns we will bonds are not selling at par is that many men the moment they be called on to pass legislation of that nature. buy a bond immediately sell it on the market. We have also We must keep steadily in mind alw·ays the fact that the bulk heard of instances of men in small country towns, the storekeep of our war expenditures must inevitably be financed by the sale ers in small country towns, who advertise that they will pay $95 of bonds. Just what the relative proportion should be between cash for a $100 liberty bond, and it may be that in many cases bonds and. taxes it would not be valuable now to discuss. It i poor farmers or others who have bought these bonds and feel bound to depend on circumstances and conditions as they may temporarily embarrassed are glad to get that $95 cash. All these hereafter arise. things have a tendency to depress the bonds; and with the nor I was unwilling at the outset to subscribe to the program mal tax in this country of only 4 per cent and the high rate advocated by the Secretary of the Treasury that our war ex that we ha-ve to day in surtaxes, the liberty bond is by no means penditures should be financed on a fifty-fifty basis. I am un as good an im·estment as the average municipal bond, and you willing now to subscribe to the proposition that it shall be now have got to ask men to be very patriotic, particularly the rich financed on a two-thirds and one-third basis. I am willing to men, to 'buy these bonds with a normal tax of only 4 per cent. vote for this $8,000,000,000 tax measure, not because it hap l\Ir. GARNER. 'Vill the gentleman yield? pens to be one-third of $24,000,000,000 but because I think a 1\Ir. LONGWORTH. Yes; with pleasure. tax of at least $8,000,000,000 is necessary, for I am firmly of 1\lr. GARI\TER. There are three ways by which we can hold the opinion that the amount of $24,000,000,000 estimated for the a greater inducement to people to buy liberty bonds. One of expenses of next year is an underestimate rather than an over them is to increase the normal tax, say, to 15 or 20 per cent, estimate. another is to increase the rate of-interest, and the third is to 1\fy belief is that a larger proportion of the war expenditures increase the Cannon amendment, so called. Those three methods than two-thirds ought to be borne by coming generations. I make it more desirable. For instance, if you increase the nor subscribe, therefore, to the statement in our report that the mal tax to 15 per cent you would have a 51 per cent liberty bono. ;Hloption temporarily of the one-third plan does not commit If you increased the Cannon amendment, say to $20,000, you re Uongress to that proportion in the future. I would not ha\e lieve everyone owning $20,000 worth of bonds from any taxes joined in any report which could be regarded as committing whatever, ·.and is not either one of these methods the better me in the future to any definite percentage. remedy to make them more attractive than it is to increase the I did not believe at the beginning of the formation of this bill. rate of interest and carry that on through 20, 30, or 40 years? · nor did I think any member of the Ways and Means Commit Mr. LONGWORTH. I agree absolutely with my friend from tee did, that it would be possible to raise by taxation $8,000,- Texas, and I will say that if the proposal comes to us to increase 000,000 without resorting to consumption taxes. · the amount of the so-called Cannon amendment even as high as But we have succeeded, for there is no doubt that this bill $25,000, I shall favor it. It stands now as I recall it at $5,000. will raise $8,000,000,000 and more, if the sources from which I will ask the gentleman from illinois if that is not so? the revenues are being derived remain unimpaired. I shall Mr. MADDEN. Five thousand dollars. not stop to debate here whether it might not have been wise to 1\fr. LONGWORTH. As I recall it, the original amendment raise a portion of the revenue by tariff duties and internal proposed $10,000, but the Bouse cut it to $5,000. revenue taxes on articles of daily consumption. Under the con ·Mr. CANNON. I do not recall that, but the House passed it nt ditions it was thought inadvisable and impracticable to do so. $5,000. Tariff duties and consumption taxes remain as a field to fall Has the gentleman noticed, as I know he has, that the 3! back on in case we shall have to raise more taxes, or in case per cent bonds of the first liberty loan which were nontax some existing sources of revenue are destroyed by legislation or able for any purpose, either State or National, are now Selling otherwise. at a premium, whereas the 4! per cents are selling, I think, at This bill remains as it stands a tax: on wealth pure and simple. about 94 or 95. I am not sure about that. HaS the gentleman But in my belief it taxes wealth pretty nearly to the straining · considered the proposition, for a successful liberty drive, of legis~ point, and any further taxes must be borne by people purchasing latlon that would authorize, say, 3! per cent without being sub~ articles of daily necessity. ject to taxation, as against the 4! per cent bonds that are sub~ The main revenue-producing features to this bill in relative ject to surtaxes? oruer are these : 1.\'lr. LONGWORTH. I will say to the gentleman that I have War and excess-profits taxes, $3,200,000,000. given a good deal of consideration to that subject. I was rather In{lividual-income taxes, $1,500,000,000. disinclined at the beginning to vote for a provision which would Taxes on beverages containing alcohol, $1,066,000,000. make the 4 or 4i per cents s~bject to a surtax, but I dislike to put Corporation taxes, $900,000,000. my opinion on questions like this as against the opinion of the Tobacco taxes, $350,000,000. Secretary of the Treasury and his advisers. They are emphati And the rest, taxes on luxuries or near luxuries. cally of the opinion that these bonds should be subject to a sur In my judgment, this is about the limit that can be raised tax, and as I say I am perfectly willing to go along, though from any of these sources. If you should attempt to tax higher I am ready at any moment to vote for any measure, whether you would lose revenue, and, correspondingly, if you should by in the direction of the raising of the normal tax or of the rais legislation destl·oy any one of them you will have to make up ing of the amount of bonds that can be held by an individual the deficit by taxes on articles of daily consumption. not subject to the surtax to a substantially larger amount pro E\en since this bill was reported to the House a source of vided in the amendment originally offered, and mo t wisely, I re\enue estimated at $240,000,000 has been destroyed, or will think, by the di tinguished gentleman from Illinois [1\fr. shortly be desh·oyed, by Executive order. The real loss of CANNON]. revenue in this bill will be considerably larger, because con- . 16154 CONGRESSION .A.L RECORD-HOUSE. SEPTEMBER 101. nected with the industry about to be destroyed are incomes and at the counters. I believe that 1s the system they have in France profits which are taxable under this bill, and various incidentals now. They have to stand around and wait while there 1s pre which will probably bring the loss of revenue up to between pared a receipt which must be put on a certain form and be $400,000,000 and $500,000,000. It thus seems that we may be numbered. It takes not only the time of the clerk but of the forced to consumption taxes sooner than any of us expected, purchaser. and the raising of even so comparatively small a sum as Mr. LONGWORTH. The gentleman is correct. Even m 240,0003 000 by consumption taxes is no light task. The obvious France to-day they have no general sales tax. They have a sales thing to do, it seems to me, would be to resort, in the first place, tax on luxuries and near luxuries, and also a tax upon which the to the tariff and to choose a few articles which wm·obviously be plan adopted in this bill is modeled, of taxing an article which high-revenue producers. Those which most prominently stapd per se, is a necessity, as a luxury when its sale price reaches ~ out are coffee, tea, rubber, wool, hides, and sugar. certain point. The Treasury Department has told us that such Now, if we were to put a tax of 7 cents a pound on coffee, 25 a general tax on sales would be tremendously difficult to ad· cents on tea, 10 per cent ad valorem on rubber, 20 per cent minister. on wool, and 15 per cent on hides, and an extra cent on sugar, 1\Ir. HARDY. Mr. Chairman, will the gentleman yield? you barely