Much is being said about the plausible sounding contention that because
a portion of the young manhood of the Nation has been conscripted,
therefore money also must be conscripted. Why, that is the very thing
the Government has been doing. It has conscripted a portion, a
relatively small portion, of the men of the Nation. It has conscripted a
portion, a large portion, of the incomes of the Nation. If it went too
far in conscripting men, the country would be crippled. If it went too
far in conscripting incomes and earnings, the country would likewise be
crippled.
Those who would go further and conscript not only incomes but capital, I
would ask to answer the riddle not only in what equitable and
practicable manner they would do it,[1] but what the Nation would gain
by it?
Footnote 1:
It is true that a few years ago a capital levy was made in Germany,
but the percentage of that levy was so small as to actually amount to
no more than an additional income tax, and that at a time when the
regular income tax in Germany was very moderate as measured by the
present standards of income taxation.
Only a trifling fraction of a man’s property is held in cash. If they
conscript a certain percentage of his possessions in stocks and bonds,
what would the Government do with them?
Keep them? That would not answer its purpose, because the Government
wants cash, not securities.
Sell them? Who is to buy them when everyone’s funds would be depleted?
If they conscript a certain percentage of a man’s real estate or mine or
farm or factory, how is that to be expressed and converted into cash?
Are conscripted assets to be used as a basis for the issue of Federal
Reserve Bank Notes? That would mean gross inflation with all its
attendant evils, dangers and deceptions.
Would they repudiate a percentage of the National debt? Repudiation is
no less dishonorable in a people than in an individual, and the penalty
for failure to respect the sanctity of obligations is no different for a
nation than for an individual.
The fact is that the Government would gain nothing in the process of
capital conscription and the country would be thrown into chaos for the
time being. The man who has saved would be penalized, he who has wasted
would be favored. Thrift and constructive effort, resulting in the
needful and fructifying accumulation of capital would be arrested and
lastingly discouraged.
I can understand the crude notion of the man who would divide all
possessions equally. There would be mighty little coming to anyone by
such distribution and it is, of course, an utterly impossible thing to
do, but it is an understandable notion. But by the confiscation of
capital for Government use neither the Government nor any individual
would be benefited.
A vigorously progressive income tax is both economically and socially
sound. A capital tax is wholly unsound and economically destructive. It
may nevertheless become necessary in the case of some of the belligerent
countries to resort to this expedient, but I can conceive of no
situation likely to arise which would make it necessary or advisable in
this country. More than ever would such a tax be harmful in times of war
and post-bellum reconstruction, when beyond almost all other things it
is essential to stimulate production and promote thrift, and when
everything which tends to have the opposite effect should be rigorously
rejected as detrimental to the Nation’s strength and well-being.
There is an astonishing lot of hazy thinking on the subject of the uses
of capital in the hands of its owners. The rich man can only spend a
relatively small sum of money unproductively or selfishly. The money
that it is in his power to actually waste is exceedingly limited. The
bulk of what he has must be spent and used for productive purposes, just
as would be the case if it were spent by the Government, with this
difference, however, that, generally speaking, the individual is more
painstaking and discriminating in the use of his funds and at the same
time bolder, more imaginative, enterprising and constructive than the
Government with its necessarily bureaucratic and routine regime possibly
could be. Money in the hands of the individual is continuously and
feverishly on the search for opportunities, i. e., for creative and
productive use. In the hands of the Government it is apt to lose a good
deal of its fructifying energy and ceaseless striving and to sink
instead into placid and somnolent repose.
Taxation presupposes earnings. Our credit structure is based upon
values, and values are largely determined by earnings. Shrinkage of
values necessarily affects our capacity to provide the Government with
the sinews of war.
There need not be and there should not be any conflict between profits
and patriotism. I am utterly opposed to those who would utilize their
country’s war as a means to enrich themselves. Extortionate profits must
not be tolerated, but, on the other hand, there should be a reasonably
liberal disposition toward business and a willingness to see it make
substantial earnings. To deny this is to deny human nature.
Men will give their lives to their country as a matter of plain and
natural duty; men, without a moment’s hesitation, will quit their
business and devote their entire time and energy and effort to the
affairs of the Nation, as a great many have done and every one of us
stands ready to do, without any thought of compensation. But, generally
speaking, men will not take business risks, will not venture, will not
be enterprising and constructive, will not take upon themselves the
responsibilities, the chance of loss, the strain, the wear and tear and
worry and care of intense business activity if they do not have the
prospect of adequate monetary reward, even though a large part of that
reward is taken away again in the shape of taxation.