raise $240,000,000. And yet these particular duties 1\Ir. LONGWORTH. Yes. are higher than I have ever heard suggested: 1\Ir. HARDY. Along that line, I would like to lmow if the A duty of 7 cents a pound on coffee would produce ap- gentleman has ever considered the question of what mi "'ht be proximately ------~------$91, 000, 000 derived from a sales tax on real estate sales, and let me elaborate A duty of 25 cent s a pound on tea wo!lld produce ap- a little upon that. You have in section 201 a definition of in proximately------25, 000, 000 A uuty of 10 per cent ad valorem on rubber would produce come, in which you state that an income is the amount received approximately ------19, 500, 000 for the sale of real, personal, or mixed property over and nbove A duty of 20 per cent ad valorem on wool would produce what was paid. for it, if it was -purchased after March 1, 1913, approximately------20, 000, 000 A duty of 15 per cent ad valorem on hides would produce or over and above what its estimated value was if you owned approximately ------32, 000, 000 it before that time. The result is that under that definition .A duty of 1 cent a pound on sugar would produce approxl- every man who sells any kind of property mn t account as a ~atelY------53,000,000 part of his income for the proceeds of that property over what Total------·---- 240, WO, 000 he gave for it or over its value l\fareh 1, 1913-a very difficult This is offered simply as an illustration of the difficulty we proposition, it seems to me-making it absolutely necessary to are bound to encounter in raising substantial revenue by con see what every article was sold for, and at the srune time a sumption taxes. If the entire schedule from which this $240,- very unjust proposition. The whole unearned increment whieh 000,000 is derived is destroyed our difficulties increase im- pays no taxes without a sale is thrown into the scale and must measurably. · pay a tax, if a sale of real estate or any other property occurs. No matter what our opinions may be as to the wisdom and Would it not be more equitable to select such articles as you justice of the case, let us not deceive our elves and let us not wish to put a sale tax on, as, for in tance, real estate, and im deceive the country as to the revenue aspect of this question. pose a straight tax of so much upon the proceeds of every real 'Ve owe it to ourselves and we owe it to the country to speak estate sale? Could that not be easily done? with perfect frankness about the ultimate cost of prohibition. l\Ir. LONGWORTH. Of course, as the gentleman has indi· It is estimated that taxes imposed on the sale of ·beverages con cated, we do now indirectly tax sales of real estate in the sense taining alcohol will produce a revenue of $1,066,600,000. It is that we compel any man who sells real est~te at a profit to obvious, therefore, that if this source of revenue is entirely de return that profit as income, and in that way we tax lt. If stroyed we lose over a billion doll!lrs; but that is not all by any you tax the sale direct of a piece of real estate, I am inclined to means. The experts of the Treasury Department have esti think that would be equivalent to taxing the real estate it elf mated that the special taxes on dealers and manufacturers and as property, which, in my belief, is unconstitutional. I agree the income taxes and exces -profits taxes that will be derived with the gentleman upon the general sales tax. Of course, we !rom per ons engaged in this industry would amount to over shall have to come to it e-ventually, perhaps, but o long as we $400,000,000. Besides this the loss of revenue to the various can avoid it I hope that we will not tax the sale of overalls in States would have to be supplemented by taxation of some sort exactly the same way that we tax the sale of diamonds. [Ap by the States, which would be deductible from the incomes of plause.] citizens of these various States, and which would reach such Mr. HARDY. Will the gentleman allow me to call his atten a large amount that the Treasmy estimates that the probable tion to the fact that under this very bill you do tax sales of real 1evenue to be derived under this bill, instead of being $8,000,- estate, only you tax them for a very small amount-50 cents on 000,000, will be only a little more than $6,000,000,000. The $500? problem of raising these extra $2,000,000,000, involving as it But it seems to me that the principle is the same, that yon does immense taxes to be imposed on nece saries of life, is one can make a more equitable tax by taxing sales of real estate, that we must face, and its solution will demand the best thought not taxing real estate, but just as now you call it a tax on of the best statesmanship in this country. deeds and conveyances, call it a tax on the privilege of execut Mr. S~IITH of 1\Iichigan. Mr. Chairman, will the gentleman ing a deed, and yon can make it equal, exact, and just, and not yield? just call a man's income this year. the unearned increment as Mr. LONGWORTH. Yes. for the five years; it may be that you can sell it for more in :ur. SMITH of Michigan. Has the gentleman ever considered 1920, and that is eight years, and 1921 will be still further. a sales tax or know how much that will bring? · You add the increased value on, not the value, for it is admit 1\lr. LONGWORTH. A general sales tax is a consumption ted universally the dollar has gone down and property you paid tax, pure and simple. It bears with equal force upon the poorest $50 for in 1913 is wo1·th $100 to-day, and yet if a man sells that man in the country and upon the richest. The gentleman from property at market value to-day he pays an income tax as if on :1\Iichigan and I probably drink just as much tea as J obn D. the profit, whereas if we treated every transaction alike and nockefeller, and probably more, because I imagine our digestion taxed all sales of real estate a certain per cent, say 1 per cent, is better, but we will pay just the same tax or more than 1\Ir. you would get much more revenue and be much more equitable Rockefeller, and that is the difference between the system of in the distribution of the tax. taxation in this bill and the system of consumption taxes. Mr. LONGWORTH. The gentleman's suggestion is interest Under the bill as it stands now-and I am not defending every ing; I confess I have not given it very much thought-- provision of it-it does tax throughout those best able to pay 1\Ir. HARDY. I would like the gentleman to roll that over in the taxes. The moment we come to consumption taxes, whether his mind. by revenue tariffs on noncompeting articles or by a sales tax, Mr. LONGWORTH. I shall be glad to do so. just at that moment we begin to tax those who are. least able Mr. GRAHAl\I of Illinois. Will the gentleman yield for a to pay. That is the problem we have before us, because, as I question? have endeavored to point out, we have gone the absolute limit Mr. LONGWORTH. I will. consistent with any degree of safety in taxing wealth as such, 1\Ir. GRAHAM of Illinois. I do not know whether this is and hereafter we must, when we have to raise revenue, be forced breaking in on the thread of the gentleman's argument or not, to consumption taxes on nece itie . but inasmuch as the gentleman has been interrupted, perhaps Mr. YOUNG of North Dakota. 1\fr. Chairman, will the gen he c .:m answer now. This bill provides a basis of ascertaining tleman yield? war profits and excess pTofits, the prewar period of 1911, 1912, Mr. LONGWORTH. Yes. _ and 1913, as I understand it. Now, does the gentleman think Mr. YOUNG of North Dakota. A sales tax is a1 o very diffi that the profit that a man made in business in 1911, 1912, or cult to administer, is it not, and requires a lot of. time of busi 1913 is a propei· basis to go on in estimating what his profit in ness men and their clerks, and also the customers who stand the same business ought to be now, considering the depreciated r 1918. ": r ·coNGRESSIONAL REOORD-- H01J SE. value of the dol1ar now as compared with what it was then? not catch, as does the excess-profits tax:, the profits of some of In other word.s-- the richest corporations in the country. But it is anticipated 1\fr. LONGWORTH. If the gentleman will be so kind as to that nine-tenths of all the corporations of this country will fall postpone his question, I will answer it when I get to the excess this year under the war-profits tax, and it will therefore raise and war profits tax. . enormous re\enue. Mr. GRAHAl\I of Illinois. Very well. Responding more specifically to the question of the gentleman l\lr. LONGWORTH. On the whole, this bill, in my judgment, is from illinois, I can see no possible injustice in subjecting cor a Yast improvement over the present law, not only in constl'UC· porations who were going along fairly well, we will say, before tion, but in principle. 'Vith regard to the new system of taxes the war, and haYe made tremendous profits since the war, to a on profits, particularly, a radical change has been made. In the tax imposed upon the difference between their prewar profits first place the excess-profits tax no longer applies to individuals. and their war profits.· Not only is this a wise policy on broad economic grounds, in It is possible that some gentlemen may not understand exactly my opinion, but more important still it automatically wipes out what the war-profits tax: is, a13 provided in this bill. To my that monstrosity in the present law known as section 209, under mind it is absolutely extraordinary that the expert draftsmen of which a man who derives his income from personal effort and the Ways and Means Committee ha\e been able to put in a page personal service pay.s a higher tax than a man who derives his and a quarter what it takes under the British law something income from invested capital. That, to my mind, was an utterly like 45 pages to cover. A page and a quarter of this bill, gen indefensible proposition, and most of you will recall that I had tlemen, covers the whole question of the war-profits tax, a tax: no hesitation in saying so. Under this bill I rejoice to say that which will raise something like ~2,000,000,000 . If the question in no case will salaries and professional incomes be taxed at a of the gentleman from Illinois were based on the proposition higher rate than incomes derived from capital. that, no matter what or how small the average prewar profits I wish we could have gone even further. I wish we could of a corporation were, 80 per cent of their pre ent profit should have provided under the income tax that incomes derived from be taken, I would say that it was not a just tax. But when, as personal effort and per. onal service should have been taxed at in tJ1is law. no matter how unsuccessful a corporation may have a less rate than incomes derived from invested capital. This is been before the war, it is entitled to a deduction of at least 10 a principle that I have been contending for in Congress and out per cent upon its invested capital, to my 1nind no more fair or for a good many years, and I was delighted to find it recom just tax could be conceived of in time of war. meilded by the Secretary of the Treasury in his communication And there is another feature of it, gentlemen, which I think sent to the chairman of the committee on the 5th of June. The of at least equal importance, and that is the effect it will have chairman of the committee has done me the honor to say that I upon the speeding up of war supplies, because it will protect contended for the principle of a differential between earned and those Go\ernment officials whose business it is to make contrncts unearned incomes from the beginning of the formation of this on the part of the Government. Some of the most important bill, but the difficulties, both in the drafting of such a provision contracts tlmt these officials, high and low, are called upon to and in its administration seemed to be insuperable, and it was only at the very last moment and at the final conference be make must be made without any basis whatever of actual knowl tween the subcommittee of. the Ways and Means Committee, of edge. A corporation, for instance, may be called upon to pro which I was a member, and the Secretary of the Treasury and duce some article for the use of the GoYernment which it has his advisers that I felt forced to abnndon my contention. I am neYer manufactured before. comforted, however, to know that we have made substantial It must, of course, take tremendous risk , and if everything progress in that direction and I feel confident that a way will goes well it " ..ill probably make a profit so enormous that it sometime, and I hope speedil3·, be found to enact into law a dif would be regarded as an excessively bad contract from the ferential in favor of earned as against unearned income. Gon~rnment's point of Yiew. If, howe"Ver, it is understood in I am glad, too-and now I am going to proceed to answer in advance that the Government is. going to get back 80 per cent some degree the question of the gentleman from Illinois_:_! am of its profits, if it is successful, the·Government is not a loser glad, too, that the principle of the war-profits tax has been and the corporation ought not to complain. I think our ex adopted in this bill. I have been opposed to the principle of the perience has proven that if we had bad a large war-profits ta.~ excess-profits tax from the time of its inception, and I have at the beginning the production of many "·ar necessities which only supported it, as I am supporting it to-day, as a war meas has sadly lagged behind would ha"Ve been greatly speeded up, ure producing a Yery great revenue, because it does catch some because then there would haYe been no necessity for a long Yery rich corporations that made large profits before the war periort of haggling as to the costs of material and other details which, under the war-profits system, would go entirely untaxed. which has worked to the "Very serious di ·advantage of the Gentlemen will recall that when the excess-profits tax: was ad country. vanced here as a revenue measure in time of peace, that being Let me illustrate· a moment. Suppose the gentleman from in the January before the war-.January, 1917-I opposed it Kansas [l\1r. CAMPDELL], who sits in front of met was a manu on the floor and offered an amendment to strike it from the bill. facturer of machine tools and I the director of munitions? I I hope you will pardon me now if I quote a sentence or two want the gentleman from Kansas to make me some machinery from what I said on that occasion, merely for the PUl1Jose of for boring big guns. The gentleman from Kansas has no factory showing for my own satisfaction that my criticism at that time suita.ble; he bas no machinery suitable; but be is perhaps the seems in- the light of subsequent events to have been justified. only man who has an organization which could by any possi I said this: bility produce these absolutely necessary things. Without .n. You propose a tax upon business, a tax upon the business of the war-profits tax I am in this position: The gentleman from country, big and little, and particularly little; a tax based not upon Kansas Yery justly- says, "I shall baYe to risk an immense magnitude of operation but upon economy of operation; a tax to be amount of capital; I shall ha"Ve to build a factory; I shall have imposed simply and solely upon efficiency of production. You propose a ta.."C which will be borne in the main not by men of large capital but to build new machinery; I shall hn•e to develop processes, and by men of small capital. You propose to tax the Amel'ican citizens I can not afford to take that contract unless you leave me a who by intelligent, progressive, and economical management of their big leeway." r esources have done a pro!"perous business and to let those of larger capital but whose methods have been wasteful, extravagant, and un I, as a Go"Vernment official, do not feel justified in giving hiru progressive go free. all the leeway he asks, because if everything turns out right A few weeks ago the Secretary of the Treasury appeared be he will make a profit so huge that I will be in the position of fore the committee and said this of the excess-profits tax, after having been responsible for the waste of an enormous amount an experience of something more than a year in its administra of the Government's money. But if we have a war-profits tax tion. of 80 per cent I can say to the gentleman from Kansas, " Go ahead ; I will not haggle with you about the details or the cost The excess-profits tax must rest upon the wholly indefensible notion that it is a function of taxation to bring all profits down to one level, of your materials. We want these big guns, and we want them with relation to the amount of the capital invested, and to deprive in now. Go ahead and make a big profit and we will take 80 pet• dusty, foresight, a.nd sagacity of their fruits. The excess-profits tax exempts capital and burdens brains, ability, and energy. The excess cent of it away from you after you have performed your con profits tax fallfl less beavt!y on big business than on small business, be tract." If we had had that from the beginning, gentlemen, in cause big business is generally overcapitalized and small business is my judgment we would be far more up to date in the absolute often undercapitalized. necessities of our war program than we are to-day. I hope it may be pardonable in me to take some satisfaction 1\Ir. DEWALT. Will tQ.e gentleman permit an interruption? in that statement of the Secretary of the Treasury in justifying, 1\Ir. LONGWORTH. I will; with pleasure. at lea t to some extent, my predictions of the effect of the 1\fr. DEWALT. The gentleman bas been informing upon this excess-profits tax. subject and there came to my mind a thought. It seems that In principle, to my mind, "ar-profits tax is the fairest of all this system.as proposed is in the alternative, is it not? taxes in time of war. The only trouble about it is that it does 1\Ir.· LONGWORTH. Yes, sir. 10156 CONGRESSIONAL RECORD-HOUSE. SEP'l'EMBER 10, lli. DEWALT. Now, would it interrupt the gentleman's Mr. LONGWORTH. Will the gentleman from Michigan yield trend of thought to give a concrete illustration as to hew it me some time? works out in the alternative? That has been a puzzling question Mr. FORDNEY. How much more time does the gentleman to quite a number of people. want? l\Ir. LONGWORTH. . I will be very glad to do so. I think Mr. LONGWORTH. Half an hour, I think. I can make it clear in a few words. Let me say, ih the first Mr. FORDNEY. I will yield such time as the gentleman · place, that I do not at all disagree that an excess-profits tax has desires. been nece sary as a war measure. My criticism against it Mr. LONGWORTH. I thank the gentleman. was as to its principle, and particularly directed against it as Mr. TREADWAY. Mr. Chairman, will the gentleman yield? a peace measure. I have, for instance, thought that when we Mr: LONGWORTH. Yes; I yield to my colleague on the shall have won this war, and when we return to a more normal committee. basis and taxes can be reduced, the first tax that we ought to Mr. TREADWAY. You have s:uoken of the e..'miDple with repeal, will be the excess-profits tax. reference to the 22 very large corporations that would come But the exces -profits tax does catch that class of corporations under the war-profits rather than under the excess-profits tax. whose earnings before the war were very large. Assume that Would the gentleman be kind enough to give some information under this bill the provi~ion is that there shall be both methods or illustrations relative to the small corporations, the 50,000 in force, the excess-profits tax and the war-profits tax; that all to $100,000 corporatiollB, where they would naturally be affected corporations shall make returns under both systems, and then by the class of tax! shall pay to the Government the highest rate that can be exacted Mr. LONGWORTH. That would be very hard to tell. The by either. worst feature of the excess-profits tax has been with reference It is apparent that those corporations which have run along to that small corporation, the corporation with a comparatively pretty evenly and which were ri::taking good profits before the small capital, where the brains and the energy and the ability war, and which have been making good profits since the war of the management have been re ponsible for their profits. began, will, in all probability, come under the excess-profits tax, Those corporations are at a disadvantage as compared "\"\ith because there is no surplus in the war year over the earnings in other corporations, larger ones, which in various ways have the prewar year. However, the corporation which was making been able to pad, either properly or improperly, their _capital; only a small amount-say, for instance, 6 per cent-before the and hence the tendency has been to tax under the excess· war, anu either through enhancement of material or through a profits t~x the small corporation, which depends, as I say, upon contract for providing supplies to the Government they have efficiency of management, higher relatively than larger corpora made 25 per cent since the war, it would come automatically tions not so efficiently managed. under the war-profits tax and be so assessed. I think that makes 1\ir. PLATT. Mr. Chairman, will the gentleman yield? it clear. 1\ir. LONGWORTH. Yes; I yield to the gentleman from New Mr. CRISP. Mr. Chairman, will my colleague permit a sug. York. gestion? Mr. PLATT. The gentleman has said that a large part of The CHAIRMAN. Does the gentlemun from Ohio yield to the the war-profits tax will come from the manufacturers of muni gentleman from Georgia? tions, and so forth, under Gov rnment contracts. Of course the l\fr. LONGWORTH. Yes. Government can not enhance itself much by the money it pays Mr. CRISP. According to the statement of Treasury officials, out itself. That is like trying to pull yourself up by the boot a.bout 90 per cent of the corporations that would pay a tax would straps. eome under the war-profits tux and about 10 per cent would come 1\Ir. LOKGWORTH. I do not know just what the gentleman under the ex:ce s-profits tax. means. 1\Ir. LOr~GWORTH. Yes. The department furnished us with Mr. PLATT. You say that a large proportion of the excess a lot o'.f very interesting data. They took 22 corpor::ttions, among profits are made by manufacturers of munitions who have Gov the very large t corporatitms in this country, typical corpora ernment contracts. How much is that expected to figure in tions, some that had been doing very well before the war and the revenue to be derived from the war-profits tax? some that had been doing not so well befO're the war; and they Mr. LONGWORTH. I would say to the gentleman that that found that out of those 22 corporations 18 would pay under the would be utterly impo sible to estimate. Of course I as ume war-profits tax and 4 under the excess-profits tax; and that that a good many corporations have made large profits out of probably would be a pretty fair estimate of all the corporations Governments contracts ; but an immensely larger number have in the country. made even larger amounts of money during the war wl10 'vere 1\lr. GRAHAM of illinois. Mr. Chairman, will the gentleman under no contractual relations directly with the Government. yield? Mr. PLATT. I have no doubt that is true, but a good many Mr. L0.1. TGWORTH. Yes. people seem to think that the Government can finance itself Mr. GRARAM of Illinois. I, for my own curio ity, made out of money which it itself is paying out, which is absurd. scme computations under these schedules myself, and my results Mr. LONGWORTH. Of course it is absurd. But it has little seemed to indicate tllat if the earnings of the corporations were to do with the question now under consideration. le s than the amount of their capital stock, the greater tax Mr. SHERLEY. l\fr. Chairman, if the gentleman will permit, would be imposed uruler the war-profits system, but if the the reverse of it would be more absurd. It would be manifest earnings were largely in exce s of the capital stock they would that the Government, spending the money which it is spending, come under the excess-profits system. That is, the excess was could not hope to raise revenues sufficient to conduct its affairs found under that system. I think the computation will show unless it got a return out of the large profits which come out of that to be generally true. governmental activities. Mr. LONGWORTH. I do not think the gentleman has the Mr. LONGWORTH. The gentleman from Kentucky is exactly right way of basing his figures. In the first place, the capital right. Under this war-profits tax the war profiteer will no stock has nothing whatever to do with it. It is only the ques longer be able to revel in his entire gains, for now comes the ! tion of the actually invested capital. And so far as the invested Government and ex:acts from him 80 per cent of his profits, ca11ital i concerned, the same rule exactly applies to the ex which the Government'~ demand for war materials has made ce -profits tax and the war-profits tax, and the only difference possible. . ill th t under the excess-profits tax we allow only 8 per cent There is another item of this bill to which I want to devote a JWO poses of the German autocracy to dominate first Europe and accomplish this greatly desired end most, can be devised, the Asia, and then the Western Hemisphere, industrially, finan policy of national disarmament would be most wise and welcome. cially, commercially, socially, and politically, have so fully and This problem will doubtless be measurably determined, as it clearly unfolded themselves, no intelligent person with a spark should, at the peace table. In any event, the " gospel of force " of patriotism or with the slightest love of liberty will hesitate to must be forever uprooted and repudiated. It may be said that place both life and property at the disposal of his Government in if general· disarmament should fail of adoption, and I hope it this time of supreme crisis. [Applause.] Even the casual may not, the expenses of maintaining substantial armies and reader now knows that from the day of the Potsdam conference navies after:- the war -by the various important countries will on July 5, 1914, world conquest and world domination were aggregate $4,000,000,000 to $5,000,000,000 annually. This amount deliberately decreed by the ruling powers in Germany, and have would pay off the world's war debt within one generation. since been vigorously prosecuted by the Germa~ and its allied Mr. Chairman, the question of taxation, difficult enough in armies. The most ignorant person is now familiar with the time of peace, becomes increasingly so in time of war. In peace uncivilized, savage, and barbarous methods employed by the times the people expect and demand both equitable and scientific German Government in waging this unholy, outrageous, and un taxation, whereas in time of war, owing to the far greater reve speakable war of conquest. For brutality and inhumanity, for nue demands, the artificial business conditions, and the brief duplicity and false pretense, for rape and robbery, for piracy ness of the e..'dstence of strictly war taxes, the same degree of and fiendish cruelty, for the malicious destruction of innocent strictness as to equity or scientific accuracy is neither possible lives and property, for the deliberate violation of the inalienable nor entirely expected. It is a matter of congratulation, how rights of both nations and individuals, for the utter and con ever, that since our entry into the war all political parties temptuous disregard of every vestige of right, justice, honor, have agreed as to the general scope, nature, and extent of our fair dealing, .and moral sense, the conduct of the German over war-revenue legislation. lords from the day they plotted and precipitated this world war In discussing the war-revenue measure in 1917, I said: has been without parallel and without comparison, and has In view of the fact that we may be entering a somewhat long war, too br-ought upon their heads a universal judgment of criminal in much careful investigation and consideration of the principles of sound taxation and all phases of each Hem proposed to be taxed and the formu famy which a million years of atonement can not remove. [Ap lation of an equitable and comprehensive initial revenue measure can plau e.] Talk about "peace by negotiation"! How can you not well be given. With a basis of taxation thus established on "lines negotiate any question with scoundrels and villians, with assas-· broad and sound, one story after another of taxation can be added, it necessary, as the war progresses and our revenue needs increase, without sins and freebooters, with highwaymen and desperadoes? They disturbance of business or economic conditions and without the neces must first either be killed or disarmed, and then let honorable sity of constantly readjusting or patching up our tax structure. • • • men speak and act for their nation at the peace table. The real and chief ground of complaint against past and present tax laws Mr. Chairman, the Government of the United States has thus ts not due to high taxation but to inequitable taxation. far financed the war on sounder and wiser lines than any other In drafting the first war-revenue measure during the spring nation. It is true that in so doing we had the benefit of the of 1917 the Ways and Means Committee outlined the general experience of other countries which had previously entered the policy, since pursued, of imposing taxes for war purposes as war. It is a matter of keen satisfaction that the Treasury has much as possible on wealth, luxury, pleasure, and seminecessi so ably and efficiently met its share of these great war re ties. This is upon the principle that those able to pay must of sponsibilities, which are the most difficult of all financial re ·necessity bear the chief tax burdens, while those more unfortu sponsibilities. Our great Secretary of the Treasury and his. nate persons who hover over the brink of starvation as they go able assistants and aids are entitled to unstinted praise for the through life can only fight when needed and can not be expected faithful and highly capable manner in which they have met and to pay a very substantial amount of taxes. sol•ed in the most practical way every problem of war finance The income and excess-profits taxes are the backbone of our coming within the Treasury's functions which has arisen. Con financial ·system. For many years the income tax was placed gress has likewise promptly, earnestly, and patriotically formu under the ban of the Constitution by the Supreme Court. Lucky lated along the soundest and most constructive lines and it was that during the years preceding the war the protracted enacted into law every fiscal measure, and all others, in fact, fight made to revive the income tax forced an amendment to the that would be llelpful ·or necessary to the most vigorous P.rose Constitution and resulted in the enactment of a comprehensi\e cution of the war. system of income taxation which had reached an efficient stage When a nation .once finds itself obliged to enter a war, a few of development when the United States entered the war and belated critics generally make their appearance and condemn thereby became the ready agency for raising the chief portion of the country for not having placed itself on a strict war basis our war revenue. For the present fiscal year the income tax years before. This class of criticism is really an indictment and excess-profits tax, levied on the same principle, are expected of Mr. Chairman, in connection with ·tariff views we hear much tax: methods in any important commercial country should bo discussion of trade conditions and prospects. There are many as few and as general as possible, because they are more pro suggestions on eYery hand that we should now proceed in every ductive, less expensive to collect, frequently more equitable, way to prepare to meet after-war conditions. While the after and far less confusing and irritating. The big question now is war problems are but secondary in importance to the war to levy the maximum of revenue for war purposes, and at the problems, and will probably be more complex, we should not same time make the most equitable adjustment and distribu become enough engrossed in our preparation to meet after-war tion possible with respect to all persons, businesses, and indus conditions as to neglect some of the important and urgent things tries in the light .of ability to pay. I we could and ·should now do to bring the war to a speedy and Mr. GREEN of Iowa. Will the gentleman yield? · successful termination. This is the question of present para ~fr. HULL of Tennessee. I will. mount and supreme importance. After-war conditions will be 1.\lr. GREEN of Iowa. It is often said that England levies I greatly affected by the peace terms. The time when the war no local taxes ; but, as the gentleman is a \\are, that is an ends will also be a factor. \Ve are already sure of a great error. I made some investigation of that matter, which led merchant marine, an unprecedented gold reserve, and adequate me to believe that the local taxes amount to more than foreign banking facilities. We will have available our immense $500,000,000. resources, including raw materials, to be manufactured and sold Mr. HULL of Tennessee. That corresponds with the figures everywhere when the war closes. Europe will be greatly defi I have been able to obtain. cient in raw materials. The shelves of the business houses in While it is true that not quite 10 per cent of the total war all Em·opean and far-eastern countries will be empty, and if our expenditUPes incurred by all nations has been met by war-tax manufacturers are well stocked with goods at that time they revenue, it is also true that, with the exception of Germany, should have enormous foreign sales after the close of the war. all countries have sh·iven to make the largest levies consistent · The United States has now gone' from third to first place as with their resources and domestic conditions. Canada has exporter of manufactmed goods, or from a valuation of $1,099,- increased her revenue from $120,000,000 to $230,000,000 ; Eng 000,000 to $4,019,000,000. Our growing export trade will retain land, which is more representative in this respect than any . our gold at home. Prior to om entry into the war last year we other foreign country, has increased her levy from near $1,000,- 1 had paid $3,000,000,000 of our indebtedness to EU!'ope and 1oaned 000,000 to $4,500,000,000. Her total expenditures for four years . $3,000,000,000 over there. This does not include Government of war have been $39,650,000,000, of which $10,105,000,000 were loans of over six billions since made to allied nations. Another raised from taxation. Deducting normal taxes and normal after-war handicap to Europe will be that the cost of her physi expenditures and allowing for the value of permanent assets, cal i·econstruction will amount to $5,000,000,000. apart from loans to allies and dominions, leayes an actual w1lr Individually I have never shared in the persistent advocacy expenditure of $35,650,000,000 and war revenue of $6,105,- of the "war after the war " of which we have read so much 000,000. Estimating her loans to allies at one-half value, she during the past two years. Economic wars are but the germs figures her total recoverable assets at $8,980,000,000. This of real wars. Trade retaliation and trade discrimination, from would make the proportion of net ·war cost raised by revenue boycotting down, inevitably produce friction and irritation be 23.04 per cent. - tween nations, and haYe, in fact, been one of the chief underly Mr. LONGWORTH. Will the gentleman yield? ing causes of most wars of the past. Should the present Ger Mr. HULL of Tennessee. I will yield to the gentleman from man rulers control the affairs of Germany as heretofore I Ohio. should, of course, favor economic and every other kind of war Mr. LONGWORTH. . How much, if the gentleman can state, fare against them in the future, but our success in the present is the total revenue raised by customs duties? war, which is certain to come within a year, presupposes the Mr. HULL of Tennessee. Under the recent increase in the last elimination of these overlords and the lodgment of power in the finance bill introduced in April they estimated. that the amount hands of the people. Believing as I have that the best antidote to be derived is $472,000,000, but I may sas that $412,000,000 against war is the removal of its causes rather than its preYen of that amount is expected to be derived from tea, coffee, sugar, tion after the causes once arise, and finding that trade retalia and tobacco. tion and discrimination in its more vicious forms has been pro l\1r. GARNER. They are really consumption tuxes. · ductive of bitter economic wars, which in many cases have Mr. HULL of Tennessee. The customhouse collects the tax developed into wars of force, I introduced a resolution in the on those particular articles that I ha Ye named. House of Representatives during the early part of last year Mr. GARNER. But they are really consumption taxes. which would provide for the organization of an international Mr. HULL of Tennessee. To be sure. trade agreement congress, the objects of which should be to Mr. LONGWORTH. And so would they be in this country eliminate by mutual agreement all possible methods of retalia consumption taxes. tion and discrimination in international trade. This comse Mr. GARNER. Yes; on those articles. should. tend greatly to diminish the dangerous possibilities of Mr. LONGWORTH. How high ha,ve they gone on tea, coffee, economic warfare and to promote fair and friendly trade rela and sugar? tions among all the nations of the world. Dealing with the Mr. HULL of Tennessee. I have not glanced at the rates subject of competition through the tariff is another and different during the last few weeks, and I could not be accurate in regarcl question. In my judgment the country that will prosper greatest to it. I think sugar is 51 ·cents a pound, and tea 24 cents a after the war will be that country which develops the highest pound. There is now considerable demand for increased war state of utility and efficiency in its production; that country taxation there. Our loans to allies are much better placed which encourages invention and· scientific and industrial educa than those o'f England. Russia owes her $2,840,000,000, and tion and training in the largest measure; that country in which the smaller States $595,000,000. France, on account of Ger capital and labo1· in a friendly spirit mutually work out a rela man occupation, has only been able to levy new annual taxes tionship just and fair to both with respect to each important of $449,000,000. Italy has more than doubled her prewar industry. Antiquated machinery, worn-out methods, and ineffi revenues, so that they now yield over $800,000,000. Germany cient management will have to be abandoned. has financed the war chiefly through loans, indemnities, and Mr. Chairman, the United States is now at a maximum fiat money. It is impossible to secure accurate figures as ·to capacity of production. It is in a far better position to meet tht! exact amount of war revenue she has imposed. Her differ war burdens under these conditions than it will be to defer ent votes of credit show general Goyernment expenditures of them to later years, when the ability of the country to pay $34,750,000,000 during the war. The German States have afso the high level of taxes that would then be necessary will be met considerable war expenditures. The general Government much less than it now is. Values and production in each line there has only sought to increase taxes to meet normal expendi of industry can not be expected to be so Wgh then. England· tures, including the interest on war debt. They have failed expects a- revenue yield of $4,500,000,000 for a full year from even in this respect and have been obliged to issue bonds in a her present schedule. We are in a better position to raise number of instances to meet interest on war loans; The total $8,000,000,000 than England is the amount contemplated. Some new taxes collected by Germany since the outbreak of th~ one may say that. the American people pay more State and local war aggregate $2,876,000,000. Only $1,000,000,000 of this levy, taxes than the English. It may be replied that they have however, is a permanent tax. This amount added to her nor county and municipal taxes to· pay in England, whereas in mal revenue of $750,000,000 before the war only gives her an this country more than one-half our State taxes, for example, aggregate permanent peace tax of· $1,750,000,000 with which to are paid largely by those who are not subject to appreciable meet fixed annual post-war expenditm·es of $3,500,000,000. income or excess-profits taxes. This ratio in measurable pro l\fr. Chairman, the United States entered the war on April portions runs through the county and municipal tax payments. 6, 1917. Our ordinary re\enue receipts· for- the fiscal year It will be noted that England levies comparatively few taxes. e.ading June 30, 1917, were $1,118,174,000. No receipts from but they are general in their application. My opinion is that the war-revenue act of 1917 reached the Treasury within this .10164 CONGRESSIONAL RECORD-HOUSE. SEPTEl\illER 10, period. On the other hand, the Government was obliged to ex rations subject to income tax for the years 1915, 1916, 1917, and pend from April 6 to June 30, the end of the fiscal year, the estimated amount for 1918 is near $45,000,000,000 after all $1,218,502,000. To meet this expenditure the ordinary revenue the usual allowances for expenses of every 1.'ind, depreciation receipts of $567,438,000 and the proceeds of the first liber·ty temporary repairs, and so forth. From this entire amount th~ , loan, 1,466,335,000, both of which amounts eame into the Treas Government has derived in income and excess profits taxes thus ury during this period, wer..e utilized. Of the amount expended far less than $3,500,000,000. The added income and excess during this time, loans to our allies comprised $885,000,000. It profits tax levy for 1918, estimated at $5,500,000,000, would will thus b~ seen that both war and normal expenditures in this make a combined levy from these sources of -$9,000,000,000 count y for the latter portion of the fiscal year 1917 only for these four years, leaving to the taxpayers ·of the country amounted to $333,000,000. $86,000,000,000. Adding to the $885,000,000 loaned to the allies the amount Mr. Ohairm:m, it has been the intention and controlling effort expended by this Government for the war or for other thau o.f the committee to app~rtion taxes equitably in reporting tills nbrmal purposes from April G to June 30, 1917, shows $954,- bill. The bill contains many safeguards against any inequities 000,000 as the total war expenditures of the United States from that may arise from its operation. While these are intended April 6 to June 30 of that year. During the fiscal year ending to be comprehensive, I think some additional provi ions muy be June 30, 1918, the total ordinary and war expenditures of the necessary to carry out the general pnrpo es of the bill with the Government were $12,696,702,000. Of this amount $4,738,029,000 degree of equity and efficiency desirable. I wish here to com were loaned to the allies, which would leave remaining rl total pliment in the highest terms the able and distinguished chair expenditure of the Government for this fiscal year at $8,714,- man of the committee and also each member for the honest, 000,000. The aggregate amount of expenditures just stated earnest, and painstaking tabors they underwent in their zealous were met by revenue receipts of all kinds amounting to and patriotic endeavors to evolve a measure which woul<.l be ~3,664,581,000, by proceeds unscientific methods, transfer most of it to the Treasury. In more, in fact, than would rise under tax laws applicable to its chief features the plan this bill proposes is the best that normal business conditions. could be offered to this end. Another provision authorizing a taxable concern to allocate This general tax could not be expected to continue perma profits and deductions to the years of accrual in cases. of con nently after the war. The tax had its origin in the Scandi tracts extending over a period of years, in a law carrying ex navian countries early in the \f"ar, when it was discovered that tremely high rates such as the proposed bill, would avoid more certain firms were making abnormal profits from the sale of or less hardship in this cla s of cases. Section 302, limiting foodstuffs to Germany and that c rtain shipowners were realiz the ta.x according to. the amount of capital, i a commendable ing like profits from war shipping. It was soon ueemed goou effort to limit harshness and injustice in certain ca es of small public policy to classify these war profit and apply a special corporations. Since there is no real relationship between pro tax to them. . fits and the capital . employed, because the earnings are due As the war progre sed and increa ed profits above•those of primarily to the activities of the principal owner, the relief the prewar level became general in the various industries, contemplated may not prove as accurate and comprehensive as whether engaged directly in activities contributory to the war may be found justifiable. The English law exempts profits of or not, the term " war profits " was gradually applied to this husbandry, offices, and professions, when the latter huve little higher category of profits arising during the war and under war or no capital. conditions from whatsoever source. Some 14 countries have I am unable thus far to see just what variety of effect , if since adopted a tax designed to reach these swollen profits. any, the provision imposing 20 per cent on corporations render These laws \"ary ill many important respect . The English law, ing professional sen-ices may have. Clause 2 of subdivision A, which has been far more successful and produced a much larger section 326, relating to invested capital, will work injury to revenue than any other, "lays generally a tax on the profits in corporations which have been conservatively capitalized in that excess of the prewar profits of a given busine s concern, whether property of considerable value has been turned in for stock or conducted by an individual, partnership, or corporation. I h!lve shares of nominal, or materially less, value than that of the always favored this comprehensive plan. The secret of the suc tangible property at the time of payment. The administration cess of this law has been the fact that such provisions have been of the present law under a regulation which allows the Treas made as would permit each individual bu iness to have a fair, ury to ascertain the true facts in a given case has been entirely not to say liberal, prewar deduction as a basis for a heavy tax satisfactory and occasioned no abuse nor an excessive number on the profits above the deduction. As to normal business, of applications for recognition in this respect. which comprises the overwhelming number of cases, the general As to the flat 10 per cent deduction allowed in exceptional provisions of the law operate with fair ati faction both to the cases or classes under the war-profits provision, my opinion is Go\"ernment and the taxpayers. The great problem is to deal in that this is too much in some cases and not enough in others., the same spirit satisfactorily with exceptional business, which, Variable rates from 7 or 8 per cent to 12 per cent, which would it is true, comprises a minority of cases. The Englsh law con correspond to the normal percentage of earning of each im tains special provisions for this purpose, and to this end confers portant industry during the prewar period would better fit in on the trE>.asury such discretion as it needs in making as essments on business conditions. It is true this might occasion some to deal equitably with taxpayers 'vhose methods of capitaliza loss of revenue, but much of it would be made up uuder properly tion, income-producing factors, previous abnormal losses, pre adjusted income-tax rates. war trade depressions, or hazards of industry bring them within In the administration of the present law, where some haye ·the class of exceptional business. conservatively capitalized a valuable piece of property for far Any war-profits tax method must contemplate and arisen under the operation of the combined system of taxation able and necessary this character of publicity may be-and I strongly favor it to the fullest extent suggested by the public interest-the plan in England. should not b£. coupled with and made a part of the general tax law The two distinguishing characteristics of a war-profits tax unless it were calculated to sustain, rather than materially to injure are that it would reach profits over and above normal profit'3 the operation of., the tax law. Attention may be called to the enactment of the Federal Trade Com which have arisen during the war and under war conditions, mission act, one of the prime purposes of which was publicity of the and second, its many equitable reliefs which are indispensable to inner affairs, private-trade methods, trade practices. and conduct of its practical and efficient operation, both from the standpoint business concerns whenever deemed to be in the public interest. This act, however.!. imposes penalties on any officer or employee of the Fed of the taxpayer and of the Government. Establish a reasonable eral Trade \.;Ommission for divulging any facts of thi.'! chamcter de and fair prewar standard, deal equitably with special cases, and veloped by the commission, unless first authorized to do so by the com the GoYernment can take most of the remaining profits without mission itself. The commission is only authorized to make public such portions of the information obtaiped by it " as it shall deem injury or complaint. · expedient in the public interest," and it is entirely prohibited from Coming to the estate tax, I doubt the wisdom of the provision making public " trade secrets and names of custome.rs. " 'l'he report whicll is designed to impose the tax on the total amount of the of the commission after an investigation of a bus1ness concern on charges of antitrnst practices can only be made public in the discretion net estate, heedless of the effect of similar State taxes. This of the commission. It will thus be seen that careful restrictions against action will result either in subjecting estates to a tax on a tax any general publicity are contained in the law, one or the underlying or in obliging the States to make their levies on the remainder purposes of which is to expose to the condemnation of the public and, by app.ropriate official proceedings, to cru·b certain business practices, n:fter PUBLIC BILLS, RESOLUTIONS, AND MEMORIALS. The VICE PRESIDENT. There being no objection, the newly Under clause 3 of Rule XXII, appointed Senator will present himself at the desk for the pur.: 1\Ir. KAHN introduced a bill (H. R. 12910) to amend section pose of ta.lting the oath of office. 24 of an act entitled "An act for making further and more effec 1\Ir. DREw was escorted to the Vice President's desk by 1\Ir. tual provisions for the national defense and for other purposes," LoDGE; and the oath prescribed by law having been administered approved June 3, 1916, as amended, which was referred to to him, be took his seat in the Senate. the Committee on Military Affairs. PRODUCTION AND CONSUMPTION OF G..\SOLINE (S. DOC. NO. 277).; The VICE PRESIDENT laid before the Senate a communica- . PRIVATE BILLS AND RESOLUTIONS. tion from the United States Fuel Administrator, transmitting, Under clause 1 of Rule XXII, private bills and resolutions in response to a resolution of the 9th instant, a statement rela were introduced and severally referred as follows: tive to the production, consumption, and exportation of gaso By l\1r. ELLIOTT: A bill (H. R. 12911) granting a pension to line, which, with the accompanying paper, was ordered to lie on Lewis M. Strain; to the· Committee on Pensions. the table and be printed. By Mr. FIELDS: A bill (H. R. 12912) granting an increase MESSAGE FROM THE HOUSE. of pension to L. C. Bohannon; to the Committee on Pensions. A message from the House of Representatives, by J. C. South, By 1\Ir. KAHN: A bill (H. R. 12913) for the relief of Edna R. its Chief Clerk, announced that the Speaker of the House had Brady; to the Committee on Claims. signed the enrolled joint re olution (S. J. Res. 172) authorizing By Mr. SHOUSE: A bill (H. R. 12914) granting an increase the President to establish zones in which intoxicating liquors of pen ion to Orceneth F. Smith; to the Committee on Invalid may not be sold, manufactured, or distributed, and it was there- Pensions. upon signed by the Vice President. · RESOLUTIONS. PETITIONS, ETC. :Mr. CURTIS presented resolutions adopted by the Pecos Val Under clause 1 of Rule XXII, petitions and papers were laid ley Water Users' Association, of El Paso, Tex., fav:oring the on the Clerk's desk and refen·ed as follows: enactment of legislation for the reclamation of arid and swamp By the SPEAKER (by request): Memorial of the Chamber lands for the use of soldiers returning from the war, which of Commerce of the United States of America, submitting a were referred to the Committe_e on Public Lands. · report of the Federal trade committee of the Chamber of Com merce of the United States; to tl:ie Committee on Interstate and WOMAN SUFFRAGE. Foreign Commerce. · Mr. PHELAN. ~fr. President, 1,050,000 citizens, North, By Mr. GREEN of Iowa: Petition of Freuerick W. Evans, South, East, and West, have petitioned the Senate of the United for enactment. of war-time prohibition; to the Committee on the States in favor of equal suffrage. The petitions were circu Judiciary. fated by the Hearst newspapers, and I desire to present them By Mr. LINTHICUM: Memorial of the Board of School to the Senate. The petition of the 1,050,000 is as follows: Commissioners of Baltimore, Md., favoring "The Star--spangled To the Senate of the Unitea States: Banner" as the national anthem; to the Committee on the The President says that the suffrage amendment should be passed Library. as a just recognition of the work American women have done for the support of the war. We agree with the Presid~nt. By Mr. SNOOK: Petitions of H. H. 1\Iiller and 35 others, of The President says that t.bis suffrage amendment is a necessa~;y war West Unity, Ohio, and of A. C. Schantz and 66 others, of Arch measure; that it will help to win the war. Senators, that alone is surely reason enough why J'OU should vote for bold, Ohio, protesting against the proposed 1·ate of taxation on the amendment. · the sales of automobiles; to the Committee on Ways and Means. Senators, your petitioners urge you to stand by the President and to By 1\fr. VARE: 1\Iemorial of the White Haven Sanitarium heed his advice and vote for the suffrage amendment, both as a war 9223; measure that will help us to win victory sooner and as an act of high Association, favoring House bill to the Committee on justice to the patriotic women of the United States. · 'Vays and Means. By Mr. YOUNG of North Dakota: Petition of the Women's The women in my State have long enjoyed suffrage, and as Christian Temperance Union of New Rockford, N. Dak., uTging a result of that experiment I am free to state that it is an ex war-time prohibition; to the Committee on the JudiciaTy. ample worthy to be followed by the other Commonwealths of the country and by the country itself. The VICE PRESIDENT. The petition will be referred to the SENATE. Committee on Woman Suffrage. ELECTION OF PRESIDENT Al\1> \'ICE PRESIDENT. WEDNESDAY, Septembe1•11, 1918. Mr. SHAFROTH. For the Senator from Tennessee [Mr. The Chaplain, Rev. Forrest J. Prettyman, D. D., offered the SHIELDS, from the Committee on the Judiciary] I submit the tollowing prayer : views of the minority on the joint resolution ( S. J. Res. 12) . Almighty God, we have committed our way into Thy hands. proposing an amendment to the Constitution of the United Our national problem is to know and to do the will of God. We States providing for the election of President and Vice Presi pray Thee to give the inspiration of Thy Spirit that we may dent without the intervention of the Electoral College, estab · di cern the path of duty and right and by Thy grace maintain lishing their terms of office from the third Tuesday of January the ideals that have been committed to us as a Nation. Grant following their election, and :fi.ting the time when the terms of us Thy guidance and blessing this day. For Christ's sake. Senators and Representatives shall begin, and I ask that they Amen. be printed as part 2 of Senate Report No. 165. The Secretary proceeded to read the Journal of the proceed The VICE PRESIDENT. The report will be receiyed ancl ings of l\Ionday last, when, on request of 1\Ir. SMOOT and by printed. unanimous consent, the further reading was dispensed with and RESURVEY OF TOW-""SHIP LINES. the Journal was approved. Mr. NORRIS. From the Coriunittee on Public Lands I report SENATOR FROM NEW HAMPSHIRE. back favorably without amendment the bill (H. R. 8004) au l\1r. LODGE: l\1r. President, I present the credentials of Hon. thorizing the resurvey and retracement of lands heretofore IRVING \V. DnEw, appointed by the governor of the State of New returned as surveyed public lands of the United States under Hamp hh·e a Senator to fill the vacancy in the Senate created certain conditions, and I submit a report (No. 566) thereon. by the death of the late Senator GALLINGER. , I ask unanimous consent for the present consideration of the · The VICE PRESIDENT. The Secretary will read the cre bilL - dential . Mr. SMOOT. Let the bill be read. The credentials were read, as follows: The VICE PRESIDENT. The Secretary will read the-bill. STATE OF NEW HAMPSHillE, The Secretary read the bill, as follows : EXECUTIVE DEPARTME~T. Be it enactea, etc., That upon the application of the owners of three To the PRE SIDEXT OF TirE SE~ATE OF THE UXITED STATES: fourths of the privately owned lands in any township covered by This is to cer t ify that, pursuant to the power vested in me by the public-land surveys, more than GO per cent of the area of which town Constitut ion of the Unitecl States a nd the laws of the State of New ships is privately owned, accompanied by a deposit with the United Ha rup hire, I, ilPnry W. K Py •s, the governor "of said State, do hereby States surveyor general for the proper State, or if there be no surveyor appoint l nVI NG W. DnEw a Senator from said State in the Senate of general of such State, then with the Commissioner of the General Land the Unitecl Stat es until the vacancy ther ein, caused by the death of Office, of the proportionate estimated cost, inclusive of the necessary JAco n ll. GAI.L I XGEn is fi lled by election. as provided by law. work, of the resurvey or retracement of all the privately owned lands W itn e~s : His excPiiency our govPrnor Henry W. Keyes, and our seal in said township, the Commissioner of the General Land Office. subject hereto a ffix ed a t Con cord, t his 2tl day of September, A. D. 1918. to the supervisory authority of the Secretary of the Interior, sllaJI be HENRY ,V, KEYES, Gov ernor. autborizt'd in his discretion to cause to be made a resurvey or r etrace By the governor : ment of the lines of said township and to set permanent corners and [SEAL.] EDWIN C. BEAN, monuments in accordance with the laws and regulations governing sur Secretat·y of State. veys and resurveys of public lands; that the sum so deposited sllall be